Keywords

reactivity, ratings, reputation, institutional logics, impression management, corporate social responsibility, philanthropy

Abstract

We examine why organizations may at times decrease their performance after receiving a positive rating. We argue that in contrast to the prevailing assumption that organizations will strive for favorable ratings to achieve reputational benefits, incompatibility between a positive rating and a dominant institutional logic may cause recognized firms to question the perceived value of maintaining superior performance, thus leading them to strategically reduce their efforts on the rated dimension. Using a difference-in-differences design, we examine how companies responded to being rated as charitable organizations, an evaluation that we argue was generally perceived as incompatible with the dominant logic of shareholder maximization during the early 1990s. Our results suggest that firms that were rated as generous were more likely to decrease philanthropic contributions relative to firms that were not rated as generous. We also found this reaction to be amplified or attenuated by organizational and institutional factors that increased or decreased the saliency of the perceived incompatibility between the philanthropy rating and the dominant shareholder logic. These findings provide insights for scholarship on organizational reactivity and impression management and raise important questions for scholars and practitioners interested in improving the effectiveness of evaluation metrics as drivers of organizational performance.

Original Publication Citation

https://journals.sagepub.com/doi/10.1177/00018392221124916

Document Type

Peer-Reviewed Article

Publication Date

2022-10-11

Publisher

SAGE Journals

Language

English

College

Marriott School of Management

Department

Management

University Standing at Time of Publication

Associate Professor

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