Abstract
There is widespread recognition that organizational culture matters in corporations involved in systemic crime and wrongdoing. However, we know far less about how to assess and alter toxic elements within a corporate culture. The present paper draws on management science, anthropology, sociology of law, criminology, and social psychology to explain what organizational culture is and how it can sustain illegal and harmful corporate behavior. Through analyzing the corporate cultures at BP, Volkswagen, and Wells Fargo, this paper demonstrates that organizational toxicity does not just exist when corporate norms are directly opposed to legal norms, but also when: (a) it condones, neutralizes, or enables rule breaking; (b) it disables and obstructs compliance; and (c) actual practices contrast expressed compliant values. The paper concludes that detoxing corporate culture requires more than changing leadership or incentive structures. In particular, it requires addressing the structures, values, and practices that enable violations and obstruct compliance within an organization, as well as moving away from a singular focus on liability management (i.e., assigning blame and punishment) to an approach that prioritizes promoting transparency, honesty, and a responsibility to initiate and sustain actual cultural change.
Highlights
Following major corporate scandals, most of the attention focuses on assigning individual liability to the highest possible executive
Such assessment requires a deep analysis of structures, values, and practices that run against the law, that enable rule breaking, that obstruct compliance, and that delegitimize the law and norms supporting it
This paper has shown how toxic culture exists at the levels of structures, values, and practices in corporate organizations
Summary
Most of the attention focuses on assigning individual liability to the highest possible executive. 2017 report of the Independent Directors of the Board of Wells Fargo, the bank itself came to admit that what happened was an organizational, not just an individual problem: “The root cause of sales practice failures was the distortion of the Community Bank’s sales culture and performance management system, which when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts”. It uses the forensic ethnography framework to analyze deviant elements of corporate culture at BP, VW, and Wells Fargo Based on these analyses of the root cultural causes for corporate misconduct, the paper concludes by discussing their implications for addressing corporate wrongdoing and changing toxic corporate cultures. As stated in the Netflix Documentary Dirty Money, season 1, episode 1, minute 27:28
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