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A Mixed Blessing? CEOs’ Moral Cleansing as an Alternative Explanation for Firms’ Reparative Responses Following Misconduct

Abstract

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.

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Fig. 1

Notes

  1. 1 Importantly, we are not suggesting that CEOs’ impression management motives inherently precludes a desire to benefit stakeholders or do what is morally right. Rather, we argue that such motivations are simply not characteristic of impression management. That is, although CEOs motivated to manage the impressions of stakeholders may very well adopt an accommodative, pro-stakeholder posture in the wake of misconduct, the situationally contingent nature of impression management suggests that such motives may also drive CEOs to engage in defensive, self-serving responses if such tactics are perceived to be in their best interest (Hersel et al., 2019). Accordingly, moral cleansing is likely to prompt reparative behaviors out of a desire to reaffirm one’s self-view as a moral person, whereas IM prompts a much wider array of possible behavioral strategies contingent on the perceived efficacy of the behavior in casting the focal actor (i.e., the CEO and his/her firm) in a positive light.

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Carnevale, J.B., Gangloff, K.A. A Mixed Blessing? CEOs’ Moral Cleansing as an Alternative Explanation for Firms’ Reparative Responses Following Misconduct. J Bus Ethics (2022). https://doi.org/10.1007/s10551-022-05138-6

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Keywords

  • Firm misconduct
  • Upper echelons
  • Impression management
  • Moral cleansing
  • Authenticity
  • Strategic cognition