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Organizational wrongdoing is still very much prevalent in today’s society. Traditional and social media are full of examples of organizations engaging in unethical or illegal behavior. While it is difficult – if not impossible – to establish whether the ever-increasing number of reported cases of wrongdoing is due to an actual increase in the phenomenon (objectivist view of wrongdoing) or to more attention being paid to it (social-constructivist view of wrongdoing), the fact remains that organizational wrongdoing seems to have become the norm rather than an exception in our everyday life. This is concerning, as organizational wrongdoing tends to undermine trust in fundamental institutions, such as the Market, the State, Religion, and Law, and may lead to them being replaced by other – sometimes less desirable – institutions or create an “institutional void.” Because of its potential impact on established institutions, organizational wrongdoing deserves to be closely monitored and further examined. This volume of Research in the Sociology of Organizations is an attempt to draw attention to the theoretical and empirical relevance of the topic, consolidate and extend the knowledge accumulated in this area of research, and highlight potential direction for future research. The volume explores in particular the definitions and antecedents of organizational wrongdoing.

Organizational wrongdoing is still very much prevalent in today’s society. Traditional and social media are full of examples of organizations engaging in unethical or illegal behavior. While it is difficult – if not impossible – to establish whether the ever-increasing number of reported cases of wrongdoing is due to an actual increase in the phenomenon (objectivist view of wrongdoing) or to more attention being paid to it (social-constructivist view of wrongdoing), the fact remains that organizational wrongdoing seems to have become the norm rather than an exception in our everyday life. This is concerning, as organizational wrongdoing tends to undermine trust in fundamental institutions, such as the Market, the State, Religion, and Law, and may lead to them being replaced by other – sometimes less desirable – institutions or create an “institutional void.” Because of its potential impact on established institutions, organizational wrongdoing deserves to be closely monitored and further examined. This volume of Research in the Sociology of Organizations is an attempt to draw attention to the theoretical and empirical relevance of the topic, consolidate and extend the knowledge accumulated in this area of research, and highlight potential direction for future research. The volume focuses in particular on the variegated consequences and impact of organizational wrongdoing.

When organizations engage in misconduct, social control agents play a crucial role in sanctioning them to show the enforcement of societal norms and reduce the risk of future deviance. We study the interaction between the government and the media, two key social control agents, in the evaluation organizational misconduct. While past work has focused on the influence of the media on the government, we theorize the influence of the government on the media. The government is a social control agent with supreme formal authority to punish misconduct, and thus its actions are of particular interest to the media as they form evaluations of misbehaving organizations. However, the government, tied by conflicting demands, sometimes turns a blind eye to misconduct and supports misbehaving organizations for the greater societal good, instead of punishing them. How is the media’s perception of misbehaving organizations affected by such government actions? We explore this question by looking at the case of the 2008 government bailout of investment banks in the United States, after those were caught red-handed for their involvement in the sub-prime financial crisis. Carrying out a content analysis of newspaper reporting (2007–2011), we show that the negative perception of investment banks and their misconduct is attenuated when they receive government support. Our work contributes to the emerging literature on the social construction of organizational misconduct and illuminates the interaction between government and media in the evaluation of behavior as organizational misconduct.

An emerging stream of research has identified critical events as spikes in societal interest that increase public attention to firm behavior and can function as exogenous triggers for change. With respect to misconduct, firms vary considerably in how they respond to critical events, and for a visible change in their undesirable behavior to transpire, there needs to be ongoing accumulation of work by social-control agents. While social-control agents are often boundedly rational in their decision-making, most studies have overlooked the ability of critical events to restrict or redirect collective attention among such agents. Drawing on the case of a regulatory agency’s enforcement actions against violations of anti-money laundering regulations by three European banks, we investigate the influence of critical events on social-control agents’ enforcement behavior. This study achieves two goals: first, we identify three types of fieldwide critical events that influence social-control agents’ behavior, and second, we demonstrate that these events may shape the regulatory environment in which firms operate, thus allowing for different organizational responses to enforcement actions. Our findings contribute to the literature on critical events and organizational misconduct.

This chapter explores the evolution of the media framings of a corporate corruption scandal over time. Our analysis focuses on the evolution of media frames used by the English and French Press in the coverage of the corruption scandal involving SNC-Lavalin, a Quebec-based multinational engineering firm. We reveal how media coverage shifted from balanced and nuanced coverage of a complex phenomenon that facilitated debates on the appropriate consequences of corruption to a selective (re)construction of events to serve partisan agendas when the company’s legal plight was politicized. Our study contributes to the literature on media framings of corporate corruption by highlighting how the politicization of a corporate corruption scandal led to a dual climate of opinion across the English and French Press.

Scandals regularly sweep through organizational fields: they wreak havoc in markets, vaporize billions of dollars in firm value, bring down giant corporations, get CEOs fired, alter the evolution of technologies, and trigger major changes in society. In spite of their significance for organizational life, scandals have received remarkably limited attention in management research. I build on the social sciences’ sparse but growing stream of research on scandals to explore the concept beyond its usual representation as a discrete event. I propose that an organizational scandal may be understood as an interactional process associated with the disclosure of alleged organizational misconduct that involves: a public struggle between alleged perpetrators and social control agents over the framing of organizational misconduct; moralizing by audience members; collective effervescence at the societal level; and the potential rewriting of the moral rules applicable to organizations and their members.

Misconduct allegations have been found to not only affect the alleged firm but also other, unalleged firms in form of reputational and financial spillover effects. It has remained unexplored, however, how the number of prior allegations against other firms matters for an individual firm currently facing an allegation. Building on behavioral decision theory, we argue that the relationship between allegation prevalence among other firms and investor reaction to a focal allegation is inverted U-shaped. The inverted U-shaped effect is theorized to emerge from the combination of two effects: In the absence of prior allegations against other firms, investors fail to anticipate the focal allegation, and hence react particularly negatively (“anticipation effect”). In the case of many prior allegations against other firms, investors also react particularly negatively because investors perceive the focal allegation as more warranted (“evaluation effect”). The multi-industry, empirical analysis of 8,802 misconduct allegations against US firms between 2007 and 2017 provides support for our predicted, inverted U-shaped effect. Our study complements recent misconduct research on spillover effects by highlighting that not only a current allegation against an individual firm can “contaminate” other, unalleged firms but that also prior allegations against other firms can “contaminate” investor reaction to a focal allegation against an individual firm.

Organizational wrongdoing researchers often look to past cases to empirically develop and support theoretical understanding. Their research is therefore conducted at a temporal distance to focal events and frequently relies on retrospective accounts and surviving documentary evidence. These methodological circumstances define historical research practice, and we demonstrate in this paper the valuable insights that historical approaches can provide organizational wrongdoing research. Specifically, we draw on a range of practices from history and the social sciences to introduce four historically informed approaches: narrative history, analytically structured history, historical process study, short-term process study. We differentiate these based on their particular affordances and treatment of two key methodological considerations: historical evidence and temporality. We demonstrate the specific value these approaches represent to organizational wrongdoing research with several exemplars showing how they have been used in related fields of research.