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The Effects of Interfirm Ties on Illegal Corporate Behavior
Author(s) -
Collins Jamie D.,
Reutzel Christopher R.
Publication year - 2017
Publication title -
business and society review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.524
H-Index - 21
eISSN - 1467-8594
pISSN - 0045-3609
DOI - 10.1111/basr.12117
Subject(s) - reciprocity (cultural anthropology) , interpersonal ties , business , social capital , strong ties , capital (architecture) , similarity (geometry) , industrial organization , microeconomics , economics , social psychology , psychology , sociology , archaeology , history , social science , artificial intelligence , computer science , image (mathematics)
Although numerous benefits are associated with interfirm ties, these external relationships can also have negative consequences. Theoretically based in the relational component of social capital, we identify one potentially serious consequence of interfirm ties, propensity of firms engaging in illegal behavior. Results of our study of S&P 500 firms suggest that companies benefit from a lower likelihood of illegal behavior when they have numerous weak ties to other firms. Conversely, when they become overly embedded in a network of strong ties, they are more likely to engage in illegal behavior. We also found evidence that reciprocity and status similarity influence firms’ propensity to engage in illegal behavior.