A Non‐Proxied Empirical Investigation of Cultures Effect on Corruption

• Published date: 01 June 2018
• DOI: http://doi.org/10.1111/basr.12142
• Date: 01 June 2018

A Non-Proxied Empirical

Investigation of Cultures

Effect on Corruption

DEKUWMINI MORNAH AND RAYMOND J. MACDERMOTT

ABSTRACT

We empirically examine the effect of two measures of cul-

ture, the World Values Survey and Hofstede’s six dimen-

sions, on three measures of corruption, Transparency

International’s CPI, the International Country Risk Guide,

and the World Bank’s Corruption Index. By adopting

three measures of corruption and using a large data set

covering many countries over many years, we offer more

robust results as to the effects of aspects of culture on

corruption. Using the World Values Survey, we find that

Trust in society, Control over one’s destiny and Respect

for others decrease corruption while Obedience increases

corruption. We find strong evidence that societies charac-

terized by high Power Distance and Masculinity are more

corrupt. Some evidence is found to indicate Long Term

Orientation, Indulgence, and Individualism have a nega-

tive effect on corruption. The effect of Uncertainty Avoid-

ance on corruption is unclear. The results have

Dekuwmini Mornah is an Assistant Professor in the Department of Economics and Business,

Virginia Military Institute, Lexington, VA. E-mail: mornahd@vmi.edu. Raymond J. Macdermott

is a Professor in the Department of Economics and Business, Virginia Military Institute, Lex-

ington, VA. E-mail: macdermottrj@vmi.edu.

V

C2018 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by

Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford OX4 2DQ, UK. DOI: 10.1111/basr.12142

Business and Society Review 123:2 269–301

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implications for international business leaders as well as

policy makers.

INTRODUCTION

On October 31, 2014, Blaise Compaore, the President of

Burkina Faso was forced to resign through violent demon-

strations after he attempted to flout the constitution and

extend his 27-year rule of the country. Corruption and manipula-

tion of the judiciary has been cited as the reason for the violent

uprising that forced him out of power. The Arab Spring which

began in 2010 ousted leaders in Tunisia, Egypt, and Yemen with

major protests and civil uprisings occurring in more than a dozen

other countries. In all these uprisings, political corruption is widely

speculated to be the main cause as demonstrated by Wikileaks dip-

lomatic cables.

1

While corruption—defined as the misuse of public

office for private gain—is difficult to measure, perceptions of cor-

ruption are measurable. Perception of corruption in Burkina Faso,

Tunisia, Egypt, and Yemen as reported by Transparency Interna-

tional’s corruption index from 2005 to 2015 averaged between 7.0

and 8.2 on a scale of 0–10; where 0 is least corrupt and 10 most

corrupt.

2

However, other countries in similar or worse circumstan-

ces and with high political corruption were relatively stable during

this period. What makes some countries react more strongly to

political corruption than others and why is this relevant for busi-

ness? All things being equal, the different reactionary effects from

countries of similar political corruption levels suggest differences in

cultural orientations are probable causes (Ashour 2006; Olken

2005; Seleim and Bonti, 2009).

In this article, we seek to empirically examine the question: “Can

cultural and social orientations explain differences in national cor-

ruption levels?” Which aspects of a country’s culture will grow cor-

ruption and which aspects stifle corruption? Using 3-year

averages, we construct a panel data set covering upwards of 80

countries and 15 years with three measures of corruption, mea-

sures of culture from the World Values Survey and Hofstede’s six

dimensions of culture as well as other control variables. We adopt

recent innovations in econometrics to assess the effect of cultural

270 BUSINESS AND SOCIETY REVIEW

orientations on corruption across countries. Apart from using the

most comprehensive data set to date to test the relationships

between culture and corruption, this study is novel in using the

World Values Survey to assess the effects of aspects of culture on

corruption. In addition, the study provides more robust results by

using different but highly correlated measures of corruption as well

as different estimation methods. This article will also add to the

debate of whether some religions encourage corruption by their

perceived teachings and how those teachings are predicted to influ-

ence corruption.

Why is the question of culture and corruption important for pol-

icy makers and business leaders? The negative effects of corruption

on socio-economic development (Mauro 1995; Mo 2001), institu-

tional capacity (Collier 2002), human capital (Svensson 2005), gov-

ernment stability (Kaufmann et al. 2003; Rose-Ackerman and

Palifka 2016), international trade (De Jong and Bogmans 2011;

Thede and Gustafson 2012), foreign direct investment (Cols and

Rodr

ıguez-Pose 2017; Mornah and Akpandjar 2015; Zhao, Kim,

and Du 2003), trust in government (Chang and Chu 2006; Shleifer

1997), and globalization (Glynn, Kobrin, and Naim 1997; Lalountas

et al. 2011; Park and Khanoi 2017) are well documented. The drive

to be competitive in global markets and to rid global business of

unethical practices has led governmental, non-governmental, and

international organizations to continuously craft policies aimed at

curbing corruption and promoting an ethical culture in interna-

tional business (Getz and Volkema 2001). Because of these efforts,

it is important for policy makers and business leaders to under-

stand the cultural antecedents of corruption as they craft policies

to curb corruption or business deals to mitigate the risks of

corruption.

The majority of the research on the causes of corruption have

focused on the socio-economic factors. For instance, more devel-

oped countries have been found to be less corrupt (Treisman

2000). Countries that practice common law legal systems or are

former British colonies are found to be less corrupt (La Porta,

Lopez-de-Silanes, Shleifer, and Vishny 1999; Treisman 2000,

2007). Openness to trade has been found to have a negative effect

on corruption (Ades and Di Tella 1999; Mornah and Akpandjar

2015; Treisman 2000, 2007) while countries with longer running

democracies are less corrupt (Treisman 2000). However, the

271MORNAH AND MACDERMOTT