Browsing by Subject "Employment law"

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In the face of litigation risk : how potential lawsuits shape employment decisions
(2022-08-18) Shardlow, Thomas Edward; Burris, Ethan R.; Harrison, David A; Patil, Shefali V; Mayer, David M
Despite the constant threat of litigation based on everyday business decisions, management scholars know little about how managers handle the potential for legal action. In this dissertation, I begin to examine the previously unexplored domain of litigation risk, which I define as the extent to which an actor believes that a specific decision is likely to result in a legal or legalized process that may carry extreme negative outcomes. Using a series of three experiments, I begin by demonstrating the distinctiveness of litigation risk from other previously identified domains of risk. I also differentiate litigation risk broadly from other constructs – ethical leadership and agreeableness – that might otherwise explain a person’s perception of and desire to avoid decisions involving litigation risk. I then begin to explore a particular instantiation of litigation risk: employment discrimination. Using a scenario-based study, I demonstrate that litigation risk is empirically distinct from other constructs that have been used to explain the underlying causes of workplace discrimination. I also show that the extent to which litigation risk is perceived differs between hiring, promotion, and termination decisions. Moreover, because litigation risk is more prevalent for members of minority groups, managers tend to avoid and/or mitigate it in ways that may negatively affect the law’s effectiveness in rooting out employment discrimination. Indeed, this paper provides evidence suggesting that the law may only shift the timing of discrimination rather than eliminate it altogether. The theoretical and practical implications of these findings are then discussed.