81 / 2024-04-19 13:05:58

The effect of misconduct on restaurant firm survival

Restaurant industry; Long-run survival rate; Organizational misconduct; Boomerang effect; Negative spillover resistance

Restaurant firms resort to misconduct to enhance survival while ignoring the negative effect of the misconduct spreading. This paper investigates how misconducts from both individual and environmental levels make a mixed impact on the long-run survival of restaurants. The results show the following findings. 1) When nothing else is considered, the survival probability of a firm increases as own misconduct increases. But this kind of correlation would be hugely weakened by the increase of the firm’s familiarity and identifiability. 2) Firm's misconduct is like a boomerang, which deteriorates the business environment by triggering the misconduct of peers, and in turn, the spreading peer misconduct harms the focal firm's survival ultimately. 3) When peer misconduct is prevalent, higher familiarity and identifiability of a firm can resist the negative spillover effect of peer misconduct. The paper contributes to the literature on hospitality firm survival and organizational misconduct.