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Entrepreneurial Orientation and Corruption

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Abstract

Organizational corruption is a wide-spread negative aspect of economic activity, and a seemingly never-ending series of corruption scandals has been made public around the globe. Although research is performed in a broad variety of disciplines, ranging from psychology to management to law, a fully satisfactory explanation for the causes of organizational corruption has not been found. By looking at organizational factors as potential triggers for corruptive behavior, this study draws upon the concept of entrepreneurial orientation (EO). Diverse studies have shown that EO, as an antecedent to company performance, has a positive effect. Recent EO literature, however, indicates that EO has not only positive but also negative consequences. In this line of reasoning, this study builds upon principal agent theory and makes a first step in exploring the impact of EO on a negative aspect of business behavior, namely organizational corruption. We gathered survey data and publicly available data from 411 firms, inquiring for both acts of corruption from within the top management team over the last 3 years and the level of entrepreneurial orientation within the organization. Results show diverging effects along the individual dimensions of EO; they point to risk orientation as the dark side of EO, as it significantly increases the likelihood of corrupt behavior in companies. In contrast, innovation orientation, to a certain extent, counterbalances by reducing the likelihood of corrupt behavior.

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Authors and Affiliations

  1. RWTH Aachen, Kackertstraße 5, 52072, Aachen, Germany

    Tobias Karmann, René Mauer, Tessa C. Flatten & Malte Brettel

Authors
  1. Tobias Karmann
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  2. René Mauer
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  3. Tessa C. Flatten
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  4. Malte Brettel
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Corresponding author

Correspondence to Tessa C. Flatten.

Appendix

Appendix

Entrepreneurial Orientation Scale based on George and Marino (2011), Covin and Slevin (1989), and Miller and Friesen (1978).

Proactiveness:

  • In dealing with competitors, our firm typically initiates actions that competitors respond to.

  • In dealing with competitors, our firm is very often the first business to introduce new products/services, administrative techniques, operating technologies, etc.

Risk-taking:

  • Our firm stresses a fully delegated policy for employees.

  • Our firm gives the freedom for individuals or teams to develop new ideas.

  • In general, the top managers of our firm have a strong tendency to be ahead of others in introducing novel ideas or products/services.

Innovativeness:

  • Our firm encourages and stimulates technological, product/service-market, and administrative innovation.

  • Our firm stimulates creativity and experimentation.

  • Our firm’s innovative initiatives are hard for competitors to successfully imitate.

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Karmann, T., Mauer, R., Flatten, T.C. et al. Entrepreneurial Orientation and Corruption. J Bus Ethics 133, 223–234 (2016). https://doi.org/10.1007/s10551-014-2305-6

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