We examine the processes involved in the escalation of a plant closure from a local concern to a perceived organizational moral failure that commands national attention. Our empirical case covers the controversy over the decision of telecommunications giant Nokia to close a plant in Germany, despite having received significant state subsidies, and the relocation of production to Hungary and Romania. We conducted an inductive study that utilizes a semiotic analysis to identify how various actors framed the controversial plant closure and (...) sought to cast it as moral failure. Our analysis uncovered two distinctive moral framings of the plant closure and revealed how key actors used evocative labels to frame these events in moral terms. These moral framings drew in additional stakeholders, generated more widespread media coverage, and turned the case into an organizational moral failure in the eyes of the national public. We contribute to the literature on organizational moral failure by theorizing its escalating process and elaborating why and how local events may become moral issues of interest to broader stakeholder groups. (shrink)

In recent years, research on morality in organizational life has begun to examine how organizational conduct comes to be socially constructed as having failed to comply with a community’s accepted morals. Researchers in this stream of research, however, have paid little attention to identifying and theorizing the key actors involved in these social construction processes and the types of accounts they construct. In this paper, we explore a set of key structural and cultural dimensions of apparent noncompliance that enable us (...) to distinguish between four categories of actors who engage in constructing the label of moral failure: dominant insiders, watchdog organizations, professional members, and publics. The analysis further clarifies which category of actor is more likely to succeed in constructing the label of moral failure under which circumstances, and what accounts they are likely to use, namely scapegoating, prototyping, shaming, and protesting. (shrink)

Greenwashing is a phenomenon that is linked to scandals that often occur at the supply-chain level. Nevertheless, research on this subject remains in its infancy; much more is needed to advance our understanding of stakeholders’ reactions to greenwashing. We propose here a new typology of greenwashing, based on the locus of discrepancy, i.e. the point along the supply-chain where the discrepancy between ‘responsible words’ and ‘irresponsible walks’ occurs. With three experiments, we tested how the different forms of greenwashing affect stakeholders’ (...) reactions, from both ethical and business perspectives. We developed our hypotheses by building on attribution theory, which seeks to account for how observers construct perceptions about events. We had anticipated that the more internal, controllable and intentional the discrepancy is, the greater the blame attributed to a company is, and the lower the intention to invest will be. When greenwashing occurs at a company level, this results in a higher level of blame attribution, while the intention to invest falls. Indirect greenwashing refers to a misbehaviour perpetrated by a supplier who claims to be sustainable, and which results in a less negative impact on a supplied company. We also propose the vicarious greenwashing, which occurs when the behaviour of a supplier is in breach of a company’s claims of sustainability. This type of greenwashing is nevertheless detrimental to investment. The findings here advance our understanding of how greenwashing shapes stakeholders’ reactions, and highlight the need for the careful management of the supply-chain. (shrink)

Greenwashing is a phenomenon that is linked to scandals that often occur at the supply-chain level. Nevertheless, research on this subject remains in its infancy; much more is needed to advance our understanding of stakeholders’ reactions to greenwashing. We propose here a new typology of greenwashing, based on the locus of discrepancy, i.e. the point along the supply-chain where the discrepancy between ‘responsible words’ and ‘irresponsible walks’ occurs. With three experiments, we tested how the different forms of greenwashing affect stakeholders’ (...) reactions, from both ethical and business perspectives. We developed our hypotheses by building on attribution theory, which seeks to account for how observers construct perceptions about events. We had anticipated that the more internal, controllable and intentional the discrepancy is, the greater the blame attributed to a company is, and the lower the intention to invest will be. When greenwashing occurs at a company level, this results in a higher level of blame attribution, while the intention to invest falls. Indirect greenwashing refers to a misbehaviour perpetrated by a supplier who claims to be sustainable, and which results in a less negative impact on a supplied company. We also propose the vicarious greenwashing, which occurs when the behaviour of a supplier is in breach of a company’s claims of sustainability. This type of greenwashing is nevertheless detrimental to investment. The findings here advance our understanding of how greenwashing shapes stakeholders’ reactions, and highlight the need for the careful management of the supply-chain. (shrink)

Much research has examined the positive effects of legitimacy spillover. However, negative events may reduce the extent of legitimacy, which may in turn spillover to affect the legitimacy of important stakeholders including alliance partners. This study examines incidents of regulative legitimacy violation and focuses on the effect such incidents have on the alliance partners of the perpetrating organizations. We specifically examine three types of such violations—administrative law, criminal law, and civil law—to show that the loss of regulative legitimacy negatively influences (...) the stock market performance of alliance partners. More interestingly, not all corrective actions and repair efforts are equally impactful. We show that the effect of repair efforts by the perpetrating firm on the alliance partner differ depending on the nature of those violating incidents. (shrink)