Opening the Black Box of »Corporate Culture« in Law and Economics

Conventional economic analysis of organizational behavior in the face of legal incentives has largely ignored the concept of »corporate culture.« Building on recent work in economics as well as contributions from sociology and social psychology, this paper suggests that the emergence of belief systems that determine what is paid attention to and what is ignored has an important effect on compliance with law under conditions of ambiguity and will vary in nature and intensity based on the competitive conditions that the firm faces. Illustrations of relevance to legal analysis are taken from environmental law, equal employment law and corporate/securities law.