Managing failure: how anticipatory and reactive strategies interrelate

Impression management describes the strategies a firm implements to manage evaluator perceptions, an important dimension of firm survival and success. Scholarship to date has considered how firms manage impressions before and after negative events, but considerations of how and why firms use these strategies developed independently. By synthesizing arguments from anticipatory and reactive impression management, I develop and test a novel theoretical framework that treats a firms impression management strategies as path-dependent. I also assess the relative effectiveness of these impression management pairings on firm stock responses, which represent the collective evaluations of firm outsiders. Finally, I investigate the role of anticipatory strategy effectiveness on each pairing to further examine the influence of stock market responses on decision making. I test these relationships in a sample of late-stage clinical trial terminations by public U.S. pharmaceutical firms. Together, these contributions illuminate how firm impression management decisions are more nuanced than previous research suggests and that different pairings of strategies carry significant implications for firm performance.