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Opening the Black Box of "Corporate Culture" in Law and Economics

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  • Donald C. Langevoort

Abstract

Conventional economic analysis of organizational behavior in the face of legal incentives has largely ignored the concept of "corporate culture." Building on recent work in economics as well as contributions from sociology and social psychology, this paper suggests that the emergence of belief systems that determine what is paid attention to and what is ignored has an important effect on compliance with law under conditions of ambiguity and will vary in nature and intensity based on the competitive conditions that the firm faces. Illustrations of relevance to legal analysis are taken from environmental law, equal employment law and corporate/securities law.

Suggested Citation

  • Donald C. Langevoort, 2006. "Opening the Black Box of "Corporate Culture" in Law and Economics," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(1), pages 80-96, March.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200603)162:1_80:otbboc_2.0.tx_2-6
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    References listed on IDEAS

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    1. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December.
    2. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    3. Carrillo, Juan D. & Gromb, Denis, 1999. "On the strength of corporate cultures," European Economic Review, Elsevier, vol. 43(4-6), pages 1021-1037, April.
    4. Robert Gibbons, 2003. "Team theory, garbage cans and real organizations: some history and prospects of economic research on decision-making in organizations," Industrial and Corporate Change, Oxford University Press, vol. 12(4), pages 753-787, August.
    5. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(1), pages 119-140, April.
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    Cited by:

    1. Lee Biggerstaff & David C. Cicero & Andy Puckett, 2013. "Unethical Culture, Suspect CEOs and Corporate Misbehavior," NBER Working Papers 19261, National Bureau of Economic Research, Inc.
    2. Christoph Engel & Werner Güth, 2006. "Corporate Culture as a Resource for Management. Comment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(1), pages 97-100, March.
    3. Biggerstaff, Lee & Cicero, David C. & Puckett, Andy, 2015. "Suspect CEOs, unethical culture, and corporate misbehavior," Journal of Financial Economics, Elsevier, vol. 117(1), pages 98-121.
    4. Hiller, Victor & Verdier, Thierry, 2014. "Corporate culture and identity investment in an industry equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 93-112.

    More about this item

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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