1_Good Public Governance

Financial Accountability & Management, 30(1), February 2014, 0267-4424

An Institutional Theory Perspectiveon Corruption: The Case of a

Developing Democracy

SOMA PILLAY AND RON KLUVERS∗

Abstract: The purpose of this paper is to use quantitative data to describecorruption in the SANPS, and use Luo’s (2005) institutional theory to gain insightsinto how corruption develops and remains entrenched despite the introduction ofanti-corruption legislation. A total of 1,500 questionnaires were distributed to publicservants in nine provinces, but predominantly in Kwa Zulu Natal and Gauteng.There were 702 returned giving a response rate of 47%. We conclude that thefindings discussed in this paper lend support for Luo’s theoretical model being ableto provide insight into the development of corruption, its consequences and possibleremedies.

Keywords: corruption, institutional theory, task environment, institutional environ-ment

INTRODUCTION

There is no scarcity of scandals that illustrate the depth and pervasiveness ofcorruption in developing democracies such as South Africa. In the wake of thesescandals awareness has grown of the social, political and economic costs resultingfrom corruption. According to Misangyi et al. (2008) there are two alternativeframeworks that have dominated research into corruption. First, the economicperspective is concerned with the influence of rational self-interest, efficiencyand formal regulative structures in explaining the development of corruption.They go on to argue that this approach provides limited results in combatingcorruption as it does not include the normative and cognitive structures. Whilethe second framework focuses extensively on culture, structures and cognition

∗The authors are respectively from the Faculty of Business and Economics, Monash University,Australia; and the Faculty of Business and Enterprise, Centre for Enterprise Performance,Swinburne University of Technology, Hawthorn, Melbourne, Australia. They would like tothank the anonymous referees for their helpful suggestions.

Address for correspondence: Soma Pillay, Faculty of Business and Economics, MonashUniversity, Australia.e-mail: [email protected]

C© 2014 John Wiley & Sons Ltd, 9600 Garsington Road,Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. 95

96 PILLAY AND KLUVERS

within organizations. Further, they suggest that the effective resistance ofcorruption must consider the complex relationships between institutional logics,resources required to sustain the elimination of corruption and the institutionalentrepreneurs who attempt to eliminate corruption.

This institutional approach to understanding corruption is used by Luo(2005) in the development of his model. Lou argues that many disciplineshave examined corruption but have not been able to address the organizationalcontext, behaviours and processes that support corruption. While Luo doesnot specifically use the terms institutional logics or institutional entrepreneurshe does examine corruption in an organizational context taking the cultural,structural and behavioural aspects into account. While Luo’s (2005) focus is oncorruption in private commercial organizations most corruption takes place inthe public sector (Abdulai, 2009) and he has called for studies to be undertakenin different contexts. This study seeks to assess the applicability of Luo’s modelto the public sector in a developing democracy, namely South Africa.

Post apartheid South African society is still to a large extent in transitionbetween the past regime and a democratic dispensation. As a result, SouthAfrican public servants are confronted by principles and philosophies of the pastand the introduction of a new value system. The possibility that the transitionprocess is facilitating the growth of corruption provides an impetus to devisesystems of governance based on empirical research that may address the scourgeof corruption. This has proved to be a difficult task and academic contributionsin this domain are, as yet, limited. In part this is due to published literaturelagging behind policy debates. A bibliographic search of electronic databasesfailed to identify any academic publications based on empirical studies in thearea of corrupt behaviour in developing democracies such as South Africa. Giventhe comments made by Misangyi et al. (2008) an institutional perspective wasconsidered appropriate for this study.

We begin with a conceptual framework in which we discuss institutionaltheory and its applicability to the study of corruption in organizations. Wealso briefly consider the New Institutional Theory (NIT) in particular the roleof institutional logics and institutional entrepreneurs and how they underscoreLuo’s model. Luo’s theoretical model is described and our modifications to hismodel explained. Next we discuss the South African Scenario. This is followedby a discussion about the South African public service in which we examinethe official attempts to counter corruption in the SANPS. We describe theresearch method used to gather the data. This is followed by a report of ourfinding. Finally, we draw conclusions about the usefulness of Luo’s model andan institutional perspective for the study of corruption.

CONCEPTUAL FRAMEWORK-INSTITUTIONAL THEORY

Internationally the fight against corruption has received a great deal ofattention. Misangyi et al. (2008) argue that an economic perspective focusing

C© 2014 John Wiley & Sons Ltd

AN INSTITUTIONAL THEORY PERSPECTIVE ON CORRUPTION 97

on rational self-interest, efficiency pressures and regulative structures has hadlimited success explaining and developing tools to resist corruption. One suchexample of an economic perspective is agency theory. According to a principal-agent analysis corrupt exchanges encourage private gain in the making of publicdecisions (Bull and Newell, 1997). The analysis examines the relationships thatexist among three protagonists: the citizen, the principal (a government), andan agent (a public official) who manages the relationship between the citizenand the government (Becker, 1968; and Klitgaard, 1988). The monopoly powerof agents and the degree of discretion they enjoy in exercising their powercreate a formidable information barrier between the principal and the agent.Under these circumstances, agents are assumed to be more prone to corruptionif they enjoy a complete control over an activity, have wide discretion in decisionmaking and little accountability (Riley, 1998). According to Klitgaard (1988),the degree to which officials have an opportunity to garner corrupt benefits is: (i)positively associated with their degree of monopoly over a service or activity andtheir discretion in determining the distribution of resources; and (ii) negativelyassociated with the level of accountability associated with their activities. Luo(2005) goes on to state that:

the person being bribed must necessarily be acting as an agent for another individualor organisation because the purpose of the bribe is to induce him to place his owninterests ahead of the objectives of the organisation for which he works (p.123).

Therefore the agent transfers his allegiance to another principal. Luo extendsthis argument further by maintaining that it is through a weak task andinstitutional environment that the agent is able to transfer his allegiance. Thisis so because strong monopoly powers and control, information asymmetry,lack of transparency and institutional complexity allows the agent to exploitopportunities to enhance his own interests. Further, it is argued by Klitgaard,(1988) that ‘principal-agent’ analysis suggests that the larger the gains, thegreater the possibility for corruption. However, with higher stakes, strongermoral constraints might be aroused, and the stronger a society’s moralinhibitions, the lower the likelihood of an individual succumbing to thetemptation of corruption. Klitgaard’s (1988) contribution thus emphasised theeffect on the agent working in an organization with strong moral values andstandards. However, where the dominant culture has weak moral constraintsthen there is a greater possibility of corruption occurring.

Misangyi et al. (2008) argue for an organizational perspective focusingon culture, structure and cognition within organizations as a means forunderstanding the development of corruption. Corruption takes place withinand between organizations. Corrupt behaviour is facilitated or resisted byorganizational structures; corruption is encouraged or discouraged by anorganization’s dominant culture. Thus corruption must be understood atthe organizational level if it is to be successfully resisted and Luo (2005) speaksof organizational corruption and defines corruption as:



an illegitimate exchange of resources involving the use or abuse of public or collectiveresponsibility for private ends (p.121).

Luo’s model, describes the interaction between structure, culture and behaviour.Luo (2005) has attempted to reflect the dynamic relationship between

organizational environments, the behaviour of individuals, outcomes andorganizational architecture. He argues that an organization is the basic unitin which corruption can develop through unchecked opportunistic behaviour.Luo’s model provides an explanation of the development of corruption by usinginstitutional theory to explain the links between the task and institutionalenvironments the consequent malfeasant behaviours, the possible outcomes ofthose behaviours and the anti-corruption systems an organization might use tocounter corruption.

It has been suggested that an interdisciplinary perspective should be usedin analysing the social and cultural dynamics of corruption (Collier, 2002; andPaldam, 2002). Given the diversity of variables involved, it is perhaps surprisingthat the studies that examine corruption across nations (Husted, 1999; Sung,2002; Treisman, 2000; and Xin and Rudel, 2004) have considered corruptionto be a one-dimensional and static construct, whilst others (Rodriquez et al.,2005) have contended, that corruption is multi-dimensional. Rodriquez et al.(2005) concludes, and Luo appears to agree, that the relationship betweenorganizations and corruption is multi-dimensional since corruption becomesembedded as an element of the norms and rules used by organizations and, thus,affect an organization’s legitimacy. The multi-dimensional nature of corruptionin South Africa makes the use of Luo’s model an appropriate and relevantone.

According to Dacin et al. (2002) institutional theory has been used to explainboth individual and organizational actions including aspects of administrativeand management practice (Tolbert and Zuckein, 1983). These organizationalbehaviours reflect a culture that evolves over time and becomes legitimisedwithin an organization and society (Eisenhardt, 1988). Corruption becomesentrenched by this legitimizing process. According to Kamoche and Harvey(2006) institutional theory is predicated on the willingness of individuals andgroups to follow predetermined acceptable patterns of behaviour that aresupported by society. In the case of corruption it is not so much societies supportrather it is the lack of support of an anti-corruption culture; particularly politicalsupport. Abdulai (2009) contrasts the political support given to anti-corruptionmeasures in Singapore and Hong Kong with the lack of political support inGhana.

The core premise of institutional theory is that organizations aspire toexternal legitimacy by complying with their institutional context (Glynn andAzbug, 2002). In the present context, Rodriguez et al. (2005) contended thatcorruption affects organizational legitimacy through its effects on formal andinformal activities. Other influential theories of the causes of corruption tend



to concentrate on the organizations that house corrupt officials (Xin and Rudel,2004).

However, the literature on institutional theory provides little insight intothe specific process by which the internal environment of organizations allowscorruption to develop. We believe that Luo (2005) explains how corruptionbecomes institutionalised. According to Scott (2001) an institution is a stableset of rules supported by surveillance and sanctions. He goes on to say thatthere are three pillars that support and describe institutions. The regulativepillar is based on rational behaviour that is in the individual’s self interest byconstructing structures that will control one’s own behaviour and that of others.The second pillar sees institutions as predominantly normative. However, somenorms only apply to particular individuals or positions. The third pillar is thecognitive pillar in which symbols such as words, gestures and signs are used toconvey meaning to objects and activities enabling individuals to interpret them.

Following from Scott (2001), Kamoche and Harvey (2006) go on to argue thatthe informal rules and regulations of a society are linked directly to a society’sculture and sub-cultures. Further, these informal rules and regulations helpcontrol behaviour of members of the group by indicating acceptable interaction,norms, roles, and behaviours in prescribed social settings. Behaviour is guidedby specific social institutions as well as by the general culture. Implicit valuesand norms are derived from those with whom one has frequent face-to-facecontact and specify ‘how things are done’. The introduction of explicit anti-corruption rules will have little effect if the implicit values and norms supportingcorruption are supported by powerful individuals and have become entrenched.The practices of the past have become embedded in South Africa’s publicsector culture and organizations making it difficult to implement anti-corruptionmeasures.

This point was reinforced by ter Bogt (2008) in his research examiningaccounting change in Dutch local government. He argued that routines are‘rooted’ in the organization’s values and traditions, and that the role ofindividuals and subgroups in fostering or inhibiting change should not beunderestimated. Thus, it would be expected that the changes designed tocurb corruption as a result of a new South African constitution and anti-corruption laws would be resisted by those in the public service who hadgained from the established organizational culture. Further, Modell (2001) hasshown that managers are likely to act proactively to counter externally imposedrequirements. Anti-corruption measures will not be supported, resources willnot be allocated to fight corruption and an anti-corruption culture will not beencouraged.

Similarly, Ostergren (2006) concluded that the strength of the parties involvedin negotiating change seemed to be the most significant element in the process,as the strongest party wins. Therefore, anti-corruption legislation will be ignoredif it is perceived to have little support from those with power. However, in thecase of Hong Kong and Singapore the opposite was true and powerful support



was given to anti-corruption measures (Abdulai, 2009) thus institutionalizinganti-corruption values and behaviour.

Misangyi et al. (2008) argued that the effective curbing of corruptioninvolved the interplay between institutional logics, resources and institutionalentrepreneurs. According to Thornton and Ocasio (1999) institutional logicscan be described as defining the content and meaning of institutions andare concerned with shaping organizational structures which are shaped bycultural rules and cognitive structures. They go on to argue that the focusof institutional theory is not only on isomorphism but rather on the effects ofdifferent institutional logics. Thornton (2004) points out that while institutionallogics shape rational behaviour, individual and organizational actors in turninfluence institutional logics.

Changing the institutional logics of an organization often requires theinvolvement of an institutional entrepreneur. According to DiMaggio (1988)institutional entrepreneurs are agents of legitimacy that help to create andsupport institutions considered to be aligned with their interests, in this case apattern of behaviour that encourages and entrenches corruption. The creationof institutions requires legitimacy, a condition resulting from the fact thatalternatives are perceived to be less appropriate, desirable or viable (Docinet al., 2002). Misangyi et al. (2008) argue for the need to change organizationallogics to fight corruption through institutional entrepreneurs. In particular,they insist that corruption will persist as long as identities and schemas thatguide practice are not addressed. In addition anti-corruption reforms must bechampioned by institutional entrepreneurs who legitimate the new institutionallogic that supports anti-corruption reform. Finally, the reformers must haveresources, both symbolic and material, to sustain the new institutional logic.The inter-play of these elements is described by Yadong Luo’s institutionalmodel.

LUO’S INSTITUTIONAL MODEL OF CORRUPTION

Many studies of corruption have focused on the impact of the macro-environmenton state- level corruption. However, Luo’s study focused on influences in theorganizational environment that enable organizational corruption to develop.Luo argued that corruption was encouraged when uncertainty and powerconcentration occurred with regulation and institutional pressures, such asopaqueness, injustice and complexity. Organizational architecture, resultingfrom the interaction between culture, structure and system, determined howeffectively an organization can actively resist corruption. Without this archi-tecture, organizations would be subject to organizational deficiency, strategicimpediment, competitive disadvantage and evolutionary hazards, all caused bycorruption.

According to Luo (2005) the task environment consists of information,external resources or conditions that may affect the setting or attainment of



strategy. The task environment is made up of oligopolistic intensity, whichrefers to the market power of a company and is more appropriate in a businesssetting. In the public sector it relates to the concentration power in governmentagencies. Regulatory control relates to the degree of intervention by authorityinto policies and the access to resources. Luo goes on to state that excessiveand poor regulatory control can lead to ambiguity for businesses dealing withthe public sector. But we argue that ambiguous regulatory control can lead toconfusion amongst public servants.

In Luo’s model structural uncertainty refers to the extent of an industry’sstructural attributes that are subject to volatility because of governmentinterference or changes in government policy and implies a lack of sufficientinformation. We have modified the definition of structural uncertainty to meanthe uncertainty within the public service as a result of changes in governmentpolicy the lack of clear direction and the lack of information upon which to basesactions.

The institutional environment facilitates or curbs organizational corruptionand is made up of three elements; transparency, fairness and complexity.Transparency refers to the degree that regulatory systems are open andeasy to understand. Luo argues that opaqueness gives government agenciesand individual public servants the ability to interpret ambiguous rules andrequirements thus opening the way for corrupt behaviour. Fairness describesthe extent to which regulatory systems are applied in a just, impartial andnon-discriminatory manner while complexity refers to the complexity of boththe regulatory systems and the socio-cultural environments being complicated,difficult to understand and to comply with. Such an environment encouragesmalfeasant behaviours. Malfeasance is opposed to ethical behaviours andviolates the rules and corruption becomes manifest through various malfeasantbehaviours.

Luo lists four types of malfeasant behaviour:

1 System malfeasance that exists when corrupt and illegal acts take placeacross the organization;

2 Procedural malfeasance exists when an organization’s formalized ethicsprocedures are not strictly adhered to by some employees at some levels;

3 Categorical malfeasance occurs when many corrupt practices occur inone or two teams, departments, sub-units or functions;

4 Structural malfeasance occurs when most hierarchies are involved incorruption that is relatively minor in quantity and gravity.

Malfeasant behaviours can result in the development of deterrent outcomes suchas the undermining of strategy, a lack of strategic focus and the organizationbecoming weakened and unable to adequately respond to its environment.



Figure 1

Luo’s Institutional Perspective of Corruption: A Theoretical Model(p.121)

Institutional Behaviour Reflecting Corruption

Institutional Consequence Generated by Corruption

Institutional Architecture Resisting Corruption

Task Institutional Environment Environment 1. Oligopolistic 1. Institutional

intensity transparency

2. Regulatory 2. Institutional control fairness

3. Structural 3. Institutional uncertainty complexity

Malfeasant Behaviour1. System

malfeasance2. Procedural

malfeasance3. Categorical

malfeasance4. Structural

malfeasance

Deterrent Outcomes that may occur1. Evolutionary

hazards2. Strategic

impediment3. Competitive

disadvantage4. Organizational

deficiency

Anti-Corruption System at the Organizational Level1. Organizational

culture2. Organizational

structure3. Compliance

system

Institutional Environment Shaping Corruption

Figure 2

A Modified Institutional Perspective of Corruption

Institutional Behaviour Reflecting Corruption

Institutional Consequence Generated by Corruption

Institutional Architecture Resisting Corruption

Task Institutional Environment Environment1. Power 1. Institutional

concentration transparency

2. Regulatory 2. Institutional control fairness

3. Structural 3. Institutional uncertainty complexity

Malfeasant Behaviour1. System

malfeasance2. Procedural

malfeasance3. Categorical

malfeasance4. Structural

malfeasance

Deterrent Outcomes that may Occur1. Evolutionary

hazard2. Strategic

impediment

3. Organizational deficiency

Anti-Corruption System at the Organizational Level1. Organizational

culture2. Organizational

structure3. Compliance

system

Institutional Environment Shaping Corruption

In Luo’s model deterrent outcomes include evolutionary hazards, strategicimpediments competitive disadvantage and organizational deficiencies

The term evolutionary hazards refer to the legal consequences for corruptindividuals and organizations; in particular the organization’s tarnished imageresulting from the perception that corrupt behaviour is present in the organiza-tion. Strategic impediment includes the misallocation of resources, limitationson capability, and a lack of confidence. Organizational deficiency results in a



lack of innovation, efficiency, transparent and effective communication. We havenot included ‘competitive disadvantage’ in our discussion simply because we aredealing with the public sector, whereas Luo has based his model on business.

As shown in Figure 1 above, the final part of Luo’s model describes theorganizational anti-corruption system that includes culture, organizationalstructure and the compliance system. Corporate (organizational) culture,according to Luo, sets the moral tone in an organization and includes suchelements as vision statements, social rituals, values, role models, customs andslogans. Of particular importance is a clear, detailed anti-corruption statementthat can be used by management in day-to-day decisions. Such statements areseen as resources that can be used by institutional entrepreneurs (Misangyiet al., 2008). Organizational structures can detect and correct misconduct as theorganization’s structure determines the content of jobs, establishes monitoringsystems and regulates the way tasks and responsibilities are fulfilled. Thecompliance system enables active resistance to corrupt practices through theestablishment of a code of conduct and a compliance program. According toLuo, compliance programs consist of training, due diligence and formalizedprocedures and should bring the behaviour of organizational members into linewith the shared ethical standards and regulations.

The encouragement of whistle-blowing can reveal malfeasant behaviouragainst the compliance system. However, whistle-blowing will only occur if itis supported by the organization’s culture and leadership. Legislation alonewill not provide sufficient protection for a public official who wishes to makea disclosure about wrongdoing (Fennely, 1998). Whilst whistle blowing hasenormous potential as a mechanism for exposing and controlling misconduct,there are costs associated with the decision to blow the whistle. It can conflictwith an organization’s culture, traditions of loyalty to superiors and solidaritywith colleagues. Indeed, reporting wrongdoing often backfires, whistle blowersbecome victims, they are often considered disloyal and not ‘team players’, withtheir careers usually suffering (Finn, 1995; and Glazer and Glazer, 1989). Co-workers who fear retaliation from managers may also avoid whistleblowers(Miceli and Near, 1992) or feel that the whistleblower has revealed weaknessesin the organizational structure. Luo’s model provides a multi-dimensionalframework with which to understand the interplay of forces that might impacton anti-corruption measures such as whistle blowing and enables an assessmentto be made of the vulnerability of the SANPS to corruption.

THE SOUTH AFRICAN SCENARIO

In post apartheid South Africa, attempts have been made to address corruptionthrough the introduction of anti corruption laws, and a new constitution whichis seen to be part of the principles of the African renaissance (Makgoba,1999). However, the anticipated results expected from the introduction ofsuch measures, have not been forthcoming. The power of the entrenched



informal structures is such that initiatives such as the principles of the Africanrenaissance, anti-corruption legislation, codes of conduct and the post apartheidconstitution have been resisted. Measures have been introduced to promoteaccountability and good governance. Despite these developments, concernsabout public sector reform in South Africa have intensified in recent years(Adebajo et al., 2007; and Mavuso and Balia, 1999). There have been calls forgreater efficiency, transparency, and integrity in public organizations — drivenby the realization that poor governance in the SANPS contributes to the unequaldistribution of opportunities and that corruption threatens effective government.

In this regard, the distinctive nature of South Africa’s history cannot beignored. With the advent of inclusive democracy in 1994, the newly electedgovernment inherited a system of governance with institutions that were indirect conflict with the imperatives of good government (Adebajo et al., 2007;and Mavuso and Balia, 1999). In particular Lodge (1999) has contributed to theongoing discourse attempting to understand and document this crucial periodin the life of the country. Lodge noted that the failures of specific governmentorganizations had much to do with the country’s historical legacy. That is, mostof the provinces (states) that experienced administrative inefficiency and a slowpace of service delivery came about through an amalgamation of previouslyseparated administrations. For instance, the merger of the former homelands,Transkei and Ciskei into Eastern Cape required considerable work to ensure theeffectiveness of the new institution. Administrative inefficiency was reinforced bythe failure of the ruling party, the ANC, to effectively co-ordinate its provincialstructures, therefore reducing the ability of local networks to fight againstcorruption.

Concerns about ineffective public administration and poor governance werelinked to various organizational environments. An example of this concern wasillustrated by the Ministry of Economic Affairs’ Reconstruction and DevelopmentProgram, an economic policy strategy focusing on poverty alleviation andeconomic development. The policy did not live up to expectations of stakeholders.Different sectors of society had a different understanding and interpretation ofthe content and objectives of the Reconstruction and Development Program(RDP). For the leaders of the Congress of South African Trade Unions(COSATU), the RDP would go a long way to achieve economic developmentthrough state intervention in the economy. On the other hand, for membersof big businesses, the RDP represented a less expensive state, and bettereducated and productive workers. The expectations of the general public werefor more jobs, proper housing and access to basic infrastructure. Considerableadvances were made thus ensuring that at least basic needs like water supplyand electricity provision were met. However, many of the other objectives of theRPD have not been met. The apparent lack of success of this program can belinked to poor governance.

It has been noted through the years that the lack of co-ordination betweenthe different spheres of government, have hampered good governance (Pillay,



2008). The lack of good governance has been manifested in various processessuch as municipal elections and the delivery of services. The problems associatedwith poor governance provided the impetus for the reconstructive foundation ofan African revival, termed the ‘African Renaissance’.

The term ‘African Renaissance’, as championed by the ANC broadly speaking,focuses on an ‘idea of modernity’ that maintains Africa’s revival will only comethrough the development of a liberal democracy (Makgoba, 1999). Mbeki (inMakgoba, 1999) however, maintained that the whole concept of the renaissancewould be incomplete and unreal if important issues of corruption, continuedpolitical instability, economic development and transformation, poor politicalleadership and ill focused economic policies, were not addressed. The AfricanRenaissance was seen as an attempt to create a better future that wouldovercome South Africa’s history, roots and current realities.

However, many politicians and public figures have difficulty defining theconcept. This was possibly because South Africa’s democracy was one wheredisagreement around the broad national agenda and reconciliation versus trans-formation continues to plague the fledging democracy. Historical developmentsled to the South African political economy inheriting three major characteristics:a profound and racially skewed distribution of wealth; a typical developingeconomy with the usual problems of poverty and an oversupply of unskilledlabour; and a narrow economic base. It is in this context that the issue ofcorruption is important. A further challenge, closely linked to the above, wasfor South Africa to overcome the vicious cycle of poverty where low savings andinvestment, low capital accumulation, very low levels of productivity and lowaverage income were continuously impacting on and reinforcing one another.

The social, political, cultural, and economic realities of South Africa arequite different from those found in many other developing democracies.The causes of poor governance are thus contextually rooted in the country’sbureaucratic traditions, political development, social history, and culturaldimensions. Important governance issues in the South African public servicehave included:

i. Undesirable social controls and antiquated laws. In the South Africanpublic service, many individuals, who, because of injustices in the past,have been deprived of a decent lifestyle, have aspirations to acquire alifestyle they felt entitled to. Often this is through weak social controlsand outdated laws.

ii. An inability to reduce inefficiency in the public service continuesparticularly in terms of the inability to deliver services as a result ofexcessive red tape and rigid bureaucracies.

iii. An excessive discretion for some in the public service. The more discretiona person has, the more senior the post they occupy and the more authoritythey exercise, the greater the opportunity for corrupt practices to occur.



iv. Defective administrative arrangements (including inadequate controls).The South African Public Service inherited a system where there wasa notorious lack of accountability. In addition, the previous exclusionof many of the homeland public service agencies from resources andthe inferior education and training given to their staff resulted in theunfortunate reality that many public servants were not adequately skilledand experienced to handle their responsibilities (Mavuso and Balia,1999).

Developments such as those described above help to explain how corruptioncan take hold and lead to malfeasant behaviour in public sector organizations.While anti-corruption legislation has been introduced it has been ineffective.Luo (2005) argued that while political scientists, legal scholars and economistscan point to the societal causes of corruption they do not have the toolsto understand corruption in its organizational context. Organizations are thebasic unit of corrupt practice and unless organizations are prepared to activelyresist corruption it is impossible for a society to overcome corrupt behaviour.The pervasiveness of corruption can be attributed to South Africa’s uniquehistory, ideologies, systems of governance and political structures and it canbe argued that these elements have helped institutionalize corruption in theSANPS.

CORRUPTION AND THE SANPS

Early in 2011, South Africa’s national police chief was accused of spendingtaxpayers’ money unlawfully. In another case, a Cabinet minister reportedlyused public funds to live in a luxury hotel and fly first-class. Within one province,Kwa Zulu Natal, twenty five cases, involving corruption have been investigatedin the 2009/2010 financial year (www.star-telegram.com).

Corrupt practices have become institutionalized and therefore entrenchedthroughout the SANPS. Informal structures (networks that are not accountableto anyone and that participate in illicit activities) have existed since colonialtimes (Phatak et al., 2005) and have influenced the development of South Africansociety (Makgoba, 1999). South Africa is a recent developing democracy andaccording to Transparency International (2009) remains one of the most corruptnations in the world. In post apartheid South Africa, attempts have been made toaddress corruption through the introduction of anti corruption laws, and a newconstitution which is seen to be part of the principles of the African renaissance(Adebajo et al., 2007; and Makgoba, 1999). However, the anticipated resultsexpected from the introduction of such measures, have not been forthcoming.The power of the entrenched informal structures is such that they can resistthe principles of the African renaissance, anti-corruption legislation, codes ofconduct and the post apartheid constitution.



Despite the introduction of the Constitution of the Republic of SouthAfrica, 1994, and the attempt to develop a public administration based ondemocratic principles, many still perceive the South African public serviceas being characterized by complex regulatory control, structural uncertainty,and lack of institutional transparency, unfairness and institutional complexity(Heath, 2000; and Mavuso and Balia, 1999). Against this background thedevelopment of systemic malfeasance (entrenched wrong doing across thesystem), procedural malfeasance (unfair and wrong procedures) and struc-tural malfeasance (structural injustices, structures that permit wrong doing)are not unexpected (Heath, 2000; Mavuso and Balia, 1999; and Mafunisa,2000).

The SANPS spans nine provinces and twenty six national governmentdepartments. The SANPS is a complex organization because of its history,culture and hierarchical structure. South Africa, as one of many African stateswas born out of a colonial system which was based on corruption, nurtured byinstitutions which violated human rights and thrived because of inequalities andinjustices (Lodge, 1999). It was often maintained that the ruling elite were morecommitted to their own interests. To sustain the consumptive colonial lifestyle,the ruling elite needed wealth which could not be made without dominationand exploitation of the very people they were expected to protect. Hence a non-accountable and non-transparent government in which democratic principleswere ignored developed and became entrenched.

Whilst considering the relationship between corruption and South Africa’straditional society, observers often point to the customary exchanges of gifts asan element in traditional life which has been thought to contribute to corruptionin modern times. There were and are many features of the traditional powerstructures which in the context of colonial and post colonial society contributeto the prevalence of corruption. South Africa has been unable to grow anddevelop as other nations of the world largely as a consequence of the legacy ofcolonialism (Mbeki, 2000). It has been argued that South African public servantshave attempted to adopt and internalize the qualities required for their rolesas administrators in modern liberal democracy, however, some have not beencompletely successful. Often public servants are caught and squeezed precisely atthe point of conflict between the demands of modern government and traditionalpower structures. It is in this context that the entrenched informal structuresand networks are able to resist the introduction of new norms of governancethus undermining attempts to combat corruption.

Our research, using Luo’s institutional model, hopes to gain insight intohow corruption has become entrenched in the SANPS. Researching corruptbehaviour, because it is illegal, is problematic (Luo, 2005). However, theorganizational conditions that allow corruption to develop, the consequencesof corrupt behaviour and the attempts to curb corruption can all be studied. Wechoose to focus on the failure of new institutions in South Africa to impact



on corruption in the SANPS by examining the weaknesses in the task andinstitutional environments; the subsequent malfeasant behaviours and deterrentoutcomes.

RESEARCH METHOD

The ability of Luo’s model to provide insights into the entrenchment ofcorruption in the SANPS can be gauged by seeking answers to the followingquestions:

1 Does significant corruption exist in the SANPS?

2 Has there been structural uncertainty and lack of regulatory control inthe task environment?

3 Has there been a lack of institutional transparency and fairness andcomplexity in the institutional environment?

4 Is there evidence any of the different types of malfeasance in the SANPS?

5 Are members of the SANPS aware of deterrent outcomes as described byLuo?

6 Are the SANPS’ organizational culture, organizational structure andcompliance systems adequate to resist corruption?

The answering of the above questions allows us to answer our research question:

1 Does Luo’s institutional model provide insights into the entrenchednature of corruption in the SANPS?

A survey was conducted by distributing 1,500 questionnaires, designed todetermine the perceptions and attitudes of public servants towards corruptionas it influenced the organizations they worked in. Respondent’s perceptionsof anti-corruption measures were also sought. An attempt was made toinvestigate the feelings and attitudes towards corruption held by respondentsand to understand the social and organizational conditions under which theyworked. Our two broad independent variables were task environment (powerconcentration, regulatory control and structural uncertainty) and institutionalenvironment (institutional transparency, institutional fairness and institutionalcomplexity).

The survey instrument comprised closed and open questions with differentscales, that is, some questions were five scaled likert whiles others were threescaled, ‘Yes’ ‘No’ and ‘uncertain’. The source of these questions ranged fromobservations, informal conversations, South African literature such as Mavusoand Balia (1999), Sangweni and Balia (1999) and other secondary sources relatedto the topic of corruption. These questions were developed independently from



any prior studies because of South Africa’s unique socio-political development.The survey was pre-tested by ten public servants. Based on feedback from theseresponses, some minor changes were made.

The unit of analysis was individual public servants located across nineprovinces. In the provinces of KwaZulu Natal (KZN) and Gauteng, the mainresearcher physically handed the survey document to the respondents andarranged to collect the completed survey documents in sealed envelopes a fewdays later. The researcher did not remain whilst the survey was being completed.It should also be noted that KZN and Gauteng have the largest number of publicservants and it was felt that physically distributing and collecting the surveydocuments would ensure a high response rate for these two provinces. With theremaining provinces the survey document was posted with a return envelope.In this case a lower response rate was observed. The sample was administeredacross nine provinces to the 26 SANPS departments in South Africa. See Table 1.Most responses came from Kwa-Zulu Natal and Gauteng.

Table 1

Geographical Location of Respondents

Provinces % Respondents

Northern Cape 0.7%North West 0.9%Mpumalanga 1.9%Northern Province 3.1%Western Cape 3.3%Free State 5.0%Eastern Cape 6.6%Gauteng 37.7%KwaZulu-Natal 40.9%

The survey was not directed at a particular rank, as public servants of everyrank are directly or indirectly affected by corruption. Senior management wasthe smallest group of respondents which can be partially explained by therebeing a small number of senior managers in the SANPS (See Tables 2 and 3)and pointing to a concentration of power.

Table 2

Employment Category

Employment Category % Respondents

Senior management 8.3%Middle management 30.6%Junior management 31.9%Other 29.2%



Table 3

Employment Categories by Province

North West East Free North NorthKZN % Gauteng % Mpumalanga % West % Cape % Cape % State % Cape % Prov %

Other 17.8 6.8 0.4 0.0 0.9 2.0 0.9 0.1 0.3Junior

Mgt17.1 9.0 0.6 0.6 0.6 1.9 1.7 0.1 0.4

MiddleMgt

5.3 17.4 0.6 0.3 1.6 2.1 1.7 0.1 1.6

SeniorMgt

0.7 4.6 0.3 0.0 0.3 0.6 0.7 0.3 0.9

FINDINGS

The results presented in this paper are based on responses from across SouthAfrica and from different government departments. A total of 702 South Africannational public servants completed the questionnaire. A total of 1,500 question-naires were administered of which a total of 702 or 47% were returned. Thisresponse was possible because the research tool assured respondents’ anonymity.

Corruption in South Africa was considered to be pervasive and could havesignificant consequences for the public servants who responded to our survey.Respondents were asked to indicate which forms of malfeasant behaviour weremost prevalent in their departments. Bribery, corruption and influence peddlingwere considered to be the most common forms of behaviour (64.2%). Whileaccepting gifts for preferential treatment was reported as being the leastcommon type of malfeasant behaviour (4.7%) (see Table 4).

Table 4

Types of Corrupt Behaviour

A Bribery, corruption, influence peddling 64.2%B Financial transactions for personal gain 11.1%C Favouring relatives and friends when awarding government contracts 11.3%D Accepting gifts for preferential treatment 4.7%E Other 7.7%

The data reported in Table 5 reveals that a majority of respondents consideredthe current South African Government to be more corrupt than its predecessor(42.6%), and 23.6% considered it to be as corrupt as its predecessor. A smallergroup of respondents (14.1%) believed that the current government was lesscorrupt than its predecessor, therefore, the majority of respondents reported noimprovement in the level of corruption. When the results reported in Tables 4



Table 5

Level of Corruption under the Current Government

Percentage

As corrupt as predecessor 23.6%More corrupt than predecessor 42.6%Uncertain 19.2%Less corrupt 14.1%Missing 0.5%Total 100.0%

and 5 are considered together an impression is formed of significant malfeasantbehaviour being entrenched across government departments

WEAKENING OF THE TASK ENVIRONMENT

The results reported in Table 6 point to a perception that the task environmentencourages corrupt behaviour as suggested by Luo (2005). Respondent’s reportedthat there were challenges to achieving good governance (93.43%), while 57.5%disagreed with the statement that the government had been actively mobilizingcivil society to monitor governance. A slightly smaller number reported thatthey were not aware that counselling and consultation were available to resolve

Table 6

Task Environment

Statement Disagree Uncertain Agree

Challenges of achieving goodgovernance

3.2% 3.4% 93.43%

Government has been activemobilizing civil society to monitorgovernance

57.5% 16.7% 25.8%

Aware of guidance counselling /consultation available to publicservants to resolve ethical issues

55.3% 7.5% 37.2%

The Constitution is an effectiveprotection against corruption

54.7% 14.4% 30.9%

Lack of real political commitmentto fight corruption

7.8% 16.1% 75.9%

Familiarity with appropriatelegislation

56.3% 8.7% 35.0%

Undergone ethics andaccountability training

65.1% 5.1% 29.8%



ethical issues. The constitution was considered to be effective against corruptionby only 30.9% of respondents, while most respondents believed that the SouthAfrican government lacked the political will to fight corruption (75.9%). Themajority of respondents (56.3%) disagreed that they were familiar with theappropriate legislation and 65.1% reported not having undergone ethics andaccountability training. Most respondents (75.8%) agreed that there was a linkbetween poor remuneration and corruption. Results reported in Table 6 indicatethat there are no resources that an institutional entrepreneur could use tochange the institutional logics of the SANPS.

The findings indicate that regulatory control was perceived to be poorwhile there appeared to be a high degree of structural uncertainty. The taskenvironment was seen to be encouraging corruption. The inadequacy of thetask environment is underscored by the results reported in Table 7 showingthat respondents believed there was a need for anti-corruption training andimplying that the current level of training was inadequate. A clear majorityof respondents agreed that there was a need for educational programs (38.2%agreed, 52.4% strongly agreed) and by implication pointing out that the needfor anti-corruption education was unmet.

Table 7

Need for Educational Programs

Strongly disagree 0.7%Disagree 2.1%Uncertain 6.6%Agree 38.2%Strongly agree 52.4%

WEAKENING OF THE INSTITUTIONAL ENVIRONMENT

The institutional environment was also perceived by respondents as encouragingcorruption (see Table 8). The majority of respondents agreed that the political,administrative and procedural systems were complex and had been associatedwith corruption (75.5%). Secrecy was seen to be a barrier to the curtailmentof corruption by 80.1% of respondents. This is despite the introduction of thePromotion of Access to Information and the Protected Disclosure Acts. An overwhelmingmajority of respondents (94.9%) agreed that management was responsible fordeveloping and enforcing proper systems of governance. At the same timerespondents reported having concerns about the ethical standards of the currentleadership (72.5%) and they also believed that core public values had notbeen communicated (50.0%). Most respondents agreed with the statement thatthere was a need to strengthen law enforcement against corruption (96.1%).



Table 8

Institutional Environment


Complexity of political, administrative,procedures and systems

11.1% 13.4% 75.5%

Secrecy is a barrier to curtailingcorruption

7.3% 12.6% 80.1%

Management responsible fordeveloping and enforcing propersystems of governance

2.0% 3.1% 94.9%

Concern about ethical standards ofcurrent leadership

13.4% 14.1% 72.5%

Core public values have not beencommunicated

37.9% 12.1% 50.0%

Need to strengthen law enforcementagainst corruption

1.3% 2.6% 96.1%

Insufficient pressure on judicialinstitutions to impose morestringent penalties for corruption

29.3% 11.0% 59.7%

Link between poor remuneration andcorruption

15.7% 24.2% 75.8%

Respondents also agreed with pressure being applied on judicial institutions toimpose more stringent penalties for corruption (59.7%). A lack of faith in theability of judicial institutions to curb corruption was strongly indicated when theresults of these statements are taken together. Again, these results show thatthe institutional logics in the SANPS favour corruption.

The results reported in Table 8 show that most respondents believed that theinstitutional environment is inadequate to fight corruption. This is underscoredby the results presented in Table 9 showing the reasons why public servantswere reluctant to blow the whistle. Whistle blowing is an important mechanismfor resisting corruption, not just because it helps law enforcement, but alsobecause it creates a potential link between the individual and the organization.

Table 9

Reasons for Reluctance of Public Servant Whistleblowers

Victimization 71.4%Loyalty to colleagues 13.8%Unaware of procedures to follow 9.5%Other 3.9%No response 1.4%



The attitude of those in authority towards whistle-blowers is an indication of theattitude to corruption However, Table 9 shows respondents believed that therewere immense difficulties faced by whistle blowers, such as intimidation and alack of official support. Respondents indicated that the reasons for reluctance toblow the whistle were victimization (71.4%), loyalty to colleagues (13.8%) andlack of awareness of procedures to follow (9.5%) (see Table 9). These findingspoint to a weak institutional environment and a lack of cultural resources thatan institutional entrepreneur could use against corruption.

Luo’s Model shows that there are organizational consequences flowing fromMalfeasant behaviours. In the case of the SANPS it would appear to be anevolutionary hazard (see Table 10). The results reported in Table 10 clearlyshow that respondents were aware of the consequences of corruption for theeconomy and decision making within the SANPS. While the results revealed inTable 7 strongly suggest strategic impediment.

Table 10

Deterrent Outcomes


Corruption in SA is a disincentive toeconomic activity

4.8% 13.4% 81.8%

Corruption distorts priorities 5.9% 13.4% 80.7%

DISCUSSION

Corrupt behaviour is opportunistic and can have devastating consequencesfor individuals, organizations and nation states. Corruption takes place inand through organizations and represents the establishment of institutions ofcorruption that exist in shadow organizations having their own culture andprocedures that undermine the anti-corruption culture and procedures of theofficial organization. By their nature corrupt transactions are hidden fromview and therefore cannot be studied directly. The consequences of corruption,which Luo has labelled ‘deterrent outcomes’, can be observed however. Therespondents reported the existence of significant corruption in the SANPS(see Tables 4 and 5) and unambiguously answered our first question in theaffirmative. The data reported in this paper points to widespread malfeasance,particularly systemic, procedural and structural malfeasance. There also appearsto be evidence of categorical malfeasance with regard to the judiciary (seeTable 8)

The respondents in our study reported that corruption was pervasive and of aserious nature (see Table 4). The introduction of a new democratic government,a new constitution in 1994, anti-corruption laws and the ‘African renaissance’



have had little impact on entrenched corruption in the SANPS (see Table 5). Thisfinding is consistent with Modell (2001), Chang (2006) and ter Bog, (2008) whoargued that imposed changes, if not supported by those in authority, would beinadequate to change behaviour (institutions) and curb corruption. In additionthe reported persistence of corruption (see Table 5) indicates that the imposedchanges were not seen to be in the self–interest of those benefiting from theentrenched institutions supporting corrupt behaviour. The results also suggestthat potential institutional entrepreneurs did not have cultural or economicresources to change the institutional logics (see also Table 7).

The results reported in Table 6 answer our second question indicating thatthere has been structural uncertainty and a lack of regulatory control in the taskenvironment of the SANPS. The findings indicate that regulatory control wasperceived to be poor while there appeared to be a high degree of structuraluncertainty. Structural uncertainty results from a lack of transparency, aconcentration of power through steep hierarchical systems (see Table 2). Whilethe reported lack of familiarity with legislation, lack of political commitmentto fight corruption and the lack of training (see Table 6) lead to uncertainty.Our second question whether there has been a lack of regulatory control andstructural uncertainty in the task environment can also be answered in theaffirmative.

Our third question was also answered in the affirmative as the findingsreported in Table 8 suggest that there had been a lack of institutionaltransparency and fairness while at the same time the institutional environmentwas characterized by complexity. The results reported in Table 8 indicated thatparticipants believed it was impossible to curb corruption due to the complexnetwork of political, procedural and administrative systems. Respondentsreported secrecy and a lack of transparency. The respondents’ belief thatpoor remuneration could lead to corruption and that the legal system did notadequately deal with corruption suggests that the institutional environment alsolacked fairness (see Table 8).

The institutional environment did not support or encourage support forwhistleblowers, which would assist transparency and discourage corruption.Support for whistle blowers would include an organizational culture thatencouraged disclosure of corrupt behaviour and accommodating the needs of theperson making the disclosure while at the same time protecting the rights ofindividuals who are the subject of the disclosure. However, respondents reportedthat the predominant reason for reluctance to whistle-blow was the fear ofvictimization (see Table 9). In organizations where unfairness is perceived tobe systemic and procedures lack transparency the ability to resist corruptionwill be limited (Mavuso and Balia, 1999). Similarly, Luo suggests that wherethe task and institutional environments are weak malfeasance will develop. Ourfindings confirm the link between a weak task and institutional environmentsand the development of various forms of malfeasance. The results reported inTable 4 point to wide-spread malfeasant behaviour. There appears to be evidence



of system, procedural, structural and categorical malfeasance. The data wouldindicate that the latter is present in the legal system given the perception thatthe legal system is inadequate in fighting corruption (see Table 8).

This obviously has serious consequences for public support of criminal justiceagencies. An independent and efficient justice system is regarded as the primaryagent for controlling corruption (Mavuso and Balia, 1999). Whilst any corruptexercise of public office is likely to affect the social, economic and moral fabricof the community, corruption in the judicial system is particularly harmful sincethe proper administration of justice is the last resort of those who seek justice,order and stability in the state. Our fourth question, regarding the evidence formalfeasance, can be answered in the affirmative.

Finally, the consequences of corruption described by Luo as deterrentoutcomes were reported by the respondents. This is a further indication of theentrenched nature of corruption in the SANPS (see Table 4) and also the failureof the anti-corruption measures introduced so far. Despite the consequences ofcorruption being recognized by public servants and the measures introducedto curb corruption, respondents reported that corrupt behaviour had notdiminished. Respondents also reported that they understood the economic andsocial consequences of persistent malfeasance (see Table 10). These findingsare indicative of evolutionary hazards and organizational deficiency described inLuo’s model. Evidence for strategic impediments, that according to Luo are man-ifest in poor resource allocation and the deterrence of building capability, is to befound in Table 7. The fifth question can therefore be answered in the affirmative.

The deterrent outcomes will in turn weaken the anti-corruption system at theinstitutional level as it will be argued there is not the political will or insufficientresources to enforce anti-corruption laws, properly train public servants, provideadequate pay, promote transparency and strengthen the justice system tocombat corruption. However, those benefiting from corruption are in positionsto make decisions about the anti-corruption system and they will place limits onthat system. The corporate culture will accept the existence of corruption; theorganizational structure will remain unchanged, allowing the continuation ofmalfeasant behaviours and the compliance system will lose legitimacy as it willbe seen as weak in preventing corruption. The question of whether the SANPS’organizational culture, organizational structure and compliance systems canadequately resist corruption must therefore be answered in the negative.

Throughout history some people have been motivated by self- interest.However, changing human behaviour to eliminate self-interest is problematic.Luo’s model, on the other hand, explains the development of corruption at anorganizational level by focusing on the adequacy of the task and institutionalenvironments. The findings presented in this paper indicate that both the taskand institutional environments in the SANPS were inadequate in actively curbingcorruption. Consistent with Luo’s model there was evidence that the weaktask and institutional environments had led to malfeasant behaviour and theconsequent deterrent outcomes.



CONCLUSIONS

Our last question was concerned with the ability of Luo’s institutional model toprovide insights into the entrenched nature of corruption in the SANPS. Whilethe model seeks to explain the development in business organizations we haveshown that the broad categories are still relevant to the public sector. Most ofthe elements in each category are appropriate for the analysis of corruption inthe public sector, with the exception of oligopolistic intensity, that clearly refersto an industry’s structure and can be renamed as power concentration. Similarlycompetitive disadvantage, under deterrent outcomes is not applicable to thepublic sector.

The links between the categories are not clearly explained by Lou, however,the concept of institutional logics as the means by which weak task andinstitutional environments encourage malfeasant behaviour and deterrentoutcomes strengthens the model. The results reported in this paper suggestthat Luo’s institutional model does provide insights into how corruption canbecome entrenched in an organization. The model gives a possible explanationof why the new South African constitution, the anti-corruption legislation andthe ‘African Renaissance’ have been ineffective in curbing corruption. They werenot supported by the task or institutional environments and were not seen bypotential institutional entrepreneurs as a means of changing the institutionallogics in the SANPS thus explaining why the organizational anti-corruptionsystem remains undeveloped. Conversely, it can also be argued that if Luo’smodel provides insights, it points to practical changes that could be made at theorganizational level to combat corruption. By changing the institutional logicsand strengthening the anti-corruption elements in the task and institutionalenvironments malfeasant behaviours should be curbed.

The findings presented in this paper justify the use of an institutionalperspective to study corruption. This is important for several reasons. First, it isdifficult for corrupt behaviour to be directly and accurately observed or recorded,however, the impacts of corrupt behaviour on organizations and individuals canbe examined thereby revealing the means by which institutions are used andchanged enabling corruption to become established. Second, institutional theoryexplains the role of symbols, values and organizational culture to the functioningof an organization allowing us to see the influence of the informal structures andinstitutions. Third, institutional theory throws light on the relationship betweenorganizations and the individuals working in them giving us an insight intothe impact of an individual’s values on their role in an organization. The resultsreported in this paper underscore the usefulness of Luo’s model in understandinghow corruption can become dominant in an organization. However, the data forthe research reported in this paper was gathered using a questionnaire andis therefore subject to the weaknesses of that research method. We suggestthat further research be undertaken in various organizations using a qualitativemethod.



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