This paper deals with structural challenges arising for organizational change after corporate scandals.
Corporate scandals have become an increased phenomenon and corresponding information spreads progressively fast in times of digital and social media. These can pose an extreme threat to organizations’ legitimacy and reputation and thus, endanger their performance and survival chances. Nevertheless, there are still many examples of ‘bad handling’ and organizations seemingly do not know how to cope with such incidents correctly. The way organizations and their environments perceive and respond to a scandal constitutes a decisive factor concerning its outcome and consequences.
Despite the extreme threat and inevitable harm that arise out of corporate scandals, they can be seen as triggering events that generate a chance for fundamental and beneficial organizational change. The corresponding literature on crisis management focuses on response strategies to improve perceptions of the organization. To substantially solve and permanently prevent the reoccurrence of such an incident, however, fundamental change in the organization’s practices and behavior is necessary.
This research question is addressed with an integrated approach to exploit both, knowledge from theory on crisis and change management as well as business practice and reality. In order to develop practical guidelines for organizations and to demonstrate how theoretically developed recommendations may look like and can be implemented in practical reality, this paper includes a case study. The theoretical approach is thereby enriched by an analysis of the Siemens AG after their bribery scandal in 2006. As result of the research, a framework is developed that should serve as a guideline for an effective handling of corporate scandals. Therein, implications from theory and practice are combined and both, the organization’s direct response to the scandal as well as the management of the subsequent change, are considered. The main goal of this response and change effort is to recreate a perception of integrity to regain support both from the outside as well as from the organization’s inside.
Table of Contents
1. Introduction
2. Corporate Scandals
2.1 The Scandal’s Internal Antecedents
2.2 The Effects of Corporate Scandals
2.3 The Siemens Bribery Scandal
3. The Direct Response to a Corporate Scandal
4. Organizational Change after a Corporate Scandal
4.1 Derivation of a Change Management Approach
4.2 An Integrated Framework
4.3 Change Management and Sustainable Improvement
5. Conclusion
6. Limitations and Future Research
7. Bibliography
Research Objective and Core Themes
The primary objective of this work is to develop a comprehensive framework for managing organizational change effectively following the occurrence of a corporate scandal, addressing the challenge of re-establishing organizational legitimacy and integrity. By integrating theoretical perspectives on crisis and change management with practical insights from the Siemens bribery scandal, the paper provides guidelines for organizations to turn such crises into catalysts for fundamental, beneficial transformation.
- Strategic management of organizational crises and corporate scandals.
- Methods for immediate response to minimize reputational damage.
- Derivation of an integrated change management framework.
- Alignment of organizational architecture, culture, and compliance systems.
- Long-term organizational learning and sustainability after a scandal.
Excerpt from the Book
The Scandal’s Internal Antecedents
Corporate scandals do not occur by mischance. Prior research has named common origins and factors that are existent in organizations facing a corporate scandal. These internal origins have been described both on the individual and on the organizational level (Ashforth et al. 2008). At the individual level, scandals are said to be caused by the attitude and behavior of single, rather higher-level organizational members, so-called ‘bad apples’, that devolve to the entire firm (Kuhn and Ashcraft 2003). An organization’s leadership, thereby, constitutes a key factor as it incorporates a role-model and value-shaping function. Regardless of whether the respective leaders are engaged in malpractice themselves, they send clear signals to employees about the expected way of doing business (Ashforth and Anand 2003). Their establishment of misaligned incentives and rewards, imperfectly communicated code of ethics as well as wrong ways of handling immoral actions drive employees to engage in disputable behavior often without being consciously aware of it (Joshi et al. 2007). Especially the role of an organization’s CEO has been emphasized since his or her lack of moral values and integrity is likely to originate managerial fraud and the commitment to false behavior (Zona et al. 2013).
Summary of Chapters
1. Introduction: This chapter defines the scope of the paper, emphasizing that corporate scandals, while threatening an organization's reputation, can be viewed as opportunities for fundamental organizational change.
2. Corporate Scandals: This section explores the nature, internal origins, and far-reaching effects of corporate scandals, using the Siemens bribery scandal as a illustrative case study.
3. The Direct Response to a Corporate Scandal: This chapter focuses on the immediate, short-term strategies required to mitigate reputational damage and begin the process of regaining stakeholder trust.
4. Organizational Change after a Corporate Scandal: This chapter develops an integrated framework for managing long-term change, combining planned and emergent approaches to foster sustainable improvement.
5. Conclusion: This chapter synthesizes the main findings, reiterating that a proactive, deliberate, and inclusive approach to change is essential for organizations to successfully navigate the aftermath of a scandal.
6. Limitations and Future Research: This chapter acknowledges the constraints of the single-case study approach and suggests directions for future empirical research on a larger scale.
7. Bibliography: This section lists the extensive academic and professional sources utilized throughout the research.
Keywords
Corporate scandal, Organizational change, Crisis management, Reputation repair, Stakeholder management, Siemens, Compliance, Organizational culture, Change management framework, Business ethics, Corporate integrity, Organizational crisis, Transparency, Sustainability, Leadership.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on how organizations can navigate the aftermath of corporate scandals by transitioning from immediate crisis response to long-term, fundamental organizational change.
What are the primary themes discussed in the work?
Key themes include the internal origins of scandals, stakeholder management, the integration of crisis and change management theories, and the practical implementation of compliance and cultural reforms.
What is the primary goal of the proposed framework?
The goal is to provide a guideline for organizations to re-establish legitimacy, trust, and a reputation for integrity after being hit by a major corporate scandal.
Which scientific methods are employed?
The paper utilizes an integrated approach, combining an extensive literature review on crisis and change management with a qualitative case study of the Siemens AG bribery scandal.
What does the main body cover?
The main body covers the identification of scandal antecedents, the immediate stakeholder response, the development of a change management framework, and the alignment of organizational architecture and culture.
Which keywords define this work?
Relevant keywords include corporate scandal, organizational change, crisis management, reputation, stakeholder management, and corporate integrity.
How does the framework incorporate the Siemens case study?
The Siemens case is used to demonstrate how theoretical principles of change management were practically applied to address corruption, improve compliance, and drive organizational transformation.
Why is the "top-down" approach combined with "bottom-up" engagement?
While a top-down approach is necessary for immediate direction and urgency after a scandal, the paper argues that bottom-up engagement is essential for successfully internalizing new cultural values and behavioral norms.
- Citar trabajo
- Vanessa Ostertag (Autor), 2014, Failure as a Chance. Managing Organizational Change after Corporate Scandals, Múnich, GRIN Verlag, https://www.grin.com/document/450747
