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Unformatted text preview: Academy ol Management Executive. 2004, Vol. 18. No. 2 Business as usual: The acceptance and perpetuation of corruption in organizations Vikas Anand, Blake E. Ashforth, and Mahendra Joshi 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. In the past, fraud was viewed as a rare event that happened to unlucky organizations. Now it is commonly accepted that fraud is taking place at virtually every organization, every business. The only question is ho'w big it is and how can we catch it before it gets out of hand and destroys a company or organization as it has done with some companies recently, such as Enron." (Tony Bishop, President of the Association of Certified Fraud Examiners)^ // we look wifhin the oiganization and iden- tify the individual who seems most closely connected with the harm — for instance, the foreman who orders the workers down the dangerous mine shaft or the corporate execu- tive who orders the marketing of an unsafe drug —we do not find an individual whom we recognize as evil but someone who looks rather like us.'^ The intense focus on corporate corruption started by Enron and WorldCom has continued with more recent discoveries of fraud in other organizations such as Tyco, HealthSouth, and Parmalat. A nota- ble and disturbing feature of these and many other corruption cases is that they did not result from the actions of single individuals; the corrupt acts typ- ically required knowing cooperation among nu- merous employees. Employees typically went along with activities that were obviously unethi- cal. Most such acts were committed by individualscal....
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This note was uploaded on 01/27/2011 for the course SOM 301 taught by Professor Staff during the Spring '08 term at George Mason.
- Spring '08