Where’s the Line Between Rule-Breaking and Strategy?

Based on research by Alessandro Piazza, Patrick Bergemann (UC–Irvine) and Wesley Helms (Brock).

Key findings:

• Breaking the rules can be a winning strategy. If they play their cards right, companies that challenge regulations, like Uber, can turn legal battles into market dominance.
• Negotiation beats confrontation. Firms that engage with regulators instead of fighting outright have a better shot at shaping the rules to their advantage.
• Regulation can legitimize rule-breaking. When companies have enough influence, what starts as deviance can end up becoming the new industry standard.

As anyone who has followed the rise of ride-sharing apps or the booming industry of combat sports knows, some businesses thrive not by playing by the rules, but by rewriting them.

New research co-authored by Rice Business professor Alessandro Piazza takes a hard look at corporate rule-breaking, exploring why some organizations get away with flouting norms and laws, while others are swiftly shut down. 

“Markets do not just evolve on their own — companies force them to,” says Piazza. “But market disruption isn’t just about breaking rules — it’s also about strategically engaging with those who enforce them. Some companies master this dynamic; others get crushed by it.” 

For businesses that break the rules, the stakes are high. On one side, organizations that deviate risk regulatory crackdowns, legal battles and public backlash. But on the other, the potential rewards are enormous — setting new market standards and securing competitive advantages that would have been impossible had they played it safe. 

Think Uber, which often flooded cities with drivers before regulations could catch up — offering $500 cash incentives to new drivers in New York, for instance, in 2018, ahead of a cap on ride-sharing. At the same time, the company has invested heavily in lobbying lawmakers, ultimately convincing dozens of states to enact laws favorable to ride-sharing companies. 

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When Breaking the Rules Works

At the heart of Piazza’s research, published in the Academy of Management Review, is a simple yet powerful question: Why do some organizations succeed in pushing boundaries, while others are crushed under regulatory pressure? 

According to the paper, the answer comes down to social control — the ways in which regulators, competitors and the public respond to corporate deviance. The researchers break this down into two key factors: cooperativeness and formality. 

Cooperativeness refers to whether regulators and rule-breakers work together to find a solution or engage in outright conflict. Formality, meanwhile, distinguishes between backroom deals and informal negotiations versus full-scale legal action and policy changes.

As Piazza explains: “Social control is not just about stopping deviance — it can actually legitimize it. The same forces that try to curb a disruptive company can end up enshrining it in the system.”

His study finds that when businesses and regulators engage cooperatively, organizations like Uber often succeed in securing a place in the market. This is because negotiations allow them to shape the rules to their advantage, rather than being subjected to rigid enforcement. 

UFC vs. Napster

Consider how mixed martial arts (MMA) went from outlawed bloodsport to mainstream entertainment by playing the long game. Once branded as a brutal, no-holds-barred spectacle, the Ultimate Fighting Championship (UFC) introduced weight classes and mandatory gloves, and they banned dangerous moves to align with state athletic commissions. 

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These reforms, along with extensive lobbying, paved the way for regulation and legalization, culminating in New York lifting its ban in 2016, marking the 50th state to do so. Today, the UFC is a billion-dollar industry with mainstream legitimacy and prime-time TV deals.

By contrast, when companies face uncompromising opposition, their survival is far less certain. Established in 1999, the infamous peer-to-peer file-sharing application Napster blew up the music industry overnight, letting millions swap songs for free and sending record labels into a panic. However, lawsuits for mass copyright infringement piled up, the courts cracked down and without a legal way forward, Napster was forced to close down in 2001. 

According to Piazza, the stakes couldn’t be higher: “For some companies, breaking the rules is a strategy, not a mistake. But it’s a high-risk, high-reward game. If they win, they redefine the market. If they lose, they might not survive.”

Rule-Breaking as a Business Strategy

A key takeaway from the research is that organizational deviance is not inherently bad or good — it is a strategic gamble. For organizations willing to challenge existing norms, success depends on understanding and navigating the mechanisms of social control. 

Organizations that work strategically with regulators, form alliances, and present their actions as socially beneficial often gain a competitive advantage. But those that miscalculate their bargaining power or underestimate the pushback from stakeholders risk losing everything.

Ultimately, Piazza’s research reminds us that while conformity may offer safety, calculated deviance can be a powerful tool for innovation and growth. The trick is knowing when to push, when to negotiate, and when to walk away. 

Or, as he puts it: “It’s not just about getting away with it. It’s about making sure, in the end, you don’t have to.”

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Piazza, Bergemann and Helms, “Getting Away with It (Or Not): The Social Control of Organizational Deviance.” Academy of Management Review 49.2 (2024): 249-72. https://doi.org/10.5465/amr.2021.0066