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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Indirect Compellence and Institutional Change: U.S. Extraterritorial Law Enforcement and the Erosion of Swiss Banking Secrecy
Organization Unit
  • Florian Überbacher
  • Andreas Scherer
Item Subtype Original Work
Refereed Yes
Status Published electronically before print/final form (Epub ahead of print)
  • English
Journal Title Administrative Science Quarterly
Publisher Cornell University, Johnson Graduate School of Management
Geographical Reach international
ISSN 0001-8392
Page Range 1 - 41
Date 2019
Abstract Text Based on an in-depth, qualitative case study about a conflict between governmental authorities from the United States and Switzerland over the regulation of Swiss banks, we introduce indirect compellence as a novel triadic and indirect mechanism through which coercion leads to institutional change. Hostage-taking being a prototypical example, indirect compellence is typified by a coercive actor who takes a third party hostage to gain influence over a targeted actor. In our case, it meant that U.S. authorities (coercers) compelled Swiss policy makers (targets) to erode the famed Swiss banking secrecy rules by threatening the targets to otherwise enforce U.S. law extraterritorially against Swiss banks and bankers (hostages). Our constructivist and target-centered perspective explains this type of coercive pressure in detail, and it also suggests that targeted policy makers judge and respond to it contingent on their political ideologies. Our study contributes to research on power and influence in institutional environments and to research on global business regulation and transnational governance. Most generally, it also expands scholarly understanding of triadic relationships. In contrast to Simmelian perspectives’ focus on triads in which the third party is in a powerful brokerage position and frequently benefits as a tertius gaudens, our study suggests that the third party can also become a rather powerless tertius miserabilis who suffers rather than benefits from others’ conflict.
Digital Object Identifier 10.1177/0001839219855033
Other Identification Number merlin-id:18161
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