Implicit Complicity and “Negative Spillover”: Reputation Damage from BP’s Oil Spill Crisis

What do birds, beaches, and Chevron have in common? They have been “tarred by the same gush” of “negative spillover” from BP’s Deepwater Horizon catastrophe.

In one of the weirder cases of a collision between literal and figurative language, the “negative spillover” of BPs Deepwater Horizon crisis is soiling not only birds and beaches, but also corporate reputations.

Through “negative spillover” (Tu, Sengul, & Lester, 2008), the reputations of other oil companies, various BP business partners, and even social service organizations working with BP are being damaged.

The reputations of these organizations are being degraded not because we think that they are responsible themselves for the oil spill.

Instead, we believe that their similarity to BP implies that they are complicit.

In this crisis (as in many others), we are uncertain about what combination of factors “caused” the spill. Crises are rarely caused by one person, one action, or one system within organization. Instead, crises are caused by complex interrelationships among people, actions, and systems.

And, while crises may be caused by factors unique to the failed organization, it is also possible that factors beyond the organization are involved. The crisis might be “firm specific”; then again it might just be chance that this particular organization, in this particular industry, caused this crisis.

In light of the difficulty of pinpointing causation (and blame), we consider what other actors might possibly be complicit. Then, we take our negative evaluation of the failed organization and spread it over our evaluations of these other organizations. For an organization’s reputation, negative spillover is the opposite of “basking in reflected glory”.

Similarity => Negative Spillover

Shared genes:   Similarity leads to negative spillover because the rest of us assume that similar organizations share “genes”. Similar organizations–other oil companies–were and still are just as likely as BP to create environmental crises. The structural similarity of these oil companies to BP suggests that their internal norms and systems are quite like BP’s.

It makes sense, then, to expect that if BP had faulty systems and inadequate response plans, so too must Shell and Exxon. Similarity suggests that these organizations could be responsible for future, similar crises. After all, these organizations are “just like” BP.

You look just like the known polluter, ergo you ARE also a polluter.

Shared context:    Similarity leads to negative spillover because we assume that organizations in similar contexts have the same opportunities and constraints. These other oil companies work within the same industrial and regulatory systems as BP, so there can be no expectation that these organizations are subject to significantly different (or more noble) practices.

When the crisis is believed to have been caused by many factors, some of which are not specific to the failed firm, similar organizations are presumed to be just as bad, potentially.

Similarity implies complicity

Another reason why these similar organizations experience negative spillover is that their similarity to the failed firm suggests another kind of complicity: failure to prevent the crisis.

These other oil companies have maintained the status quo, offering little competitive incentive to others within the industry to improve on factors related to the crisis.

if other oil companies had better safety practices, better cleanup practices, better environmental positions, BP might have felt competitive pressure to adopt these ‘better’ practices. While organizations often sink to the “lowest common denominator” they also compete with each other to be perceived as “better” than the rest to extract some kind of competitive advantage.

This is actually what BP was claiming to do (but did not execute) with their “Beyond Petroleum” campaign. BP claimed to be different from other oil companies because they were committed to protecting the environment by pursuing sustainable alternatives. We (their audience) believed their claims to be different and gave BP a more positive reputation than any other oil company.  BP’s “Beyond Petroleum” campaign did put some pressure on other oil companies to get them to present themselves as more green too.

By holding the same destructive potential, and by not having acted themselves to raise the standards, other oil companies are seen as being implicitly complicit in the Gulf Oil Spill.

Can other oil companies avoid negative spillover from BP’s crisis?

Preferential Detachment

To avoid negative spillover, individual oil companies and oil companies as a group could engage in “preferential detachment”, where they try to regain legitimacy and relative good standing by reducing their actual links to the failed organization and by reducing perceptions that they are similar.

BP’s partners and suppliers in Deepwater Horizon, Anandarko and Halliburton, are directly linked to the failed rig. They are fighting to distance themselves from blame by showing that they were, in fact, not involved in any of the decisions or actions that led to the spill. It will be interesting to see if this strategy has any positive effect.

Other oil companies are trying to distance themselves from BP, by claiming that they are different in several important ways. They have argued that they have better response plans, better safety systems, more reliable technology. However, careful investigative journalism has shown that these companies are no different, either in terms of their envirmental protecion procedures or their general rapacity, from BP.

Real change?

Other oil companies are unable to present themselves as different and detached themselves from BP in any material way. Distinguishing themselves as as authentically different will involve fundamental changes in internal organization as well as external business practices. These changes take time, so if they have any intent of being different, it will take time for these differences to be perceived and to influence their company’s reputation.

The most logical strategy for distinguishing themselves against BP with regard to this environmental crisis would be to point out how much better their spill response plans are, how much better their environmental precautions are, and how much better their safety systems are. Ironically, this strategy will make any oil company more vulnerable to reputation damage in the future. Good reputations can become liabilities: Audiences come to expect more of organizations with good reputations (in this case, green reputations), so audiences are are more punitive when the organization fails

Implicit Complicity vs. Actual Responsibility

It makes complete sense that other oil companies ) are being blamed and seeing their reputations tarnished by the BP Oil Spill.

While BP might be slightly more risk-insensitive than other oil companies, it seems as much a matter of luck as intentional bad management that BP was the organization that caused this spill. Exxon had their own spill and could easily have another. Shell is busy poisoning large swathes of Nigeria.

None of these oil companies is different from BP in a significant way.

Negative Spillover isn’t an “accident”

Unlike the Gulf Oil Spill, the reputation damage of negative spillover isn’t an accident. Damage to oil company reputations hasn’t been unfair, or inadvertent. The reputation damage has been earned.

Reputation damage results from our ‘best guess’ for holding organizations accountable.  Negative hits to corporate reputation translate into reduced financial performance. So, although the link is long and indirect, further lowering our opinions of oil companies may have small some punitive impact.

Unlike the birds and the beaches, then, oil companies like Exxon, Shell, Chevron, & others deserve the negative spillover.

Until (perhaps while) real change is attempted, the very least we can do is see all of these similar organizations for what they are — complicit.

See also:

What is Collateral Reputation Damage?
Reputation, Beyond Authenticity, by Mignon van Halderen on February 1, 2009
Yu, T. Y. Sengul, M. and Lester, R. H. 2008. ‘Misery Loves Company: The Spread of Negative Impacts Resulting from an Organizational Crisis’, Academy of Management Review, 33 (2): 452-472.

Image: GreenPeace Behind the Logo contest

Tagged as: Anandarko, Beyond Petroleum, BP oil spill, Chevron, collateral reputation damage, corporate reputation, Deepwater Horizon, Exxon, Gulf Oil, Halliburton, implicit complicity, liability of good reputation, Mignon van Halderen, negative spilllover, reputation damage, shared context, shared genes, Shell Oil