A Review of the Halo Effect and Its Applications at the Corporate Level

Abstract

The halo effect is a cognitive bias that twists people’s judgment in the rating process and has a significant influence on HRM(human resource management) practices. However, as a heuristic, the halo effect has shown much potential for improving the economic outcomes of corporate business and management as well. This essay gives a review of the halo effect and its applications at the corporate level based on the literature from 1920 to 2022. While the concept of the halo effect has been fully developed throughout the century, the problem of distinguishing true halo from illusory halo remains unsolved, which leads to the stagnation of further research on HRM practice. However, the study of the halo effect in brand marketing is rather mature, providing diverse advertising, sales, and crisis strategies for corporations to increase long-term gain. Furthermore, the literature on the halo effect has been focusing on more contemporary fields of application, such as the promotion of cultural products in the context of globalization, which could be a trend for researchers in the near future.