A Bailout for the Outlaws: Interactions Between Social Control Agents and the Perception of Organizational Misconduct

Abstract

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.

Citation

Pichler, R., Roulet, T.J. and Paolella, L. (2023), "A Bailout for the Outlaws: Interactions Between Social Control Agents and the Perception of Organizational Misconduct", Gabbioneta, C., Clemente, M. and Greenwood, R. (Ed.) Organizational Wrongdoing as the “Foundational” Grand Challenge: Definitions and Antecedents (Research in the Sociology of Organizations, Vol. 84), Emerald Publishing Limited, Leeds, pp. 31-50. https://doi.org/10.1108/S0733-558X20230000084002