The leading non-governmental organization in the anti-corruption field, Transparency International, defines corruption as “the abuse of entrusted power for private gain.” The academic literature on corruption uses similar definitions—for example, Ashforth and Anand define corruption as “the misuse of authority for personal, subunit and/or organizational gain.” This encompasses many commercial practices, and methods of corruption include bribery, extortion, embezzlement, theft and fraud, abuse of discretionary powers, favoritism, regulatory capture, nepotism, and clientelism.
Because corrupt practices are usually hidden and covert, the extent of corruption is difficult to measure. Transparency International’s annual Corruption Perceptions Index is the best-known index, and is most often used by businesses to evaluate their risk-exposure in global markets. But it focuses on public-sector corruption as perceived by subject-matter experts, and is therefore limited in both scope and explanatory power.
For several decades, corruption has been increasingly recognized as a significant global problem and an underlying cause of poverty, inequality, terrorism, and conflict. Over the last decade in particular, the issue has caught the attention of national regulators, international finance and policy institutions, corporations, activists, and the media. Of particular note, the International Consortium of Investigative Journalists (ICIJ) has worked to expose offshore financial structures that facilitate corruption, leading to an ongoing reexamination of the role of the international financial system (including “enablers” such as lawyers and accountants) in facilitating corruption.
It is difficult to know the true extent and cost of corruption; most commonly-cited statistics either have issues or are unfounded (Wathne & Stephenson, 2021). However, the inherent immorality of corruption and the well-evidenced risks/harm to individuals, organizations, and society are adequate justification for efforts to fight corruption.
Corrupt practices encompass commonplace human behavior. For corporations, the bribery of government officials is the most salient form of a corrupt act, and is the focus of current international regulation. The United States’ 1977 Foreign Corrupt Practices Act (FCPA) targets this form of corruption, and the government’s enforcement of the FCPA increased significantly from 2007 onwards. The law bans companies that have any presence in the US (defined broadly, to include foreign companies that transfer money via the US financial system) from making corrupt payments to foreign officials to win or retain business.
The law has both anti-bribery and accounting provisions—corporate bribery leads to false accounting, because a bribe payment on the company’s behalf will be falsely recorded as a legitimate payment. Since the early 2000s, many other jurisdictions have enacted similar anti-corruption laws, including UK, Canada, Norway, China, and Brazil. The UK Bribery Act is notable in being the most extensive in scope—it encompasses commercial bribery, and departs from the FCPA in including facilitation payments (small bribes made to speed up or otherwise enable access to government services to which the recipient is entitled) in the scope of regulation.
Today, there is a remarkable degree of international regulatory consensus over the expectations of business with regard to bribery, and though enforcement in many jurisdictions remains weak, it is increasing. This consensus notwithstanding, there are outstanding questions with regard to the effectiveness of the dominant approach to anti-corruption in business.
This page focuses on how businesses can develop and implement more effective anti-corruption programs.
Ideas to Apply
A paradox exists in which corruption is universally condemned as unethical/immoral, yet corrupt behavior is widespread.
Zero tolerance policies can be effective deterrents. But they depend on being practically feasible and the psychosocial environment, and may also create a motivation to further conceal one’s own corruption or speak up less about the corruption of others.
Companies focus on the prevention of bribery. But public concern is expanding to include other forms of corruption, many of which are legal.
Corruption is not limited to mindless or ill-intentioned people. But is also a risk to morally engaged and well-intentioned people.
Corrupt environments impose norms, rewards, and punishments. These ensnare individuals in the corruption through loyalty, team mentality, and a sense of surviving via shared fate.
Individuals participating in corruption use neutralization, alternate moralities, and group mentality. These maintain their self-image as ethical/moral.
Areas of Research
What are the key elements of an effective anti-corruption program?
Because corrupt practices are so pervasive in business, it is impossible for companies to completely eliminate the risk of corruption. As a result, an effective anti-corruption program is considered both an operational and legal defense against employee violations of anti-corruption laws, and may reduce the penalties an organization faces if it is found to have engaged in bribery. Such programs may also assist with negotiated settlements. International regulators including the US Department of Justice (written in 2012 and updated in 2020), and the UK Ministry of Justice (written in 2010) have written extensive guidance on the key elements of an anti-corruption program, which are consistent across jurisdictions and comprise the following elements:
- Commitment from senior management and a clearly articulated policy against corruption;
- Code of conduct and compliance policies and procedures;
- Oversight, autonomy, and resources;
- Risk assessment;
- Training and continuing advice;
- Incentives and disciplinary measures;
- Third-party due diligence and payments;
- Confidential reporting and internal investigation;
- Continuous improvement: periodic testing and review;
- Mergers and acquisitions: pre-acquisition due diligence and post-acquisition integration.
With the exception of the requirement that senior management make a commitment to anti-corruption via “tone at the top,” this approach focuses overwhelmingly on policies, procedures, and processes, rather than culture, norms—or human behavior more broadly. FCPA enforcement continues to rise year on year, so there are significant outstanding questions about the gaps in implementation of these programs, and limitations in the design of the programs themselves.
Given the focus on processes, policies, and procedures in the DOJ’s best-practice framework, it is unsurprising that companies tend to treat corruption as a risk that should be tackled via internal controls, and make anti-corruption programs the responsibility of the compliance and legal departments. The dominant corporate approach is to treat corruption risk as a version of the principal-agent problem (meaning that employees who pay bribes violate their fiduciary duty to the corporate “principal”) that can be eliminated with the right processes. The regulatory climate means that “zero tolerance” is the only appropriate public position for companies to take on the issue. It is logical and unsurprising that companies that have implemented anti-corruption programs lean heavily on audits, due-diligence checks, and other documentary processes that demonstrate efforts to reduce corruption exposure.
However, as several studies mention, not all corrupt acts can be characterized as principal-agent problems. A 2011 study examines the many scenarios where individual employees can participate in unethical behavior for prosocial reasons, with the belief that they will support their boss, their organization, or both. The study finds that positive social relationships and higher levels of identification with the organization may unintentionally encourage unethical behavior designed to benefit the organization, despite also enhancing favorable outcomes such as increased job performance and extra role behavior. This involves “neutralization,” a process which masks the moral content of an unethical action or otherwise causes it to be overlooked.
Social exchange theory suggests that employees might view unethical approaches to helping their organization win business as a way to “reciprocate positive social exchange relationships with their employer.” High levels of organizational identification may also induce employees to engage in unethical prosocial behavior. This is partly because it can encourage disregarding ethical standards such as personal values, norms, and cognitive processes. Organizational identification can also lead employees to ignore the victims of the firm’s unethical behavior, focus on the perceived wrongs victims commit, and maintain a higher loyalty to the organizational group than wider society.
The issue from an organizational standpoint is that a compliance-led approach does not adequately address either the individual or group psychology of corruption. Preventative policies and processes are necessary, but not sufficient. Corruption risk touches almost every aspect of a multinational company’s business and has consequences across back and front office functions. Senior leadership commitment to anti-corruption, and legal compliance and ethical norms more broadly, is rightly understood to be a critical factor in anti-corruption. However, the dominant approach is to view anti-corruption efforts as a regulatory cost, and make it the compliance department’s responsibility, while giving this department limited or no independence from the C Suite. The tensions that result from that approach have been recognized, and have resulted in a recent push to give Chief Compliance Officers a direct reporting line to the Board of Directors.
Making a business case for anti-corruption may also be critical in creating organizational buy-in, even if it shouldn’t be necessary. Corruption may appear to be efficient or beneficial, but this is probably not true in the long-term or when examining sophisticated analyses of the impacts (Nichols, 2012). Corruption has a dynamic relationship with the bureaucratic environment in which a company operates. Once bribery is on the table, the cost of bribes usually increases, as do the number of procedural barriers that can only be cleared via bribes, and the number of individuals seeking bribes. Ultimately, this leads to higher costs and more harassment than operating with integrity. There is also the potential for reputational damage, and the threat of exposing past bribery as leverage against the company. Risking criminal penalties only to participate in conduct that typically has the opposite of the intended result, just isn’t a good business proposition. This remains widely misunderstood, in line with the perception that “greasing a few wheels” may be necessary in certain business environments.
A common element of anti-corruption efforts is a “zero-tolerance” or “clean-hands” policy approach. This tone is likely appropriate, and can be part of highly successful efforts, such as large-scale governmental changes (Quah, 2017). However such policies also create a motivation to more effectively hide or cover up corruption, making it harder to detect (Dupuy & Neset, 2018). The consequences for reporting corruption of others is also heightened and may silence whistleblowers or hinder speak-up culture inside an organization.
While zero tolerance is a just aim, ensuring such an approach is successful requires consideration of the psychological and sociocultural influences in the environment that affect individual decisions (Tu et al., 2020). For example, youth raised in corrupt environments are highly accepting of corruption, and few have ethical objections to actions like bribery (Abun et al., 2020), suggesting that firm policies will be both needed and resisted. Implementation to provide the appearance of compliance or as a threat of punishment alone, are unlikely to be beneficial on balance. There is also the issue of practicality and potential repercussions (and risks to an organization) from those disempowered (many external to the organization) when their corruption is no longer effective or accepted.
Regulatory investigations are still a low-likelihood/high-impact event. At the same time, regulation has become more aggressive in the United States, and regulators tend to reward examples of aggressive enforcement inside companies. As a recent paper argued, the consequences of this shift have been mixed. Compliance teams have gained visibility and resources. But the compliance team has come to be seen as an internalized law enforcement function that responds to external pressure from government regulators and the public—and tends to be staffed by lawyers and former regulators. Moreover, “Criminalized compliance regimes are inherently ineffective because they impose unintended behavioral consequences on corporate employees. Employees subject to criminalized compliance have greater opportunities to rationalize their future unethical or illegal behavior.”
This evidence on the importance of culture and group dynamics to anti-corruption efforts has refocused regulators on “cultures of compliance” and “conduct risk.”
How does corporate culture impact the effectiveness of anti-corruption programs?
The academic literature on these questions is vast, but fragmented, with contributions from a range of disciplines. This partly reflects the complexity of corruption as an organizational phenomenon. It can manifest as the actions of one “bad apple” or disloyal agent, or be restricted to practices in a certain region or team. Alternatively, it can impact the whole organization, as a result of leadership and strategic decisions at the top (such as sales targets that are set without regard to market conditions). Academic articles tend to focus on one particular determinant of organizational corruption, whether it is the external environment, leadership, incentives, individual moral awareness and decision-making, or organizational structures—and to examine the relationship of this factor to corruption independently. However, “When factors are highly interdependent—as many organizational processes are—focusing on a single factor obscures the fact that organizational degradation processes may grow in scale over time. Although Robinson and Greenberg made a case for examining the dynamics of corruption in organizations in 1998, Trevino et al. (2006) have had to repeat that call as few studies thus far have touched on this apparent dynamic nature of corruption.”
One study distinguishes between “corrupt organizations” (a top-down process, where corruption is carried out by employees to benefit the organization) and “organizations of corrupt individuals” (a bottom-up process, where corruption is carried out for the benefit of the individual, but becomes so widespread that it can be considered an organizational phenomenon). It argues the primary beneficiary of the corrupt act makes a qualitative difference, as does the degree of collusion between organizational members.
Although this distinction is useful, it is also artificial in several respects. Aggressive bonus structures may be put in place by a company without the goal of becoming a corrupt organization, although they can encourage corrupt practices with the belief of benefit to both the individual and the organization. Nonetheless, the study raises interesting questions about whether it is possible to generalize about corruption, and also speaks to a need to examine both its group and organizational characteristics.
One powerful and widely-referenced study discusses how corruption becomes normalized in organizations. The study discusses three mutually reinforcing processes that lead to normalization—institutionalization (where a corrupt decision or act becomes embedded in structures and processes), rationalization (where self-serving ideologies develop to justify the behavior) and socialization (where new employees are induced to view corruption as permissible). There is a particular focus on how cultures or subcultures of corruption develop within organizations, through the idea of the “social cocoon”. The authors go on to discuss the rationalizing ideologies in these deviant cultures, which include ideas of denial of responsibility, denial of injury, denial of the victim, and appeal to higher loyalties.
The article supports further exploration of group relationships in explaining corruption in organizations. A review of the behavioral ethics literature further supports a focus on group dynamics and organizational change theory, and highlights this as a gap in existing studies. This normalization can exacerbate the risk of pro-organizational unethical behaviors as well (Umphress & Bingham, 2011). When employees consider whether to be unethical on behalf of their organization, existing cultural norms may influence the perceived acceptability of such pro-organizational unethical behaviors.
Attempts to denormalize corruption are inherently difficult, especially where corruption has already existed and rationalizations are in place. Preventing or rolling back the normalization of corruption likely requires in-depth analysis of practices, routines, and rationalizations that ultimately support the view of corruption as normal. Typically normalized corruption is a “point of arrival” rather than a discrete decision, with many nudges leading to the arrival at that point. There may be great social value inside the organization to be gained through corrupt behavior, and responsibility is problematically “distributed, automatized, and organized.”
Careful analysis and monitoring of company culture, incentives, and social networks may reveal pressures toward corrupt behavior, which can help prevent normalization or achieve denormalization. In addition, when corrupt behavior is detected, interviewing guilty parties to obtain an understanding of their experience can also reveal organizational dynamics that led to the behavior.
Another explanation for corruption normalization is that the culture in various types of corrupt organizations (government, pharmacy, sports, construction, etc.) supports the notion that the organization is in a state of “war,” leading to the belief that the end (success) justifies the means (corruption). Further supported by a perceived need for security and punishment of deviation from corrupt practices, employees rationalize bad behavior as necessary for security and justifiable as team spirit. As a “community of fate,” they feel their mutual survival is on the line as they are pressed into a battle against competitors and market conditions. This shared fate also leads to a higher commitment and a sort of team spirit, but these potential positives are tainted by pressure to support the group, excess focus on results/success, and enforcement of organizational silence. Because group survival is essential, survival instincts overtake moral/ethical thinking, justifying corruption as acceptable and necessary.
A more recent review suggests that organizations are more likely to become corrupt if there is an overwhelming focus on competition with growth as an exclusive goal, leadership is complacent and evades accountability, incentives are unrealistic, there are norms of secrecy and fear, and decision-making is strongly hierarchical and directive. This reveals the degree to which tackling corruption rests on a more ethical internal culture. As Donald C. Langevoort has argued, there is a “conundrum [that] the origins of noncompliance may be found in seemingly benign (even prized) behaviors, traits and cultural artifacts that are thought to generate success in a hyper-competitive marketplace.” Most companies struggle to manage this dilemma of what traits and behaviors to reward—for example, relationship building and networking are essential to the success of sales teams, but can easily evolve into practices that would be considered bribery. Furthermore, industry disruption and geopolitical uncertainty are giving momentum to perceptions of an external environment in which ruthless and competitive business practices are seen as the only way to survive.
Culture, leadership, organizational factors and corruption
Corrupt actions may require action by an individual, but the influences on the individual are varied and strong. Culture, leaders, and the nature of the organization can be key influencers of individual corrupt behavior. Identifying and mitigating these influences will be critical for successfully attenuating corrupt activities.
Psychological contracts between employee and employer may be a strong driver of actual behavior. Evidence for this can be seen in the fact that unethical leadership is associated with increased crimes of obedience, but this relationship is dampened by individual moral awareness (Javaid et al., 2020). Unethical leadership creates pressure to participate in criminal acts, however moral awareness and development seem to help people resist that pressure. This may show an organizational need to select and train moral awareness and moral development, particularly among leaders, but also to help employees raise concerns and resist managerial pressure.
At other times, a relationship and psychological contract with the organization can create beneficial pressure to act more ethically. Employee-organization connectedness is related to more ethical behavior, in part through greater moral courage (Fernando et al., 2021). When connected and courageous, the employee is likely to act morally and take action when others endanger the organization through unethical behaviors such as corruption.
The importance of unspoken psychological contracts is further clarified by research findings that the contract can create feelings of shame and guilt when an employee feels that failure to participate in corruption is a disruption/violation of the agreement (Abraham et al., 2020). Contrary to the assumption that an employee may be less prone to feeling shame/guilt, allowing them to be corrupt, these feelings may be highly prevalent but tied to fulfilling the expectations of a psychological contract. Activating or guiding these self-conscious emotions to align with ethical pursuits, such as feeling more guilt about corruption than organizational noncompliance, may be an important lever in the reduction of corrupt behaviors (Tchouta, 2020; Abraham et al., 2020).
There are many other contextual organizational, industrial, and social factors that set the stage for corruption to be more likely and inherent to certain job roles (Fernando & Bandara, 2020). Contextually Based Human Resource Theory posits that spheres of influence, such as Product/Market/Technology dimension, Organizational/Administrative/Cultural heritage, and Social/Cultural/Legal dimension combine to shape the perspectives of the dominant coalition. As such, a manufacturing company with a history of creating the lowest-cost solutions, in a country with lax environmental regulations, may be run by a core of decision-makers who are accustomed to using less-safe materials to gain advantage, as a matter of perceived necessity to retain their competitive edge. A new member to this organization doesn’t make these choices, but will most likely tacitly comply or fail to reform the corrupt majority.
With employees subject to positive and negative organizational pressures regarding ethics and corruption, their own moral awareness and courage may be the only saving grace. So it follows that anti-corruption training can improve their ability to reject justifications for corruption. The conversion of pressures into behavior are governed in large part by the employees ability to think morally and act in accord with moral values (Hauser, 2019).
It is also likely effective to manage the sources of pressure on individual employees. To do this, an organization must address tensions between global and local standards as well as internal tension between compliance and commercial goals. Suggestions include increasing board level commitment to anti-corruption, and incentivizing compliant behavior instead of tying pay and promotion to targets (David-Barrett et al., 2017).
Corruption can be seen as “degeneration of a legitimate value” (Lennerfors, 2019). This can include de-rationalization by producing alternative discourse (re-framing discussion) or going beneath discourse (non-verbal cues); de-institutionalization by manipulating organizational memory (altering narratives) or highlighting counterfactual corruption events; and de-socialization by excluding the personal (reducing individual agency) or excluding the social (rejecting social obligations). Through these methods of degeneration, individual responsibility and methods of sense-making can be altered to encourage corruption.
Further, there are four ways to relate to anti-corruption measures (anxiety, superego, courage and justice) and effective programs are likely to address all four. Lennerfors explains that corruption is often used as a catch all term for “anything bad,” extending to actions such as toleration of sexual harassment in the workplace, and as evidenced by historical examples such as the “corrupting the youth” for which Socrates was condemned to death. People are also aware that nearly all things are a trade-off of values and that every value could, at least in some obscure scenario, be compromised. With this context of doing right vs. doing wrong, always with some uncertainty, we relate to anti-corruption with all the complexity of how we relate to another person, and in four ways:
- Anxiety: due to apparent conflicting demands (i.e. maximize profit but don’t cheat), the individual feels unclear how to act or what their company truly wants from them. The person acts to reduce this anxiety, and without undeniable clarity regarding expectations, it is difficult to decide what is right.
- Superego: viewing anti-corruption efforts and rules as paramount and immutable, a person relating in this way behaves in strict conformance, viewing all others with suspicion, reporting every potential transgression regardless of the social or practical consequences.
- Courage: when relating to anti-corruption efforts through courage, one does not rely on external guardrails, acting with certainty and conviction on an internally-derived sense of what is right. With pride in knowing they are virtuous and not corrupt, temptations are easy to resist to maintain a sense of following a righteous path of ethical behavior.
- Justice: viewing the world as complex and rife with competing valid claims on what is right, the individual relates to anti-corruption as a balancing act with ever-changing inputs. Right and wrong are fluid and negotiated, an intersectional process of adaptation and accommodation.
Knowing these potential ways of relating to anti-corruption efforts, interventions can be shaped to appeal to these psychological pathways, and anticipate how some people may act (often unexpectedly or counterproductively) as they follow one or more of these paths.
Corruption may spread inside organizations as a result of emotional contagion (Smith-Crowe & Warren, 2014). Because moral behavior develops in the context of relationships, even well-intentioned and morally engaged individuals can become corrupt, either when there is moral ambiguity or they succumb to instrumental pressures. In the emotion-evoked model proposed by Smith-Crow & Warren, individuals’ emotions shape their changing moral perspective. They are likely to be praised for corrupt behavior (resulting in prideful emotions), while transgressions against the organizational norms are punished with violation-sanctioning (causing shame, embarrassment, guilt), resulting in the corrupt behavior appearing as the moral one within these relationships. In this way, early compliance leads to further reinforcement and maintenance of corruption.Other times, the corrupt behavior is viewed without ambiguity and as categorically immoral. In these situations the reaction is anger and/or contempt for the one requesting such behavior and refusal to comply. In this case, the corrupt behavior is avoided, but still may occur later and more wilfully if the circumstances or individual perceptions change.
How can companies operate ethically in corrupt environments?
At the national level, government leniency toward unethical practices is likely to foster unethical cultures within firms. This is the central dilemma for businesses attempting to operate according to ethical organizational norms, when the surrounding context is unethical. A study that compared Hofstede’s cultural model and the Transparency International Corruption Perceptions Index found that societies with high power distance (acceptance of unequal power distribution), more collectivistic as opposed to individualistic culture, and an orientation valuing short-term gains over long-term ones were the factors that most clearly drove higher levels of corruption. A more recent study suggests that perceptions of corruption are linked to inequality and perceptions of unfairness. In highly unequal countries, people do not expect fair treatment, so there is a low correlation between perceptions of fairness and corruption. In more equal countries, people are more likely to perceive corruption as due to unfairness.
Also important are cognitive factors in corruption (U4). The assumption that individuals are rational actors simply responding to available rewards and punishments has failed to adequately explain corrupt behavior. For potential punishments to be impactful, they need to be salient (and therefore front of mind), and the likelihood (or perceptions of likelihood) of corrupt behavior leading to detection/punishment must be relatively high. When the possibility of getting caught seems distant and unlikely, risk-aversion may not be strong enough to prevent corrupt actions. This can be remedied in part with improved information flows about the costs of corruption, rewarding ethical behavior, and providing frameworks for high-quality organizational decision-making.
Corrupt behavior is often intuitive and unintentional as well. This means that when corruption is commonplace, or decisions are made under time pressure, there may be no evaluation of the decison’s ethics at all. Accountability mechanisms, transparency, and codes of conduct can be helpful in this regard.
Once a matter is viewed as an ethical one, corruption tends to be less likely for those with greater self-control and when individuals can see direct (rather than indirect) harm. The individual must also reject rationalization narratives that might otherwise free them from responsibility or feelings of guilt.
When implementing a program to address or prevent corruption, it is also advisable to implement all parts of the program simultaneously, affecting all levels and roles in the organization at once. This reduces the appearance of corruption as common, and instead signals unified (and fair) commitment to ethical behavior.
Ultimately corruption results from the choices individuals make, balancing both their values and needs. Thinking of corruption as being more accepted in certain countries and cultures may be more of a stereotype than reality. Corruption researchers, working to synthesize existing literature, have suggested that cultures universally condemn corruption, but may see differences in the presence of corruption due to other factors. It is likely that in some places corrupt behaviors are necessary for survival, and so people participate despite viewing it as unethical, or they justify the behavior in their mind, all without changing their larger view that corruption is generally wrong.
Much bribery occurs to circumvent government incapacity to provide basic services, leading to a view that participation in the ineffective official’s system is actually the less ethical choice. Adeptly navigating broken systems can even lead to a sense of pride in one’s skill at doing so. In addition, alternate moralities exist, such as those demanding loyalty to kin or other familiar groups, overriding the immorality of corruption. In light of this perspective, efforts to convince people that corruption is unethical are ineffective (because they already know and agree); what may be a much more effective strategy for remedying corruption is uncovering and understanding the practical reasons and competing moralities motivating it. Ethnographic research is needed in this area, the results of which would inform organizations on the precise causes of corruption they are trying to prevent in the region where they operate.
Consistent with the suggestion to focus on individual decision-making, recent cross-disciplinary research has done just that, analyzing corruption in the social and situation contexts in which it takes place. Pertiwi concluded that there are three components of the debate surrounding individual-making relevant to corruption:
(1) Whether corruption is a result of mindless or mindful processing;
(2) the role of individual’s perception or subjectivity and
(3) the role of social contexts or environment in inﬂuencing their perception.
Things to ask to answer these questions in any given context include “what does corruption mean to people in this particular organization or community?” and “what role-identities are being invoked when people discuss their experiences of corruption?”. Conducting research in this manner, in the community of interest, is recommended to identify the nature of corruption present and how to counteract it.
Actions to take in corrupt environments
These are difficult environments in which to be ethical, but this also creates an opportunity to differentiate by being the lone or one of few ethical companies. (Velamuri et al., 2017)
- Frame your ethics in a way that appeals to large numbers of people, who then in turn may support your cause. For example, frame your ethics as rooted in environmentalism, which many people support. Also some of those that support the larger cause will then support you.
- View corruption in gradations along a continuum, rather than all or nothing. Usually only some percentage of people participate in corruption, even when it seems to be the norm. Similarly, each person could participate in corruption rarely, or frequently, and engage in minor or major forms of corruption.
- Identify and appeal to the types of stakeholders your organization relies on (indifferent, absentee, ethical, pragmatic). Being ethical can please many of them while only a few might be lost to less ethical competitors.
- Build strategic partnerships, borrow reputation, engage in judicial action.
Velamuri (2021) conducted case studies in India and Zimbabwe: “Based on our in-depth studies of two firms in India and Zimbabwe that resisted corruption and survived for extended time periods, we propose that in addition to behaving ethically, firms need to elicit favorable responses from a critical mass of stakeholders from both strong and weak tie networks in order for their ethical reputations to diffuse quickly and widely.”
Foreign-owned companies may be at a disadvantage in corrupt environments due to lack of familiarity with local cultural and legal norms, as well as not knowing how to effectively participate in corruption (e.g. who to bribe; Hanousek et al., 2019). However, sub-environments often exist where corruption is less prevalent. Finding and operating in these environments is recommended, where possible. A company that has significant competitive leverage, such as one that provides an essential service, or makes a significant contribution to the local economy, may have more leverage to fight corruption and signal their commitment to local regulators – or even influence positive reforms and collective action to tackle corruption.
Resistance to corruption
Individuals with greater moral commitment, regardless of demographics and personal characteristics, may be less likely to give in to corruption (Linder et al., 2021). Those who are uncompromising with respect to their integrity are less likely to accept bribes, while those with more honesty/humility are less likely to give bribes.
Zones of non-compliance, “a set of pre-decision-making elements in which at a certain point, failure to comply become an acceptable thing to do” (Meza & Zizumbo-Colunga, 2020), are another important concept regarding narratives that inform individuals’ participation in corruption.
Approach corruption with humility and a learning approach. Experts and leaders who presume to know the solutions to corruption, and impose an approach, may perform poorly (Juarez-Garcia, 2021). Instead, learning and questioning can lead to understanding the motivations for corruption and how to solve it more effectively. An important part of the learning process may be discovering corruption “folklore,” or shared beliefs and perceptions about how corruption works in a particular industry and region (Bautista-Beauchesne, 2020). Bautista-Beauchesne found in his research on corruption in Canadian (Quebec) public works, that people involved in the industry shared similar understandings about the corruption, describing it as an “open secret” with many taking a “piece of the pie,” and corrupt contractor / public servant relationships being “business as usual.”
Corruption poses strategic- and external-risk dimensions that cannot be eliminated, either in theory or in practice. An organization may be committed to a zero-tolerance approach to bribery and facilitation payments, but it cannot control the environment in markets where corruption is endemic, and bribe requests occur on a daily basis, often with a dimension of extortion. Companies must therefore make strategic decisions as to whether to enter some markets, accepting a certain level of inherent corruption-risk, or to stay out of them. Treating corruption solely as a preventable risk stymies vital debate around these issues, as can internal rhetoric over “zero tolerance”. Leading organizations often set zero tolerance as a goal, while encouraging staff and third parties to share challenges that can inform more effective oversight efforts.
The compliance team may hold an accurate understanding of the corruption environment in particular markets, but the implications of this are often not incorporated into strategic plans, revenue projections, and incentive structures. The business-growth potential in certain high-risk markets is well known; some level of integrity risk may be considered an acceptable price to pay for first-mover advantage, access to new consumers, and the opportunity to take market share from more cautious rivals. However, if frontline sales teams are being given growth targets of 25 percent in such markets, it is likely that they will feel a need to participate in corrupt practices to meet their targets, even if passively or indirectly. Aggressive growth goals along short-time horizons and best-practice compliance are usually incompatible goals in high-risk environments. Companies can manage some of these risks by paying attention to how they design their incentives and reward systems. Another study suggests that there are gains to be made by focusing on latent support for tackling latent resistance to corruption and differentiating oneself by signaling a commitment to ethical behavior.
As a final consideration, efforts by experts and organizations to combat corruption may fail when there is inadequate understanding of the culture and environment in which the corruption takes place. The reasons for and ramifications of corrupt behaviors may be misunderstood by outsiders, no matter their expertise. Philosophy professor Mario Juarez Garcia (2021) has suggested that often overlooked factors include epistemic trespassing (failing to identify the limits of one’s skills) and moral incompetence (making the wrong moral decision).
Epistemic trespassing can occur when, for example, corruption experts operate in an unfamiliar society, context, or industry, or when a business executive acts as a corruption expert without specific corruption training. Moral incompetence can occur when one’s own morals, while well-intentioned, lead to the wrong moral decision. This overstepping can result in blindness to the interpretations and motivations of those involved, ultimately leading to unsuccessful or even harmful attempts to address corruption. For example, someone from a society where bribery is neither necessary nor legal, may aggressively expose corruption in a society where bribery is used necessarily (e.g. to obtain clean water or medical care) by those with less money and power to survive, meaning that the anti-corruption effort was likely immoral by doing harm to those with limited options.
Suggestions for Future Research
- Investigate the relative effectiveness of anti-corruption strategies for addressing various types of corruption.
- Longitudinal studies on effectiveness of anti-corruption programs.
- Compare the cost/benefit differences of preventing vs. remedying corruption.
- Better understanding of the factors/antecedents contributing to situations of moral ambiguity (where the correct moral action is unclear).
- Gain understanding of mixed emotions or emotional trajectory (e.g. shame, anger, contempt) and how the balance of these motivates ethical decision making.
- Observational or ethnographic studies within organizations, to discover more variables of interest or test/generate new theories of corruption.
- Historical reviews to understand successful past reforms, as well as the crises and conditions that lead to meaningful change.
- Case studies on high-integrity organizations in corrupt environments, toward an understanding of how they maintain integrity and the resulting outcomes.
- Research on the effectiveness/impact of good governance.
- Assessment and improvement of existing corruption measurement techniques.
- Identify factors for resilience to corruption pressures, such as moral courage, situational judgments, and critical thinking.
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Velamuri, S. R., Venkataraman, S., & Harvey, W. S. (2017). Seizing the Ethical High Ground: Ethical Reputation Building in Corrupt Environments. Journal of Management Studies, 54(5), 647–675. https://doi.org/10.1111/joms.12248
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