Purpose: The study is to examine how a punishment of insurance companies(agents) for salesperson who violated contracts affects the network comprised of salespeople. Research design, data, and methodology: This study, the survey was conducted by requesting an online survey company. A survey-based study comprising a sample size of 183 in South Korea was conducted to test the proposed hypotheses. The subjects of this study were insurance agents who had experienced punishment for contract violation by insurance companies. Results: First, it was found that the severe punishment of the insurance companies(agents) for the salesperson who violated the contract has a positive effect on the network density of other salespeople(observers) in the network. Second, severity of punishment has no significant effect on the network embeddedness of salespeople. Third, fairness of punishment has no significant effect on the network density and network embeddedness of salespeople. Finally, the network density has a positive effect on the network embeddedness of salespeople. Conclusions: This study has great significance in that it conducted the study from the perspective of an observer (other salesperson within the salesperson) who observes the actor (the salesperson who is punished) from the perspective of the network. based on these findings, the implications for theory and practice are discussed in detail.