Only honorable business leaders can stop corruption

Posted: December 4, 2012 at 10:28 am

The World Economic Forum’s blog this week is dedicated to combating corruption.  In my contribution I argue that only by changing the dominant value system of managers we will be able to curb the damaging effects of corruption:

Corruption will not be eradicated through legislation and prosecution alone. It will take a deep change in the values of the only individuals who can ultimately stop it: business leaders.

No matter how high the legal penalties may be, an opportunistic, self-interested manager within a large corporation can always find a way to make the pay-off of a bribe a no-brainer. This is so because the personal benefits of earning a contract can be significant and the probability of getting caught can be easily minimized. The very same factors that make the modern corporation so productive – specialization and localization of knowledge – also make it extremely difficult to control the decisions of each individual manager. The delegation of authority to managers with specialized knowledge makes the corporation vulnerable to decisions by those managers because they are often the only ones who understand the full complexity of a given contract (technical details of the products being sold, personal circumstances of the individuals involved in the transaction, dynamics of the social and institutional context in which the transaction takes place, etc).

Read the rest of this article on the World Economic Forum’s blog.

Write to Ángel Cabrera at president@gmu.edu

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