Daily Silicon Valley

Daily Magazine For Entrepreneurs

Home » The Elephant is in the Room; how to combat with it? How to Make Space in the Room? A Guideline for Policy-Makers!

The Elephant is in the Room; how to combat with it? How to Make Space in the Room? A Guideline for Policy-Makers!

Despite the widespread corruption, not everyone in post-socialist states is eager to bribe. Individuals with promising start-up ideas but an aversion to bribery may be left out of the pool of possible business beginnings, abandoning what may have generated growth and jobs otherwise. It’s important to remember that people with venture creation ambitions bolstered by bribes’ perceived effectiveness aren’t always the ones with the most long-term and productive (in Baumol’s view) business ideas.

Our research sheds light on crucial policy issues. This is concerning because, as previously indicated, the entrepreneurial potential is more likely to be channeled towards socially undesirable, unproductive activities when corrupt environments make otherwise unavailable economic possibilities appealing. Because informal institutions are generally durable over time, it appears to be critical for policymakers to embrace long-term anti-corruption policies that can withstand the turbulence of elections and government transitions. If potential entrepreneurs react to corruption’s perceived effectiveness, policymakers should devise methods to reduce bribery’s payoffs and reliability.

An inclination towards corruption or integrity is not etched in a society’s genetic heritage or cultural roots. Similar to good governance, corruption is the product of multiple individual and collective actions, encouraged and discouraged via the institutional matrix, social relationships and circles of recognition, the structure of cultural norms, and social values. The combination of these factors creates expectations, habits, beliefs, preferences, paths of thinking, and judging the sense of one’s own – also others’ – actions, which direct its assessment over time and change public beliefs towards corruption and its diffusion throughout the civil society, state, and markets. In an effective anti-corruption policy, pecuniary disincentives discourage individual engagement in illicit agreements, public acknowledgment of the value of integrity, and moral barriers.

The four shapes of corruption exemplified in figure (1) indicate how different “institutional conditions” shape the environment of individual choice. It encompasses both the vertical dimension of enforcement mechanisms and formal regulation, implemented via the state coercive apparatus and the horizontal proportions of informal constraints of social/interiorized accountability mechanisms, which can be more or less integrity versus corruption-enhancing.

Figure 1 Institutional matrix forming the agents’ choices

Source: https://seer.imed.edu.br/

It’s reasonable to assume that the four “equilibria” results are not equally stable. Ceteris paribus, the systemic – i.e., high density – and sporadic – i.e., low density – crime cases (2 and 3 in figure 1) are relatively more significant and enduring because of informal limitations, and the state apparatus converges on a unified outcome. In the first case, both favor the respect of anti-corruption regulation and law; in the second case, both undermine it. The latter scenario realizes when a competing structure of expectations (Finally sanctioned by an alternative values system that supports them, lessening moral costs) takes the place of weak formal institutions that technically state the prohibition of corruption techniques. “In such cases, formal regulations and procedures are not systematically enforced, enabling players to ignore or violate them.” As researchers mentioned: “Even if the government prohibits the importation of certain goods through a statutory law, if people believe it is effective to bribe customs officers to get around the law and make it a prevailing practice, it seems more appropriate to regard the practice as an institution rather than the ineffective statutory law.” Multiple equilibria – with wide variations in corruption levels – may reflect varied adaptive expectations and social norms, i.e., the complementing or competing nature of informal restrictions and effective/ineffective formal institutions.

As indicated in our simplified typology – the “anti-corruption box” of the figure (2) –there are two distinct strategies in the fight against corruption: top-down policies aimed at strengthening vertical control and sanctions over corrupt bribers and agents; and bottom-up strategies, according to the horizontal mobilization and assumption of accountability of societal actors and groups, which shall fortify their role as circles of recognition of the values of integrity and law obeying conducts. Suppose the status quo is systemic corruption; any effort to operate on the top-dow axis of the anti-corruption box – both with step-by-step or big-bang measures – risk being insufficient or doomed to failure. Any increase in repression and law enforcement will be hampered by persistent, deep-rooted dissemination of ethical orientation and informal norms that deem illegal behavior acceptable.

Figure 2 The “anti-corruption box”

Source: https://seer.imed.edu.br/

The economic “rational-choice” perspective, mixed with the neo-liberal paradigm, provided the theoretical toolbox underlying anti-corruption policies, measures and reforms suggested in the last decades by inter-governmental and international organizations, often as a prerequisite for the subsequent distribution of investments and economic aids. In this aspect, corruption is the unavoidable outcome of the overextended, iper-regulated, and iper-regulating, unaccountable operations of an interventionist State through decision-making processes monopolized by public agents aiming to create and allocate rents. Such descriptions of the diffusion of bribery ultimately depend on the intervention of the state in the markets, in terms of both public services and regulation: as a corollary, free-market is invoked as the ultimate situation for the effectiveness of anti-corruption reforms, having privatisation, liberalisation, cuts in public spending, and deregulation as the cornerstones of any suggested policy. When it comes to anti-corruption, the dominant canon dictates measures aimed at cutting the public budget, deregulating, dismantling the social state and privatizing public assets, and intensifying the repression and punishment apparatus – as in the inherently authoritarian ACAs strategies implemented in Hong Kong and Singapore – among other things. Additionally, in the principal-agent model, the “equilibrium properties” of systemic corruption are generally ignored: the problem is not the relative effectiveness of institutional systems in decreasing corruption incentives, but “which kinds of processes are likely to be successful for enacting such reshapes”. The structure of values underlying the so-called neoliberal paradigm – prevailing since the 1980s’ in western social policy-making and democracies economic, after the cycle of collective mobilisation of the 1960s – 1970s – fits with such policy point of view but have its drawbacks.

It is not just the regulative approach (or better the de-regulative policy strategy) underlying neoliberalist policies that may be corruption-enhancing, as exemplified in the frequent evidence of bribes paid to manipulate privatisation processes. The attempt to reduce the state’s role in the economy unavoidably creates a quantity of un-regulated, opaque, unaccountable interactions among public agents, private corporations and other “strong” economic and financial interests, which may interfere with the functioning of markets (personal corruption distorts market connections as well) precisely as with the expected integrity of public officials. Additionally, such policies have augmented the power of giant corporations, increased their monopoly power and favouring collusive interactions with state agents. Finally, an “amoral” justification of the pursuit of profits relies on the strengthening of a structure of values opposite to any possible notion of public ethics and public-spiritedness, when public integrity is less prized than personal success, profits matter more than observing ethical standards, monetary rewards more than symbolic achievements. When transmitted and shared through socialisation processes, amoral conceptions and practices of capitalism may apply a similar “market fundamentalism” in the relationship between private and public agents. Since corruption in democratic decision-making implies the substitution of a demand supply logic to the universalistic principles of the rule of law, we might expect that amoral neoliberalizm as an internalised set of values illustrates a twofold effect: first, it weakens normative and moral limitations against corruption; secondly, engaging in corrupt practices, i.e. applying a market logic within a “state-centred” and “bureaucratic” environment, may produce within circles of agents engaged in illicit acts a self-legitimising stance, therefore reversing into some moral benefit the practice of corruption itself.

The neo-liberal ideology promotes the autonomy of the market from the state as a path to good governance. The hypothesis is that the less the state intervention, the less the potential for corruption. Without any strengthening of moral barriers, neoliberal practices have, on the contrary, increased the connivance among politics and business, specifically in systemic corruption. The illusory advocacy of neoliberalism turned into opposite outcomes: liberalisation, deregulation, and privatisation fuelled corruption, while their advocates had claimed the opposite. However, if the crime did not diminish, it seemed to have changed forms. In particular, neoliberalism has—through various mechanisms—attacked the very basis of political parties, which are not credible nor effective as to third party enforcers of corrupt deals, so changing the balance and functioning of corrupt networks. The centripetal model of systemic corruption changed in several countries. The party is substituted by other collective players (religious association, free-masonry, etc.) as “trust” suppliers and guarantors of corrupt exchanges. Groups might play this role.

When coherent informal institutions complement official rules, they produce the expected outcomes. Therefore, the fertile ground of any anti-corruption regulatory reform lies in a simultaneous set in motion of bottom-up initiatives, empowering societal players, making them influential towards those political entrepreneurs having the authority to shift the formal “rules of the game”, making anti-corruption law effective. Civil society and local community participation in anti-corruption policies might represent a potential preliminary spark to set in motion any possible positive feedback interplay among players interests towards integrity and optimistic expectations that an exit from systemic crime can be found. Recognising the importance of “appropriate cultural sources” in promoting and maintaining integrity, anti-corruption projects shall accept the social values prevailing in each country.

Mutual acknowledgement of the public’s responsibility in monitoring government actions and generalised awareness about the costs of bribery could, in turn, increase the perceived significance of transparency and anti-corruption commitment for bureaucrats and policymakers, who would pay the price in terms of consent and career prospects if the item is dropped from the agenda, or even worse, if the matter is linked to a corruption scandal. The forming of similar beliefs about one’s own and others’ evaluations of the effects of bribe-taking or offering would generate a self-reinforcing behaviour model. When everybody in society starts to expect that corruption is a risky, marginal, low-profit activity, socially blamed, nobody has any incentive to take the first step along the long (and dangerous) road of corruption. Moreover, anti-corruption “trial-and-error”, incremental and decentralised processes have the well-known quality of avoiding the potentially catastrophic consequences of more comprehensive and ambitious reforms while favouring learning processes among social movements activists, social entrepreneurs, associations, policymakers and bureaucrats –a positive-feedback mechanism in itself.

In recent years, societal movements against kleptocratic practises, crooked politicians and businesspeople have established a new explanatory framework. Consequently, also the policy toolkit was enlarged. The fight against corruption is an essential constituent of a broader effort of citizens to oppose the quality of democratic procedures is deteriorating. Therefore, to raise resistance against corruption, it is necessary to restore or discover new accountability and transparency mechanisms that will permit more effective control of citizens on the rulers. This necessitates the revitalisation of a political philosophy that views politics as a tool for achieving the common good rather than a tactic. Experiments and experiences that increase citizens’ opportunities to participate in public policy formulation, decision-making, and implementation phases increase public awareness and knowledge, spreading a broad understanding and knowledge that are jealously hidden in the “technocratic” conception of politics for ideological beliefs or “wilful misconduct.”

With appropriate legislation, the fight against corruption must be reframed as a public good. The privatisation of daily goods and services, such as water, has been blamed for the rise of political corruption, leading to the opacity and inefficiency of the associated processes. The avarice of huge businesses and its ability to bribe politicians at all levels have been blamed for the rise in prices paid by citizens and the decline in the quality of services delivered.

Effective combat against corruption also requires the defence of citizens’ rights. Without the certainty of ownership, the power of the patrons and political bosses – to whom particularistic demands are addressed – increases. Between the important elements that increase the possibility of success, we may consider the existence of properly instituted ombudsmen’s offices and facilitated access of individual and collective actors to the judiciary (class action) to denounce discrimination and privileges significantly when such practices strengthen social awareness.

In many recent mobilisations from below, the issue of corruption is defined as a problem of social justice instead of a mere obstacle towards a good government. Additionally, in the fight against corruption, decentralised knowledge and citizens’ awareness are considered more important than experts’ understanding. More specific, the awakening of public awareness spreads thanks to a collection of diffuse denounces of political malfeasance (Spanish indignations ironically set the “state of malestar” opposite of the “state of benestar,” i.e. the state of malfeasance opposite the welfare state). From Wikileaks to individual bloggers to e-platforms and networks, knowledge about and condemnation of corruption has expanded in recent years thanks to the backing of NGOs, movements, groups, and activists. This technique aided the creation of horizontal accountability systems to raise public awareness and punish and enforce the law. The fight against systemic corruption, which is afflicting an increasing number of representative democracies, cannot be reduced to a single-issue policy or delegated to experts but must be linked to a rethinking of policy and participation.

………………………

Authors Biography

Mohammad Heydari is an Iranian associate professor, scientist, and author. He was born on August 14, 1992, in Tehran, Iran. He published more than 13 books and over 88 scientific papers with famous authors and high-level research groups in his research fields; Currently, his papers are published and accepted by 37 different countries. 

Mohammad Heydari is currently working at Business College, Southwest University, one of the country’s 100 key national universities. In August 2020, Dr. Heydari was accepted as the youngest associate professor and faculty member of Management Science and Engineering (MS&E) at Business College, Southwest University, Chongqing, China. At the same time, he was nominated for the “National Young Talent Program” title, one of the highest awards for foreigners working in academia. 

In 2019, he received the Chinese Government Ministry Award Education Scholarship for outstanding research and academic activities at the national level. In 2017, Dr. Heydari received the (Nanjing Municipal Government) scholarship in (MS&E). Dr. Heydari earned his DSc., Ph.D. from the School of Economics and Management, Nanjing University of Science and Technology, China. Dr. Heydari’s research is in the areas of (1) Human Resources and Business Administration, Organizational Psychology and Organizational Behavior and Organizational Studies; (2) Applied Mathematics, Optimization Algorithm & Operation, Supply Chain Management, and Decision Analysis; (3) Entrepreneurship Management and Psychological Entrepreneurship Research.

Author Email: [email protected]

………………………

Mahdiye Saeidi is an Iranian researcher and author. She was born on February 17, 1978, in Arak, Iran. She published one book, accomplished many scientific papers with Dr. Mohammad Heydari and worked in high-level research groups. Mahdiye Saeidi is currently working at Business Operation Dept. in National Iranian Tanker Company, one of the biggest shipping companies in the world, as a vessels’ demurrage and freight account, controller and vessels’ operator from March 2004. In 2017 she reached her Master’s degree in Information Technology from Payam Noor University of Tehran. The title of her Master’s thesis was assessing the effective factors in the acceptance of Internet of Things technology in smart buildings. She researches in (1) Information Technology (2) Human Resources and Business Administration.

Author Email: [email protected]

………………………

Ling Zhao is a bachelor degree student, born in Jianshui, Yunnan, China, on May 3, 2002. She is currently studying at Business College Southwest University, one of the country’s 100 key national universities. She studies two majors: international economics and trade; the minor is psychology; and she used to be an art student. 

In 2021, in her first academic year, she won the “National Inspirational Scholarship” and the honorary title of “Merit Student.” and received second-class financial aid from the school. She has a particular interest in the areas of Human Resources and Business Administration, Industrial and organizational psychology, and Organizational Behavior and Organizational Studies with a particular emphasis on “psychological and social influences on work behavior.” She also intends to research “Healthcare Risk Management and Emergency and Disaster Management.”

Author Email: [email protected]

Silicon Valley Daily

Daily magazine for entrepreneurs and business owners

Back to top