Master’s Thesis Corporate Communication
The effect of CEO dismissal coverage on public’s attitude towards the organization
Master’s program Communication Science Graduate School of Communication
Student: Frederik Rutgers 10875255 Supervisor: Dhr. dr. P. Verhoeven Date: 26/06/2015
ABSTRACT
This paper explores the effect of CEO dismissal coverage on publics’ attitude towards the organization. Publics’ attitude is measured using a six dimensional model, which includes trust, satisfaction, control mutuality, commitment, attitude
towards the brand, and purchase intentions. A possible moderation effect of the
times people made use of the service of the organization is discussed on the effect of change in attitude based on the dismissal coverage. The sense-‐making theory, agenda setting theory and social judgment theory are used to provide theoretical background. A total of 214 Dutch participants were provided with a survey to measure the effects of the dismissal coverage. The results show that there is a significant change in publics’ attitude based on the dismissal coverage. The dimensions of trust, control mutuality and attitude towards the brand also show a significant decrease in attitude towards the organization. The moderation effect shows partially significant results. There can be concluded that CEO dismissal coverage has a negative impact on publics’ attitude towards the organization, which may harm the reputation.
Keywords: CEO dismissal, publics’ attitude, attitude towards organization
INTRODUCTION
“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board”. This was the e-‐mail message Chief Executive Officer (CEO) Carol Bartz sends to her employees when being fired by the internet company Yahoo. This was the result of disappointing results and high tensions with the larger shareholders. Despite the fact that the stock value of the company responded well on the news of dismissal (an increase of 6%), the way the dismissal was conducted gain the most attention in international media. What is the effect of such negative publicity on public attitude towards the organization?
A Chief Executive Officer can be seen as an individual at the apex of an organization whose personal reputation can have immediate and long lasting impact upon the organization (Ranft, Zinko, Ferris & Buckley, 2006). Besides that, the reputation of CEO’s seems to contribute to competitive advantages. However, this reputation is a fragile factor for organizations. There is more and more published about the CEO’s and their private live, health or managing capacities (Ranft et al., 2006). Based on this information the public can form their opinion about the CEO, which can affect the attitude towards the firm. Besides that, research by Ciani and Kaplan (2010) suggested that the pre-‐ existing attitude towards a CEO plays a significant role in the fortification of trust in the firm in terms of predicting future performance. Based on previous research, it could be concluded that the reputation of the Chief Executive Officers has high importance for firms. Like Mercer (2004) mentioned, the management’s reputation for credible financial reporting is a “more enduring trait about a firm’s managers, referring to investors’ perceptions of managers’ competence and trustworthiness.” (p. 189). But what happens when a CEO’s dismissal is announced? Will this harm the organization, or the CEO itself, or both?
Unexpected negative outcomes, like a CEO dismissal or a poor financial performance, triggers individuals to spontaneously seek and evaluate causal information or explanations (Hastie, 1984). When the decision is made that the CEO of the organization will be dismissed, it is up to the Board of Directors to provide this information. This is mostly done in the form of a press release. An obvious explanation could be dismissal due to poor organizational performance,
in which CEO’s are commonly pointed out as scapegoat (Ranft et al., 2006). Nonetheless, this isn’t the manner, which is most common. A public explanation for the recently dismissed CEO of McDonald’s, Don Thompson, was not mentioned in the press release of McDonald’s’ board of directors. The media did find an explanation in the form of declining sales, which where presented in the annual reports of the fast food firm (Fortune magazine). Although this did not affect the stock market value, the public could find the internal agitation remarkable.
The public has limited access to information regarding internal development in organizations. Because media provide the public which such information, individuals tend to rely on this source and use it in the evaluation of the firm (Einwiller, Carroll & Korn, 2010). Due to the nature of media to provide the public with entertaining news, an event like CEO dismissal is likely to gain attention. The publicity associated with such a scandal can have a profound impact on the organization. This can include tarnishing of the public brand image, withdrawal of support or increased scepticism towards the brand (Giberman & Sheldon, 2002). It may be clear that there is a prominent concern for organizations in the situation of a CEO dismissal, on how to deal with this issue, without doing harm to the organization. Regarding the study conducted by Einwiller et al. (2010), it could be wise to provide information in the organizations’ press release concerning the dismissal in a way that news media cannot frame it in a more harmful way for the organization.
So far there has not been any research regarding the influence of CEO dismissal on the public attitude towards the firm. The goal of this research is to provide new insights regarding this issue. The research question is drafted as followed:
What is the effect of CEO dismissal coverage on public attitude towards the organization?
THEORETICAL FRAMEWORK AND HYPOTHESES
CEO dismissal and reputation
The executive quality is commonly thought of in the ability of a given CEO to positively influence the performance of one firm (Graffin, Boivie & Carpenter, 2013). Due to the fact that people tend to have limited information about the performance of a firm, they tend to rely on heuristics, which is known as the ‘romance of leadership’ (Meindl, Ehrlich & Dukerich, 1985). This refers to disproportional responsibility that individuals tend to relay upon the CEO when evaluating a firm. The heuristic occurs in the evaluation of successful performance, but also in times of failure, which can ultimately lead to a dismissal of a CEO. The theory is based on people’s tendency to search for causal explanations of organizational outcome (Meindl et al., 1985).
Another theory that links performance to CEO agency is describes as ‘star CEOs’ or ‘ CEO celebrity’ (Hayward, Rindova & Pollock, 2004). This theory proposes that media has the tendency to over-‐attribute the impact in which a CEO affects the firm. The researchers argued that journalists found the disposition of the CEO as a greater value than the broader situational factors in predicting an organizations’ performance. Consistent with the idea that CEO’s gain higher interest of the public, a CEO celebrity arises when journalists broadcast attributions that a firm’s positive performance has been caused by CEO’s actions (Hayward et al., 2004). There are three core components that cause CEO celebrity. First, journalists broadcast attributions of the CEO in the mass media, which eventually reaches the public. Secondly, the attribution involves the causes of a firm’s action that lead to its positive performance. Third, the attributions are not based on environmental conditions, such as luck or other individuals’ performance in the firm. This shows that individuals are likely to use the attributes of a CEO in finding a causal explanation for a firms’ performance. It also applies when the organization shows poor performance, which can also lead to a fault indication towards the CEO. Research by Fredrickson, Hambrick and Baumrin (1988) showed that poor organizational performance, although not directly, affects dismissal of a CEO.
Besides the fact that the dismissal is prejudicial for the CEO itself, it also showed a harmful impact on the organization. A study conducted by Shen (2003) discussed that dismissing a (new) CEO could be very disruptive to the firm. This was due to the effect that a dismissal “hinders the establishment of reliable and predictable routines that are highly regarded by inside and outside stakeholders” (p. 469). Despite the fact that there has been a growing attention towards CEO’s (Ranft et al., 2006), the question remains what the effect of public attitude towards a firm caused by a CEO dismissal is. Noteworthy, because replacing a CEO is one of the most important actions a board of directors may take because of the long-‐term implications in terms of a firm’s investment, operation, and financial decisions (Huson, Parrino & Starks, 2001). Based on the literature, the following hypothesis has been drafted:
Hypothesis 1: Public’s attitude towards the organization is more negative after the dismissal coverage than prior to the dismissal coverage
Agenda setting and CEO dismissal
There has been a large increase in the volume of business news appearing in the mass media during the last recent decades (Carroll & McCombs, 2003). This highlights the importance for organizations to manage possible harmful internal issues to avoid negative publicity. Although much is done to avoid such publicity, the news media showed to have a role in shaping organizational events. This specific ability to influence the public by bringing salience of both their topic and their images has been called the agenda-‐setting role of the media (McCombs & Reynolds, 2002). The core principle is that the prominence media assign to the news will eventually become the prominence of the public, on which they base their opinion (Carroll & McCombs, 2003). Based on the agenda setting principle, it could be stated that the news media have a significant role in the shaping of negative issues of organizations such as a CEO dismissal.
Carroll and McCombs (2003) explain two levels of agenda-‐setting. The first concerns the salience of objects, in which the object can be seen as the thing (e.g. in this case CEO dismissal) we have an opinion about. The second level of agenda-‐setting regards the salience of the attribution based on the objects. These
attributes are subscribed to the objects from the media agenda to the public agenda. The process of framing converges with attribute agenda setting, because in both cases the focus is on the salience of characteristics and traits that is put forward in the media (McCoombs & Velenzuela, 2007). The effects of second level agenda-‐setting can be described in terms of two dimensions: substantive and evaluative. The substantive dimension can be put down as the traits that define the objects and can be arranged along an affective dimension (Deephouse, Carroll and McCombs, 2001). These can be positive, negative or neutral. The evaluative dimension can be seen as the overall evaluation of the organization based on the news coverage (Deephouse, 2000).
In times of high performance of a firm in combination with a distinct story of the CEO about the success, the media and the public are likely to pay positive attention towards the CEO (Hayward et al., 2004). The power of the celebrity CEO also seems to last in poor performance of the organization. Stakeholders often keep trust in the celebrity CEO and seek the cause elsewhere, which could lead to blaming the organization or other executives (Park, Kim & Sung, 2014). This could damage the reputation of an organization.
Sensemaking of CEO dismissal
Sensemaking involves the ongoing retrospective development of plausible images that rationalize what people are doing (Weick et al., 2005). This means that it involves a process where circumstances are turned into a situation that is comprehended in words that serve as a call for action. The retrospective feature of sensemaking regards that it’s use is to shape past events. There are three important points regarding sensemaking that need to be distinguished. First, the process of sensemaking occurs when organizational events are turned into words or put into salient categories. Secondly, the written and spoken texts are organized by itself. Third, reading, writing, editing and conversing are crucial for the way the end product is shaped and used by the media (Gioia, Thomas, Clark & Shittipeddi, 1994). These actions can be discussed in terms of a CEO dismissal in the way in which the media ‘frame’ the message about the CEO dismissal. The way media make sense of the event is of high importance regarding the message the public receives. Besides that, a call for action is mentioned. To put it easily,
this recalls the question what should be done with the message. People tend to clarify situations and eliminating ‘might have beens’ by reducing equivocality (Colville, Brown & Pye, 2012). The answers to questions that arise from sense-‐ making emerge from presumptions about the future, the simultaneously translation to action and an increasingly clear vision about the future (Weick et
al., 2005). In this case, the public is exposed to news coverage of CEO dismissal
and tries to make sense of it. The way media steers the public in one direction is believed to be of great impact on the public’s opinion. There seems to be a mutually reinforcing dynamic between the media and the public opinion (Katsourides, 2014), which means that they constantly influence and empower each other. Thus, the effect of news coverage on CEO dismissal could influence the public opinion towards the situation and possibly the organization.
Based on the sensemaking theory and the agenda-‐setting theory, it could be stated that news media coverage has a significant role in public opinion in times of CEO dismissal. This can be subscribed to the increased attention of mass media towards organizational issues (Carroll & McCombs, 2003), combined with the influence of sense-‐making by the media on the public (Katsourides, 2014).
Forming attitude on CEO dismissal
An attitude is an evaluation of an object or thought, which comprises anything an individual may hold in mind (Bohner & Dickel, 2011). There has been little consensus about a comprehensive definition of the term. Bohner and Dickel (2011) provided a model in which definitions of attitude can differ. They conclude that they vary across two different approaches: attitudes as stable entities versus attitudes as temporary constructions. When attitudes are considered as stored in memory, it supports the stable entity perspective. Temporary constructions of attitudes are more short-‐term constructs that are constructed ‘on the spot’. The ‘umbrella’ definition, as stated by Eagly and Chaiken (2007), provides an overall view of attitude as they refer to attitudes as “psychological tendency, expressed by evaluating a particular entity with some degree of favor or disfavor” (p. 582).
Hon and Grunig (1999) provided a multidimensional construct of the relationship people have with an organization. This relationship is useful in
measuring attitude, due to the good predictive power it has on people’s attitude. Kim and Chan-‐Olmsted (2005) also stated that organization-‐public relationships are very useful in predicting consumers’ attitude towards the brand. Besides the predictive power, it seems very useful in predicting change in attitude that can occur based on a provided cue (Hon & Grunig, 1999). The authors propose four dimensions of the relationship people can have with a brand: trust, satisfaction, commitment, and control mutuality.
Trust is widely accepted as an important dimension of the relationship people
have with an organization (Grunig & Huang, 2000) and it is seen as an essential element for a relationship to be successful (Berry, 2005). Moorman, Deshpande and Zaltman (1993) argue that confidence and reliability are highly important in trustworthiness. When trust is affected, it could have serious consequences for the relationship that is maintained with an organization. Based on this it is argued that the dismissal coverage will harm the relationship people have with the organization and will affect the public’s attitude. This leads to the following hypothesis:
Hypothesis 2: People have less trust in the organization after being exposed to dismissal coverage than prior to the dismissal coverage
Satisfaction means that the organization and its public feel positive towards each
other (Kim & Chan-‐Olmsted, 2005). Another important issue to maintain satisfaction is the positive expectations that have been met by the organization to reinforce the relationship (Grunig & Hon, 1999). When the positive expectations have not been met, this could lead to dissatisfaction towards the relationship with the organization. The public can see negative news coverage as a violation of expectations. This leads to the following hypothesis:
Hypothesis 3: People are less satisfied with the organization after being exposed to dismissal coverage than prior to the dismissal coverage
Commitment is in the literature on organizational behavior often used to denote
an attitudinal state (Fournier, 1998). It is defined as “the relative strength of an individual’s identification with and involvement in a particular organization” (Steers, 1977, p. 46). Commitment also seems to govern changes in the potency of the public’s attitude (Funk & Pritchard, 2005). A negative cue could harm the feeling of commitment towards an organization due to a lack of identification. This could have a negative impact on people’s attitude towards the organization. This leads to the following hypothesis:
Hypothesis 4: People are less committed towards the organization after being exposed to dismissal coverage than prior to the dismissal coverage
Control mutuality refers to “the degree in which parties agree on who has the
rightful power to influence on another” (Grunig and Hon, 1999, p.13). It represents the influence of one party on the relative probabilities of actions of the other party (Jo, Hon & Brunner, 2004). Control does not necessarily mean that the power has to be equally distributed to gain acceptance by both the parties (Ki & Hon, 2007). It is of higher importance that both parties accept the power position of the other party. When people feel that the power the other party has is not used appropriately, it could result in an aversion towards the relationship. This will lead to a more negative attitude towards the relationship and the organization. Based on the previous literature, the following hypothesis is drafted:
Hypothesis 5: People agree less on the distribution of power of the organization after being exposed to dismissal coverage than prior to the dismissal coverage
Besides the four dimensions of Grunig and Hon (1999), research by Kim and Chan-‐Olmsted (2007) extended the model by adding two dimensions: Attitude towards the brand and purchase intention. The attitude towards the brand differs from the attitude towards the organization in a way that a brand can be described as a product (Keller, 1998). This product adds other dimensions to
differentiate it from other products to satisfy the same needs. It is the brand that produces perceptions and feelings towards an organization (Achenbaum, 1993).
Attitude towards the brand measures the attitude of people towards a specific
brand directly. Ajzen and Fishbein (1980) referred to the brand attitude as a predisposition to respond in a consistently favorable or unfavorable manner towards a particular brand. It not only measures what people say about the brand, but also what they know and think, what they feel and how they inclined to act (Lindemann, 2002). To weight the effect of a negative cue in terms of change in attitude, the following hypothesis is proposed:
Hypothesis 6: People are less positive towards the brand after being exposed to
dismissal coverage than prior to the dismissal coverage
Purchase intention is the consumers’ tendency to act towards an object and is generally measured in terms of buying behavior (Kim & Chan-‐Olmsted, 2005). It is fruitful to measure this dimension because of the direct effect attitudes towards a brand has on purchase intentions (Homer & Yoon, 1992). A positive attitude towards a brand will lead to an increase in purchasing the product of service, where a negative attitude will lead to a decrease in purchasing behavior. When public’s attitude is damaged due to the dismissal coverage, this will be reflected in the purchase behavior. This will lead to the following hypothesis:
Hypothesis 7: People are less likely to purchase products/services from the organization after being exposed to the dismissal coverage than prior to the dismissal coverage
Social Judgment Theory
The social judgment theory is a social-‐psychological view on people’s attitude. This theory states that social judgment is based on one’s self-‐system, which is a structure of attitudes that is showed in more characteristic than situational-‐ specific situations (Sherif & Hovland, 1961). The self-‐system is especially involved in emotional-‐motivational processing; thinking in terms of win or lose,
positive or negative, approach or avoidance (Sherif, Kelly, Rodgers, JR, Sarup & Tittler, 1973). More recent research has demonstrated that two mechanisms have a large impact on constructing social judgments by individuals: path-‐ dependency and cue diagnosticity (Mishina, Block, Mannor, 2012). The path dependence aspect of social judgment refers to the prior beliefs people have towards the subject and in the way it influences what people expect and notice, as well as the interpretation of actions and statements (Fiske & Taylor, 1991; Srull & Wyer, 1979). When people have no clear prior believes or their believes are neutral or ambivalent, the path-‐dependency does not seem to play a role in the judgment process (Mishina et al., 2012). The cue diagnosticity of social judgment is based on the provided cue and whether there is discrepancy between the prior believes and the cue. This determines how the cue will be incorporated to adjust the evaluation. They found that people with a positive prior attitude towards a firm show less attention to a negative cue. This cue is more likely to be attributed to situational or external factors. This suggests that, when measuring public attitude towards a negative cue (CEO dismissal), people with a prior positive attitude towards the organization will show no or less reaction to the negative news coverage. This leads to the following hypothesis:
Hypothesis 8: People who are positive towards the news coverage are more negative towards the organization after the dismissal coverage than people who are negative towards the coverage
When people made use of the service of the organization before, it could be stated that their attitude is at least somewhat positive towards the organization due to the choice for the particular firm. People must engage in frequent, interactive behavior with the organization to hold a positive attitude towards the organization (Fournier, 1998). When people make more use of the products or services of an organization, they are more strongly attached (Park, Whan, MacInnis, Priester, Eisenferich & Iacabucci, 2010). Based on this, it could be stated that more frequent use of the services lead to a more positive attitude towards the organization. The following hypothesis has been constructed:
Hypothesis 9: People who made use of the organizations’ services once or more show less negative attitude change due to the dismissal coverage than people who never made use of the organizations’ services
METHODS
Sample
To test the hypotheses a sample of 214 respondents completed a questionnaire on CEO dismissal coverage of the organization, which was KLM. KLM is a Dutch Airlines organization. This organization was chosen because of the high familiarity among the Dutch population and the recently dismissed CEO Camiel Eurlings. The dismissal event received much media attention, which made it useful for this study. The questionnaire was completely in Dutch, which resulted in only Dutch participants. To acquire the data, there has been made use of a person approach to the respondents using e-‐mail or Facebook messaging. The snowball sampling method has been used, where respondents where asked to distribute the survey among their network. When respondents did not respond to the request to participate in the study, they where send a reminder.
Procedure
Respondents where send an invitation for participation in the survey using social media and e-‐mail. Followed by the invitation the link towards the survey was provided. When clicking on the link, there was a short text that explained what kind of questions would be asked. Besides that, information was provided regarding the anonymity of the participants and the duration of the survey, following the ASCOR ethical guidelines. People were aware of the fact that they could end the survey at any time without any consequences. Participants agreed on the terms and conditions on forehand of the actual questionnaire.
When agreeing on the terms and conditions, the participants had to answer several demographic question regarding gender, age and highest education. Then participants indicated the amount of experience with the organization, based on the frequency of flights in which people choose KLM.
Then the repeated measures design started by providing the participants with 23 questions about how they value their relationship with KLM. This provided information on the prior attitude towards the organization. When the questions where completely answered, the CEO dismissal coverage was provided. The coverage was a combination of two news articles from the most read Dutch (sensational) newspaper De Telegraaf. There was chosen for a combination of two articles due to the two-‐sided information. The first article was based on negative coverage of the CEO Camiel Eurlings and the second article was based on negative coverage of the Board of Directors. The dismissal coverage can be found in the Appendix 1.
After the negative news coverage respondents where provided with 14 questions regarding the credibility of the coverage. The credibility questions where followed by the same 23 questions that measured the prior attitude. This showed insight in the possible change in attitude due to the coverage. The post-‐ coverage questions changed in order to minimal recognition. Finally respondents received a debriefing and had the possibility to leave their e-‐mail for further results of the study.
Variables
Attitude towards the organization
Public attitude was measured using the questionnaire provided by Hon and Grunig (1999) and was expanded by Kim and Chan-‐Olmsted (2005). This questionnaire consists of 23 questions and is based on the relationship people have with an organization. The relationship people argue to have shows a good indicator of publics attitude. Besides that, it shows to have good predictive power in any change in attitude when messages are disseminated about the organization (Hon & Grunig, 1999). The questionnaire consists of four elements:
trust (∝ = .88), control mutuality (∝ = .87), commitment (∝ = .86) and satisfaction
(∝ = .89). Research by Kim and Chan-‐Olmsted (2005) added the dimension of
attitude towards the brand (∝ = .92) and purchase intentions (∝ = .81). All items
in the attitude questionnaire provided respondents with statements with which they could agree of disagree. The complete questionnaire was retrieved from Kim and Chan-‐Olmsted (2005) and can be found in the Appendix 2.
Trust
Trust can be seen as ‘one party’s level of confidence in and willingness to open oneself to the other party’ (Hon & Grunig, 1999). It consists of three dimensions. The integrity dimension measures the belief that an organization is fair and just. The dependability dimension shows the belief that an organization does what it says it will do. The competence dimension shows measures if people belief an organization is capable to do what it says it will do. One example of an item in the trust element is: ‘KLM treats me fair and honestly’. There has been made use of a Likert 7-‐point scale (totally disagree to totally agree).
Control mutuality
Control mutuality is described as ‘the degree to which parties agree on who has the rightful power to influence one another’ (Hon & Grunig, 1999). Although imbalance between the organization KLM and its’ consumers is natural, the power to influence one another can be seen as a requirement in a stable relationship. A stable relationship is essential for a positive attitude of the public towards an organization. An example of an item in the questionnaire is: ‘KLM and I pay attention to what each other communicates’. There has been made use of a Likert 7-‐point scale (totally disagree to totally agree).
Commitment
The extent to which people believe and feel that it is worthy to spend energy to maintain and promote their relationship with the organization can be described as commitment towards the organization (Hon & Grunig, 1999). Commitment is described in two dimensions, which are continuance commitment and affective commitment. Continuance commitment refers to a certain line of action and affective commitment is an emotional orientation. An example of a commitment item in the questionnaire is: ‘Compared to other companies, I value my relationship with KLM more’. There has been made use of a Likert 7-‐point scale (totally disagree to totally agree).
Satisfaction
Satisfaction refers to the extent to which people feel favorable toward the organization because positive expectations people have about the relationship are reinforced (Hon & Grunig, 1999). The relationship is satisfying when the benefits outweigh the costs. An example of an item is: ‘I am happy with my interactions with KLM’. There has been made use of a Likert 7-‐point scale (totally
disagree to totally agree).
Attitude towards the brand
Brand attitude is defined as a predisposition to respond in a consistently favorable of unfavorable manner towards a brand (Ajzen & Fishbein, 1980). It can be regarded as an overall evaluation of the brand (Wilkie, 1990), which leads to consumer behaviors as purchase intentions. An example of an item in this questionnaire is: ‘In general, I consider KLM as positive’. There has been made use of a Likert 6-‐point scale (totally negative to totally positive). This was chosen to eliminate ‘neutral’ answers.
Purchase intention
The value of brand attitude rests in the ability to influence people in a manner that will lead to the purchase intention of the product of service (Kim & Chan-‐ Olmsted, 2005). The affective and cognitive attitude towards the organization has a direct effect on purchase intentions (Homer & Yoon, 1992). This will be a reflection of the attitude people have towards the organization. An example of an item in this dimension is: ‘The chance I will buy a ticket from KLM is likely’. There has been made use of a Likert 6-‐point scale (totally negative to totally
positive). This was chosen to eliminate ‘neutral’ answers.
Attitude towards dismissal coverage
The scale that measured the attitude towards the dismissal coverage was provided by a study conducted by Stockwell (2006). The questionnaire measures people attitude towards newspaper about the read news coverage (∝ = .72). A Likert 5-‐point scale was used and the items had pairs of words and phrases with opposite meanings. The respondents had to indicate the circle that best
represents their feelings about the read newspaper article. For example, one set of words is ‘moral’ and ‘immoral’. The first circle represents a highly immoral feeling towards the coverage and the last circle represents a highly moral feeling. The full questionnaire of the attitude towards the dismissal coverage can be found in Appendix 3.
Times made use of the services of the organization
The more people make use of the services of the organization, the more it is likely they hold a positive attitude towards the organization. In order to hold a positive relationship with a brand, the consumers must engage in frequent interaction with it (Fournier, 1998). Similarly, it is also necessary for consumer to use products or services to hold a positive attitude towards the organization (Park, Whan, MacInnis, Priester, Eisenferich & Iacabucci, 2010). These behaviors are discussed by Batra, Ahuvia and Bagozzi (2012) as important aspects for brand love, which naturally stand for a high positive attitude towards the organization. This is why respondents where asked about the frequency of use of the organization. This was measured using an answer scale of: once or twice, three of four times, four plus, or never.
Analysis
In order to test the hypotheses several analyses have been conducted using IBM SPSS Statistics 21. For the first seven hypotheses a paired-‐sample t-‐test has been used to analyze the data. This was useful because of the comparison of pre-‐ and post measurements of the same group and variable. There also has been made use of a confidence interval to gain insight in the strength of the possible effect. Hypothesis 8 was tested with a linear regression analysis. The analysis was chosen because it could measure the strength and the direction of the possible effect. Hypothesis 9 was measured using Hayes Process analysis, which conducted a moderation analysis. Figure 1 shows the model for hypothesis 9. All hypothesis are tested with ∝ = 0,05.
Figure 1: Model for testing the moderation effect of times people made use of the organization on the effect of attitude towards the dismissal coverage on change in attitude RESULTS
A total of 267 respondents started the questionnaire, whereof 215 respondents completed it. When analyzing the data, one respondent was removed from the dataset due to a biased response pattern. This resulted in a sample of 214 (N = 214) useful respondents. Of these respondents 61,7% was female (n = 132) and 38,3% was male (n = 82). The youngest respondent had the age of 18 years and the oldest was 68 years old (M = 29,04, SD = 11,99). Most people included the ‘highest education’ category of university education (63%), followed by universities of applied science education (24,8%). The frequency people flew more then four times with KLM airlines were 40,2% (n = 86), followed by one or two flights (24,3%, n = 52). Both the group that never flew with KLM as well as people who flew three of four times included 38 people (17,8%). Full frequencies can be found in the Appendix 4.
Table 1: Results of the paired sample t-‐test testing hypothesis 1
Paired Samples T-‐Test testing the differences between pre-‐ and post attitude on dismissal coverage Paired Differences t Df Sig. (2-‐tailed) Mean Std. Deviation Std. Error Mean 95% Confidence Interval of the Difference
Lower Upper Pair Pre attitude and
Post attitude ,16985 ,39518 ,02701 ,11660 ,22310 6,288 213 ,000
Attitude towards
dismissal coverage Change in attitude
Times made use of the organization
The results of the first hypothesis show with a paired-‐sample t-‐test that publics’ attitude towards the organization is more negative after the dismissal coverage that prior the dismissal coverage (t = 6,29, p = 0,000). This means that the mean of the prior attitude (M = 4,69, SD = 0,048) differs significantly from the mean of the post attitude (M = 4,52, SD = 0,054). The hypothesis is confirmed. All details concerning hypothesis 1 can be found in the Table 1 and Appendix 5.
The second to seventh hypothesis can be found in table 2. Hypothesis 2 states that people have less trust in the in the organization after being exposed to the dismissal coverage. The analysis shows that the hypothesis is confirmed (t = 8,81, p = 0,000, CI [0,322;0,508]). Hypothesis 5 argues that the control mutuality, which measured the degree to which parties agree on the power balance, will decrease due to the dismissal coverage. This is confirmed with the analysis (t = 7,63, p = 0,000, CI [0,237;0,401]). Hypothesis 6 stated that the attitude towards the brand was less positive after the dismissal coverage than prior the dismissal coverage. The value of t = 5,06 shows a significant effect of dismissal coverage (p = 0,000, CI [0,121;0,276]). People tend to respond in a more unfavorable manner towards the brand after the dismissal coverage. Hypothesis 3, which stated a change in satisfaction after the dismissal coverage, does not show a significant
Table 2: Paired Samples t-‐test for hypotheses 2 – 7 testing change in attitude Paired Samples Test
Paired Differences t Df Sig. (2-tailed) Mean Std. Deviation Std. Error Mean 95% Confidence Interval of the Difference Lower Upper H2 Trust ,41511 ,68894 ,04709 ,32228 ,50794 8,814 213 ,000 H3 Satisfaction ,05140 ,62163 ,04249 -,13516 ,03236 -1,210 213 ,228 H4 Commitment ,05724 ,61947 ,04235 -,14071 ,02623 -1,352 213 ,178 H5 Control mutuality ,31893 ,61111 ,04177 ,23658 ,40127 7,634 213 ,000
H6 Attitude towards the brand ,19860 ,57454 ,03927 ,12118 ,27601 5,057 213 ,000
effect (t = -‐1,21, p = 0,228). The hypothesis is rejected. Hypothesis 4
(commitment) and hypothesis 7 (purchase intention) also do not show a significant effect of dismissal coverage (t = -‐1,35, p = 0,178, t = 1,72 p = 0,087). Hypotheses 4 and 7 are rejected.
Hypothesis 8 states that people who are positive towards the news coverage are more negative towards the organization after the dismissal coverage than people who are negative towards the dismissal coverage. Previous research showed that the effect of dismissal coverage has a more negative impact on attitude change when people hold a more positive attitude towards the coverage. The hypothesis was tested using a linear regression analysis in which attitude towards the dismissal coverage was the independent variable and the change in attitude was the dependent variable. The analysis showed a b = -‐ 0,038, which means that the publics’ attitude change to more negative as people rated the dismissal coverage as more positive. Because of the low b-‐value, the hypothesis is dismissed (t = -‐0,583, p = 0,561). The results of the linear regression analysis can be found in table 3 and Appendix 6.
Table 3: Linear Regression analysis testing hypothesis 8
Hypothesis 9 stated a moderation effect of the times people made use of the organization on the effect of dismissal coverage on change in attitude. This was measured using the Hayes Process tool in SPSS Statistics. The model can be seen in figure 2. The direct effect of dismissal coverage to the mediator (times made use of the organization) did not show a significant effect (t = -‐1,19, p = 0,239). The direct effect of the mediator on change in attitude did show a significant effect with a t-‐value of -‐2,77 (p = 0,006). The total effect of dismissal coverage on change in attitude did not show significant results (t = -‐0,58, p = 0,561). The
Change in attitude towards the organization based on attitude towards the dismissal coverage
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) ,277 ,186 1,489 ,138
Attitude coverage -,038 ,066 -,040 -,583 ,561
P = 0,561**
direct effect of dismissal coverage on attitude change also did not show a significant effect (t = -‐0,81, p = 0,417). This shows a rejection of the hypothesis, based on a not significant mediation effect. The proportion explained variance, provided by the model summary of the added ANOVA, did show a significant effect of the total model on the change in attitude 𝑅! = 0,04 𝐹 = 4,01, 𝑝 = 0,019 . This suggests that attitude towards the dismissal coverage and the times people made use of the organization do explain a significant proportion in the variance on attitude change. There is partially support for a mediation effect, because there is an effect in explaining change in attitude based on the independent variable and the moderator. It can be stated that the model is significant (p = 0,019), but that the results should be interpreted with caution. The hypothesis is partially confirmed.
Figure 2: Model for testing the moderation effect of times people made use of the organization on the effect of attitude towards the dismissal coverage on change in attitude DISCUSSION
The goal of this research was to examine the effect of CEO dismissal coverage on public attitude towards the organization. The research reflects on the growing attention CEO’s gain in media on their private lives, health or managing capacities (Ranft et al., 2006). Negative publicity such as CEO dismissal triggers the public to seek and evaluate causal information or explanations (Hastie, 1984). This information is mostly provided by the media, which the public tend
Attitude towards
dismissal coverage Change in attitude
Times made use of the organization
P = 0,417
P = 0,239 P = 0,006
** Total effect of DV on IV
P = 0,019*
