Academy of Management

By Daniel Butcher

Why do some instances of misconduct become scandalized while other misdeeds are not? Turns out that violations that form a compelling narrative, especially those featuring high-status miscreants, are more likely to be widely publicized, according to Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville.

Ethical breaches happen all the time, but only a small portion of misconduct actually gets picked up by the media and covered to such an extent that they become scandals. To understand that phenomenon, he and colleagues researched data breaches as a form of corporate misconduct.

“We were looking at, ‘To what extent does it matter whether other companies engaging in the same misconduct are high-status firms in your industry versus in other industries, and how did that affect whether or not your misconduct was likely to be scandalized? How do members of the media make these choices?’” Pollock said. “We found that the media like to tell a story—this is their job, to put together an interesting story that people want to read and follow.

“And if there are a lot of firms in the same industry, and especially high-status firms in the industry, who are engaging the same kinds of misconduct and get caught or try to get it covered up, that gives them a story to tell that suggests that there’s this trend in the industry, that there’s some sort of bad behavior that’s prevalent,” he said.

“It’s not just a bad apple, but rather there’s a bad barrel; there’s something going on in this industry that makes it more interesting and notable and so that’s a story they like to tell.”

Sometimes people rationalize unethical conduct because “everyone is doing it,” but that can actually increase the risk of a scandal if a widespread shady industry practice is brought to light.

“So if you are in those firms’ industry, especially if you are also high-status, then you’re likely to get sucked into be part of that story, and your misconduct is more likely to be scandalized than if you were in a different industry,” Pollock said. “The converse is true, that if you’re in a largely scandal-free or low-status industry, then you’re actually less likely to have your misconduct scandalized, because it doesn’t fit the narrative of ‘This is a bad industry doing these sorts of behaviors.’

“The story of the scandal is: ‘People in a particular industry are engaging in practices that allow these data breaches to occur,’” he said. “And so, you can actually benefit if you’re in a different industry, and your misconduct is less likely to be scandalized—even if you’re guilty of the exact same type of misconduct.”

Author

  • Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.

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