Glenda Lowndes, Reference Assistant, Bronfman Business Library

Published Friday February 21, 2014

Literature on crime and corruption in organizations dates back to the 1960’s however, ever since the corruption scandal of Enron Corporation, there has been an increase in theoretical research regarding unethical organizational practices as a common occurrence rather than a rare event in contrast to earlier literature. (Anand, Ashforth, & Joshi, 2005). Let’s not forget the Global Financial Crisis in 2008, where corruption played a key role in the downfall of large financial institutions and also led to corporate governance reforms. Many factors were involved in this collapse; however, banks did play a big role in the events that took place. They were loaning large amounts of money without requiring much capital and were approving mortgages much more freely by not recording transactions (Acharya & Richardson, 2009).

Ashforth defines corruption as “the illicit use of one’s position or power for perceived personal or collective gain” (as cited in Burke, Tomlinson, & Cooper, 2011, p. 3). Corruption seems to be emerging more frequently, affecting all types of organizations (profit, not-for-profit, and government) and the players involved not only include individuals in the organization, but the organization itself (Ashforth, Gioia, Robinson, & Trevino, 2008). Examples of corruption in organizations can include but are not limited to bribery, embezzlement, fraud, insider trading, and manipulating financial documents. Some companies involved in corruption cases included Intel Corporation, which is facing anti-trust charges for allegedly threating other computer production companies, and JP Morgan Chase & Co. which was charged with making unauthorized payments to associates (Burke et al., 2011).

Since the demise of Enron, many corporations have shown interest and implemented enhanced corporate governance rules and standards (Niskanen, 2005). Corporate governance refers to a regulating body that effectively controls and directs the affairs of the organization (Colley, 2005). The body usually consists of a board of directors, Chief Executive Officer (CEO), and stakeholders, where the responsibilities are distributed among them depending on the level of authority. The process of implementing corporate governance starts with the owners/stakeholders of the organization who elect a board of directors, who are representatives that controls and oversees the affairs of the organization (Colley, 2005).  The board of directors hires a CEO, who takes orders and direction from the board of directors to run the organization. “The CEO is accountable to the board of directors, which, collectively and individually, is accountable to the shareholders” (Colley, 2005).

Currently at Bronfman Business Library, in the Carol Anne Letheran Fireplace Lounge, we have set up a display called “Corporate Governance Gone Bad” highlighting the many books, e-books and videos that focus on crime and corruption in organizations. Featured in our display is Ronald J. Burke, a professor at Schulich School of Business, who has written about illegal corporate behaviours. Burke’s 2011 book, “Crime and Corruption in Organizations” examines why individuals or organizations decide to act dishonourably; the consequences for their actions; and what individuals, organizations and societies can do to limit it from taking place (Burke et al., 2011).

Want to learn what not to do when working for a high profile organization? Come by and check out the many educators and scholars that have written about corporate wrongdoing and how to resist unethical behaviours in the workplace. Also, check out our Corporate Governance Research Guide which can help with assignments, research papers, and other useful resources.

References

Acharya, V. V. & Richardson, M. (2009). Causes of the Financial Crisis. A Journal of Politics and Society, 21(2-3), 195-210.

Anand, V., Ashforth, B. E., & Joshi, M. (2005). Business as Usual: The Acceptance and Perpetuation of Corruption in Organizations. The Academy of Management Executive, 19(4), 9-23.

Ashforth, B. E., Gioia, D. A., Robinson, S. L., & Trevino, L.K. (2008). Introduction to Special Topic Forum: Re-Viewing Organizational Corruption. The Academy of Management Review, 33(3), 670-684

Burke, R. J., Tomlinson, E. C., & Cooper, C. L. (2011). Crime and corruption in organizations: Why it occurs and what to do about it. Farnham, Surrey, England ; Burlington, VT: Gower.

Colley, J. L., Business Pro - York University., Books24x7 - York University., & Books24x7, I. (2005). What is corporate governance? New York: McGraw-Hill.

Niskanen, W. A. (2005). After Enron: Lessons for public policy. Lanham, Md.: Rowman & Littlefield Publishers.