Based on three in-depth, qualitative case studies on persistent noncompliance with anti-money laundering regulations by major European financial firms over a 15-year period (2005-2020), we investigate why organizations continue to engage in misconduct despite being repeatedly scrutinized by regulatory authorities. We develop a grounded process model that explains the escalating contestation between offending firms and regulatory authorities. Our social-control agent perspective explains this process in detail by clarifying the shifts in regulators’ attitudes towards misconduct over time. We elucidate three episodes of contested interaction between firms and regulatory authorities: regulatory framing, confronting complacency, and coercing acquiescence. We found that within these episodes, learning in response to regulatory enforcement was respectively perverse, myopic and involuntary. More specifically, we find that noncompliance becomes normalized as a result of regulatory restraint, purposefully maintained through symbolic and isolated remediation, and eventually resolved following salient critical events.
|Number of pages
|Published - 2020
|36th EGOS Colloquium 2020: Organizing for a Sustainable Future: Responsibility, Renewal & Resistance - Universität Hamburg, Hamburg, Germany
Duration: 2 Jul 2020 → 4 Jul 2020
Conference number: 36
|36th EGOS Colloquium 2020
|2/07/20 → 4/07/20