Amenable Controls: How Companies Influence Laws, Reputation, and Morals
In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, 2019), Chapter 45.
Posted: 8 May 2019 Last revised: 15 Jun 2020
Date Written: May 6, 2019
What happens when sustainability concerns clash with the company’s bottom line? On paper, various systems should deter unsustainable behavior: fear of liability (legal sanctions), diminished business opportunities (reputational sanctions), or guilty feelings (moral sanctions). Yet, in reality, companies do not take these legal, reputational, and moral sanctions as given. They rather count on their ability to dilute the expected sanctions. Companies reduce the probability of being caught by controlling the information environment and creating plausible deniability. They are often the ones dictating the public perception of whether they behaved sustainably or not. Companies can also dilute the sanction that is imposed once they are caught, by capturing the regulators, and reducing the guilt associated with immoral behavior. Recognizing that all systems of control can be gamed opens up space for rethinking policy implications, such as designing the legal system in ways that balance the non-legal systems’ areas of malleability.
Keywords: reputation, information avoidance, regulatory capture, role morality, moral licensing
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