1. This paper used three studies to explore the construction and effectiveness of organizational verbal accounts following controversial events.
2. Findings suggest that accounts are constructed by linking two broad forms of accounts (acknowledgments or denials) with two broad types of account contents (references to institutionalized or technical organizational characteristics) and that accounts that combine acknowledging forms of accounts with references to widely institutionalized characteristics are the most effective in protecting organizational legitimacy.
3. Construction of accounts: is explained by spokespersons' attempts to provide logical, believable, and adequate explanations.
4. Effectiveness of accounts: is explained by audiences' perceptions of the type and severity of controversial actions, their expertise in the controversial area, and their expectations of organizational responses.
5. Findings: Following moderately negative controversies, non-expert audiences expect organizations to acknowledge the events and provide evidence that actions related to the controversy were performed in accordance with widely endorsed and normative practices.
6. Organizations may protect or even enhance their legitimacy following controversies that violate social norms if those controversies are followed by acknowledging accounts that refer to normative structures, procedures, or goals. In addition, this research suggests that organizations may proactively prepare for controversial actions by retaining and using institutionalized structures and procedures in their everyday operations. These institutionalized practices may then be referred to in accounts of future organizational crises. The well-constructed account, it appears, may be mightier than the average blow to organizational legitimacy.
Pfarrer et al., 2008
1. Gap: there have been few attempts to examine organizations' behavior after committing a transgression. Thus, the research question we address is "How can an organization restore its legitimacy and achieve reintegration with a diverse group of stakeholders after committing a publicly known transgression?"
2. Purpose: in this paper is to advance the literature on organizational corruption, renewal, and legitimacy by proposing an interactive stage model of organizational reintegration with stakeholders following a transgression.
3. Reintegration process: including (1) discovering the transgression, (2) explaining their wrongdoing, (3) serving penance by accepting punishment, and (4) internally and externally rehabilitating or rebuilding the organization's processes and legitimacy.
4. Organizational failure after a transgression incurs huge costs for the organization, its stakeholders, and society in general. Hence, the four stage model developed in this paper fills an important void in the literature to illustrate a process through which organizations might regain legitimacy with their stakeholders after committing a transgression.
Rhee & Valdez, 2009
1. Purpose: direct researchers' attention to the crucial yet long overlooked contextual questions surrounding the damage and repair of organizational reputation.
2. Reputation repair is easier when:
3. Proposition 1: A higher-weighted proportion of positive to negative reputation dimensions increases stakeholders' perceptions of an organization's capability to repair its reputation.
4. Proposition 8: Endorsers' persistent support of a firm after its reputation-damaging event increases stakeholders' perceptions of the firm's capability to repair its reputation.
5. Reputation repair is more difficult:
6. Proposition 2: The greater the relevance of a damaging event to a firm's positive dimensions, the greater the external visibility of the event.
7. Proposition 3: A firm's age increases the external visibility of a reputation-damaging event.
8. Proposition 4: The diversity of market segments served by a firm decreases stakeholders' confidence in the firm's capability to repair its reputation.
9. Proposition 5: The diversity of market segments served by a firm increases the external visibility of reputation-damaging events.
10. Proposition 6: The more prevalent and severe watchdog agencies' negative reactions (e.g., scrutiny and punishments) are to a firm's reputation-damaging events, the more visible the events are to stakeholders.
11. Proposition 7: The more prestigious the media outlet reporting a firm's reputation-damaging events, the more visible the events are to the public.
Westphal & Deephouse, 2011
1. Overall, the results provided strong support for our theoretical perspective on interpersonal influence in relations between top executives and journalists.
2. Disclosure of negative information about a firm—specifically, the disclosure of relatively low corporate earnings—prompts the CEO to engage in higher levels of ingratiatory behavior toward journalists who cover their firms.
3. Ingratiation reduced the propensity for journalists to issue negative statements about the firm following the disclosure of low corporate earnings. Moreover, it not only reduced negative statements about the subject of the information disclosure (i.e., firm performance), but it also reduced negative statements about firm leadership and strategy.
4. Journalists who issue negative statements about a firm are subsequently less able to communicate with the firm's CEO.
5. Such negative reciprocity would tend to deter other journalists from issuing negative reports about the firm in the future. In particular, journalists who were aware of another journalist's inability to communicate with the CEO after issuing negative statements about the CEO's firm were less likely to issue negative statements about that firm in response to the disclosure of relatively low firm performance.
6. Taken together, the results suggest that CEOs can influence journalists to issue relatively positive reports about their firms through two mechanisms: ingratiatory behavior toward individual journalists and negative reciprocity that deters other journalists.
Graffin et al., 2011
1. Our primary objective has been to develop and test a theory of strategic noise—that is, anticipatory impression management whereby firms' leaders may inject strategic noise at the time that a significant organizational event is announced.
2. Hypothesis 1: CEO successions will be noisier than predicted by chance.
3. Hypothesis 2: Tenure of the outgoing CEO will be positively related to the likelihood of a noisy CEO succession event.
4. Hypothesis 3: The gap in pay between the outgoing CEO and the rest of the top management team will be positively related to the likelihood of a noisy CEO succession event.
5. Hypothesis 5: Recent firm stock performance will be positively related to the likelihood of a noisy CEO succession event.
6. Hypothesis 6: Prior CEO experience will be negatively related to the likelihood of a noisy CEO succession event.
7. Hypothesis 8: The appointment of a CEO from a high- (positive) reputation firm will be negatively related to the likelihood of a noisy CEO succession event.
8. We argue and find empirical support for the idea that they may also seek to manage stakeholder impressions through the release of confounding information. We have shown that strategic noise has been a significant factor in CEO succession, and that its occurrence is systematically affected by firm context and identifiable characteristics of both outgoing and incoming CEOs.
Zavyalova et al., 2012
1. Low levels of industry wrongdoing provide a context for maximum penalties in the media when a firm violates societal expectations, but high levels of industry wrongdoing may provide a safety net for offenders.
2. Firms that do not engage in wrongdoing nevertheless experience declines in the tenor of media coverage if the industry as a whole has high levels of wrongdoing.
3. Thus, firms may want to work together to maintain lower levels of industry wrongdoing through higher safety and quality standards in order to limit negative media attention and exposure to regulators.
4. If a firm itself recalls a product, managers should be aware that announcements of technical actions are more likely to restore the positive tenor of media coverage than announcements of ceremonial actions.
5. However, when the levels of industry wrongdoing are high and especially when the focal firm has not engaged in wrongdoing, announcements of ceremonial actions are a more effective strategy than announcements of technical actions.
6. Taken together, our research findings suggest that managing the message is an important part of a firm's strategy, and firms might benefit from a combination of technical and ceremonial actions, depending on whether the firm itself or its competitors engaged in wrongdoing.
Through a series of three inductive and deductive studies, I describe how spokespersons from the California cattle industry constructed and effectively used verbal accounts to manage perceptions of organizational legitimacy following controversial events. Findings of Study 1 suggest that organizational accounts are constructed by linking two forms of accounts: acknowledgments or denials, with two contents of accounts: references to institutional or technical characteristics of the organization. Findings of Studies 2 and 3 suggest that, in protecting organizational legitimacy (1) acknowledgments are more effective than denials, (2) references to institutionalized characteristics are more effective than references to technical characteristics, and (3) accounts combining acknowledgments with references to institutionalized characteristics are more effective than accounts with only one of these components. Effectiveness appears to depend on audiences' perceptions of the controversy, expertise in the area of controversy, and expectations of organizational responses. Overall, findings suggest that concepts from institutional and impression management theories may be combined to improve our understanding of organizational accounts and thus enhance models of symbolic management."
Pfarrer et al., 2008
We propose a four-stage model of the organizational actions that potentially increase the speed and likelihood that an organization will restore its legitimacy with stakeholders following a transgression. Organizations that work to discover the facts of the transgression, provide an appropriate explanation of their wrongdoing, accept and serve an equitable punishment, and make consistent internal and external rehabilitative changes increase the likelihood of meeting stakeholder demands and, consequently, have a higher probability of successfully achieving reintegration with stakeholders than those that do not.
Rhee & Valdez, 2009
We explore the contextual factors surrounding reputation damage and their potential implications for reputation repair. We propose a model that examines how (1) the multidimensional property of reputation, (2) organizational age, (3) the diversity of market segments served by the organization, and (4) third parties influence a firm's perceived capability to cope with a reputation-damaging event and the external visibility of the event, which, in turn, determine the difficulty of the firm's reputation-repairing activities.
Westphal & Deephouse, 2011
In this study we consider how and when interpersonal relations between chief executive officers (CEOs) and journalists can influence the content of journalists' reporting about corporate leaders and their firms. Specifically, we draw from the social psychological literature on interpersonal influence and social exchange to suggest (i) how the disclosure of relatively low corporate earnings may prompt the CEO to engage in ingratiatory behavior toward journalists, and (ii) how such behavior may be effective in prompting journalists to issue relatively positive reports about the CEO's firm. We also extend our theory to consider how relatively negative journalist reports may prompt CEOs to retaliate against individual journalists by limiting or cutting off communication with the offending journalist, and how such retaliation may deter other journalists from issuing negative reports about the firm in the future. We find support for our hypotheses in a unique data set that includes large-sample survey data on CEO-journalist relations. We discuss how our research contributes to the growing literature in organization theory and strategy on the social processes by which corporate leaders influence the behavior of information intermediaries and other external constituents toward their firms. Moreover, we suggest that an implication of our findings is that top executives can actively influence the reputation of their firms, as well as their own reputations as corporate leaders, by engaging in interpersonal influence processes toward journalists.
Graffin et al., 2011
We develop and test a novel theory about strategic noise with regard to CEO appointments. Strategic noise is an anticipatory and preemptive form of impression management. At the time it announces a new CEO, a board of directors seeks to manage stakeholder impressions by simultaneously releasing confounding information about other significant events. Several CEO and firm characteristics affect the likelihood that this will happen. Strategic noise is most likely when long-term CEOs have a wide pay gap between other top managers at high stock price performance firms, and when a new CEO does not have previous CEO experience or comes from a less well-regarded firm. Results showing that CEO succession announcements are noisier than they would be by chance have some interesting implications for impression management theory, traditional event study methodology, and managerial and public policy. Interviews with public firm directors on CEO succession provide additional validity for the strategic noise construct and help us to articulate key elements of the theory.
Zavyalova et al., 2012
We contribute to research on the management of social perceptions by considering the relative effectiveness of a firm's technical and ceremonial actions in managing media coverage after its own or its competitors' wrongdoing. We examine these relationships in the context of product recalls by U.S. toy companies over a ten-year period, 1998 - 2007. Consistent with our hypotheses, firms with higher levels of wrongdoing experience less positive media coverage; however, this decline is mitigated during periods of higher industry wrongdoing. Additionally, we find support for a negative spillover effect: the tenor of media coverage about a focal firm is less positive if others in the industry recall products. Further, the technical actions help firms attenuate the negative effect of their own wrongdoing on the tenor of media coverage, whereas ceremonial actions amplify this effect. In contrast, ceremonial actions are more effective in attenuating the negative effect of industry wrongdoing on the tenor of media coverage about the focal firm.