Judging Firms' Unethical Behaviors: Does Cultural Similarity Matter?

ABSTRACT Do people mete out harsher punishments for identical unethical behaviors committed by foreign compared to domestic firms? Liability of foreignness (LOF) reasoning suggests that this is the case. Using a quasi‐experimental survey in France, we go a step further by investigating the influence of cultural similarity on ethical judgment. We examine whether people mete out less harsh judgment on a foreign company from a culturally similar country compared to a foreign company from a culturally dissimilar country. Our findings show that cultural similarity does not have a significant impact. Moreover, in the French context, the findings show that punishment for unethical behavior meted out to domestic and foreign firms relates more to cultural characteristics and does not apply in the same way for all dimensions of corporate social responsibility. Thus, we discuss various strategies and managerial implications.