Rational choice, situated action, and the social control of organizations

The legal and administrative apparatus responsible for the social control of organizations relies extensively on the deterrent effects of punishment. This strategy presumes a rational choice model of organizational misconduct that decontextualizes decisionmaking, emphasizing consequences while ignoring how preferences are formed. I raise three challenges to the rational choice/ deterrence model of social control: (1) research and theory on decisionmaking, (2) a sociological paradigm that situates individual action in a structure/ culture/agency nexus that influences interpretation, meaning, and action at the local level, and (3) an analysis of the Challenger launch decision at NASA as situated action, showing how structure, culture, and history shaped preferences and choice. These challenges suggest a need to reorient regulatory activity toward the social context of decisionmaking. I conclude with a research agenda to explore the relationship between situated action, preference formation, and rational choice. Management decisions in the business world that value competitive and economic success more highly than the well-being of workers, consumers, or the general public so often have come to public attention that today's most widely accepted model of corporate criminality portrays managers of profit-seeking organizations as "amoral calculators" whose illegal actions are motivated by rational calculation of costs and opportunities (Kagan & Scholz 1984). Driven by pressures from the competitive environment, managers will violate the law to attain desired organizational goals unless the anticipated legal penalties (the expected costs weighed against the probability of delaying or avoiding them) exceed additional benefits the firm could gain by violation. The amoral calculator model locates the cause of business misconduct in the calculations of individual decisionmakers. It reflects the logic of sociological rational choice theory (Hechter 1987; Friedman & Hechter 1988; Cook & Levi 1990; J. S. Coleman 1990a; Hechter & Kanazawa 1997), but with one important distinction. When decisionmakers' calculations of costs and benefits are tainted by self-interest, economics, or politics so that intentional wrongdoing and/or harm result, their calculation becomes amoral. The amoral calculator model also has wide acceptance as an explanation for the misconduct of other types of organizations that violate laws, administrative rules, and regulations. Though not corporate profit seekers, to survive, all organizations must compete for scarce resources (Pfeffer & Salancik 1978; Vaughan 1983:54-66). Competition for scarce resources encourages research institutions to falsify data in order to win grants and prestige; universities to violate NCAA recruiting regulations in order to guarantee winning athletic teams; police departments to violate the law to make arrests that bring recognition and funding; political parties and governments to commit illegalities to secure national and international power. In response to competitive pressures emanating from the external environment, according to the amoral calculator model, individuals attempt to achieve organization goals through violative behavior. The linchpin of the model's applicability to a variety of organizations is the violative behavior itself: Because laws, rules, or administrative regulations forbid the behavior and carry penalties, decisions to violate appear to be imbued with intent, calculation of costs and benefits, and some degree of forethought about harmful consequences. Punishment is considered an important tool for the social control of organizations because of institutionalized beliefs that the ultimate cause of organizational offending is rational actors who will include the costs of punishment in their calculations and be deterred from violative behavior. Most certainly, the legal and administrative apparatus for the social control of organizations utilizes diverse approaches (e. …