Free and Unmerited: The Unappreciated Organizing Power of Grace

Abstract

Grace, an unconditional and voluntary gift in the presence of unmet expectations, is often associated with theology yet pervades everyday life. Despite its ubiquity, management scholarship is quiet on understanding how grace shapes organizational relationships and outcomes. This article positions grace as a promising construct for management scholarship across entrepreneurship, strategic decision-making, organizational relationships, and institutional dynamics. I begin by articulating the three constitutive conditions of grace: social construction requiring undeserving recipients and unobligated givers, presence of unmet expectations, and absence of obligation by the giver. Next, I demonstrate how grace operates through institutional, exchange, and relational organizing processes that enable temporary norm deviations, transcend traditional exchange logics, and redistribute power to facilitate relationship renegotiation. Finally, I propose promising research directions that illuminate how actors navigate tensions between accountability and flexibility. This research agenda has potential to enhance the interactions and relationships between people, organizations and institutions.

Introduction

Grace is more ubiquitous in everyday life than its theological associations suggest (Hyde & Joseph, 2022). It appears in finance when late fees are waived (Kagan, 2023), patent laws for inventors who delay filing (United States Patent and Trademark Office, 2024), and inconspicuously in video games when a character's death is suspended (Guild Wars, 2015). These examples reveal a shared understanding of grace beyond religion, and recent work has validated the ubiquitous nature of grace in diverse workplace populations (O’Connell & Adams, 2024, 2025). The widely understood “fall from grace” has been used to analogize theories of status (Graffin et al., 2013) and prestige (Kakkar et al., 2020), yet management scholarship has not leveraged grace's theoretical potential (Hodge et al., 2022; O’Connell, 2022).

Grace's theological foundations (Hyde & Joseph, 2022) do not preclude it from enriching management research. Similar religious constructs have contributed to our understanding of identity (Kreiner et al., 2015), leadership (Gümüsay, 2019), institutional logics (Gümüsay et al., 2020), and entrepreneurship (Smith et al., 2023), and grace itself has informed leadership (Thomas & Rowland, 2014) and organizational change (O’Connell & Adams, 2024) research. In an era of cancel culture, the gift of grace to those who fall short of expectations may create space for learning (Levitt & March, 1988) rather than mere impression management (Mishina et al., 2010) in response to fear of being societally canceled (Ng, 2020). Amid financial instability, grace may foster ecosystem resilience (Roundy et al., 2017) rather than self-preservation, as seen between funders and entrepreneurs in the 2023 Silicon Valley Bank collapse (Brown & Whyte, 2023). In workplace communication, grace may enable authentic dialogue about belonging (Walton & Cohen, 2007) between minority identifying individuals and executive team members (Kerr, 2021–present) rather than posturing. This article positions grace as an understudied phenomenon and offers pathways for advancing institutional (Lawrence & Suddaby, 2006), entrepreneurship (Smith et al., 2021), strategy (Dyer & Singh, 1998), and leadership (Thomas & Rowland, 2014) theories.

What Grace Is (and Is Not)

Grace is “a gift given unconditionally and voluntarily to an undeserving person by an unobligated giver, the giver being either human or divine” (Emmons et al., 2017, p. 276). It occurs in both human (“common”) and divine (“special”) forms (McMinn et al., 2006), as validated through lived experiences (O’Connell, 2022) and captured with validated scales (e.g., Bufford et al., 2017; O’Connell & Adams, 2024, 2025) and empirical literature reviews (e.g., Hodge et al., 2022). Grace has three constitutive conditions important for management theorizing. First, grace is socially constructed (see Silvestri, 2021; Schiller, 1794, as cited in Thomas & Rowland, 2014) requiring an undeserving person (e.g., debtor) and an unobligated giver (e.g., creditor). Second, grace occurs where the receiver falls short of expectations (e.g., forgetting to pay a bill). Third, grace appears in the absence of an obligation by the giver and the presence of a gift (e.g., waiving a late fee). These conditions indicate that grace temporarily transforms “stable reproducible forms of behavior undergirded by regulatory, normative or cognitive forces” (Lounsbury & Gehman, 2024, p. 65), facilitating single-event aberrations without institutional change (Steele, 2021). For example, U.S. patent law's grace period allows filing within 1 year of an invention's first publication, enabling a temporary suspension of regulatory requirements without changing the entire patent system.

Important extant research has distinguished grace from attributes of kindness and compassion (Thomas & Rowland, 2014), and forgiveness, altruism, justice, and mercy (Hodge et al., 2022). While compassion may serve as an antecedent to grace through understanding others’ circumstances, and kindness may represent grace's observable demonstration (Thomas & Rowland, 2014), grace transcends both through its unmerited versus benevolent gifting. Grace differs from related concepts in keyways: unlike forgiveness (McCullough & Witvliet, 2002), it does not require personal change in response (though positive transformation has been self-reported; Schellekens et al., 2021); unlike altruism (Piliavin & Charng, 1990), it involves no necessary sacrifice (Hodge et al., 2022); and unlike justice (Emmons et al., 2017) and mercy (Duff, 2007), it focuses on gifts rather than punishments. Finally, it has also been suggested that grace serves as an important antecedent to job satisfaction, thriving, and turnover intent (O’Connell & Adams, 2025), and human flourishing (Emmons et al., 2017; Hodge et al., 2022; O’Connell, 2022). This work identifies some of the necessary yet not sufficient conditions of grace suggesting that grace has both observable (behavioral expressions) and latent (relational construction) levels with organizational consequences. Evidently, further research is needed to understand how grace organizes our social worlds, and its implications for management theories.

Grace's theological foundations span multiple religious traditions, representing divine unmerited favor toward humanity. In Christianity, grace embodies God's divinity transcending human failings, while in Judaism it is God's hesed or loving-kindness (Emmons et al., 2017). This theology influenced ancient Greco–Roman gift systems (Barclay, 2015) where grace created complex webs between giver and receiver. Early Christianity deployed grace to establish new relational patterns, revealing how grace transforms relationships and permits temporary norm deviations; phenomena observed in contemporary qualitative studies of grace (O’Connell, 2022).

The transcendence evoked by grace's theological roots has been used in other scholarly disciplines to describe ethereal phenomena. Esthetic theories describe grace as observable beauty, borrowing grace's spiritual weight to capture seemingly transcendent esthetic experiences such as “elegance and sexiness” (Menninghaus et al., 2019). However, broader definitions risk eroding grace's initially distinctive qualities. For instance, Krause (2025, p. 7) defines grace as “a moment in which we might, consciously or unconsciously, take a risk using parts of ourselves in order to bring forth a connection or integration.” This broad definition could equally describe entrepreneurship—calculated risks connecting customers with problem-solving products—rather than unmerited gifts to undeserving recipients. As we explore grace's organizing power, these theological foundations provide the necessary conceptual depth for understanding its distinctive organizational manifestations and theoretical potential.

Grounding Grace in Management Literature, and Future Research Directions

Although grace is both broadly and deeply explored in theology (Meissner, 1964) and related academic journals (e.g., Journal of Psychology and Theology), it remains notably absent from mainstream management scholarship. While shifting societal perceptions have complicated management scholarship's engagement with religious concepts (Hartmann et al., 2005), they offer unique opportunities for advancing scholarship (e.g., Gümüsay, 2019; Gümüsay et al., 2020; Kreiner et al., 2015; Smith et al., 2023). Grace demonstrates organizational relevance across management's foundational disciplines: sociological perspectives on institutions (patent law's grace periods; Lawrence & Suddaby, 2006), economic perspectives of exchange (financial fee waivers; Mauss, 1990), and psychological perspectives of interpersonal dynamics (gaming; Zelizer, 2012). While an integrated framework exceeds this article's scope, grace's disciplinary breadth reveals its potential as an organizing phenomenon that bridges theoretical conversations in management scholarship, particularly since these processes intersect in practice. For example, institutional suspensions may require relational renegotiation, gift-based exchanges can create new institutional patterns, and power redistributions may necessitate temporary rule suspensions. This interconnectedness suggests grace's potential to understand coordinating mechanisms of multiple organizational domains, and therefore its worthiness for further study.

Institutional Organizing Processes

Grace represents institutional work as “the purposive action of individuals and organizations aimed at creating, maintaining and disrupting institutions” (Lawrence & Suddaby, 2006, p. 215). This perspective shows how actors engage with institutions through everyday activities (Lawrence et al., 2011) bridging macro- and micro-analyses (Hampel et al., 2017; Smets & Jarzabkowski, 2013). When everyday adaptations temporarily suspend regulatory, normative, or cognitive elements (Scott, 1995) without dismantling them, this constitutes “institutional suspension.” Unlike creating, maintaining, or disrupting institutions, suspension represents a novel manifestation of institutional work that is observable in grace. For organizations, suspension provides controlled flexibility within rigid systems as when university review boards establish “institutional suspensions” for ethics violations without dismantling entire research programs. Importantly, grace-based suspension differs from strategic suspension through its underlying logic. Rather than calculated risk management by obligated actors, grace-based suspension emerges from unobligated givers (e.g., university review boards) extending unmerited concessions (e.g., to researchers), driven by gift-giving rather than instrumental concerns. Grace functions as visible practice and invisible social lubricant, preventing breaches from cascading into larger disruptions. When actors extend grace, they temporarily suspend usual obligations, potentially allowing deviations to be reintegrated rather than marked as violations (Steele, 2021), revealing how institutions bend without breaking through small acts.

Grace's capacity for suspension raises critical questions: How do organizations balance the frequency and scope of grace-based suspensions without undermining institutional stability? What determines whether grace strengthens institutions as a “repair mechanism” (Micelotta et al., 2017) or enables institutional decay through normalized violations (Lawrence & Suddaby, 2006)? Organizational crisis management offers a promising setting, where suspensions of normal procedures could be compared across organizations that explicitly frame them as “grace periods” versus other justifications. Corporate governance presents another promising setting for examining how boards extend grace to executives during performance shortfalls or strategic missteps, revealing boundary conditions for institutional stability. Methodologically, comparative case studies could illuminate how grace-based responses versus strict enforcement affect long-term legitimacy, while longitudinal approaches can document institutional evolution through cycles of violation, practice (of grace), and reintegration (Langley et al., 2019).

Exchange Organizing Processes

Grace is a unique form of gifting that transcends economic exchange by creating meaningful social bonds (Faldetta, 2022; Mauss, 1990). While genuine gifts are theoretically unconditional, most organizational gift exchanges exist on a continuum between altruism and strategic interest (André et al., 2017; Frémeaux & Moneyron, 2024). Unlike economic exchanges that demand equivalent returns, the gifting of grace establishes frameworks that shape future interactions without mandating specific returns (André et al., 2017), strengthening social bonds while preserving the unobligatory nature of the initial gift (Emmons et al., 2017). This is particularly evident in entrepreneurship. In startup accelerator programs, mentors gift grace to founders by providing guidance despite missed milestones (Cohen et al., 2019), while entrepreneurial teams gift grace to one another by absorbing temporary inequities in workload or compensation (Huang & Knight, 2017). These acts create “patterns of life” (Smith et al., 2021) that shape future expectations. Unlike market-based exchanges that terminate or issue penalties for unmet expectations, the gifting of grace establishes flexible frameworks for collaboration while preserving the autonomy necessary for innovation.

Grace's transcendence of traditional exchange logics (whether formal contracts; Williamson, 1989; or social obligations; Uzzi, 1997) raises important research questions: How does the gifting of grace reconfigure obligations without explicitly articulating them (Mauss, 1990)? What influences decisions to gift grace versus enforce contracts? Entrepreneurial financing provides an illuminating setting with tensions between contract enforcement and relationship preservation where researchers could investigate how venture capitalists’ grace decisions are influenced by relationship quality (Hallen & Eisenhardt, 2012) and ecosystem embeddedness (Burt, 2007). Patent systems offer another promising setting for comparing innovation outcomes across jurisdictions with varying grace period provisions. Methodologically, event history analysis could identify patterns of grace extension supplemented by interviews exploring how grace is interpreted by inventors, lawmakers and legal teams, while difference-in-differences designs comparing outcomes across grace period changes would provide valuable insights into the effects on innovation.

Relational Organizing Processes

Grace is a process of relational work, which is the purposive action of people in establishing boundaries and the exchanges associated with those boundaries (Zelizer, 2012). While relationships within organizations typically transcend single interactions to form ongoing exchanges (Blumstein & Kollock, 1988), they are fundamentally shaped by power—the degree to which one party depends on another for valued resources (Emerson, 1962; Pfeffer & Salancik, 2003). Within this framework, grace temporarily redistributes power by creating opportunities for relational renegotiation rather than termination when boundaries are breached. Power redistribution becomes evident when expectations are violated such as in psychological contract breach (Robinson & Morrison, 2000) when the aggrieved party typically has increased power through their legitimate right to enforce consequences. By relinquishing enforcement power through grace, givers transform relationships in ways that can strengthen their position while creating space for relationship persistence and power reconfiguration (Schildt et al., 2020). Power-balancing dynamics create conditions where participants feel safer taking interpersonal risks necessary for learning (Edmondson, 1999) enabling actors to experiment with alternative practices without triggering enforcement protocols (Hallett, 2003). However, when power is temporarily redistributed through acts of grace but without genuine behavioral changes, relationships may deteriorate through diminished trust and legitimacy (Robinson & Morrison, 2000; Westphal & Zajac, 1998). Thus, the relational work of grace is in tension with institutional arrangements: organizations must balance accountability with the flexibility needed for evolving power relations (Santos & Eisenhardt, 2009).

This paradoxical power redistribution raises important questions: How does grace enhance the influence of those who temporarily suspend enforcement? Does extending grace create competitive advantages through relationship-specific assets, or weaken strategic positions by establishing precedents for underperformance? While traditional theories suggest that enforcing boundaries strengthens power positions (Pfeffer & Salancik, 2003), grace may paradoxically enhance the influence of those who temporarily suspend enforcement. At the interpersonal level, grace offers distinctive contributions to leadership theory (Thomas & Rowland, 2014) by revealing how relationships might evolve through managed breaches rather than consistent reliability (Graen & Uhl-Bien, 1995). At the organizational level, strategic management researchers could investigate how grace functions differently in competitive versus collaborative relationships. Rather than equalizing relationships, repeated extensions of grace could intensify power asymmetries, extending resource dependence theory (Pfeffer & Salancik, 2003) by examining how voluntary nonenforcement alters dependency. Methodologically, experience sampling could track leader–member interactions around “violation events” and subsequent relationship trajectories, while process research approaches (Langley et al., 2019) could trace how specific grace events reconfigure power relations between organizations.

Practical Implications and Final Thoughts

Grace is a ubiquitous and understudied phenomenon in organizational life that offers transformative potential for both scholarship and practice. The practical implications extend beyond traditional management applications to fundamental questions about our potential to humanely organize social life. As noted in this article's introduction, grace provides frameworks for addressing contemporary organizational challenges—including cancel culture, financial instability and workplace communication—in more humane ways. Rather than defaulting to punishment when expectations are unmet, people might consider when institutional suspensions enable learning, when the gifting of grace strengthens relationships while maintaining standards, and when grace creates dialogue rather than escalation. Research on grace might equip practitioners to move beyond bureaucratic responses toward more human-centered organizing. While grace cannot eliminate accountability, it could make organizational relationships more sustainable and resilient across domains from corporate governance to diversity initiatives. Rivera's (2019) practitioner account of a failed indigenous land acknowledgment she led as facilitator illustrates multidirectional grace dynamics: the group exercised institutional suspension rather than immediate condemnation, Rivera acknowledged harm without demanding absolution (unmerited exchange), and subsequent dialogue occurred on affected parties’ terms (relational organizing)—all while maintaining accountability standards. By clarifying how organizations navigate tensions between standard enforcement and situational flexibility, research on grace may offer insights that transform not just management scholarship, but how we organize our social world.

By theorizing grace as a distinctive organizing mechanism spanning institutional, exchange, and relational processes, this article opens pathways for challenging management assumptions and bridging theoretical conversations. Grace research may reveal fundamentally different organizing approaches that balance accountability with compassion, standards with flexibility, and efficiency with humanity.