Effective Resource Management of Governments and Corruption

Abstract

This paper shows theoretically and empirically that public officials’ corruption is likely to degrade the quality of government management practices. By shedding light inside the classic “black box” idea of management, we explain how public corruption exerts a bad influence upon leadership, use of information and resource allocation. This bad influence of public corruption, as a consequence, will deteriorate the overall management quality of governments by weakening the integration of management subsystems. Data support our arguments by showing that increase in public corruption in an American state government decreases the probability significantly that the state may maintain its management excellence. The paper also demonstrates that infrastructure management of state governments is most vulnerable to corruption. Two-stage least squares instrumental variable (2SLS-IV) regressions support the robustness of our model and the empirical results.