Does Your Company Seem Socially Irresponsible?

There are significant differences between how company executives and the general public judge negative corporate behavior. Failure to understand and predict these differences can be costly to a business.

Public perceptions of corporate irresponsibility are formed from judgments of three core pieces of information: 1) a harmful effect, 2) an innocent victim and 3) a culpable organization. We have developed a model that describes how these perceptions of harm, innocence and culpability are shaped in subjective, yet predictable, ways. By explaining how these perceptions form, the model can be used to help predict and even influence perceptions. (Our model is described in greater detail in a paper we published in the April 2012 issue of the Academy of Management Review titled “Understanding Attributions of Corporate Social Irresponsibility.” See “Related Research.”)

The effect of a company’s actions may be perceived as more or less harmful than it actually is. An effect that is concentrated in time and space, or is unexpected, seems more harmful than an effect that is dispersed or typical. For example, quantitatively speaking, a death is a death. But from the public’s vantage point, multiple people dying in a single car accident seems far worse than the same number dying in multiple accidents spread out over several months. Dying in an unusual crash, such as a car plunging over a cliff, seems much worse than dying in an ordinary collision.

Every year in the United States, there are about 30,000 deaths caused by motor vehicle accidents. These commonplace occurrences are so spread out geographically and throughout the year that they seldom hold the public’s attention. But when a commercial airplane crashes, that usually grabs headlines and in some cases, could affect the stock price of the airline or the airplane manufacturer, even though such airplane accident deaths are comparatively rare.

Victim innocence is also subjectively perceived. Observers make judgments about victims and whether they helped bring about or could have prevented the harm they suffered. In general, stronger victims seem more complicit, weaker victims more innocent. A child is more likely to be deemed the victim of corporate irresponsibility than a competent adult.