Business Corruption Research Articles

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.

Trust

The word trust has been active in the language of lay persons and helping professionals throughout written history. Although it is a vital and essential ingredient in living, trust has not been a lucid and tangible concept. As people become more interdependent and as North American society continues to experience the pressures of population growth, economic problems, high divorce and crime rates, corruption in business and politics, and other deepening concerns, helping professionals will be compelled to develop a better understanding of trust and its importance to modern living.

TYPES OF CORRUPTION AND ASSESSMENT OF THEIR IMPACT ON SOCIO-ECONOMIC PROCESSES IN SOCIETY

This article studies the concept of corruption and its individual types. Corruption can be observed in many countries of the world, but its extent differs greatly. The institutional conditions that have formed in different countries have become prerequisites for the differentiation of countries by the corruption level. This article aims to identify the mutual influence between corruption phenomena and socio-economic processes in society. Following the analysis of literature review, three types of corruption have been identified: domestic, business, and political. The hypothesis of the study is the assumption that certain types of corruption can have an uneven impact on socio-economic processes based on the level of development of the country. Studying corruption has required using the methods of induction, deduction, scientific generalization, classification, aspect analysis, and correlation analysis. The empirical data was collected from the following international organizations: the World Bank, Transparency International, Reporters without Borders. The results show that corruption of a certain type involves subjects of certain categories in corruption relations, influencing specific types of public relations. Business corruption has a negative impact on economic development, while domestic corruption has a negative impact on the trends in the development of social relations in society. There was a high direct closeness of the relationship between the level of corruption and GDP per capita, as well as between the level of corruption and the index of press freedom; there is a noticeable inverse closeness of the relationship between the level of corruption and the Gini coefficient.

The Issues of Alcohol Production and Abuse in Russia in Mikhail Katkov's Publications

The article is devoted to the study of the evolution of views on the issues of alcohol production and abuse by the largest ideologue of Russian conservatism M. N. Katkov – editor-publisher of the newspaper “Moskovskie Vedomosti” and the magazine “Russkii Vestnik”. It analyses the speeches of the famous publicist and his associates on the pages of these publications aimed at alterations in the excise system, in force since 1863, in order to limit the excessive consumption of strong alcoholic beverages and overcome its severe social consequences. The reasons that prompted the famous publicist in the early 1880s to launch a campaign for the introduction of a wine monopoly are explained: the decline of the popularity of the liberal economic doctrine in the West as a result of the world economic crisis of 1873–1878; the rise of the movement in European countries for the transfer of the drinking trade to the treasury under the influence of stagnation in agriculture; the expansion of state intervention in economic life in Russia. The article points out the arguments given by Katkov in favor of a monopoly, which, in his opinion, had to allow regulating the distillery industry, ending rampant drunkenness, eradicating drunkenness and corruption in the beverage business. It is particularly noted that Katkov considered this reform one of the main points of his program for creating a “national” economy in Russia, protected from the West by high customs barriers and assuming multilateral participation of the state in the development of the national economy, and these attitudes largely corresponded to the protectionist course of the government in the reign of the penultimate Russian tsar, Alexander III.

Corruption: institutional features, social determinants and consequences

The article considers the nature, causes, determinants and consequences of corruption. As a form of social deviation of a delinquent nature and as a type of crime, corruption has a destructive effect on all spheres of social life, primarily on their management - by redistributing their resources and by replacing social values and goals with group and personal ones. Corruption affects not only states but also international affairs; therefore, we need active opposition to corruption from the world community: International Anti-Corruption Day was included in the calendars of 187 countries including Russia. According to the World Bank, the annual global amount of bribes is 1 trillion US dollars. For many countries, corruption has become a threat to national security, which makes them seek and use effective and often radical measures to counter corruption, and to conduct comprehensive studies of corruption as an objective and widespread social phenomenon. The authors consider corruption on the basis of an interdisciplinary methodology with an emphasis on institutional and structural-functional approaches, which allowed to identify institutional features of corruption, its structure, functions and social consequences, and to assess the efficiency of anti-corruption measures. The article is based on the statistical data on the dynamics of corruption in Russia and the Republic of Bashkortostan in 2012-2020, and on the results of the sociological survey conducted by the Institute for Strategic Studies of the Republic of Bashkortostan in 2020 according to the methodology for assessing corruption described in the Decree of the Government of the Russian Federation. The survey focused on the problems in the interaction of citizens and employees of state and municipal authorities (everyday corruption), and in the interaction of authorities and business (business corruption) (the corresponding samples were 814 and 300 people). The study of everyday corruption was conducted by individual formalized interviews, of business corruption - by the online survey on the Google Forms.

Enhancing Financial Reporting Quality through Corporate Ethics Commitment: A Malaysian Review

A rising number of cases involving ethical misconduct within firms have of late received considerable attention in Malaysia. Despite the country's declaring having a strong corporate governance policy, strengthened through the Code of Ethics for Company Directors and Malaysia Code of Corporate Governance, the unethical practices and lack of integrity within firms remain an issue. PricewaterhouseCoopers (PwC) Malaysia conducted a survey in 2018, it was found that 41 percent of Malaysian registered companies were guilty of committing some forms of economic crimes, specifically business misconduct, asset misappropriation, bribery, and corruption. They added, the actual number may be higher due to many cases of ethical misconduct that typically go unreported. Furthermore, crimes of ethical misconduct in Malaysia have also increased by 28 percent in the last two years. It was revealed taht corporate culture was the most influential element in helping detect early warning signs of ethical misconduct within a firm. A KPMG 2019 report published in the subsequent year also suggested that an unhinged desire for a wealthy lifestyle acts as a prime motivation behind many of the unethical behaviors discovered. Thus, in the light of the increasingly worsening situation of ethical misconduct in Malaysian firms, the need to explore these corporate ethical issues has never become more crucial and appropriate. The ubiquitous nature of the issue has subsequently jeopardized the financial reporting quality of Malaysia's firms. Keywords: Corporate Ethics, Corporate Governance, Earnings Management, Financial Reporting Quality

Press freedom and corruption in business-state interactions

We show that press freedom has a role in constraining business corruption. Using firm-level data, we find that countries with greater press freedom have significantly fewer incidences of bribery involving public officials. In particular, we find that a free press is associated with a substantial reduction in the percentage of firms that report corruption during interactions with tax officials and when obtaining construction permits. Furthermore, we find that fewer businesses in these countries report that corruption is the biggest problem that they face. These findings highlight the role of an independent media in combating corruption.

Corporate criminal liability for Bribery in Kuwait: issues in disclosing commissions

PurposeThis study aims to critically analyse corporate criminal liability for bribery in Kuwait, by focusing on laws and regulations as key problem-solving mechanisms. To that end, it identifies and assesses the existing anti-bribery laws in Kuwait, including a legal evaluation based on international standards. This study raises several issues concerning the lack of regulations of private bribery, facilitating payments and kickbacks in government contracts, and gifts and hospitalities in private sector, using UK Bribery Act 2010 (UK BA 2010) as a reference. This study showcases how these legal shortcomings are inconsistent with international treaties, and undermine efforts to tackle corruption. Emphasis has been put on criminalising private bribery, regulating the acceptance of hospitalities and gifts and abolishing the commission payment regime in public contracts in Kuwait.Design/methodology/approachAdopting a doctrinal focus, this paper examines case studies on curbing corporate bribery using both primary and secondary sources. Given the increasingly transitional and organised nature of business corruption, extravagant gifts and facilitating payments in public procurements globally, a comparison is drawn with the UK BA 2010.FindingsKuwait’s legal system does not criminalise bribery in private sector. Its anti-bribery laws are not at par with international standards. Therefore, the laws on disclosing commissions in public contracts must be abolished, and facilitating payments and hospitality payments in private sector must be regulated.Originality/valueThis study explores corporate criminal liability for bribery in Kuwait by investigating the weaknesses and legal shortcomings of the existing anti-bribery laws, and proposing reforms to counter these using UK BA 2010 as a guide.

A Smarter Fight Against Corruption

According to a recent study, in forty-eight countries around the world, more than a quarter of citizens pays bribes in exchange for service. In this article, the authors suggest that a key to a more effective and socially responsible fight against corruption lies in sequencing. Here, they explain how initiatives targeting high-level corruption in government and business must take priority, preceding the reforms of the public sector.

How far are we from understanding corruption? The effect of cultural distance on corruption perception

PurposeThis study aims to examine the relationship between cultural distances between countries and their scores in the Corruption Perception Index (CPI), which is the most commonly used measure of corruption in international business (IB) research.Design/methodology/approachThe authors applied fixed-effect (generalized least squares) statistical modeling technique to analyze 1,580 year-country observations.FindingsThe authors found that the CPI score is determined to a large extent by cultural distances between countries, specifically the distance to the USA and to Denmark.Research limitations/implicationsCPI is often used as a sole measure of state-level corruption in IB research. The results show that the measure is significantly influenced by cultural differences and hence it should be applied with great caution, preferably augmented with other measures.Originality/valueTo the best of the authors’ knowledge, this is the first study to look at cultural distances as determinants of CPI score. The authors empirically test whether the CPI is culturally biased.

Глобальные инициативы и результативность деятельности «Группы двадцати» по противодействию коррупции в бизнесе

The relevance of this issue is due to the fact that the events that began in the new Millennium in the global anti-corruption movement have further highlighted the important role of the fight against corruption in the business sector. A special role in combating corruption in the sphere at the global level is assigned to the Group of twenty — G20. In the course of the research, the author came to the conclusion that, quite positively, the functioning of the business sphere was affected by the adoption in November 12, 2010 in the city of In Seoul, the leaders of the G20 “Anti-corruption action Plan”, which for the first time openly called for a closer public-private partnership in the fight against corruption. Today, the G20 is a group of key countries with developed and emerging market economies. As major trading powers, the G20 has a special responsibility to prevent and combat corruption, create a legal and policy framework that promotes a clean business environment, and continue to assist countries in their efforts to build capacity to fight corruption. Today, the G20 sets a good example for many countries, international associations, and groups to fight corruption in business.

International mega-corruption Inc.: the structural violence against sustainable development

PurposeThis paper aims to determine the underlying structural foundations that explain why mega (large-scale) corruption exists in an ever-more sophisticated form and how and why the phenomenon remains an intractable threat to global socio-economic stability and sustainable development.Design/methodology/approachPost-colonial theory is used along with critical perspectives on corruption in international business. The paper privileges the decolonization of the current paradigm where “hegemonic orthodoxy” is maintained and enforced through domesticated criticism of corruption in academic literature and in the media.FindingsThe author explains the foundations of “International mega-Corruption Incorporated” (ImC Inc.) and concludes that apart from being the results of greed and criminal intent, it is a designed and weaponized violent instrument for undermining human progress. ImC Inc. occurs through resource control and the manipulation of institutions. Thus, the same theories, the same analyses and the same media exposés on the “pandemic of ImC Inc.” are followed by the same inactions or lacklustre interventions that ignore the powerful international financial institutions serving as the major facilitators.Social implicationsThe nature of ImC Inc. as an existential threat requires mass awareness about its historicity and deep-seated influence on institutions, in order for stakeholders to form a countervailing power to proactively disrupt it in its complexity and in contextually meaningful ways.Originality/valueThis paper provides useful clarifications about specific factors that determine how ImC Inc. exists and thrives in its current form and how to deploy sweeping, corrective and pre-emptive interventions rather than reactionary policies against ImC Inc.

КОРУПЦІЯ ЯК СИСТЕМНА ПРОБЛЕМА ФІНАНСОВОЇ БЕЗПЕКИ В УКРАЇНІ

The article substantiates the need for a systematic analysis of the phenomenon of corruption in business. The evolution of the concept of «corruption» from the general understanding as an anti-moral social phenomenon to its analysis through a political, socio-economic and legal prism is studied. The author made a comprehensive analysis of Ukraine's anti-corruption position in recent years. The dynamics of change of the international index of perception of corruption in Ukraine is investigated. It is also considered how the indicator of corruption control in the legal and political sub-index of the International Property Rights Index (IPRI) has changed. In addition, the dynamics of change in the bribery risk index in Ukraine is analyzed. The author also reveals the peculiarities of the relationship between the state and business and the presence of cases of corruption in them by analyzing the results of a survey of representatives of business entities. The article proposes a classification of corrupt actions in business by the following characteristics: the subject, type and frequency of corrupt actions, the initiator of corrupt actions. The author describes the corrupt relationships of employees with contractors, in particular when paying for products with forged documents, when receiving / providing products in violation of quality standards, when concluding knowingly unfavorable financial agreements, when concluding fictitious non-commodity agreements, criminal inaction under improper execution of agreements, upon receiving additional loyalty. The need to combat corruption has led to the development of an organizational model for the implementation of anti-corruption policy in enterprises, which includes the preparatory stage, assessment of the anti-corruption position of the enterprise and the implementation of anti-corruption measures in the enterprise. The article also identifies the principles that must be followed in the implementation of anti-corruption policy at the state level and business units. Among the national principles it is proposed to take into account the following: clarity of anti-corruption legislation, transparency and consistency of government action in the field of anti-corruption, efficiency of law enforcement and judicial systems, irreversibility of punishment for corruption, compliance of domestic anti-corruption legislation with international law, media impartiality citizens. At the enterprise level, it is recommended to adhere to the following principles of anti-corruption policy: compliance of the company's anti-corruption policy with anti-corruption legislation, documentation of anti-corruption measures at the enterprise, accessibility of anti-corruption principles to employees and partners, ensuring confidentiality in informing employees. who provided information on cases of corruption, a personal example of zero tolerance for corruption on the part of the owners and the head of the enterprise, the irreversibility of punishment for corruption.

КОРРУПЦИЯ КАК ФАКТОР РИСКА ОГРАНИЧЕНИЯ РАЗВИТИЯ ЭКОНОМИКИ

The article is devoted to the problem of the corruption component in the Russian economy. Considered and structured modern forms of contradictions in the interaction between business and power structures. The phenomenon of rent-oriented behavior of power state structures and how this phenomenon affects the modern factors of exploitation of a person by a person is considered in detail. The main features of corruption relations and the mechanisms of functioning of the practices of business corruption in modern Russia are systematized. Conclusions are drawn from the analysis of scientific sources on the essence and characteristics of rent-seeking behavior of economic entities in terms of the corruption component.

The dark side of transparency in developing countries: The link between financial reporting practices and corruption

This paper examines the impact of financial reporting practices on corruption obstacles for about 150,000 firms across 143 mostly developing countries from 2006 to 2019. We document a strong positive relationship between the production of audited financial statements (AFS) and corruption obstacles (CO) faced by the firm. We argue that in a corrupt business environment, rent-seeking bureaucrats use the credible financial information to optimize their bribe demands. Our baseline results remain robust after addressing endogeneity concerns. We further show that country-level institutional quality has a moderating effect on the AFS-CO relation. The evidence from surveying entrepreneurs also provides qualitative support for our empirical findings. Our study sheds light on a previously under-explored adverse consequence of transparency - exposure to corrupt bureaucrats where institutions are weak.

Supply chain corruption practices circumventing sustainability standards: wolves in sheep's clothing

PurposeA growing number of private, voluntary and mandatory sustainability standards have recently emerged. However, supply chain corruption practices as mechanisms to circumvent sustainability standards have also grown and occur regularly. This paper strives to elaborate theory on the intersection of institutional theory, business corruption and the sustainability standards literature by investigating factors that influence the emergence of supply chain corruption practices.Design/methodology/approachBased on secondary data, four in-depth case studies of supply chain corruption practices are investigated through the use of adaptive theory and the method of constant comparisons to elaborate theory on this important phenomenon.FindingsThe paper suggests that although sustainability standards can improve supply chain sustainability performance, if they are adopted only symbolically and not substantively, unanticipated outcomes such as supply chain corruption may occur. The study proposes a typology of supply chain corruption practices, further explores the symbolic adoption of sustainability standards in supply chains and proposes the novel construct of “social isomorphism for corruption.” Since focal companies play central roles in leading supply chain corruption practices, we reason that they can also play a pivotal role in preventing supply chain corruption practices by promoting the substantive adoption of sustainability standards across their supply chains.Originality/valueThis paper elaborates theory on the challenging phenomenon of corruption in supply chains by linking the supply chain management literature to the corruption and the sustainability discourses and offers important insights to aid our understanding on the topic. It generates six propositions and four contributions to the sustainable supply chain management theory, practice and policy.

Job Tenure, International Work Experience, and the Acceptance of Corruption

In the past, management studies have paid insufficient attention to the relationship between professionals’ career-related backgrounds and their corrupt business practices Therefore, the aim of this paper is to gain deeper insights into career-related factors shaping professionals’ tendency to condone corruption. Specifically, we focus on two central career-related factors: job tenure and international work experience. Based on a survey of 184 professionals – employed and self-employed – we find an inverted u-shaped relationship between job tenure and the likelihood of condoning corruption meaning that in the middle of their career professionals show the highest tendency to condone corrupt behavior. Moreover, we find an almost J-shaped relationship between international work experience and the acceptance of corruption. This indicates that professionals who spent most of their business lives abroad, are the most likely to condone corruption. Based on these findings, we discuss theoretical explanations and implications for research and practice.

Is there a commendable regime for combatting money laundering in international business transactions?

Purpose Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through grand corruption, are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins. Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust commercial advantages and organized crimes. This study aims to highlight the need for comprehensive anti-corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by heterogeneous state-level AML regimes to date. Design/methodology/approach This study welcomes the United Nations Convention against Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these instruments’ true impact or lack thereof. The mutual evaluation reports (MERs) and state-level AML regimes in the UK, the USA and Canada are analyzed to illustrate the distinct implementation of international soft law in domestic legislation. Findings This study finds that UNCAC and the FATF recommendations are pivotal steps towards the establishment of a global AML regime for international business, albeit, one that remains imperfect because of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to navigate and improve the discrepancies in varied AML legislation. Originality/value The author provides an in-depth and balanced analysis of current state-level AML developments and relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and contributes to academic research in AML.