Reputation at risk: The influence of stakeholder mobilization for family firms
Type
conference paper
Date Issued
2024
Author(s)
Abstract
Research about the effects of firm reputation following a negative event remains equivocal. Some studies highlight the benefits accrued by high-reputation firms, while others point to the liabilities of a strong reputation. In this study, we propose that the inconsistencies in research findings may stem from insufficient attention to how stakeholders mobilize in response to perceived wrongdoings, either as individuals or collectively through class action lawsuits. We develop and test our hypotheses in the context of family firms, which are broadly recognized to have reputational advantages over nonfamily firms. By examining a unique dataset of individual and class-action customer lawsuits filed in federal courts against US firms between 2007 and 2019, our findings reveal a nuanced scenario. For family firms, a high reputation serves as a protective shield against lawsuits from individual customers, but becomes a vulnerability when facing collective actions by groups of customers. Our theory and findings offer novel insights into the complex interplay between firm reputation and stakeholder mobilization, especially within family business settings. This study enhances our understanding of how a firm’s reputation can differently shape stakeholder reactions in the aftermath of negative events.
HSG Classification
contribution to scientific community
Event Title
SMS 44th Annual Conference
Event Location
Istanbul, Turkey