The influence of the institutional context on corporate illegality |
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| Authors: | Claudia Gabbioneta Royston Greenwood Pietro Mazzola Mario Minoja |
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| Affiliation: | 1. DIEC, University of Genoa, Italy;2. Department of Strategic Management & Organization, University of Alberta, Canada;3. University of Oxford, United Kingdom;4. Department of Management and Economics, IULM University, Italy;5. Department of Communication and Economics, University of Modena and Reggio Emilia, Italy;6. Department of Management and Technology, Bocconi University, Italy;1. Purdue University, West Lafayette, USA;2. Rotella Acrospire, Chicago, USA;1. University of Naples “Federico II”, Department of Economics, Management, Institutions, Campus Universitario Monte S. Angelo, Via Cinthia 26, 80126 Naples, Italy;2. Second University of Naples, Department of Economics, Corso Gran Priorato di Malta 2, 81043 Capua, Italy;1. DCU Business School, Dublin City University, Dublin 9, Ireland;2. University of Amsterdam Business School, Plantage Muidergracht 12, 1018 TV Amsterdam, The Netherlands;1. Accounting and Finance, University of Aberdeen Business School, Edward Wright Building, Dunbar Street, Aberdeen AB24 3QY, UK;2. Toi Ohomai Institute of Technology, Rotorua, New Zealand |
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| Abstract: | This paper examines the relationship between the institutional environment and sustained corporate illegality. We find that cognitive assumptions generate expectations that can, under specific circumstances, induce organizations to amplify illegal actions and that serve to lessen regulatory scrutiny. We also find that, once initiated, illegal actions can become hidden because of institutionalized practices that enable their concealment and that weaken the prospect of detection. These processes and effects are particularly noticeable in networks of professional regulators who become mutually over-confident and over-influenced by each other to the extent that their independent critical assessments and judgements are compromised. Mechanisms of mimetic herding and social humiliation compromise independence of judgement. Networks of interacting professionals are thus vulnerable to a collectively induced lowering of regulatory vigilance. |
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