- New Horizons in Management series
Edited by Ronald J. Burke and Cary L. Cooper
Chapter 10: Organizational Responses to Allegations of Corporate Corruption
Vikas Anand, Alan Ellstrand, Aparna Rajagopalan and Mahendra Joshi I think this antitrust fever is a craze, which we should meet in a very dignified way and parry every question with answers which while perfectly truthful are evasive of bottom facts. Excerpted from a letter written by a Standard Oil Director to John D. Rockefeller in 1888.1 Introduction Exposure of corporate corruption and wrongdoing is increasingly common in today’s world of intense media scrutiny. Organizations are often faced with allegations of impropriety that involve legal and/or ethical violations. Such allegations can range from being totally baseless to completely accurate. When faced with these accusations, organizations typically go into a crisis mode and they develop a strategy to counteract them (Dezenhall and Weber, 2007). The actual organizational response to these accusations is likely to be influenced by legal considerations, by the credibility of the allegations and the accusers and by organization routines and values. The opening excerpt also highlights the fact that organizations expended considerable effort in deciding their responses to allegations of impropriety well before the current cynical climate in the wake of numerous exposed corporate scandals. An organization’s response to such allegations is extremely important for a variety of reasons. First, the nature of the organizational response is likely to shape the attitudes of its key stakeholders (Pfeffer and Salancik, 1978; Pfarrer et al., 2008). Several instances exist where organizations accused of corruption lose support of groups such as key customers, local communities, and creditors because the response does...
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