Much research has examined how a firm’s involvement in a major scandal results in negative outcomes for that firm, including negative effects on reputation, performance, and interorganizational relationships. Research has also begun to demonstrate how these effects spill over to industry peers, focusing on reputational and performance consequences. However, research has not yet examined the relational implications to industry peers following scandal within the industry. I therefore integrate the literatures on spillover, director interlocks, and social networks to make predictions regarding the impacts of scandal on the director interlock networks of industry peers among S&P 500 firms from 2009-2017. Specifically, I examine how relational factors influence the impacts that an industry peer firm’s scandal has on these important interorganizational relationships. I find that reciprocated interlocks and shared experience may protect firms from negative outcomes of industry association with a scandal firm, but that scandal industry firms in triadic relationships may experience negative relational spillover. These findings have implications for research on scandals, spillover, and director interlock networks, as well as practical implications.
