Why do companies deviate from standards and what shall we do about it?

Standards appear as legal or quasi-legal rules and relate to a variety of topics, including product or service quality, information security, environmental performance, health and safety in the workplace, and many more. Much has been written, or rather suspected, about corporate cultures of companies where standards were broken terribly. The Boeing airplane crashes or the Volkswagen emission scandal confronted societies with the question of why some companies do not adhere to standards while others do—competitors like Airbus appear to be complying with governance regulations and Volvo does not seem to have installed any banned software. 

At the same time and not to be forgotten: organizational deviance also has a basic entrepreneurial quality. Today’s discourse on organizational deviance often assumes that the assessment of the flawed-ness of a behaviour is valid and applies equally to everyone. However, the entrepreneurial quality of deviance counteracts this conviction to remind us that “innovation” implies at its very core the action of distancing oneself from existing standards. With this approach, the concept of organizational deviance challenges the current discourse on organizational misbehaviour and shows that standards—for instance for aviation, medical technology, or the transportation sector—are in constant development and must also provide sufficient flexibility to allow for entrepreneurship and innovation.

Explanations for deviant or conforming behaviour that not only hold individual executives accountable but that also take the organizational context into account are urgently needed. The individual responsibility of executives must be expanded to the conditions of organizing that they shape—not just considering the concrete knowledge of deviant behaviour, such as a manipulation of software. Executives stipulate meaning for why standards are important, provide resources for standard enactment, as well as develop sanctioning and rewarding mechanisms for standard enactment, which make those terrible standard manipulations as described above or conversely the adherence to standards more likely. Whether organizations deviate from or comply with standards thus depends on how sensemaking, resource provision, and sanctioning mechanisms blend with or contradict one another—contradictions coming, for instance, from limited resources, inadequate sanctioning or rewarding mechanisms, or from overwhelming efforts to create meaning around standard-compliant work. All companies face these contradictions when implementing standards but deal with them in different ways. Their dealing with contradictions shapes the companies’ compliance behaviour. 

Knowledge about what leads either to a certain type of deviance or to compliance is developed in separate academic discourses. Using structuration theory as developed by Anthony Giddens allows us to see organizational deviance as being constrained by powerful societal structures (such as legislation or standardisation bodies) as it is likewise a function of the expression of human beings’ will. In the end, standard agents like safety managers, regulatory affair units, or project managers, but also external stakeholders like clients, customers, or suppliers, who take or are given direct or indirect responsibility for standard compliance shape the organizational antecedents for standard enactment. Depending on how standard agents monitor the effects of these standard enactment and resulting contradictions, they accomplish a certain type of deviance or compliance.

What shall we do about it? Beyond the inspiration to study standard deviations and compliance in various empirical settings, these thoughts shall also inspire the ongoing debate around corporate criminal law, which in many countries is not yet installed. Our research findings provide a theoretical justification for why corporate criminal law is necessary and offer suggestions as to how internal compliance management can be assessed. We underline the far-reaching responsibility of executives for the organisational conditions for standard enactment, both in view of human safety as well as environmental protection, but also stressing the limits of standards for the sake of innovation wherever necessary. Misconduct is not only dependent on personality, personal preferences, or a certain organizational culture, but also on the conditions of work and organizing. Responsibility for organizational conditions should be ascribed to executives even they do not have any precise knowledge of a specific misconduct going on, as might have been the case, for instance, in the Volkswagen emission scandal. Further, legal rules, such as medical device regulation and railway law, must be subject to constant scrutiny and adjusted over the course of time to allow and prepare for innovation.