Title: Organizational Responses to Negative Evaluation by External Stakeholders: The Role of Organizational Identity Characteristics in Organizational Response Formulation (Subscription or fee required.)
Authors: Amy E. Randel (San Diego State University), Kimberly S. Jaussi (State University of New York, Binghamton), and Stephen S. Standifird (University of San Diego)
Publisher: Business & Society, vol. 48, no. 4
Date Published: December 2009
In the wake of negative headlines about many companies, this paper asks a timely question: How should a company respond when criticized by outsiders, be they the media, politicians, customers, or just people on the street? The authors argue that an organization’s reaction should depend on how much the criticism threatens to besmirch the company’s core identity. Complex companies — that is, corporations with many different products or services — can often fend off opprobrium by refocusing the public on the parts of the business not under attack.
For example, in 2003, after years of litigation and negative publicity over the health risks of cigarettes, Philip Morris changed its name to Altria and ran commercials designed to inform consumers that more than half of its revenue came from selling food, through its Kraft division. Altria employed what the authors call an “attack and deflect” strategy, which involved vigorously challenging court rulings while attempting to shift the focus to other areas of its business. By contrast, after the highly publicized Jayson Blair plagiarism scandal in 2003, the New York Times had to respond more directly to the discovery that numerous Blair-penned articles were taken almost word for word from other sources. Because the nature of the offense was central to the Times’ identity and integrity, the authors note, the paper reacted correctly by running an 8,000-word front-page story detailing how the transgressions occurred. The top two editors resigned, and an ombudsman post was created to increase accountability and transparency.
The research has several implications for managers. Firms with complex organizational identities have more flexibility when reacting to bad news because they can divert attention to other parts of the company. Firms with a single focus lack maneuverability in the face of negative evaluations by outsiders. As the level of perceived threat increases, so should the aggressiveness of the organization’s response.
Bottom Line: Organizations threatened by negative evaluations from key stakeholders must determine how the attack will affect their reputation before crafting a response. For some, the best strategy is to direct attention elsewhere, whereas others will fare better by refuting the claim or addressing it head-on.
- Matt Palmquist was a founding staff writer and is currently a contributing editor at Miller-McCune magazine. Formerly, he was an award-winning feature writer for the San Francisco–based SF Weekly.