The paper examines the causes of and managerial responses to political corruptness. Corruptness is non a new phenomenon, but it has merely late received considerable attending in the literature and in international government organic structures, and the organic structure of work remains fragmented. Even with national and international Torahs that seek to control corruptness, it remains a serious concern. This paper, pulling from resource dependance and institutional positions foremost seeks to bring out the ancestors of corruptness, and so proposes that houses in more politically corrupt states are more likely to use political histrions as managers or utilize political action, as will houses wishing to turn up in politically corrupt states.


With the controversial parliamentary elections in Russia merely completed, and presidential political relations intensifying, susurrations of the “ Putin ” system are acquiring louder. Initiates claim that the newest rival, billionaire Mikhail Prokhorov, a donee of the Putin government, is now turning to political relations to alter that government ( Loiko, 2011 ) . The narrative high spots Russia ‘s hard predicament on the way to transparent democracy and capitalist economy following the prostration of the Soviet Union two decennaries ago. In the wake of the autumn of the Iron Curtain, the head covering of “ freedom foremost, regulations subsequently ” created a system of buddy capitalist economy where the politically well-connected reaped the benefits of pseudo-privatization ( Rodriguez, Uhlenbruck, & A ; Eden, 2005 ) . Corruptness became, or possibly persisted as, the norm.

Contrast the Russian narrative with recent events in the United States and one rapidly sees that corruptness is non merely a 2nd or 3rd universe job. Rather, to go on the cold-war typology of provinces, first-world states are non immune from those utilizing “ entrusted power for private addition ( Transparency International, 2010: 4 ) ” . Whether it is authorities loans to an alternate energy start-up with doubtful fiscal foundations, but with solid political connexions, or it is leveraging decennaries of Congressional service to harvest important “ adviser ” fees from a big, authorities sponsored but in private managed mortgage surety, one demand non look far to happen hints of corruptness. As some have noted, no province, no affair how developed, is wholly immune from the disease of corruptness ( Transparency International, 2010 ; United Nations, 2004 ) .

This paper will first briefly reexamine the literature to bring out the ancestors of corruptness. As Samanta et Al. ( 2010 ) and Park ( 2003 ) note, understanding the causes of corruptness is necessary to contending it and its effects. From here, this paper will suggest a few possible managerial reactions to corruptness in both the domestic and international scheme contexts. The treatments draw to a great extent from both institutional and resource dependance positions.


As noted above, corruptness has merely been a popular topic among faculty members for a comparatively short period of clip ( Rodriguez et al. , 2006 ; Samanta et al. , 2010 ) . This deficiency of involvement is non alone to academia. While corruptness is by no agencies a new job, international organic structures like the United Nations have merely late taken action to control what it sees as negative effects. Kofi Annan, so UN Secretary General, opened the 2004 publication of the United Nations Convention Against Corruption with the undermentioned statement on the injury of corruptness

Corruptness is an insidious pestilence that has a broad scope of caustic effects on societies. It undermines democracy and the regulation of jurisprudence, leads to misdemeanors of human rights, distorts markets, erodes the quality of life and allows organized offense, terrorist act and other menaces to human security to boom.

This evil phenomenon is found in all countriesaa‚¬ ” large and little, rich and pooraa‚¬ ” but it is in the underdeveloped universe that its effects are most destructive. Corruptness hurts the hapless disproportionately by deviating financess intended for development, sabotaging a Governmentaa‚¬a„?s ability to supply basic services, feeding inequality and unfairness and detering foreign assistance and investing. Corruption is a cardinal component in economic underperformance and a major obstruction to poverty relief and development ( three ) .

His statement prefaces the publication of the 2003 United Nations declaration that created an international legal model to contend corruptness. Taking consequence in 2005, the declaration echoes the long Sung concerns of other non-governmental organisations like Transparency International that have sought to raise consciousness on the hurtful effects of corruptness. Transparency International publishes the one-year Corruption Perceptions Index. Even with the United Nations Convention Against Corruption, and a host of specific national Torahs, the 2010 publication states that “ about three quarters of the 178 states in the index score below five, on a graduated table from 10 ( really plumb ) to 0 ( extremely corrupt ) . ” They conclude, “ these consequences indicate a serious corruptness job ( Transparency International, 2010: 3 ) ” . The most recent study suggests that the go oning planetary fiscal crisis might hold played a function, as many of the states hardest hit by the crisis have seen their corruptness perceptual experiences worsen. Surely, this study is imperfect, as it relies entirely on adept assessments, but this imperfectness hits on an of import point that the organisation besides addresses in its study: corruptness is, by its nature, hidden, and, therefore, “ hard to mensurate ( 4 ) ” .

Having established that corruptness remains a planetary job, and possibly a declining one even in the face of international understandings and a host of national Torahs, a natural inquiry arises: what causes corruptness? While many surveies show certain economic variables are important determiners of corruptness ( Evrensel, 2010 ; Park, 2003 ) , institutional theory is peculiarly informative in the instance at manus ( and could perchance explicate the empirical surveies associating economic variables to corruptness ) . To the institutional theoretician, environments affair, and they act to restrain behavior ( North, 1990 ; Scott, 2008 ) . Meyer and Rowan ( 1977 ) kick-started an involvement in the institutional environment with their seminal work that suggested that organisations would publically and officially conform to institutional force per unit areas, although internal and informal procedures might differ. This institutional account of isomorphy was expanded by DiMaggio and Powell ( 1983 ) . Analyzing organisations at the field degree, they found that organisational Fieldss tend toward homogeneousness because of three isomorphous force per unit areas: coercive, mimetic, and normative. Scott ( 2008 ) treats these three isomorphic force per unit areas as the mechanisms by which establishments constrain behaviour in three wide, but possibly overlapping, pillars: regulative, normative, and cultural-cognitive. The regulatory pillar encompasses rule-making or implementing establishments, both formal and informal, while the normative pillar remainders on values, or social penchants, and norms, or thoughts of what should be done. Finally, the cultural-cognitive establishments are based on “ taken for grantedness, ” or those frames through which shared significance is formed ( 57 ) . The Scott model is a utile tool for forming idea, particularly here, as the corruptness treatment intimations at institutional force per unit areas from each pillar.

Central, nevertheless, to institutional theory, and the plants discussed above, is the construct of legitimacy ( Suchman, 1995 ) . In his meta-analysis of the legitimacy literature, Suchman states, “ Legitimacy is a generalised perceptual experience or premise that the actions of an entity are desirable, proper, or allow within some socially constructed system of norms, values, beliefs, and definitions ( 1995: 574 ) “ . Scott ( 2008 ) later explains that the trade name of legitimacy alterations depending on the institutional pillar. For those regulatory establishments, legitimacy may be lawfully granted, while legitimacy in normative establishments may be morally evaluated. In the cultural-cognitive kingdom, legitimacy arises when the organisational actions mesh with the taken for given frame of mention. Take together, these three bases form an onion-like image of legitimacy, with the cultural cognitive footing at the nucleus and the lawfully sanctioned footing organizing the outer bed. To sum up, legitimacy provides the footing and ability for an organisation to move in a peculiar society scene ; therefore, legitimacy is necessary for endurance ( Meyer & A ; Rowan, 1977 ; Suchman, 1995 ) .

These basic dogmas of institutional theory have wide applications, and are applicable to the current treatment. Institutional theory offers peculiarly outstanding accounts for the being of corruptness in the first topographic point. Uncovering the ancestors of corruptness will be one key to work outing the planetary corruptness job ( Samanta et al. , 2010 ) ho Apart from the public policy prohibitions that could follow this disucssion, bring outing the ancestors of corruptness besides offers directors better information to utilize in their responses to corruptness.

Several recent surveies speak straight to the institutional causes of corruptness ( Judge, McNatt, & A ; Xu, 2011 ; Puffer & A ; McCarthy, 2011 ; Samanta et al. , 2010 ; van den Bersselaar & A ; Decker, 2011 ) . Puffer and McCarthy ( 2011 ) use an institutional position to explicate current concern patterns in Russia. Their work suggests that failures in the denationalization procedure after the autumn of the Soviet Union delegitimized Russia ‘s formal establishments. They farther suggest that in this formal institutional nothingness, the trust on informal establishments, enduring hangovers from the water under the bridge Communist epoch, led to endemic corruptness, among other maladies. Here, so, we may deduce that, because of bastard formal establishments, houses seek legitimacy and endurance through informal channels, which suggests both an ancestor and consequence of corruptness. Related to the ulterior treatment, Puffer and McCarthy besides suggest that this institutional environment has led to comparatively weak corporate boards.

Detailing painful histories, van den Bersselaar and Decker ( 2011 ) use institutional theory to explicate the rise of corruptness in Ghana and Nigeria. Their work traced the roots of corruptness to an institutional struggle that arose from colonisation, where a wholly foreign and incompatible institutional model was imposed by the colonizing powers. Throughout the decolonisation procedure, corruptness evolved as a fully fledged establishment to accommodate those colonial establishments with the new domestic environment. Taking this survey in history with the Russian experience discussed by Puffer and McCarthy ( 2011 ) and the image of corruptness painted by institutional theory begins to propose that the presence of corruptness may be informed by institutional passages.

Another recent survey takes the treatment in a different way, but besides uncovers an of import institutional ancestor to corruptness. Samanta et Al. ( 2010 ) analyzed corruptness across several OPEC and OECD states. Their sample choice allowed for the control of several variables the might foretell corruptness. The focal point of their survey was on the effects of faith on corruptness. In the institutional theory context, faith may cross Scott ‘s ( 2008 ) pillars, as spiritual values may be both taken for granted at the cultural-cognitive degree, expected at the normative degree, and, in the instance of theocratic societies, mandated at the regulatory degree. Samanta et Al. found that faith did play a statistically important function in foretelling corruptness, with the preponderantly Muslim states seeing higher degrees of corruptness. The writers noted that this was likely due, non to the nature of Islam, but, instead, to the predomination of theocratic governments in many of the OPEC provinces. This suggests that autocratic governments, particularly those runing under the pretense of faith, may be more prone to corruptness. This suggestion is supported by a recent survey by Evrensel ( 2010 ) . In that survey, the writer tested the effects of several institutional and economic variable on corruptness, and found that totalitarian governments and weak judicial systems were important determiners of corruptness.

While this treatment does non supply an thorough list of the ancestors of corruptness, it supports the thought that corruptness can be explained, at least partly, by the institutional context. With roots deep in political and spiritual history, corruptness as an establishment necessitates action on the behalf of organisations in order to derive legitimacy, and, therefore, chances for endurance. While it might be convenient for organisations or faculty members to disregard the politically cloudy, possibly miry, issue of corruptness, it ‘s presences in the deeply engrained “ regulations of the game ” suggests such ignorance is folly. Alternatively, organisations must work to control the effects of corruptness, which brings us to the following treatment on the managerial responses to corruptness.

MANAGING Corruptness

The presence of political corruptness has of import deductions for the domestic houses runing in the corrupt state ; nevertheless, its effects on transnational endeavors besides deserve attending. This subdivision will analyze possible managerial responses for both local and transnational house, trusting to a great extent on two strands of research from the resource dependance position.

Like institutional theory, resource dependance theory is externally focused. Again, environments affair ( Pfeffer & A ; Salancik, 1978 ) . Pfeffer ( 1987: 26-27 ) summarizes the cardinal dogmas of this position well:

1 ) the cardinal units for understanding intercorporate dealingss and society are organisations ; 2 ) these organisations are non independent, but instead are constrained by a web of mutualities with other organisations ; 3 ) mutuality, when coupled with uncertainness about what the actions will be of those with which the organisations interdependent, leads to a state of affairs in which endurance and continued success are unsure ; hence 4 ) organisations take actions to pull off external mutualities, although such actions are necessarily ne’er wholly successful and bring forth new forms of dependance and mutuality ; and 5 ) these forms of dependance produce interorganizational every bit good as intraorganizational power, where such power has some consequence on organisational behaviour.

While early institutional theoreticians took their environment as given ( Meyer & A ; Rowan, 1977 ) , the early work in resource dependence theory recognized that directors could work to make their environments. In their seminal text, Pfeffer and Salancik ( 1978 ) describe five tools directors have at their disposal to voyage and extenuate these webs of resource mutualities: amalgamations and acquisitions, joint ventures, boards or managers, political action, and executive sequence. Two of these tools, political action and boards of managers, will be highlighted in the current treatment. While joint ventures and amalgamations and acquisitions have some relevancy, and will be discussed subsequently, political action and boards of managers offer houses possibly the most direct means to pull off corruptness. Executive sequence, with its internal focal point, will non be discussed.


Figure 1 illustrates the consequence of possible managerial responses to corruptness. While corruptness might tip the graduated table of mutuality or power off from the organisation, doing it more hard for the house to run efficaciously or expeditiously, the house may utilize political action or boards of managers to lean the graduated table back toward its favour. Each of these managerial actions deserves a closer expression.

Pfeffer and Salancik ( 1978 ) proposed three ways boards may be used to pull off resource dependences: entree to information via advice and expertness, discriminatory entree to resources, and legitimacy. Pfeffer ( 1972 ) states “ that board size and composing are non random or independent factors, but are, instead, rational organisational responses to the conditions of the external environment. ” Sanders and Carpenter ( 1998 ) impart support, and pull our eyes to the international context, by happening that board size tends to increase with degrees of internationalisation. Other surveies have besides through empirical observation examined each of the noted possible benefits ( Johnson & A ; Greening, 1999 ; Luoma & A ; Goodstein, 1999 ; Provan et al. , 1980 ) . Closer to the inquiry at manus, Provan et Al. ( 1980 ) found that holding community leaders on boards of managers was associated with discriminatory entree to critical resources.

Pfeffer and Salancik ‘s ( 1978 ) 3rd benefit of utilizing boards of managers to pull off resource mutualities, legitimacy, must be highlighted. As legitimacy is a nucleus concept of institutional theory, there is considerable conceptual convergence. Scott, nevertheless, makes a differentiation on how this construct differs across these theoretical models:

In a resource-dependence… attack to organisations, legitimacy is typically treated as merely another sort of resource that organisations extract from their institutional environment… However, from an institutional position, legitimacy is non a trade good to be possessed or exchanged, but instead a status reflecting perceived consonant rhyme with relevant regulations and Torahs, normative support, or alliance with cultural cognitive models. Furthermore, unlike material resources or proficient information, legitimacy is non an input to be combined or transformed to bring forth some new and different end product, but a symbolic value to be displayed in a mode such that it is seeable to foreigners. ( 2008: 59 )

This institutional position on legitimacy, so, places a greater focal point on the urgency of legitimacy. Here, more than simply a resource, legitimacy prevarications at the nucleus of organisational activity. It should be noted, nevertheless, that the viing position are non needfully reciprocally sole. Rather, the institutional position adds deepness to the resource dependance take on legitimacy.

While Pfeffer and Salancik ‘s ( 1978 ) three utilizations for boards of managers have received considerable attending in the literature, small work can be found that applies the construct to corruptness. However, given the importance of resources to the roots of corruptness, the application appears natural. Corrupt political histrions, by definition, must command some signifier of a resource necessary for organisational success, whether it be the initial right to be or entree to natural resources. While corruptness spans the political systems continuum, revisiting Evrensel ( 2010 ) provides peculiarly outstanding support, as that work links totalitarian administration, with its associated tight control of domestic resources, to higher degrees of corruptness. Using the foundation of the resource dependance position, we would anticipate that organisations would react to corruptness by trying to extenuate their dependance on corrupt political histrions.

Proposition 1 – As the degree of corruptness additions, houses will be more likely to use political histrions as managers in order to derive entree to cardinal resources, including, but non limited to, legitimacy.

While this proposition focuses on domestic responses to corruptness, the benefits of using managers need non be specifically domestic. Rather, the statement can be extended to the international context, where houses may wish to turn up in a corrupt environment.

Proposition 1a – As the degree of corruptness additions, entry seeking houses will be more likely to use political histrions as managers in order to derive entree to cardinal resources, including, but non limited to, legitimacy.

As noted, another watercourse within the resource dependance perspective literature can be applied to the job of corruptness: political action. Hillman et Al. ( 2009 ) note that this country of Pfeffer and Salancik ‘s ( 1978 ) seminal work is likely the most unmarked. At the bosom of political action lies the desire of the house to determine the environment through act uponing Torahs and ordinances. Pfeffer and Salancik ( 1978: 190 ) note, “ organisations may utilize political agencies to change the status of the external economic environment. ” The small work that has been done on this watercourse focuses, as can be expected, on the government/organization relationships. Mezner and Nigh ( 1995 ) found that houses will utilize more political action as their dependance on the authorities additions, supplying support similar to Bimbaum ( 1985 ) . Others have examined the benefits that political action can afford ( Hillman, Zardkoohi, & A ; Bierman, 1999 ; Peng & A ; Luo, 2000 ) .

One recent survey, in peculiar, demonstrates the considerable convergence between political action and boards of managers, particularly in the context at manus. Lester, Hillman, Zardkoohi, and Cannella ( 2008 ) examined the post-government calling of authorities functionaries. They found that different degrees of single societal capital influenced whether or non ex-officials joined corporate boards. This survey highlights the links between boards, political action, and the resource dependance position.

In this short literature watercourse, surveies have focused largely on how houses mitigate dependences on the authorities. The issue of corruptness, nevertheless, requires a polish. While dependences on the authorities might give corrupt histrions an chance to utilize corrupt patterns, the mutuality here lies between the corrupt political histrions and the organisation. Using the lessons from the related political action literature, we propose the followers.

Proposition 2 – As the degree of corruptness additions, houses will be more likely to utilize political action to cut down dependance on corrupt histrions.

Again, the statement can be extended to the international context.

Proposition 2a – As the degree of corruptness additions, entry seeking houses will be more likely to utilize political action to cut down dependance on corrupt histrions.


This paper has applied penetrations from institutional and resource dependance positions to the issue of corruptness. The managerial responses outlined above rise a figure of inquiries, deductions, particularly in the international context, and lead to several possible extensions, some of which are discussed below.

Returning to Kofi Annan ‘s foreword ( United Nations, 2004 ) , we see that he lists several immoralities associated with corruptness. This paper has, so far, assumed that corruptness is a social malady. However, this premise, and Kofi Annan ‘s announcements can and should be evaluated. Many of the hurtful effects of corruptness centre around its effects on economic indexs. FDI flows are one of several factors that influence frequently quoted steps like GDP. A treatment of FDI is peculiarly utile as it besides highlights managerial responses to corruptness.

Transaction cost economic experts have mostly, but non surprisingly, viewed corruptness as lending to the costs of making concern ( Besley & A ; McLaren, 1993 ; Husted, 1994 ) . This attack frequently views corruptness negatively as falsifying efficient markets. Corruptness is non merely damaging to houses, but can besides take to income inequality ( Gupta et al. , 1998 ) and decreases in revenue enhancement grosss ( Ades & A ; Di Tella, 1999 ) . However, writers within this theoretical position are non needfully unified in their review of corruptness. Early work suggested that corruptness can take to more efficient outcomes, as it can cut down regulatory rigidness ( Huntington, 1968 ; Leff, 1989 ) . This more positive return on corruptness was echoed by Lien ( 1986 ) who suggested that graft could advance efficiency, as more efficient houses can afford higher payoff ( Hinings and Greenwood [ 2002 ] might inquire, efficient for whom? ) .

Several writers in this dealing cost venas have examined the relationship between corruptness and FDI. Most seem to back up the thought the corruptness is damaging, projecting uncertainty on the more positive takes earlier discussed. Zhao et Al ( 2003 ) looked at both corruptness and transparence across 40 states and seven old ages and found that corruptness undermined FDI influxs. These consequences echo Habib and Zurawicki ( 2002 ) . They examined corruptness as a locational disadvantage, working through Dunning ‘s ( 1988 ) eclectic paradigm, and besides found that the corruptness deterred investing.

Other surveies using dealing cost economic sciences have looked at the composing of FDI influxs, instead than their overall degree. Smarzynska and Wei ( 2000 ) examined corruptness and FDI in an Eastern European context in the mid 1990s. They found that higher degrees of corruptness shifted FDI toward joint ventures. Tekin-Koru ( 2006 ) , nevertheless, found the opposite consequence in a survey of FDI influxs to Turkey. There, pulling to a great extent from dealing cost economic sciences, the writer noted that corruptness decreased the likeliness of joint venture as the manner of entry and increased the likeliness of entirely owned subordinate as the manner of the entry. Tekin-Koru attributed this struggle to the unique, transitional features of the economic systems included by Smarzynska and Wei when the survey was conducted. This raises a potentially of import but unreciprocated inquiry sing the interaction of political and market passages with corruptness.

While a dealing cost attack has been popular, institutional theoreticians have besides examined corruptness and its effects on FDI, conveying us back to one of the two theoretical models to a great extent relied on in this paper. Rodriguez et Al ( 2005 ) supply a more nuanced return on corruptness, developing a two dimensional model to explicate houses ‘ responses to corruptness. Pulling entirely from institutional theory, they posit that legitimacy seeking entrants will establish their manner of entry on the pervasiveness and flightiness of host state corruptness, presuming the house has already decided to come in that venue. While their theoretical position is defended by observing that corruptness is one of the coercive “ regulations of the game, ” the writers besides note, albeit briefly, that viing positions may take to different propositions. However, their definitional attack is insightful.

The propositions provided by Rodriguez et Al. ( 2005 ) were refined and tested by Uhlenbruck et Al ( 2006 ) in the context of the telecommunications industry in the 1990s. Again utilizing institutional theory as a lens, the writers tweaked the literature proposing high degrees of corruptness led to lessenings in FDI by demoing that the pervasiveness and flightiness of corruptness alterations the composing of FDI, if non the overall degree. This work may assist to accommodate an evident struggle in the dealing cost economic sciences literature: while many surveies have found a important negative relationship between corruptness and FDI ( Habib & A ; Zurawicki, 2002 ; Mauro, 1995 ) , non all writers are speedy to project corruptness in a negative visible radiation ( Lien, 1986 ) .

Although non explicitly viewed through an institutional lens, Globerman and Shapiro ( 2003 ) , in a survey of U.S. outward FDI, found that high degrees of corruptness in developing and passage economic systems deterred investing, therefore returning us to the state degree of analysis. This survey, concentrating on administration, besides noted that corruptness is higher among those states with civil, instead than common, jurisprudence legal foundations. Their focal point on administration systems fits good into the institutional theory literature environing Scott ‘s ( 2008 ) regulative pillar discussed earlier, but besides describes managerial response through FDI.

While writers have examined the links between corruptness and FDI as a whole, few have looked at the effects of corruptness specifically on cross-border amalgamations and acquisitions CBM & A ; As.. Like the corruptness literature, the literature environing CBM & A ; As is prevailing with viing theoretical positions. Transaction cost economic sciences has been, possibly, the most popular lens through which to position amalgamations and acquisitions ( Hillman et al. , 2009 ) . Much of the economic sciences based research has focused on the value creative activity, efficiency, resource redisposition, and market subject drivers of amalgamations and acquisitions ( see Haleblian, Devers, McNamara, Carpenter, & A ; Davidson, 2009, for a reasonably comprehensive reappraisal of the M & A ; A literature ) . One of the more successful attacks within economic sciences for analyzing cross-border activity specifically comes from Tormenting ‘s eclectic paradigm ( 1988 ) . The eclectic paradigm postulates three chief determiners of FDI: ownership, location, and internalisation advantages. Uddin and Boateng ( 2011 ) used this position to inform their findings that certain location specific macroeconomic variables lead to alterations in the frequence of CBM & A ; As. Analyzing CBM & A ; A activity in the United Kingdom from 1987-2006, the writers GDP, exchange rates, portion monetary values, and involvement rates were important drivers of CBM & A ; A outlflows, while GDP, money supply, and portion monetary values were important drivers of influxs.

Returning to institutional theory, we see that it has besides been used to explicate CBM & A ; A activity. As antecedently noted, institutional theory postulates that houses will seek legitimacy, and, therefore, endurance, by conforming to the institutional environment ( Meyer & A ; Rowan, 1977 ; Scott, 2008 ; Suchman, 1995 ) . Of Scott ‘s ( 2008 ) three pillars, the regulative, normative, and cultural cognitive, the regulatory pillar has, possibly, been most used to turn to CBM & A ; As. Embracing the coercive power of the province, the regulatory pillar offers an easy mensurable tool for empiricists, as its effects can sometimes be summarized in wide macroeconomic variables like revenue enhancement rates. In the institutional context, some bookmans have noted that place state regulatory issues may force houses to prosecute in outward FDI ( Witt & A ; Lewin, 2007 ) . Other writers focus on host state factors. For illustration, Kostova et Al. ( 2008 ) found that houses may take FDI to derive legitimacy in a host state. Still yet, other writers have considered the industry, instead than state, level institutional force per unit areas that might drive action. In fortunes with high degrees of uncertainness, for illustration, houses may react to the environment by miming their successful rivals ( DiMaggio & A ; Powell, 1983 ) . This was confirmed in the context of amalgamations by Stearns and Allan ( 1996 ) .

While dealing cost and institutional theory attacks provide significant explanatory power, they offer an uncomplete image of the drivers of CBM & A ; A activity. Returning to resource dependence theory ( Pfeffer & A ; Salancik, 1978 ) , nevertheless, may make full this spread. Pfeffer ( 1972 ) suggests that houses may get other houses “ foremost, to cut down competition by absorbing an of import rival organisation ; 2nd, to pull off mutuality with either beginnings of input or buyers of end product by absorbing them ; and, 3rd, to diversify operations and thereby lessen dependance on the present organisations with which it exchanges. ” Casciaro and Piskorski ( 2005 ) refined Pfeffer and Salancik ‘s mutuality concept by spliting it into two sub-constructs, common dependance and power instability. The writers found that common dependance increased the likeliness of a amalgamation or acquisition, while power instability decreased the likeliness. This work, like much of the literature in this watercourse, focuses on domestic houses. However, these principles easy extend to the planetary context, particularly on the 2nd and 3rd principles Pfeffer provides.

In visible radiation of the old propositions, we see that some houses may be in a better place to pull off corruptness than others, as some houses will, no uncertainty, addition better entree to those political histrions that control resources or whose presence may be legalizing. Taking this thought with the treatment of amalgamations and acquisitions, it follows that houses seeking “ to pull off mutuality with either beginnings of input or buyers of end product ” ( Pfeffer, 1972: 39 ) would aim those companies in the best place to pull off corruptness, taking to the concluding proposition. This treatment nevertheless, remainders, to a big grade, on the proposition outlined earlier.


This paper has sought to supply conceptual underpinnings to a few inquiries environing managerial responses to corruptness. While this conceptual work opens many doors for other conceptual work, each proposition deserves careful proving. These propositions could be tested utilizing either qualitative or quantitative agencies. While issues of entree might rule the qualitative attack, the empirical attack is non without obstructions.

Each offer several challenges for empirical testing. First, a clear, easy quantifiable definition of corruptness is absent from the literature. As such, clear, valid information may be difficult to obtain. As antecedently noted, Transparency International provides one-year steps of the perceptual experience of corruptness for about 200 states through its Corruption Perceptions Index. This index is one the more popular in the literature, being used by Wei ( 1997 ) , Heidenheimer ( 1996 ) , and Lambsdorff ( 1997 ) , to call a few. The consequences of a meta-analysis by Judge, McNatt, and Xu ( 2011 ) suggests that the Corruption Perceptions Index and the besides popular Control of Corruption Index from the World Bank so present valid steps. But utilizing this index presents challenges. Campos and Giovannoni ( 2007 ) note that corruptness and lobbying are practically replacements. In richer states, they suggest buttonholing may be more prevailing, while those in poorer states may be more willing to cover with corruptness. If these two signifiers of influence are simply two sides to the same coin, would an index like that compiled by Transparency International understate to presence of corruptness in wealthier states because it is termed otherwise? This semantic inquiry could be of import. Furthermore, should corruption me measured in absolute footings? Or should the differences in corruptness between states be used? The literature is inconclusive, as surveies have found important consequences utilizing both ( Habib & A ; Zurawicki, 2002 ) .

Another important challenge to proving the above propositions might be deriving entree to board of managers informations, particularly for private houses. To get the better of this, one could utilize merely publicly traded houses in the sample where board information is easier to come by ; nevertheless, this narrows our ability to generalise. Is the proportion of publically traded houses to in private held houses changeless across national boundaries? Possibly corruptness plays a function in the initial public offering in more corrupt states, therefore skewing the consequences. Yet another challenge comes with the political histrions concept. What is the best definition to utilize? Is it an office holder? What about senior degree administrative officials or advisers? With political advisers, their function may non be obvious, which creates farther jobs.

Possibly the most efficient attack, given these challenges, is to utilize the Corruption Perceptions Index, along with publically available information on boards of managers, utilizing a narrow definition of political histrions, in a multivariate arrested development analysis. This signifier of analysis is surely consistent with old surveies will let one easy control of the many other potentially explanatory variable. Given the grants, nevertheless, this attack, will be restricting. Alternatively, a intercrossed attack may be best: one where the restrictions of the quantitative methods are supplemented with the rich, elaborate information gleaned from a qualitative survey. Using this intercrossed attack non merely provides a Fuller image, but the inclusion of qualitative methods might really good better or get the better of the challenges involved in the empirics.


This paper has provided a focussed reappraisal of the ancestors of corruptness, a treatment of the managerial responses to corruptness, and a few concerns sing testing of the included propositions. While economic indexs have proven to be of import determiners of corruptness ( Evrensel, 2010 ; Park, 2003 ) , we have argued that the institutional context ( Puffer & A ; McCarthy, 2011 ; Samanta et al. , 2010 ; van den Bersselaar & A ; Decker, 2011 ) is peculiarly utile for the inquiries at manus. Using this background, and the penetrations of resource dependence theory, we have sought to widen organisational theory by contending a few possible effects corruptness may hold on managerial action, particularly in the country of boards of managers and political action. As the recent Transparency International ( 2010 ) publication indicates, corruptness remains a serious job, supplying grounds of the continued importance of this subject.

Finally, we close this paper with a call to action. Kofi Annan, at the terminal of the foreword to the 2003 United Nations Convention Against Corruption quoted above, stated, “ Be assured that the United Nations Secretariat, and in peculiar the United Nations Office on Drugs and Crime, will make whatever it can to back up the attempts of States to extinguish the flagellum of corruptness from the face of the Earth. It is a large challenge, but I think that, together, we can do a difference ” ( United Nations, 2004: four ) . This call to action evoked memories of the Hinings and Greenwood ( 2002: 411 ) piece in which they sought to reply the inquiry: “ What are the effects of the being of organisations? ” In that article, they reminded faculty members that organisations, and organisation surveies, do non be in a vacuity. Alternatively, our capable exists in a universe populated with existent people, and we must inquire how our work affects those really existent people across socioeconomic degrees.

Cuervo-Cazurra ( 2006 ) late studied the effects of corruptness on FDI. His survey found that new regulatory understandings among and within some developed provinces led to a diminution in FDI flows to more corrupt states, while organisations from badly corrupt states were non deterred by corruptness in other states. He suggested that the international understandings on corruptness, to at least some extent, were working. This survey is complemented by another ( Kwok & A ; Tadesse, 2006 ) that suggested that corporations straight puting in foreign markets, while typically assumed to conform to that environment, in fact could hold a positive impact by conveying down corruptness. Sing these surveies in the context of Kofi Annan ‘s statement of hope and Hinings and Greenwood ‘s ( 2002 ) call for more people oriented research, we echo the recent work of Scherrer and Palazzo ( 2011 ) . Corporations have an chance to self-regulate by, possibly, taking on a more political function to determine a better environment, non merely for themselves, although those benefits can be existent, but for the one million millions of people who continue to experience the effects of corruptness daily.