Abstract
Banks are paying huge fines for misrepresentation, money laundering and interest-rate fixing, while representatives of media organizations are being arrested for bribery … the list of scandals goes on and on. As such it is a particularly appropriate time to consider the reasons for and causes of such illegal and unethical behaviour.
In this helpful book, Palmer focuses on the individual level of analysis and on collective wrongdoing as he addresses the core issues of why some individuals initiate wrongful behaviour and why others then join them. He takes a sociological approach to defining wrongdoing: behaviours that are labelled wrongful by social control agents. His theoretical framework is based on the identification of two perspectives on organizational wrongdoing, two dominant approaches to analysing the causes of wrongdoing and eight specific explanations of wrongdoing, and showing the relationships between them. Each of the two overarching perspectives on wrongdoing has something to say about the nature and causes of wrongdoing and the characteristics of the individuals involved. In what he terms the conventional dominant perspective, wrongdoing is conceptualized as abnormal behaviour, whereas the other view holds that wrongdoing is in fact a normal occurrence.
Do people wake up in the morning and say, ‘I think I’ll do something illegal today’? Palmer identifies and discusses two ideal-typical approaches to answering this question. In what he again calls the dominant approach, wrongdoing is the result of conscious decisions made by rational actors who develop positive inclinations to engage in wrongdoing. The second approach is more recent and now more popular, and argues that wrongdoing is produced in a particular social context by boundedly rational actors who are not positively inclined to engage in wrongdoing.
Palmer then discusses eight specific explanations of organizational wrongdoing. In his discussion of each explanation, Palmer provides an overview of the underlying theories, drawing on a range of disciplines – sociology, economics, psychology, ethics and management – and provides examples showing how each explanation can be applied.
Two explanations are in what he terms the dominant accounts category: the rational choice account – the jumping-off point for all other accounts – and the culture account. I now describe Palmer’s approach to the rational choice account in order to show how he tackles these explanations, which all follow a similar pattern. He starts his discussion with an example: Ford’s cost−benefit analysis-based response to the problem of the exploding fuel tanks of the Ford Pinto, where it was deemed to be cheaper to pay out damages to those injured than to recall the cars. The theoretical underpinnings of this explanation are provided by agency theory and strain theory, and Palmer then draws on expectancy theory, the role of individual differences and the role of situational variation to provide an overarching framework for the rational choice account, where he also discusses the limits to rational choice, decision frames and heuristics. Examples of wrongdoing are provided in the discussion of theory, and the chapter ends with an assessment of the rational choice explanation.
Palmer links these two explanations of the causes of wrongdoing to the overarching perspective that sees organizational wrongdoing as an abnormal phenomenon. The five explanations in an alternative accounts category are linked to the perspective that views wrongdoing as a normal phenomenon. The explanations are: the administrative system, the situational social influence, the power structure, the accidental behaviour and the social control account. Palmer favours the latter, which says firstly that behaviour becomes wrongdoing only when labelled as such (see his definition of wrongdoing), and secondly that social control agents can encourage wrongdoing. These accounts have in common that the immediate social context of the wrongdoers is seen as being important. Social context is, however, rather narrowly understood: it is the group or organization, not society, culture or economic system.
The last explanation is the ethical decision account, which claims that people make decisions based on ethical considerations; it bridges the perspectives and approaches.
So are we condemned to having to put up with companies whose employees bribe, cheat and mislead? Palmer proposes remedies based on the accounts. For instance, the rational choice explanation calls for severe punishment and the social influence explanation implies training people to resist group pressures.
Missing from the book is a broader, more historical perspective. An interest in corporate wrongdoing is related to the growing importance of Corporate Social Responsibility, which itself reflects a shift from shareholder towards stakeholder capitalism – none of these topics is to be found in the index. Then there is a wider unaddressed question: is wrongdoing normal in all organizations at all times or only under capitalism? Still, the book is very useful for anyone interested in organizations and ethics. With his fine review of relevant theories and by providing a wealth of examples, Palmer is able to demonstrate that organizational wrongdoing is indeed ‘normal’, as his title suggests.