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PRELIMINARY
“The Causes of Organizational Wrongdoing” (MGB 291)
Summer 2019 Professor Donald Palmer
(April 8, 2019)
Overview Introduction
The Causes of Organizational Wrongdoing examines the reasons why people engage in unethical, socially irresponsible, and illegal behavior in organizations. The course is predicated on two assessments. First, I believe that most managers (and management students) share the same basic desire to manage in ethical, socially responsible, and legal ways and the same basic ideas about the difference between right and wrong. Second, I believe that unethical, socially irresponsible, and illegal behavior is pervasive, rather than rare in organizations. Thus, I think it is as important to ask why so many managers behave badly in organizations, even though the vast majority of managers are good people. My hope is that if we can develop a good answer to this question, we can reduce the chance that we, those we manage, and those who manage us will engage in wrongful behavior in the organizations of which we are members.
I have assigned two books for the course. The first, Normal Organizational Wrongdoing , was written by me and was published in paperback by Oxford University Press in 2013. The second, Blind Spots , was written by Max Bazerman and Ann Tenbrunsel and was published by Princeton University Press in 2011.
We will spend most of our time trying to apply the material from the readings and my lectures to case material and your own personal experience. The case material will consist of book chapters, newspaper articles, videos, and movies. Because the course will require students to engage in a substantial amount of independent thinking and class participation, I strongly suspect that only the most motivated students will enjoy and benefit from this class. If you are looking for a class in which you can sit in your seat and absorb material presented in the readings and the lectures, which I think is an entirely reasonable desire , this probably is not the course for you.
Course Goals and Pedagogical Approach
I have designed The Causes of Organizational Wrongdoing primarily to accomplish one goal: to increase student awareness of the many factors that can cause them, their peers, their subordinates, and their superiors to engage in wrongdoing. I think the best way to accomplish this goal is to expose students to theory about the causes of wrongdoing and cases depicting wrongdoing in
advance of class and to then engage in active discussion of the theory and cases in class. I do not think this goal can be achieved effectively by taking exams or writing papers on the subject. The work load for the course and the structure of performance evaluations follows from my main goal and my pedagogical approach.
Work Load
Students will be asked to do a substantial amount of reading before each class session, likely more reading than students have been asked to do in advance of class in most other courses they have taken at the GSM (this burden will be felt particularly acutely by students taking the course on alternating weekends). I will begin each class with a brief lecture intended to refresh students’ memories of the reading and to highlight the most import parts of the reading. These lectures will not cover everything I expect students to get out of the reading. The balance of class will be focused on discussing the reading (e.g., clarifying and raising questions about it) and then analyzing the cases. Thus, if you are looking for a course in which you can come to class unprepared with the intention of “catching up” with the material later, which I think is an entirely reasonable desire , this is not the course for you.
Performance Evaluations
As indicated above, I will expect students to do a substantial amount of reading in advance of each class session and I will expect students to pay close attention to and contribute to class discussion. To increase the likelihood that students will meet these expectations, I will administer a quiz at the beginning of five class sessions (perhaps the even numbered sessions) that requires students to answer questions about the reading. I also will administer a quiz at the end of the other five class sessions (perhaps the odd numbered sessions) that requires students to answer questions about the class discussion. I will design these quizzes to distinguish between students who are doing the reading in advance of class and are paying attention in class from those who are not doing the reading in advance of class and who are not paying attention in class. I will not design the quizzes to distinguish between students on the basis of their fine-grained understanding of the reading or discussion. As indicated above, there will be no midterm or final exam in this course. There also will be no final paper. I will, though, factor in a student’s participation in class discussion when determining his/her final grade.
What This Means for Students Thinking about Taking the Course
To simplify, students will be asked to devote a lot of time and energy to preparing for and participating in each class session of The Causes of Organizational Wrongdoing. They will not be asked to engage in activities that are removed from the class sessions, such as studying for exams and writing papers. The upside of this format is that students have no responsibilities other than preparing for and participating in class. When the last class ends, the course ends. The downside of this format is that students do not have the luxury of neglecting the course in one or two weeks and then catching up in a following week. Students should be mindful of both the upside and downside of this format when deciding whether to enroll in the course.
Session 1B (Friday, June 21) Culture
Summary : In this class session we will examine the second account of organizational wrongdoing that we will consider in the course, known as the cultural explanation ( NOW , Chapter 5). Specifically, we will consider the two main ways in which an organization’s culture can facilitate wrongdoing; endorsement and the stipulation of extenuating circumstances. We will also consider how cultures originate and how organizational participants (i.e., managers and employees) come to embrace them. Our in-class case discussion will focus on discerning how cultural factors might have facilitated the development and proliferation of the “bounty system” in professional football, in which players and coaches provided monetary rewards to teammates for injuring opposing players. Please read the four Sports Illustrated articles and the Chicago Tribune article in preparation for this discussion. We will view a video-taped interview with a former professional football player in class to supplement our discussion of the bounty system in football. I have included a short editorial written by a former employee of Goldman Sachs and an article on Volkswagon as optional reading, which will allow interested students to consider how cultural elements that facilitate wrongdoing might be at work in more traditional work settings.
Readings : NOW , Chapter 5: Culture.
Cases : King, Peter “Way Out of Bounds,” Sports Illustrated , March 12, 2012.
Trotter, Jim “The Conscience of the Locker Room,” Sports Illustrated , March 12, 2012.
Layden, Tim “Intimidation Rules,” Sports Illustrated , March 12, 2012.
Lawrence, Andrew “The Commissioner Cracks Down,” Sports Illustrated , March 12,
Bowen, Matt “Bounties Part of Game across the NFL, Chicago Tribune , March 2, 2012.”
In Class : “Antonio Pearce,” ESPN Sports (video)
Optional: Ewing, Jack and Graham Bowley “The Engineering of Volkswagon’s Aggressive Ambition,” The New York Times , December 13, 2015. Available at: https://www.nytimes.com/2015/12/14/business/the-engineering-of-volkswagens- aggressive-ambition.html?_r=
Smith, Greg, “Why I am Leaving Goldman Sachs,” The New York Times , March 14,
- Available at: http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving- goldman-sachs.html.
Session 2A (Friday, July 19) Power Structures
Summary : In this class session we will examine the third explanation of organizational wrongdoing considered in the course; the power structure explanation ( NOW , Chapter 9). Specifically, we will familiarize ourselves with the two main forms of power in organizations: formal and informal power. Formal power is rooted in the chain of command, with those at the top of the organizational hierarchy having power over those on the bottom. Informal power is based on resource dependence relationships, with those in control of scarce and important resources having power over those who depend on them for those resources. We will then examine how being subject to both forms of power can cause people to engage in wrongful courses of action, even when people are disinclined to do so. Please read the specified pages in Chapter 9 of NOW to develop a preliminary understanding of these ideas ( you need not read any other sections of this chapter in advance of class). In class we will consider how formal and informal power facilitated sexual assault and harassment at the Weinstein Company, the exposure of which jump-started the #MeToo social movement. We also will view and discuss an interview with an accountant who was ordered to commit fraud, but who found a way to circumvent these orders ( Whistling While You Work ). FYI: While I have not included as optional reading reportage on other celebrities’ sexual misconduct, interested students will not find it difficult to locate articles on sexual assault and harassment perpetrated by Matt Lauer, Charlie Rose, and R. Kelley (among others). Further, while every instance of misconduct has unique features, students who track down reportage on these other celebrities’ sexual misconduct will find that power structures played a similar role in their misconduct as they did in Weinstein’s.
Readings : NOW Chapter 9: Power Structures, pp. 176 – 190.
Cases : Twohey, Megan, Jodi Kantor, Susan Dominus, Jim Rutenberg, and Steve Eder, “Feeding the Complicity Machine” The New York Times , December 6, 2007. Available at: https://www.nytimes.com/interactive/2017/12/05/us/harvey- weinstein-complicity.html.
In-Class : Whistling While You Work , Helios Digital Learning (video)
Session 3A (Friday, August 2) Situational Social Influence: Part 1
Summary : In this class session we will began our examination of the fifth explanation of organizational wrongdoing; the situational social influence explanation. Specifically, we will examine how situational social influence processes condition the effects of some of the previously considered facilitators of organizational wrongdoing, such as rational choice and culture processes. We will also consider how situational social influence processes can directly facilitate organizational wrongdoing. I think it is necessary to closely examine actually instances in which situational social influence processes facilitate wrongdoing to obtain a good idea of how these processes operate. For this reason, we will spend most of the class period discussing case material. Please read the specified pages in Chapter 8 of NOW to develop a good understanding of these ideas. I will not spend much time reviewing the material on these pages in class. In class, we will discuss two sworn statements given by professional cyclists who confessed to using banned performance enhancing substances and practices in their careers, focusing primarily on how situational social influence factors might have caused them to begin and then escalate their use of these substances and practices. We will also view and then discuss selected scenes from the movie Eight Men Out, focusing primarily on how situational social influence processes might have caused members of the 1919 Chicago White Sox baseball team to “throw” that year’s World Series Championship.
Readings : NOW , Chapter 8: Situational Social Influence, pp. 145 – 161.
Cases : “Affidavit of David Zabriskie,” USADA Reasoned Decision on Lance Armstrong. Available at: http://d3epuodzu3wuis.cloudfront.net/Zabriskie+David+Affidavit.pdf
“Affidavit of Christian Vande Velde,” USADA Reasoned Decision on Lance Armstrong. Available at: http://d3epuodzu3wuis.cloudfront.net/Vande+Velde+Christian+Affidavit.pdf
In-Class : Eight Men Out , selected scenes
Session 3B (Friday, August 2) Situational Social Influence: Part 2
Summary : In this class session we will complete our examination of the fifth explanation of organizational wrongdoing. Specifically, we will examine how a potent and complex form of situational social influence, escalating commitment to a course of action, can facilitate organizational wrongdoing. In my extensive reading of actual instances of organizational wrongdoing, I have been impressed by the large percentage of cases in which commitment appeared to have played a role in facilitating the misconduct. Further, in my examination of types of situational social influence, I have been impressed with the uniquely multifaceted dynamics that commitment processes exhibit. Please read the specified pages in Chapter 8 of NOW to develop a good understanding of how commitment processes work. In class we will discuss how escalating commitment might have influenced an accountant to perpetrate financial fraud at WorldCom. Then we will view and discuss scenes from the movie Quiz Show , focusing on how commitment processes might have lead a promising young college professor to participate in a tawdry television game show fraud. I have included an article on financial fraud at the Indian software services company Satyam as optional reading, to allow you to consider how commitment processes might underpin organizational misconduct similarly or differently in an international context.
Readings : NOW , Chapter 8: Situational Social Influence, pp. 162-175.
Case : Pulliam, Susan, “Ordered to commit fraud, a staffer baulked, then caved,” The Wall Street Journal , June 23, 2003.
In-Class : Quiz Show (selected scenes)
Optional : Timmons, Heather and Bettina Wassener, “Satyam chief admits huge fraud,” The New York Times , January 7, 2009. Available at: http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html?_r =
Session 4B (Friday, August 16) Decision Making: Part 2
Summary : In this class session we will complete our examination of the behavioral decision- making explanation of organizational wrongdoing. Specifically, we will examine two ways in which one can build on recent developments in the behavioral decision- making approach, taking into account two factors that exacerbate the problem of bounded rationality; variability in the complexity of decision contexts and the temporal unfolding of decisions. Please read the specified pages in Chapter 6 of NOW to develop an understanding of these two factors ( please do not read any other sections of this chapter in advance of class ). In our case discussion we will consider two other instances of wrongdoing in which behavioral decision processes appear to have facilitated wrongdoing, both involving Enron Corporation. The first focuses on Enron’s main accounting firm, Arthur Anderson (described in “Ties to Enron blinded Anderson”). The second focuses on one of Enron’s principal investment bankers, Merrill Lynch (described in “Deals and Consequences” and the excerpt from Conspiracy of Fools ).
Readings : NOW , Chapter 6: Ethical Decision-Making. (pp. 96-98, 103-117)
Cases : Alexander, Burns, Manor, McRoberts, and Torriero, “Ties to Enron blinded Anderson” Chicago Tribune , September 3.
Thomas, Landon, (2005), “Deals and Consequences,” The New York Times, November 20.
Eichenwald, Kurt, (2005), Conspiracy of Fools , pp. 293-4, 295-6, 298, 347, 353-4.
Session 5A (Friday, August 16) Accidents, Social Control Agents, and A Detailed Case Study
Summary : This class will be broken up into three parts. First, I will present a brief overview of the seventh explanation of organizational wrongdoing considered in the course; the accidental misconduct view. Organizations sometimes perpetrate unexpected behaviors or perpetrate expected behaviors that have unanticipated consequences. And sometimes, these “accidents” constitute or lead to wrongdoing. Ships run aground, airplanes crash, chemical plants release toxic gasses, and financial systems meltdown. And these accidents can cause harm and lead to negative publicity, civil suits, and criminal prosecution. I will briefly elaborate the causes of accidents that constitute or lead to wrongdoing. Second, I will present a brief overview of the eighth (and final) explanation of wrongdoing considered in the course; the social control agent explanation. In order for someone to cross the line separating right from wrong, another actor (individual or organization) must draw the line in a particular place. These other actors who draw the line separating right from wrong are partly responsible for the creation of wrongdoing in organizations. Had they not drawn a line separating right from wrong, there would be no line to cross. I will briefly elaborate the factors that influence the drawing of the line separating right from wrong, referred to by sociologists as the “social control of wrongdoing.” Third, we will engage in an extended discussion of a case of wrongdoing at the University of North Carolina involving the creation of bogus courses to which student athletes were steered in order to increase the likelihood that they would remain eligible to compete on UNC sports teams. This discussion will help us integrate and deepen our understanding of the eight causes of wrongdoing in organizations considered in the course. It will also give us an opportunity to witness how social control agents of various types prosecute wrongdoing in organizations. The two chapters from NOW that focus on accidental wrongdoing and the social control of wrongdoing, listed below, are optional. Read them if you have the time and interest to do so. The case on the UNC bogus course scandal, also listed below, is required. Please read this case in advance of class (I will assign restricted page ranges to read in advance of class).
Readings : None.
Cases : Wainstein, Kenneth, A. Joseph Jay III, and Colleen Depman Kukowski, (2014) “Investigation of Irregular Classes in the Departmennt of African and Afro- American Studies at the University of North Carolina at Chapel Hill”, Cadwalader
Optional : NOW Chapter 10: Accidental Wrongdoing.
NOW Chapter 12: The Social Control of Wrongdoing.
