Comparing promoter and employee attributions for the causes of firm failure: the case of an Indian petrochemical company

Gok K., Deshpande S., Deshpande A. P., Hunter G.

INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT, vol.23, no.12, pp.2576-2596, 2012 (SSCI) identifier identifier


The central question this study addressed was why did an Indian petrochemical company fail? We employed the attribution theory to compare attributions for corporate failure at three levels: employees versus promoters, top management versus middle management and non-management, and at a third level, attributions reported in the Western context versus the Indian context. While there is an abundance of literature investigating attributions for corporate failure, ours is one of the first studies to compare these attributions between groups involved in corporate operations. We used event analysis technique while analyzing the Directors’ Reports and while conducting the interviews. Our findings revealed that the promoter's account of corporate failure was self-serving, with negative results attributed to external factors while the top management, for example, showed a tendency for self-serving bias by denying responsibility in the events that led to the eventual demise of the company, and also, due to the actor–observer effect, they attributed the company's failure more heavily to the Indian promoters’ dispositional characteristics such as their inability to manage the external environment, which prevented the company from adapting to its external environment. The findings of this study suggest that different groups report distinct causal attributions for corporate failure.