Categorisation and Assimilation-Contrast Theory Explaining Loss of Trust after an Alleged Corporate Misconduct

Abstract There is a limited understanding of how information about a negative event is used by customers when deciding whether to continue to trust a company (a key aspect of reputation management) and how the same information can result in different choices by individuals. To meet this gap, the aim here is to test the predictions from categorisation theory and assimilation contrast theory and to add to our theoretical understanding of trust loss. A moderation model of survey data ( n = 410), a cluster analysis and a content analysis of explanations given are used to test hypotheses. The work demonstrates that a reaction to a potential trust violation involves two stages: a decision on responsibility, followed by an evaluation of the significance of the misconduct. If a trusted supplier is not held responsible, the typical customer will not re-categorise the supplier as not trusted. If they are held responsible, the typical customer may re-categorise the supplier as not trusted depending on how significant they believe the misconduct to be.