After a transgression has occurred within an organization, a primary concern is the reintegration of the affected parties back into the organizational community. However, beyond offenders and victims, reintegration depends on the views of organizational peers and their desire to interact with these parties. In two studies, we demonstrated that offender amends and victim forgiveness interact to predict peer reintegrative outcomes. We found evidence of backlash against unforgiving victims: Peers wanted to work the least with victims who rejected appropriate amends, (...) thus penalizing them for their failure to contribute to the restoration process. This backlash effect was due to decreased liking of the victim and the perceived failure to repair the offender-victim relationship. These findings demonstrate that peers expect both offenders and victims to do their part to achieve reconciliation following transgression, and both may suffer the consequences of failing to meet peer expectations. Implications for reintegration within organizations are discussed. (shrink)

Business Ethics, the Environment &Responsibility, Volume 32, Issue 4, Page 1452-1469, October 2023.

When firm misconduct comes to light, CEOs are often faced with difficult decisions regarding whether and how to respond to stakeholder demands as they attempt to restore their firms’ legitimacy. Prior research largely assumes that such decisions are motivated by CEOs’ calculated attempts to manage stakeholder impressions. Yet, there are likely other motives, particularly those of a morally-relevant nature, that might also be influencing CEOs’ decisions. To address this limitation, we advance moral cleansing as an alternative explanation for how and (...) why CEOs lead their firms to respond to stakeholder demands following the firm’s misconduct and, in turn, whether they can successfully restore their firm’s legitimacy. In the context of firm misconduct, moral cleansing motives reflect CEOs’ desire to restore their threatened moral self-image resulting from the misconduct. We theorize that a CEO’s moral cleansing motives increase the likelihood that their firm will engage in a series of reparative responses that can restore the firm’s legitimacy (i.e., discovery, explanation, penance, and rehabilitation). In addition, we explicate the unique implications of CEOs’ moral cleansing in a post-misconduct context by theorizing how such motives may simultaneously improve one form of their firms’ legitimacy while hindering another. Specifically, we theorize that CEOs’ moral cleansing motives increase (decreases) the authenticity (strategic cognition) of their firm responses, which strengthens (weakens) the effectiveness of those responses on the firms’ ability to restore its moral (pragmatic) legitimacy with stakeholders. We conclude with a discussion of the implications of this work. (shrink)

Moral repair is an important way for firms to heal moral relationships with stakeholders following a transgression. The concept is rooted in recognition theory, which is often used to develop normative perspectives and prescriptions, but the same theory has also propelled a view of moral repair as premised on negotiation between offender and victim(s), which involves the complex social construction of the transgression and the appropriate amends. The tension between normative principles and socioconstructivist implementation begs the question how offending firms (...) should approach moral repair. Addressing this question, we develop a two-level conceptualization of moral repair, distinguishing between procedural and substantive levels of practice, which accommodate normativity and socioconstructivism, respectively. In so doing, we enrich the literature by 1) promoting conceptual clarity, 2) refining understanding of the moral repair process, and 3) suggesting the use of a unified, configurational approach to studying (nonlinear) relations between amends and moral outcomes. (shrink)

Studying and discussing boundary violations between people is important for potentially averting future harm. Organizations typically respond to boundary violations in retributive ways, by punishing the perpetrator. Interestingly, prior research has largely ignored the impact of sexual boundary violations and retributive dynamics on teams. This is problematic as teams provide an obvious setting not only to detect and discuss troubling behavior by peers, but also for learning how to prevent future harm. Therefore, in this study we explore team-level experiences regarding (...) sexual boundary violations and organizational responses to these incidents. Drawing on an in-depth case study, our findings shed light on the profound negative consequences of a retributive organizational response to sexual boundary violations. Additionally, our findings show how a restorative approach, inviting teams to reflect on the violations and their impact, can help teams to recover. Our main contribution involves a model that demonstrates how the interplay between sexual boundary violations, retributive, and restorative organizational responses affects teams. This model shows how combining these responses can acknowledge distress within teams, heal relationships between team members through dialogue, and open up the possibility to learn from these events. This model extends prior research focusing on individual actions and outcomes regarding violations. Additionally, by combining retributive and restorative organizational responses in one model, we extend the literature on restorative organizational responses to boundary violations. (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)

In the absence of effective judicial remediation mechanisms after business-related human rights violations, companies themselves are expected to establish remediation procedures for affected victims and communities. This is a challenge for both companies and victims since comprehensive company-based grievance mechanisms are currently missing. In this paper, we explore how companies can provide effective remediation after human rights violations. Accordingly, we critically assess two different approaches to conflict resolution, alternative dispute resolution and restorative justice, for their potential to provide dialogue-based, non-judicial (...) remediation. We argue that remedy through agreement-driven ADR mechanisms risks marginalizing the interests and concerns of victims and affected community members, particularly in weak institutional contexts. Hence, we develop a dialogue-driven framework for corporate remediation of human rights violations grounded on RJ principles. This restorative framework provides a comprehensive CGM that focuses on the harms and needs of victims and aims at restoring justice through restorative dialogue. Based on a prompt discovery and a thorough investigation of the grievance, companies should design and prepare the remediation process together with victims, offenders and affected community members. Through restorative dialogue with the affected parties about the circumstances and impacts of the wrongdoing, companies can repair the harm, regain legitimacy amongst stakeholders as well as transform their business practices to avoid future human rights violations. (shrink)

Organizational transgressions cause recurring scandals. Often disclosed by whistleblowers, they generate public outrage and force organizations to respond. Recent studies have tried to answer the question: “What happens after a transgression becomes publicly known?” They highlight organizational responses marked by recognition of the transgression, penance and reintegration of the organization. However, that research only deals with transgressions involving illegal organizational practices. This article broadens the field of study to include legal but unethical organizational practices. It is based on the case (...) study of a recent scandal: LuxLeaks (2010–2018). This scandal concerns tax avoidance practices that were advised by the international audit and consulting firm PwC to hundreds of companies and made public by whistleblowers. The case data result from cross-comparisons of several organizational (PwC) and governmental (Luxembourg) communication documents as well as parliamentary, judicial and press documents. The article’s results highlight a legalistic organizational response that is so far under-explored in the literature. This response is marked by a rhetoric of denial, reformism and self-victimization and by judicial retaliation against the whistleblowers. It reveals the paradoxes of “legalization” in contemporary organizations, and its role in the perpetuation of unethical corporate practices. (shrink)

This article aims to investigate the impact of employee perceptions of corporate social responsibility on job embeddedness under the drastic circumstances of coronavirus disease 2019. This study also investigated the role of organizational identification as a psychological mechanism linking employee perceptions of corporate social responsibility to job embeddedness. Survey data were collected from 325 employees in banking industry of China and analyzed using partial least squares structural equation modeling. Results revealed that CSR to employees and organizational identification were positively and (...) significantly related to job embeddedness, while CSR to customers, CSR to government, and CSR to society did not significantly predict job embeddedness. Organizational identification fully mediated the relationship between CSR to customers, CSR to government, CSR to society and job embeddedness, and partially mediated the relationship between CSR to employees and job embeddedness. The results suggest engaging in CSR activities can lead employees to identify themselves with the organization and enhance their embeddedness. The article concludes with several implications for practice and recommendations for future research. (shrink)

There has recently been a growth in research that examines how corporations respond to allegations of unethical actions. Although scholars have gained much insight about the range of responses available to and used by organizations, there has been almost no study of why firms choose one response over another. In this article, the authors present a framework of likely organizational response choices to allegations of wrongdoing; we propose that response choices are based on the degree of reputational risk from stakeholder (...) withdrawal of support and on perceived threats to the firm’s primary or secondary identity. (shrink)

We tested whether the impact of an organizational transgression on consumer sentiment differs depending on whether the organization is a nonprofit. Competing hypotheses were tested: that people expect higher ethical standards from a nonprofit than a commercial organization, and so having this expectation violated generates a harsher response and that a nonprofit’s reputation as a moral entity buffers it against the negative consequences of transgressions. In three experiments participants were told that an organization had engaged in fraud, exploitation of women, (...) or unethical labor practices. Consistent with the moral disillusionment hypothesis, decreases in consumer trust post-transgression were greater when the organization was described as nonprofit, an effect that was mediated by expectancy violations. This drop in trust then flowed through to consumer intentions and consumer word of mouth intentions. No support was found for the moral insurance hypothesis. Results confirm that nonprofits are penalized more harshly than commercial organizations when they breach consumer trust. (shrink)

Trust is critical to the development and maintenance of collaborative and cohesive relationships in societies, broadly, and in organizations, specifically. At the same time, trust is highly dependent on the social context in which it occurs. Unfortunately, existing research involving trust remains somewhat limited to a particular set of developed economies, providing a window to explore a culture's stage of economic development as a key contextual determinant of trust within organizations. In this article, we review the state of the scholarship (...) on trust and identify those qualities of trust that are common in organizations at similar stages of economic development, referred to as its etic aspects. We then also distinguish those elements of trust that are, to the contrary, culturally specific or emic in nature. We structure our discussion around the “life cycle of trust” (i.e., the creation, maintenance, and postfracture repair of trust) and consider unique factors in its application to developing economies. In doing so, we ground our examination in expository examples through field experience in Haiti. We conclude with the proposal of a framework for future research oriented toward the resolution of remaining theoretical and empirical queries as they relate to trust in developing economies. (shrink)

At a time when some are questioning the relevancy of business education in general, others are now asking whether MBA programs should be blamed for society’s declining trust in business and the numerous corporate ethical failures of recent decades. Whether the full blame lies with business schools or not, MBA instructors are actively seeking more effective ways to help students adopt more practical and ethical managerial paradigms. Because trust theory is simple and robust and outlines the basic mental processes that (...) drive economic exchange while simultaneously prioritizing ethical behavior, in this article, we argue that it is distinctively suited to operationalize stakeholder theory in the classroom, providing MBA students with both a principled and a practical foundation or thematic platform for their MBA coursework and subsequent careers. We also discuss potential challenges and limitations and provide recommendations for future research. (shrink)

ABSTRACT:After a transgression has occurred within an organization, a primary concern is the reintegration of the affected parties back into the organizational community. However, beyond offenders and victims, reintegration depends on the views of organizational peers and their desire to interact with these parties. In two studies, we demonstrated that offender amends and victim forgiveness interact to predict peer reintegrative outcomes. We found evidence of backlash against unforgiving victims: Peers wanted to work the least with victims who rejected appropriate amends, (...) thus penalizing them for their failure to contribute to the restoration process. This backlash effect was due to decreased liking of the victim and the perceived failure to repair the offender-victim relationship. These findings demonstrate that peers expect both offenders and victims to do their part to achieve reconciliation following transgression, and both may suffer the consequences of failing to meet peer expectations. Implications for reintegration within organizations are discussed. (shrink)

In this article we set the context for this special issue focusing on individual and organizational reintegration in the aftermath of transgressions that violate ethical and legal boundaries. Following a brief introduction to the topic we provide an overview of each of the four articles selected for this special issue. We then present a number of potentially fruitful empirical, theoretical, and normative directions management and ethics scholars might pursue in order to further advance this evolving literature.

ABSTRACT:Although there is ample evidence that stock markets react negatively to unethical corporate behavior, our understanding of the mechanisms that shape variation in these reactions across different incidents of misconduct remains underdeveloped. We propose and test a framework for explaining this variation by focusing on the role of the media in disseminating initial information about misconduct. We argue that the signaling effects of this information are important for investors because corporations have strong incentives to limit the information they disclose about (...) misconduct. More specifically, we hypothesize that investors are more likely to react negatively when the media presents clear and credible information that misconduct occurred, that the firm was responsible for it, and that the misconduct was the result of deeper organizational problems. We also predict that information which signals that a firm has restorative capacity tempers investor reactions when the media places blame for misconduct on the corporation rather than specific individuals. We test our hypotheses in a unique sample of 345 acts of corporate misconduct in five European countries. Our findings provide broad support for our hypotheses, and we discuss implications for research on corporate misconduct and the role of non-state actors in regulating unethical corporate behavior. (shrink)

ABSTRACT:Re-establishing trust presents a complex challenge for a firm after it commits corporate misconduct. We introduce a new construct, moral salience, which we define as the extent to which the firm’s behavior is morally noticeable to the stakeholder. Moral salience is a function of both the moral intensity of the firm’s behavior and the relational intensity of the firm-stakeholder psychological contract. We apply this moral salience construct to firm misconduct to develop a model of trust repair that is based on (...) goodwill, and moderated by the firm’s stakeholder culture. (shrink)