The cases of corruption reported by the media tend almost always to involve a private party (a citizen or a corporation) that pays, or promises to pay, money to a public party (a politician or a public official, for example) in order to obtain an advantage or avoid a disadvantage. Because of the harm it does to economic efficiency and growth, and because of its social, political and ethical consequences, private-to-public corruption has been widely studied. (...) class='Hi'>Private-to-private corruption, by contrast, has been relatively neglected and only recently has started to receive the attention it deserves. The purpose of this paper is to offer some thoughts on the nature and importance of private-to-private corruption; the legal treatment it receives in some of the world''s leading countries; and the measures that companies can take to combat it, with special consideration of its ethical aspects. (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)

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)

The book roots corruption in the idea of a departure from conventional standards, and thus offers an account not only of its corrosiveness but also of its malleability and controversiality. In the course of a broadranging exploration, it examines various links between private and public corruption, connecting the latter with other social and political structures.

The book roots corruption in the idea of a departure from conventional standards, and thus offers an account not only of its corrosiveness but also of its malleability and controversiality. In the course of a broadranging exploration, it examines various links between private and public corruption, connecting the latter with other social and political structures.

This essay draws on comparative ethnographic material from Albania and Italy. It addresses different forms of corruption, arguing that in order to understand the way in which phenomena such as corruption occur and are experienced in any given society, we should contextualize them in the historical and cultural traditions of that specific society. In doing so, however, we should be alert in avoiding falling into the trap of either moral relativism or cultural determinism. The essay suggests that an (...) anthropological analysis of corruption should distinguish between legal rules and social norms. In particular, the empirical study of such norms helps to understand the meanings—both individual and inter-subjective—that actors give to the social and political situation in which they operate. (shrink)

In this paper we evaluate the ethical aspects of a public-private partnership (PPP) for the production and distribution of electricity in a particular context, i.e.,in a developing country characterized by a high corruption rate. In general, multinational enterprises (MNE) are considered suspect in developing countries by their own populations and by others, especially in those countries perceived as corrupt. A second source of suspicion concerns the privatization of utilities: utilities such as electricity and clean water play an essential (...) role in people’s lives, thus, leaving their production and distribution in the hands of for-profit companies may seem imprudent, particularly with respect to the poorest people. On the basis of a questionnaire submitted to managers of a privatized utility company in Cameroon, this case study suggests that the combination of these two sources of suspicion does not automatically lead to negative outcomes. (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)

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)

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 supplierbuyer 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)

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)

In Aristotle's account of change, lacking a form is called privation (Physics I.7 191a14). For example, someone takes on the form of being musical only from previously having the privation of being unmusical. However, he also states that “shape and nature are spoken of in two ways, for the privation too is in a way form” (Physics II.1 193b19). I will demonstrate that these seemingly contradictory statements are not actually in tension. Since all perceptible matter must be enformed, we would (...) have trouble discussing things that have yet to undergo generation, like menstrual fluid, and things that have undergone corruption, like corpses, if we did not cite the privation as a sort of form. I will argue that, given his commitment to hylomorphism, Aristotle is committed to privation being a form in a qualified sense. It cannot be a form in an unqualified sense because privation often spoils the matter such that it can no longer be reformed. The fact of the matter is we cannot draw a bright line between privation and form because the two are contraries and can be said to hold to different degrees at different points on a spectrum. (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)

In this book, Seumas Miller develops distinctive philosophical analyses of corruption, collective responsibility and integrity systems, and applies them to cases in both the public and the private sectors. Using numerous well-known examples of institutional corruption, he explores a variety of actual and potential anti-corruption measures. The result is a wide-ranging, theoretically sophisticated and empirically informed work on institutional corruption and how to combat it. Part I defines the key concepts of corruption, power, collective (...) responsibility, bribery, abuse of authority and nepotism; Part II discusses anti-corruption and integrity systems, corruption investigations and whistle-blowing; and Part III focuses on corruption and anti-corruption in specific institutional settings, namely policing, finance, business and government. Integrating theory with practical approaches, this book will be important for those interested in the philosophy and ethics of corruption as well as for those who work to combat it. (shrink)

Making use of facilitating payments is a very widespread form of corruption. These consist of small payments or gifts made to a person – generally a public official or an employee of a private company – to obtain a favour, such as expediting an administrative process; obtaining a permit, licence or service; or avoiding an abuse of power. Unlike the worst forms of corruption, facilitating payments do not usually involve an outright injustice on the part of the (...) payer as they are entitled to what they request. This may be why public opinion tends to condone such payments; often they are assumed to be unavoidable and are excused on the grounds of low wages and lack of professionalism among public officials and disorganisation in government offices. Many companies that take the fight against “grand” corruption very seriously are inclined to overlook these “petty” transgressions, which are seen as the grease that makes the wheels of the bureaucratic machine turn more smoothly. Despite this, facilitating payments have a pernicious effect on the working of public and private administrations: all too often they are the slippery slope to more serious forms of corruption; they impose additional costs on companies and citizens; and in the long run they sap the ethical foundations of organisations. Although many articles on corruption mention facilitating payments, there have been no systematic studies from a company’s point of view. This article thus focuses on facilitating payments from the point of view of the company that makes the payment, either as the active partner (when it is the company that takes the initiative) or as the passive partner (when the official or employee is the instigator). (shrink)

This book represents the first systematic qualitative analysis of a new type of collective anti-corruption initiatives. The author describes how companies can take responsibility in the fight against corruption and which six success factors play an important role in this difficult endeavor. Despite great international efforts throughout the last two decades, corruption has not significantly decreased on a global level. In light of globalization, private actors increasingly cooperate in the fight against corruption in the context (...) of sector-specific coordinated governance initiatives. In this study, this new collective approach is examined in view of its potential to curb corruption. Contents - Introduction - Theoretical Background: Self-Interest as a Means of Preventing Corruption - Methodological Approach - Multiple-Case Study Analysis - Cross-Case Analysis and Discussion - Summary and Conclusions Target Groups - Researchers and students in the fields of politics, economics, and business ethics - Practitioners such as compliance managers and other anti-corruption specialists The Author Berta van Schoor works as a compliance manager at a major German company. She wrote her doctoral thesis at the Business Ethics Chair of the Technical University Munich. As a co-leader of the regional chapter of Baden-Wuerttemberg of Transparency International Germany, she regularly speaks on topics like corruption prevention and the role of business in combating corruption. While working on her thesis she also gave lectures in business ethics and sustainability management. (shrink)

This article argues that the misalignment of private profit-maximizing objectives with public health needs causes institutional corruption in the pharmaceutical sector and systematically leads firms to act contrary to public heath. The article analyzes how financial incentives generate a business model promoting harmful practices and explores several means of realigning financial incentives in order to foster therapeutic innovation and promote the rational use of medicines.

Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises, this paper contributes to the literature by considering for the first time the effects of corruption on the financial performance of Vietnamese private SMEs. Interestingly, contrary to previous findings, we find that corruption when measured by a dummy variable, does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, the intensity of bribery (...) and the majority of the forms of corruption were found to have negative impacts on firms’ financial performance. Hence, a typical approach using only a dummy variable for bribery might not adequately evaluate the impact of bribe intensity or even ignores the negative impacts of some types of bribes on firms’ financial performance. The findings suggest that anti-corruption measures are vital for the development of the Vietnamese private SMEs. (shrink)

Corruption (bribery, extortion, blackmail, favor‐currying, abuse of insider information, nepotism, favoritism, mafias, protection rackets, siphoning off funds, laundering illicit money) is a source of concern for governments, entrepreneurs, private individuals, non‐governmental organizations, companies – indeed, for society as a whole, on a number of levels; economic, sociopolitical, and ethical. The purpose of this article is primarily to explain why corruption is a cause for concern for companies. It begins by explaining what corruption is, describing how it (...) occurs and offering a causal explanation, and then goes on to describe how it occurs in companies and why it is a cause of concern for them. (shrink)

The ethics of corruption cannot be analysed without simultaneously addressing the legitimacy of public office or entrusted power. This paper introduces a concept of core unethical corruption, defined as violations of distributed ethical obligations for private gain. In other words, it is suggested that what is ethically wrong with corruption is that it entails the violation of certain obligations attributed to agents. By explicitly relating corruption to obligations, this approach helps make ethical sense of the (...) concepts of public office or entrusted power, attending to the question of their legitimacy. Since distributed obligations are implied by a wide range of ethical theories, the concept of core unethical corruption also reflects a (partial) overlapping consensus on the ethics of corruption. (shrink)

Corruption is a source of concern for governments, entrepreneurs, private individuals, non‐governmental organizations, companies – indeed, for society as a whole, on a number of levels; economic, sociopolitical, and ethical. The purpose of this article is primarily to explain why corruption is a cause for concern for companies. It begins by explaining what corruption is, describing how it occurs and offering a causal explanation, and then goes on to describe how it occurs in companies and why (...) it is a cause of concern for them. (shrink)

This paper presents a conception of corruption informed by epistemic democratic theory. I first explain the view of corruption as a disease of the political body. Following this view, we have to consider the type of actions that debase a political entity of its constitutive principal in order to assess corruption. Accordingly, we need to consider what the constitutive principle of democracy is. This is the task I undertake in the second section where I explicate democratic legitimacy. (...) I present democracy as a procedure of social inquiry about what ought to be done that includes epistemic and practical considerations. In the third section, I argue that the problem of corruption for a procedural conception of democracy is that the epistemic value of the procedure is diminished by corrupted agents’ lack of concern for truth. Corruption, according to this view, consists in two deformities of truth: lying and bullshit. These deformities corrupt since they conceal private interests under the guise of a concern for truth. In the fourth section, I discuss the difficulties a procedural account may face in formulating solutions to the problem of corruption. (shrink)

Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises, this paper contributes to the literature by considering for the first time the effects of corruption on the financial performance of Vietnamese private SMEs. Interestingly, contrary to previous findings, we find that corruption when measured by a dummy variable, does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, the intensity of bribery (...) and the majority of the forms of corruption were found to have negative impacts on firms’ financial performance. Hence, a typical approach using only a dummy variable for bribery might not adequately evaluate the impact of bribe intensity or even ignores the negative impacts of some types of bribes on firms’ financial performance. The findings suggest that anti-corruption measures are vital for the development of the Vietnamese private SMEs. (shrink)

The literature on ‘institutional corruption’ has paradoxically missed what seems a central application of this expression, its application to institutions that are corrupt. In this article, I defend a view of what it is for an institution to be corrupt, in terms of the motivation of the institution’s rules. If an individual office-holder or role-occupant is corrupt when their actions are improperly motivated by private gain, then an institution is corrupt when the same can be said of its (...) rules: the institution’s rules are improperly motivated by private gain. Or if we should prefer a narrower account of corrupt conduct by individuals, as necessarily involving transactions with third parties, a correspondingly narrower account of an institution’s corruptness can also be given. Under either of these versions of my view, an institution’s being corrupt is to be distinguished from something else that might be called ‘institutional corruption’, namely the corruption of institutions, in the sense of their being degraded or undermined. I argue that some of the literature’s best-known accounts of ‘institutional corruption’ are best interpreted as being about the degrading of institutions, rather than about what it is for an institution to be corrupt. (shrink)

The study is based on the hypothesis that there is a link between corruption and underdevelopment and that corruption is responsible for the shortcomings and poor performance of the Nigerian political economy. In addition to examining the historical trajectory of corruption in Nigeria, this paper delves into the underlying causes of corruption as well as its cumulative impact on national development in the country. Lastly, the paper assesses some public and private sector initiatives that have (...) been taken and that might stem the tide of corruption. (shrink)

Corruption is defined as private individuals or enterprises who misuse public resources for private power and/or political gains. They do so through abusing public officials whose behavior deviates from the formal government rules of conduct. Ethical behavior is defined as individuals or enterprises adhering to a non-corrupt work or business practice. A review of the academic literature is conducted drawing on perspectives from the political, economic, and anthropological sciences. Insights from a Danish research program are reported on. (...) This program identifies five different actions for dealing with corruption: (1) no action; (2) withdrawals from markets; (3) decentralized decision-making process; (4) establishment of an anti-corruption code; and (5) mutual commitment through integrity pact. The following aspects of ethical behavior should be regulated through an anti-corruption code: the company vis-à-vis political parties; gifts and entertainment expenses; political campaign contributions; and policy against small-scale corruption. Directions for future research are considered including the role of international organizations and multinational companies in fighting corruption and fostering ethical behavior; the role of countries and their governments; and the management systems. (shrink)

: This paper argues that three salient corrupt practices that mark contemporary Chinese health care, namely the over-prescription of indicated drugs, the prescription of more expensive forms of medication and more expensive diagnostic work-ups than needed, and illegal cash payments to physicians—i.e., red packages—result not from the introduction of the market to China, but from two clusters of circumstances. First, there has been a loss of the Confucian appreciation of the proper role of financial reward for good health care. Second, (...) misguided governmental policies have distorted the behavior of physicians and hospitals. The distorting policies include (1) setting very low salaries for physicians, (2) providing bonuses to physicians and profits to hospitals from the excessive prescription of drugs and the use of more expensive drugs and unnecessary expensive diagnostic procedures, and (3) prohibiting payments by patients to physicians for higher quality care. The latter problem is complicated by policies that do not allow the use of governmental insurance and funds from medical savings accounts in private hospitals as well as other policies that fail to create a level playing field for both private and government hospitals. The corrupt practices currently characterizing Chinese health care will require not only abolishing the distorting governmental policies but also drawing on Confucian moral resources to establish a rightly directed appreciation of the proper place of financial reward in the practice of medicine. (shrink)

Venezuelan media present corruption as a major problem of the country and a research conducted by the author shows managers perceive it as business ethics' main issue. The corruption type addressed to in this article is the collusion between public officials and private managers for illegal or undue profits. Corruption in this form is related to the long-standing policy of State intervention and overregulation of the economy in order to industrialize the country. The issue analyzed is (...) the perception of corruption as a major political and social problem. Corruption is pervasive in many societies but it is not perceived as a central problem. The explanation for this perception in Venezuela is the increased impoverishment of people as a consequence of present economic crisis (the corrupt person is perceived as taking from my pocket) and the openness and pluralistic character of the political system. Moral indignation and scandal is the result of this new feature of Venezuelan society. Changes in the economic policies and the awareness of corruption seem to establish the basis to overcome the perception of corruption as the paramount problem it is now. (shrink)

Doron Navot | : According to recent conceptual proposals, institutional corruption should be understood within the boundaries of the institution and its purpose. Political corruption in democracies, prominent scholars suggest, is characterized by the violation of institutional ideals or behaviors that tend to harm democratic processes and institutions. This paper rejects the idea that compromises, preferences, political agreements, or consent can be the baseline of conceptualization of political corruption. In order to improve the identification of abuse of (...) power, the concept of political corruption should not be related directly to democratic institutions and processes; rather, it should be related to ideals whose content is independent of citizens’ preferences, institutions and processes. More specifically, I articulate the relations between political corruption and the notion of subjection, and include powerful citizens in the category of political corruption. Yet, I also suggest redefining under what conditions agents are culpable for their motivations in promoting private gain. By doing this, we better realize how democratic institutions can be the source of corruption and not just its victims. Such a redefinition, I propose finally, is the basis for the distinction between individual and institutional corruption. | : Selon les propositions conceptuelles récentes, la corruption institutionnelle doit être comprise dans les limites de l’institution et de ses objectifs. D’éminents spécialistes suggèrent que la corruption politique dans les démocraties est caractérisée par la violation des idéaux ou comportements institutionnels, ce qui tend à nuire aux processus et institutions démocratiques. Cet article rejette l’idée que les compromis, les préférences, les ententes politiques ou le consentement peuvent constituer le fondement de la conceptualisation de la corruption politique. Afin d’améliorer l’identification des abus de pouvoir, le concept de corruption politique ne doit pas être relié directement aux institutions et processus démocratiques; il doit plutôt être rattaché aux idéaux dont le contenu est indépendant des préférences des citoyens ainsi que des institutions et des processus. Plus précisément, j’exprime clairement les relations qui existent entre la corruption politique et la notion d’assujettissement et inclus les citoyens puissants dans la catégorie de la corruption politique. Cependant, je suggère également de redéfinir les conditions dans lesquelles les agents peuvent être reconnus coupables pour leur motivation à favoriser le gain privé. Ce faisant, nous réalisons mieux de quelle manière les institutions démocratiques peuvent être la source de la corruption et pas seulement ses victimes. En terminant, je propose qu’une telle redéfinition constitue le fondement de la distinction entre la corruption individuelle et institutionnelle. (shrink)

Corruption is a word used loosely to describe many kinds of action that people find distasteful. We prefer to reserve it for the intentional misuse of the good offices of an established social entity for private benefit, posing as fair trading. The currency of corruption is not always material or financial. Moral corruption is all too familiar within churches and other ostensibly beneficent institutions, and it happens within medicine and the pharmaceutical industries. Corrupt behavior reduces trust, (...) costs money, causes injustice, and arouses anger. Yet it persists, despite all efforts since the beginnings of societies. People who act corruptly may lack conscience and empathy in the same way as those with some personality disorders. Finding ways to prevent corruption from contaminating beneficent organizations is therefore likely to be frustratingly difficult. Transparency and accountability may go some way, but the determined corruptor is unlikely to feel constrained by moral and reporting requirements of this kind. Punishment and redress are complicated issues, unlikely to satisfy victims and society at large. Both perhaps should deal in the same currency—material or social—in which the corrupt dealing took place. (shrink)

Are federal prosecutions of non-federal officials for corruption likely to improve non-federal government? This essay suggests that such prosecutions can undermine the distinctive style of democracy at the state and local level, an effect that can be harmful to democracy in America overall. This conclusion rests on a larger argument about the different nature of federal and non-federal democracy in the United States. To insure that each official maintains impartial loyalty to values defined by a single, popularly accountable policymaker, (...) the federal system of bureaucratic populism strictly separates the officials’ public and private interests, through various devices such as civil service protection for executive officials, Article III life tenure, and fixed salary for federal judges, specialized training for federal officers, and conflict-of-interest rules that bar federal officers from acting when their judgment could be compromised by private interests. By contrast, participatory populism rejects this separation of the public and private spheres, instead mixing professional and lay decision-making by using thousands of part-time, under-paid executive and legislative officers who are expected to have substantial private interests in the communities that they represent. The essay argues that each style of democracy has mutually exclusive advantages and disadvantages. However, enforcement of federal anticorruption law against non-federal democracies can undermine their system of mingled private and public interests, reducing the degree to which such governments can provide laypersons with opportunities for political activity. As an illustration of the overextension of federal criminal law, I examine the First Circuit’s interpretation of 18 U.S.C. §§ 1341 and 1346, the federal mail fraud statute in United States v. Sawyer. Sawyer comes dangerously close to declaring that any undisclosed state or local officer’s conflict of interest constitutes a violation of § 1346 when it involves the U.S. mails. I argue that this view of § 1346 is an error. Participatory populism requires that private and public tasks be closely mingled in ways that bureaucratic populism forbids. Undoubtedly, this mixture of public and private creates a risk that public office will be used for private gain. However, it also avoids some of the bureaucratic sclerosis and lack of lay participation that can be endemic to the more centralized federal tradition. In conclusion, I suggest that federal prosecutors ought to content themselves with using § 1346 to enforce already-existing state criminal conflict-of-interest rules, for the sake of preserving a place in our federal regime for participatory populism. (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)

This article considers what policy reforms may help catalyze corporate commitment to combating corruption. The starting point for this discussion is a voluntary, corporate principles approach to self-regulation. Such an approach should seek to encourage corporations to implement effective compliance and ethics programs and to disclose information related to their anti-corruption activities to relevant stakeholders. Although a corporate principles approach is a private initiative, there is a significant role for the public sector. This article discusses some of (...) the ways that the public sector can support and further the goals of a corporate principles approach to combating corruption. The reforms discussed in this article include amnesty programs for corporations that self-disclose corrupt payments, the use of corporate monitors in the enforcement of anti-corruption laws, expanding the definition of corruption in criminal laws, sustainability reporting indicators related to bribery, and the implementation of multi-stakeholder initiatives to support a corporate principles approach. (shrink)

Corruption is a more important idea for Hobbes than has been recognized: a state of nature can result from corruption of the people, corruption of counsellors and corruption of legal processes. Hobbes often uses a 'cognitive' conception of corruption — the distortion of mental processes, by faulty reasoning or improper attitudes. Corruption means that citizens think they benefit from sedition, counsellors advise with self-interested rhetoric rather than impartial logic, witnesses lie and judges settle cases (...) by bribes or pity. Although corruption is often thought to involve the pursuit of private gain, Hobbes only talks about corruption in terms of misjudged private gain, where an individual is motivated by his apparent, short-tem self-interest, rather than his real, long- term self-interest. That is why corruption can lead to a state of nature. (shrink)

This article considers an international sample of venture capital and private equity funds to assess the role of law, corruption, and culture in setting fund manager fees. With better legal conditions, fixed fees are lower, carried interest fees are higher, clawbacks are less likely, and share distributions are more likely. Countries with lower levels of corruption have lower fixed fees and higher performance fees, and are less likely to have clawbacks and cash-only distributions. Hofstede's measure of power (...) distance is negatively related to fixed fees and the use of cash-only distributions, but positively related to performance fees and clawbacks. Overall, the data strongly indicate that corruption, culture, and legal settings are much more significant in determining fees than fund manager characteristics and/or market conditions. (shrink)

We examine corruption across three Central and Eastern Europe countries through a social psychology framework which integrates social identity theory, social cognitive theory and moral disengagement mechanisms. We illustrate how various social identities influence individual and collective action in terms of ethical behavior and corruption, thereby creating, maintaining and perpetuating petty, grand and systemic public/private corruption through triadic co-determination via cognition, behavior and the environment. Despite growing research on corruption normalization, less is known about the (...) cognitive and behavioral mechanisms in ethical decision making, the cognitive workings of how individuals reconcile unethical behavior and the social psychological processes behind corruption in society and organizations. Expert interviews reveal internally conflicted multi-layered social identities perpetuating corruption, some embedded in nationalistic history and others tied to the European Union, which supports the divergent paths of CEE countries since the fall of communism. Some moral disengagement mechanisms are common across all three countries, while others are linked to specific circumstances. Social identity mechanisms feed into moral disengagement, which individuals draw upon to reconcile the conflict between unethical behavior and moral codes. Patterns of moral disengagement aggregate to the country level and explain normalization of corruption in CEE society and organizations. (shrink)

In order to shed light on the issue of crony corruption in the context of economic transition, I focus on the puzzle of China's unique experience of economic transition characterized by the duality forms and effects of crony corruption underlying local corporatism in a dual-track (i.e., market and political tracks) transition. I argue that the duality of local corporatism derives from the duality of crony corruption. First, the early form of local corporatism as state-business public alliance is (...) embedded in informal crony corruption as positive for the purpose of wealth growth in the initial phase of economic transition with public and private interests aligned as compatible. Second, the later form of local corporatism as official-manager private collusion is embedded in quasi-formal crony corruption as negative for the purpose of wealth transfer in the later phase with public and private interests in conflict as incompatible. The duality of crony corruption in the two phases of economic transition is caused by the interplay between formal and informal factors and between economic and political factors. My contribution is twofold. First, I explain China's transition in terms of crony corruption underlying local corporatism. Second, I develop an integrated framework of crony corruption concerning its content, process, antecedent and consequence. (shrink)

This study looks at how the corporate governance of family-owned business groups, the most dominant form of private sector organising in Asia, deals with different forms of corruption during the course of common business transactions. As a part of an ethnographic study conducted in 2007 to look at the impact of corporate governance reforms in the Philippines, one of the emergent themes from the study was the presence of significant corruption in the business environment of the country. (...) A total of 40 semi-structured interviews were conducted with board members from business groups and senior public sector officials supplemented by document analysis of media articles and other text and participant observation. Using Rose-Ackerman’s typology of petty and grand corruption, results show the dilemmas faced when trying to operate within the precepts of corporate governance whilst dealing with the practical reality of corruption in public sector institutions. The results of the study provide empirical evidence into corruption’s impact on Asian business groups and contribute to knowledge on the links between strong institutions and the efficacy of corporate governance. (shrink)

High-profile corporate scandals earlier in this decade provoked outrage and legislative action; however, corporate executive-level ethical lapses continue to come to light. This article examines the work of Professor Dunfee and his coauthors on corruption, ethical leadership, and social contracts theory, and relates that literature to corrupt activities by corporate executives. Corruption is defined broadly to encompass executive self-dealing, which harms their firms. The specific example of stock options backdating is used to show the harmful impact on shareholders (...) and the lack of managerial integrity though consequentialist, deontological, and legal analysis, as well as a critique of the practice using social contracts principles. Ultimately, this article utilizes the insights of Dunfee and his coauthors, and the lessons from the backdating example, to propose a framework aimed at improving corporate governance and preventing future executive corruption. The framework includes a strategy of identification and prevention, employing detection and eradication mechanisms, and institutional learning from past instances of corporate corruption. (shrink)

Using the arguments of Ludwig von Mises and Friedrich August von Hayek, I argue that private ownership solves the economic problem of corruption. Since private ownership discourages entrepreneurs from rent-seeking, and privately owned media provide objective and unbiased information to citizens, any legal reform establishing and enforcement of private ownership also solves the corruption problem.

Recent research suggests that collectivism breeds corruption in bank lending. This finding, together with the stickiness of culture, poses a direct challenge to economic growth in collectivist societies. In this paper, we address this grim outlook by examining the types of firms that are susceptible to the detrimental effect of collectivism on lending integrity and the formal institutions that can help alleviate such effect. We find that the adverse effect of collectivism on bank corruption is more severe in (...) small and medium-sized firms, privately owned firms, and non-exporting firms, while it is considerably weaker in countries with more effective private monitoring, a higher fraction of foreign-owned banks, a more competitive banking sector, better information sharing, and stronger legal and political institutions. Our findings are robust to using alternative measures of collectivism and alternative dependent variables. These results highlight how firm-level characteristics and formal institutions interact with collectivism in affecting firms’ access to bank credit. (shrink)

This work addresses corruption in politics and the public services, arguing that corrupt public officials should be exposed, prosecuted and gaoled, just like their colleagues in the private sector. It covers ethical standards in the public service, both state and federal; the practice of government; the relationships between officials; their advisors and the public; the interplay between politics and personal behaviour, and offering explanations as to what can be done about corruption in public service through asking questions (...) like; how does corruption gain a foothold in public affairs?; how can public trust be rebuilt between bureaucrats, the politicians and the people who vote for them?; and how can we improve accoutability over the cover-ups? (shrink)

This study looks at how the corporate governance of family-owned business groups, the most dominant form of private sector organising in Asia, deals with different forms of corruption during the course of common business transactions. As a part of an ethnographic study conducted in 2007 to look at the impact of corporate governance reforms in the Philippines, one of the emergent themes from the study was the presence of significant corruption in the business environment of the country. (...) A total of 40 semi-structured interviews were conducted with board members from business groups and senior public sector officials supplemented by document analysis of media articles and other text and participant observation. Using Rose-Ackerman’s typology of petty and grand corruption, results show the dilemmas faced when trying to operate within the precepts of corporate governance whilst dealing with the practical reality of corruption in public sector institutions. The results of the study provide empirical evidence into corruption’s impact on Asian business groups and contribute to knowledge on the links between strong institutions and the efficacy of corporate governance. (shrink)

Worried that the current paradigm of political corruption (individual corruption: the misuse of public office for private gain) is too narrow to protect democratic institutions from private interests, the political theorist Dennis Thompson resurrects the premodern notion of institutional corruption, which refers to practices that undermine the purpose of political institutions. From the lenses of institutional corruption, practices such as money in political campaigns, lobbying, or wealth inequality are to be condemned and eradicated to (...) protect democratic institutions. The goal of this paper is to provide reasons against resurrecting the notion of institutional corruption in the realm of policy for three main reasons. First, it is baseless: there is no empirical evidence that the sole presence of money alters democratic results. Second, it is unnecessary: individual corruption can be used to condemn and sanction illegal actions that undermine democratic decision making. And third, it is unclear whether policies against money in politics are beneficial or detrimental to electoral competition. In the light of empirical evidence, I conclude, we should not resurrect the unnecessary and potentially misleading idea of institutional corruption. Empirical studies, in fact, show that liberal electoral democracies, at least in developed countries, are more responsive to the voters’ will than Thompson believes. (shrink)

The identification and amelioration of political corruption has long absorbed political science. But has corruption always been a problem about abuse of public trust for private gain, or a lack of probity, integrity and transparency in governance? For some, the 'modern' conception of corruption is radically different from the classical, whereby corruption is held to be conceived in exclusively moralistic terms as a loss of virtue in the polity, a generalized condition afflicting political elites and (...) citizens indiscriminately. But, as will be shown in the following discussion, the so- called 'modern' conception of corruption (corruption 2) was very well developed in the classical period, particularly in Athens and Rome. This did not mean, however, that this conception always prevailed, therefore this paper is just as concerned to map and comprehend the fractures and contradictions in antique attitudes to 'corruption 2' that prevented it from being either monolithic or universally honoured. (shrink)

Broadly defined, government corruption is the abuse of public power for private gain. It can assume various forms, including bribery, embezzlement, cronyism, and electoral fraud. At root, however, government corruption is a problem of trust. Corrupt politicians abuse the powers entrusted to them by the electorate (the principal-agent problem). Politicians often resort to corruption out of a lack of trust that other politicians will abstain from it (the collective action problem). Corruption breeds greater mistrust in (...) elected officials amongst the public. The problem of trust is compounded where a lack of transparency and asymmetric information impede effective control over the exercise of public powers. (shrink)