How the public shaming of peers enhances corporate social performance: evidence from blacklisted firms in Japan

Abstract

This study aims to show how vicarious public shaming, that is the public disgrace of several peers in the same industry, affects focal firms’ corporate social performance (CSP). Drawing on the legitimacy and category theories, we suggest that since an increased vicarious public disgrace harms the legitimacy of the entire industry, peer companies attempt to negate these potential legitimacy losses by improving their CSP. This tendency is more pronounced in firms that have a poor record of CSP. Using a context of the Japanese blacklisted companies by the government for labor law delinquency between 2016 and 2019, our results confirm that vicarious public disgrace is a significant antecedent to improving CSP. Our findings also imply that the appropriate use of public disgrace can enhance overall the CSP levels.