Organizations and ethics : antecedents and consequences of the adoption and implementation of the ethics and compliance officer position

Abstract

As open systems, organizations interact with their environments and respond to laws, norms, and other pressures to conform in search of societal legitimacy. Organizations, however, are far from uniform in their responses to institutional pressures. As entities with idiosyncratic sets of values and prior experiences, organizations act according to a mix of established patterns of behavior and perceived self-interest. One result may be conformity in adoption, but variance in implementation. This is particularly true of issues such as ethics, where ambiguous and evolving definitions of expected behavior encourage organizations to respond with varying degrees of substance. This dynamic environment is made more complex by pressures that ebb and flow in wave-like patterns of intensity as societal attention coalesces around specific events and then dissipates. This study examines how firms respond to shifts in pressures for greater ethical behavior by appointing an Ethics and Compliance Officer (ECO), from 1990 to 2008. In particular, I demonstrate that, while firms make adoption decisions in response to broad, field-level forces, it is firm-specific factors that determine resource commitments in implementation. I also test the hypothesis that an organization’s implementation decisions are consequential, with greater benefits gained by firms that commit more resources to the ECO position. As such, this study identifies important antecedents and consequences of adoption and implementation behavior that help explain organizational heterogeneity in the face of institutional pressures to conform.