Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-25T20:37:04.183Z Has data issue: false hasContentIssue false
  • English
  • Français

The Persistence of Organizational Deviance: When Informal Sanctioning Systems Undermine Formal Sanctioning Systems

Published online by Cambridge University Press:  05 November 2018

Danielle E. Warren
Danielle E. Warren*
Affiliation:
Rutgers University
Get access Rights & Permissions [Opens in a new window]

Abstract:

Organizations adopt formal sanctioning systems to deter ethical violations, but the formal systems’ effectiveness may be undermined by informal sanctioning systems which promote violations. I conducted an ethnographic study of six trading crowds on two financial exchanges to understand how informal and formal sanctioning systems, which are grounded in different interpretations of equity, interact to affect trader deviance from rules established by the financial exchange (exchange deviance). To deter informal trader norms that conflict with exchange rules, the exchanges formally prohibit traders’ informal sanctions. The exchanges, however, underestimate traders’ informal sanctions related to ostracism and social rejection, which are not only difficult for the exchanges to detect, but also interpersonally hurtful and harmful to trader performance. Consequently, the traders’ informal social sanctions lead to secondary sanctions from trading firms. Ultimately, the informal sanctioning system evades the formal sanctioning system by exploiting what the exchanges deem to be minor rule violations.

Keywords

devianceostracismsocial rejectionequityinformal sanctionsformal sanctions
Type
Article
Information
Business Ethics Quarterly , Volume 29 , Issue 1 , January 2019 , pp. 55 - 84
Copyright
Copyright © Society for Business Ethics 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Abolafia, M. Y. 1996. Making markets: Opportunism and restraint on Wall Street. Cambridge, MA: Harvard University Press.Google Scholar
Ashforth, B. E., & Anand, V. 2003. The normalization of corruption in organizations. Research in Organizational Behavior, 25: 1–52.CrossRefGoogle Scholar
Baker, W. 1984. Floor trading and crowd dynamics. In Adler, P. & Adler, P. (Eds.), The social dynamics of financial markets: 107–127. Greenwich, CT: JAI Press Inc.Google Scholar
Barker, J. R. 1993. Tightening the iron cage: Concertive control in self-managing teams. Administrative Science Quarterly, 38: 408–438.CrossRefGoogle Scholar
Bowles, S., & Polanía-Reyes, S. 2012. Economic incentives and social preferences: Substitutes or complements? Journal of Economic Literature, 50: 368–425.CrossRefGoogle Scholar
Corbin, J., & Strauss, A. 2008. Basics of qualitative research: Techniques and procedures for developing grounded theory (3rd ed.). Thousand Oaks, CA: Sage Publications, Inc.CrossRefGoogle Scholar
Cropanzano, R. & Stein, J. H. 2009. Organizational justice and behavioral ethics: Promises and prospects. Business Ethics Quarterly, 19: 193–233.CrossRefGoogle Scholar
Eisenberger, N. I., Lieberman, M. D., & Williams, K. D. 2003. Does rejection hurt? An fMRI study of social exclusion. Science, 302: 290–292.CrossRefGoogle ScholarPubMed
Ethics Research Center. 2016. Global business ethics survey: Measuring risk and promoting workplace integrity. Arlington, VA: Ethics Research Center.Google Scholar
Ethics Resource Center. 2014. National business ethics survey 2013. Arlington, VA: Ethics Resource Center.Google Scholar
Glaser, B. G., & Strauss, L. S. 1967. The discovery of grounded theory: Strategies for qualitative research. New York: Aldine de Gruyter.Google Scholar
Gneezy, U., & Rustichini, A. 2000. A fine is a price. Journal of Legal Studies, 29: 1–17.CrossRefGoogle Scholar
Hollinger, R. C., & Clark, J. P. 1982. Formal and informal social controls of employee deviance. The Sociological Quarterly, 23: 333–343.CrossRefGoogle Scholar
Hollinger, R. C., & Clark, J. P. 1983. Deterrence in the workplace: Perceived certainty, perceived severity, and employee theft. Social Forces, 62: 398–418.CrossRefGoogle ScholarPubMed
Kelling, G. L., & Coles, C. M. 1998. Fixing broken windows: Restoring order and reducing crime in our communities. New York: Simon & Schuster.Google Scholar
Moore, C. 2008. Moral disengagement in processes of organizational corruption. Journal of Business Ethics, 80: 129–139.CrossRefGoogle Scholar
Mulder, L. B. 2009. The two-fold influence of sanctions on moral norms. In DeCremer, D. (Ed.), Psychological perspectives on ethical behavior and decision making: 169–180. Charlotte, NC: Information Age Publishing.Google Scholar
Mulder, L. B., Verboon, P., & De Cremer, D. 2009. Sanctions and moral judgments: The moderating effect of severity and trust in authorities. European Journal of Social Psychology, 39: 255–269.CrossRefGoogle Scholar
Nelissen, R. M. A., & Mulder, L. B. 2013. What makes a sanction “stick”? The effects of financial and social sanctions on norm compliance. Social Influence, 8: 70–80.CrossRefGoogle Scholar
O’Reilly, J., Robinson, S. L., Berdahl, J. L., & Banki, S. 2014. Is negative attention better than no attention? The comparative effects of ostracism and harassment at work. Organization Science, 26: 774–793.CrossRefGoogle Scholar
Reidenbach, R. E., & Robin, D. P. 1990. Toward the development of a multidimensional scale for improving evaluations of business ethics. Journal of Business Ethics, 9: 639–653.CrossRefGoogle Scholar
Roethlisberger, F. J., & Dickson, W. J. 1961. Management and the worker. Cambridge, MA: Harvard University Press.Google Scholar
Roy, D. F. 1953. Work satisfaction and social reward in quota achievement: An analysis of piecework incentive. American Sociological Review, 18: 507–514.CrossRefGoogle Scholar
Smith, N. C., Simpson, S. S., & Huang, C. 2007. Why managers fail to do the right thing: An empirical study of unethical and illegal conduct. Business Ethics Quarterly, 17: 633–667.CrossRefGoogle Scholar
Smith-Crowe, K., & Warren, D. E. 2014. The emotion-evoked collective corruption model: The role of emotion in the spread of corruption within organizations. Organization Science, 25: 1154–1171.CrossRefGoogle Scholar
Tenbrunsel, A. E., & Messick, D. M. 1999. Sanctioning systems, decision frames, and cooperation. Administrative Science Quarterly, 44: 684–707.CrossRefGoogle Scholar
Treviño, L. K., & Victor, B. 1992. Peer reporting of unethical behavior: A social context perspective. Academy of Management Journal, 35: 38–64.Google Scholar
Treviño, L. K., & Weaver, G. R. 2001. Organizational justice and ethics program “follow-through”: Influences on employees’ harmful and helpful behavior. Business Ethics Quarterly, 11: 651–671.CrossRefGoogle Scholar
US Securities and Exchange Commission. 2016. Annual Performance Report.Google Scholar
Verboon, P., & van Dijke, M. 2011. When do severe sanctions enhance compliance? The role of procedural fairness. Journal of Economic Psychology, 32: 120–130.CrossRefGoogle Scholar
Warren, D. E. 2003. Constructive and destructive deviance in organizations. Academy of Management Review, 28: 622–632.Google Scholar
Warren, D. E. 2006. Ethics initiatives: The problem of ethical subgroups. In Mannix, E. B., Neale, M., & Tenbrunsel, A. (Eds.), Research managing groups and teams: Ethics: 83–100. London: Elsevier Science Press.CrossRefGoogle Scholar
Warren, D. E., Gaspar, J., & Laufer, W. S. 2014. Is formal ethics training merely cosmetic? A study of comprehensive ethics training and indicators of ethical organizational culture. Business Ethics Quarterly, 24: 85–117.CrossRefGoogle Scholar
Williams, K. D. 2007. Ostracism. Annual Review of Psychology, 58: 425–452.CrossRefGoogle ScholarPubMed