Abstract
Organizational transgressions cause recurring scandals. Often disclosed by whistleblowers, they generate public outrage and force organizations to respond. Recent studies have tried to answer the question: “What happens after a transgression becomes publicly known?” They highlight organizational responses marked by recognition of the transgression, penance and reintegration of the organization. However, that research only deals with transgressions involving illegal organizational practices. This article broadens the field of study to include legal but unethical organizational practices. It is based on the case study of a recent scandal: LuxLeaks (2010–2018). This scandal concerns tax avoidance practices that were advised by the international audit and consulting firm PwC to hundreds of companies and made public by whistleblowers. The case data result from cross-comparisons of several organizational (PwC) and governmental (Luxembourg) communication documents as well as parliamentary, judicial and press documents. The article’s results highlight a legalistic organizational response that is so far under-explored in the literature. This response is marked by a rhetoric of denial, reformism and self-victimization and by judicial retaliation against the whistleblowers. It reveals the paradoxes of “legalization” in contemporary organizations, and its role in the perpetuation of unethical corporate practices.
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Notes
Deriving from the Greek for “stumbling block” or “trap”, something that causes a fall into sin.
For more about this judicial reversal, the criteria and the way they were applied by the appeal court judges, see Ouriemmi et al. (2021).
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Ouriemmi, O. The Legalistic Organizational Response to Whistleblowers’ Disclosures in a Scandal: Law Without Justice?. J Bus Ethics 188, 17–35 (2023). https://doi.org/10.1007/s10551-022-05321-9
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DOI: https://doi.org/10.1007/s10551-022-05321-9