Corporate Misconduct and Trust Repair: Integration of Organizational Behavior and Corporate Discourse Perspectives

Thursday, 2 July 2015: 4:00 PM-5:30 PM
CLM.3.05 (Clement House)
Nobuyuki Chikudate, Hiroshima University, Hiroshima, Japan
Toru Yoshikawa, Singapore Management University, Singapore, Singapore
On witnessing the large scale corporate wrongdoings in recent years, organizational trust has been one of the widely discussed themes among researchers in organization and sociology. Corporate misconducts often have negative impacts on the public’s trust in the corporations and can sometimes lead to the corporate crises. The corporations are thus compelled to repair damaged trust among their external constituents.  In previous organizational behavior studies, however, the primary focus is the internal process and mechanism to repair damaged employee’s trust toward their organizations by applying theory in interpersonal trust (e.g., Gillespie & Dietz, 2009). We instead focus on organizational trust externally.

Specifically, we aim to develop theory on corporate actions that can halt a decline in public’s trust in the corporations by utilizing perspectives and concepts in the field of corporate discourse. First, we regard the external entity of corporations as “public” rather than stakeholders.  Here, public refers to the people who participate and maintain the governance of civic societies by becoming both audiences and actors in public arenas (Habermas, 1989; Vasquez & Taylor, 2001). It is not identical to stakeholders who are any groups or individuals who can affect or are affected by the achievement of the corporation’s objectives (Freeman, 2010).  Second, we present an argument that a corporation is perceived as an “anthropomorphized entity” in the eye of the public when it addresses its own misconduct; behaviors of the top executives are often seen as those by this anthropomorphized entity itself (Cheney, 1992).  By integrating the research on trust and trust repair in organization studies and corporate discourse, we develop a theoretical framework that allows us to better understand the process of trust damage, repair, and restoration in the eye of the “public.”  

We argue that the effectiveness of corporate actions to repair the public’s trust will likely depend on whether such actions demonstrate the firm’s and management’s ability, benevolence, and integrity (Mayer, Davis, & Schoorman, 1995) to address the problem and restore the public’s perceptions of the firm’s trustworthiness. We further develop a typology on the effectiveness of corporate actions to repair the public’s trust with a combination of corporate apologia and corrective actions (or lack of them).  Anthropomorphized corporations would be able to repair the damaged trust by utilizing corporate apologia that is originated from Aristotle’s philosophy to defend the corporation against reputation/character attacks and to repair damaged corporate trustworthiness. Corporate apologia is about a response to criticism that seeks to present a compelling competing account of corporate accounts (Hearit, 2006). While corporate apologia is a key element in the trust repair process, we contend that the demonstration of corrective actions is often necessary because the corporations have to convince the public that they will not repeat the wrongdoings in the future.  Finally, we explore several cases of corporate wrongdoings and how each corporation used corporate apologia and/or corrective actions to repair and restore the public’s trust.