Assessing the effect of government surveillance on firm supererogation: The case of the U.S. automobile industry

• Author: Matthew Rutherford,Shawn L. Berman,David E. Cavazos
• DOI: http://doi.org/10.1111/beer.12179
• Published date: 01 April 2018
• Date: 01 April 2018

ORIGINAL ARTICLE

Assessing the effect of government surveillance on firm

supererogation: The case of the U.S. automobile industry

David E. Cavazos

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Matthew Rutherford

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Shawn L. Berman

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James Madison University, Harrisonburg,

Virginia, USA

2

Anderson School of Management,

University of New Mexico, Albuquerque,

New Mexico, USA

Correspondence

David E. Cavazos, James Madison

University College of Business,

Harrisonburg, VA, USA.

Email: cavazode@jmu.edu

This study buildson prior researchinvestigating the antecedents of firmsupererogation. Examining

vehicle recalls in the U.S. automobile industry from 1966 to 2010 reveals that surveillance-based

government enforcement programs can have widespread industry effects on a specific type of

supererogatory action, firm volunteerism. Specifically, increases in government surveillance are

associated withfirms going beyond what is legally required of themby initiating voluntary product

recalls for defects not covered in existing government regulation. Such effects are shown to be

unique among surveillance efforts as other government enforcement activities, such as standards-

based regulation,are revealed to have a negativeassociation with firm supererogation.

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INTRODUCTION

There is growing interestin understanding the antecedents of firmvol-

untary behavior, as such behavior goes beyond simply complying with

existing regulation. Scholars have noted a key distinction between the

types of firm volunteerism. Mazutis (2014) points out that while firms

sometimes volunteer in instances that fall within their current obliga-

tions, they may additionally take supererogatory actions. These supere-

rogatory behaviors are of interest as they are not governedby existing

regulation. Such actions therefore represent those activities that go

“beyond the call of duty”and whose domain is distinctfrom CSR activ-

ities and positive deviance, both of which may include obligatory firm

activities (Mellema, 1991). The mechanismsresulting in supererogatory

actions are understudied (Mazutis, 2014). Accordingly, this study aims

to further understand supererogatory actions by examining how

governmentregulation efforts impact such behavior.

Firm compliance with government regulation has emerged as an

important issue in the automobile industry. In 2014, for instance,

General Motors was found to have ignored information regarding

faulty ignition switches and keys that affected millions of vehicles

(Higgins & Summers, 2014). This problem is now being directly linked

to at least 30 deaths (Edwards, 2014). Toyota came underfire in 2009

for appearing to be slow in addressing issues associated with sudden

acceleration that also resulted in fatalities (Keane, 2010; Keane &

Ohnsman, 2010). Morerecently, Volkswagen was found to have inten-

tionally avoidedcompliance with U.S. Environmental ProtectionAgency

emissions standards by having devicesinstalled in vehicles whichwould

create the impression of compliance (Schmitt, 2016). In all but the case

of Volkswagen, there were no supporting government regulations

stipulating standards for the defects in question. In such cases, volun-

tary actions by automobile manufacturers to identify and act, even in

the absence of government safety standards, could have saved lives.

These cases highlight the importance of understanding when and how

firms will be voluntarily responsive to safety defects as well as the

kinds of government enforcement that can best encourage such

responsiveness.

The primary forms of government regulation have been shown to

have varyingdegrees of influence on firm compliancebehavior. Regula-

tory standard-setting,such as agency statutes andregulations, has been

criticized for lacking efficiency (Moran, 1995). In addition, standard-

setting may result in organizational resistance to regulation (Moran,

1995). In contrast, regulatory surveillance, such as a site inspection,

results in firm compliance when government organizationsaggressively

monitor organizations (Mendeloff & Gray, 2005). Therelative effective-

ness of surveillance appears to stem from concerns that increased sur-

veillance may signal noncompliance to firm stakeholders (Mendeloff &

Gray, 2005). Missing from this literature is an exploration of how

governmentenforcement activitiesmay result in firm supererogation.

Institutional theory has long explored various types of isomorphic

pressures and their impact on firm behavior (e.g.,Oliver, 1991). Recent

research has explored government regulation as a specific form of

coercive pressure (e.g., Narunnabi, 2015; Ramanathan, Poomkeaw, &

Nath, 2014). Such pressure can result in isomorphism as firms apply

similar practices because of government regulation. The isomorphic

properties of government regulation, however, can vary. Policies which

result from heavy political influencesuch as lobbying, for instance, may

not result in similar compliancebehavior among regulated organizations

(Nurunnabi,2015).

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C2018 JohnWiley & Sons Ltd wileyonlinelibrary.com/journal/beer BusinessEthics: A Eur Rev. 2018;27:1 56–163.

Received:23 July 2016

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Revised: 20 November2017

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Accepted:3 December 2017

DOI: 10.1111/beer.12179