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Credit: Zach Sheldon

A company’s reputation and prestige can affect outcomes in discrimination lawsuits, according to a joint study between professors from Penn and Northwestern University.

A corporation such as Google, for example, is extremely well-admired, listed as “highly innovative” and “a great place to work.” At the same time, former employees have filed two lawsuits against the tech giant: one filed by women who say they were paid less than their male counterparts, and another citing discrimination against conservative white men.

Although this so-called “halo effect” can be an advantage, if Google were found liable, the halo would actually expose the company to more severe punishment and harsh critique — what the researchers call the “halo tax.”

On the flip side, companies with already tarnished reputations do not have as much to lose. For example, the problematic culture of ride-sharing company Uber — currently listed among USA Today’s most hated companies — is widely known.

Although Uber is facing allegations of workplace discrimination and sexual harassment, it did not have a “halo” to begin with; its flaws were evident from the start. 

“If you have a criminal record, you will be punished more harshly," Mary-Hunter McDonnell, a former Kellogg Ph.D. student and current assistant professor at Penn, told Kellogg Insight. "We found it works differently for organizations. Juries don’t make the same character attributions to chronically deviant organizations. They think about organizations differently.”

“Prestige is harmful to organizations in that it draws attention to their potential hypocrisy,” Kellogg School professor Brayden King said. “These companies are supposed to be standout examples of virtue in their industries or examples of how companies should behave. It makes them high-profile targets.”