Behavioral versus Institutional Antecedents of Decentralized Enforcement in Organizations: An Experimental Approach

Abstract:     
Social enforcement, the decentralized action by organizational actors of monitoring, identifying, and reporting legal violations, is widely recognized as a key factor in ensuring good governance. This article reports on a study conducted in the United States and Israel examining the behavior of individuals when confronting unlawful conduct within their workplaces. The study provides novel insights into the relationships between state-based, organizational-based, and employee-based enforcement. It finds that the likelihood and the manner of reporting will vary depending on the type of illegality and is strongly correlated to perceptions of legitimacy, job security, and voice within the workplace. Comparing illegalities, employees prefer to report clear violations by rank-and-file employees rather than violations by managers. At the same time, external reporting to government or media entities is most likely when violations involve the organization as a whole or implicates top management. The study also finds cultural and gender differences in reporting patterns. Finally, the study demonstrates that social norms are more predictive of social enforcement than expected organizational costs.

Number of Pages in PDF File: 57

Keywords: corporate self-regulation, decentralized enforcement, motivations for social sanctioning, social norms, whistleblowing

JEL Classification: K42, M14, Z1

working papers series