Overview

Title

WICKED WEBS: BUSINESS PARTNER NETWORKS AND SILENCE
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Track

B – SDGs and Scientific Research

Authors

Name
1 - Ana Carla Bon
Pontifícia Universidade Católica do Rio de Janeiro - Nucleo de Estudos em Organizações Sustentaveis - IAG
2 - sylvia therezinha de almeida moraes
PONTIFICAL CATHOLIC UNIVERSITY OF RIO DE JANEIRO -
3 - JORGE F DA SILVA
PONTIFICAL CATHOLIC UNIVERSITY OF RIO DE JANEIRO - BUSINESS SCHOOL

Abstract

One of the most insidious forms of unethical behavior and illegality is corruption, which has become a serious problem, especially in poor and emerging markets, and has a direct impact on the achievement of sustainable development goals. Corruption affects investments and economic growth, exacerbates inequality (LI; XU; ZOU, 2000; MAURO, 1995), drains financial resources from healthcare and education (MAURO, 1998), exerts pressure on environmental controls and policies (ESTY; PORTER, 2002), supports oligarchic control (FOGEL, 2006), and increases risks and uncertainty (GETZ; VOLKEMA, 2001). As Baughn, Bodie, Buchaman and Bixby (2010) argued, the level of bribery can be seen as a function of both supply (payers, corporations) and demand (recipients, e.g. government), and individual firms can, in fact, benefit from it (GALANG, 2012; MELO; SAMPAIO; OLIVEIRA, 2015). Therefore, it is fundamental to prevent corruption in order to advance the implementation of sustainable development goals. In Brazil the situation is endemic, as reflected by everyday headlines, such as the eye-opening cases involving PETROBRAS and Odebrecht. A KPMG survey of 500 executives at top Brazilian firms revealed that an astonishing 62% of respondents admitted that their companies might be engaged in corruption, and an even higher percentage, 85%, believed that their competitors might also be willfully engaged in such behavior. Moreover, in 2013 PWC surveyed 132 firms in Brazil and found that 27% admitted to having engaged in some type of unethical behavior, for example, bribery, fraud, and/or asset deviation (TORRES, 2014). However, this phenomenon is not restricted solely to Brazil or Brazilian companies (GARRET, 2014). As Ashforth, Gioia, Robinson and Trevino (2008, p. 670) summarized: “Corruption, it seems, is everywhere.” Some researchers have investigated the causes of corruption and ways to prevent it (GALANG, 2012; NICHOLLS-NIXON; CASTILLA; GARCIA, 2011). In Brazil, research on business corruption is just getting started, and thus far, however, few (e.g., MELO et al., 2015; MIARI; MESQUITA; PARDINI, 2015) have focused on the corporation side as a source of bribery. Scholars have also taken different approaches, such as the macro perspective, analyzing the impact of country level factors – economic, social and cultural – on corruption (e.g., LÓPEZ; SANTOS, 2014). Others have analyzed the option for a strategy that includes corruption (e.g., RODRIGUEZ; UHLENBRUCK; EDEN; 2005). The fact is that so far research has shown that different factors – individual, organizational, situational – can contribute to unethical situations and corruption (KISH-GEPHARDT; HARRISON; TREVINO, 2010; O’FALLON; BUTTERFIELD, 2005; PENDSE; 2012). One situational factor that can serve as a means for corruption is the social network. Indeed, certain scholars have called attention to understanding which social network might be most likely to promote corruption and fraud (BRASS; BUTTERFIELD; SKAAGS, 1998; NIELSEN, 2003, HUANG; RICE, 2012). Corrupt individuals and/or organizations can develop alliance networks, using their social capital (power, influence, information) to “outsource” bribes (SPENCER; GOMEZ, 2011). On the other hand, non-corrupted individuals may feel the need to remain silent in light of such deviation in firms in other not to lose their own social capital (MILLIKEN; MORRISON; HEWLIN, 2003). But keeping quiet fosters a snowball effect where corruption is acceptable. It also increases the perceived behavioral tolerance of future acts of corruption, thereby creating an incentive for further unethical actions (CHANG; LAI, 2002; MUEHLHEUSSER; ROIDER, 2008). This study suggests that researches should look beyond the more often visible positive effects of alliances and social networks, to investigate how wicked webs can develop an efficient corrupted system. Bridging social network and alliances’ areas of research with focus on the “dark side”, this theoretical review proposes three pillars to understand and prevent corruption: first, it is important to focus on the internal networks of the firm (the groups within the firm) that support a strategic decision to commit unethical acts; second, it is fundamental to understand the “wicked webs” that alliance networks can build, and how these are connected with the firm (the inter-firm connection); and lastly, the social network can be a valuable tool to understand why people do not even want to talk about ethical issues, let alone blow the whistle (considering that there are mechanisms available for doing so). The conclusion of this study includes a discussion of theoretical contributions, practical implications, and suggestions for future research.