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To Condemn or Not to Condemn: Why Bad Behaviour Doesn't Always Damage Reputation

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We've seen plenty of unethical behaviour in the business arena over the past decade. But surprisingly, bad behaviour doesn't always lead to reputational consequences. The authors offer a Model of Reputational Loss which explains why, using Arthur Anderson and PayPal as prime examples. The key levers involved, they argue, are the firm's perceived control of the situation; perceived certainty that the event truly occurred; the level of perceived threat to stakeholders; and perceived deviance from established practices. In addition, they show that stakeholder motivation and media coverage also play key roles in whether or not an organization's reputation is significantly damaged by bad behaviour.
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