The Impact of Emotions on Stakeholder Reactions to Organizational Wrongdoing

• Author: Arnaud Banoun,Meena Andiappan,Lucas Dufour
• Published date: 01 September 2019
• DOI: http://doi.org/10.1111/emre.12141
• Date: 01 September 2019

The Impact of Emotions on Stakeholder

Reactions to Organizational Wrongdoing

LUCAS DUFOUR,

1

MEENA ANDIAPPAN

1

and ARNAUD BANOUN

2

1

Montpellier Business School, Montpellier, France

2

EDC Paris, France

In this study, we develop a theoretical model thatcaptures the influence of emotions on a stakeholder’s decision to

act against an organization afterorganizational wrongdoing. Relying oncognitive appraisal theory, we focus on the

role of emotions during two central phases in the stakeholder response process: appraisal and intention. First, we

argue that based on their appraisal of the wrongdoing, stakeholders will experience certain primary emotions

(e.g. disappointment, anger)which will impact their first response towardsthe organization. Second,we propose that

certain secondaryemotions (e.g. hope, remorse)will influence their intentionto act against the organization. Finally,

we argue that the stakeholder’s perceived power and self-interest will influence the stakeholder’s decision to act

against the organization.

Keywords: emotions; organizational wrongdoing; stakeholder; cognitive appraisal theory

Introduction

Over the past 30 years, a vast body of literature has

investigated how stakeholders perceive organizational

wrongdoing (for a review see Parmar et al., 2010).

However, it is only recently that studies have begun to

focus on how stakeholders respond to, and take action

against, organizations in the face of wrongdoing (Rhee

and Valdez, 2009; Reuber and Fischer, 2010; Barnett,

2014). This focus was greatly prompted by the string of

corporate scandals exposed by the media over the past

two decades, including such companies as Worldcom,

Tyco and more recently, Volkswagen which engendered

strong stakeholder reactions.

When stakeholders perceive organizational

wrongdoing –that is to say, when an organization acts

in a way that does not respect its obligations to

stakeholders –they are frequently driven to act against

the organization, with the goal of either punishing the

organization or encouraging it to change (Barnett, 2014).

Surprisingly, the evidence suggests that stakeholders can

react very differently from one another when facing the

exact same organizational wrongdoing; for example,

while some stakeholders remain loyal to the organization,

others definitively end their relationship with the

organization and still others engage in negative word-

of-mouth (Ferguson and Johnston, 2011). The reasons

that have been proposed to explain such a discrepancy

in stakeholders’reactions have primarily focused on

cognitive and rational factors (Reuber and Fischer,

2010; Barnett, 2014). Though numerous authors have

noted that the stakeholder’s reaction process has been

considered as largely rational and that the role of

emotional factors remain understudied (Coombs and

Holladay, 2004; Gillespie and Dietz, 2009; Rhee and

Hadwick, 2011), it is only recently that researchers have

begun to investigate the role of emotions on

stakeholders’reactions (e.g. Rafaeli and Vilnai-Yavetz,

2004; Siltaoja and Lahdesmaki, 2015).

Our goal in the presentstudy is to understand the role of

emotions in stakeholder responses to organizational

wrongdoing. We focus on how emotions and perceptions

affect stakeholder’s initial reactions, and subsequent

intentions, to act towards the organization. Thus, our

paper develops a three-part model based on the cognitive

appraisal framework: first, we explore the relationship

between primary emotions and initial reactions to

wrongdoing based on the stakeholder’s appraisal of the

wrongdoing; second, we explore the relationship between

secondary emoti ons and stakeholder i ntentions; and

finally, we analyze how the stakeholder’s evaluation of

the resources and opportunities available to him or her –

Correspondence: Lucas Dufour, Montpellier Business School, 2300

Avenue des moulins 34185 Montpellier, France. E-mail l.dufour@

montpellier-bs.com

DOI: 10.1111/emre.12141

©2017 European Academy of Management

European Management Review, Vol. 16, 761–, (2019 )

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stakeholder’s perceived power and perceived self-interest

–influence the s takeholder’s decision to act against t he

organization.

We believe that for academics and firms alike,

understanding the role of emotions on stakeholder

response after organizational wrongdoing is as critical as

understanding the role of cognitions, for the following

three reasons. First, we believe that the inclusion of

emotions into the study of stakeholder response can shed

light on the paradox of why certain wrongdoings result

in public actions against a firm, while a similar

wrongdoing may result in very little reaction. For

example, if a company like the Body Shop whose image

is centered on social responsibility, trust and ethics

(Fukukawa et al., 2007) faces litigation for employee

exploitation, it is more likely to face difficulties in

regaining stakeholder confidence than a company facing

the same litigation that developed relationships with its

stakeholders based on a low-cost strategy. As Frijda

(1986) broadly noted, emotions are the outcomes of the

process of evaluating the world in termsof an individual’s

own concerns and which modify readinessfor action. We

argue that one of the reasons for the above disparity in

stakeholder reactions is due to emotions: stakeholders in

the former case may feel emotions such as anger, while

in the latter case, they are more likely to feel emotions

such as disappointment. Second, studying emotions can

serve to aid firms in formulating their strategic responses

to such wrongdoings. For example, for firms facing

disappointedstakeholders, reorientingstakeholder interest

and refusing to accept responsibility for an event may

work well (a defense or distract strategy). However, for

firms facing angry stakeholders, this type of strategy is

likely to have detrimental consequences; instead, firms

may choose toengage in dialogue with these stakeholders,

and attempt to appease them by listening and responding

to their concerns (thus deescalating the situation). Third,

emotionalreactions guide responsesnot solely at their first

appearance, but also through the secondary reactions to

uncertain situations (Loewenstein et al., 2001). Thus,

emotions may be necessary and even act to mediate the

connection between cognitive evaluations of risk-related

behavior in uncertain situations.

In the past decade, a n umber of studies have

demonstrated that emotions, defined as a ‘mental

experience with high intensity and high hedonic content’

(Cabanac, 2002: 80), strongly influence stakeholder

perceptions of organizational actions and decisions

(Coombs, 2007; Kim and Cameron, 2011; Huy et al.,

2014). However, the literature appears scarce on two

fronts. First, very few articles have proposed a theoretical

model that integrate how the emotions experienced by

stakeholders influence their decision to act against an

organization after perceiving an organizational

wrongdoing (with the exception of Ashton-James and

Ashkanasy’s 2008 work that concentrates on the impac t

of emotions on strategic decisions). Second, the reasons

why two stakeholders experiencedifferent emotions while

facing a similar organizational wrongdoing has not been

clearly investigated.

In this paper, we identify the specific emotions an

individual stakeholder experiences when facing

organizational wrongdoing and how these emotions

influence his or her intention to act against the

organization. In the fo llowing paragraphs, we d efine

organizational wrongdoing and present a brief literature

review of the role of emotions in the response process.

Drawing on the response and intent literature, we

distinguish three steps in the stakeholder’s response

process: first, their immediate emotional response;

second, their intention to act against an organization and

third their decision to act against the organization. For

each step of the process, we identify the emotions

experienced by the stakeholder that are most likely to

enhance or inhibit the stakeholder’s intention to act

against an organization, and how the stakeholder’s

evaluation of the resources and opportunities available

can influence the stakeholder’sresponse.

This paper contributes to the management literature by

extending and challenging current theory in two ways.

First, the majority of studies linking emotions to

stakeholder actions in terms of wrongdoing have focused

on the direct impactof anger on the action (e.g. Lerner and

Tiedens, 2006; Coombs, 2007). Based on the cognitive

appraisal model of emotions framework, we suggest that

in addition to ange r, three other primar y emotions

(disappointment, fear and disgust) can trigger the

stakeholder’saction against an organizationand that these

emotions are moderated by secondary emotions (hope,

fear of counter-retaliation, remorse and righteous anger).

Second, for both primary and secondary emotions, we

specify which emotions are likely to occur at each phas e

in the response process, how they affect intent, and why.

In this way, we respond to the calls made by studies such

as Lerner et al. (2015) askingfor management literature to

investigate further the crucial issues of emotions,

intentions and actions.

Definition of organizational wrongdoing

Organizational wrongdoing can be defined as any illegal,

unethical, unfairor potentially harmful actionthat violates

the stakeholder’s expectations and that encourages the

stakeholder to take action to stop, prevent or punish the

organization involved (Miceli et al., 2012). According to

Palmer (2012), there are two different approaches that

can be used to explain the causes of organizational

wrongdoing. The first approach, considered as the

dominant framewor k, assumes that wrongdo ing is

produced by either ‘bad apples’(rational actors that

L. Dufour et al.

©2017 European Academy of Management

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