Introduction

Espionage threatening the intellectual property constituting a company’s unique selling point increasingly features in company risk assessments (e.g. Oppenheimer et al. 2015; Jalil and Hassan 2020). This study provides an internal focus on crisis management, which is often lacking in crisis research. We show that in these high-velocity circumstances (Eisenhardt 1989), speedy responsiveness to internal and external stakeholders is necessary but insufficient. Instead, as Weick (1995) suggested, rapid improvisation based on clear-headed social learning is required, similar to Irby’s (1992) thinking in the midst of action, applying timely communication (Coombs 2007; Coombs and Holladay 2014) to agree a prognosis while conducting a shared diagnosis, and Weick’s (1995) simultaneity, akin to battlefield responsiveness. Weick, who describes rather than defines, simultaneity contrasts it with learning by referencing reliance on routine, reliability, repetition, automatic processing and memory. Instead, simultaneity is learning that crosses multiple layers that together make sense, like jazz musicians improvising around a theme. His key point is that the simultaneity in learning draws together layers of knowledge, while activity is taking place and irreversibly makes sense of what is happening. Our contribution is to show that for such thinking and simultaneity to be effective in this unusual situation, rich preparation by managers seeking to defend the company is required, including a deep understanding of the context and cultures in which the company trades. To investigate this unusual but revealing situation, we draw upon Nardi’s (1996) concept of distributed learning and the Vygotskian (1926) approach to social learning, for which, in the words of Engeström (2007), context is everything. Uniquely, Vygotsky emphasised emotional attachment and sensemaking in light of previous experience, shaped by context and culture. Learning (for example, about a technology or service system) is distributed in the sense that all learning reaches outwards, only makes sense by its connections to other activity systems: what Vygotsky terms zones of proximal development. Secondly, learning is distributed to other people concerned with the sensemaking, who contribute ideas that polish, hone and otherwise nuance the knowledge an individual contributes. Put simply, learning only becomes knowledge when related to other bodies of knowledge and is accepted as useful by other people actively using the body of knowledge. Our research question is Faced with a crisis that includes internal sabotage by significant agents, what aspects of social learning are important for embattled leaders seeking to rebuff the sabotage and maintain organisational integrity and stability?

In this rare situation of some senior managers seeking to destroy a company they have helped build, our argument is informed by Kinder et al.’s (2018) idea that restoring is an exercise in consciousness building, a battle for ideas requiring relational leadership, where groups or individuals lead and manage the coordination of change among stakeholders (Uhl-Bien 2006) and rebuild the collaborative management that typified the company prior to the crisis. Our contribution is as follows. First, we add to the literature on crisis management by synthesising Vygotsky’s (1926) approach to social learning with Irby’s (1992; cf. Mavin and Cavaleri 2004) and Weick’s (1995) ideas on learning while embattled or performing, emphasising that this is only possible if based on prior learning about the context and culture of the company and its stakeholders (cf. Kolb 2014). Second, to manage business development and organisational reputation during the crisis, it is essential to use distributed learning, thinking and doing simultaneously. Third, we suggest that the social learning framework we adopt has a general use for managers facing sabotage and suggest practical steps for risk mitigation.

Following a review of previous research relating to reputation risks and organisations, we then review the literature on social learning during a crisis, from which we suggest an analytical framework that we use to present this case study. We then present the discussion and conclusions.

Previous Research: Reputation Risks and Organisations

EC is a growing company that has faced significant operating and ethical challenges during its foundation and early years of operation. As Stinchcombe (1965) noted, small companies face the liability of newness, which can be turned into an asset if the product/service is relevant to customer needs. However, no product sells itself; creating legitimacy with staff, customers and partners such as banks (Stone 2011) and suppliers is an essential aspect of company growth. In line with Deephouse and Carter (2005), Deephouse (2000), in this paper, legitimacy refers to social acceptance resulting from loyalty to social norms and expectations, and reputation refers to a comparison among organisations (Kuoppakangas et al. 2013; Barnett et al. 2006; Bromley 2000; cf. Rindova et al. 2005).

As Chun (2005) noted, building a positive reputation and associated credibility is essential for an organisation and its growth (Fischer and Reuber 2007). This is particularly true for recruiting and retaining staff members (Fombrun 1996, 2000). Reputation is an important aspect of strategy (i.e. differentiation from competitors), since a positive reputation suggests some competitive advantage (Fombrun and Shanley 1990; Walker 2010; Suomi and Järvinen 2013), thereby reducing market and financial risk (Ewing et al. 1999). Fombrun and Shanley (1990, p. 234) concluded that ‘reputation is the outcome of a competitive process in which firms signal their key characteristics to constituents to maximise their social status’. To cite a well-known Dutch saying, trust walks in slowly, but leaves on a horse, meaning that reputation can be quickly lost and is difficult to recover (Rayner 2003; Scandizzo 2011). Loss of credibility and legitimacy can impact staff loyalty, customer perception and investor commitment, and for a small growing company, loss of reputation is a significant threat (Csiszar and Heidrich 2006; Aula 2010; Wang and Wanjek 2018).

A ruined reputation might also affect the loyalty of stakeholders, shareholders and investors, as well as competitiveness, local positioning, media relations and the legitimacy of operations, thus threatening the company’s existence (Chen 2021; Aula 2010; Xifra and Ordeix 2009). Reclaiming a lost reputation or turning a negative reputation into a positive one is not an easy task.

According to O’Callaghan (2007), reputational risks are social and political, internal and external. External reputation risk includes, for example, bribery, insufficient attention to cultural morals and human rights abuses (Szwajca 2018). Internal reputation risk includes product/service failure, poor decision-making and corruption (cf. Olmedo-Cifuentes et al. 2014). As Gaultier-Gaillard and Louisot (2006) noted, loss of reputation weakens a company’s ability to function, posing an existential threat. We can envisage circumstances in which misperception of reputation brings unearned benefits. Our focus, however, is on the dangers of loss of reputation and how rapid learning by managers can mitigate threats (Markwick and Fill 1997). We therefore turn to the nature of social learning and the depth of understanding of context and culture that managers require to make sense of risk to reputation.

Learning in Adversity

Weick’s (1995) metaphor of the collective mind responding to a crisis relates to heedful interrelations in a social system. His idea is that a group response to a crisis (an unanticipated harmful existential threat) involves rapid learning and improvisation that weaves disparate layers or bodies of knowledge into a new whole constituting relevant new learning (Carmeli and Schaubroeck 2008). While Weick envisaged a group acting for crisis control, for example, an engine problem during a flight, our concern is with a business ecosystem in which by definition there is no central controller. Instead, autonomous units respond to crisis change separately; however, their responses recognise that their welfare aligns with the health of the ecosystem. Thus, the task of managers seeking to stabilise a company by restoring/preserving reputation is one of consciousness raising—persuading customers, staff and stakeholders that the crisis has been resolved and the company retains legitimacy.

According to Nardi (1996), this is an exercise in distributed learning: communicating and persuading stakeholders that a positive reputation is not threatened and that the company is stabilised and worthy of trust that their cognitive state of understanding about the company, including emotional trust in the company, is not misplaced, their cognitions based on knowledge distributed by people in the company and other stakeholders is not misplaced. While Weick focussed on rapid learning, Weber et al. (2011) pointed out that learning occurs in a context and culture that influences learning. Crisis learning by managers should therefore be seen as an exercise in social learning, the nature of which we discuss now (cf. Smith 2006).

Rapid Sensemaking

A crisis that threatens reputation, particularly one initiated by despoilers, as in the present case, constitutes what Eisenhardt (1989) called a high-velocity environment—change is rapid, and yesterday’s collaborators are today’s saboteurs. Normal ways of working and rules cease to apply, and managers seeking to protect the company’s reputation need to improvise. Improvisation is the iterative synthesising of planning and implementation, as opposed to the linear and sequential application of standard operating procedures. Irby (1992) called this thinking in the midst of action, giving the example of a group of medical doctors diagnosing a patient’s condition, speculating on possible answers, discounting some suggestions and eventually as a collective agreeing on the best-fit diagnosis. The learning occurs while diagnosing the patient, not before or after, but in the midst of action. Weick (1995) used the term simultaneity. Improvisation involves learning what to do without the luxury of forethought, yet staying within an acceptable business paradigm and respecting the norms prevailing in the business context and culture. This is not the opportunism that Cameron and Quinn (2006) suggested, since context and culture constrain decisions. Rather, the rapid learning necessary is serendipitous, which does not mean luck, but a prepared mind seeking a new way of working (Merton and Barber 2004). Such learning not only has to be rapid (Eisenhardt 1989), it also needs to quickly realign the company to its context and culture, making stakeholders comfortable that its legitimacy and reputation are intact.

In this case, saboteurs who were previously on the inside of the company were at work, so the learning necessarily involved restructuring. Agyris and Schön’s (1997) triple-loop enables complex problem-solving and thus improving the performance of organisations. Triple-loop learning also encourages new learning strategies to be created and it can be employed, where learning to learn or learning from experience occurs: new ways of learning, new ways of implementing and the creation of new structures. Another way of looking at this reputation defence in a crisis is that a new service system needs to emerge, what Baker and Nelson (2005) referred to as bricolage, creating something new out of what is already available. Ogle (2007) referred to the ideas space, a dynamic new view of the company’s alignment to context and culture, with new and convincing narratives entering the consciousness of staff and other stakeholders.

Rapid Social Learning

Crises that are unexpected, and in this case involving saboteurs, are emotionally charged. We chose Vygotsky’s (1934) approach to learning as a way of explaining and understanding this case, since he proposes that all learning involves emotional attachments. Learning is mediated by language and socially inherited norms, metaphors and frameworks.

Vygotsky (1934) emphasised that learning is socially constructed; making sense of new artefacts (activity) is mediated by context and culture alongside previous learning inside zones of proximal development (ZPD) (Stenvall et al. 2018; see Wertsch 1985). While referencing experience in making sense of new learning, Vygotsky emphasised cognition more than (for example) Argyris and Schön (1997) or Wenger (1998). His stance is similar to Dewey and Authentic’s (1938) experiential or pragmatic learning and Kolb’s (2014) experiential learning cycle and learning inventory. Unlike knowledge management theory, the social learning approach does not rely on the problematic distinction between explicit and tacit knowledge; it focuses on how knowledge is created rather than how it is archived, distributed and managed. Vygotsky’s social learning approach involves active learning and, as Raelin (2008) pointed out, ideally suits action research and learning. Consciousness unifies all cognitive learning processes (Nardi 1996) distributing learning structures and representations (Vygotsky’s activity systems) by creating new (more widely shared) activity systems: consciousness that hears positive echoes in its social referencing. According to Vygotsky, all learning is social: cognitions always reference culture and context (Wertsch 1985). As learning is internalised, individuals create new combinations and interpretations resulting in new knowledge (Daniels et al. 2007).

Vygotsky’s (1978) approach highlights the role of social interaction in reconstructing prior knowledge. He explored the ZPD as the difference between what a learner can do without help and the capabilities of the same learner engaged in interactions with other people bringing other sets of knowledge. Such learning always involves emotional reattachment (Vygotsky 1926, 118); it is affective, the result of cultural predispositions.

Our framework adapts Vygotsky’s (1934) social learning theory. We triangulate our findings with this literature, evaluating the usefulness of our framework structured by the four influences constituting an activity system: the individual, context, organisational dynamics and culture. Emotional-cognitive individual workers are learning new solutions in a crisis. This learning is guided by degrees of emotional attachment, trust and empathy and involves taking time to reflect and unlearn. Learning is tested, and distribution is the organisational environment and system. Context shapes all learning. ‘Soft’ features of the learning environment culture revolve around expectations.

As Vygotsky (1978) stated, a social learning approach involves active learning, and according to Raelin (2008), this ideally suits action research and learning. This social and active learning is analysed in this article. Horizontal analysis was used to examine the data based on the internal and external matters in the crisis, individual learning and organisational culture in the midst of the crisis, the organisation in practical crisis and experientialities and the crisis from a reputation perspective. In addition, analysing the positive and negative issues in the company and the new perspectives in this article, it is emphasised that learning is socially constructed with attention to context and culture alongside previous learning development.

Methods

In this study, we examine an international engineering company (EC) founded in 2010 by former employees of another big company, X (hereafter CX), in the engineering business field. For anonymity, the case company is referred to as EC. Its revenue in 2018 was close to €14 million, and it had approximately 60 employees. EC is a fast-growing global player in its field. In 2011, the EC was brought to legal action by CX and sued for industrial espionage. The long trial was concluded in November 2019.

Following Yin (2003), our strategy is a single qualitative case study approach, which, as Halinen and Törnroos (2005) argued, is suitable for gaining a rich understanding of the case under scrutiny in its real-life context (Suomi 2015; Saunders et al. 2003). Qualitative case studies have distinctive value when a context-specific investigation requires a significant depth of data (Silverman 2011). The aim of this study is not to generalise statistically; instead, we aim to expand social learning theory (Flyvbjerg 2006). Furthermore, a single-case study has the potential to provide novel insight into complex social action and allow the reader to enter the story and explore it.

This single-case study’s empirical data collection was carried out in 2018–2020. Altogether, 18 informants were selected using purposeful sampling (Strauss and Corbin 1998) and thematically interviewed using an interpretative enquiry approach (Silverman 2011; Rabinow and Sullivan 1985). Eight of the 18 interviewees represented those involved in the espionage legal court processes and played a central role in the trial case (the founders of the company, including the CEO); thus, they are the key interviewees in this case study. The other interviewees (10) were included in the interviews due to their knowledge of the business context and their long careers in a similar field. They were selected using the qualitative snowball sampling method (Bernard 2000). Their role as interviewees was to provide a wider understanding of the context of this study in terms of the business field of the case organisation. They were not employees of EC. For this study, the eight key interviewees played a central role since they were insiders/employees of EC. The information received during the interviews was linked to the research environment that is the interest of this research (Yin 2003).

The 18 thematic interviews lasted from two to six hours, with three hours being the average time. All interviews were audio recorded. The eight key informants were asked to talk about their views on the espionage case and how they had or had not coped during the long process of the legal process. Because the research topic and aims were sensitive in nature, the interviews lasted for a long time to build trust between the interviewee and the researcher. All interviews resulted in the provision of in-depth information on the topic under scrutiny. The other interviewees (10) were asked about their views on the EC espionage case as outsiders of the organisation with an understanding of the business field and what they had learned from the media reports. The information from their interviews added to the researchers’ understanding of the case under scrutiny. Quotations from these interviews are not used in this paper, because the focus is on internal stakeholders and their experiences in the midst of the crisis.

The gathered empirical data were abductively analysed in four phases in line with Dubois and Gadde’s (2002, p. 559) definition of abductive method: “In studies relying on abduction, the original framework is successively modified, partly as a result of unanticipated empirical findings, but also of theoretical insights gained during the process”. First, the interview recordings were explicitly transcribed into text. The transcribed texts were carefully read by the researchers to form a general view of the data for thematic grouping guided by the interview themes: Please tell me about your experiences and views on the espionage case of EC, how and what has helped you to cope, and what has obstructed you in coping during the long legal process. In the third phase, and in line with the abductive approach, the existing framework and empirical data were revisited, and several important themes were identified. In the fourth phase, as a result of the iterative analysis and comparisons of notes and discussions among the researchers, the detected themes were synthetically merged into four groups: (1) coping mechanisms and negative crisis impacts, (2) differences in how employees experienced the event, (3) social construction and shared experiences and (4) reputational aspects.

These four theme groups are presented in the results and analysis section. The original empirical data extracts were translated from Finnish to English. Due to the strict anonymity requirements and the sensitive nature of this study, the interviewees were not identified in this study, and they are presented with codes, i.e. interviewee number 2 as (2a) (Silverman 2011).

Findings

The analysis yielded four themes, illustrating how the organisation’s leaders engaged in social learning as they sought to defend the espionage case at trial and maintain the external reputation of EC. Our research question was as follows: Faced with a crisis that includes internal sabotage by significant agents, what aspects of social learning are important for embattled leaders seeking to rebuff sabotage and maintain organisational integrity and stability?

The findings are grouped into four themes: (1) Individual learning in the midst of a crisis (coping mechanisms and negative crisis impacts), (2) Internal and external crisis matters (differences in how employees experienced the event), (3) Organisation in practical crisis and experientialities (social construction and shared experiences) and (4) Crisis and reputation (reputational aspects).

Individual Learning in the Midst of Crisis

The first theme reflects on coping mechanisms and negative crisis impacts in terms of social learning in dynamic situations, according to which the employees’ knowhow and learning abilities are crucial for the organisation to overcome a crisis. The case organisation was in the midst of a crisis for a long time due to espionage legal trials. Internally, there were multiple crises among the employees when the legal trial issues were discussed.

The trial processes coursed challenges internally, because it was impossible to function with work during the trial days. (2a)

Many of EC’s employees were not aware of what happened at the legal trials and what kind of crisis it had created during the workdays for those involved in the legal procedures. Only those employees who were involved in the legal trials and in the discussions concerning the case knew the reality and how the legal process was processed in court. The representatives of the court and the legal advisers contacted only the litigants, who were asked and expected to be bound to secrecy.

Being bound to secrecy is partly due to the fact that no one wishes to complicate or hinder the legal processes in court. We were afraid that everything would be more difficult at the personal, organisational and especially legal levels. (3aL)

Most of EC’s employees were confused about the processes, and it was difficult for them to understand how court decisions individually affected those eight employees under suspicion of espionage. This might have affected EC’s organisational culture and how the crisis and emotions were managed. The informants discussed very personal matters in the interviews.

Only God has helped me. If I had not found faith, I would have turned to suicide a long time ago, because the [legal] process was so heavy. (4a)

It was very challenging in the organisation when one employee was dwelling in a personal crisis while another was planning the future of the business.

There was a lot of uncertainty among the employees and inconsistency in operations due to the challenging everyday working environment. According to the informants, individuals’ endurance in different situations and learning from peers was important in the midst of the crisis. One way of coping was learning in everyday work. The following are some examples of quotations concerning employees’ feelings and anxiety during everyday work situations.

During the court trial, I was continuously reminded that I had previously been judged guilty. These events made it difficult to cope with everyday work. Continuous fear of the court trial starting, loss of credit cards and the fear of house searches by the police. All these leave marks on a person. (8aL)

During the legal court processes, no one wanted to help each other. We wanted to cope independently; however, we needed a lot of help. (6a)

The organisational crisis and the affiliated employees’ uncertainty hindered all operations. It also affected those employees who were not involved in the legal court processes. In addition, in the midst of the crisis, learning was difficult. According to the informants, there was a lot of uncertainty, which produced concern about how to survive the crisis. The informants discussed how the organisational culture and the senior leadership should be able to balance uncertainty and belief in a better future and sense of community among the employees. The long-standing uncertainty created blurred trust and confusion about the future. Due to the changing situations and unpredictability, it was not possible to make far-reaching future plans for the organisation.

Internal and External Crisis Matters

The second theme focuses on differences in how employees experienced the event and how social learning, facing inward and outward in the midst of the crisis, created different internal and external realities. Internally, the crisis formed two clear-cut sides: those involved in the legal trials and those not involved. The informants commented in the following ways:

People who were involved in the legal processes formed a strong commonness with each other, and those who were not involved did not really know any details. Externally, some employees accused their peers. Even kids were asked, ‘Does your father work there with the criminals?’ (2a)

There were clearly people who took their stance against the other side, and this polarised the employees internally. You had to be on one side or the other. The trial took 10 years, which is a very long time, and peers structured their own realities of the trials, even though they did not know any details. (11a)

Those employees who were involved in the legal processes experienced incidents and feelings that other employees did not know about. The silence and restrictions on discussing details of the legal processes and trials affected the entire company and its employees as well as the families of the suspects. Furthermore, there was much disappointment about unkept promises from employers, as seen in the following quotations.

My wife did not receive any help, even though it had been promised by EC. In this kind of process, a person’s deeds should help the family. (8aL)

The company [EC] could have supported us financially and in other ways too. It is not ‘a handshake’ if there is not any support. This was a very expensive exercise. The invoices will be very costly for the participants [those involved in trials]. (6a)

All that was promised was not delivered. (3a)

Organisation in Practical Crisis and Experientialities

The third theme addresses social construction and shared experiences, scrutinising social learning in the context of business and everyday work life. The informants discussed how their shared experiences were constructed by communality among the employees who were involved in the legal trial and who experienced the external threats and challenges connected to it. An exchange of experiences occurred among those who felt that they had been treated badly in the legal court and investigation processes.

Mr. X confessed, and I felt that it also affected my situation, even though I had nothing to do with it. (6AI)

The communal experiences were easier for some of the employees. These experientialities were formed by experiences during the legal trials. In a peculiar way, the legal trial crisis led to unifying the employees’ empowerment. The informants explained how the unification of power was formed because people had to ally with those who had similar experiences. Allying was the only way to survive in the difficult situation. Unique individual experiences were also raised in the interviews regarding the legal trials.

It was felt inside the organisation that there were differences in how people were treated, and it created a lot of conflicts. (8a)

Altogether, according to the informants, the shared common experiences were important in coping with the crisis. Those who were not involved in the legal trials did not have the same common experiences. The experientialities in the organisation became important via practical operations. The shared common experientialities were formed by the crisis and connected to the legal trials and how it created internal conflicts in the organisation.

The employers’ stance has been unclear the whole time. There has not been any support. The company [EC] has not been involved in any way, even when we have asked. There has not been any mental support, even though it was promised in the beginning. It has been totally opposite; we have been threatened not to make any agreements, even if we would have wanted to. We were forbidden to make any agreements. (6a)

To get through and solve the problems was important for the organisations’ operations to function. Similarly, it was important to take care of the business to succeed in international markets. The informants explained that it was important to grow sales and secure work for all employees. A balanced organisational culture without interference would enable continuity and development.

Crisis and Reputation

The fourth theme reflects the reputational aspects and social learning. The informants stated that one way of managing the organisation’s reputation was not to give any interviews or information to the media. Consequently, there was very little information in public and few publicly open materials. The downside of the no publicity policy was the secrecy. Very little information was known outside of the organisation, and it was emphasised strictly to the employees that they were not allowed to provide any information concerning the espionage case and trial outside the organisation. Even at the international level, there was not much published information concerning the case.

Internationally, the publicity was scarce, and news coverage was rather limited and scattered. (1aL)

Even inside the organisation, employees were reluctant to speak about the issue. The total silence around the case did not build EC’s organisational culture nor enhance its positive internal or external reputation. In addition, the informants who participated in the court trials felt that they were left alone in the midst of the crisis.

I was not helped in any way by the company in terms of the trials’ financial expenses, nor mentally, nor did the company help in terms of building the organisation’s reputation. (4a)

In the interviews, only a few mentioned organisational reputation. The informants talked more about their own personal reputations in terms of the espionage case. They dwelt on their own personal experiences connected to the trial processes. Many of these were stories involving deep sensitive emotions and personal reflections, with unique construction of subjective realities. There was not much room to reflect on the organisation’s reputation. Nevertheless, all the informants mentioned that it was very important to communicate to their customers that all employees wished to build and keep strong ties with them and that the employees’ professional skills and knowhow were at a highly prestigious level.

Discussion

This study contributes to the broader body of research on how an organisation’s reputation crisis (cf. Carrol 2009) creates a situation of disruption that yields adaptation through a social learning process. It highlights the internal focus on managing organisational reputation in the midst of a crisis. The research question we aimed to answer was Faced with a crisis that includes internal sabotage by significant agents, what aspects of social learning are important for embattled leaders seeking to rebuff the sabotage and maintain organisational integrity and stability?

We emphasised reputation as being both internal and external, and the impact in the two spheres. As noted by Suomi et al. (2020), internal reputation, characterised as a moving target taking on different meanings for different groups, requires coherence and depth to have an internal impact. Incorporating social learning via the exchange of experiences among those involved, we discussed employees’ coping and overcoming of challenges and their internal communication in the midst of a crisis (cf. Frandsen and Johansen 2016; Griffin 2014; Young 2018; Kuipers and Schonheit 2021) to support social learning. The results indicate that concentrating on delivering positive external information to clients in the midst of a crisis may safeguard an organisation’s reputation.

Individual Learning in Crisis

The results of this study are in line with Vygotsky’s (1978) approaches in that employees’ social learning and reconstruction of existing knowhow may support coping in a crisis situation. A central matter is a person’s own desire to learn and develop new skills by first unlearning (not forgetting) and reconstructing new skills with their current knowledge. Employees’ social learning is important for business development as well as coping and overcoming crises. The empirical data revealed that common experientialities of cognitions, emotions and moral predispositions may support employees’ coping in the midst of a crisis.

The exchange of experiences among those who were involved in the legal processes helped them overcome their crisis-related stress to some extent. In addition, they socially constructed their common reality of the crisis on top of each individually constructed reality. This resonates with Weick’s (1995, 40) retrospective sense making: ‘Work experiences that rise prospectively in fragments and fall retrospectively into pattern—a mixture of continuity and discontinuity’, employed here as dynamic individual learning to cope with crisis.

Organising Business Responses to Crisis

The results of this study indicate the importance of an organisation’s reputation in the midst of a crisis and how such a situation calls for clear communication, both internally and externally (Ewing et al. 1999; Kuoppakangas et al. 2019a, b; Guerber et al. 2020). How an organisational crisis is managed reflects on an organisation’s reputation. When an organisation runs into crisis, its reputation is externally evaluated, mostly by how it manages its public communication. It may control trust between and within organisations. The organisation in this study chose not to communicate publicly about the crisis. Even so, the number of clients and revenue of EC grew exponentially during the crisis, which somewhat contradicts earlier research findings suggesting that a reputation at risk may result in lost revenue and markets (cf. Suominen 2003; cf. Markwick and Fill 1997).

EC has mostly international clients, and it was assumed by the informants that the publicity of the case did not reach them, because internationally, public information about the espionage case was incomplete and scattered. The results of this study suggest that EC’s good reputation for prestigious knowhow within their field protected the business during the crisis (Ewing et al. 1999). EC communicated to its clients that they wished to build and maintain tight relationships with them and that their knowhow remained uniquely strong in their field. Here, reputation management in the midst of a crisis was taken on a positive pathway by outward-looking learning. Instead of communicating the crisis and the context of espionage claims, EC concentrated on the positive sides of their company’s skills and unique knowhow.

Context of Business and Everyday Work Life in Crisis

The notion of trust was raised in the empirical data as being jeopardised internally (see also Kish-Gephart et al. 2010). According to Suomi (2015), trust plays a key role in managing and building organisational reputation. This study supports the idea that human interaction is the foundation of trust. Thus, trust is a function of the power, quality and duration of human interaction (Campbell 2007; Gunningham and Sinclair 2009). Trust in interactive relationships is determined by the participants’ impressions of the degree of trust experienced towards the other party in a direct or indirect interactive relationship, as found in this study. The trust between the employees and the employer suffered, as did the organisation’s internal reputation and trustworthiness. Nevertheless, in this case, the clients reacted in an opposing way, and the company’s revenue continued growing during the decade, while the espionage legal trials took place.

Cultural Setting of Business and Employees

Internal communication is important because employees reflect and construct socially their realities of a crisis (Kuoppakanagas et al. 2013). Coherent and effective internal communication may support the wellbeing of employees in the midst of a crisis. The results of this study show how employees’ wellbeing deteriorates when employers do not show support or keep promises (Kuoppakangas et al. 2019a, b). In addition, lacking or uncoordinated internal communication may negatively affect employees’ wellbeing (Kuoppakanagas et al. 2013). Employees build the organisational reputation internally and externally; thus, it is important to take care of their wellbeing during a crisis (Kuoppakangas et al. 2019a, b; Suomi 2015). In addition, unkept promises by the company do not support the employees’ construction of its internal reputation, which they communicate outside of the organisation.

In addition to organisational reputation, this study found that individual employees’ reputations also contributed to the external and internal reputation of the organisation (Kuoppakanagas et al. 2013). The company’s failure to communicate the details of the crisis to the employees internally affected EC’s organisational culture, creating negativity and blame and dividing the employees into two polarised groups. As the company’s leaders did not take responsibility and guide the way towards a more unified culture, clearly orchestrated internal communication was lacking, and there was room for suspicion and rumours, which introduced negativity into the organisation. Consequently, the wellbeing and work-related effectiveness of the employees were affected negatively, both for those involved in the legal trials and those who were not. The issues of trust and distrust became evident. Favourable reputation, that is, reputation capital building, nests in mutual trust among employees, employers and external stakeholders. In this case study, the clients’ trust in the organisation was steady, and the heritage of EC’s services was strong and even grew during the crisis due to the niche knowhow and positive communication by EC.

In this paper, we have emphasised reputation as being both an internal and external impacting factor in the two spheres, in line with, who stated that internal reputation, though characterised as a moving target taking on different meanings for different groups, requires coherence and depth to have impact internally. In this sense, the ‘turn’ towards aligning reputation theory with the theory of entrepreneurship, as described by Eabrasu (2021), means that external reputation as part of the liability of newness may be at early stages of development, whereas internal reputation may be at a more mature stage of development. These differences are important, because as we have shown, it is possible to maintain an external reputation when faced with a crisis, while at the same time altering reputation internally for some groups.

When organising business responses to a crisis, first, the crisis has to be detected and defined within the organisation. In an organisation, signals of an impending crisis are often ignored either intentionally or unintentionally, and the crisis may go undetected. The events and discussions can come as a surprise. A crisis can put an organisation on standby and halt activities. If an organisation’s operations are detected in a timely manner, appropriate action can be taken that will preserve the organisation’s operational capacity. This study has examined the external crisis of the organisation and related it to social learning and reputation management. Crisis event delimitation is important, and the crisis can easily spread outside the organisation as well. Individuals who are not involved in a crisis can even increase the organisation of the crisis. Furthermore, external stakeholders may become negative if they are involved in dealing with it. However, the damage caused by the crisis to outsiders may be minor. The most significant impacts are most often limited to the inside of the organisation and do not harm external stakeholders.

Conclusions

This study had an internal focus on how an organisation’s reputation crisis created a situation of disruption that yielded adaptation through a social learning process. Hence, we aimed to answer the question: Faced with a crisis that includes internal sabotage by significant agents, what aspects of social learning are important for embattled leaders seeking to rebuff the sabotage and maintain organisational integrity and stability?

Social learning via the exchange of experiences among those who are involved in a crisis supports employee coping and overcoming challenges. Hence, leaders and managers must guide and coordinate internal communication in the midst of a crisis to support social learning. If internal communication is lacking, it has jeopardising outcomes similar to unkept promises. Furthermore, focusing on delivering positive external information to clients in the midst of a crisis may safeguard organisations’ reputations.

Based on this research, it can be said that it is essential for management to understand the aspects of individual learning in crisis by taking into account that people in different life situations require different encounters. Life situations can cause various crises in the workplace and should be considered and addressed by supervisors. If some individuals are incapable of fully accepting the demands of the job, ways should be found to help them. Sometimes, it can be difficult to identify these challenges and individuals in an organisation. Learning does not occur if the organisation supports learning as a result of the crisis. Learning should not be fragmented, but must be supported, and learning patterns need to change during a crisis. The challenge of leadership is diversity and individuality. Meeting people is an important way to support social learning and make the work community more functional.

In the context of business, management and everyday work life in a crisis, all the functions of the organisation must continue as before. If operations need to be changed, then that time should be minimal, and the impact on services/products should be minimal. Activities should continue normally during and after a crisis. During a crisis, there should be no product or service losses for customers, because they may have long-term effects on the business. The challenge for the organisation is to find sufficient resources to deal with the situation. Organisational leadership can be challenging, so leaders should find support on their own and from others. The organisation and external stakeholders always need to be aware of the situation. Decision-making should be quick, and internal conflicts should be avoided. All external voltages must be avoided, and operations should remain as normal as possible. Decision-making must be based on facts.

When looking at the cultural setting of the business and its employees, the organisation may suffer long-term negative repercussions after a crisis. The reputation capital of the entire industry may also suffer. Due to ineffective crisis management, the community may see the organisation as unreliable or hostile, and negative emotions and effects need to be addressed quickly. The organisation and staff may see errors in the details of crisis management but will continue to operate normally. The reputation of the organisation is enhanced by effective crisis management. In an organisation, staff can be seen as survivors, heroes, caring or victims of circumstances. The different experiences of individuals in a crisis help the whole person understand the approach to coping with the crisis.

This study was a single-case study, which somewhat limits its transferability to broader contexts. However, it provides insight into how social learning and positive external communication may support organisations’ survival in crisis situations. Future studies should examine the role of internal and external trust and distributed learning in managing reputation in the course of a crisis.