This paper draws on Weber’s theodicy problem to define organizational corruption as the emerging discrepancy between experience and normative expectation. Theodicy describes the attempts to explain this discrepancy. The paper presents four normative principles enlisted by observers to respond to perceived corruption: moral dilemma, detachment, systematic regulation, and normative controls. Consistent with social construction, these justifications work to either reaffirm or challenge prevailing social norms in the face of confusing events. An exemplar case involves perceived corruption (...) in the business of mountain climbing as represented through the 1996 Mt. Everest climbing disaster. The events illustrate how theodicy informs descriptive accounts of corruption and expose two limitations of normative models of ethics. (shrink)

This article uses social dominance theory (SDT) to explore the dynamic and systemic nature of the initiation and maintenance of organizational corruption. Rooted in the definition of organizational corruption as misuse of power or position for personal or organizational gain, this work suggests that organizational corruption is driven by the individual and institutional tendency to structure societies as group-based social hierarchies. SDT describes a series of factors and processes across multiple levels of analysis (...) that systemically contribute to the initiation and maintenance of social hierarchies and associated power inequalities, favoritism, and discrimination. I posit that the same factors and processes also contribute to individuals’ lower awareness of the misuse of power and position within the social hierarchies, leading to the initiation and maintenance of organizational corruption. Specifically, individuals high in social dominance orientation, believing that they belong to superior groups, are likely to be less aware of corruption because of their feeling of entitlement to greater power and their desire to maintain dominance even if that requires exploiting others. Members of subordinate groups are also likely to have lower awareness of corruption if they show more favoritism toward dominant group members to enhance their sense of worth and preserve social order. Institutions contribute to lower awareness of corruption by developing and enforcing structures, norms, and practices that promote informational ambiguity and maximize focus on dominance and promotion. Dynamic coordination among individuals and institutions is ensured through the processes of person-environment fit and legitimizing beliefs, ideologies, or rationalizations. (shrink)

Employee attributions and emotional reactions to unethical behavior of top leaders in an organization recently involved in a highly publicized ethics scandal were examined. Participants (n = 76) from a large southern California government agency completed an ethical climate assessment. Secondary data analysis was performed on the written commentary to an open-ended question seeking employees' perceptions of the ethical climate. Employees attributed the organization's poor ethical leadership to a number of causes, including: lack of moral reasoning, breaches of trust, hypocrisy, (...) and poor ethical behavior role modeling. Emotional reactions to corruption included cynicism, optimism, pessimism, paranoia and fear, and were targeted at top leaders, organizational practices (i.e., the old boy network, nepotism, and cronyism) and ethics interventions. Implications for leadership training and other organizational ethics interventions are discussed. (shrink)

Corruption poisons corporations in America and around the world, and has devastating consequences for the entire social fabric. In this article, we focus on organizational corruption, described as the abuse of authority for personal benefit, and draw on Weber’s three ideal-types of legitimate authority to develop a theoretical model to better understand the antecedents of different types of organizational corruption. Specifically, we examine the types of business misconduct that organizational leaders are likely to engage (...) in, contingent on their legitimate authority, motives, and justifications. We conclude by suggesting managerial implications of our theoretical model and propose directions for future research. (shrink)

This paper explores Albert Bandura's concept of moral disengagement in the context of organizational corruption. First, the construct of moral disengagement is defined and elaborated. Moral disengagement is then hypothesized to play a role in the initiation of corruption by both easing and expediting individual unethical decision-making that advances organizational interests. It is hypothesized to be a factor in the facilitation of organizational corruption through dampening individuals’ awareness of the ethical content of the decisions (...) they make. Finally, it is hypothesized to contribute to the perpetuation of corruption in organizations, because if individuals who have a greater propensity to morally disengage are more likely to make decisions that advance organizational interests regardless of the ethicality of those decisions, they may also be rewarded for those decisions in terms of organizational advancement. Together these studies form an argument that moral disengagement plays an important role in processes of organizational corruption. (shrink)

The dominant academic paradigm and the main inspiration of anticorruption policies is the economic theory of corruption, according to which anticorruption policies should be focused on raising the costs associated with corrupt behavior. In this article, I provide three reasons to explain why anticorruption interventions in organizations inspired by the economic theory of corruption frequently fail. I contribute to the current literature by integrating the literature on constructive deviance, on personality psychology, and on managerial biases in ethical decision-making (...) into the study of corruption and into the design and implementation of anticorruption interventions. Research propositions are advanced. Research and practice implications are discussed. (shrink)

Despite universal agreement that corruption is norm-deviant, the criteria required to ascertain deviance remain elusive. The problem is even more pronounced for organizational corruption, not least because the construct remains somewhat ambiguous and is often conflated with proximate management constructs like antisocial or unethical organizational behavior. In this article, I identify the suitable criteria for the determination of deviance in organizational corruption and determine whether it is, indeed, antisocial or unethical. In order to minimize (...) ambiguity, I first limit the scope of organizational corruption to corruption within, rather than by, organizations, which is most conceptually challenging insofar as the aforementioned questions are concerned. I then conclude that organizational corruption should be specified solely with respect to the focal organization’s normative framework; it is anti-organizational rather than antisocial. Higher level normative prescriptions that arise from the organization’s embedding within its social context remain relevant, but only insofar as they are incorporated within the organization’s normative framework. Moreover, I argue that organizational corruption is not necessarily unethical, since the moral evaluation of an organizational act is, in principle, distinct from the determination of its deviance to organizational norms. (shrink)

Although theory refers to organizational culture as an important variable in corrupt organizations, only little empirical research has addressed the characteristics of a corrupt organizational culture. Besides some characteristics that go hand in hand with unethical behavior and other features of corrupt organizations, we are still not able to describe a corrupt organizational culture in terms of its underlying assumptions, values, and norms. With a qualitative approach, we studied similarities of organizational culture across different corrupt organizations. (...) In this study, we performed content analysis on interviews of 14 independent experts about their experience with corrupt organizations. With this approach, we gained insights about different corrupt organizations spanning different branches (e.g., government, foreign trade, pharmacy, sports, building industry). We found that corrupt organizations perceive themselves to fight in a war, which leads to their taken-for-granted assumption that “the end justifies the means”. This assumption inspires many values and norms of the organizational culture. An important value in a corrupt organization is “security”, and an important norm is punishment of deviant (i.e., non-corrupt) behavior. Furthermore, managers and employees differ in their perception of organizational culture. While the management endorses values, such as success, results, and performance, and implements these values in their norms of goal setting, employees make use of rationalization strategies and endorse values of security and team spirit. (shrink)

The globalizations of capital markets in the last 20 years has led to a historic degree of financial integration in the world. It is clear, however, that globalization is not conducive to a complete homogeneity of financial markets and institutions. Among others, one element of diversity is the importance of the impact of corruption in emerging countries. Corruption decreases the credibility of financial institutions and markets. Scandals and unethical behavior in financial institutions erode confidence in such firms. Relying (...) on neoinstitutional literature, this article focuses on the link between corruption and organizational isomorphism in financial institutions in emerging countries. Therefore, our aim is to examine the institutional reasons for corruption in financial institutions in emerging countries. Our structural equation model is based on empirical research in financial institutions in emerging countries. A questionnaire was administrated to 70 top executives of financial institutions in 18 different emerging countries. (shrink)

ABSTRACT:Despite widespread attention to corruption and organizational change in the literature, to our knowledge, no research has attempted to understand the linkages between these two powerful organizational phenomena. Accordingly, we draw on major theories in ethics, sociology, and management to develop a theoretical framework for understanding how organizational change can sometimes generate corruption. We extend anomie theory and ethical climate theory to articulate the deinstitutionalization of the normative control system and argue that, through this deinstitutionalization, (...) organizations have the potential to become incubators for corruption. We qualify this process by proposing conditions more ripe for anomie and under which this deinstitutionalization is more likely to occur, propounding moderating relationships that influence organizational reconfiguration. Examples of turbulence in the contemporary business environment that can trigger change highlight our discussion. We conclude with managerial implications, offering means by which the deleterious effects of corruption may be arrested or controlled. (shrink)

Based on neo-institutional literature, this article aims to show the influence of organizational isomorphism on corruption. The focus is institutional explanations of corruption. Our model is based on empirical research in Russia at the end of the 1990s. A face-to-face questionnaire was conducted with 552 top executives in private firms across various economic sectors. We used the structural equation model Partial Least Squares, PLS, technique to test our hypotheses. The developed model provides an integrated approach to the (...) study of the relationship between corruption and organizational isomorphism. Our empirical data from firms in Russia allowed us to test various theoretical hypotheses concerning the influence of organizational isomorphism on corruption. Our emphasis is on the influence of competitive and institutional isomorphism on corruption. (shrink)

Corporate anti-corruption initiatives can make a substantial contribution towards curtailing corruption and advancing efforts to achieve the United Nations’ Sustainable Development Goals. However, researchers have observed that underdeveloped assumptions with respect to the conceptualization of corruption and how firms respond to corruption risk impeding the efficacy of anti-corruption programs. We investigate the relationship between the perceived level of corruption in foreign host countries and the organizational structure of subsidiary operations established by multinational corporations. (...) Foreign host market corruption is disaggregated into two components—private and public corruption. We employ an uncertainty-based perspective grounded in transaction cost theory to focus upon the distinct mechanisms through which private and public corruption can each be expected to impact a foreign subsidiary’s organizational structure [wholly-owned subsidiary or a joint venture with a local partner]. We expect that each type of corruption fosters a different type of uncertainty which predominates in shaping the MNC’s choice of foreign subsidiary investment structure. Hypotheses are developed and tested with a sample of 187 entries into 19 foreign host markets. Each type of corruption was found to exert a distinct effect upon the organizational structure of foreign subsidiaries. More precisely, while heightened perceived levels of public corruption were found to motivate MNCs to invest through a JV with a local partner rather than a WOS, more pronounced private corruption precipitated the opposite outcome. (shrink)

Organizational corruption has recently attracted considerable scholarly attention, especially since its devastating effects following recent major corporate scandals, the worldwide economic crisis of 2009, and the current European Union monetary crisis. This paper is based on the analysis of three distinct, yet contextually related, case studies in a European Union member state: (a) an incident of corruption by a minister in an adjudicative role, (b) widespread financial misreporting and perjury within an organization, and (c) abuse of due (...) process and obstruction of justice by civil servants within a ministry. These cases serve to illustrate, for the first time, Aguilera and Vadera’s (in J Bus Ethics 77:431–449, 2008 ) framework of organizational corruption, which relates distinct types of a corrupter’s opportunity, motivation, and justification with the type of corruption present in the organization. Furthermore, the data suggest how the framework may be extended and reveal conceptual issues that require reconciliation. This study attempts such reconciliations and offers some suggestions on how the findings may be utilized by policy reformers or corruption controllers. (shrink)

In this paper, we apply imprinting theory to examine how institutional transformation substantially influences perceptions of corruption that we argue to be incorporated to a varying extent in organizations founded in that period. For this purpose, we compare the effect of a sudden shock (dissolution of the Soviet Union) on the managers' present perceptions to that of a steady transition (EU accession). We consult the 5th round of the Business Environment and Enterprise Performance Survey from 2012 to 2014 analyzing (...) 4715 interviews with managers of organizations from twelve Central and Eastern European countries. Our results reveal striking differences in the present perception of corruption for organizations founded immediately before and immediately after these institutional transitions. The study's results contribute to the research on imprinting theory regarding the relationship between organizations and institutional conditions that constitutes a lasting effect on organizational structures. Thus, applying an institutional perspective that considers less stable periods for organizations yields a promising avenue in research on organizational behavior. (shrink)

Despite a strong sensitization to the corruption problem and a large body of interdisciplinary research, scientists have only rarely investigated which motivational, volitional, emotional, and cognitive components make decision makers in companies act corruptly. Thus, we examined how their interrelation leads to corruption by proposing an action model. We tested the model using a business simulation game with students as participants. Results of the PLS structural equation modeling showed that both an attitude and subjective norm favoring corruption (...) led to a desire to act corruptly. Given high perceived behavioral control, this desire was transformed into an intention that finally resulted in corrupt action. Components related to general private and professional goals did not allow for any prediction. Based on these results, we discuss preventative measures and methods for combating intra- and inter-organizational corruption. (shrink)

We examine how corporate bribery is impacted by cultural distance between multinational enterprises home and host countries, and organizational distance to core values between MNE entry modes and MNE headquarters. Tension between external and internal legitimacy helps to explain why cultural and organizational distances will affect MNE bribery. The empirical analysis used data from cross-border transactions by MNEs that were sanctioned by US regulatory officials between 1978 and 2011. We find statistical support for all hypotheses capturing main and (...) moderating effects and suggest that MNEs may be seriously risking their legitimacies from transactions in corruption-prone host countries. (shrink)

This paper develops the concept of the ‘continuum of destructiveness’ in relation to organizational corruption. This notion captures the slippery slope of wrongdoing as actors engage in increasingly dubious practices. We identify four kinds of individuals along this continuum in corrupt organizations, who range from complete innocence to total guilt. They are innocent bystanders, innocent participants, active rationalizers and guilty perpetrators. Traditional explanations of how individuals move from bystander status to guilty perpetrators usually focus on socialization and institutional (...) factors. In addition to these factors, we propose that the very distance between an act and its ethical consequences (ethical distance) may also play a determining role – if not always in the same way – in the transition process. Having developed this conceptual argument, we conclude with a discussion of managerial and research implications. (shrink)

Organizational corruption is a wide-spread negative aspect of economic activity, and a seemingly never-ending series of corruption scandals has been made public around the globe. Although research is performed in a broad variety of disciplines, ranging from psychology to management to law, a fully satisfactory explanation for the causes of organizational corruption has not been found. By looking at organizational factors as potential triggers for corruptive behavior, this study draws upon the concept of entrepreneurial (...) orientation. Diverse studies have shown that EO, as an antecedent to company performance, has a positive effect. Recent EO literature, however, indicates that EO has not only positive but also negative consequences. In this line of reasoning, this study builds upon principal agent theory and makes a first step in exploring the impact of EO on a negative aspect of business behavior, namely organizational corruption. We gathered survey data and publicly available data from 411 firms, inquiring for both acts of corruption from within the top management team over the last 3 years and the level of entrepreneurial orientation within the organization. Results show diverging effects along the individual dimensions of EO; they point to risk orientation as the dark side of EO, as it significantly increases the likelihood of corrupt behavior in companies. In contrast, innovation orientation, to a certain extent, counterbalances by reducing the likelihood of corrupt behavior. (shrink)

This article examines how private equity returns in Asia are related to levels of legal protection and corruption. We utilize a unique data set comprising over 750 returns to private equity transactions across 20 developing and developed countries in Asia. The data indicate that legal protections are an important determinant of private equity returns in Asia, but also that private equity managers are able to mitigate the potential for corruption. The quality of legal system (including legal protections) is (...) positively related to returns. Inefficient legal protections negatively impact transaction structures and economic certainty when exiting investments. We also find that private equity managers, irrespective of the quality of legal system they are operating within, can mitigate the potential impact of corruption. Private equity returns are higher in countries with higher levels of corruption, controlling for legal systems. This finding is consistent with the view that private equity managers bring about organizational change to alleviate the costs of corruption. Our findings are robust to inclusion of controls for Hofstede cultural variables, economic conditions, and transaction specific characteristics, as well as consideration of econometric sample selection methods for unexited investments. (shrink)

In their 2018 article in the Cambridge Quarterly of Healthcare Ethics, Little, Lipworth, and Kerridge unpack the concept of corruption and clarify the mechanisms that foster corruption and allow it to persist, noting that organizations are “corruptogenic.” To address the “so-what” question, I draw on research about trust and trustworthiness, emphasizing that a person’s well-being and sense of security require trust to be present at both the individual and organizational levels—which is not possible in an environment where (...) corruption and misconduct prevail. I highlight similarities in Little et al.’s framing of corruption to the persistent problem of scientific misconduct in research and publishing. I acknowledge the challenges in stemming corruption in science and medicine and conclude with a discussion about the need to reinvigorate a web of stakeholders to actively engage in professional regulation. (shrink)

Corruption within the private sector has often not been dealt with in Brazil. Organizations may find corrupt acts in its operations or practices, but specific concepts and programs to avoid them are neither concrete nor clear. Some Brazilian stockholders have become aware of the risks involved in unethical procedures and are adopting the Best Practices of Corporate Governance initiative. International agencies have intensively supported organizations and governments in an effort to define policies that inhibit illegal or corrupt cultural habits (...) throughout the world, but Brazilian practitioners show insufficient response. Skepticism may indicate a lack of understanding about how an ethical leadership can guide employees, setting high standards for the organizational culture and climate, clearly defining limits of correct behavior, and creating appropriate codes of ethics. Transparency still has to be discovered as a significant tool to encourage professionalism in performance and reporting of data in Brazilian companies. In this article, we analyze the ethical behavior of the purchasing department of a multinational company in its host country, Brazil. It focuses specifically on the supplier–buyer relationship. The results indicate that despite the negative reputation Brazilians have in business ethics, a company can still develop a positive and ethical relationship with its stakeholders. Communication, transparency, compliance with the company’s code of conduct as well as the supplier’s awareness of the buyer’s code of conduct are the factors which influence the supplier–buyer relationship. Transparency can be used as a tool to reduce corruption, thereby increasing ethical behavior and company image. Good ethical behavior can help to build up a company’s image. (shrink)

Learning and development are often linked in the organization studies literature. To understand the dynamics of organizational moral development, this paper utilizes the notion of organizational moral learning (OML). It is explored using three perspectives: organizational learning, Islamic and critical realist perspectives. The perspectives are then synthesized together to form a single framework, called the OML by ‘spiritual hearts’ framework. At the centre of the framework is the spiritual heart, the seat of profound understanding and moral consciousness. (...) The heart plays a central role in organizational moral development, especially with regard to its potential to be ‘purified’ and corrupted. Two extreme parameters then are created: on one side is the ‘purified hearts’ with high moral consciousness contributing towards OML, and on the other is the ‘corrupted hearts’ with high immoral consciousness contributing towards organizational immoral learning. Between the two extremes are the ‘diseased hearts’, possessing a mixture of moral and immoral consciousness to various degrees, and have the potentials to contribute to both moral and immoral developments. The paper further suggests strategies to facilitate OML and simultaneously inhibits organizational immoral learning. (shrink)

This article studies the effects of social institutions on organizational corruption at the societal level by focusing on the possible interactions between the institutional pillars that have been identified in past research. Based on these three institutional aspects or pillars, this article tests the interactive effects of social institutions among societies throughout the world. The results suggest that the three institutional pillars have significant interactive effects on organizational corruption at the societal level. A discussion of the (...) implications of the research findings for researchers and practitioners is given. (shrink)

To date, theory and research on corruption in organizations have primarily focused on its static antecedents. This article focuses on the spread and growth of corruption in organizations. For this purpose, three downward organizational spirals are formulated: the spiral of divergent norms, the spiral of pressure, and the spiral of opportunity. Social Identity Theory is used to explain the mechanisms of each of these spirals. Our dynamic perspective contributes to a greater understanding of the development of (...) class='Hi'>corruption in organizations and opens up promising avenues for future research. (shrink)

This article studies the effects of social institutions on organizational corruption at the societal level by focusing on the possible interactions between the institutional pillars that have been identified in past research. Based on these three institutional aspects or pillars, this article tests the interactive effects of social institutions among societies throughout the world. The results suggest that the three institutional pillars have significant interactive effects on organizational corruption at the societal level. A discussion of the (...) implications of the research findings for researchers and practitioners is given. (shrink)

While public (or government) corruption has attracted a lot of attention, private (or business) corruption has been relatively under-addressed. A specific form of corruption, namely, paying a bribe to a public official, is easily identifiable as unethical and possibly illegal, but this is not clear in a private business context. Yet private bribery also has serious organizational consequences. This exploratory study suggests that individuals have difficulty in recognizing the ethical connotations of potential bribery, and draws attention (...) to the need to build skills in this regard. (shrink)

Corruption continues to represent a tenacious challenge to internationally active companies. According to prevailing international anti-corruption standards, a company can be held criminally liable if it does not put all necessary and reasonable organizational measures in place to prevent corruption. The regular training of employees is considered one of the most effective ways to prevent corruption. Employee training is considered helpful in efforts to minimize the risk of employees becoming involved in corrupt behavior. With this (...) idea in mind and building on the fraud triangle model and neutralization theory, this paper examines whether business professionals who have undergone anti-corruption training are more likely to reject prevailing justifications of corrupt practices than are those who have not undergone such training. The empirical analysis in this paper is based on regression models using data obtained from a unique dataset that includes 200 business professionals. The findings provide evidence that training is positively linked to the likelihood of rejecting justifications of corruption. However, the research also suggests that methods of training must become more specific in order to tackle challenging questions regarding the gray areas of ethics and compliance. (shrink)

In the current study, we examine the changes in disclosure practices on compliance and the fight against corruption at Siemens AG, a large German multinational corporation, over the period 2000–2011 during which a major corruption scandal was revealed. More specifically, we conduct a content analysis of the company’s annual reports and sustainability reports during that period to investigate the changes of Siemens’ corruption and compliance disclosure using both quantitative and qualitative methods. Through the lens of legitimacy theory, (...) stakeholder analysis, and organizational façades, we find evidence that Siemens changed its compliance and corruption disclosure practices to repair its legitimacy in the wake of the 2006 corruption scandal. We analyze these strategies more closely by using the rational, progressive, and reputation façades framework. Our primary findings suggest that the annual reports show peaks of disclosure amounts on corruption and compliance disclosures earlier than sustainability reports, which can be partly explained by analyzing the disclosures made about—and to—the different stakeholder groups. We find that the annual report focuses more on internal stakeholders such as employees, while the sustainability report focuses more on external stakeholders such as suppliers. We also find that the company uses the façades differently depending on which report is being analyzed. (shrink)

Although there are several conceptions of organizational moral learning (OML), there is a need for more empirical studies. This study aims to provide illustrations of the dynamism of organizational moral learning by spiritual hearts (OML-SH), where OML and organizational immoral learning (OIL) are coupled antagonistically. Two OML-SH initiatives (i.e., the Quality Control Circle program and 100-hour training record system) within Brunei’s public sector are scrutinized to illustrate the dynamic process of OML-SH, spanning individual, group, and organizational (...) levels. From the two exploratory case studies, the purifying mechanism was coined to capture the laminated interplay between the spiritual hearts, group understanding, leadership, organizational intention, structure, culture, and resources to drive OML. In contrast, the corrupting mechanism was also coined as the opposite force to drive toward OIL. From the study, leadership and organizational learning repositories were seen to play essential roles in the purification of the spiritual heart (i.e., individual moral development). Additionally, the spiritually diseased hearts occupying the two extremes of OML and OIL were seen to experience moral ambivalence, which was also not captured in previous studies. The paper concludes with suggestions to manage moral ambivalence for more positive outcomes, drive OML further and impede OIL simultaneously. (shrink)

This study investigated how the social identities assumed by individuals as part of their professional roles influence the nature and use of a range of rationalizations for their corruption or the corrupt acts of others. Thirty senior Indonesian public servants were interviewed about the causes and factors that perpetuated corruption during the Suharto era, and how they rationalized corrupt behavior within the role of being a civil servant. Findings revealed that corruption was routine and embedded in the (...) daily activities and administrative structures of Indonesian public servants. Rationalizing ideologies that supported corruption included a denial of responsibility, social weighting and an appeal to higher loyalties. Central to these rationalizations were explanations around the low levels of civil service salaries, poor accountability, and corrupt leadership at senior levels of the government. However, the expression of these rationalizations varied across three social or role identities of the Indonesian civil servant: the professional civil servant, the collegial civil servant, and the corrupt civil servant. The implications of these findings for interventions in organizations in developing countries are discussed. (shrink)

For three decades, scholars have investigated the phenomena of organizational misconduct (OM) in the fields of business ethics, management, and organization studies. In recent years, the construct has gained increased attention due to widely reported corruption, bribery, crime, violations, and other acts of immorality undertaken by organizations, especially in emerging markets. Despite its popularity, review studies on OM are sparse, and no systematic review of research on OM in the context of emerging markets exists. This article attempts to (...) fill this void by analyzing the literature on OM in the specific context of emerging markets based on a systematic review methodology and integration approach. Based on the findings of our literature review, we develop an integrative model of the antecedents and consequences of OM in emerging markets and discuss important moderators that may curtail the development of OM and alleviate its consequences. In doing so, we provide scholars with a conceptual model and overview of the current knowledge and findings on the topic. We further discuss important gaps in the literature and provide fruitful avenues for future work that we believe are promising to advance our understanding of OM in the context of emerging markets. (shrink)

Tax compliance is an important issue for governments and the public alike. To meet public needs and fund public mandates, firms around the world are expected to comply with tax laws. Factors that are related to organizational (firm) tax compliance have not been sufficiently examined in the literature. Owing to the increasing global influence of transition economies, factors associated with firm tax compliance in transition economies are particularly of interest. Based on a sample of over 5,000 firms from 22 (...) former Soviet Bloc transition economies, we find that higher levels of corruption and higher levels of particularized trust (reliance on friends and family) are associated with lower levels of tax compliance. Interestingly, we also find that the negative relationship between corruption and tax compliance is weakened in situations of higher generalized trust (trust in strangers). Overall, our study’s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies. (shrink)

Why do physicians have financial conflicts of interest? They arise because society expects physicians to act in their patients’ interest, while simultaneously, financial incentives encourage physicians to practice medicine in ways that promote their own interests or those of third parties. Because physicians’ clinical choices, referrals, and prescriptions affect the fortune of third parties, these third parties may offer physicians financial incentives to make income-driven clinical choices. In the past, physicians and scholars typically conceived of conflicts of interest as an (...) ethical issue to be resolved according to individual judgment or professional and organizational norms. However, society can mitigate or eliminate conflicts of interest by changing financial and organizational arrangements in medicine. Conflicts of interest, therefore, are as much matters of public policy and management as individual choices or social norms. (shrink)

The academic literature has viewed drivers of corruption in isolation and, consequently, failed to examine their synergistic effect. Such an isolated view provides incomplete information, leads to a misleading conclusion, and causes great difficulty in curbing corruption. This paper conducts a systematic literature review to identify the drivers of corruption in the construction industry. Subsequently, it develops a system dynamics (SD) model by conceptualizing corruption as a complex system of interacting drivers. Building on stakeholder and open (...) systems theories, the proposed SD model shows how the complex reinforcing relationship between authoritative, organizational, cultural, and financial drivers of corruption further increases corrupt practices. The new model also provides lessons that can be helpful in the development of policy frameworks to control corruption in the construction industry. To achieve success in the fight against corruption, the findings of this research suggest that (1) corruption must be understood at both the organizational and state levels, (2) anticorruption practices must be informed by ethically grounded stakeholder management strategies, and (3) anticorruption reforms must go hand-in-hand with strategies to tackle the economic downturn. (shrink)

The development of efficient and strategic anti-corruption measures can be better achieved if a deeper understanding and identification of the causes of corruption are established. Over the past years, many studies have been devoted to the research of corruption in construction management. This has resulted in a significant increase in the body of knowledge on the subject matter, including the causative factors triggering these corrupt practices. However, an apropos systematic assessment of both past and current studies on (...) the subject matter which is needful for the future endeavor is lacking. Moreover, there is an absence of unified view of the causative factors of corruption identified in construction project management. This paper, therefore, presents a comprehensive review of the causes of corruption from selected articles in recognized construction management journals to address the mentioned gaps. A total number of 44 causes of corruption were identified from 37 publications and analyzed in terms of existing causal factors of corruption, annual trend of publications and the thematic categorization of the identified variables. The most identifiable causes were over close relationships, poor professional ethical standards, negative industrial and working conditions, negative role models and inadequate sanctions. A conceptual framework of causes of corruption was established, after categorizing the 44 variables into five unique categories. In descending order, the five constructs are Psychosocial-Specific Causes, Organizational-Specific Causes, Regulatory-Specific Causes, Project-Specific Causes and Statutory-Specific Causes. This study extends the current literature of corruption research in construction management and contributes to a deepened understanding of the causal instigators of corruption identified in CPM. The findings from this study provide valuable information and extended knowledge to industry practitioners and policymakers as well as anti-corruption agencies in the formulation and direction of anti-corruption measures. To corruption researchers in CM, this study is vital for further research. (shrink)

Corruption devours profits, people, and the planet. Ethical leaders promote ethical behaviors. We develop a first-stage moderated mediation theoretical model, explore the intricate relationships between ethical leadership and employee ethical behaviors, and treat ethical climate and organizational justice as dual mediators and leaders’ moral attentiveness as a moderator. We investigate leadership from two perspectives—leaders’ self-evaluation of moral attentiveness and members’ perceptions of ethical leadership. We theorize: These dual mediation mechanisms are more robust for high moral leaders than low (...) moral leaders. Our three-wave data collected from multiple sources, 236 members and 98 immediate supervisors in the Republic of Iraq, support our theory. Specifically, ethical leadership robustly impacts organizational justice’s intensity and magnitude, leading to high employee ethical behaviors when leaders’ moral attentiveness is high than low. However, ethical leadership only influences the ethical climate’s intensity but has no impact on the magnitude when leaders’ moral attentiveness is high than low. Therefore, organizational justice is a more robust mediator than the ethical climate in the omnibus context of leader moral attentiveness. Our findings support Western theory and constructs, demonstrating a new theory for Muslims in Arabic’s emerging markets. Individual decision-makers apply their values as a lens to frame their concerns in the immediate and omnibus contexts to maximize their expected utility and ultimate serenity-happiness. Ethical leadership trickles down to employee ethical behaviors, providing practical implications for improving the ethical environment, corporate social responsibility, leader-member exchange, business ethics, and economic potentials in the global competitive markets. (shrink)

Although corruption has become a hot topic in organizational research, few studies have examined how it is socially constructed. To partially bridge this gap, the present paper takes a critical discursive perspective on the representation of corruption in the media. The empirical focus is on the media coverage of a corruption scandal that revolved around two instances of formal corruption charges and successive acquittals. Based on the analysis, the paper exemplifies how the media makes sense (...) of and gives sense to controversial activities in response to changing and at times contradictory information. In particular, the paper highlights interplay between four dominant discourses—transgression, political, public scapegoating, and individualistic—that that were mobilized throughout the media coverage. These discourses were intimately linked with wider dynamics between problematizing and restorative media framings and thus provided crucial means of reconstructing and reformulating the legitimacy of the reported activities throughout the scandal. While the findings are context specific, this study suggests that similar interplay and dynamics are important aspects of media sensemaking around controversial activities related to corruption. (shrink)

We examine the perceived importance of three organizational preconditions theorized to be critical for ethics program effectiveness. In addition, we examine the importance of ethical leadership and congruence between formal ethics codes and informal ethical norms in influencing employee perceptions. Participants from a large southern California government agency completed a survey on the perceived effectiveness of the organization’s ethics program. Results suggest that employee perceptions of organizational preconditions, ethical leadership and informal ethical norms were related to perceptions of (...) ethics program effectiveness. Based on these findings, organizations should evaluate the presence of essential preconditions and take steps to ensure that leaders model espoused organizational values to foster perceptions of effective ethics programs. (shrink)

Although corruption has become a hot topic in organizational research, few studies have examined how it is socially constructed. To partially bridge this gap, the present paper takes a critical discursive perspective on the representation of corruption in the media. The empirical focus is on the media coverage of a corruption scandal that revolved around two instances of formal corruption charges and successive acquittals. Based on the analysis, the paper exemplifies how the media makes sense (...) of and gives sense to controversial activities in response to changing and at times contradictory information. In particular, the paper highlights interplay between four dominant discourses—transgression, political, public scapegoating, and individualistic—that that were mobilized throughout the media coverage. These discourses were intimately linked with wider dynamics between problematizing and restorative media framings and thus provided crucial means of reconstructing and reformulating the (il)legitimacy of the reported activities throughout the scandal. While the findings are context specific, this study suggests that similar interplay and dynamics are important aspects of media sensemaking around controversial activities related to corruption. (shrink)

This study investigates how collective corruption appears, using a computational method. Specifically, acknowledging that the characteristics of collective corruption process are analogous to percolation phenomena, we illuminate that collective corruption is formed by ongoing social interactions in an organizational boundary. By formulating a percolation-based system dynamics model, we consider the behavioral characteristics of collective corruption in terms of individuals’ corruption preferences governed by personal attributes on corruption. We also propose and examine scenarios regarding (...) the formation of collective corruption. (shrink)

Goal-setting has become a popular and effective motivational tool, utilized by practitioners and substantiated with decades of empirical research. However, the potential for goal-setting to enhance performance may come at the cost of ethical behavior. I propose a theoretical model linking attributes of goals and goal-setting practices to unethical behavior through two psychological mechanisms – ethical recognition and moral disengagement; and addressing the moderating role of individual differences (e.g., goal-commitment and conscientiousness), as well as the broader organizational ethical context.

"Small treasuries" (xiaojinku) are off-book accounts found in many large enterprises in China for the purpose of rewarding managers and their subordinates, building up guanxi (personal networks), and even financing the business operations of their danwei (work units). We analyze CESTs with reference to their antecedents, constructs, and consequences. Our analysis indicates that while CESTs can, in some cases, help organizations deal with immediate financial problems, they have negative impacts on organizational performance in relation to the moral hazard of (...) managers, as well as the allocation of organizational resources, in respect of sustainability of strategic advantages and growth, and mismanagement of organizations. Because of the involutionary behavior of managers in Chinese enterprises, we propose that it will require not only organizational controls, but also a fundamental change in these managers' ideology for solving the problems of CESTs. (shrink)

This article uses the concept of partial organization to examine how organizing principles can facilitate the effective operation of networked forms of corruption. We analyze the case study of a corruption network in the South Korean maritime industry in terms of how it operated by selectively appropriating practices normally associated with formal bureaucratic organizations. Our findings show that organizational elements built into the corruption network enabled coordination of corruption activities and served to distort and override (...) practices within member organizations. The network was primarily organized through the hierarchical organization of a bounded and controlled set of members and, to a lesser extent, through processes of monitoring and sanctions. Given its clandestine nature, the network avoided the use of explicit rules to govern behavior, instead relying on habituated routines to ensure consistent and predictable action from members. We find that organizational elements were rescinded when the corruption network was exposed after the sinking of a passenger ferry, the Sewol. By rolling back its hierarchical organization and reverting to core relationships, the corruption network sought to preserve its center. The article illustrates the explanatory value of studying how the activities of corruption networks are enabled and adapt to existential challenges through partial organization. (shrink)

Whistleblowing is an effective tool against fraud and corruption in organizations. However, as researchers have struggled to acquire data on actual whistleblowers, research relies on hypothetical intention data and student samples, which is seen as a major limitation. Using a field study of 1,416 employees from China, Germany, and Russia, the purpose of this article is to identify differences and similarities between intention and actual whistleblowing decisions, thus aiding research and interpretation of prior and future studies. I also contribute (...) by analyzing whether findings can be generalized across different cultures and whether status and power influence the whistleblowing process. My results reveal that the key difference between hypothetical and real decisions is not in variables that affect the process, but in effect sizes: Employees underestimate the effect of situational (retaliation) and organizational (compliance measures) variables in hypothetical compared to actual whistleblowing. Thus, reliance on intention research is not inherently problematic, when effect sizes are interpreted with caution. I also find that results are similar across countries and that status and power may not be decisive factors in whistleblowing. My findings should also be of interest to practitioners and policymakers, as they assist in designing effective whistleblowing systems and environments in organizations. (shrink)

As conventionally understood, corruption relies on a set of universally agreed rules that determine what constitutes the appropriate allocation of organizational resources. This article explores whether rule-based approaches to corruption are applicable where business organizations, such as public private partnerships, and the public fundamentally disagree about what constitutes an appropriate allocation of resources. Drawing on empirical research about PPPs in Vietnam, this article compares how government, business organizations, and the public conceptualize the transfer of public assets into (...) private ownership. It argues that a public interest approach to corruption is needed where PPPs privatize public assets within the law, but against the express wishes of the public. (shrink)

This study examines the relationships between violation of the Buddhist Five Precepts, money consciousness, and the tendency to pay bribes among organizational employees in Bangkok, Thailand. A total of 385 organizational employees in Bangkok participated in the study. Structural equation models were used to test the relationships. The fitted model shows a mediation effect of money consciousness on the relationship between violation of the Buddhist Five Precepts and the tendency to pay bribes. Results indicate that the extent of (...) violation of the Buddhist Five Precepts is associated with money consciousness to predict the tendency to pay bribes. Observing the Buddhist Five Precepts and not allowing money consciousness to influence behaviors may reduce ethical problems. (shrink)

This paper describes a novel diagramming technique that we have found useful for highlighting differences in the work values of countries located within a single cultural region, followed by a brief demonstration of its application to countries in two regions (Latin America and the Mediterranean) with regard to managing corruption. We also indicate a few of the various ways that this technique can be used, such as to identify similarities between countries that are not in the same cultural region, (...) yet have one or more important cultural characteristics in common which set them apart from others in their respective regions.The paper directs attention to the practical and theoretical significance of intra-regional cultural differences that may be taken for granted by insiders to the region, while being overlooked by others. We hope that the introduction of this diagramming technique will stimulate further conceptual and empirical exploration of the potential significance of intra-regional cultural differences for international business ethics, as a preliminary step towards development and delivery of organizational interventions to manage the ethical frictions generated by critical differences in beliefs, attitudes, norms and values internationally. (shrink)