Coming with Baggage: Past Rejections and the Evolution of Market Relationships

Fernandez-Mateo, I and Coh, M (2015) Coming with Baggage: Past Rejections and the Evolution of Market Relationships. Organization Science, 26 (5). pp. 1381-1399. ISSN 1047-7039

Abstract

We examine the role of past rejections in the evolution of market relationships. We identify a theoretical tension between the informational benefits and the negative affect resulting from interactions in which one actor rejected another. Rejection can help select future mutually beneficial transactions, but it can also trigger negative affect and lead rejected actors to decline exchange opportunities with those who rejected them in the past. We test this theory with longitudinal data on candidates considered by an executive search firm, using insights from fieldwork and interviews to understand better what motivates the parties’ reactions to being rejected. This paper contributes to research on relationship evolution and highlights the importance of handling rejection in market interactions.