Reports that James Murdoch is stepping down from News International is great news. Given the severity and prevalence of allegations against the company, and Mr. Murdoch’s deep ties into the strategy and vision that led to such concerns, this is probably the best thing that could happen for News International.
What we know from years of research is that when people have deep ties into an organization (and no one has deeper ties than James Murdoch), they often have trouble recognizing just how problematic their continued involvement can be for the organization. The psychological biases at work here are strong, as these individuals feel deep pride in having built great organizations, deep ownership in making them successful, and deep needs to see their vision come to fruition.
However, when an organization is dogged with allegations of fraud, bribes and deceit, their feelings can become even stronger to try to protect what they built. This paradoxically runs counter to what we know about how organizations can best move forward and succeed. Whether the allegations are true or not, the organization will be held back significantly if the public does not trust them.
This is all the more true for a news organization, who the public must trust for the organization to succeed. The continued involvement of "tainted" executives makes trust very difficult to win back, and may be impossible.
In recent research, forthcoming in the Strategic Management Journal, my co-authors and I write about just how difficult organizational reputation is to win back once it is lost. For News International, the key is to make a clean break.
For their sake, I hope this resignation does represent a clean break, and helps them to move forward to a brighter future.
Strategic Management Journal, forthcoming. The path dependence of organizational reputation: how social judgment influences assessments of capability and character. Yuri Mishina, Emily S. Block and Michael J. Mannor.