Multiple-Actor Scandals as Evaluative Discontinuities: The Role of Trust in Scandal Dynamics (with Alessandro Piazza, Rice University, Joe Porac, NYU, and Mike Mai, NUS)
Scandals are known to exert pervasive and enduring effects in organizational and market settings, especially when they involve multiple actors. While most existing research has highlighted the dynamics of contamination and competitive substitution as the mechanisms underlying scandal spillovers, we argue that scandals undermine generalized trust at the field level, and in so doing act as evaluative discontinuities that alter how the performance of social actors is evaluated in their aftermath. Through two empirical studies that combine observational and experimental evidence, we find support for this account. In particular, we find that while high-status actors tend to experience evaluative advantages under ordinary conditions, such advantages disappear in the aftermath of scandals, as the generalized loss of trust that ensues tends to affect them to a greater degree, being the main beneficiaries of such trust. Along similar lines, newcomers to the field—who are often subjected to evaluative penalties under ordinary circumstances—see their performance evaluated more positively in the aftermath of scandals as a result of greater trust resulting from their outsider status. We discuss the implications of our findings for theories of scandal, status, and evaluation in organizations and markets.