Firms use algorithms to make important business decisions. To date, the algorithmic accountability literature has elided a fundamentally empirical question important to business ethics and management: Under what circumstances, if any, are algorithmic decision-making systems considered legitimate? The present study begins to answer this question. Using factorial vignette survey methodology, we explore the impact of decision importance, governance, outcomes, and data inputs on perceptions of the legitimacy of algorithmic decisions made by firms. We find that many of the procedural governance (...) mechanisms in practice today, such as notices and impact statements, do not lead to algorithmic decisions being perceived as more legitimate in general, and, consistent with legitimacy theory, that algorithmic decisions with good outcomes are perceived as more legitimate than bad outcomes. Yet, robust governance, such as offering an appeal process, can create a legitimacy dividend for decisions with bad outcomes. However, when arbitrary or morally dubious factors are used to make decisions, most legitimacy dividends are erased. In other words, companies cannot overcome the legitimacy penalty of using arbitrary or morally dubious factors, such as race or the day of the week, with a good outcome or an appeal process for individuals. These findings add new perspectives to both the literature on legitimacy and policy discussions on algorithmic decision-making in firms. (shrink)

Even though the COVID-19 pandemic has represented an intense period of stress and anxiety for individuals, it has also been an opportunity for firms to engage in cause-related marketing initiatives as a means of providing support and helping them cope with this global pandemic. This study analyzes the influence of cause–brand fit and cause–brand alliance on customer-based legitimacy and reputation. This study also examines the mediating and moderating roles of trust and betrayal, respectively. Data were collected from 455 participants during (...) the first wave of the pandemic, especially during the first lockdown. The results contribute to unveiling the economic and societal outcomes of cause-related marketing. The findings also enrich the antecedents of the legitimacy and reputation conferred by customers. (shrink)