Do nepotism and cronyism have payoff boundaries? A cross-country investigation

Abstract

In modern business, the phenomena of “nepotism” and “cronyism” are often observed, which are usually associated with corruption in the public sector and abuse of public resources. However, these phenomena are international in scale, and no country or sector of the economy is free from them. Existing research does not identify shared and contradictory interests of individuals based on nepotism or cronyism. This study aims to fill this research gap. A research hypothesis was developed and tested in order to determine a point from which nepotism and cronyism are not beneficial to their perpetrators. The research data included Poles and Albanians. According to Transparency International (2022), the obtained results showed that Polish society is currently less vulnerable to corrupt practices than Albanians. Moreover, it was substantiated that relative altruism operates as the mechanism that explains nepotism or cronyism practices. Individuals involved in nepotism or cronyism perceive these practices as a tool to reduce the risk of their operations failing. However, the phenomena lead to long-lasting reciprocity, like in the case of corruption. This study contributes to a better contextual diagnosis of organizations and helps develop preventive strategies.

The Negative Social Capital and Supreme Audit Insitutions: Cognitive Orientation and Practical Tips

“…Corruption is accompanied by nepotism and cronyism. These two phenomena are associated with negative social capital and manifest in creating "interest groups" to obtain illegal privileges (Dobrowolski et al, 2022). The role of the public sector in reducing corruption has been widely recognised.…”

Auditors maximising their utility: Economic analysis of the supreme audit institution

“…SAI audits affect the activities of auditees by promoting an attitude of respect for the law, integrity, transparency, and accountability (Dye & Stapenhurst, 1998;O'Donnell, 1998;Stapenhurst & Titsworth, 2002;Tores & Pina, 2002;European Court of Auditors, 2019;Dobrowolski & Sułkowski, 2020;Sułkowski & Dobrowolski, 2001, 2003Dobrowolski et al, 2022).…”

Innovative ecosystem: the role of lean management auditing

“…Internal auditing plays a vital role in theory and practice. Researchers emphasize the importance of internal auditing in reducing operational risk, improving processes and structures, and the role of new technologies in strengthening audits (Dittenhofer, 2001;Fadzil et al, 2005;Allegrini et al, 2006;Hass et al, 2006;Lenning, 2018;Pizzi et al, 2021;Chiarini et al, 2021;Dobrowolski, 2022). Besides, the role of external auditing in modern countries is addressed in the literature.…”

“…It means that auditing should enhance the effectiveness of the audited processes, and simultaneously the internal auditing functions should operate effectively (Dittenhofer, 2001;Cook et al, 2016;Dobrowolski, 2021b). Some authors (Karim and Siegel, 1998;Deshmukh et al, 1998;Sulkowski, 2020a, 2020b;Dobrowolski et al, 2022) point to the importance of audits in preventing public ethnocentrism, fraud, corruption, and money laundering. Furthermore, by using efficient audit processes, it is possible to reduce reputational risk and attract more socially aware investors (Cayón and Gutierrez, 2021;Kostiukevych et al, 2020), improve the internal customer relationship and overall quality of the corporate governance system (Jerzemowska and Koyama, 2020;Mishchuk et al, 2020).…”

“…Fraud is almost an everyday reality in business and public organizations. Meeting the requirements set out in the above standards requires training auditors to identify symptoms of fraud and the knowledge of programs used by IT organizations, particularly in the accounting field (Dobrowolski et al, 2022).…”