The New Perspective on Organizational Wrongdoing

Abstract

Wrongdoing in and by organizations offends public sensibilities, is costly to organizations, and is injurious to the individuals who perpetrate it and are victimized by it. The dominant perspective on organizational wrongdoing considers it to be an abnormal phenomenon; behavior that is rare, clearly aberrant, perpetrated by people who are abhorrent (who possess outsized preference structures or perverse values), and produced by a narrow range of out of whack organizational arrangements (most frequently, misaligned incentives or perverse cultures). However, new emerging theory and research on organizational wrongdoing present a fundamentally different perspective. It views wrongdoing as a normal phenomenon; behavior that is prevalent, not much different than rightdoing, perpetrated by people who are for the most part upstanding (otherwise ethical, socially responsible, and law abiding), and is a function of a plethora of structures, processes, and mechanisms that are integral to the efficient and effective functioning of organizations. This new way of approaching wrongdoing has important implications for managers.

Blame Game Theory: Scapegoating, Whistleblowing and Discursive Struggles following Accusations of Organizational Misconduct

“…Within this body of research, many argue that organizational misconduct is socially constructed (Greve et al, 2010). The line between what is right and wrong is blurry and can be manipulated by both audiences and perpetrators (Palmer, 2012(Palmer, , 2013. A pivotal triggering event for the social construction of misconduct is the accusation of misconduct, through which behaviour is identified as wrongful and is exposed to audience scrutiny.…”

“…We anchor our model in the view that audiences actively make sense of their social context (Radoynovska & King, 2019) where this sensemaking is prompted by the disruptive and surprising event of an accusation of misconduct. The audiences that engage in sensemaking following an accusation can be damaged parties, customers or suppliers, governments, regulators, the media or simply the general public (Clemente, Durand & Porac, 2016; Palmer, 2013). Some of these audiences are likely to be more invested than others in trying to attribute responsibility for the misconduct and thus are more active in their sensemaking, especially those with a higher stake in the accusation of misconduct (e.g.…”

“…When such an accusation is made, it is still to be determined whether misconduct really took place and, if so, who was responsible (Faulkner, 2011). The organization’s behaviour is subsequently evaluated by external audiences – groups of actors who actively try to make sense of a situation (Radoynovska & King, 2019; Roulet, 2020) – and judgements are made about its wrongfulness (Mohliver, 2019; Palmer, 2013). This audience evaluation is therefore often associated with negative outcomes such as a reputational penalty for the accused organization (Coombs & Holladay, 2006).…”

“A word is enough to the wise?!”: a study on narratives produced by the media when translating the role of the players involved in the Operation Car Wash in Brazil

“…In light of this, in this work, we understand organizational wrongdoing from the perspective of normal wrongdoing, in which the configuration of a series everyday practices, apparently accepted, can lead to scandals of great proportions, mainly when they involve agents of different natures -public, private, and control agents among others. Unveiling this interaction of relationships between various agents appears to be the central point of narratives produced by the media in its search to present the "correct and true" version of what's happened, which is a true web of great and small practices which sustain organizational wrongdoing, when observed from a perspective of normality (PALMER, 2012(PALMER, , 2013.…”

Blind Alleys of Financial Fraud

“…Organizational wrongdoing is a phenomenon, not a passing occurrence. It is more of a norm than an exception (Palmer, 2013) and will likely continue to exist as long as we have organizations. Cases of wrongdoing may be of several types, including bribery, cheating, circumventing regulatory enforcement (e.g., Volkswagen), overstepping the rights of stakeholders (e.g., Wells Fargo), or committing financial fraud (e.g., Satyam Computers).…”