Organizational Corruption

Donald Palmer

in Management

ISBN: 9780199846740
Published online January 2013 | | DOI:
Organizational Corruption

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Corruption, narrowly defined, entails the perversion of political organizations by internal or external agents. By this definition, corruption includes public officials’ use of their office to obtain private benefit, and private-sector organizations’ use of illegal means to influence governmental decisions. Corruption of this latter sort can have many manifestations. Domestic corporations can bribe domestic governments, as when Colonial Heritage used covert payments to the city council president in Woodbridge, New Jersey, in return for expedited building permits. Domestic corporations can bribe foreign governments, as was the case when Lockheed bribed foreign officials to purchase the company’s aircraft (which ultimately led to the passage of the US Foreign Corrupt Practices Act). Foreign subsidiaries of domestic corporations may also bribe local governments, as when Walmart de México used local intermediaries to convey payments to public officials in return for expedited building permits. Defined more broadly, corporate corruption entails organizations’ use of illegal means to enhance their survival and profitability. Corruption of this sort can have many manifestations. Corporations can pollute the natural environment, as was the case when Hooker Chemical dumped toxic chemicals into the abandoned Love Canal. Corporations can infringe on the rights of their employees, as when Sears systematically discriminated against women employees. Corporations can misstate their earnings to bolster their stock price, such as when Enron manufactured bogus transactions with investment banks such as Merrill Lynch. Finally, corporate corruption, as most broadly defined, includes the use of illegal means by multiple members of corporations to advance their interests. Corruption of this sort can also have many manifestations. Individuals can misappropriate stockholder wealth, as was the case when Tyco top management provided itself with outlandish perks. Individuals can siphon off resources, as was the case when Andy Fastow and associates constructed a network of special-purpose entities at Enron to generate personal wealth. This bibliography is constructed with the broadest definition of corruption in mind, a definition that incorporates each type of corruption discussed above. For this reason, the authors of this article characterize the subject as “organizational wrongdoing.” Many scholars of organizational illegality distinguish between crime perpetrated on behalf of the firm (labeled corporate crime) and crime perpetrated on behalf of individuals within the firm, against firm interests (known as white-collar crime). The authors of this article do not embrace this distinction in this review of organizational wrongdoing because the two types of wrongdoing often are difficult to distinguish from one another.

Article.  10969 words. 

Subjects: Business and Management

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