By Abdi Ali
Published December 11, 2019
Honesty and strong leadership in government, not financial incentives and criminal punishment, are what will help society in rooting out corruption in business.
A study by University of Birmingham in Britain shows that Government leaders must set a good example to the business community if they want to eliminate corporate corruption.
Professors Amon Chizema and Ganna Pogrebna of Birmingham Business School, in a study titled The impact of government integrity and culture on corporate leadership practices: Evidence from the field and the laboratory, argue that corporate governance choices made by business leaders are directly related to government integrity. Dishonest practices are more likely in states where the government operates in a way that is dishonest or unethical.
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The researchers, whose findings have been published in The Leadership Quarterly, have also demonstrated that leaders are more likely to make honest decisions and abstain from bribery and tax evasion when asked what a good leader would do in a particular business situation.
“The world craves credible and sincere leadership. Our policies need to shift from financial and legal solutions of the corruption problem to influencing leadership values and culture at all levels of the society,” says Professor Pogrebna.
When listing most important values in the desirable leadership culture, experimental participants named “credibility” as the most important characteristic of a good leader. Experimental study results demonstrate that Chief Executive Officers (CEO) are more likely to cheat in a corrupt environment than in a transparent one.
Where government integrity is low, the corruption problem arises from a gap between what is right and what is mandated by law. This gap may be bridged by instilling acceptable social norms in corporate leaders.
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Professor Chizema said: “Humanity has grappled with corruption for decades with many solutions proposed, yet the most widely-used toolkit involves regulation, law enforcement and economic measures, which have failed to eradicate dishonest business practices.”
“Governments need to get it right first before expecting corporate citizenry to do the right thing. Norms often precede legislation but are supported, maintained and extended by laws. If those with power to change societal norms do not have the interest or motive to do so, corporate leaders may continue to make bad corporate governance choices and decisions.”
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The researchers at one of the world’s top 100 institutions whose work is said to attract researchers and teachers and more than 6500 students from more than 150 countries, argue that the effect of government integrity must be taken into account – alongside company and CEO characteristics, plus corporate governance mechanisms – when analysing corporate leadership performance.
