The impact of corruption and public governance quality on family firm business strategy

Abstract

Corruption is a plague with serious economic and social consequences and has a greater impact than people perceive. The impacts on business are severe but often underestimated. The aim of this paper is to analyze the influence of public governance environment on the strategical opportunistic use of related party transactions in family firms. Considering corruption as a good indicator of conditions that boost unethical behavior, the study investigates whether high standard of public governance quality at a regional level, as well as low corruption, helps to reduce specific types of opportunistic transactions. Based on a regression analysis on European‐listed family firms in Italy, France, and Germany, we find that high public governance quality at the regional level reduces companies' opportunistic transactions. The study addresses a gap in the literature, first, because it empirically shows a link between the quality of the context and some unethical business strategies, confirming that a negative context leaves room for opportunistic behaviors and that high standards in the public governance quality discourage firms' opportunistic behaviors through specific transactions and, second, because it focuses on family firms suggesting that a strong family power that controls strategy and decision‐making process, if operate in a bad public quality context, may be involved in opportunistic behaviors.

Corrupt practice and sustainability reporting: Lifecycle perspective

“…1 Its detrimental impact extends beyond immediate financial losses, affecting stakeholders' trust, market integrity, and overall economic stability (Cicchiello et al, 2023). Organizations that engage in corrupt practices compromise their ethical standing and risk legal consequences and reputational damage (Medioli et al, 2024). Majeed et al (2024) found a significant negative relationship between corruption and green innovation.…”

Corporate corruption, business strategy and sustainable environment

“…Medioli et al (2022) analyse the influence of public governance environment on the strategical opportunistic use of related party transactions in family firms. Considering corruption as a good indicator of conditions that boost unethical behaviour, the study investigates whether high standard of public governance quality at a regional level, as well as low corruption, help to reduce specific types of opportunistic transactions.…”

“…Considering corruption as a good indicator of conditions that boost unethical behaviour, the study investigates whether high standard of public governance quality at a regional level, as well as low corruption, help to reduce specific types of opportunistic transactions. Based on a regression analysis on European listed family firms in Italy, France and Germany, Medioli et al (2022) find that high public governance quality at the regional level reduces companies' opportunistic transactions.…”

“…All the research questions provided in the special issue proposal have been addressed by the contributors: Ruggiero and Mussari (2022) focus on the definitions, characteristics and issues of corporate corruption and Trequattrini et al (2022) analyse the contribution of blockchain‐based technologies to anticorruption practices; Changwony and Kyiu (2022) examine the implications of business strategies on the tendency for firms to engage in corruption; Cappelli et al (2022) explore the challenge of digital change and its contribution to transparency and anticorruption policies within Italian universities; Medioli et al (2022) analyse the influence of public governance environment on the strategical opportunistic use of related party transactions in family firms; and Cardoni et al (2022) investigate the value relevance of corporate governance and anticorruption policies from a sustainable value perspective, basing the analysis on institutional and stakeholder theories; Moscariello et al (2022), through a single case study, offer practical insights to understand what are the main attributes that distinguish an effective compliance programme from a formal/legal one.…”

Effect of organizational ethical self-interest climate on unethical accounting behaviour with two different motivations in China: the moderating effect of Confucian ShiZhong Thinking

“…OESIC has typical characteristics of self-interest ethical decision-making, which emphasizes maximizing individual interests as the decision-making goal and not hesitating to cause damage to the interests of others (Victor and Cullen, 1988). Although many studies have explored the impact of OESIC on unethical behaviour in the general context (Wang and Hsieh, 2013;Gorsira et al 2018;Joe et al 2018;De Hoogh et al 2021), despite increasing research on unethical behaviour in the general business context (Medioli et al 2022), there is still little in-depth research on the impact of OESIC on unethical behaviour in the accounting context and its related mechanism (Rogošić and Perica, 2023). Therefore, we focus on the effect of OESIC on UAB in this study.…”