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Organizational Identity Orientation and CEO Dismissal After Corporate Misconduct
Journal article   Open access   Peer reviewed

Organizational Identity Orientation and CEO Dismissal After Corporate Misconduct

Thomas J. Fewer, Dali Ma, Andrea C. Farro and Chuanren Liu
Business & society
13 Mar 2026
DOI: https://doi.org/10.1177/00076503261425350
url
https://doi.org/10.1177/00076503261425350View
Published, Version of Record (VoR)CC BY-NC V4.0,  Open

Abstract

Business & Economics Business Social Sciences
Corporate misconduct can have devastating consequences for organizational stakeholders. Yet firms diverge sharply in how their boards respond to such infringements, especially when deciding whether to dismiss the CEO. We theorize that boards interpret misconduct through the lens of organizational identity orientation-that is, the nature of assumed relationships between an organization and its stakeholders. Using a machine learning analysis of shareholder letters from S&P 500 firms (2004-2017), we show that organizational identity orientation shapes dismissal decisions. Firms with individualistic orientations, which emphasize personal achievement, are more likely to dismiss CEOs as misconduct is seen as an individual failing. In contrast, firms with collectivistic orientations, which emphasize interdependence, are less likely to dismiss CEOs as misconduct is interpreted as diffuse and systemic. These findings reveal how organizational identity orientation shapes boards' interpretations of responsibility, offering new insights into why firms experience different accountability outcomes in response to wrongdoing.

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