Creating a More Inclusive and Sustainable Future
The referral penalty: Decreased perceptions of merit undermine helping behavior towards referred employees
Journal of Applied Psychology
Employee referrals are commonly used by organizations due to their numerous benefits. However, it remains unclear how organizational incumbents, who are uninvolved in the hiring process, perceive and react to referral beneficiaries. Although traditional views suggest that the presence of a referral signals merit, incumbents’ perceptions may differ. We theorize that incumbents are more likely to perceive referral beneficiaries as less merited than non-referred employees, due to perceived legitimacy concerns stemming from a simplified view that reliance on network contacts de facto compensates for lower qualifications. Drawing on equity theory, we then theorize that low merit perceptions lead to less positive and more negative behaviors towards referral beneficiaries, as an attempt to restore the equilibrium between beneficiaries’ perceived inputs (e.g., driven by perceived lower merit) and outputs (e.g., being on payroll). Sampling employees from industries in which referrals are normative (Study 1a) and from a cultural context that is positively predisposed toward referrals (Study 1b) confirmed our theorizing. In a subsequent study, aiming to enhance the generalizability of our findings, we found supporting evidence for perceived equity violations, leading incumbents to engage in corrective behaviors toward referral beneficiaries (Study 2). Finally, testing our hypotheses more conservatively, we found that negative attributions toward referral beneficiaries persisted even when the referred employees had demonstrated high performance, thereby underscoring the robustness of our findings (Study 3). This paper elucidates important unintended consequences of one of the most popular hiring methods - employee referrals - and draws implications for both theory and practice.
Tomova Shakur, Teodora, Texas Christian University and Derfler-Rozin, Rellie, University of Maryland
Should I Stand Up for My Mistreated Colleague? When and Why High-Status Team Members Stand Up for Their Coworkers
Organizational Behavior and Human Decision Processes, January 2026
Supervisory mistreatment has adverse consequences for its victims. Coworkers, as observers, can shape victims’ experiences by standing up for them. Yet doing so entails the risk of supervisory retaliation. High-status coworkers should be well-positioned to stand up for victims as they have greater social capital at work. However, such retaliation risks may loom large for them because they are highly motivated to protect what they have. Thus, prior research reports both positive and negative links between status markers and various forms of standing up. We suggest that these inconclusive findings stem from examining individuals’ status only within a single domain (e.g., work) while neglecting how their standing in other groups may shape their experiences in that focal domain. Building on status inconsistency theory (Lenski, 1954) and the concept of status portfolios (Fernandes et al., 2021), we argue that status variance (i.e., inconsistency of status across groups) shapes how high-status employees react to mistreatment. Specifically, we hypothesize that high-status employees with high (compared to low) status variance will experience greater fear of retaliation and reduced willingness to stand up. We argue that this occurs because they perceive their status portfolios as unstable and become more vigilant in protecting their elevated standing at work. Four complementary studies provided support for our hypotheses. We discuss implications for research on bystander intervention, supervisory mistreatment, and status.
Gencay, Oguz, PhD., Bilkent University., Derfler-Rozin, Rellie, PhD. University of Maryland, Arman, Gamze, UWE Bristol
Does earnings management matter for strategy research?
Strategic Managment Journal, August 2025
Strategic management research often uses accounting data, despite well-known concerns that earnings management could obscure the link between actual and measured performance. We apply methods from the econometric literature on bunching to estimate that around 15 percent of firm-year observations in Compustat manipulate accounting earnings to achieve profitability. We show that cash-based performance measures are less susceptible to manipulation and that the choice of accrual versus cash-based measures “matters” for two classic strategy research questions: a decomposition of ROA variance and an analysis of persistence in firm performance. These findings underscore the importance of robustness testing and contribute to an emerging literature that reconsiders the link between theoretical constructs and empirical performance measures.
Gibbs (Purdue), Simcoe (Boston U), and Waguespack (Maryland)