Here’s our latest pick of interesting articles covering stakeholder trust.
Is fair treatment enough? Fairness and stakeholder behaviour
Fairness and justice are core issues in stakeholder theory. Although such considerations receive more attention in the ‘normative’ branch of the stakeholder literature, they have critical implications for ‘instrumental’ stakeholder theory as well. In research in the instrumental vein, although the position has seldom been articulated in significant detail, a stakeholder’s inclination to take action against the firm or, conversely, to cooperate with it, is often taken to be a function of its perceptions concerning the fairness or unfairness (or equity or inequity) of the treatment it receives in its relationship with the firm. Thus, from various works in this domain can be distilled what might be termed a ‘fairness-based perspective on stakeholder behaviour’.
This perspective, as it currently stands, assumes a high degree of homogeneity in stakeholders’ responses to fair, unfair, or munificent treatment by the firm. This supposition is itself typically based on a presumption that stakeholders consistently and uniformly adhere to norms of equity and reciprocity in their relationships with firms. However, research developments in equity theory and social exchange theory suggest that such assumptions are likely untenable.
Accordingly, in this work, after outlining the fairness-based perspective on stakeholder behaviour, the author undertakes to augment it by presenting propositions concerning the possible influences of stakeholders’ equity preferences and exchange ideologies on their propensities to sanction or support the firm. Incorporating these stakeholder traits into the fairness-based perspective should enhance the predictive validity of its propositions concerning stakeholder behaviour in response to fairness or unfairness in the firm–stakeholder relationship.
Hayibor, S. 2017. Is fair treatment enough? Augmenting the fairness-based perspective on stakeholder behaviour.
Journal of Business Ethics, 140(1), 43–64.
Managers’ moral obligation of fairness to (all) shareholders: Investors over others?
Drawing on ethical principles of fairness and integrative social contracts theory, moral obligations of fair dealing exist between the firm and all shareholders. This study investigates empirically whether privileged investors of publicly traded firms engage in legal, but morally questionable, trading that at the expense of non-privileged institutional or atomistic investors.
In this context, the authors define privilege as the access to material, nonpublic earnings surprise information. The results show that the opportunity for procedural unfairness (e.g., the likelihood of an earnings surprise and information asymmetry) increases with the presence of privileged investors. However, this procedural unfairness does not appear to lead to distributive unfairness even though the level of abnormal trading also increases with the presence of privileged investors. That is, the findings suggest that other shareholders are in fact better off from an outcome perspective given that the abnormal stock price returns upon the announcement of an earnings surprise are either more positive (in response to a favourable surprise) or less negative (in the case of an unfavourable surprise) when the firm has a high proportion of privileged investors.
The researchers extract the important implications of their study for future research on the fairness of capital markets and information asymmetry amongst classes of investors, as well as for public policy.
Evans, J.D., Perrault, E. & Jones, T.A. 2017. Managers’ moral obligation of fairness to (all) shareholders: does information asymmetry benefit privileged investors at other shareholders’ expense?
Journal of Business Ethics, 140(1), 81–96.
Consumer trust in green products: The case of organic food
Consumer trust is a key prerequisite for establishing a market for credence goods, such as “green” products, especially when they are premium priced. This article reports research on exactly how, and how much, trust influences consumer decisions to buy new green products. It identifies consumer trust as a distinct volition factor influencing the likelihood that consumers will act on green intentions and strongly emphasizes the needs to manage consumer trust as a prerequisite for the development of a market for green products.
Specifically, based on a mixture of qualitative and quantitative methods, it is found that lack of consumer trust is a barrier for the development of a market for organic food in Thailand. Two focus groups and ten in-depth interviews revealed low knowledge about and low trust in organic food, certification, control, and labelling.
Further, a mall-intercept survey (N = 177) revealed that lack of (especially) system trust reduces consumer expectations about benefits of buying organic food, and it makes them less likely to buy organic food. Mistrust in the control system and in the authenticity of food sold as organic has a significant negative impact on self-reported buying behaviour. Implications for policy and future research are discussed.
Nuttavuthisit, K. & Thøgersen, J. 2017. The Importance of Consumer Trust for the Emergence of a Market for Green Products: The Case of Organic Food.
Journal of Business Ethics, 140(2), 323–337.
Trust and distrust constructing unity and fragmentation of organisational culture
While the coexistence of trust and distrust has been acknowledged in previous literature, the understanding of their connection with organisational culture is limited. This study examines how trust and distrust construct the unity and fragmentation of organisational culture.
Productive working relationships can be characterised by high trust, but strong ties and high trust may also account for false organisational unity. This study shows that trust and distrust can co-exist and distrust may even increase trust in particular situations. Moreover, Kujala, Lehtimäki and Pučėtaitė describe how the cognitive and affective components of trust and distrust relate to the unity and fragmentation of organisational culture. These authors present an empirical case study of a company where tension and distrust between top management, middle management and shop stewards affected the organisational culture.
The study contributes to earlier research by discussing trust as a multidimensional and dynamic phenomenon. The study shows how the affective and cognitive components of trust and distrust constitute the unity and fragmentation of organisational culture. The authors propose that if an organisation is willing to improve its ethics, it should rely on fragmentation rather than unity.
Kujala, J., Lehtimäki, H. & Pučėtaitė, R. 2016. Trust and Distrust Constructing Unity and Fragmentation of Organisational Culture.
Journal of Business Ethics, 139(4), 701–716.
Are there benefits in third party employment branding like “best places to work”?
Yes, according to Brian Dineen and David Allen. “Best Places to Work” (BPTW) and similar competitions are a proliferating form of third party employment branding. Little is known, however, about how single or repeated third party employment branding occurrences relate to key human capital outcomes. Extending signalling theory by considering signal credibility and comparability, Dineen and Allen use archival and survey data from 624 BPTW participants in 16 competitions across a three-year period to develop and test hypotheses linking BPTW certifications to collective turnover rates and key informant perceptions of applicant pool quality.
The researchers find that certifications are associated with lower turnover rates, and in addition, propose competing crystallisation and celebrity hypotheses that model turnover trajectories with repeated certifications, finding diminishing marginal turnover reductions across multiple certifications.
The authors also examine company size and industry job opening moderators, finding that as certifications increase, applicant pool quality is: (1) higher in smaller companies, and (2) higher when job openings are scarcer. Finally, beyond being certified or not, they find supplemental evidence for effects of the specific certification level achieved (e.g., 2nd versus 15th). This investigation advances theory related to collective turnover, applicant pool quality, and employment branding, and is relevant to company decisions about seeking or re-seeking third party certifications.
Brian R. Dineen & David G. Allen. 2016. Third Party Employment Branding: Human Capital Inflows and Outflows Following “Best Places to Work” Certifications.
Academy of Management Journal, 59(1), 90-112.
What’s behind employer branding – in addition to trust?
This study reviewed and analysed the phenomenon of employer branding. It began with a review of recent research in employer branding. Next, drawing the theoretical knowledge from OB, HRM, and marketing, a framework is developed depicting the antecedents of employer branding and its impact on the company performance.
For this, primary data were collected administering a questionnaire survey on 347 top-level executives in 209 companies in India, and secondary data were collected on financial performance. The results revealed that realistic job previews, perceived organisational support, equity in reward administration, perceived organisational prestige, organisational trust, leadership of top management, psychological contract obligations, and corporate social responsibility influence employer branding, which in turn impact non-financial and financial performance of companies.
Furthermore, leadership of top management is the most potent predictor of employer branding. Greater deviation of the existing state from the ideal state of antecedents adversely affects employer branding. Management can use this framework for developing strategy towards implementation of employer branding.
Mukesh K. Biswas & Damodar Suar. 2016. Antecedents and Consequences of Employer Branding.
Journal of Business Ethics, 2016, 136(1), 57-72.
Greenwashing and a trust crisis among Chinese energy companies
For many energy companies in China, green brand strategy is becoming an important approach to enhance competitive advantage. However, greenwashing behaviours result in a crisis of trust. Existing research focuses on green marketing, but is silent on the institutional view of the trust crisis resulting from greenwashing by energy brands. Thus, this study takes a decoupling perspective from institutional theory and considers legitimacy, energy policy management, and green brand theories to shed light on the path from the decoupling of an energy brand from green promise (DEBG) to green energy brand trust (GEBT) and the role of brand legitimacy and brand loyalty.
It then analyses survey data to conclude that DEBG not only has a direct negative effect on GEBT but also has an indirect influence through the vital mediating role of green energy brand legitimacy. Moreover, brand loyalty is a moderating factor and can alleviate the energy brand trust crisis. These findings not only can enrich the theories of energy brand management and green marketing but also offer important implications for energy policy management.
Guo, R., Tao, L., Li, C.B. et al. 2017. A Path Analysis of Greenwashing in a Trust Crisis Among Chinese Energy Companies: The Role of Brand Legitimacy and Brand Loyalty.
Journal of Business Ethics, 140(3), 523–536.