Georgia State U., J. Mack Robinson College of Business
Research shows bystander firms face uncertainty about spillovers from a peer’s reputational event, such as competence failure. Extending these earlier findings on spillovers, this research investigates bystander reactions to uncertainty arising from such reputational event. Specifically focusing on online reputation management actions, we theorize and find empirical evidence that same-category bystanders differentially engage with customer reviews after the peer’s failure when compared to non-bystanders. Empirically testing this in the context of restaurant actions on Yelp platform around Chipotle’s E. coli outbreak in Seattle, we find that bystanders differentially respond more to highly influential reviews—reviews with negative tenor and those written by very active reviewers—than non-bystanders. These findings have implications for research on organizational misconduct, spillovers, and online reputation management.
