Morality and Continuity Authenticity Trade-offs in the Removal of Unethical Founders

When a company’s founder engages in ethical misconduct, the company may fire the founder in hopes of restoring the brand’s reputation. Across four preregistered experiments, we find that firing an unethical founder does not enhance brand reputation compared to retaining the founder. We reason that this is because consumers view the founder as embodying the essence of the brand. Thus, although removing an unethical founder may distance the brand from the moral transgression, it also compromises continuity authenticity by suggesting that the company has disrupted its connection to its essence, resulting in no net gain to brand reputation. We find that this morality-continuity authenticity trade-off is moderated by the moral transgression’s connection to the brand’s founding values and the severity of the moral transgression.