Why Stakeholders Ignore Firm Misconduct: A Cognitive View

Journal of Management, Forthcoming

48 Pages Posted: 7 Nov 2011

See all articles by Michael L. Barnett

Michael L. Barnett

Rutgers Business School, Newark & New Brunswick

Date Written: November 6, 2011

Abstract

This paper explains inconsistency in stakeholder punishment for firm misconduct. It does so by developing a cognitive view of the process by which stakeholders allocate their limited attention. This cognitive view outlines individual and situational factors that produce variation in a stakeholder’s likelihood of noticing that an act of misconduct has occurred, in how the stakeholder will assess misconduct if he or she does notice it, and in the stakeholder’s decision to punish a firm if he or she judges it to have engaged in misconduct. In sum, this process suggests that as stakeholder attention varies across each step of this process, misconduct often will not result in punishment. This suggests limits on the ability to deter firm misconduct through social control.

Keywords: business case, corporate misconduct, social cognition, social control, stakeholder theory

JEL Classification: L59, K49, H30

Suggested Citation

Barnett, Michael L., Why Stakeholders Ignore Firm Misconduct: A Cognitive View (November 6, 2011). Journal of Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1955610

Michael L. Barnett (Contact Author)

Rutgers Business School, Newark & New Brunswick ( email )

NJ
United States

HOME PAGE: http://www.business.rutgers.edu

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