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Journal of Business Ethics (2009) 87:89108 Springer 2008 DOI 10.1007/s10551-008-9872-3
Why Firms Engage in Corruption: A Top Management Perspective
Jamie D. Collins
Klaus Uhlenbruck Peter Rodriguez
ABSTRACT. This study builds upon the top management literature to predict and test antecedents to firms engagement in corruption. Building on a survey of 341 executives in India, we find that if executives have social ties with government officials, their firms are more likely to engage in corruption. Further, these executives are likely to rationalize engaging in corruption as a necessity for being competitive. The results collectively illustrate the role that executives social ties and perceptions have in shaping illegal actions of their respective firms.
KEY WORDS: corruption, social ties, rationalization, India
The engagement of rms in corrupt acts, among themselves and with government ofcials, is perhaps the principal threat to continued social support for private businesses. Scandals involving self-dealing top management teams are common and universal as are reports of the bribery of bureaucrats and elected ofcials (Djankov et al., 2005). Yet, common acts of corruption, such as bribery and fraud, are illegal virtually everywhere (Noonan, 1984) and executives typically view the question of legality as the minimum standard of conduct guiding their assessment of ethical behavior (Hitt and Collins, 2007). Nonetheless, despite substantial efforts to combat corruption through public and private initiatives, widely accepted measures of corrupt activity reveal that illegal corrupt transactions are as prevalent as ever in most countries and on the rise in others (Kaufmann and Kraay, 2008; Lambsdorff, 2006).
What is perhaps most puzzling about corruption is that it persists and ourishes even where it is universally decried. Businesses frequently engage in corrupt activities even when managers share the widely held view that corruption imposes substantial
costs to broader society. The apparent incongruity between personal beliefs and the remarkable persistence of corruption contextualizes the ineffectiveness of many rm-level ethics initiatives. Despite ones understanding and appreciation of corruptions costs, once an unethical practice is seen as the way things are done it can readily become an unwritten rule of competition (Brass et al., 1998; Oliver, 1997).
The substantial resources rms expend seeking to maintain the publics trust plainly support the value of learning why rms engage in corruption. Research on the engagement of rms...