Summary Organisational Scandals and Misconduct
Contents
Lecture 1: Rational choice......................................................................................................................1
Lecture 2: Administrative systems.........................................................................................................3
Lecture 3: Situational social influence...................................................................................................5
Lecture 4: Power structure....................................................................................................................6
Lecture 5: social control.........................................................................................................................8
Lecture 6 organisational reactions.......................................................................................................10
(case sessions are excluded)
Lecture 1: Rational choice
Rational choice: cost-benefit analysis, benefits outweigh costs.
Two rational choice theories:
1. Agency theory
, 2. Strain theory
Agency theory: Agent works for principal. Both have different incentives. Agents may engage in
wrongdoing to outperform, potentially hurting principal interest. (example, loan crisis where
managers gave out too many loans hurting solvency and causing crisis).
Strain theory: People engage in wrongdoing due to difference in social classes. Low class may have
less opportunities -> crime/wrongdoing to overachieve.
Culture explanation: wrongdoing due to cultural aspects. Can be done both through endorsing
wrongdoing or allowing in certain circumstances.
Cultural content: norm/values
Cultural forms: symbols/practices etc.
Example Enron: wrongful practices: top trader to strip club / goal achievement by all means / rule
breaking allowed if goals are reached.
Techniques of neutralization: used do define circumstances where wrongdoing is allowed.
Denial of responsibility: wrongdoing allowed when not your responsibility.
Denial of injury: wrongdoing allowed when no one is harmed.
Denial of victim: wrongdoing allowed when the victim deserves to be wronged.
Social weighting: wrongdoing allowed because everybody does it or because entity is illegitimate
everybody cheats, so I can cheat and SEC examiners don’t have to be taking seriously, they are
stupid.
Appeal to higher loyalties: wrongdoing acceptable if a higher moral goal is achieved, making
wrongdoing noble. Manipulating markets cause of belief in free markets.
Contents
Lecture 1: Rational choice......................................................................................................................1
Lecture 2: Administrative systems.........................................................................................................3
Lecture 3: Situational social influence...................................................................................................5
Lecture 4: Power structure....................................................................................................................6
Lecture 5: social control.........................................................................................................................8
Lecture 6 organisational reactions.......................................................................................................10
(case sessions are excluded)
Lecture 1: Rational choice
Rational choice: cost-benefit analysis, benefits outweigh costs.
Two rational choice theories:
1. Agency theory
, 2. Strain theory
Agency theory: Agent works for principal. Both have different incentives. Agents may engage in
wrongdoing to outperform, potentially hurting principal interest. (example, loan crisis where
managers gave out too many loans hurting solvency and causing crisis).
Strain theory: People engage in wrongdoing due to difference in social classes. Low class may have
less opportunities -> crime/wrongdoing to overachieve.
Culture explanation: wrongdoing due to cultural aspects. Can be done both through endorsing
wrongdoing or allowing in certain circumstances.
Cultural content: norm/values
Cultural forms: symbols/practices etc.
Example Enron: wrongful practices: top trader to strip club / goal achievement by all means / rule
breaking allowed if goals are reached.
Techniques of neutralization: used do define circumstances where wrongdoing is allowed.
Denial of responsibility: wrongdoing allowed when not your responsibility.
Denial of injury: wrongdoing allowed when no one is harmed.
Denial of victim: wrongdoing allowed when the victim deserves to be wronged.
Social weighting: wrongdoing allowed because everybody does it or because entity is illegitimate
everybody cheats, so I can cheat and SEC examiners don’t have to be taking seriously, they are
stupid.
Appeal to higher loyalties: wrongdoing acceptable if a higher moral goal is achieved, making
wrongdoing noble. Manipulating markets cause of belief in free markets.
