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How Good Organizations Go Bad

Bankruptcy, scandal and indictments seem to dominate business reporting as new instances of corporate corruption come to light daily. Organizational corruption is widespread, and is far more costly to society than street crime, according to assistant professor of management Vikas Anand.

“In most instances, the behavior creeps up on people. They are not intentionally evil, and they don’t start out to be corrupt, but there are processes that take over and make their behavior seem normal,” said Anand.

Anand and Blake Ashforth, Chapman Professor in Business Management at Arizona State University, identified three mutually reinforcing processes that underlie the normalization of corrupt practices: institutionalization, rationalization and socialization. Their model uses these processes to explain a variety of behaviors, including how morally upright individuals can routinely engage in corruption without experiencing conflict and how rational organizations can engage in “suicidal corruption.” It will appear in the 2004 edition of Research in Organizational Behavior.

Ashforth and Anand agree that organizational corruption is best addressed by prevention. They believe that leaders should institutionalize ethical values and awareness at all levels and hold individuals at all levels accountable for the means as well as the ends. Organizational practices should be made more transparent through practices like ethics audits or confidential hotlines, and employees should have access to the confidential advice of ethics officers and a non-threatening avenue for reporting corrupt practices, such as an independent ombudsman.

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