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Corruption has long been a source of (i) argument as to its meaning and ethical implications and (ii) interest as to its effects on the multinational firm. Coordination of efforts to provide a comprehensive understanding of corruption has been found lacking (see generally, Robertson & Watson, 2004). Unfortunately, problems associated with corruption continue. This paper addresses the nature of corruption, with particular focus on the type of institutional rule circumvented by corrupt activity. Characteristics of the subject "rule" may influence the likelihood of corruption and may in future work aid in identifying improved mitigation tactics.
INTRODUCTION
In the cracks of an institutionalized society, corrupt practices take root and become part of the overall environmental fabric. Corruption occurs both in the environment external to the firm and internally, often with resulting waste and inefficiency through redirection of resources in unintended ways. Genaux (2004) claimed at it origin the term "corruption" had a core meaning of "injustice." The conceptualization of corruption as a system of decay has been linked to religious beliefs and primarily Western or Christian perspectives (see Genaux, 2004). However, as noted by Davis and Ruhe (2003, p. 276), "few studies have examined how cultural characteristics are associated with perceptions of country corruption."
Corruption involves activities designed to circumvent the rules, laws or norms of a society. Every society has organized itself, based on its cultural beliefs, around a set of rules, laws and norms (Jennings & Zandbergen, 1995). An obvious, though very basic, explanation for differences in levels and types of corruption across countries lies in the differences of the rules of those countries. To better understand the phenomena of corruption, as it occurs in many different contexts, this paper focuses on the relationship between rules and corruption. The analysis considers how different types of rules are more or less likely to prompt a manipulative response in the form of corruption. To better understand the importance of the nature of the rule might aid in unlocking why corrupt activity occurs, variations in corruption levels and variations in the impact of corrupt activity across different rules contexts.
This paper begins with an overview of the corruption problem and definitional issues. Then, the paper suggests a new definition of corruption and dissects relevant differences in...