Business Corruption Research Articles

Determinants of experiences and perceptions of corruption: A case study of Russian regions

In this article, the main determinants of experiences and perceptions of corruption in the Russian regions are analyzed. The research focuses on evaluating the determinants of corruption among ordinary people and business representatives in three regions of Russia. The main objectives of the research are: to reveal the relationship of individual characteristics and attitudes toward corruption with citizens’ actual experiences and perceptions of corruption; to learn how experiences and perceptions of corruption influence each other. The main conclusion is that the experience of corruption and its perception are interrelated. Those members of both the general public and the business community who perceive the prevalence of corruption to be high report experiencing corrupt practices more often than those who see a lower frequency of corruption. People who justify corruption are more likely to report encountering bribery and other low-level corruption practices. For business corruption, tolerance of corruption shows a significant link with perception of corruption, but not with real experiences of corruption. Social learning theory and victimization theory can explain the interdependence of perceptions and experiences of corruption in the Russian regions. The indicators of both perception and experience of corruption in the research can be used as indirect measures of corruption. Their interrelation in the same survey may also indicate their validity as instruments for measuring corruption.

Risks of “Social Legitimacy” of Corruption under Sanctions: Assessment of the Sentiments of the Regional Business Community

Introduction. In the context of a large-scale sanctions regime, the intensification of anti-corruption work requires special attention among a number of adjustment measures related to structural changes in the economy and changes in supply logistics. Sanctions become a trigger for the emergence of new corrupt practices. The purpose of this article: using sociological analysis methods, to identify the “social legitimacy” (admissibility, acceptability) of corrupt behavior in the business community as a risk factor for the growth of corruption in unfavorable conditions of sanctions pressure. Materials and Methods. The article is based on the results of a sociological study conducted by the authors using a questionnaire survey to assess the level of business corruption in 2021 pre-sanction and in 2022‒2023 sanction years for the Russian economy among the business community of the Sverdlovsk region (n = 500 annually). In order to compare regional trends with all-Russian ones, the results of sociological studies were used: “Business Barometer of Corruption in Russia” and “Consequences of the introduction of sanctions for Russian business.” Results. Risks to the social legitimacy of corruption under sanctions have been identified: against the general background of a negative assessment of corruption by the business community, there has been an increase in the number of supporters of the position that corruption can help solve pressing business problems, as well as those who are neutral towards corrupt business practices; an increase in the desire of the business community to justify the use of corrupt behavior patterns with the usual “that’s the way it is in Russia” has been revealed. Another risk is the dissonance between values and behavior: “In general, corruption is bad, but in a crisis situation, in my daily practice, I can, even must, use corrupt schemes”. Discussion and Conclusion. The life position of the business community, in which corruption is accepted as an inevitable norm of social interaction, turns out to be a barrier to anti-corruption work. The need to intensify sociological research to study the culture of everyday life in the Russian business community has been recorded. The results obtained can be used by government agencies, the chamber of commerce and industry; the union of small and medium-sized businesses, representatives of the business community to intensify anti-corruption work.

Combating Corruption in Business: A Comparative Analysis of National and International Efforts

We have identified that the research problem lies in the limited focus of most international and national concepts and efforts on combating corruption, which mainly aim to preserve public money and the prestige of public office. This is reflected in the issuance of legislation and the development of plans and policies that primarily target prevention and law enforcement in the face of corruption. However, these efforts are relatively narrow and do not adequately address the need to protect the private sector, private funds, and individuals who are not public employees in the business field. It is important to correct these concepts and trends to support better anti-corruption efforts more objectively and comprehensively. Keywords: Corruption, Development, Business Environment, Egypt.

Navigating informal business institutions in Africa: Expatriates’ response to the ‘magendo’ phenomenon in Uganda

This paper explores how expatriates deal with host country informal business practices that differ from their home country institutional frameworks. We note that expatriate business people working in emerging markets of Africa often contend with corrupt business practices rooted in local informal institutions and the lack of strong formal institutions regulating business practices. We also observe that while local people take informal institutions such as magendo, as a way of life and adjust to them, expatriates being ‘outsiders’ respond in different ways. The study employed a qualitative phenomenological design that involved in-depth interview of a small sample of expatriates operating in Uganda. For data analysis, NVivo 11 was used to search for and retrieve chunks of labelled data. The key findings indicate that expatriates from countries with strong formal institutions experience the most frustrations and often reject informal business practices. On the other hand, expatriates from countries with weak institutions are more pragmatic and easily adapt to existing practices in the new environments. Multinationals however, often reject informal business practices due to their market power and strict codes of conduct.The study recommends that small-medium category expatriates targeting Africa need to align with influential local people so as to navigate business informalities that characterise informal business environments.

Деловая коррупция и противодействие ей в организациях

Деловая коррупция и противодействие ей в организациях

Analysis of Multinational Builders’ Corruption Based on Evolutionary Game from the Perspective of International Reputation

Transnational cooperation in international corporations has become an important force in promoting the economic development of countries, and corruption in cross-cultural business has an important impact on the sustainable development of international cooperation. Based on the construction field, this study applies evolutionary game theory to the microlevel to investigate the corrupt behavior of international corporations from reputation perspectives, taking into account their reputation and cooperation behaviors. The findings indicate that the sensitivity of each party involved in the corruption behavior differs concerning international reputation, and a heightened reputation of the supervisory company can effectively curb the corrupt behavior of subcontracting. Additionally, the behavior of the general contracting company shows a sense of inertia, while the three main parties—general contracting company, supervisory company, and subcontracting company—exhibit multistage decision-making characteristics as their international reputation gradually improves. Through the lens of multinational enterprise cooperation and the development of the construction industry, this study aims to address the constraints faced by the construction industry in various countries and identify potential solutions. Furthermore, it provides insights into key issues related to international engineering corruption governance.

Private sector perspective on corruption and informality: a comparative analysis of Serbia and Croatia

ABSTRACT Corruption and informality in business are research topics that have previously received less attention among scholars, especially in Southeast Europe. To fill this gap, and to bring some clarity to the phenomena of corruption and informality in the private sector, this article addresses the extent and manifestations of corrupt and informal practices in business in two post-socialist countries of ex-Yugoslavia, Serbia and Croatia. Analysis is performed on primary data from surveys of businesspeople in both countries, with the main aim of revealing their understanding and acceptance of illicit practices and determinants of businesspeople informal behaviour in the SME sector. The acceptance of four types of informal practices, namely: treating, giving and receiving gifts, networks, and favouring, is modelled using Probit estimation technique. The results reveal that the corrupt behaviour of businesspeople in two observed countries is related to their acceptance of informal practices. Additionally, the manifestations of these practices in real business-to-business and business-to-government relations are shown.

Double jeopardy: FCPA enforcement and MNC risk-mitigation strategies

Does transnational anti-bribery enforcement affect the risk-mitigation strategies of firms? This paper uses an original dataset on the enforcement actions of the Foreign Corrupt Practices Act (FCPA) to examine the law’s impact on corporate behavior and political risks for multinational corporations (MNCs). I argue that corrupt institutions are not necessarily undesirable for foreign investors. Foreign firms seek above-normal returns in high-risk markets through informal exchanges with the host government. FCPA enforcement provides a “fire alarm” that affects firms differently given their sensitivity to corruption concerns. FCPA enforcement has unequal deterrence against corporate misconduct, encouraging some firms to adopt transparency norms while incentivizing other firms to be more insidious in their corrupt business practices. I use a partial observability bivariate probit model to estimate the unobservable propensity of firms to engage in corrupt exchanges. Then I examine the impact of FCPA enforcement on Chinese FDI, and find that Chinese investments are deterred from markets with robust legal institutions. The FCPA’s deterrence effects against corrupt competitors is a positive outcome for U.S. MNCs. However, American companies experience diminished returns in countries with strong investor protection regimes. External legal interventions under the FCPA generate regulatory burdens on U.S. that limit their business opportunities.

Paradoxical Manifestations of Institutional Social Trust in Russian Regions: Corruption and Shadow Employment as Types of Social Trust

Introduction. The paradoxicality of which lies in the fact that with a lack of official institutional trust of the population in the authorities, it flows into informal, criminal and semi-criminal social spheres, into corrupt social ties and groups, and into the informal economy, shadow employment. The purpose of the article is to conduct a sociological theoretical and methodological analysis of the paradoxical forms of institutional social trust in Russian society in the form of corrupt and shadow economic ties. Materials and Methods. Empirical data on the shadow labor market in the Russian Federation were obtained in the course of mass and expert surveys conducted in 2021 in 10 regions of the Russian Federation and 2 megacities. In the course of preparing this publication, general scientific, logical methods were used, structural-functional, sociocultural, anthroposociocultural, projective approaches in modern sociology, the method of sociological imagination, the methodology of analysis and the formation of “we-groups”. Results. In the course of the authors’ research, it was found that such negative social phenomena as domestic and business corruption, shadow (informal) employment are a paradoxical form of expression of institutional trust in society. The paradox of the sociological correlation of corruption and shadow employment with institutional trust only at first glance seems illogical and contrary to sound scientific understanding. As a result of the analysis, the authors have revealed that with a lack of basic institutional trust of the Russian population in state and municipal authorities, social trust flows into informal, semi-criminal and criminal spheres. It has been proved that corruption and informal employment as forms of social practice become forms of expression of specific political trust based on strong social ties (blood related, kindred, friendly) in Russian regions. The authors’ team determined that corruption and informal employment are becoming a type of informal social self-organization of society, which close the gap between the political communications of the elite and the expectations of civil society. Discussion and Conclusion. Corruption and the informal economy are becoming a paradoxical form of manifestation of situational, horizontal, institutional trust based on strong (blood related, kindred, friendly) ties, on the social ties of “we-groups”, on the atomism of the Russian regional society. This research can be practically used by sociologists, lawyers, criminologists, social psychologists, law enforcement officers of the Russian Federation.

How do Cultural Values and Country Norms Influence Tolerance for Corrupt Business Practices?

How do Cultural Values and Country Norms Influence Tolerance for Corrupt Business Practices?

CORRUPTION IN BUSINESS: MOTIVES AND INFLUENCE ON SHADOW ECONOMY

The paper devoted to the research of the corruption offenses in the activity of business entities which are quite a common phenomenon that causes serious moral, economic and political problems, hinders development and distorts fair competition. The purpose of the study is to reveal the distinguishing peculiarities of corruption in business to business relations and special features of the behavior of the corrupt company employee in the context of corruption influence on the level of the shadow economy of Ukraine. The differences between employment in the public and private sectors are highlighted. Analyzing relevant literature, the paper offers a model of corruption-related decision-making of an enterprise employee that takes into account all the factors that may influence a choice of involvement in the corruption offenses. The main causes of corruption in business are viewed as the competitive advantages the company can gain and the level of corruption around it. The research proves that the company can start participating in corrupt practices because many representatives of the business environment are involved in it, claiming that it is the only way to survive. The paper proves the impact of corruption on the level of shadow economy on the example of Ukraine. The essence and constituent elements of the shadow economy are revealed, as well as the negative consequences of the shadow economy, the spread of which is facilitated by corruption in the authorities and government. We proved that the higher level of corruption in the public sphere will result in a higher level of corruption inside the business environment. We proved that special attention should be given to the corruption in business relations as a sub-set of a general corruption phenomenon. The suggested by authors model of corruption-related decision making in business to business relations facilitates better understanding of the true nature of the business corruption phenomenon and development of well thought anti-corruption measures both on company and government levels.

Can a signal mitigate a dilemma? Quality management standards, corruption, and business ethics

In this study, we employ theWorld Bank Enterprise Survey (WBES)data for 93,570 firms in 141 mostly developing countries to examine the signaling value of International Organization for Standardization (ISO) certification and the role corruption plays in the signaling value of ISO adoption. We also investigate whether ISO adoption reduces the magnitude of corruption activities in corrupt business environments. We find that ISO adoption can facilitate firm sales growth and the signaling value of ISO adoption increases as corruption at both firm and country levels increases. In corrupt business environments, ISO adoption has a moderating effect on corruption activities.

Humor, transparency, and the management of distrust among business rivals: a case study of berthing meetings at the Port of Tema in Ghana

This article builds on rich empirical data following our unexpected discovery of a local practice to circumvent a stressful and counterproductive work environment due to distrust at the Port of Tema in Ghana. Using theoretical work on networks, trust, and humor, as well as extensive ethnographic fieldwork, we found that the humorous atmosphere at the regularly held physical berthing meetings fosters a sense of community, which enables competing professions, private companies, and public institutions to manage their mutual distrust. In an environment where trust among competitors is unrealistic, we argue that the objective of the performance of humor and transparency at the physical berthing meetings is the management of distrust rather than the creation of trust. The meetings have, gradually, grown to serve as a pragmatic local stakeholder adaptation to the challenges posed by universally perceived politicized, opaque, and corrupt business practices at the Port of Tema and beyond. In conclusion, we posit that our empirical findings allow us to identify the potential of and gaps in theories about trust and humor in understanding the dynamics of coping strategies among competitors in business settings that are characterized by unethical practices.

Is digital transformation the Deus ex Machina towards sustainability transition of the European SMEs?

The 2030 Digital Compass aligned with the European Green Deal prioritize transparency through the digital transformation of the European SMEs paving the way to a more sustainable production paradigm. Thus, a twin transition is in motion facilitated by the New Industrial Strategy supporting the adoption of green business strategies across industrial ecosystems. This paper investigates whether the digital transformation and the decision to participate in public procurement as a transparent external funding source support adoption of business actions fostering sustainability transition. Data over more than 20,000 SMEs in the EU-28 over the period 2015–2019 complemented by country-specific attributes towards sustainability and institutional business environment are combined. Econometric results indicate that digital transformation fosters sustainability transition. Although participation in public tenders exerts a positive and systematic effect on the adoption of a sustainability supporting strategy, the two decisions appear independent indicating that SMEs are determined to shift the production paradigm irrespectively. Business operational problems affect but not deter sustainability transition. Business corruption in countries of low levels of sustainability impedes sustainable business actions, yet evidence favors higher transparency. The latter highlights the necessity towards building a coherent although adaptable institutional framework. This study contributes to SDGs 7, 12, 13 and 16.

Citizens and Business Corruption: Challenges before Collective Capability

Corruption enables private gains for public purposes, violates democracy, and incapacitates the majority of people. Though under-discussed, business or corporate corruption rather flourishes from governments’ various omissions and commissions. The field-responses in several parts of West Bengal, India reveal that people have sound understanding of both business and government corruption, but their individual efforts are too inadequate in countering corruption. Still, such awareness; and people’s continued interest in politics sets the context before collective capability: by non-violent means, people need to use the state’s space for asserting empowerment and agency; and revitalize the regulatory agencies, as countervailing forces for strengthening democracy’s space against corruption.

From Well-Side Meetings to Pelican Strategy: A Context-Based Approach to Combat Corruption

This article takes up the question of what strategy is to be used among different communities to eradicate corruption across borders. The debate between two legal scholars, Steven Salbu and Philip Nichols, over the viability of extraterritorial application of anti-bribery laws remains thought-provoking when we look at the effectiveness of the OECD Anti-bribery Convention or FCPA in curbing corruption. Empirical research shows that firms from countries with extraterritorial legal restrictions do not necessarily refrain themselves from paying bribes in foreign transactions. This article ties the Salbu-Nichols’ debate, ISCT, mediating institutions theory, and Pelican Gambits strategy together to structure a context based anti-corruption framework. It builds on ISCT’s authenticity and legitimacy principles to give context of the norms in order to apply various strategies to combat corruption. This article is by no means to promote elimination of laws or regulations of corruption or acquiescence of illegitimacy of corruption in international business. Instead, the framework emphasizes the importance of the interactive dynamics between a firm and its community when designing anti-corruption strategy in a global environment.

Application of a compliance system to prevent corporate fraud in large companies

The use of compliance systems is one of the most important components of ensuring the functioning of the activities of large companies in conditions of a high level of security. Working with big data puts organizations in front of various problems related to confidentiality and information security. Compliance systems can reduce risks by increasing the competitiveness of enterprises in the market and raising awareness of employees about illegal actions in general. Recently, the application of laws preventing corrupt business transactions has intensified, and the escalating foreign economic situation requires effective actions from business leaders, therefore, the study of ways to apply the compliance system in large companies is necessary. Within the framework of this article, the author examines the essence of compliance, its main functions, as well as methods and methods of compliance control in large organizations operating in the domestic market. An important role in this scientific article is assigned to the levels of development of the compliance system, consideration of international standards, as well as the areas of compliance in large companies, which are highlighted by the author in accordance with the specifics and features of the activities of large companies in the domestic market. The author also considers compliance principles, the observance of which is necessary to ensure the achievement of the company's goals, the development of methods for their adoption, as well as ensuring system control of the functioning of the organization. The paper focused on the need to continue implementing the development strategy of large companies aimed at automating business processes. The main tools for countering corporate fraud that are used by large companies in conditions of aggravation of the risk of corporate fraud are listed.

Rethinking corruption in international business: An empirical review

A reliable understanding of corruption in IB has prescriptive implications for MNEs’ strategies to manage it. We propose three means by which research on corruption can improve its reliability: (i) develop theorizing and empirical modelling on mechanisms at the firm level; (ii) develop conceptual and empirical clarity and alignment on the distinct nature of corruption being investigated (i.e., scale versus predictability); (iii) develop acute measures of the types of corruption that an MNE's experience can seek to manage. Given this broad research setting, we revisit four published empirical studies on corruption and take a diagnostic approach by looking at the concepts and empirical analysis involved in this research. The four studies are Habib & Zurawicki (2002), Cuervo-Cazurra & Genc (2008), Sartor & Beamish (2018), and Qi & Nguyen (2021). By systematically replicating their findings in three ways, we conclude that theorizing on corruption at the country level is the most effective for making core conjectures about corruption's effects on overall measures of economic activity; however, understanding of the different dimensions of corruption alongside how experience leads to effective management requires greater theoretical and empirical precision and substantiation.

Growth and welfare effects of corruption penalties

This paper analyses the steady-state effect of business corruption penalties on economic growth, corruption and welfare. To that end, the baseline horizontal R&D growth model is extended to include corruption, which is generated in intermediate goods production. Taxation on corruption depresses profits in production but also wages, leading to labor being reallocated from production to R&D, and, therefore, to a higher economic growth rate. Moreover, it also reduces corruption and increases welfare if preferences towards a corruption-free environment are strong enough. The results are in line with the data observed for 15 EU countries.

Corruption as a perverse Innovation: The dark side of digitalization and corruption in international business

Digitalization has had pervasive effects on corruption, introducing new opportunities and challenges to minimize the use of corruptive behaviours. This study investigates the dark side effects of digitalization, documenting its facilitation of corruption across countries as a form of perverse innovation. Building upon the theory of moral intensity and the extant literature on innovation, modularity, and complexity and considering the international business context, we develop a multilevel conceptual model with testable future research propositions. The core of our model is that each act has a component of moral intensity that determines the likelihood of individual MNE agents engaging in corrupt business behaviour. Furthermore, the complexity and modularity of products and services, coupled with a highly complicated international business environment, can facilitate the ease with which individual actors can engage in corrupt business practices. Finally, we provide recommendations for both theory and practice.