Selective Social Remembering: Social Irresponsibility, Organisational Salience, and Firm Reputation

Abstract

Organization memory studies have theorized that firms should manage their stakeholders’ collective memories following instances of corporate social irresponsibility (CSI), as not doing so, may negatively influence organizational outcomes. Yet, research exploring the relationship between stakeholders’ collective-memory, CSI and corporate reputation, is underdeveloped. Drawing on the availability bias literature and attribution theory, we theorize that social remembering by stakeholders is strongly ‘selective’ when recalling the CSI behavior of salient firms - organizations which are readily available for recall in their stakeholders’ collective memory – compared to less salient firms, which increases the reputation risk of CSI for organizations which are considered salient. Using a unique dataset of 1,518 company-year CSI events, this paper confirms the strong moderating effect of organizational salience on the relationship between CSI and changes in corporate reputation.