Institutional disasters like Enron, Chernobyl, Deepwater Horizon, and countless corporate scandals have one thing in common: culture. When things go wrong on a massive scale, the root cause often isn’t just a technical error or one bad actor — it’s the invisible web of values, beliefs, and behaviours that shape how people in organisations think and act every day.
A study published in the Journal of Business Ethics by E. Julie Hald, Alex Gillespie, and Tom W. Reader from the London School of Economics takes a deep dive into this question. Through a systematic review of 74 case studies of institutional failure, the authors uncover how culture not only causes organisations to fail but also prevents them from correcting problems before disaster strikes. Their findings reveal a powerful new model — one that divides culture into causal and corrective forces.
The Cultural Roots of Failure
The study reviewed decades of real-world institutional breakdowns — from industrial accidents and financial fraud to ethical scandals — to identify recurring cultural factors. Across industries and continents, 23 cultural factors repeatedly emerged as drivers of failure.
The most common? Misplaced priorities. Organisations often elevate profitability or productivity above safety, ethics, or wellbeing. This “profit-over-principle” mindset creates blind spots that make failure almost inevitable. For instance, Enron’s hypercompetitive “rank and yank” culture pushed employees to cheat rather than collaborate. At Chernobyl, a fixation on efficiency and control led to inadequate training and unsafe procedures.
Other key cultural flaws included:
- Poor management — leaders who were overconfident, distant, or failed to supervise effectively.
- Inadequate training and unclear policies — employees unaware of correct procedures or left without guidance.
- Failure to listen — management ignoring frontline warnings or feedback.
- Fear and silence — employees too intimidated to speak up due to bullying or retaliation.
- Complacency — disbelief that failure could happen within their organisation.
These patterns show that institutional collapse rarely stems from a single error; it’s the cumulative outcome of cultural norms that discourage truth-telling, learning, and accountability.
Causal vs. Corrective Culture
One of the study’s most significant contributions is its distinction between causal culture and corrective culture.
- Causal culture refers to the underlying values and practices that create the conditions for failure — such as cost-cutting, neglecting safety, poor leadership, or weak regulation.
- Corrective culture refers to how organisations respond to early warning signs. It’s about whether people can speak up, whether managers listen, and whether lessons are learned before it’s too late.
In other words, causal culture creates the cracks; corrective culture determines whether anyone fixes them.
Alarmingly, the researchers found that in most cases, failure was preventable. Organisations typically had multiple opportunities to intervene — employees raised concerns, small incidents occurred, warnings were issued — but these went unheeded. As one case study put it, failures often arise not because nobody saw the problem, but because nobody acted.
Listening: The Missing Piece
Among the 23 cultural factors identified, three were new and not typically included in existing models of safety or ethical culture: listening, bullying, and homogeneity.
“Listening” stood out as the most critical of these. In a third of the cases, leaders simply ignored signs of danger or dissent. Sometimes, warnings conflicted with deep-seated beliefs (“this can’t happen here”). Other times, they clashed with competing priorities like speed, output, or reputation. In NASA’s Challenger disaster, for instance, engineers voiced concerns about O-ring safety, but their warnings were overridden by management pressures to launch on schedule.
Listening failures were disproportionately linked to loss of human life — perhaps the most devastating outcome of poor culture.
“Bullying” reinforced silence, punishing employees who spoke up. And “homogeneity” — hiring and promoting like-minded people — created echo chambers where alternative viewpoints were suppressed, fuelling groupthink and moral blindness.
Towards a Unified Model of Culture and Failure
The study found that nearly all cultural factors overlapped with established models of safety culture and ethical culture, which traditionally sit in separate academic domains. However, in practice, ethical and safety failures share the same DNA. Whether the outcome is an oil spill or a corruption scandal, the underlying cultural dynamics — poor leadership, ignored warnings, fear of reprisal — are strikingly similar.
This suggests the need for a unified framework that integrates both perspectives, recognising that safety and ethics are two sides of the same cultural coin.
Building a Culture That Corrects Itself
The good news? The same cultural mechanisms that cause failure can also be harnessed to prevent it. The authors argue that organisations should focus not only on preventing causal risks but also on strengthening corrective culture — the ability to detect, voice, and act on problems.
Practical steps include:
- Encouraging psychological safety so employees feel safe to speak up.
- Training leaders in active listening and empathetic communication.
- Rewarding corrective actions, not just performance outcomes.
- Simulating crisis scenarios to build reflexes for learning and accountability.
- Monitoring organisational “listening systems” — like complaint channels and incident reports — to ensure they’re actually used and trusted.
Ultimately, failures don’t happen because organisations make mistakes; they happen because they fail to correct them.
Conclusion: Culture Is the First Line of Defence
The LSE researchers’ review offers a sobering truth: disasters are not born overnight. They are the predictable outcomes of cultures that normalise shortcuts, silence dissent, and prioritise output over integrity. But culture can also be the solution.
By cultivating both strong causal awareness (doing things right) and corrective responsiveness (fixing things when they go wrong), organisations can transform failure from a fatal flaw into a learning opportunity.
In the end, the difference between collapse and resilience isn’t strategy or structure — it’s culture.