When Corruption Corrupts: How Foreign Firms Use Strategic Agility to Deal with Corruption

Abstract

Corruption has detrimental effects on individuals, organizations, societies, and nations; it therefore comes as no surprise that the extant research in this area is focused on government corruption and on bureaucrats who coerce firms to pay bribes. Although the coercive nature of institutional pressure cannot be overstated, we question the view that, when faced with corruption, firms are merely powerless victims; in fact, we theorize that firms often play an active role and that their actions can and do perpetuate corporate corruption. Our longitudinal, qualitative study of 55 foreign firms operating in Russia and Ukraine and of eight local chambers of commerce reveals that, to deal with corruption, firms use strategic agility—often in nonmarket settings—to avoid, comply with, and even instigate and entrench corruption. Unpacking the corruption-agility link is no trivial matter, especially because strategic agility is framed as an adaptive modality; it was therefore surprising to learn about its maladaptive side and how it causes negative externalities such as heightened corruption. Managers rarely divulge their corrupt activities; so, corroborating research on this topic, including on the role played by strategic agility and nonmarket settings, is urgently needed.