Seminar – Ratings, reactivity, and the paradox of recognising responsibility

Ben Lewis, Associate Professor, Brigham Young University

We examine why organisations may at times decrease their performance after receiving a positive rating. In contrast to the prevailing assumption that organisations will strive for favourable ratings to achieve reputational benefits, we argue that when the values captured by the rating are perceived as incompatible with a dominant logic that it may lead organisations to strategically reduce their performance on the rated dimension. Utilising a difference-in-differences design, we examine how companies responded to being rated and recognised as a charitable organisation, an evaluation that we maintain was generally perceived as incompatible with the dominant logic of shareholder maximisation during the early 1990s. Our results suggest that rated companies decreased philanthropic contributions more after being rated as a generous firm relative to firms that were rated but not recognised, primarily as an anticipatory impression management tactic. We also found this reaction to be amplified and attenuated by 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 how organisations react to external evaluations and raise important questions for scholars and practitioners interested in the effectiveness of evaluation metrics in shaping organisational performance.

Speaker bio

Ben W. Lewis is an Associate Professor of Strategy in the Department of Management at the Brigham Young University Marriott School of Business. He is currently on sabbatical leave working with scholars at London Business School and Imperial College London.

Ben’s research explores how firms strategically manage their reputation, particularly within the domains of corporate social and environmental responsibility. Recently, he has focused his efforts on understanding how corporations respond to ratings and rankings. His work has been published in leading management journals including Administrative Science Quarterly and the Strategic Management Journal. In 2017, he received the William H. Newman Award, a prestigious recognition from the Academy of Management for solo-authored work based on a dissertation. In 2020, he received the Emerging Scholar Award from the Organizations and the Natural Environment division of the Academy of Management.

Ben received his PhD in Management from the Johnson College of Business at Cornell University in 2013, and a MAcc and BS in Accounting and Economics from Brigham Young University in 2008. Prior to pursuing his doctoral studies, he was involved in international development work in Kenya and Mozambique. Many of his research interests have been shaped by these experiences and drive his efforts to understand how business can be used as a force for good in society.

For more information, please contact Luke Slater.