Paraphrasing

Unit II Assessment

Question 2

Widespread external perceptions that a firm has acted in a socially irresponsible manner can have negative consequences for a firm, since an organization’s success—indeed its survival— depends, in part, on satisfying normative expectations from its environment (Pfeffer & Salancik, 1978; Scott, 2008). When organizational action seems controversial to observers and constituents, the firm risks losing current and potential members, as well as outside endorsement and support, and it risks providing “ammunition for adversaries” (Elsbach & Sutton, 1992: 712). An organization that is seen as a bad actor in society can have a hard time attracting customers, investors, and employees (Fombrun, 1996). Indeed, ample evidence from empirical research shows that counternormative behavior can lead to such consequences for the firm as lawsuits, financial losses through settlements and sales declines, increases in the cost of capital, market share deterioration, network partner loss, or other costs associated with a negative reputation (e.g., Baucus & Baucus, 1997; Davidson, Worrell, & Cheng, 1994; Haunschild, Sullivan, & Page, 2006; Karpoff, Lee, & Martin, 2008; Strachan, Smith, & Beedles, 1983). In spite of the demonstrated significance to organizations of reactions to bad behavior, the corporate social responsibility (CSR) literature tends to focus on the meaning of and expectations for responsible behavior, rather than on the meaning of irresponsible behavior. Irresponsibility, distinct from responsibility, is often not discussed explicitly in the CSR literature, 1 but the implication is that irresponsibility is simply the opposite side of the responsibility coin—that is, the failure to act responsibly. Here we develop a theoretical perspective that explicitly focuses on irresponsibility and that particularly helps explain attributions of social irresponsibility in the minds of the firm’s observers.

Lange, D.,...