When is it Good to be Bad? Contrasting Effects of Multiple Reputations for Bad Behavior on Media Coverage of Serious Organizational Errors

Abstract

We have long known that organizational reputation is consequential. While highlighting the effects of a reputation for good behavior, however, prior work has largely overlooked the possibility that a reputation for bad behavior is qualitatively distinct. In addition, we know that organizational reputation is multidimensional. Although this is conceptually intriguing only if different types of reputation produce different effects, concurrent tests of such differences are rare. In response, we study the effects of multiple reputations for bad behavior on the media coverage of a serious error by a firm. Due to the need for the news to be new, we predict the media is more likely to cover errors that supplement a firm’s general character reputation, but will likely ignore errors that are redundant given a firm’s specific capability reputation. We test this theory in the context of 113 major oil spills in the United States, from 1985 to 2016. Results confirm the theorized contrasting effects. Counterintuitively, we also find the media is even less likely to cover repeat offenders that cause larger spills. We conclude that, at least for media coverage of oil spills, being bad can have its benefits for firms.