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

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 managem...

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Bibliographic Details
Authors: Liu, Alfred Zhu (Author) ; Liu, Angela Xia (Author) ; Moon, Sangkil (Author) ; Siegel, Donald (Author)
Format: Electronic Article
Language:English
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Published: Springer 2024
In: Journal of business ethics
Year: 2024, Volume: 191, Issue: 3, Pages: 443-463
Further subjects:B Product recall
B Corporate social responsibility
B Crisis Management
B ethical decision-making
Online Access: Volltext (lizenzpflichtig)
Description
Summary: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.
ISSN:1573-0697
Contains:Enthalten in: Journal of business ethics
Persistent identifiers:DOI: 10.1007/s10551-023-05467-0