Repairing Trust in an Organization after Integrity Violations: The Ambivalence of Organizational Rule Adjustments

Abstract

This paper investigates how an organization attempts to repair trust after organizational-level integrity violations by examining the influence of organizational rules on trust repair. We reconstruct the prominent corruption case of Siemens AG, which has faced the greatest bribery scandal in the history of German business. Our findings suggest that tightening organizational rules is an appropriate signal of trustworthiness for external stakeholders to demonstrate that the organization seriously intends to prevent integrity violations in the future. However, such rule adjustments were the source of dissatisfaction among employees since the new rules were difficult to implement in practice. We argue that these different impacts of organizational rules result from their inherent paradoxical nature. To address this problem, we suggest managing an effective interplay between formal and informal rules.

Changing Corporate Governance in Response to Negative Media Reports

“…Researchers have described organizational responses to scandals in terms of repairing trust, reputation and legitimacy (Gillespie, Dietz and Lockey, 2014;Gomulya and Boeker, 2014;Pfarrer et al, 2008). Eberl, Geiger and Ablander, 2015). McDonnell and King, 2013;Westphal and Graebner, 2010;Zavyalova et al, 2012).…”

“…Similarly, there is no reason why trust repair cannot involve symbolic actions that have limited practical implications but send a strong signal to stakeholders (e.g. Eberl, Geiger and Ablander, 2015). If the audience does not perceive these signals as misleading, then such signalling can help organizations to engender trust.…”

“…McDonnell and King, 2013;Zavyalova et al, 2012), we consider these responses from the trust-repair perspective, acknowledging that attempts to repair trust have important symbolic components but can also involve substantive changes in how organizations operate (Eberl, Geiger and Ablander, 2015; 170 I. McDonnell and King, 2013;Zavyalova et al, 2012), we consider these responses from the trust-repair perspective, acknowledging that attempts to repair trust have important symbolic components but can also involve substantive changes in how organizations operate (Eberl, Geiger and Ablander, 2015; 170 I.…”

“…While some prior studies describe responses to media reports about organizational misconduct in terms of impression management (e.g. McDonnell and King, 2013;Zavyalova et al, 2012), we consider these responses from the trust-repair perspective, acknowledging that attempts to repair trust have important symbolic components but can also involve substantive changes in how organizations operate (Eberl, Geiger and Ablander, 2015; 170 I. Okhmatovskiy and D. Shin Gillespie, Dietz and Lockey, 2014).…”

An Empirical Examination of Organisational Trust Recovery: Influences and Implications

“…Some researchers have argued that the use of denial is the most appropriate response to an integrity based trust violation (Eberl et al, 2015). Denial is defined as 'a statement whereby an allegation is explicitly declared to be untrue (i.e., the statement acknowledges no responsibility and hence no regret)' .…”