When Mom-and-Pops Differ from Chains: The Moral Authenticity as a Market Advantage for Small Organizations

• In Event: 200 - Regular Session. Organizations: Logics, Hybridity, and Identity

Abstract

The primary objective of this paper is to provide a firmer theoretical and empirical foundation for the idea that small organizations (and retailers in particular) may enjoy a morality-based competitive advantage. I build upon literature on moral authenticity where an audience pays attention to actors’ motivation in evaluating of their behavior. I develop the idea that the formality of organizational process generates beliefs about service or product providers’ authentic motives (or lack thereof), thereby giving rise to a higher moral standing to the small organizations. In particular, I argue that if their actions are morally ambiguous but there is no explicit violation of a moral norm, small organizations benefit from their high moral standing, which consequently becomes a competitive advantage in the market. I use the diamond retail industry as my empirical setting to develop and test these arguments. Using observations of retailers’ websites and field interviews, I investigate how organizations deal with the moral ambiguity with respect to “conflict diamonds”—diamonds that funds rebels in war zones—and what the underlying reasons are. The experiment supports my argument that small organizations experience less demand to clarify their moral integrity in cases of moral suspicion.

Author

• Jae-Kyung Ha, Massachusetts Institute of Technology