Business as usual: The acceptance and perpetuation of corruption in organizations

Abstract

Executive Summary Many of the recent corruption scandals at formerly venerated organizations such as Enron, WorldCom, and Parmalat have some noteworthy features in common. In most instances, the fraudulent acts involved knowing cooperation among numerous employees who were upstanding community members, givers to charity, and caring parents—far removed from the prototypical image of a criminal. The involvement of such individuals in corrupt acts, and the persistence of the acts over time, is both disturbing and puzzling. We argue that the above phenomenon can be explained in part by the rationalization tactics used by individuals committing unethical or fraudulent acts. Rationalizations are mental strategies that allow employees (and others around them) to view their corrupt acts as justified. Employees may collectively use rationalizations to neutralize any regrets or negative feelings that emanate from their participation in unethical acts. Further, rationalizations are often accompanied by socialization tactics through which newcomers entering corrupt units are induced to accept and practice the ongoing unethical acts and their associated rationalizations. We describe the different forms of rationalization and socialization tactics and the ways in which firms can prevent or reverse their occurrence among employees. The onset of these two tactics can establish enduring corruption in organizations and become institutionalized in seemingly innocuous processes.