Does Corporate Social Responsibility Always Result in More Ethical Decision Making? Evidence from Product Recall Remediation

Journal of Business Ethics, Forthcoming

52 Pages Posted: 26 May 2023

See all articles by Alfred Z. Liu

Alfred Z. Liu

McMaster University

Angela Xia Liu

UNC Charlotte

Sangkil Moon

University of North Carolina (UNC) at Charlotte

Donald S. Siegel

Arizona State University-School of Public Affairs

Date Written: May 13, 2023

Abstract

Recent research suggests that committing to corporate social responsibility (CSR) can induce moral licensing among employees, resulting in unethical behaviors. We extend this line of research and develop a theoretical framework to study how CSR influences managerial decision-making in crisis management. We test this theory in the context of product recall remediation. We examine under what circumstances CSR induces morally consistent or morally dubious recall remedial decisions and factors moderating this effect. We focus on two product recall remedial decisions that differ in ambiguity—full versus partial compensation and proactive versus passive recall. We predict and show that a company’s strong prior CSR performance increases the likelihood of full compensation but decreases the likelihood of a proactive recall. This finding suggests that CSR can induce moral licensing behavior at the highest corporate level when a decision is morally difficult to diagnose. Further analysis reveals that consumer harm and institutional ownership moderate the relationship between CSR and these two remediation strategies. Together, our findings provide important insights into when CSR leads to moral licensing in crisis remediation and how the link can be mitigated, and thus shed light on when CSR yields consistent and meaningful ethical business decisions.

Keywords: corporate social responsibility, ethical decision making, product recall, crisis management

Suggested Citation

Liu, Alfred and Liu, Angela Xia and Moon, Sangkil and Siegel, Donald S., Does Corporate Social Responsibility Always Result in More Ethical Decision Making? Evidence from Product Recall Remediation (May 13, 2023). Journal of Business Ethics, Forthcoming , Available at SSRN: https://ssrn.com/abstract=4447763

Alfred Liu

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Angela Xia Liu (Contact Author)

UNC Charlotte ( email )

7046871794 (Phone)
7046871794 (Fax)

HOME PAGE: http://https://belkcollege.uncc.edu/directory/angela-xia-liu

Sangkil Moon

University of North Carolina (UNC) at Charlotte

Donald S. Siegel

Arizona State University-School of Public Affairs ( email )

411 North Central
Phoenix, AZ 85004
United States
6024961101 (Phone)

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