Author(s): Zhuofan Zhang, Ruth Chatelain-Jardon, Jose Luis Daniel,
What are the effects of a scandal on organizational results? How does a socially irresponsible behavior event affect organizational financial performance, organizational image, and consumers’ purchase intentions? Does a scandal lead to a decline in these organizational outcomes? Does the proximity to the end-consumer influence how a scandal affects the organizational results? Previous studies have shown inconclusive results for the relationship between Corporate Social Performance (CSP) and financial performance. This study hypothesizes that scandals have a negative impact on the image and performance of organizations. Moreover, it is expected that irresponsible corporate behaviors negatively affect consumers’ purchase intentions. Results show a significant difference in corporate image, financial performance, and consumers’ purchase intentions between organizations facing scandal conditions and those in non-scandal conditions, regardless of the company’s position in the supply chain. Conclusions and implications are discussed.