Abstract
The growing uses of algorithm-based decision-making in human resources management have drawn considerable attention from different stakeholders. While prior literature mainly focused on stakeholders directly related to HR decisions (e.g., employees), this paper pertained to a third-party observer perspective and investigated how consumers would respond to companies’ adoption of algorithm-based HR decision-making. Through five experimental studies, we showed that the adoption of algorithm-based (vs. human-based) HR decision-making could induce consumers’ unfavorable ethicality inferences of the company (study 1); because implementing a calculative and data-driven approach (i.e. algorithm-based) to make employee-related decisions violates the deontological principles of respectful employee treatment (study 2). However, this effect was attenuated when consumers had high (vs. low) power distance beliefs (study 3); the algorithm served as assistance (vs. replacement) for human decisions (study 4); or the adoption was framed as employee-oriented (vs. company-oriented) motivated (study 5). Our findings suggested that consumers are aversive to algorithm-based HR decision-making because it is deontologically problematic regardless of its decision quality (i.e. accuracy). This paper contributes to the extant understanding of stakeholders’ responses to algorithm-based HR decision-making and consumers’ attitudes toward algorithm users.
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Notes
The project received IRB at School of Management, Huazhong University of Science and Technology (IRB #: 2020.04.23, Study Title: AI-HRM).
We used MTurk's Qualification Type function to avoid any overlapping of participants across our studies. After each experiment, we granted the participants the same qualification. The granted population did not receive further invitations.
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The authors gratefully acknowledge the grants supported by National Science Foundation of China (71672063, 72072065, 72072152, 71925005, & 72232009), City University of Hong Kong SRG (7005478 & 7005791), and Social Science Foundation of Zhejiang Province (21YJRC01ZD) for financial support.
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Yan, C., Chen, Q., Zhou, X. et al. When the Automated fire Backfires: The Adoption of Algorithm-based HR Decision-making Could Induce Consumer’s Unfavorable Ethicality Inferences of the Company. J Bus Ethics 190, 841–859 (2024). https://doi.org/10.1007/s10551-023-05351-x
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DOI: https://doi.org/10.1007/s10551-023-05351-x