Corporate misconduct and the loss of trust

Abstract

Purpose

This paper aims to identify a typology of corporate misconduct affecting trust; to test the relative ability of individual misconducts to reduce trust and; to explain differences in how individuals respond to corporate crises.

Design/methodology/approach

The main research design uses conjoint analysis. Respondents (n = 404) rated eight combinations of six types of misconduct, identified from prior work on trust as likely to reduce trust. Initial levels of trust were established by varying both country of origin and product type.

Findings

The importance ranking for the six types was consistent across most conditions, with “bending the law” and “not telling the truth” as the most salient and “acting unfairly” and “acting irresponsibly” as the least salient in damaging trust. The characteristics of the respondent influenced the effect size.

Practical implications

As loss of trust represents loss of reputation, understanding how and when the framing of misconduct damages trust is important in managing reputation risk. The impact of any report of misconduct can be moderated if attributed by a company, the media or the individual, to a type that is less damaging to trust.

Originality/value

This study adds to our understanding as to why individuals respond differently to corporate misconduct, and contributes to prior work on reputation damage. The typology of corporate misconduct developed and tested here offers a different framework for researchers and practitioners with which to explore loss of trust and to develop existing crisis communication theory.

Citation

Davies, G. and Olmedo-Cifuentes, I. (2016), "Corporate misconduct and the loss of trust", European Journal of Marketing, Vol. 50 No. 7/8, pp. 1426-1447. https://doi.org/10.1108/EJM-11-2014-0729