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

Author Information:

Joel B. Carnevale, Martin J. Whitman School of Management, Syracuse University
Ashley Gangloff, Martha & Spencer Love School of Business, Elon University

Year of Publication:

Journal of Business Ethics (2022)

Summary of Findings:

CEOs' decisions for whether and how to lead their firms following revelations of their firms' misconduct may be affected by their desire to repair their damaged moral self-image.

Research Questions:

1. Following revelations of their firms' misconduct, how do executives' moral motives affect their firms' responses to the misconduct and ability to restore its legitimacy?

What we know:

Conventional wisdom suggests that executives' responses to their firms misconduct are motivated purely out of a desire to manage stakeholder impressions.

Novel Findings:

We propose moral cleansing - which refers to executives' desire to restore their threatened moral self-image resulting from the misconduct - as an alternative explanation for how and why executives lead their firms to respond to stakeholder demands and restore their firms' legitimacy.

Full Citations:

Carnevale, J. B., & Gangloff, A. K. A. (2022). A Mixed Blessing? Moral Cleansing as an Alternative Explanation for CEOs’ Reparative Responses Following Misconduct. Journal of Business Ethics.

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 of 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 (decrease) 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.