Power Dynamics in Corporate Scandals - A holistic analysis of the Theranos and Wirecard corporate scandals

University essay from Lunds universitet/Företagsekonomiska institutionen

Abstract: This study examines the various essences of power displayed within corporate scandals, and how it can prevent scandals from getting exposed. Building on management studies, this research aims to fill a literary gap wherein corporate scandals are explored but not through the lens of power. Adding this lens is instrumental when interpreting how scandals occur, given how various actors have different interests and resources at their disposal. In that vein, our paper applies the Four Faces of Power framework to understand how power dynamics operate among various actors involved in the scandal. Our results indicate that Theranos and Wirecard, the two scandal companies researched, were protected by the faces of domination and subjectification on a systemic level, and within this context, extensive manipulation and coercion were exercised by several actors to defend these structures and identities. This abuse of power made it difficult for actors such as employees, media platforms, regulators, and short sellers to expose Theranos and Wirecard as their efforts of resistance made small impacts and were largely met with failure. Nonetheless, as the subjectification and domination shattered, the actors attempting to bring the scandalous behaviour to light were eventually able to resist the dominance of Theranos and Wirecard along with the actors defending them. This led to the eventual downfall of both companies, as they could no longer sustain hiding their wrongful actions. Our research showcases the importance of regulating power imbalances within large organisations if they want to avoid large scandals such as Theranos and Wirecard.

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