houston voices

Houston research: Innovating a way out of corporate scandal

The organizations most likely to benefit from a competitor's scandal are ones that offer similar services, but are seen as having stricter ethical policies. Photo via Getty Images

When scandal tears through an institution, it can hurt innocents in the same field. But even the darkest scandal can sometimes benefit a similar organization ⁠— if, that is, the public sees it as far more ethical, says Rice Business professor Alessandro Piazza.

In a recent paper, Piazza collaborated with Julien Jourdan of the Université Paris-Dauphine, PSL Research University, to study the effects of the sex crimes scandal that embroiled Catholic priests and other clergy on membership in not just the Catholic Church itself, but also 16 other U.S. Christian denominations. The researchers analyzed the 16 denominations between 1971 and 2000 in an attempt to track any flight of Catholics to other churches. The findings offer insights for secular organizations in scandal-stricken fields.

To reach their conclusions, Piazza and Jourdan studied data sets from the Religious Congregations and Membership Study and the Churches and Church Membership Study, maintained by the Association of Religion Data Archives. The data included county-level statistics on congregations of 149 religious bodies.

Using this data, Piazza and his coauthor first tallied county by county church membership, coding for variables such as ethnicity and economic status. Next, they created a model to rate churches on issues such as strictness, mandatory commitment and evangelism. Finally, they compared the changes in membership figures for non-Catholic churches to explore whether former Catholics might have joined other churches as a result of the clergy scandal, and if so, which ones.

Scandal, broadly defined as publicized transgressions of established norms, can indelibly mark the collective imagination. Media amplify the effect with their investigations of the disgraced organizations, whether it be the Catholic Church, Enron, WorldCom or the British Parliament. Research shows that a scandal can tarnish individuals, organizations and, by indirect association, even entire industries.

At the same time, it's possible for members of a scandal-plagued group to prosper. When, for instance, Nike was accused of using slave labor in the developing world to make their products, rival companies that could showcase better labor practices benefited. Past studies, however, have not shown how these consequences occur, or how they affect people on the inside of the implicated organizations.

Piazza and Jourdan found that scandals can improve business for rival organizations under key conditions, the most important one being if they offer close alternatives to the services once supplied by the disgraced organizations. This kind of swap is most likely to happen when a service is still needed. After the Enron scandal, for instance, clients of its disgraced auditor, Arthur Andersen, still required auditing services, so took their business to rival auditing firms.

The researchers also analyzed the responses of people within an organization disrupted by scandal. Unlike investors, who may react to a scandal quickly and coldly, an organization's members are more likely to reflect on options before leaving.

In the case of the Catholic Church, disillusioned members gravitated to denominations that shared certain traits with Catholicism, but were perceived to enforce stricter norms. For these Catholics, religious participation and commitment to religious activity were the most compelling aspects when choosing a new church. Theology mattered less.

Most of the disillusioned Catholics, in fact, moved to Protestant denominations seen as strict and ethically austere, such as the Missouri Synod Lutheran and Southern Baptists. Far fewer turned to more liberal mainline churches such as the Presbyterian or Episcopalian churches, even though the latter is theologically close to Catholicism.

The stricter churches were more likely to draw ex-Catholics who were poorer and less educated, had contributed more money and attended more services, held stronger beliefs and belonged to more church-related groups.

Though the Catholic Church scandals unleashed enormous spiritual anguish, the practical effects also apply to secular organizations, Piazza and Jourdan write. Certain firms, like certain denominations, can gain tangibly from a rival's disgrace. The caveat: They must offer similar services, and appear to be more virtuous.

Surprising as it may sound, in other words, an industry-wide scandal can sometimes mean opportunity. When a large institution falls to rubble, its survivors resolve not to make the same mistake twice. Looking for similar services, they'll choose the most austere organizational culture they can find.

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This article originally ran on Rice Business Wisdom and is based on research from Alessandro Piazza, an assistant professor of strategic management at Jones Graduate School of Business at Rice University.

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Building Houston

 
 

Here's your latest roundup of innovation news you may have missed. Photo via Getty Images

It's been a new month and a few Houston startup wrapped up November with news you may have missed.

In this roundup of short stories within Houston startups and tech, three Houston startups across health care, space, and sports tech have some news they announced recently.

Houston digital health company launches new collaboration

Koda Health has a new partner. Image via kodahealthcare.com

Houston-based Koda Health announced a new partnership with data analytics company, CareJourney.

"This collaboration will aim to develop benchmarking data for advance care planning and end-of-life metrics," the company wrote on LinkedIn. "Koda will provide clinical and practice-based expertise to guide the construction of toolkits, dashboards, and benchmarks that improve ACP programs and end-of-life outcomes."

Koda Health announced the partnership in November..

“Beyond the checkbox of a billing code or completed advance directive, it’s important to build and measure a process that promotes thoughtful planning among patients, their care team, and their loved ones,” says Desh Mohan, MD, Koda's chief medical officer, in the post.

CareJourney was founded in 2014 in Arlington, Virginia.

"I'm hopeful next-generation quality measures will honor the patient’s voice in defining what it means to deliver high quality care, and our commitment is to measure progress on that important endeavor," noted Aneesh Chopra, CareJourney's co-founder and president.

Sports tech startup raises $500,000 pre-seed investment

BeONE Sports has created a technology to enhance athletic training. Photo via beonesports.com

Houston-founded BeONE Sports, an athlete training technology company, announced last month that it closed an oversubscribed round of pre-seed funding. The company announced the raise on its social media pages that the round included $500,000 invested.

Earlier in November, BeONE Sports completed its participation in CodeLaunch DFW 2022. The company was one of six finalists in the program, which concluded with a pitch event on November 16.

Space tech company snags government contracts

Graphic via cognitive space.com

The U.S. Air Force has extended Houston-based Cognitive Space’s contract under a new TACFI, Tactical Funding Increase, award. According to the release, the contract "builds on Cognitive Space’s work to develop a tailored version of CNTIENT for AFRL to achieve ultimate responsiveness and optimized dynamic satellite scheduling via a cloud-based API.

The $1.2 million award follows a $1.5 million U.S. Air Force Small Business Innovation Research award that the company won in 2020 to integrate CNTIENT with commercial ground station providers in support of AFRL’s Hybrid Architecture Demonstration program.

“The TACFI award allows Cognitive Space to continue supporting AFRL’s vitally important HAD program to help deliver commercial space data to the warfighter,” says Guy de Carufel, the company’s founder and CEO, in the releasee. “CNTIENT’s tailored analytics platform will enable HAD and the GLUE platform to integrate modern statistical approaches to optimize mission planning, data collection, and latency estimation.”

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