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Better than ever? Employee reactions to ethical failures in organizations, and the ethical recovery paradox

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  • Schminke, Marshall
  • Caldwell, James
  • Ambrose, Maureen L.
  • McMahon, Sean R.

Abstract

This research examines organizational attempts to recover internally from ethical failures witnessed by employees. Drawing on research on service failure recovery, relationship repair, and behavioral ethics, we investigate how witnessing unethical acts in an organization impacts employees and their relationship with their organization. In two studies—one in the lab and one in the field—we examine the extent to which it is possible for organizations to recover fully from these ethical lapses. Results reveal an ethical recovery paradox, in which exemplary organizational efforts to recover internally from ethical failure may enhance employee perceptions of the organization to a more positive level than if no ethical failure had occurred.

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  • Schminke, Marshall & Caldwell, James & Ambrose, Maureen L. & McMahon, Sean R., 2014. "Better than ever? Employee reactions to ethical failures in organizations, and the ethical recovery paradox," Organizational Behavior and Human Decision Processes, Elsevier, vol. 123(2), pages 206-219.
    • Handle: RePEc:eee:jobhdp:v:123:y:2014:i:2:p:206-219
    DOI: 10.1016/j.obhdp.2013.10.002
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    Cited by:

    1. Houston, Lawrence & Grandey, Alicia A. & Sawyer, Katina, 2018. "Who cares if “service with a smile” is authentic? An expectancy-based model of customer race and differential service reactions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 144(C), pages 85-96.
    2. Palmeira, Mauricio & Hartmann, Nathaniel N. & Chan, Eugene & Sekar, Samuel B., 2023. "Don’t blame the powerless: The impact of hierarchy on reactions to responses to ethical scandals," Journal of Business Research, Elsevier, vol. 165(C).
    3. Anna Remišová & Anna Lašáková & Zuzana Kirchmayer, 2019. "Influence of Formal Ethics Program Components on Managerial Ethical Behavior," Journal of Business Ethics, Springer, vol. 160(1), pages 151-166, November.
    4. Ong, Madeline, 2023. "The transforming power of self-forgiveness in the aftermath of wrongdoing," Organizational Behavior and Human Decision Processes, Elsevier, vol. 176(C).
    5. Marshall, Alasdair & Ojiako, Udechukwu & Wang, Victoria & Lin, Fenfang & Chipulu, Maxwell, 2019. "Forecasting unknown-unknowns by boosting the risk radar within the risk intelligent organisation," International Journal of Forecasting, Elsevier, vol. 35(2), pages 644-658.
    6. Tabea Franziska Hirth-Goebel & Barbara E. Weißenberger, 2019. "Management accountants and ethical dilemmas: How to promote ethical intention?," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(3), pages 287-322, October.
    7. Nicholas DiFonzo & Anthony Alongi & Paul Wiele, 2020. "Apology, Restitution, and Forgiveness After Psychological Contract Breach," Journal of Business Ethics, Springer, vol. 161(1), pages 53-69, January.

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