The Influence of the Institutional Context on Corporate Illegality

22 Pages Posted: 5 Mar 2013

See all articles by Claudia Gabbioneta

Claudia Gabbioneta

Università degli Studi di Genova

Royston Greenwood

University of Alberta - Department of Strategic Management and Organization

Pietro Mazzola

IULM University

Mario Minoja

Università degli studi di Modena e Reggio Emilia (UNIMORE); Bocconi University

Date Written: February 21, 2013

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.

Suggested Citation

Gabbioneta, Claudia and Greenwood, Royston and Mazzola, Pietro and Minoja, Mario, The Influence of the Institutional Context on Corporate Illegality (February 21, 2013). Accounting, Organizations and Society, Forthcoming; University of Alberta School of Business Research Paper No. 2013-09. Available at SSRN: https://ssrn.com/abstract=2222287

Claudia Gabbioneta (Contact Author)

Università degli Studi di Genova ( email )

Via Vivaldi 5
Genova, 16126
Italy

Royston Greenwood

University of Alberta - Department of Strategic Management and Organization ( email )

Edmonton, Alberta T6G 2R6
Canada

Pietro Mazzola

IULM University ( email )

Via Carlo Bo, 1
Milano
Italy
+3902891412636 (Phone)
+3902891412770 (Fax)

Mario Minoja

Università degli studi di Modena e Reggio Emilia (UNIMORE) ( email )

Viale A. Allegri 9
Modena, Modena 42121
Italy

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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