Navigating Rough Waters: A Theoretical Model of Organizational Action in Corrupted Environments

Abstract

From an institutional perspective, corruption can be understood as occurring when certain practices, norms, and beliefs become embedded in everyday life and reified as part of the broader institutional context (Misangyi, Weaver, & Elms, 2008). From a psychological perspective, Bandura (1999) argues that individuals can activate a set of mechanisms to disengage from their own moral standards and comit harmful behaviors to others. Taken together, these two perspectives would suggest that it is rather difficult for organizations to escape corruption. However, there are accounts of organizations that remain morally upright and even choose to stay in countries where corruption is rooted in the business and political realms. In this paper, I explore different types of actions that enable organizations to disengage from or resist the institutional pressure to adopt corrupt practices. I argue that dependency on third parties and the level of dynamic capabilities largely influence the response to corruption.