Impact of Rumours on the Business Organizational Structure

Rumors have been a regular feature of society for as long as it has existed and can have adverse effects on people, especially within the business context. Rumors within businesses can alter the social perceptions within by affect the attitudes and behaviors of people as well as increasing hostilities. To understand the effects of rumors, we must define what a rumor is and what the different components are, as well as distinguishing the difference between rumors and gossip. We will then talk about how rumors affect the organizational structure of businesses as well as the workers themselves. Lastly, we will give recommendations on strategies that can help stop and mitigate the effect of rumors. 

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The phenomena of rumors have been studied since the mid-20th century and as such there have been many different definitions published. One of the first definitions was by Allport & Postman (1947), defining it as “a specific (or topical) proposition for belief, passed along from person to person, usually by word of mouth, without secure standards of evidence being present”. While this definition has held up over the years since its first publishing, other scholars have shown that parts of it have become outdated as society has changed. Rosnow (2001) takes issues to two main points with the definition. Firstly, modern society has changed in a way where we share most of our information through the internet and social media, rather than “word of mouth”. Second, is that the classification of a statement as a “rumor” depends upon the context of the person. “A statement is considered “fact” to someone who can authenticate it, but “rumor” to someone for whom it is in doubt.” (Rosnow, 1980). Also, Rosnow notes that Allport and Postman describe the communication chain in their definition as a serial chain of individuals. Whereas, rumors are often communicated through to a cluster of people (Davis, 1972). Lastly, the idea of a rumor in this definition is that it is based off of a message that has been sent, that the rumor has been passed along. While some rumor can be said to have been passed through a group of people, it can also be said that the rumor is a “hypothesis temporarily set forth during group discussion in which people are attempting to make sense of an ambiguous situation (Rosnow, 1988).

Rosnow proposed a new definition that addresses the problems discussed above. Rosnow (2001) defines rumors as “an unverified proposition of belief that bears topical relevance for persons actively involved in its dissemination”. The main notion that a rumor is a statement without any proven truth remains present, however it does not specify how that information is conferred. More importantly, the definition focuses more on how the rumor is relevant to the persons involved with it. It shifts the priority of the rumor away from that of the content contained to that of the people involved with its activity.

Another distinction needed to be made is the difference between rumors and gossip within the business context. They are often used interchangeably, however there are distinct differences in characteristics between the two. Rosnow and Kimmel (2000) describe three key differences: whether or not it is based upon evidence, is significant, and is primarily about individuals. Rumors are not based on solid evidence, are usually significant and may or may not be about individuals. Gossip is different to this as it may or may not be firmly substantiated, is not typically perceived as urgent by participants, and is about individuals (Rosnow & Georgoudi, 1974).

To understand the effects that rumors have, we must first consider how and why a rumor is transmitted throughout an organization. (Rosnow, 1991) sets outs four important factors that can lead to the transmission of rumors: personal anxiety, generalized uncertainty, outcome-relevant involvement, and belief in the rumor.

Rosnow defined anxiety in the context of rumor as “an affective state—acute or chronic—that is produced by, or associated with, apprehension about an impending, potentially disappointing outcome” (1991, p. 487).  Anxiety as an emotion and as a trait characteristic has been linked to the likelihood of transmitting rumors. There are considered two explanations that explain the correspondence between anxiety and rumors. First, rumors are a way to justify the presence of anxiety. People transmitted rumors in order to justify their feelings of anxiety and in a way reduced their cognitive dissonance arising from unexplained feelings of apprehension. Second, people see rumors as a way to reduce their anxiety by regaining a sense of control. Rumors may afford a sense of control in that they help people to prepare for and/or to understand events.

Uncertainty can be defined as a psychological state of doubt about what current events mean or what future events are likely to occur. According to Tamotsu Shibutani (1966), rumors are “improvised news” necessitated by uncertain situations: when formal information is not available or not trusted, people compensate with informal speculation. He also states that rumors can be thought of  collective problem solving that tries to understand unknown situations.

The importance of a rumor refers to the significance of the topic that a rumor is applied to. From Allport and Postman’s (1947) basic law of rumor, the importance of a rumor dictates the that the higher the importance of a rumor, the more likely it is to spread. Another factor of importance is how closely tied the rumor is to the person that is hearing it. If the person is closely tied to a rumor, they will become more involved within it and have an increased chance of spreading that rumor if it is non-detrimental.

 The belief of a rumor, or as stated by Rosnow (1991) “credulity”, refers to how much trust one puts into the truth of the rumor. The higher the belief in the rumor, the more likely someone will trust in its message and a higher chance of transmitting the rumor as well. Also, the reverse is applicable, the lower the trust in a rumor that less likely someone will pas it along. Rosnow speculates that this is due to a fear of losing credibility if the rumor is seen as untrue.

Rumors within organizations

Rumors are commonplace within organizations, they are created and transmitted due to structural changes that happen within the organization. These changes can include restructuring, downsizing, layoffs, reorganization, mergers, new technology, and culture changes. All of these changes can have adverse effects on the employees as they can often be stressful experiences and may dramatically affect organizational commitment and productivity. Good communication that explains these changes can alleviate the affects these changes can have, while the opposite is true that bad communication can worsen them

Poor communication of these changes can produce uncertainty and anxiety within the organization, which leads to the creation of rumors.

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Rosnow, R. L. (1991). Inside rumor: A personal journey. American Psychologist, 46(5), 484.

Rosnow, R. L. (1988). Rumor as communication: A contextualist approach. Journal of Communication, 38(1), 12-28.

Rosnow, R. L. (2001). Rumor and gossip in interpersonal interaction and beyond: A social exchange perspective.

Rosnow, R. L., & Kimmel, A. J. (2000). Rumors. Encyclopedia of Psychology (Vol. 7, pp. 122–123).

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