Big Is Bad: Stereotypes About Organizational Size,Profit-Seeking,and Corporate Ethicality

Abstract

Individuals tend to hold a dim view of for-profit corporations, believing that profit-seeking comes at the expense of ethicality. In the present research, we show that this belief is not universal; rather, people associate ethicality with an organization’s size. Across nine experiments (N = 4,796), people stereotyped large companies as less ethical than small companies. This size-ethicality stereotype emerged spontaneously (Study 1), implicitly (Study 2), and across industries (Study 3). Moreover, we find this stereotype can be partly explained by perceptions of profit-seeking behavior (Supplementary Studies A and B), and that people construe profit-seeking and its relationship to ethicality differently when considering large and small companies (Study 4). People attribute greater profit-maximizing motives (relative to profit-satisficing motives) to large companies, and these attributions shape their subsequent judgments of ethicality (Study 5; Supplementary Studies C and D).

Keywords

stereotypes business ethics morality profit-maximizing organizational size

Introduction

Business organizations are often derogated as heartless, inconsiderate, and greedy institutions—focused more on making money than doing the right thing (Brunk, 2010). From the financial crisis of 2008 to growing public scrutiny of the technology sector (Moss & Metcalf, 2019), the past two decades have been rife with accusations of companies sacrificing ethical standards for the bottom line (Broughton, 2008). The current Edelman Trust Barometer, a yearly international survey, indicates that only 61% of the public is trusting of business organizations (Edelman, 2022). In short, people hold an unflattering impression of the modern corporation, particularly its ethical standards and moral integrity.

Perhaps because of this pessimistic view, people are increasingly placing a premium on corporate ethics in both their patronage (Benedetti & Chen, 2018; Markovic et al., 2018) and employment decisions (May et al., 2015). In recent years, perceived violations of ethical standards have sparked outrage on social media (Tice, 2012; Xu, 2017), prompted boycotts of company goods and services (Kharif & Schreier, 2021), and precipitated changes in governance and leadership (Rivera & Karlsson, 2017). Given the high stakes involved in public perceptions of malfeasance and the growing emphasis on corporate integrity, psychologists must attempt to identify the factors that shape perceptions of an organization’s ethics—its moral “principles, norms, or standards of conduct” (Treviño & Nelson, 2011). That is, what factors lead people to judge organizations as ethical or not?

People frequently rely on stereotypes to form their impressions of organizations. For example, technology firms may be seen as innovative and disruptive, nonprofit organizations as altruistic and disorganized, and government organizations as uncaring and bureaucratic. These sweeping characterizations of organizations are often industry-specific. In contrast, we highlight one attribute of an organization—its size—that may shape judgments of its ethicality, regardless of industry. From “Big Pharma” to “Big Tech,” the label of “big” has become more than just a helpful descriptor—the term now represents the demonization of large organizations (Ovide, 2020; Thiessen, 2021). In fact, we propose that larger organizations elicit harsher judgments from observers as being relatively more unethical, dishonorable, and immoral compared with smaller organizations. Furthermore, we explore whether this stereotype that large organizations have inferior business ethics is both automatic and pervasive.

What might give rise to an automatic association between corporate size and unethicality? We suggest that the size-ethicality stereotype is rooted in unconstrained profit-seeking motives attributed to larger organizations (i.e., larger organizations aim not just to “make” profits, but to “maximize” profits). To be sure, corporations have multiple objectives, which include profitability. However, individuals may assume that, for large organizations, the profit objective reigns supreme and comes at the cost of other objectives, like operating with integrity and treating others with dignity and respect (Bhattacharjee et al., 2017).

Organizational Stereotypes

Stereotypes are evaluative assumptions about an individual or entity based on its membership in a specific category, rather than its actual characteristics (Dovidio & Gaertner, 1993). Psychologists have extensively investigated how stereotypes emerge and influence perceptions of people within organizations (see Walton et al., 2015). For example, a robust literature centers around the role of occupational stereotypes, which are based on either a person’s job type (e.g., nurse, lawyer) or job category (e.g., blue-collar versus white-collar work). These occupational stereotypes are more powerful in informing judgments about employed individuals than are other types of stereotype-inducing information (e.g., age, sex, race, nationality; Feldman, 1972; Koenig & Eagly, 2014).

Research on how organizational contexts shape stereotypes has largely been limited to judgments of individuals and not how the public may judge the organization itself. In this latter domain, research is in short supply. Some scholars have argued that individuals can and do hold stereotypes about institutions; however, this work tends to paint for-profit organizations with a broad brush, comparing perceptions of for-profit organizations with those of nonprofit organizations (Aaker et al., 2010; Johnson & DeGarmo, 2018). However, not all for-profit companies are judged similarly—certain organizations are stigmatized based on their goods and services (e.g., firms in the tobacco, firearms, or sex work industries; Durand & Vergne, 2015; Hudson & Okhuysen, 2009). As an initial attempt to fill this gap in our understanding of the factors that shape how business organizations are perceived, we identify one fundamental characteristic that shapes judgments of a for-profit company: its size.

Organizational Size and Attributions of Corporate Ethicality

In its most basic form, size represents an important and primary category used for evaluation and classification of organizations (R. H. Hall et al., 1967; Kimberly, 1976). Although organizational size may refer to different measures (e.g., employee headcount, firm valuation, market share, office space), research suggests that individuals hold generalized perceptions of organizational size that roughly represent these varied characteristics (Greenhaus et al., 1978). Building on prior evidence that observers evaluate organizations across a range of anthropomorphic attributes (Aaker et al., 2010; Ashforth et al., 2020; Waytz & Young, 2012; Yang & Aggarwal, 2019), we examine how these generalized perceptions of size predict other critical judgments of organizations. Specifically, we propose that generalized perceptions of size correspond to the stereotyping of an organization’s ethicality.

Our main research question may prompt an interest in whether large organizations are, in fact, less ethical than small organizations. Indeed, some evidence links organizational size and wrongdoing (Grant et al., 2002; Mishina et al., 2010). However, other evidence is mixed (Martin et al., 2007; O’Fallon & Butterfield, 2005), not significant (McKendall & Wagner, 1997), or even negative (Clinard et al., 1979). Past research suggests that small companies and their employees might be more lenient when judging ethical transgressions (Brown & King, 1982; Longenecker et al., 2006). In contrast, large organizations may be more likely to behave ethically because they have more resources. For instance, relative to smaller firms, larger firms more often employ people who monitor ethical issues (e.g., corporate compliance officers) and devote assets to social initiatives (Stanwick & Stanwick, 1998).

Despite the lack of a clear link between organizational size and morality, we are interested in whether perceptions of size might still influence lay beliefs about organizational ethicality. Although we live in a culture that glorifies corporate success, paradoxically, when success is achieved, it is often viewed with suspicion (Frake, 2017). For instance, individuals tend to attribute career success—specifically monetary success, such as higher salaries—to ethical compromises, suggesting that there exists “a general distrust of those who appear to have prospered” (Morgan, 1993). Building on this, we predict that individuals reliably and automatically associate company size with ethicality; that is, people will infer that large organizations are less ethical than small organizations. To ground this prediction, we draw from research on attributions of corporate success (Morgan, 1993) and zero-sum mentalities around profit-seeking (Bhattacharjee et al., 2017; Campbell, 1999).

Profit, Profit-Seeking, and Profit-Maximization

We suggest that stereotyping of large organizations as less ethical than small organizations stems in part from the belief that large organizations are more motivated to maximize profit. Truth be told, all business organizations aim to generate profit, at least to some extent, because they must generate profit to survive. The economic activity tied to profit-seeking has greatly benefited the modern world. Nevertheless, profit—and profit-seeking—has often been positioned as the enemy of ethics. In fact, some scholars have suggested that individuals hold a “zero-sum view of profit,” in which profitability comes at the expense of ethical concerns (e.g., Bhattacharjee et al., 2017).

We propose that this zero-sum view of profit-seeking and ethicality has especially negative implications for large firms. At a most basic level, firm size is closely associated with increased profits, such that larger firms are, and are assumed to be, more profitable than smaller firms (Crum, 1939; M. Hall & Weiss, 1967). When forming stereotypes, individuals weigh most heavily the characteristics they view as typical of the group or entity, often extrapolating on these foundational associations to form downstream attributions (Tajfel, 1981). Noting this, we predict that larger firms will be viewed as not only more profitable but also more profit-seeking. That is, observers believe that the decisions and actions of large organizations are more directly motivated by the accrual of profits.

Attributions of profit-seeking motives may inform subsequent evaluations of ethicality because profit-seeking tends to be associated with perceived immorality (Hegarty & Sims, 1978; Walsh & Lynch, 2008) and interpreted as a reliable signal of greed (Wang & Murnighan, 2011). When judging organizations, people might view profit-seeking as an indicator of selfish intentions (S. Lee et al., 2017) that foster critical evaluations (Lin-Healy & Small, 2012) independent of outcomes (Alicke, 2000; Knobe, 2003). For instance, Campbell (1999) found that observers were more likely to attribute “bad” and “antisocial” motives and label the company’s behavior as unjust when a company was judged as profit-driven. Together, these past findings lead us to predict that people automatically link organizational size and ethicality, and that profit-seeking motives will be a critical pathway that contributes to this stereotype.

Although past research has described profit-seeking motives in broad terms (Bhattacharjee et al., 2017; Derwall et al., 2011; Kahneman et al., 1986), we suspect that individuals conceptualize organizations’ profit-seeking in more nuanced ways. Leveraging a distinction made in the decision-making literature (Simon, 1955, 1956), we argue that profit-seeking behavior can refer to both profit-satisficing and profit-maximizing actions. In general, satisficing refers to the pursuit of an outcome that meets an acceptable threshold; once an outcome surpasses that threshold, the seeker feels satisfied and does not actively pursue a better alternative (Schwartz et al., 2002). In contrast, maximizing refers to the pursuit of an optimal outcome with no predetermined threshold at which the focal party is satisfied.

We recognize that profit-maximizing and profit-satisficing are related constructs (Cheek & Schwartz, 2016). However, we argue that they will have different implications for judgments of ethicality. Profit-satisficing can be thought of as seeking an acceptable level of profitability, whereas profit-maximizing implies that there is no upper bound to the organization’s desired profitability: The company always strives to make as much money as possible. Profit-maximizing implies that the company will never be satisfied by a certain profit threshold, although we note that maximizing need not necessarily come at the expense of ethicality (i.e., a company can optimize its search for new products and services that increase profitability without engaging in unethical behaviors). However, we propose that evaluators fail to hold this more nuanced view, assuming not only that large organizations are more profit-maximizing but also that this maximizing orientation comes at the expense of morality. Our theoretical model is presented in Figure 1.

Figure 1.

Proposed Theoretical Model of Size-Based Organizational Stereotypes.

Given the cynicism with which individuals sometimes view large organizations (Jago et al., 2019; La Macchia et al., 2016; Serrano Archimi et al., 2018), we propose that observers will assume that larger firms have no limit to their desired profitability, but will attribute less “greedy” (i.e., less maximizing, more satisficing) motives to smaller firms.¹

Overview of the Experiments

We test our predictions across five experimental studies employing a diverse set of methodologies. In Studies 1 to 3, we establish the robustness of the proposed “big is bad” stereotype, showing that the tendency to stereotype larger companies as less ethical than smaller companies occurs spontaneously (Study 1), implicitly (Study 2), and explicitly (Study 3) across a range of industry and company types. We show that this stereotype is driven by the perception that larger companies are more profit-seeking (Study 3) and demonstrate that this stereotype is explained by more precise beliefs about profit-seeking that large organizations are more profit-maximizing (vs. satisficing), such that the unceasing pursuit of profit is viewed as coming at the expense of ethicality in large companies, but less so in small companies (Studies 4–5).

To strengthen the power and external validity of our findings, we leveraged a diverse range of experimental methods (e.g., free-response surveys, Implicit Association Test [IAT] tests, stimulus sampling), performed power sensitivity analyses, and controlled for potential confounds such as perceived impact of the organization. Our samples include both students and adults recruited from a range of platforms and tools representing a diversity of genders, ages, geographies (urban, rural, suburban), and political leanings. Full demographic details for each sample are presented in Online Supplement Table S1.

We report all conditions, measures, and data exclusions and provide verbatim study materials, data, codebooks, and analysis code in the Online Supplement (https://osf.io/adb3s/). Stopping rules for data collection were determined in advance, and all five studies were preregistered.

Study 1: Write a Story

Methods

Participants and Procedure

In Study 1 (preregistered, https://aspredicted.org/7ip48.pdf), we first explored whether the proposed organizational size-ethicality stereotype would emerge spontaneously, without any prompting or references to ethicality. We asked 400 English-speaking U.S.-based adults (49.5% women; M_age = 35.27, SD_age = 10.05) recruited through TurkPrime to “write a story” about either a large or small company (randomly assigned conditions). We explained that “large” meant “a big organization with tens of thousands of employees” and “small” meant “a little organization with just a few dozen employees.” Participants were given no other restrictions regarding the company, and the instructions did not mention values or ethics. A sensitivity analysis indicated that our sample size provides 80% power to detect a mean difference of d = .28 with α = .05, two-tailed (Faul et al., 2007).

Self-Reported Company Ethicality

After writing the story, participants rated the company in their story on its ethicality using five items (ethical, trustworthy, honest, sincere, and moral; α = .97), from 1 (not at all) to 7 (very much).

Self-Reported Supplementary Items

To test alternative explanations for our hypothesized effect (e.g., a global negative stereotype against large companies), participants indicated how competent, creative, bold, and boring the company in their story was, from 1 (not at all) to 7 (very much).

Self-Reported Ratings of Main Character

As an exploratory measure to assess whether the tendency to view large companies as less ethical extended to their employees, we asked participants to indicate whether the main character in their story worked at the company, and, if so, to categorize their role within the company (a low-level employee, mid-level employee, senior employee or company leader, the company as a whole, or other). Participants then rated the character using the same ethicality scale (α = .97) and supplementary items.

Participant Characteristics

Participants provided their gender, age, education, political leanings, and geographic location.

Third-Party Ratings of Company Ethicality

Two hypothesis-unaware research assistants coded the stories to create a third-party measure of company ethicality. The coders read each story and assigned the company an ethicality score from 1 (very unethical) to 7 (very ethical). They also indicated whether the company described was a real company or clearly based on a real company. Coder ratings of ethicality were averaged to create a single, third-party rating (r_interrater = .78). The correlation between participants’ self-reported ratings and the coders’ ratings of company ethicality was .68.

Results

In Study 1, 42 participants were excluded for failing to write a story. The large majority of participants wrote about a hypothetical company (88.71%). Participants in the large company condition were more likely to reference a real company when writing their story (b = 1.21, SE = .37, p < .001 using logistic regression). We accounted for this difference in our analyses by controlling for real-company status and running the same analyses but excluding the participants who wrote about real companies.² Our results held using both approaches.

Company Ethicality

Using the coders’ ratings, we found that participants who wrote about a large company characterized it as less ethical (M = 4.14, SD = 1.66) than did those who wrote about a small company, M = 4.80; SD = 1.09, t(309) = −4.40, p < .001, d = .46. We found this same pattern using participants’ own reports of company ethicality. Participants who wrote about a large company indicated that the company in their story was significantly less ethical (M = 5.23, SD = 1.85) than did participants who wrote about a small company, M = 5.98, SD = 1.34, t(326) = −4.42, p < .001, d = .46. This effect held when controlling for participant age, gender, political orientation, education level, and geography.

Supplementary Items

Analysis of the supplementary items suggests that perceptions of ethicality were not the result of a global negative stereotype. Participants reported no difference in how competent, t(359) = −0.12, p = .910, d = .03); boring, t(358) = −0.46, p = .644, d = .04; or bold, t(356) = 0.56, p = .574, d = .04, the company was, although participants who wrote about a large company reported that it was less creative (M = 5.58, SD = 1.67) than did participants in the small company condition, M = 5.92, SD = 1.42, t(350) = −2.08, p = .038, d = .23.

Ethicality of Characters

Finally, we found that this difference in judgments of ethicality extended to main characters in the story who worked at the company, t(260) = −2.99, p = .003, d = .32; participants rated main characters who worked at a large company as significantly less ethical (M = 5.65, SD = 1.46) than main characters who worked at a small company (M = 6.13, SD = 0.24). Judgments of the main character’s ethicality (when the character worked at the company) were also strongly correlated with participants’ judgments of the company’s ethicality, r = .80, t(308) = 23.16, p < .001. Most participants indicated that their main character was employed at the company they described. However, when their main character did not work at the company (N = 71), they reported no difference in the character’s ethicality based on the size condition, t(54) = 0.11, p = .912, d = .03.

Discussion

Study 1 provides initial support for our prediction that large organizations are stereotyped as less ethical than small organizations. First, by asking participants to write a story about a company and using third-party ratings of the company’s ethicality, we show that this stereotype emerges even when no information related to ethicality is provided. Second, we find exploratory evidence that this effect transferred to judgments of individuals who worked at the company. Third, our results suggest that this stereotype was specific to ratings of ethicality and not driven by more global, negative stereotypes about large organizations (i.e., we see no differences in judgments of other relevant dimensions, such as competence).

One might argue that the results of Study 1 do not reflect participants’ own attitudes, but instead what they believe others would find appealing. That is, participants merely tried to generate narratives that would be deemed acceptable by others. To ensure that the organization size-ethicality stereotype is not just publicly adhered to but also privately held, we tested the embeddedness of this stereotype in people’s minds in Study 2, exploring whether this tendency to view large organizations as less ethical also emerges implicitly.

Study 2: Implicit Association Test

Stereotyping can result from subconscious and automatic processes (i.e., implicit stereotypes) as well as conscious and deliberate effort (i.e., explicit stereotypes; Dovidio et al., 1997). While often positively correlated, implicit and explicit stereotypes are distinct forms; that is, the presence of one does not necessitate the presence of the other (Banaji & Greenwald, 1995). In Study 2, we first test whether individuals implicitly view large companies as unethical using the Implicit Association Test (IAT; Greenwald et al., 1998) before moving on to test the presence of explicit stereotypes in Study 3.

Methods

Participants

For Study 2, we recruited 152 individuals (48% women; M_age = 32.21, SD_age = 11.68) from Prolific Academic³ to complete an Implicit Association Test (IAT; preregistered at https://aspredicted.org/tb5mq.pdf). A sensitivity power analysis indicated this sample size provides 80% power to detect an effect size of d = .23 (Faul et al., 2007).

IAT and Stimuli

The IAT measures individuals’ automatic, or implicit, associations and attitudes (Greenwald et al., 1998) by comparing participants’ response latencies when associating items from two different categories with two different attributes. In our IAT, we compared associations between organizational size (large vs. small) and ethicality (ethical vs. unethical).

To tap into individuals’ generalized perceptions of organizational size (Greenhaus et al., 1978), we used images of large and small corporate offices to elicit these perceptions (images were pretested to confirm that larger buildings were associated with larger company size and smaller buildings with smaller company size). To capture ethicality, we included a list of eight synonyms associated with ethicality (ethical, moral, honest, sincere, trustworthy, honorable, virtuous, and good) and eight associated with unethicality (unethical, immoral, dishonest, deceitful, lying, corrupt, evil, and bad). Participants were shown all terms and their corresponding category or attribute before taking the IAT.

Over seven rounds, participants saw items one at a time and sorted them as quickly as possible into their respective category or attribute using two different computer keys. In the critical rounds, participants sorted items from one category and one attribute using the same response key (e.g., press “E” for all unethicality words and images of large companies; press “I” for all ethicality words and images of small companies). This procedure was then reversed, with ethicality and large companies sorted together and unethicality and small companies sorted together. We adopted a fully counterbalanced design to prevent order effects. The difference in response times between the critical rounds was used to calculate a “D-score” (Greenwald et al., 2003), capturing the strength of participants’ associations between the two concepts (e.g., unethicality and company size). In our case, a positive D-score indicates that participants associated unethicality with large companies more than with small companies, whereas a negative D-score indicates an association in the opposite direction.

Controls

Participants reported their explicit attitudes toward large and small companies (two items; for example, “How would you describe your general feelings toward large companies?”) from 1 (very negative) to 7 (very positive). Participants also reported their age, gender, political leanings (1 = very liberal to 7 = very conservative), the size of their current employer (number of employees), and tenure (in years) with their current employer.

Results

IAT data were analyzed using the open-source platform IATgen (Carpenter et al., 2019). Four participants were excluded due to timeout and error rate criteria (see Greenwald et al., 2003). Consistent with our predictions, participants were faster at sorting items when large companies and unethicality were associated together, suggesting a stronger association in that direction compared with the alternative combination (D_M = .37, D_SD = .44). A one-sample t test indicated that this implicit association was significant compared with the null hypothesis (i.e., no association or a D-score of 0), t(147) = 10.2, p < .001, d = .84. Direction and significance held controlling for participants’ employer size, tenure, political orientation, and explicit feelings toward large and small companies. As a more conservative test, we also ran analyses on a subsample of the data consisting only of those individuals who indicated a neutral to positive explicit attitude toward large companies (N = 81) and found the same pattern of effects (D_M = .25, D_SD = .47), t(81) = 4.82, p < .001, d = .55.

Discussion

Study 2 suggests that individuals engage in the implicit stereotyping of large companies, linking large companies more closely with unethicality and small companies with ethicality. These findings offer additional support for our first hypothesis that individuals view large companies as less ethical than small companies, and that these judgments emerge not only spontaneously (as suggested in Study 1) but also implicitly. However, we note that stereotypes can also emerge explicitly (i.e., through self-reported attitudes). Therefore, in Study 3, we turn our focus to the explicit stereotyping of large organizations while simultaneously expanding our investigation to cover a wide range of industries.

Study 3: 10 Industries

Participants and Procedure

In Study 3 (preregistered, https://aspredicted.org/f83jy.pdf), we examined whether negative stereotypes about large companies emerged explicitly as well as our predicted mechanism that the size-ethicality stereotype is driven, in part, by the perception that large companies are more profit-maximizing relative to small companies. To ensure the generalizability and replicability of our results, we employed stimulus sampling (Wells & Windschitl, 1999)—randomly assigning participants to judge the ethicality of a large or small company in one of 10 different industries. As an added robustness check, we controlled for the company’s perceived impact.

We recruited 2,005 participants from TurkPrime (55% women; M_age = 37.40, SD_age = 12.12). Participants were assigned to read a brief description of either a large or small company in one of 10 industries. The description provided the bare minimum of information about the company (e.g., name, product, or service offering) and was adjusted to reflect each of the 10 largest industries listed in the Global Industry Classification Standard (GICS) developed by S&P Global. These 10 GICS industry categories were technology, manufacturing, health care, real estate, financials, industrials, materials, energy, communications, and retail (we treat the two consumer goods sectors as a single “retail” industry). Sensitivity analysis indicated that our sample provides 80% power to detect a mean difference of d = .13 and f² = .007 for the regression model controlling for impact and participant factors.

We manipulated generalized perceptions of organizational size using a three-pronged approach similar to that used in prior research (Greenhaus et al., 1978): describing the company as “large” or “small,” changing the number of employees from tens of thousands to fewer than 100 (exact number varied), and adjusting the number and square footage of the company’s physical offices or stores (again, exact numbers varied; see Online Supplement for full descriptions). All other “filler” information about the company such as its mission and length of time in business was held constant within industry.

Profit-Maximizing Motives

After reading the company description, participants rated the company’s profit-maximizing motives (our proposed mediator). These motives were measured using participants’ responses to five statements about the company on a scale from 1 (strongly disagree) to 7 (strongly agree) (e.g., “[Company name]’s main goal is to maximize profit” and “[Company name] is focused on increasing its bottom line.”) (α = .89).

Perceived Company Ethicality

Participants responded to five items similar to those described in Study 2 (α = .95; how ethical, moral, honest, sincere, and trustworthy does the company seem) on a scale from 1 (not at all) to 7 (extremely).

Manipulation Check

Participants rated company size from 1 (very small) to 7 (very large).

Controlling for Relative Impact

To address the possibility that individuals judge large companies as less ethical due to their potential to have a greater negative impact relative to small companies (Jones, 1991), we measured and controlled for participants’ perceptions of the company’s potential impact. Participants reported how much of an impact they felt the company had from 1 (no impact at all) to 7 (very large impact), and how much waste they felt the company produced from 1 (a very small amount) to 7 (a very large amount).

Additional Company Ratings

Participants also reported how expensive and innovative they thought the company’s product or service would be, the quality of the company’s product or service, how organized the company’s operations likely were, and the competence of the company’s leaders, from 1 (not at all) to 7 (extremely).

Participant Factors

We also measured gender, age, level of education, political ideology, location (state), geographic domain (rural, suburban, or urban), and environmentalism (α = .85; Van der Werff et al., 2013).

Results

Manipulation Check

We first examined whether our manipulation influenced perceptions of size. Collapsing across industries, companies in the large condition were viewed as significantly larger (M = 5.66, SD = 1.09) than companies in the small condition (M = 3.02, SD = 1.46), t(1,854) = 45.90, p < .001, d = 2.05. This difference also appeared within industry.

Company Ethicality

Consistent with our first prediction, participants judged the large company as significantly less ethical (M = 4.52, SD = 1.08) than the small company (M = 4.91, SD = 1.02), t(1,995) = −8.37, p < .001, d = 0.37. Although the large company was viewed as having a greater potential impact (M = 5.39, SD = 1.18) than the small company (M = 4.47, SD = 1.35), the size-ethicality stereotype still remained after controlling for perceived impact, t(1,995) = −11.27, p < .001, f² = .08. The same was true when controlling for perceived waste-creation and participants’ political beliefs, environmentalism, and expectations regarding the quality and costs of the company’s product, F(1, 1997) = 99.86, p < .001, f² = .48.

We collapsed responses across the 10 industries when testing for main and mediation effects as outlined in our preregistered analysis plan. However, to ensure that the observed effect was not driven by a single industry or small subset, we also tested our hypothesized effects within industry. For all 10 industries, the same pattern of effects emerged (Figure 2), reaching the standard level of significance in eight of 10 industries, with significant effect sizes ranging from d = 0.31 to d = 0.67 (see Online Supplement Table S2 for within-industry statistics).

Figure 2.

Study 3. Perceived Ethicality (y-Axis) of Small and Large Companies by Industry (x-Axis).

Mediation Via Profit-Maximizing

We also tested our proposed mediation pathway. As noted above, the large company was perceived as significantly less ethical than the small company. It was also viewed as having greater profit motives (M = 5.23, SD = 1.13) relative to the small company (M = 4.66, SD = 1.20), t(1,997) = 11.04, p < .001, d = 0.49. Consistent with our theorizing, we found a significant indirect effect of size on ethicality through profit motives when collapsing across all 10 industries (ab = −.18, SE=.02, z = −8.87, p < .001 using 5000 bootstrapped resamples; Figure 3). This indirect effect was also significant in each of the 10 industries studied (see Online Supplement Table S3).

Figure 3.

Study 3. Mediation Pathway Using 5000 Bootstrapped Resamples Showed a Significant Total Effect of Organizational Size on Perceived Ethicality and an Indirect Effect Via Profit-Maximizing Attributions.

Supplementary Items

As a final step, we examined the presumed relationship between size and other company attributes to rule out the alternative explanation that the difference in perceived ethicality was merely the consequence of a halo effect or global stereotype in which the small company was viewed more positively across all dimensions. In fact, participants anticipated that the small companies’ products and services would be less expensive, t(1,995) = 8.92, p < .001, d = 0.40, and lower quality, t(2,001) = 5.28, p < .001, d = 0.24, compared with the large companies’ products and services. Furthermore, the large company was rated as more innovative, t(2,001) = 6.99, p < .001, d = 0.31; its leadership as more competent, t(2,003) = 6.03, p < .001, d = 0.27; and its operations as more organized, t(1,967) = 8.94, p < .001, d = 0.40.

Discussion

Study 3 builds on Studies 1 and 2 in several important ways. First, the tendency to stereotype large organizations as less ethical than small organizations was robust across a diverse and representative set of industries, even when controlling for perceived impact and waste generated by large and small companies. Second, attributions of greater profit motives contributed to the size-ethicality stereotype—an indirect effect that was significant both across and within all 10 industries. However, we note that Study 3 also has a pair of limitations: (a) we tested a single explanatory pathway, and (b) we did not compare our mediator, profit-maximizing, to the alternative form of profit-seeking: profit-satisficing. As a result, we are unable to rule out alternative mechanisms or draw conclusions about differences in how these two forms of profit-seeking (maximizing vs. satisficing) are attributed to large and small companies and relate to perceptions of ethicality. To address the former, we tested alternative mechanisms that might account for the ethicality stereotype against large companies in two supplementary studies (reported below), before proceeding to disentangle how individuals construe profit-seeking across organizations in Studies 4 and 5.

Supplementary Studies: Testing Alternative Explanatory Pathways

In two preregistered supplementary studies (Supplementary Study A, N=407, https://aspredicted.org/3p5s2.pdf; Supple-mentary Study B, N = 400, https://aspredicted.org/3v7tc.pdf), we again tested our predicted mechanism—that perceived profit motives significantly contribute to the effect of organizational size on judgments of ethicality—while also testing alternative pathways that might explain the effect: perceptions of the company’s competence, power, bureaucratic rigidity, employee anonymity, and potential to harm. For conciseness, we report here the main findings of only one of these supplementary studies (Supplementary Study B), although the full results for both studies can be found in the Online Supplement. Using the same size manipulations used in Study 3, we again found a main effect of company size on perceived ethicality (M_large = 4.22, SD_large = 1.39; M_small = 5.02, SD_small = 1.17), t(386.4) = −6.16, p < .001, d = 0.62. We also found that company size significantly influenced perceived profit-seeking, which again mediated the effect on ethicality (ab= −.31, SE = .06, p < .001). When including the other potential mediators with profit-seeking in a parallel mediation test, perceived profit-seeking remained a significant mediator of company size on perceived ethicality (see Table 1). We also randomly assigned participants to evaluate companies from different industries, and we note that perceived profit-seeking motives was the only variable that consistently mediated the effect within all of the industries tested across both supplementary studies. The results of this study demonstrate that while individuals’ assumptions about a firm’s profit-seeking motives are not the only factor that contributes to the negative stereotyping of large companies, they are a significant and robust contributor.

Table 1.

Supplementary Study B. Means, Standard Deviations, Test Statistics, and Mediation Results for Each of the Potential Pathways Using 1000 Bootstrapped Resamples (Collapsed Across Industry).

Variable name	Large: M (SD)	Small: M (SD)	Test statistics (large vs. small)	Individual mediating effect	Parallel mediating effect
Profit-seeking	5.70 (1.12)	4.70 (1.28)	t(390.7) = 8.31, p < .001, d = 0.83	ab = −.31, SE = .06, p < .001	ab = −.25, SE = .05, p < .001
Competence	5.03 (0.95)	4.92 (0.98)	t(397.69) = 1.20, p = .229, d = 0.12	ab = .09, SE = .08, p = .231	ab = .09, SE = .07, p = .232
Power	5.62 (0.89)	3.99 (1.16)	t(374.02) = 15.79, p < .001, d = 1.58	ab = .34, SE = .11, p = .001	ab = .06, SE = .09, p = .491
Employee anonymity	4.41 (1.26)	2.66 (1.26)	t(398) = 13.88, p < .001, d = 1.39	ab = −.58, SE = .11, p < .001	ab = −.25, SE = .08, p = .003
Bureaucratic rigidity	4.31 (1.02)	3.73 (1.00)	t(397.81) = 5.74, p < .001, d = 0.57	ab = −.04, SE = .05, p = .420	ab = .12, SE = .04, p = .002
Ability to harm	4.71 (1.63)	3.70 (1.64)	t(397.95) = 6.17, p < .001, d = 0.62	ab = −.25, SE = .06, p < .001	ab = −.12, SE = .04, p = .004

Study 4: Exploring the Profit-Ethicality Relationship in Large and Small Companies

In Studies 4 and 5, we focused our investigation on the nuances of perceived profit-seeking behavior. In Study 4 (preregistered; https://aspredicted.org/5ih82.pdf), we developed a novel experimental design to tease apart individuals’ beliefs about the relationship between profit-seeking and ethicality when considering large and small companies.

Method

Participants and Procedure

We recruited 201 participants (50.7% women, M_age = 37.25, SD_age = 10.86) through Amazon’s Mechanical Turk. Prior to completing the survey, participants verified that they were willing and able to use the Google Drawings tool to complete a portion of the survey. A sensitivity analysis indicated that our sample size provides 80% power to detect a mean difference of d = 0.19 with α = .05, two-tailed.

Participants were randomly assigned to one of two conditions. In both conditions, participants read a brief description of a food and beverage company called “Mida Foods,” headquartered in Houston, Texas. In the “large company” condition, Mida Foods was described as “large,” making over US$60 billion in revenue each year, with 40 offices, nearly 300,000 employees, and products stocked in every major grocery retailer in the United States. In the “small company” condition, Mida Foods was described as “small,” making just over US$6 million in revenue each year, with two offices, 300 employees, and products stocked in a limited number of grocery retailers in the United States.

After reading this description, participants were taken to a Google Drawings template that contained a blank two-dimensional (2D) plane and a set of detailed instructions (for the template, see Online Supplement). Arranged above the plane were four “tiles” representing four common company priorities: Quality, Profit, Innovation, and Ethicality (priorities were adapted from the organizational culture factors outlined by O’Reilly and colleagues (1991). Participants were asked to drag-and-drop the tiles onto the plane and arrange them based on how important they thought each priority was to the company. On the left-hand side of the plane was an arrow pointing up, indicating that a tile placed vertically lower on the plane reflected less importance to the company, whereas a tile placed vertically higher on the plane reflected more importance to the company. We theorized that placing the Profit tile highest on the page means that the company is not only seeking profit but aiming to maximize profit. There were no limitations as to where participants could drag-and-drop the tiles on the plane, and participants could choose to cluster them as close or as far apart as they desired (e.g., participants could place all the tiles at the same height, or place tiles with varying degrees of vertical space between them). Participants also saw the company description off to the side of the 2D-plane for reference.

After arranging the tiles, participants uploaded a copy of their Google Drawing and then completed a manipulation check (“How would you describe the size of Mida Foods as a company?” Responses ranged from 1 = very small to 7 = very big) and a series of demographic questions (age, gender, education level, political orientation, and geographic location).

Coding Procedure for Drawings

A hypothesis-unaware RA recorded the following information about each drawing: the rank of each tile from 1 to 4, with a rank of 1 meaning that the tile was placed highest vertically (for instance, if Quality was placed above all the other tiles, it would be assigned rank 1); the height of the Profit tile from the bottom of the 2D plane (measured in pixels); the height of the Ethicality tile from the bottom of the 2D plane (measured in pixels). If two tiles were arranged next to each other, they were considered to have the same height and assigned the same rank. We used the height measures to calculate an additional measure—the vertical distance between the Profit and Ethicality tiles—by subtracting the latter from the former. We anticipated that participants would not only place the profit tile higher and the ethicality tile lower for large companies compared with small companies but also place these two tiles farther away from one another for large companies due to the belief that large companies are not simply more likely to maximize profit, but to maximize profit at the expense of ethicality.

Results

Five participants were excluded for not following the instructions (e.g., changing the dimensions of the 2D plane or the tiles, not arranging the tiles at all).

Manipulation Check

The manipulation of company size operated as intended, such that participants in the large company condition viewed the company as significantly bigger (M = 6.01, SD = 1.13) than did participants in the small company condition (M = 2.93, SD = 1.12), t(194) = 19.18, p < .001, d = 2.74.

Height of Profit Tile

We first tested our preregistered prediction that participants would place the Profit tile significantly higher in the large company condition compared with the small company condition. The data supported our prediction: Participants who read that Mida Foods was a large company placed the Profit priority tile significantly higher on the 2D plane (M = 383.98 pixels, SD = 82.29) than did participants who read that Mida Foods was a small company (M = 330.11, SD = 102.30), t(185.49) = 4.06, p < .001, d = 0.58.

Height of Ethicality Tile

In addition to placing the Profit tile higher as a priority, participants in the large company condition also placed the Ethicality tile significantly lower on the page (M = 224.98, SD = 86.31) than did participants in the small company condition (M = 258.56, SD = 101.32), t(189,22) = −2.50, p = .013, d = 0.36. As a reminder, there were no requirements that the individuals rank the tiles vertically; the height of one tile need not affect the height of another.

Distance Between Ethicality and Profit Tiles

Continuing to follow our preregistered plan of analysis, we found support for our final prediction: Participants in the large company condition placed greater vertical distance between the Profit and Ethicality tiles (M = 159.00, SD = 141.51) than did participants in the small company condition (M = 71.55, SD = 175.39), t(185.7) = 3.84, p < .001, d = 0.55; see Figure 4 for illustrative examples.

Figure 4.

Study 4. Example of a Participant’s Drawing in the “Small Company” (Left) and “Large Company” (Right) Conditions.

Rank of Profit and Ethicality Tiles

As an added robustness check, we also compared the aggregated rank (P. H. Lee & Yu, 2013) of the profit and ethicality tiles as a function of organizational size. When collapsing across both the large and small conditions, profit was ranked on average as the most important company priority (M_rank = 1.77) while ethicality was ranked on average as the least important company priority (M_rank = 3.45). Quality and innovation fell in between, with average rankings of 1.92 and 3.06, respectively. However, when examining these rankings by condition, we see for the small company, profit (M_rank = 2.08) and ethicality (M_rank = 3.06) tended to be ranked closer together, occupying Positions 2 and 3 on average, while for the large company, profit (M_rank = 1.46) and ethicality (M_rank = 3.45) occupied the most extreme positions on average, being placed in Positions 1 and 4, respectively. The difference in these aggregated rankings by condition was significant, χ²(15, N = 196) = 59.53, p < .001.

Discussion

In Study 4, we aimed to capture not only whether perceptions of profit-seeking differ between large and small companies but also the degree to which these perceptions differ, and whether this difference relates to organizational size. Using digital drawings in which participants freely moved four different company priorities around a page (with more important priorities placed higher on the page), we find that individuals placed Profit higher and Ethicality lower (both with regards to absolute height and rank), suggesting a more profit-maximizing approach to profit-seeking. Individuals also tended to place greater vertical distance between Profit and Ethicality when considering a large rather than small company.

One interpretation of this effect is that individuals may believe that among large companies, profit-seeking comes at a greater cost to ethicality, such that a focus on the former “crowds out” a focus on the latter. That is, in judging large companies, people may hold a zero-sum view of profit and ethicality, whereas that mentality may be less pronounced when judging small companies. Although the free-form design of Study 4 allowed us to gather valuable insight on how individuals construe profit-seeking and its relationship with ethicality, it also limits the extent to which we can draw firm conclusions about how participants judged the organization’s profit-seeking motives. Thus, in Study 5, we take a more structured approach, directly measuring profit-maximizing and profit-satisficing motives and exploring the relative strength of their relationships with perceived organizational ethicality.

Study 5: Profit Maximizing Versus Satisficing

In Study 5, we explicitly measured differences in how profit-seeking behavior is construed when evaluating large versus small companies. We tested our prediction that large companies are viewed as more profit-maximizing relative to profit-satisficing, and that these perceptions of profit-maximizing motives can account for judgments of ethicality.

Methods

Participants and Procedure

In Study 5 (preregistered; https://aspredicted.org/dy7rs.pdf), we recruited 307⁴ students and staff (60% women, 2% nonbinary, 10% did not specify gender; M_age = 22.08, SD_age = 3.55) from a private, West Coast university. Participants were randomly assigned to either a “large company” condition or a “small company” condition. In both conditions, participants were given a cover story that the researchers were interested in learning more about companies’ social media use. A sensitivity analysis indicated that our sample size provides 80% power to detect main and interaction effect sizes of d = 0.16 with α = .05.

In the “small company” condition, participants were told they would see a social media post from KM Retail, “a small retail company with just 2 stores and nearly 40 full- and part-time employees” that turns over “about $100,000 in sales” each month. In contrast, in the large company condition, participants were told they would see a social media post from KM Retail, “a massive retail company with over 2,000 stores and nearly 40,000 full- and part-time employees” that turns over “about $1 billion in sales” each month. In both conditions, participants saw an image of KM Retail’s headquarters, which was either a small office building in the “small” condition or a large office complex in the “large” condition (see Online Supplement for full materials). These images were pretested on several dimensions including perceived size.

To maintain the cover story, all participants reviewed the same social media post from the company announcing the start of their upcoming spring sale with “20% off storewide.” Participants then completed an attention check (identifying the number of employees) and a series of multiple-choice measures.

Profit-Satisficing

Perceptions of the company’s profit-satisficing motives were measured using three items (“KM Retail aims to be profitable,” “KM Retail tries to maintain a healthy bottom line,” and “KM Retail hopes to earn money”; α = .73). Responses were on a scale from 1 (strongly disagree) to 7 (strongly agree).

Profit-Maximizing

Perceptions of the company’s profit-maximizing motives were measured in a similar manner, but the three items were adjusted to emphasize maximization of profit (“KM Retail aims to maximize its profits,” “KM Retail focuses solely on its bottom line,” and “KM Retail hopes to earn as much money as possible”; α = .75). Responses were on a scale from 1 (strongly disagree) to 7 (strongly agree). Results of a factor analysis can be found in the Online Supplement.

Company Ethicality

Company ethicality was measured using the same five-item measure described in Study 3 (α = .92).

Results

Perceived Company Ethicality

We first replicated our main effect, finding that when KM Retail was described as a large company, it was viewed as less ethical (M = 3.74, SD = 0.96) than when described as a small company (M = 4.24, SD = 0.99), t(274.83) = −4.29, p < .001, d = 0.52).

Perceived Profit-Satisficing/Maximizing

We found that the large company was viewed both as significantly more profit-satisficing (M = 5.48, SD = 0.98) than the small company (M = 5.13, SD = 0.90), t(274.11) = 3.10, p = .002, d = 0.37, as well as more profit-maximizing (M = 4.74, SD = 1.11) than the small company (M = 4.09, SD = 1.09), t(276.62) = 5.00, p < .001, d = 0.60; Figure 5). However, participants viewed the large company as significantly more profit-maximizing relative to profit-satisficing compared with the small company, and the interaction between the form of profit-seeking attributed (maximizing or satisficing) and organizational size was significant, F(1, 277) = 7.24, p = .008, using a multilevel model to account for participant-level random effects.

Figure 5.

Study 5. The Large Company Was Viewed as Significantly More Profit-Maximizing Relative to Profit-Satisficing Compared to the Small Company.

Mediation Via Perceived Profit-Maximizing

Profit-maximizing motives mediated the link between organizational size and perceptions of ethicality (ab = −.16, SE = .05, p = .002), whereas profit-satisficing motives did not (ab = −.002, SE = .03, p = .937). In addition, the indirect effect of company size on perceived ethicality via profit-maximizing was significantly greater than the indirect effect via profit-satisficing (i.e., zero overlap in 95% confidence intervals), supporting our preregistered hypothesis. This was also true when testing the mediators in parallel (Figure 6).

Figure 6.

Study 5. Parallel Mediation Pathways (Coefficients Refer to a, b, and c Legs) for Profit-Maximizing and Profit-Satisficing Using 5000 Bootstrapped Resamples.

Discussion

In Study 5, we replicate our main effect that larger companies are assumed to be less ethical than smaller companies. We also find that individuals view larger companies as significantly more profit-maximizing relative to profit-satisficing when compared with smaller companies. Critically, while prior research has conceptualized profit-seeking broadly, suggesting that it is predominantly viewed as orthogonal to ethicality (Bhattacharjee et al., 2017; Derwall et al., 2011; Kahneman et al., 1986), we show that only profit-maximizing motives—and not profit-satisficing motives—mediated the effect of organizational size on judgments of ethicality.

General Discussion

Organizational size offers many benefits, including slack resources and increased innovation (Damanpour, 1996). However, an important drawback may also come with being a large organization: perceived unethicality. Across five studies, we find consistent evidence that larger (vs. smaller) organizations are stereotyped as less ethical by observers. Study 1 suggests that people spontaneously engage in the stereotyping of large organizations as less ethical, as evidenced by the content of stories that participants wrote about either a large or small organization—without any ethics-related prompt. In Study 2, we found that this tendency to stereotype large organizations also emerged implicitly, using an IAT. In Study 3, the size-ethicality stereotype was robust across a diverse set of industries and—consistent with our prediction—was associated with our theorized mechanism: perceptions of profit motives (an association that held when accounting for alternative plausible pathways).

In Study 4, we used a novel experimental design to provide initial evidence that evaluators construe profit-seeking and its relationship with ethicality differently in large and small companies, an assertion we tested explicitly in Study 5, demonstrating that large companies are viewed as more profit-maximizing than profit-satisficing, and it is this former type of profit-seeking that better accounts for perceptions of ethicality.

Not only did we find persistent evidence of a link between perceptions of organizational size and unethicality, but this effect also held when controlling for the firm’s perceived impact (Study 3) and did not appear to be the result of a global negative stereotype against large companies (Studies 1 and 3). Our studies (all of which were pre-registered) relied on easily reproducible experimental paradigms, and our focal effect sizes ranged from d = 0.31 to 0.84, equivalent to or stronger than the average effect size in published psychology research (Richard et al., 2003), giving us confidence in the reliability of this size-ethicality stereotype.

Theoretical and Practical Implications

Social psychologists have argued that stereotypes can be applied to nonhuman entities, including government institutions and business corporations (Aaker et al., 2010; Johnson, 2019). Nevertheless, the literature on firm-level stereotypes has only begun to scratch the surface of how these judgments are formed. We expand our current understanding of organizational stereotypes by identifying a core component that shapes these judgments: firm size. Building on past research suggesting that individuals generally associate business with immorality (Reynolds et al., 2010), we present a model of size-based stereotyping involving for-profit organizations. Our findings offer strong evidence of a robust tie between organizational size and judgments of ethicality, such that larger firms are automatically judged as having lower ethical standards than their smaller counterparts.

We also heed the call for more research on the “role of attributions in the formation of ethicality perceptions” (Harvey et al., 2014). Specifically, we identify one critical psychological pathway that can shape perceptions of larger organizations’ ethicality: attributions of profit-maximizing motives. We note that while individuals hold a zero-sum view of profit-seeking and ethicality (Bhattacharjee et al., 2017), this zero-sum view is not consistently applied. Instead, profit-seeking can be deconstructed into two components—maximizing and satisficing—and attributions of the former better account for perceptions of ethicality. While individuals view large organizations as more profit-maximizing and assume that this comes at the expense of ethicality, this belief is less strongly held in judgments of smaller organizations. This distinction provides the groundwork for more nuanced investigations into how individuals judge and respond to specific forms of corporate profit-seeking behavior.

At the same time, these findings have real-world implications for large companies. The link between judgments of ethicality and subsequent consumer behavior is well established, particularly whether consumers avoid or punish firms that they perceive to be unethical (Creyer, 1997; Creyer & Ross, 1996). Boycotts, protests, and social media campaigns can damage both a firm’s ability to hire (Ogunfowora, 2014) and its bottom line (Osborne, 2009). In recent years, anti-corporate sentiment has reached a fervor, as some members of the public accuse large firms of being greedy and exploitative. This growing discord has precipitated the launch of large-scale social movements that call for sweeping corporate change (e.g., Occupy Wall Street). Leaders of large firms may be curious to know whether these negative stereotypes can be mitigated, just as leaders of anti-corporate movements may be keen to understand which factors can galvanize their followers in even more fervent opposition.

The negative stereotyping of large firms’ ethicality might also lead to a type of self-fulfilling prophecy (Merton, 1948), whereby larger firms find it challenging to maintain ethical standards. This could occur, in part, through self-selection in recruitment: If people assume that larger firms are less ethical, then less ethical individuals may be more likely to apply for jobs at larger firms. In addition, a large firm’s employees may fall victim to a form of pluralistic ignorance in which they presume that a behavior they believe is unethical will not be judged as unethical by their colleagues. Thus, they fail to report or rebuke those who engage in such behavior, wrongly presuming that normative standards are more forgiving of ethical transgressions. This experience may prompt more ethical employees to leave larger firms out of frustration, believing that any effort to enforce ethical standards would be fruitless. Each of these pathways presents an intriguing possibility that the downstream consequences of this pervasive size-ethicality stereotype generate a vicious cycle.

Limitations and Future Directions

Our work has several limitations that might serve as the basis for future research. For example, future investigations of the size-ethicality stereotype might focus on how the stereotype shifts across organizational forms. In the present research, we focus on perceptions of for-profit organizations and how differences in their size and perceived profit-seeking motives shape attributions of their ethicality. Yet, it is less likely that the same stereotype would apply to nonprofit institutions (Aaker et al., 2010). A nonprofit would presumably be seen as neither profit-maximizing nor profit-satisficing, and so our proposed mechanism would seem less relevant in this domain. Nonetheless, size may generate other associations for these organizations, such as a lack of perceived legitimacy. Thus, size may still be a valuable characteristic to better understand organizational stereotyping, more broadly.

Moreover, while we have highlighted the robust literature documenting downstream consequences of perceived corporate ethicality (e.g., Creyer, 1997; Creyer & Ross, 1996), we encourage efforts to replicate and expand upon the current findings by identifying behavioral effects of the size-ethicality link (e.g., boycotting, protesting). In addition, we suspect there may be cases where the impact of this link appears stronger or weaker. For instance, we suspect that the influence of perceived unethicality and consumer/employee behavior may be even stronger among members of recent generations, who appear to emphasize activism in response to corporate malfeasance (Francis & Hoefel, 2018; Mendini et al., 2022).

Another fruitful line of future research might be exploring what other factors (besides profit-maximization) contribute to, or attenuate, this size-ethicality stereotype. Perhaps “unicorns” (younger organizations that quickly became large) are less susceptible. They may be perceived as more ethical than long-established firms of equal size because the former seems less closely tied to the stereotyped category of large firms based on their nascent status. The presumed target of unethical behavior may also moderate the size-ethicality stereotype. Harm done to specific individuals (employees, customers) versus broader entities (the industry, society at large) can be equally unethical, but the extent to which such harm is judged to be unethical may differ. When observers assume that humans would be the target of a company’s unethical actions, they may judge a large company even more harshly compared with when, say, other companies suffer (such behavior may be seen as “just business”).

Finally, we note a pair of methodological and analytical limitations. Across our studies, we tested a range of stimuli that signal organizational size (photos, number of employees and offices, etc.). However, there may be additional features of size that can be tested in future research (e.g., total revenue and conglomerate status). We anticipate that the resulting generalized perception of size would lead to a similar pattern of effects, but this remains to be seen. In addition, we tested our proposed mechanism using bootstrapped mediation analyses. Scholars have noted that directly manipulating the mediator can be an alternative means of testing a causal pathway (Spencer et al., 2005). We therefore conducted a final exploratory study (Supplementary Study D) in which we manipulated company size as well as our mediator, the company’s profit-maximizing motives. Although this study was purely exploratory (i.e., not pre-registered), we find that when large companies presented themselves as not profit-maximizing by signaling a concern for customers and community, the negative ethicality stereotype was attenuated, providing causal evidence that attributions of profit-maximizing motives contribute to individuals’ views that larger organizations are less ethical.

Conclusion

Our research suggests that when companies grow, perceptions of their ethicality change, as people assume that these larger firms will do absolutely anything to maximize their profits. Ironically, larger organizations often have more formalized mechanisms to ensure they remain compliant with ethical standards, whereas smaller companies often lack such guardrails and, given their diminutive size, escape outside scrutiny. Nonetheless, the organizational size-ethicality stereotype persists, and in a world where perceptions of ethicality can dramatically shape how the public judges and interacts with organizations, understanding and identifying the operation of this stereotype become more important than ever.

Footnotes

Data Availability

Verbatim study materials (i.e., Methodology file), pre-registrations, data, codebooks, and analysis code can be found in the Online Supplement ().

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iDs

Andrea Freund

Francis Flynn

Transparency and Openness

Materials, preregistrations, and data available at .

Supplemental Material

Supplemental material is available online with this article.

Notes

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