The institutional environment is complex. This complexity is characterized by forces that ebb and flow in wavelike patterns as societal expectations evolve, with attention coalescing around specific events and then dissipating. Some of these critical events are broad and affect many firms, whereas others are narrow and affect individual firms. In either case, when they occur, these events elevate organizational susceptibility to societal demands but encourage different kinds of behavior in response. This study seeks to model this complexity in an area of growing interest for organization scholars—business ethics. In particular, I examine how firms respond to shifting societal pressures for greater ethical behavior by adopting and implementing the Ethics and Compliance Officer position, from 1990 to 2008. Results demonstrate that although firms decide when to adopt in response to broad fieldwide critical events, it is narrower firm-specific critical events that determine resource commitments in implementation.

We know that organizations change over time as a result of their ability to learn and their tendency to forget. What we know less about, however, is why they might change back, despite evidence suggesting that this occurs. In this paper, we develop and test a model of organizational oscillation that explains why firms cycle through periods of learning and periods of forgetting. In particular, we identify a dual role for serious errors, which push firms toward a focus on safety while also pulling them away from other foci, such as efficiency or innovation. Although existing learning research recognizes errors as disruptive, this dual effect has not been theorized. We also demonstrate that, over time, the effect of a serious error on safety weakens, allowing alternative activities to emerge that lead to subsequent errors. We draw on qualitative data from the National Aeronautics and Space Administration’s Challenger and Columbia accidents to build theory about why organizations oscillate between safety and other foci, and how serious errors trigger these shifts. We then test this theory using a data set of all pharmaceutical firms that introduced Food and Drug Administration-approved drugs in the United States from 1997 to 2004. Results confirm our theory, which contributes to our understanding of complex learning processes by identifying a mechanism by which organizations learn, then forget; then learn, then forget again.