Resistance from top to bottom : the dynamics of risk management in complex organizations

[摘要] (cont;;d) Essay 3 - In recent years a growing stream of research has sought to identify how the actions of managers can influence compliance with regulation and corporate social responsibility in areas such as environmental performance, workplace safety, and financial accounting. One such strategy that has received widespread attention is the search for proactive ;;winwin;; investments that improve both regulated outcomes and the bottom line. Yet, the prevalence of win-win investments raises an important question: if proactive investments are really profitable, why are they so often not performed, especially when their existence is so widely acknowledged? To develop insight into this question, we develop a detailed simulation model of a proactive investment in building maintenance and energy use. While a proactive investment can produce substantial positive returns, we illustrate why achieving full returns can be so difficult. Specifically, even when managers make substantial proactive investments, investments may not be large enough or long enough to cross a tipping threshold. In such cases, despite the appearance of success in the shortterm, performance gradually erodes to its original state, wiping out gains. Thus, successful self-regulation and process improvement depends not only on managers recognizing and acting on opportunities, but also on managers understanding tipping dynamics and sustaining investments beyond levels that might initially appear sufficient.

[发布机构] Massachusetts Institute of Technology