The Institute of Management and Organizations will be welcoming Florian Ueberbacher from the University of Zurich for our next MORSe Seminar on the 30th of May from 12:30 to 14:00 in PC04 in the Blue Building, he will be presenting the following paper:
Title: INDIRECT COMPELLENCE AND INSTITUTIONAL CHANGE: U.S. EXTRATERRITORIAL LAW ENFORCEMENT AND THE EROSION OF SWISS BANKING SECRECY
Abstract: We conduct a case study on the role of international coercion in national institutional change and introduce indirect compellence as a new mechanism for indirect coercion, that is, for coercing a targeted actor (B) to comply with the institutional demands of a coercer (A) if B is not directly dependent on A’s resources. Indirect compellence can be defined as the ability of A to gain compliance from B by threatening sanctions against a third party (C) if B does not comply with the institutional demands of A. In this case, the C becomes a ‘tertius miserabilis’, a third who suffers. We detail how and why indirect compellence enabled governmental authorities of the United States to overcome Swiss institutional barriers – notably the famed Swiss banking secrecy – by setting US extraterritorial law enforcement against Swiss banks and bankers. Based on our analysis we develop a constructivist theory of indirect compellence in institutional environments. Our theory gives primacy to targeted actors’ (i.e. Swiss policy-makers’) evaluation processes of and responses to coercive pressure and highlights that targets arrive at these evaluations and responses in ideologically contingent ways.