Businesses, like people, make mistakes. And when things go wrong, customers naturally look to place the blame somewhere. They could blame the employee they interacted with, managers or leaders of the organization or perhaps the business overall. In any case, the business’s reputation could become tarnished as the customer judges the situation.
But what if there was a way to understand who the customer blames? According to new research from the Broad College’s Department of Management, it all depends on how the business is framed.
“We found that a subtle shift in how an organization is framed can have a significant impact on how people attribute responsibility and punishment following an organizational transgression,” Christy Zhou Koval, assistant professor of management, explained.
Collective vs. individual frame
Koval has been working with Simone Tang from Cornell University, Richard Larrick from Duke University and Lasana Harris from the University College London to examine two framing techniques: collective, where the business is framed as a united entity, and individual, where the business is framed as its distinct members or employees.
“For example, a catering company can be collectively framed as, ‘Keller’s Market is a catering company of three caterers who own and operate it: Pauline, Trevor and Jan,’ or it can be individually framed as ‘Pauline, Trevor and Jan are caterers who own and operate the catering company Keller’s Market,’” Koval explained.
The research paper, titled “The Morality of Organization vs. Organized Members: Organizations Are Attributed More Control and Responsibility for Negative Outcomes Than Are Equivalent Members,” forthcoming in the Journal of Personality and Social Psychology, uncovers how these framing techniques apply to for-profit and nonprofit small businesses across seven experiments.
“We set up the situation with seven fictional businesses and explained that something bad happened, such as a complaint about an incorrect order from a catering company,” Koval said. “For the collective framing sample, we asked the participants to what extent did they believe that the organization had control over the outcome and if the organization was responsible. And for the individual framing sample, we asked the participants if they believed the members and employees [of the organization] had control and were responsible.”
Across the board, the results showed that more control and responsibility was attributed to the collective frame. The research also showed that “people were more punitive toward an organization when it was framed as a collective identity than as its individual members,” Koval said. “The results demonstrate how people generally see organizations as powerful entities.”
But if the customer can identify the individuals at fault, wouldn’t it be easier to blame those individuals instead of the business overall? No, because of the identifiable victim effect. “For the individual frame, customers identify [the employees] and end up sympathizing, instead of placing the blame,” she explained.
“What we find here is that people make harsher judgements when the business is framed as an organization rather than its constituent members.”
Impact and opportunities
Considering that in the United States, there are about 20 million small businesses (owned and operated by fewer than 20 people), Koval’s research findings could have important implications for small businesses and society at large.
“Our results suggest that if [small businesses] frame themselves as individuals forming an organization (rather than an organization formed by individuals), they may be granted more leniency when something goes wrong, such as missing a deadline or failing to address bugs in a system,” Koval said.
“Of course, this strategy also has a dark side, to the extent that organizations use it to evade blame or responsibility in cases of wrongdoing.”
Although there were limitations — the study’s focus was limited to small- to midsized organizations — Koval is enthusiastic about the potential for expanding this research.
“In addition to looking at situations with bad outcomes, we are looking into testing good outcomes to see if framing effects exist at all in those cases,” she said. “This could be critical for businesses that are trying to get corporate social responsibility right, for instance.
“We also want to see how these findings could be applied to the gig economy. For instance, if you have a bad Uber experience, do you attribute that to Uber overall or just the individual driver? And how would that compare to traditional taxi drivers and companies? The gig economy is more of a fluid organization, so we’re excited to see how our research applies to this new area.”