Reactions to Misconducts: Exploring Diverse Relationships

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August 2023

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Abstract

In the media, we observe different kinds of misconduct almost every day. While we may assume that organizations conform to social norms, organizations commit misconduct. Thus, researchers endeavor to discover its root cause. However, a dearth of research focuses on what happens after misconduct is identified. To fill in this research gap, this dissertation contributes to organizational misconduct by highlighting reactions after misconduct. Specifically, we investigate diverse relationships surrounding misconduct. There are three essays that explore the reaction to misconduct by applying the proper theoretical lens. The first essay (Chapter 1), which was accepted and published online first by Business and Politics, dives into the dynamic between the culpable organization and bystanders. Specifically, we highlight the reaction of the shareholders at bystanders to witnesses of the misconduct and discuss the resolution. Among various types of misconduct, we choose the corrupted corporate political activity of lobbying. One of the most corrupted lobbying scandals in U.S. history, the Jack Abramoff case, has drawn considerable attention. The negative impact of the lobbying scandal pushes the boundaries of the impact on the bystanders. We explore the reaction of shareholders of bystanders to the guilty plea of Abramoff and the introduction of the new lobbying law. By using expectancy violation and category theory, we argue shareholders at bystanders show hostile responses to the corrupted lobbying scandal while favoring the new lobbying act. To show the generalizability of our arguments, we reference the Enron scandal and the introduction of the Sarbanes-Oxley act. The second and third essays leverage workplace injuries as a form of misconduct. The second essay (Chapter 2) uses workplace injuries to investigate the tense relationship between peers and the focal organization. This essay asks this research question: Does the focal organization react to peers’ workplace injuries? A theoretical lens from social comparison and impression management provides an insightful explanation to this question by arguing that peers’ workplace injuries trigger fear among the employees at the focal organizations, leading to the focal organizations’ responses: engagement in impression management is used to distinguish themselves from peers. This goal can be achieved through social comparison by their employees. The third essay (Chapter 3) narrowly focuses on the organization itself. Unlike the other two essays, the third essay investigates the reaction to the misconduct that occurred by the organization. Leveraging the fact that organizations are reluctant to invest in the prevention of workplace injuries, we ask: What makes the organization invest in the prevention of workplace injuries? Borrowing the theoretical views from optimism bias and the attention-bias view, we argue that optimism bias among top managers breaks down when workplaces experience direct loss. The breakdown of optimism bias attracts attention to injury and succeeds in deploying more resources.

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Business Administration, Management

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