Hostname: page-component-78c5997874-lj6df Total loading time: 0 Render date: 2024-11-10T09:39:15.009Z Has data issue: false hasContentIssue false
  • English
  • Français

After the scandal – Recovery options for damaged organizations

Published online by Cambridge University Press:  02 February 2015

William De Maria
William De Maria*
Affiliation:
UQ Business School, The University of Queensland, St Lucia QLD, Australia
Get access Rights & Permissions [Opens in a new window]

Abstract

The paper advances into a new field of multi-disciplinary inquiry called scandal scholarship. The general thrust of this scholarship should be to understand what factors are determinative to the management of scandals in organizations. The specific focus of this paper is to address the question: what options do organizations have in the immediate period following public exposure? First, a typology gleaned from relevant literatures, attempts to classify the variable ways troubled organizations attempt to extricate themselves from scandal. The typology, in its naïve form, was then applied to a recent case of corporate wrongdoing of international significance. As a result the framework was refined to achieve stronger congruence between case realities and classification. With more development this typology may be able to forecast the scandal management strategies of troubled organizations through an identification of the remedial responses they deploy. This would be great assistance to those who must engage with the troubled organization such as regulators and stakeholders.

Keywords

scandalstypologiesorganizational changeoptionsgovernanceethicsremedial response
Type
Research Article
Information
Journal of Management & Organization , Volume 16 , Issue 1 , March 2010 , pp. 66 - 82
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2010

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

Allen, M and Caillouet, R (1994) Legitimation endeavors: Impression management strategies used by an organization in crisis, Communication Monograph 61: 44–62.Google Scholar
Anderson, A (2000). Integrity Risk Review of the International Marketing Group, Exhibit 1557, Cole Inquiry (AWB 0157.0174 R).Google Scholar
Anon (1998) US Justice Department joins suit alleging royalty fraud, Oil and Gas Journal 96: 44–46.Google Scholar
Argote, L (1999) Organizational learning: Creating, retaining and transferring knowledge, Kluwer, Boston MA.Google Scholar
Australian Wheat Board (AWB) (2007) Annual report. Accessed at http://awb.ice4.interactiveinvestor.com.au/awb0701/Annual%20Report%202006/EN/body.aspx?z=2&p=18&v=1&uid=, 01 2008.Google Scholar
Beamish, T (2000) Accumulating trouble: Complex organizations, a culture of silence, and a secret spill, Social Problems 47: 473–498.Google Scholar
Bennett, A and Elman, C (2007) Case study methods in the international relations subfield, Comparative Political Studies 40: 170–195.Google Scholar
Bowonder, B (1987) The Bhopal accident, Technological Forecasting and Social Change 32: 169–182.Google Scholar
Carcello, J and Neal, T (2005) Audit committee independence and disclosure: Choice for financially distressed firms, Corporate Governance: An International Review 11: 289–299.Google Scholar
Carley, K and Harrald, J (1997) Organizational learning under fire, American Behavioral Scientist 40: 310–332.Google Scholar
Cole, T (2006) Report of the inquiry into certain Australian companies in relation to the UN Oil-for-Food Program, Volumes 1-5. Commonwealth of Australia.Google Scholar
Coombs, W (1995) Choosing the right words: The development of guidelines for the selection of the 'appropriate' crisis response strategies, Management Communication Quarterly 8: 447–476.Google Scholar
Courier-Mail (2007) AWB payouts a rort, 19 01.Google Scholar
D'Aveni, R and MacMillan, I (1990) Crisis and the content of managerial communication: A study of the focus of attention of top managers in surviving and failing firms, Administrative Science Quarterly 35: 634–657.Google Scholar
Dellaportas, S, Cooper, B and Braica, P (2007) Leadership, culture and employee deceit: the case of the National Australia Bank, Corporate Governance: An International Review 15: 1442–1452.Google Scholar
De Schutter, O (2008) Corporate social responsibility European style, European Law Journal 14: 203–236.Google Scholar
Dong, B, Evans, K and Zou, S (2008) The effects of customer participation in co-created service recovery, Journal of the Academy of Market Science 36: 123–137.Google Scholar
Elman, C (2005) Explanatory typologies in qualitative studies of international politics, International Organization 59: 293–326.Google Scholar
Elsbach, K (1994) Managing organizational legitimacy in the California cattle industry: the construction and effectiveness of verbal accounts, Administrative Science Quarterly 39: 57–88.Google Scholar
Elsbach, K and Sutton, R (1992) Marriage of institutional and impression management theories, Academy of Management Journal 35: 699–738.Google Scholar
Elsbach, K, Sutton, R and Principe, K (1998) Averting expected challenges through anticipatory impression management: A study of hospital billing, Organization Science 9: 68–86.Google Scholar
Frisk, D and Kolb, J (2008) The effects of an ethics training program on attitude, knowledge and transfer of training of office professionals: A treatment and control group design, Human Resource Development Quarterly 19: 35–53.Google Scholar
Grant, R and Visconti, M (2006) The strategic background to corporate accounting scandals, Long Range Planning 39: 361–383.Google Scholar
Gray, K, Frieder, L and Clark, G (2007) Financial bubbles and business scandals in history, International Journal of Public Administration 30: 859–888.Google Scholar
Gregory, A (2005) Communication dimensions of the UK foot and mouth disease crisis, 2001, Journal of Public Affairs 5: 312–329.Google Scholar
Hale, J, Dulek, R and Hale, D (2005) Crisis response, communication challenges, Journal of Business Communication 42: 112–134.Google Scholar
Hamilton, E (2006) An exploration of the relationship between loss of legitimacy and the sudden death Group & Organization Management 31: 327–358Google Scholar
Hart, P, Heyse, L and Boin, A (2001) New trends in crisis management practice and crisis management research: Setting the agenda, Journal of Contingencies & Crisis Management 9(4): 181–188.Google Scholar
Hobbs, J (1995) Treachery by any other name: A case study of the Toshiba public relations crisis, Management Communications Quarterly 8: 323–346.Google Scholar
Holder-Webb, L and Cohen, J (2007) The association between disclosure, distress and failure, Journal of Business Ethics 75: 301–314.Google Scholar
Holm, C and Laursen, P (2007) Risk and control developments in corporate governance: Changing the role of the external auditor, Corporate Governance: An International Review 15: 322–333.Google Scholar
Horsley, J and Barker, R (2002) Toward a synthesis model for crisis communication in the public sector, Journal of Business and Technical Communication 16: 406–441.Google Scholar
Houge, T and Wellman, T (2005) Fallout from the mutual fund trading scandal, Journal of Business Ethics 62: 129–139.Google Scholar
Huber, G (1991) Organizational learning, the contributing processes and the literatures, Organizational Science 2: 88–115.Google Scholar
Hudson, B (2008) Against all odds: A consideration of core-stigmatized organizations, Academy of Management Review 33: 252–266.Google Scholar
Hughes, D (2004) Unocal off the Hook?In These Times, Accessed at http://www.inthesetimes.com/comments.php?id=618_0_2_0_C on 8 12 2004.Google Scholar
Hwang, P and Lichtenthal, D (2000) Anatomy of organizational crises, Journal of Contingencies & Crisis Management 8:129–140.Google Scholar
Independent Inquiry Committee (2005) Summary of Report on Program Manipulation, Accessed at http://www.iic-offp.org/documents/Final%20Report%2027Oct05/IIC%20Final%20Report%20-%20Chapter%20One.pdf on 20 10 2008.Google Scholar
Johnston, R. and Michel, S (2008) Three outcomes of service recovery; customer recovery, process recovery and employee recovery, International Journal of Operations and Production Management, 28: 79–99.Google Scholar
Ledgerwood, G (1998) New corporate governance paradigms for transnational enterprises – Shell and strategic futures for big oil, Corporate Governance: An International Review 69: 269–277.Google Scholar
Lee, B (2004) Audience-oriented approach to crisis communication: a study of Hong Kong consumers' evaluation of an organizational crisis, Communication Research 31: 600–618.Google Scholar
Lee, M-D (2008) A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead, International Journal of Management Reviews 10: 53–73.Google Scholar
McKelvey, B (1975) Guidelines for the empirical classification of organizations, Administrative Science Quarterly 20: 509–525.Google Scholar
Merck & Co. (2007) World Bank and Merck and Co. Inc. announce, US $50 million funding initiative to eliminate River Blindness in Africa, Accessed at http://www.merck.com/newsroom/press_releases/corporate/2007_1205.html on 6 03 2008.Google Scholar
Mohamed, A, Gardner, W and Paolillo, J (1999) A taxonomy of OIM tactics, Advances in Competitiveness Research 7: 108–130.Google Scholar
Mueller, D (2006) The Anglo-Saxon approach to corporate governance and its applicability to emerging markets, Corporate Governance: An International Review 14: 207–219.Google Scholar
Murungi, J (2004) The Academy and the crisis of African governance, African Issues 32: 9–23.Google Scholar
New York Times (2007) US: Merck agrees to settle Vioxx suits for $4.85 Billion, 9 11.Google Scholar
Pandey, G and Bowonder, B (1993) Decision making in crisis: The case of the Bhopal disaster, Disaster Management 5: 155–166.Google Scholar
Pandey, S and Verma, P (2005) Organization decline and turnaround: Insights from the World Com case, Vision 9: 51–65.Google Scholar
Parum, E (2005) Does disclosure on corporate governance lead to openness and transparence in how companies are managed'? Corporate Governance: An International Review 13: 702–709.Google Scholar
Pearson, C and Clair, J (1998) Reframing crisis management, Academy of Management Review 23: 59–77.Google Scholar
Pearson, C and Mitroff, I (1993) From crisis prone to crisis prepared. A framework for crisis management, The Executive 7: 48–59.Google Scholar
Puchan, H (2001) The Mercedes-Benz A-Class crisis, Corporate Communication 6: 42–51.Google Scholar
Pye, A (2001) Corporate boards, investor and their relationships. Accounts of accountability and corporate governing in action, Corporate Governance, An International Review 9: 186–195.Google Scholar
Samuel, Y and Mannheim, B (1970) A multidimensional approach towards a typology of bureaucracy, Administrative Science Quarterly 15: 216–228.Google Scholar
Shrivastava, P (1983) A typology of organizational leaning systems, Journal of Management Studies 20: 7–28.Google Scholar
Shrivastava, P and Mitroff, I (1987) Strategic management of corporate crises, Columbia Journal of World Business, 22: 5–11.Google Scholar
Sipika, C and Smith, D (1993) From disaster to crisis: the failed turnaround of Pan American Airlines, Journal of Contingencies and Crisis Management 3: 138–151.Google Scholar
Smith, K (2002) Typologies, taxonomies and the benefits of policy classification, Policy Studies Journal 30: 379–395.Google Scholar
Smith, D (2005) Business (not) as usual: Crisis management, service recovery and the vulnerability of organizations, The Journal of Service Marketing 9: 309–318.Google Scholar
Stanford Center for International Development. (2000). Unocal, Accessed at http://www.stanford.edu/group/SICD/Unocal/unocal.html on 18 01 2005.Google Scholar
Starbuck, W and Milliken, F (1988) Fine-tuning the odds until something breaks, Journal of Management Studies 25: 319–340.Google Scholar
Stiles, P and Taylor, B (1993) Maxwell – The failure of corporate governance, Corporate Governance. An International Review 1: 34–45.Google Scholar
Sutton, R (1987) The process of organizational death: disbanding and reconnecting, Administrative Science Quarterly 32: 542–569.Google Scholar
Sutton, R and Callahan, A (1987) The stigma of bankruptcy: spoiled organizational image and its management, Academy of Management Journal 30: 405–436.Google Scholar
Taylor, B (2006) Shell shock. Why do good companies do bad things? Corporate Governance. An International Review 14: 181–193.Google Scholar
Taylor, B (2007) The new shareholder activists: How can boards create more value? Corporate Governance. An International Review 15: 1026–1029.Google Scholar
Tuana, N (2007) Conceptualizing moral literacy, Journal of Educational Administration 45: 364–378.Google Scholar
Tucker, A and Edmundson, A (2003) Why hospitals don't learn from failures: Organizational and psychological dynamics that inhibit system change, California Management Review 45: 55–72.Google Scholar
Unocal (2001) Statement: company not supporting Taliban anyway. 14 09. Accessed at http://www.unocal.com/uclnews/2001news/091401.htm on 18 January 2005.Google Scholar
Unocal (2004a) Code of conduct, Accessed at http://www.unocal.com/ucl_code_of_conduct/index.htm on 17 01 2004.Google Scholar
Unocal (2004b). Settlement reached in human rights law suite, press release, 13 12. Accessed at http://www.unocal.com/uclnews/2004news/121304.htm on 18 January 2005.Google Scholar
Warren, R (2000) Corporate governance and accountability, Liverpool Academic Press, Liverpool.Google Scholar
Warren, D (2007) Corporate scandals and spoiled identities: How organizations shift stigma to employees, Business Ethics Quarterly 17: 477–496.Google Scholar
Williams, D and Treadway, G (1992) Exxon & Valdez accident: A failure in crisis communication, Communication Studies 43: 56–64.Google Scholar
Windsor, D (1988) Communication failure contributing to the Challenger accident: An example for technical communicators', IEEE Transactions on Professional Communications 31: 101–107.Google Scholar
Wooten, L and James, E (2004) When firms fail to learn. The perpetuation of discrimination in the workplace, Journal of Management Inquiry 13: 23–33.Google Scholar
Yin, R (2003) Applications of Case Study Research, Sage, Thousand Oaks CA.Google Scholar