Denial of Corruption: Voluntary Disclosure of Bribery Information

Abstract

This study explores the rationality behind firms' decision to admit or deny their involvement in bribery when responding to confidential surveys conducted by international agencies (such as the World Bank). Specifically, we posit that firms' reluc-tance to provide accurate information about their engagement in bribery is at least to some extent contingent on certain situ-ational factors. In other words, we claim that this behavior is context dependent. The paper uses the notions provided by the theory of planned behavior to understand the way in which the corruption of the legal environment, the intensity of market competition, and identification risk influence firms' decision to lie about their involvement in bribery.To test these notions, we use databases from the fifth wave of the EBRD-World Bank Business Environment and Enterprise Performance Survey, country-level data from the Kauffman Foundation and macroeconomic (i.e., countrylevel) information from the World Bank database. We run ordinary least squares with geographic region-clustered standard errors on data from 30 countries and 6122 individual firms during the period 2012-2013. Consistent with our expectations, the results indicate that firms operating within more corrupt legal environments, facing more competition, and bearing a higher risk of being identified are less likely to deny their involvement in bribery. We conclude that not all firms have the same incentives to lie about their participation in bribery, and therefore, identifying the drivers of this heterogeneity may help policymakers better assess the reliability of bribery information collected through confidential surveys.

Private Sector Corruption, Public Sector Corruption and the Organizational Structure of Foreign Subsidiaries

“…To address these limitations, business ethics scholars have become more focused upon enhancing our understanding of the various types of corruption that firms encounter in foreign markets (Luiz and Stewart 2014;Van Vu et al 2018), as well as the different strategic, structural and operational responses of MNCs to heightened levels of corruption (Godinez and Liu 2018;Orudzheva et al 2018;Xie et al 2018). In doing so, ethics scholarship (Clark and Brown 2015;Gago-Rodríguez et al 2018;Hauser 2018;Remišová et al 2018) is generating new research insights that are helping to inform the efforts of anti-corruption scholars who endeavor to design better strategies to curb MNC engagement in foreign market corruption.…”

The Airbus bribery scandal: A collective myopia perspective

“…Second, we argue that although scandals have the potential to cripple morale, destroy reputation, and often stifle the ability to create and capture value in the short term, they also represent opportunities for organisational renewal. In this regard, we are of the view that evading and denying scandals can be self‐defeating as organisations may risk losing the opportunity to confront and learn from the shadows of history in the form of corruption and bribery scandals (Gago‐Rodríguez et al, 2020). Rather than evading them, we encourage organisations to take the ‘path less travelled’ by developing their own Vergangenheitsbewältigung —a pioneering idea developed by the German state to help it to collectively confront its citizens' complicity in the crimes committed by the Nazi regime (Schwarz, 2020).…”

Private corruption: An integrated organizational model

“…It has been shown that in insecure and unstable environments characterized by an overall culture of illegality, corruption seems to be more faded than in environment where citizens respect the law, encourages others to respect it and rejects illegality (Pirtea et al, 2019; Nelken, 2020). Tolerance of or even acceptance of corruption in wider social environments may lead to a denial of personal responsibility and, thus, strengthen the “rationalization of corruption” (Gago‐Rodríguez et al, 2020). Several studies recognize a common initial stage: when corrupt practices produce a positive outcome, they are included into an environmental memory, to be used in the future (Arellano‐Gault, 2019).…”