A recent scandal shook the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), forcing the head of the agency, and several senior managers to resign. Allegations against the managers include sexual misconduct, nepotism and other abuses of authority. The response from key stakeholders of UNRWA was particularly harsh as countries such as The Netherlands, Switzerland, New Zealand and Belgium ceased all funding for the UNWRA within days after the incident causing significant damage to the organization.

One of the reasons explaining such severe stakeholder responses to organizational scandals involves the expectations stakeholders have towards the organization. In the case of the UNRWA stakeholder expectations for the organization’s conduct were high since the organization is mission-based, focused on providing aid to others and generally frames its actions in moral terms when communicating with the public. In my research I examine factors that influence stakeholder expectations towards organizations, and I analyze the resulting behavior of stakeholders in response to organizational scandals.

Expectations & Expectancy Violation

Expectations are a major force governing our social relationships on the personal level. We form expectations towards other people’s behavior based on previous interactions with them, their communication to us and our own values and beliefs. This idea can also be applied to the relationship between stakeholders and organizations (Kim, 2014). Similar as in interpersonal relationships, consumers, investors and donors form expectations towards an organization’s behavior based on previous interactions, their personal values and the communication style of the organization. As an example, try thinking of your personal expectations towards an organization such as “The Red Cross” and compare them to your expectations towards the organization “Google”. Which organization should behave more morally, which organization would you perceive as more competent?

These expectations play a crucial role in the relationship between stakeholders and organizations as they are not always met by the organizations behavior, for example in the case of the UNRWA. When an organization’s behavior deviates from our expectations, we experience expectancy violation. In addition, we assign violation valence, meaning that we determine whether the deviation from our expectations is considered positive, when organizations outperforms our expectations, or negative, when organizations experience scandals and fall short of expectations.

Violations that we consider negative prompt a heightened state of arousal, which is expressed cognitively and in some cases physically. On the cognitive side, people increase their interest and evaluate the violation, on the physical side, they may engage in behavior, such as boycotting an organization or protesting. As the difference between what we expect and what we observe increases, responses to the expectancy violation become stronger.

Expectancy violations theory implies that people respond more harshly to an organizational scandal when their previous expectations towards the organization behavior were high (Helm & Tolsdorf, 2013).  This is often the case for organizations, such as the UNRWA or the Red Cross, which face high expectations regarding moral conduct as they are mission-based and often frame their communication with the public in moral terms.

Implications

The expectations of stakeholders strongly influence their reactions to an organization’s actions, however since expectations form in the mind of the stakeholders and often remain unspoken, they are usually not easily detected by organizations. Organizations, in particular organizations facing especially high expectations, would strongly benefit from a better understanding of stakeholders’ expectations in order to avoid actions that inadvertently violate stakeholders’ unspoken expectations. Detecting stakeholders’ expectations requires efficient expectation and stakeholder management and should play a more crucial role for organizations in order to avoid negative consequences that might harm the credibility of the organization.

Peer Stiegert (p.stiegert rug.nl) is a PhD candidate at the Department of Human Resource Management & Organizational Behavior, Faculty of Economics and Business, University of Groningen, researching organizational scandals and the public perception of organizations.

References

Helm, S., & Tolsdorf, J. (2013). How does corporate reputation affect customer loyalty in a corporate crisis? Journal of Contingencies and Crisis Management, 21(3), 144-152.

Kim, S. (2014). The role of prior expectancies and relational satisfaction in crisis. Journalism & Mass Communication Quarterly, 91(1), 139-158.