Recovering Trees from Bad Orchards: Rehabilitation of Corrupt Organizations

Previous research on firm rehabilitation after wrongdoing views it as a stakeholder-driven process motivated by the search to regain legitimacy. The rehabilitation process implies several stages that encompass apologies and the introduction of norms, as well as practices and controls that prevent further acts of wrongdoing. Much less investigated is firm’s rehabilitation in contexts where wrongdoing, i.e., corruption, is institutionalized. We fill this gap by studying the rehabilitation process of a mafia-managed firm in Sicily which, after being confiscated by the State, is managed by its former employees who decide to form a cooperative and endorse a social vocation. In so doing, we contribute to the literature on firm’s rehabilitation and show that different processes and stakeholders are involved in contexts where wrongdoing is socially accepted.