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When the Automated fire Backfires: The Adoption of Algorithm-based HR Decision-making Could Induce Consumer’s Unfavorable Ethicality Inferences of the Company

Author

Listed:
  • Chenfeng Yan

    (Huazhong University of Science and Technology)

  • Quan Chen

    (Wuhan University)

  • Xinyue Zhou

    (Zhejiang University)

  • Xin Dai

    (Huazhong University of Science and Technology)

  • Zhilin Yang

    (City University of Hong Kong)

Abstract

The growing uses of algorithm-based decision-making in human resources management have drawn considerable attention from different stakeholders. While prior literature mainly focused on stakeholders directly related to HR decisions (e.g., employees), this paper pertained to a third-party observer perspective and investigated how consumers would respond to companies’ adoption of algorithm-based HR decision-making. Through five experimental studies, we showed that the adoption of algorithm-based (vs. human-based) HR decision-making could induce consumers’ unfavorable ethicality inferences of the company (study 1); because implementing a calculative and data-driven approach (i.e. algorithm-based) to make employee-related decisions violates the deontological principles of respectful employee treatment (study 2). However, this effect was attenuated when consumers had high (vs. low) power distance beliefs (study 3); the algorithm served as assistance (vs. replacement) for human decisions (study 4); or the adoption was framed as employee-oriented (vs. company-oriented) motivated (study 5). Our findings suggested that consumers are aversive to algorithm-based HR decision-making because it is deontologically problematic regardless of its decision quality (i.e. accuracy). This paper contributes to the extant understanding of stakeholders’ responses to algorithm-based HR decision-making and consumers’ attitudes toward algorithm users.

Suggested Citation

  • Chenfeng Yan & Quan Chen & Xinyue Zhou & Xin Dai & Zhilin Yang, 2024. "When the Automated fire Backfires: The Adoption of Algorithm-based HR Decision-making Could Induce Consumer’s Unfavorable Ethicality Inferences of the Company," Journal of Business Ethics, Springer, vol. 190(4), pages 841-859, April.
    • Handle: RePEc:kap:jbuset:v:190:y:2024:i:4:d:10.1007_s10551-023-05351-x
    DOI: 10.1007/s10551-023-05351-x
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