Public Opinion Is Not Enough to Hold Companies Accountable

Despite the known moral and practical shortcomings of relying on a “business case” to justify doing the right thing, many organizations continue to act as if bottom-line profits — rather than ethical concerns — must drive all business decisions. In particular, some leaders have argued that the court of public opinion creates a reputational (and thus financial) cost to working with governments or business partners that may have committed human rights abuses. These financial motivations are sometimes implicitly treated as a stand-in for other mechanisms — such as legal requirements — to ensure that businesses respect human rights.

This argument hinges on the idea that customers and other stakeholders will punish companies associated with human rights scandals, and so companies will thus be naturally incentivized to either persuade their partners to stop committing violations and remedy any harm done, or to avoid entering or cease relationships with partners that commit abuses. And this may sound plausible — but the recent research, realised by Rita Mota of the Esade Institute for Social Innovation and Matthew Amengual & Alexander Rustler of the University of Oxford’s Saïd Business School, suggests that when it comes to protecting human rights, the court of public opinion may not always be an effective mechanism to align decision-making with legal and ethical standards.

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Authors:
Matthew Amengual, University of Oxford’s Saïd Business School
Rita Mota, Universitat Ramon Llull’s Esade Business School
Alexander Rustler, University of Oxford’s Saïd Business School

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