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Toxic Corporate Culture: Assessing Organizational Processes of Deviancy

Benjamin Van Rooij () and Adam Fine ()
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Benjamin Van Rooij: School of Law, University of California, Irvine, 401 East Peltason Drive CA 92697 and School of Law, University of Amsterdam, Nieuwe Achtergracht 166, 1018 WV Amsterdam, The Netherlands
Adam Fine: School of Criminology and Criminal Justice, Arizona State University, 411 N. Central Ave, Suite 633 Phoenix, Tempe, AZ 85004, USA

Administrative Sciences, 2018, vol. 8, issue 3, 1-38

Abstract: There is widespread recognition that organizational culture matters in corporations involved in systemic crime and wrongdoing. However, we know far less about how to assess and alter toxic elements within a corporate culture. The present paper draws on management science, anthropology, sociology of law, criminology, and social psychology to explain what organizational culture is and how it can sustain illegal and harmful corporate behavior. Through analyzing the corporate cultures at BP, Volkswagen, and Wells Fargo, this paper demonstrates that organizational toxicity does not just exist when corporate norms are directly opposed to legal norms, but also when: (a) it condones, neutralizes, or enables rule breaking; (b) it disables and obstructs compliance; and (c) actual practices contrast expressed compliant values. The paper concludes that detoxing corporate culture requires more than changing leadership or incentive structures. In particular, it requires addressing the structures, values, and practices that enable violations and obstruct compliance within an organization, as well as moving away from a singular focus on liability management (i.e., assigning blame and punishment) to an approach that prioritizes promoting transparency, honesty, and a responsibility to initiate and sustain actual cultural change.

Keywords: compliance; organizational culture; organizational crime; ethical climate; business ethics; social norms (search for similar items in EconPapers)
JEL-codes: M M0 M1 M10 M11 M12 M14 M15 M16 L (search for similar items in EconPapers)
Date: 2018
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