The Social Foundations of Organizational Corruption

Abstract

We seek to provide a better understanding of the impact that social relationships have on corruption within organizations. In doing so, we investigate the benefits social actors derive from their relationships and how this affects corrupt activity itself. Synergies borne out of the research process have led us to draw upon the social capital literature as a theoretical lens, particularly in relation to benefits and resources it affords actor groups. Enron’s trading activities during the California energy crisis are used as an empirical setting for the research, and we draw on numerous historical data sources including naturally occurring telephone and email communication. We argue that traders obtained particularistic group benefits in the form of emotional support, collectivized engagement, information transfer and relationship influenced action. From this, we offer a model of the social foundations of organizational corruption, whereby the above benefits facilitate the maintenance and pursuance of corruption within an organizational setting.