The Influence of Critical Events on the Social Control of Misconduct: Regulatory Enforcement in the European Banking Industry
Organizational Wrongdoing as the “Foundational” Grand Challenge: Definitions and Antecedents
ISBN: 978-1-83753-279-7, eISBN: 978-1-83753-278-0
Publication date: 24 July 2023
Abstract
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.
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Acknowledgements
Acknowledgments
We are grateful to the editorial team of this volume, in particular Marco Clemente, and the anonymous reviewer for their valuable comments. We would also like to express our appreciation to the regulatory agency for offering us data access. Finally, we gratefully acknowledge comments on earlier versions of this manuscript by conference participants at the 2020 European Group for Organizational Studies colloquium and the 2021 annual meeting of the Academy of Management.
Citation
Fiorito, T., Hoff, R. and Ehrenhard, M. (2023), "The Influence of Critical Events on the Social Control of Misconduct: Regulatory Enforcement in the European Banking Industry", 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. 51-72. https://doi.org/10.1108/S0733-558X20230000084003
Publisher
:Emerald Publishing Limited
Copyright © 2023 Timo Fiorito, Richard Hoff and Michel Ehrenhard