When Things Go Wrong: Account Strategy Following a Corporate Crisis Event

Brocato, E. Deanne; Peterson, Robert A.; Crittenden, Victoria L.

doi:10.1057/crr.2011.24

Cited by 12 publications

(11 citation statements)

References 54 publications

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“…Second, we also know that within a violation context, stakeholders' expectations vary based on the nature of the violation itself. Research on violations has long acknowledged the importance of recognizing stakeholders' “socially constructed expectations” given the violation situation (Lange & Washburn, 2012, p. 301), and that stakeholders have “expectations regarding what type of account [they] would like to receive” in the aftermath of a violation (Brocato, Peterson, & Crittenden, 2012, p. 39). Because of these varying expectations, a growing line of research investigating reputation defense argues that a firm must match its response strategy to stakeholders' expectations related to the specific violation (e.g., Bundy & Pfarrer, 2015; Coombs, 2007; Raithel & Hock, 2021).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Bundy

Iqbal

Pfarrer

2021

Strategic Management Journal

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Research Summary We examine how a firm defends its capability and character reputations in response to different violations. We develop our core theoretical mechanism—stakeholders' situational expectations—to theorize that the effectiveness of a firm's response strategy following a violation depends on the nature of the violation and the reputational judgment being made. We test our hypotheses using two longitudinal violation samples and novel media‐based measures of reputation. Generally, we find that a more accommodative strategy is an effective defense following a capability violation, but it is less effective following a character violation. In supplemental analyses, we also discover that a more accommodative strategy is less effective at managing general reputation. Ultimately, our theory and findings suggest that reputation defense is more complex than previously considered. Managerial Summary We shed light on the challenges managers face in defending their multiple reputations following a violation. We suggest that the type of violation affects stakeholders' expectations of the firm, and that these expectations differentially threaten a firm's multiple reputations as well as the efficacy of its response strategy. Using a sample of capability‐based (unintentional financial restatements) and character‐based (environmental malfeasance) violations, we find that a more accommodative response strategy can defend certain reputations following a capability‐based violation but can be detrimental to other reputations. We also find accommodativeness to be generally harmful following a character‐based violation. Ultimately, our results suggest that managers should consider both the type of reputation they are defending and the nature of the violation when implementing a response strategy.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Bundy

Iqbal

Pfarrer

2021

Strategic Management Journal

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“…In the past, firms have been advised not to apologise in order to reduce the potential for an adverse lawsuit (Wooten, 2009). In recent years, however, apology has been acknowledged as one of the most viable strategies for resolving conflicts (Brocato, Peterson, & Crittenden, 2012).…”

Section: A Firm's Response To a Transgression: Apology Versus Apologiamentioning

confidence: 99%

Consumers’ forgiveness after brand transgression: the effect of the firm’s corporate social responsibility and response

Tsarenko

Tojib

2015

Journal of Marketing Management

124

103

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In this article we examine the interplay between the severity of a brand transgression, consumers' prior awareness of the firm's corporate social responsibility (CSR) initiatives, and the firm's response (apology vs. apologia) on the rates of forgiveness among consumers. Results of two experiments show that consumers' prior awareness of the firm's CSR initiatives significantly differentiates apologia from apology, with the effect of apology on consumer forgiveness being more apparent when brand transgression severity is mild. Results also show that consumer forgiveness mediates the effect of brand transgression severity, firm response, and consumer awareness on repurchase intentions. In this way, the study enables managers to determine whether or not an apology or apologia will be sufficient to solicit consumer forgiveness, using information about the levels of awareness of CSR among consumers.

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“…Regarding research that has focused specifically on business language, the notion of accounts has been applied in various research areas, such as conflict management (e.g., Bies, Shapiro, & Cummings, 1988; Sitkin & Bies, 1993), corporate crisis communication (e.g., Brocato, Peterson, & Crittenden, 2012; Massey, 2001), gender (e.g., Tata, 1998), reactions to product complaints (e.g., Conlon & Murray, 1996), negotiations (e.g., Firth, 1995), and lending decisions (e.g., Sonenshein, Herzenstein, & Dholakia, 2011). In the accounting literature, studies of the use of accounts seem to be largely absent.…”

Section: Accounts As Responses To Evaluative Situationsmentioning

confidence: 99%

“…A prevailing version of excuse is the appeal to external events and circumstances (i.e., circumstances that are presented as fully or partly beyond the control of management). In this case, the excuse “diverts the cause away from the transgressor to the external environment” (Brocato et al, 2012, p. 37). The excuse offers a possibility for the management to diminish its perceived responsibility by referring the event or act to the external or unintentional (Brocato et al, 2012; Weiner, Amirkhan, Folkes, & Verette, 1987).…”

Section: The Language Of Failure: An Empirical Investigationmentioning

confidence: 99%

“…In this case, the excuse “diverts the cause away from the transgressor to the external environment” (Brocato et al, 2012, p. 37). The excuse offers a possibility for the management to diminish its perceived responsibility by referring the event or act to the external or unintentional (Brocato et al, 2012; Weiner, Amirkhan, Folkes, & Verette, 1987). An example, perhaps not so surprising, is the claim that the losses are the results of unfavourable currency exchange rates.…”

Section: The Language Of Failure: An Empirical Investigationmentioning

confidence: 99%

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The Language of Failure

Sandell

Svensson

2014

International Journal of Business Communication

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The natural language that accompanies the accounting language in financial reports is not only a more or less accurate representation of the company but also, the authors argue, a response to explicit as well as implicit external demands, expectations, and accusations. Drawing on the notion of accounts (i.e., statements or responses that neutralize critique of not meeting expectations), the authors analyze the natural language in financial reports. In analyzing financial reports with the use of account theory, both individual actions and structurally anchored financial report discourse are approached. The theory of accounts helps the authors discern the fine-grained anatomy of financial reports by means of which impressions are managed, legitimacy is upheld, and the dialogue between companies and their public is maintained. The analysis demonstrates the presence of five types of accounts in the financial reports: excuse, justification, refocusing, concession, and mystification. Financial reporting is a legally and culturally regulated genre of business communication that partakes in the ongoing conversation between a company and its public. Understanding the role of accounts is needed to enhance the genre awareness and reader competence among the readers of financial reports.

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When Things Go Wrong: Account Strategy Following a Corporate Crisis Event

Cited by 12 publications

References 54 publications

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Reputations in flux: How a firm defends its multiple reputations in response to different violations

Consumers’ forgiveness after brand transgression: the effect of the firm’s corporate social responsibility and response

The Language of Failure

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