Understanding widespread misconduct in organizations: An institutional theory of moral collapse

Masoud Shadnam, Thomas B. Lawrence

Research output: Journal PublicationArticlepeer-review

83 Citations (Scopus)


Reports of widespread misconduct in organizations have become sadly commonplace. Sexual abuse in the Catholic Church, accounting fraud in large corporations, and physical and sexual harassment in the military implicate not only the individuals involved, but the organizations and fields in which they happened. In this paper we describe such situations as instances of "moral collapse" and develop a multi-level theory of moral collapse that draws on institutional theory as its central orienting lens. We draw on institutional theory because of its explicit concern with the relationships among individual beliefs and actions, the organizations within which they occur, and the collective social structures in which norms, rules and beliefs are anchored. Our theory of moral collapse has two main elements. First, we argue that morality in organizations is embedded in nested systems of individuals, organizations and moral communities in which ideology and regulation flow "down" from moral communities through organizations to individuals, and moral ideas and influence flow "upward" from individuals through organizations to moral communities. Second, we argue that moral collapse is associated with breakdowns in these flows, and explore conditions under which such breakdowns are likely to occur.

Original languageEnglish
Pages (from-to)379-407
Number of pages29
JournalBusiness Ethics Quarterly
Issue number3
Publication statusPublished - Jul 2011
Externally publishedYes

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Philosophy
  • Economics and Econometrics


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