Hostname: page-component-78c5997874-s2hrs Total loading time: 0 Render date: 2024-11-10T14:18:45.925Z Has data issue: false hasContentIssue false
  • English
  • Français

Organizational Reintegration and Trust Repair after an Integrity Violation: A Case Study

Published online by Cambridge University Press:  23 January 2015

Nicole Gillespie ,
Graham Dietz  and
Steve Lockey
Nicole Gillespie
Affiliation:
University of Queensland
Graham Dietz
Affiliation:
Durham University
Steve Lockey
Affiliation:
Durham University
Get access Rights & Permissions [Opens in a new window]

Abstract:

This paper presents a holistic, contextualised case study of reintegration and trust repair at a UK utilities firm in the wake of its fraud and data manipulation scandal. Drawing upon conceptual frameworks of reintegration and organizational trust repair, we analyze the decisions and actions taken by the company in its efforts to restore trust with its stakeholders. The analysis reveals seven themes on the merits of proposed approaches for reintegration after an integrity violation (including open investigations, accurate explanations, apologies, penance, and systemic reforms), and novel insights on the role of organizational identity, “changing of the guard” and cultural reforms alongside procedural modifications. The case further supports the dynamic nature of stakeholder salience across the reintegration process. The study both supports propositions from existing frameworks and suggests novel theoretical extensions for future research.

Keywords

reintegrationtrust repaircase studyorganizational fraudstakeholders
Type
Articles
Information
Business Ethics Quarterly , Volume 24 , Issue 3 , July 2014 , pp. 371 - 410
Copyright
Copyright © Society for Business Ethics 2014

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Albert, S. & Whetten, D. 1985. Organizational identity. Research in Organizational Behavior, 7 (1): 263–96.Google Scholar
Argyris, C. 1982. Reasoning, learning and action, San Francisco: Jossey-Bass.Google Scholar
Ashforth, B. & Anand, V. 2003. The normalization of corruption in organizations. Research in Organizational Behavior, 25 (1): 1–52. http://dx.doi.org/10.1016/S0191-3085(03)25001-2CrossRefGoogle Scholar
Ashforth, B.E. & Mael, F. 1989. Social identity theory and the organization. Academy of Management Review, 14 (1): 20–39.CrossRefGoogle Scholar
Barker, V.Patterson, P. & Mueller, G. 2001. Organizational causes and strategic consequences of the extent of top management team replacement during turnaround attempts. Journal of Management Studies, 38 (1): 235–69. http://dx.doi.org/10.1111/1467-6486.00235CrossRefGoogle Scholar
Bate, P.Kahn, R. & Pye, A. 2000. Towards a culturally sensitive approach to organization structuring: Where organization design meets organization development. Organization Science, 11 (1): 197–211. http://dx.doi.org/10.1287/orsc.11.2.197.12509CrossRefGoogle Scholar
BBC News. 2005. Fraud probe at Severn Trent Water. BBC News. 31 October. Available at http://news.bbc.co.uk/2/hi/uk_news/england/staffordshire/4393996.stm.Google Scholar
BBC News. 2008a. Further £2m Fine for Severn Trent. BBC News. 1 July. Available at http://news.bbc.co.uk/2/hi/business/7437255.stm.Google Scholar
BBC News. 2008b. Severn Trent see profits sink. BBC News. 5 June. Available at http://news.bbc.co.uk/2/hi/business/7483805.stm.Google Scholar
Beer, M.Eisenstat, R.A. & Spector, B. 1990. Why change programs don’t produce change. Harvard Business Review November: 4–12.Google ScholarPubMed
Bottom, W.Gibson, K.Daniels, S. & Murnighan, J. 2002. When talk is not cheap: Substantive penance and expressions of intent in rebuilding cooperation. Organization Science, 13 (5): 497–513. http://dx.doi.org/10.1287/orsc.13.5.497.7816CrossRefGoogle Scholar
Brenkert, G.G. 1998. Trust, business and business ethics: An introduction. Business Ethics Quarterly, 8 (1): 195–203.http://dx.doi.org/10.5840/beq19988219CrossRefGoogle Scholar
Brickson, S.L. 2005. Organizational identity orientation: Forging a link between organizational identity and organization’s relations with stakeholders. Administrative Science Quarterly, 50 (4): 576–609.CrossRefGoogle Scholar
Brickson, S.L. 2007. Organizational identity orientation: The genesis of the role of the firm and distinct forms of social value. Academy of Management Review, 32 (3): 864–88. http://dx.doi.org/10.5465/AMR.2007.25275679CrossRefGoogle Scholar
Brown, A.D. & Starkey, K. 2000. Organizational identity and learning: A psychodynamic perspective. Academy of Management Review, 25 (1): 102–20.CrossRefGoogle Scholar
Burke, W.W. 2002. Organization change: Theory and practice. London: Sage.Google Scholar
CCWater. 2005. Profits good for Severn Trent shareholders, but are customers getting value for money? Consumer Council for Water, Press Release, June 2005.Google Scholar
CCWater. 2008. Severn Trent Water vows to keep bills stable. Consumer Council for Water, Press Release, August 2008.Google Scholar
CCWater. 2012. Good news for Severn Trent customers. Consumer Council for Water, Press Release, May 2012.Google Scholar
CCWater. 2013. Watchdog welcomes Severn Trent’s investment pledge. Consumer Council for Water, Press Release, May 2013.Google Scholar
Chen, G. & Hambrick, D.C. 2012. CEO replacement in turnaround situations: Executive (mis)fit and its performance implications. Organization Science, 23 (1): 225–43.http://dx.doi.org/10.1287/orsc.1100.0629CrossRefGoogle Scholar
Chreim, S. 2005. The continuity-change duality in narrative texts of organizational identity. Journal of Management Studies, 42 (1): 567–93. http://dx.doi.org/10.1111/j.1467-6486.2005.00509.xCrossRefGoogle Scholar
Clark, E. & Soulsby, A. 2007. Understanding top management and organizational change through demographic and processual analysis. Journal of Management Studies, 44 (6): 932–54. http://dx.doi.org/10.1111/j.1467-6486.2007.00692.xCrossRefGoogle Scholar
Daily Mail, The. 2006. Severn Trent in more hot water over bills. 8 April. Google Scholar
Daily Telegraph, The. 2006. Ofwat penalises Severn Trent. 8 March. Google Scholar
Daily Telegraph, The. 2008. As markets are flooded with bad news, Severn are beginning to look useful again. 3 April. Google Scholar
Dietz, G. & Gillespie, N. 2011. Building and restoring organizational trust. London: Institute of Business Ethics.Google Scholar
Dirks, K.T. & Kim, P.H.Ferrin, D.L. & Cooper, C.D. 2011. Understanding the effects of substantive responses on trust following a transgression. Organizational Behavior and Human Decision Processes, 114 (2): 87–103. http://dx.doi.org/10.1016/j.obhdp.2010.10.003CrossRefGoogle Scholar
Dirks, K.Lewicki, R. & Zaheer, A. 2009. Repairing relationships within and between organizations: Building a conceptual foundation. Academy Of Management Review, 34 (1): 68–84. http://dx.doi.org/10.5465/AMR.2009.35713285CrossRefGoogle Scholar
Duckworth, Brian. 2008. Case closed?. Utility Week, 29 (12): 2.Google Scholar
DWI (Drinking Water Inspectorate). 2011. Technical audit of Severn Trent Laboratories Limited under Section 86 of the Water Industries Act 1991. 30 June.Google Scholar
Dyer, W.G. & Wilkins, A.L. 1991. Better stories, not better constructs, to generate better theory: A rejoinder to Eisenhardt. Academy of Management Review, 16 (3): 613–19.CrossRefGoogle Scholar
Edelman, 2011. Edelman Trust Barometer. New York: Edelman Associates.Google Scholar
Edelman, 2013. Edelman Trust Barometer. New York: Edelman Associates.Google Scholar
Eisenhardt, K. & Graebner, M. 2007. Theory building from cases: Opportunities and challenges. Academy of Management Journal, 50 (1): 25–32. http://dx.doi.org/10.5465/AMJ.2007.24160888CrossRefGoogle Scholar
Elsbach, K.D. 2003. Organizational perception management. Research in Organizational Behavior, 25 (1): 297–332. http://dx.doi.org/10.1016/S0191-3085(03)25007-3CrossRefGoogle Scholar
Elsbach, K.D. & Kramer, R.M. 1996. Members’ responses to organizational identity threats: Encountering and countering the Business Week rankings. Administrative Science Quarterly, 41 (3): 442–76. http://dx.doi.org/10.2307/2393938CrossRefGoogle Scholar
Financial Mail, The. 2004. Water firm scandal: Gag threat. 28 November.Google Scholar
Flores, F. & Solomon, R.C. 1998. Creating trust. Business Ethics Quarterly, 8 (2): 205–32. http://dx.doi.org/10.2307/3857326CrossRefGoogle Scholar
Freeman, R.E. 1994. The politics of stakeholder theory: Some future directions. Business Ethics Quarterly, 4 (4): 409–21. http://dx.doi.org/10.2307/3857340CrossRefGoogle Scholar
Gillespie, N. & Dietz, G. 2009. Trust repair after an organization-level failure. Academy of Management Review, 34 (1): 127–45. http://dx.doi.org/10.5465/AMR.2009.35713319CrossRefGoogle Scholar
Goffman, E. 1967. Interaction ritual: Essays on face-to-face behavior. Garden City, NY: Anchor Books.Google Scholar
Guardian, The. 2006a. Severn Trent Water ordered to cut bills by £42m after overcharging. 8 March.Google Scholar
Guardian, The. 2006b. Water firm to repay overcharged customers. 7 March.Google Scholar
Guardian, The. 2007a. Ofwat fines Southern Water £20.3 million. 15 November.Google Scholar
Guardian, The. 2007b. Severn Trent prosecuted for leaky data. 22 November.Google Scholar
Guardian, The. 2008a. Former Severn Trent executives attack SFO after leak court case. 1 July.Google Scholar
Guardian, The. 2008b. Thames Water fine reduced. 17 April.Google Scholar
Hardy, C.Lawrence, T. & Grant, D. 2005. Discourse and collaboration: The role of conversations and collective identity. Academy Of Management Review, 30 (1): 58–77. http://dx.doi.org/10.5465/AMR.2005.15281426CrossRefGoogle Scholar
Harris, J.D. & Freeman, R.E. 2008. The impossibility of the separation thesis. Business Ethics Quarterly, 18 (4): 541–48. http://dx.doi.org/10.5840/beq200818437CrossRefGoogle Scholar
Hilger, S.Mankel, S. & Richter, A. 2013. The use and effectiveness of top executive dismissal. Leadership Quarterly, 24 (1): 9–28. http://dx.doi.org/10.1016/j.leaqua.2012.07.001CrossRefGoogle Scholar
Humphreys, M. & Brown, A.D. 2002. Narratives of organizational identity and identification: A case study of hegemony and resistance. Organization Studies, 23 (3): 421–47. http://dx.doi.org/10.1177/0170840602233005CrossRefGoogle Scholar
Hurley, R.F.Gillespie, N.Ferrin, D.L. & Dietz, G. 2013. Designing trustworthy organizations. MIT Sloan Management Review, 54 (4): 75–82.Google Scholar
Husted, B.W. 1998. The ethical limits of trust in business relationships. Business Ethics Quarterly, 8 (2): 233–48. http://dx.doi.org/10.2307/3857327CrossRefGoogle Scholar
Kim, P.Ferrin, D.Cooper, C. & Dirks, K. 2004. Removing the shadow of suspicion: The effects of apology versus denial for repairing competence- versus integrity-based trust violations. Journal of Applied Psychology, 89 (1): 104–18.http://dx.doi.org/10.1037/0021-9010.89.1.104CrossRefGoogle ScholarPubMed
Kish-Gephart, J.J.Harrison, D.A. & Treviño, L.K. 2010. Bad apples, bad cases, and bad barrels: Meta-analytic evidence about sources of unethical decisions at work. Journal of Applied Psychology, 95 (1): 1–31. http://dx.doi.org/10.1037/a0017103CrossRefGoogle ScholarPubMed
Kornberger, M. & Brown, A.D. 2007. Ethics as a discursive resource for identity work. Human Relations, 60 (3): 497–518. http://dx.doi.org/10.1177/0018726707076692CrossRefGoogle Scholar
Korsgaard, M.Brodt, S. & Whitener, E. 2002. Trust in the face of conflict: The role of managerial trustworthy behavior and organizational context. Journal of Applied Psychology, 87 (2): 312–19. http://dx.doi.org/10.1037/0021-9010.87.2.312CrossRefGoogle ScholarPubMed
Lamin, A. & Zaheer, S. 2012. Wall Street versus Main Street: Firm strategies for defending legitimacy and their impact on different stakeholders. Organization Science, 23 (1): 47–66. http://dx.doi.org/10.1287/orsc.1100.0631CrossRefGoogle Scholar
Lewicki, R. & Bunker, B.B. 1996. Developing and maintaining trust in work relationships. In Kramer, R.M. & Tyler, T.R. (Eds.) Trust in organizations: Frontiers of theory and research, 114–39. Thousand Oaks, CA: Sage http://dx.doi.org/10.4135/9781452243610.n7CrossRefGoogle Scholar
Mail on Sunday, The. 2004. Water giant accused of £75 million fraud. 21 November.Google Scholar
Mayer, R.C.Davis, J.H. & Schoorman, F.D. 1995. An integrative model of organizational trust. Academy of Management Review, 20 (4): 709–34.CrossRefGoogle Scholar
Michael, M.L. 2006. Business Ethics: The law of rules. Business Ethics Quarterly, 16 (4): 475–504. http://dx.doi.org/10.5840/beq200616445CrossRefGoogle Scholar
Mitchell, R.Agle, B. & Wood, D. 1997. Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy Of Management Review, 22 (4): 853–86.CrossRefGoogle Scholar
Moran, M. 2013. Schumpeter’s nightmare? Legitimacy, trust and business in Britain. London: The British Academy. https://www.britac.ac.uk/policy/Business_Legitimacy.cfm.Google Scholar
Nakayachi, K. & Watabe, M. 2005. Restoring trustworthiness after adverse events: The signaling effects of voluntary “Hostage Posting” on trust. Organizational Behavior and Human Decision Processes, 97 (1): 1–17. http://dx.doi.org/10.1016/j.obhdp.2005.02.001.CrossRefGoogle Scholar
Observer, The. 2004. Bad news that water firms can’t wash away. 28 November.Google Scholar
Ofwat. 2003–2012. Levels of service for the water industry in England and Wales 2002–2012.Google Scholar
Ofwat. 2006. Ofwat publishes interim report into allegations against Severn Trent. 7 March.Google Scholar
Ofwat. 2008. Ofwat proposes £35.8 million fine on Severn Trent Water. 8 April.Google Scholar
Pfarrer, M.DeCelles, K.Smith, K. & Taylor, M. 2008. After the fall: Reintegrating the corrupt organization. Academy of Management Review, 33 (3): 730–49. http://dx.doi.org/10.5465/AMR.2008.32465757.CrossRefGoogle Scholar
Poppo, L. & Schepker, D.J. 2010. Repairing public trust in organizations. Corporate Reputation Review, 13 (2): 124–41. http://dx.doi.org/10.1057/crr.2010.12.CrossRefGoogle Scholar
Putnam, R.D. 2000. Bowling Alone. New York: Simon and Schuster.Google Scholar
Reicher, S.Haslam, A.S. & Hopkins, N. 2005. Social identity and the dynamics of leadership: Leaders and followers as collaborative agents in the transformation of social reality. Leadership Quarterly, 16 (4): 547–68. http://dx.doi.org/10.1016/j.leaqua.2005.06.007.CrossRefGoogle Scholar
Schein, E. 2010. Organizational culture and leadership. (4th ed.) San Francisco: Jossey-Bass.Google Scholar
Trent., Severn 2003–2012. Annual Report and Accounts 2003–2012.Google Scholar
Trent., Severn 2007. Serious Fraud Office–decision. 22 November.Google Scholar
Trent., Severn 2008. Severn Trent responds to SFO court case. 1 JulyGoogle Scholar
Trent., Severn 2009. Severn Trent wins 2009 Utility of the Year. 15 December.Google Scholar
Shapiro, D.L. 1991. The effects of explanations on negative reactions to deceit. Administrative Science Quarterly, 36 (4): 614–30. http://dx.doi.org/10.2307/2393276.CrossRefGoogle Scholar
Siggelkow, N. 2007. Persuasion with case studies. Academy of Management Journal, 50 (1): 20–24. http://dx.doi.org/10.5465/AMJ.2007.24160882.CrossRefGoogle Scholar
Sitkin, S. & Roth, N. 1993. Explaining the limited effectiveness of legalistic “remedies” for trust/distrust. Organization Science, 4 (3): 367–92. http://dx.doi.org/10.1287/orsc.4.3.367.CrossRefGoogle Scholar
Staw, B.M.Sandelands, L.E. & Dutton, J.E. 1981. Threat-rigidity effects in organizational behavior: A multilevel analysis. Administrative Science Quarterly, 26 (4): 501–24. http://dx.doi.org/10.2307/2392337.CrossRefGoogle Scholar
Suchman, M. 1995. Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20 (4): 571–610.CrossRefGoogle Scholar
Times, The. 2007. Severn Trent to cut tenth of jobs. 4 April.Google Scholar
Times, The. 2008. Severn Trent fined a record £35.8 million. 9 April.Google Scholar
Tomlinson, E.Dineen, B. & Lewicki, R. 2004. The road to reconciliation: Antecedents of victim willingness to reconcile following a broken promise. Journal of Management, 30 (2): 165–87. http://dx.doi.org/10.1016/j.jm.2003.01.003.CrossRefGoogle Scholar
Whetten, D.A. 2006. Albert and Whetten revisited. Journal of Management Inquiry, 15 (3): 219–34. http://dx.doi.org/10.1177/1056492606291200.CrossRefGoogle Scholar
Whyte, G. 1986. Escalating commitment to a course of action: A reinterpretation. Academy of Management Review 11 (2): 311–21.CrossRefGoogle Scholar
Wicks, A.C. & Berman, S.L. 2004. The effects of context on trust in firm-stakeholder relationships. Business Ethics Quarterly, 14 (1): 141–60. http://dx.doi.org/10.5840/beq20041411.CrossRefGoogle Scholar
Working with Water. 2009. Severn Trent Water named 2009 utility company of the year. Working with Water, 15 December, 2009. Available from http://workingwithwater.filtsep.com/view/5969/severn-trent-water-named-2009-utility-company-of-the-year/ (accessed April 2012).Google Scholar
Yin, R. 1994. Case study research: Design and methods (2nd ed.). Beverly Hills, CA: Sage.Google Scholar
Yokota, R. & Mitsuhashi, H. 2008. Attributive change in top management teams as a driver of strategic change. Asia Pacific Journal of Management, 25 (1): 297–315. http://dx.doi.org/10.1007/s10490-007-9060-5CrossRefGoogle Scholar
YouGov-Cambridge. 2013. Public trust in banking. Cambridge: Cambridge University Press.Google Scholar
Zavyalova, A.Pfarrer, M.Reger, R. & Shapiro, D. 2012. Managing the message: The effects of firm actions and industry spillovers on media coverage following wrongdoing. Academy of Management Journal, 55 (1): 1079–1101. http://dx.doi.org/10.5465/amj.2010.0608CrossRefGoogle Scholar