Breaking the rules: the failure of moral and legal prohibitions against corporate crime

Smith, N C, Simpson, S S and Huang, C-Y (2005) Breaking the rules: the failure of moral and legal prohibitions against corporate crime. Working Paper. London Business School nan.

Abstract

We combine prior research on ethical decisionmaking in organizations with a rational choice theory of corporate crime from criminology to develop a model of corporate offending that is tested with a sample of U.S. managers. Despite demands for increasing sentencing of corporate offenders, we find that the threat of formal sanctions does not directly affect the likelihood of misconduct. Managers' evaluations of the ethics of the act have a significant effect, as do outcome expectancies that result from being associated with the misconduct but not facing formal sanctions. The threat of formal sanctions appears to operate indirectly, influencing ethical evaluations and outcome expectancies. There is also support for the influence of obedience to authority, with managers more likely to engage in misconduct if ordered to do so by a supervisor.