Moral criticism can have a devastating effect on a business, as ING recently discovered. However, such criticism is difficult to predict, because an indignant public has double standards.

The recent consternation about the proposed salary increase of top ING executive Ralph Hamers clearly shows that businesses do not know how to prevent moral indignation. This is surprising given the potentially disastrous consequences. If clients think a business is hypocritical, this may lead not only to moral indignation, cynicism and distrust, but can even, through public anger and click activism, ruin the reputations of businesses, cause shareholder value to drop and destroy political careers. It is therefore understandable that all that public rage makes businesses and politicians feel rather insecure.

However, predicting when people will consider an act or event to be hypocritical is easier said than done. When forming an opinion, people use much more information than a contradiction between words and deeds alone. Our experimental research shows, for instance, that consumers find such a contradiction much more hypocritical (and therefore punish it more severely) if it relates to a business with morals, a charity for instance.

Why is this? It seems that people apply double standards because they are unable to differentiate between hypocrisy and immorality. As hypocrisy is by definition about lying (saying one thing but doing another) and lying is immoral, people consider the expression ‘moral hypocrisy’ to be a pleonasm and thus redundant. However, people find sex with a minor more scandalous if Oxfam staff are caught in the act than if bankers are. Research into hypocrisy has thus neglected an important element so far: people’s expectations of businesses, politicians and board members based on what they appear to stand for.

In other words, the conditions that people must meet in order not to be found hypocritical differ greatly. Certain political parties (left-wing ones?) and organizations (charities, religious organizations) will be held to higher moral standards than others. These parties and organizations are more likely to be found hypocritical purely because the expectations of them are higher. According to this reasoning, businesses that work hard on their social responsibility (for instance by paying farmers a fair price for the commodities that they supply or by having a sustainable product line etc.) can therefore be punished more severely for the same error than businesses with less social responsibility.

The funny thing is that this also makes consumers and the public themselves hypocritical: public anger swells causing one business to be punished whereas another is not, or one politician to resign whereas another can stay, when the errors they have made are comparable. We recently began to study the dynamics and contradictions of hypocrisy – that we all can be accuser and accused at the same time. There is a lack of appreciation that we are all subjected to different standards but also subject others to different standards. This applies to politicians, board members and businesses who find it difficult to predict if they will be the target of public anger, but equally to citizens and consumers who do not realize how hypocritical they themselves often are.

Dr Susanne Täuber and Dr Marijke Leliveld are researchers at the Faculty of Economics and Business of the University of Groningen.