The relationship between corrupt practices and organisational performance: an empirical investigation

Abstract

Research into corruption has received considerable attention over the last decade. However, because it is remarkably difficult to collect data in this area, empirical studies have provided mixed results about the influence of corrupt practices on organisational performance. The purpose of this study is to examine and identify a cause–and–effect relationship between corruption and performance. The analysis is based on structural equation modelling and bootstrapping estimation using a sample across the manufacturing, services and trade sectors in Greece. The study finds that there is a positive, bi–directional influence between corrupt practices of employees and corrupt business practices. Furthermore, the study finds that the negative impact of corrupt business practices on organisational performance is three times stronger than the impact of corrupt practices of employees. Finally, the study reveals that corrupt practices are influenced by the characteristics of both employees and organisations.