Preventing organizational misconduct - an operations management perspective

Abstract

Organizational misconduct---ranging from corporate fraud to environmental disasters---poses severe risks to individuals, businesses, and society. Examples such as Theranos’ fraudulent blood testing, Ford Pinto’s flawed fuel tank design, and the Deepwater Horizon oil spill illustrate the devastating consequences of firms violating legal, ethical, or social norms. Despite growing awareness of these issues, research on effective, evidence-based prevention strategies remains limited. This dissertation addresses this gap by exploring governance reforms and regulatory interventions as strategies to prevent misconduct. Using an Operations and Supply Chain Management (OSCM) lens, I study misconduct in three different contexts: informed trading during the medical device recall process, environmental injustice in U.S. manufacturing, and hygiene violations by restaurants. In each context, I explore why organizational misconduct occurs and how it can be effectively prevented or mitigated. The findings show that well-designed governance reforms and regulatory interventions can significantly reduce misconduct, providing valuable insights for firms, policymakers, and regulators, including the U.S. Food and Drug Administration (FDA), Securities and Exchange Commission (SEC), Environmental Protection Agency (EPA), and health departments. The dissertation is organized as follows: Chapter 2 introduces the topic and outlines the dissertation essays. Chapter 2 frames organizational misconduct within the OSCM literature and introduces a framework to study it. Chapters 3, 4, and 5 present three empirical essays that explore different aspects of misconduct and its prevention. Finally, Chapter 6 summarizes the findings and discusses their implications for research, management practice, and policy. This research contributes to both academic debate and practical decision-making by shedding light on effective strategies to prevent organizational misconduct. As a result, we have a better understanding of how firms may operate more ethically and responsibly.