Articles this week look at how companies face up to wrongdoings – mistakes or otherwise.
Employee wrongdoing: Managers’ responses
A growing body of literature has examined managers’ use of restorative practices in the workplace. However, little is currently known about why managers use restorative practices as opposed to alternative (e.g., punishment) responses.
The authors employed a qualitative interview technique to develop an inductive model of managers’ restorative versus punitive response in the context of employee wrongdoing. The findings reveal a set of key motivating and moderating influences on the manager’s decision to respond to wrongdoing in a restorative versus punitive manner.
The findings also suggest that managers’ personal needs and perceived duties in the aftermath of employee wrongdoing are generally more consistent with restorative responses than punishment responses, which helps explain managers’ use of restorative workplace practices.
Nathan Robert Neale, Kenneth D. Butterfield, Jerry Goodstein & Thomas M. Tripp. 2020. Managers’ Restorative Versus Punitive Responses to Employee Wrongdoing: A Qualitative Investigation.
Journal of Business Ethics, 161(3), 603–625.
C-suite financial executives and fraud
This study explores how financial executives retrospectively account for their crossing the line into financial statement fraud while acting within or reacting to a financialised corporate environment. The authors conduct the investigation through face-to-face interviews with 13 former C-suite financial executives who were involved in and indicted for major cases of accounting fraud.
Five different themes of accounts emerged from the narratives, characterising executives’ fraud immersion as a meaning-making process by which the particulars of the proximal social context (the influence of social actors and contextual characteristics) and individual motivations collectively moulded executives’ vocabularies of fraud immersion.
The executives’ narratives portray their fraud entanglement as typically occurring in small, incremental steps. Their accounts expand our understanding of the influence of socialisation on executive-level financial fraud beyond the individualised focus of the fraud triangle model.
Ikseon Suh, John T. Sweeney, Kristina Linke & Joseph M. Wall. 2020. Boiling the Frog Slowly: The Immersion of C-Suite Financial Executives into Fraud.
Journal of Business Ethics, 162(3), 645–673.
Prosocial compensation following a service failure
Prosocial compensation (PC) is a corporate social responsibility (CSR) practice that involves donating money to a charitable cause on behalf of customers as a means to compensate them for their loss after a service failure. In order to determine the effectiveness of PC, the authors carried out three experiments while also comparing its effectiveness within private and public settings.
Experiment 1 focused on the signalling effects of communicating the promise to offer PC to potential customers in the event of service failure. Results show that, in both private and public settings, PC has positive effects on corporate image, credibility, and word-of-mouth intent. More significantly, PC improved one’s CSR image, whereas more tangible compensation, such as a gift voucher, did not.
Experiments 2A and 2B focused on the effects of offering PC after a service failure on perceptions of justice. Results show that PC contributes to perceived distributive justice, procedural justice, and post-recovery satisfaction in both private and public settings.
This study showed that PC could be a relevant new CSR practice for organisations wanting to enhance theirs CSR image while contributing to fulfilling their ethical and philanthropic CSR responsibilities. The authors discuss the implications of the findings and offer several avenues for follow-up research on this initial study on PC.