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

An Institutional Theory Perspective

on Corruption: The Case of a
Developing Democracy
SOMA PILLAY AND RON KLUVERS

Abstract:
The purpose of this paper is to use quantitative data to describe
corruption in the SANPS, and use Luos (2005) institutional theory to gain insights
into how corruption develops and remains entrenched despite the introduction of
anti-corruption legislation. A total of 1,500 questionnaires were distributed to public
servants in nine provinces, but predominantly in Kwa Zulu Natal and Gauteng.
There were 702 returned giving a response rate of 47%. We conclude that the
findings discussed in this paper lend support for Luos theoretical model being able
to provide insight into the development of corruption, its consequences and possible
remedies.

Keywords: corruption, institutional theory, task environment, institutional environment

INTRODUCTION

There is no scarcity of scandals that illustrate the depth and pervasiveness of

corruption in developing democracies such as South Africa. In the wake of these
scandals awareness has grown of the social, political and economic costs resulting
from corruption. According to Misangyi et al. (2008) there are two alternative
frameworks that have dominated research into corruption. First, the economic
perspective is concerned with the influence of rational self-interest, efficiency
and formal regulative structures in explaining the development of corruption.
They go on to argue that this approach provides limited results in combating
corruption as it does not include the normative and cognitive structures. While
the 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 to
thank the anonymous referees for their helpful suggestions.
Address for correspondence: Soma Pillay, Faculty of Business and Economics, Monash
University, Australia.
e-mail: soma.pillay@monash.edu


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within organizations. Further, they suggest that the effective resistance of

corruption must consider the complex relationships between institutional logics,
resources required to sustain the elimination of corruption and the institutional
entrepreneurs 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 disciplines
have examined corruption but have not been able to address the organizational
context, behaviours and processes that support corruption. While Luo does
not specifically use the terms institutional logics or institutional entrepreneurs
he does examine corruption in an organizational context taking the cultural,
structural and behavioural aspects into account. While Luos (2005) focus is on
corruption in private commercial organizations most corruption takes place in
the public sector (Abdulai, 2009) and he has called for studies to be undertaken
in different contexts. This study seeks to assess the applicability of Luos model
to the public sector in a developing democracy, namely South Africa.
Post apartheid South African society is still to a large extent in transition
between the past regime and a democratic dispensation. As a result, South
African public servants are confronted by principles and philosophies of the past
and the introduction of a new value system. The possibility that the transition
process is facilitating the growth of corruption provides an impetus to devise
systems of governance based on empirical research that may address the scourge
of corruption. This has proved to be a difficult task and academic contributions
in this domain are, as yet, limited. In part this is due to published literature
lagging behind policy debates. A bibliographic search of electronic databases
failed to identify any academic publications based on empirical studies in the
area of corrupt behaviour in developing democracies such as South Africa. Given
the comments made by Misangyi et al. (2008) an institutional perspective was
considered appropriate for this study.
We begin with a conceptual framework in which we discuss institutional
theory and its applicability to the study of corruption in organizations. We
also briefly consider the New Institutional Theory (NIT) in particular the role
of institutional logics and institutional entrepreneurs and how they underscore
Luos model. Luos theoretical model is described and our modifications to his
model explained. Next we discuss the South African Scenario. This is followed
by a discussion about the South African public service in which we examine
the official attempts to counter corruption in the SANPS. We describe the
research method used to gather the data. This is followed by a report of our
finding. Finally, we draw conclusions about the usefulness of Luos model and
an institutional perspective for the study of corruption.
CONCEPTUAL FRAMEWORK-INSTITUTIONAL THEORY

Internationally the fight against corruption has received a great deal of

attention. Misangyi et al. (2008) argue that an economic perspective focusing

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on rational self-interest, efficiency pressures and regulative structures has had

limited success explaining and developing tools to resist corruption. One such
example of an economic perspective is agency theory. According to a principalagent analysis corrupt exchanges encourage private gain in the making of public
decisions (Bull and Newell, 1997). The analysis examines the relationships that
exist among three protagonists: the citizen, the principal (a government), and
an agent (a public official) who manages the relationship between the citizen
and the government (Becker, 1968; and Klitgaard, 1988). The monopoly power
of agents and the degree of discretion they enjoy in exercising their power
create a formidable information barrier between the principal and the agent.
Under these circumstances, agents are assumed to be more prone to corruption
if they enjoy a complete control over an activity, have wide discretion in decision
making 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 and
their discretion in determining the distribution of resources; and (ii) negatively
associated 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 individual
or organisation because the purpose of the bribe is to induce him to place his own
interests ahead of the objectives of the organisation for which he works (p.123).

Therefore the agent transfers his allegiance to another principal. Luo extends
this argument further by maintaining that it is through a weak task and
institutional environment that the agent is able to transfer his allegiance. This
is so because strong monopoly powers and control, information asymmetry,
lack of transparency and institutional complexity allows the agent to exploit
opportunities to enhance his own interests. Further, it is argued by Klitgaard,
(1988) that principal-agent analysis suggests that the larger the gains, the
greater the possibility for corruption. However, with higher stakes, stronger
moral constraints might be aroused, and the stronger a societys moral
inhibitions, the lower the likelihood of an individual succumbing to the
temptation of corruption. Klitgaards (1988) contribution thus emphasised the
effect on the agent working in an organization with strong moral values and
standards. However, where the dominant culture has weak moral constraints
then there is a greater possibility of corruption occurring.
Misangyi et al. (2008) argue for an organizational perspective focusing
on culture, structure and cognition within organizations as a means for
understanding the development of corruption. Corruption takes place within
and between organizations. Corrupt behaviour is facilitated or resisted by
organizational structures; corruption is encouraged or discouraged by an
organizations dominant culture. Thus corruption must be understood at
the organizational level if it is to be successfully resisted and Luo (2005) speaks
of organizational corruption and defines corruption as:

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an illegitimate exchange of resources involving the use or abuse of public or collective

responsibility for private ends (p.121).

Luos 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 and
organizational architecture. He argues that an organization is the basic unit
in which corruption can develop through unchecked opportunistic behaviour.
Luos model provides an explanation of the development of corruption by using
institutional theory to explain the links between the task and institutional
environments the consequent malfeasant behaviours, the possible outcomes of
those behaviours and the anti-corruption systems an organization might use to
counter corruption.
It has been suggested that an interdisciplinary perspective should be used
in analysing the social and cultural dynamics of corruption (Collier, 2002; and
Paldam, 2002). Given the diversity of variables involved, it is perhaps surprising
that the studies that examine corruption across nations (Husted, 1999; Sung,
2002; Treisman, 2000; and Xin and Rudel, 2004) have considered corruption
to 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 between
organizations and corruption is multi-dimensional since corruption becomes
embedded as an element of the norms and rules used by organizations and, thus,
affect an organizations legitimacy. The multi-dimensional nature of corruption
in South Africa makes the use of Luos model an appropriate and relevant
one.
According to Dacin et al. (2002) institutional theory has been used to explain
both individual and organizational actions including aspects of administrative
and management practice (Tolbert and Zuckein, 1983). These organizational
behaviours reflect a culture that evolves over time and becomes legitimised
within an organization and society (Eisenhardt, 1988). Corruption becomes
entrenched by this legitimizing process. According to Kamoche and Harvey
(2006) institutional theory is predicated on the willingness of individuals and
groups to follow predetermined acceptable patterns of behaviour that are
supported by society. In the case of corruption it is not so much societies support
rather it is the lack of support of an anti-corruption culture; particularly political
support. Abdulai (2009) contrasts the political support given to anti-corruption
measures in Singapore and Hong Kong with the lack of political support in
Ghana.
The core premise of institutional theory is that organizations aspire to
external legitimacy by complying with their institutional context (Glynn and
Azbug, 2002). In the present context, Rodriguez et al. (2005) contended that
corruption affects organizational legitimacy through its effects on formal and
informal activities. Other influential theories of the causes of corruption tend

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to concentrate on the organizations that house corrupt officials (Xin and Rudel,
2004).
However, the literature on institutional theory provides little insight into
the specific process by which the internal environment of organizations allows
corruption to develop. We believe that Luo (2005) explains how corruption
becomes institutionalised. According to Scott (2001) an institution is a stable
set of rules supported by surveillance and sanctions. He goes on to say that
there are three pillars that support and describe institutions. The regulative
pillar is based on rational behaviour that is in the individuals self interest by
constructing structures that will control ones own behaviour and that of others.
The second pillar sees institutions as predominantly normative. However, some
norms only apply to particular individuals or positions. The third pillar is the
cognitive pillar in which symbols such as words, gestures and signs are used to
convey meaning to objects and activities enabling individuals to interpret them.
Following from Scott (2001), Kamoche and Harvey (2006) go on to argue that
the informal rules and regulations of a society are linked directly to a societys
culture and sub-cultures. Further, these informal rules and regulations help
control behaviour of members of the group by indicating acceptable interaction,
norms, roles, and behaviours in prescribed social settings. Behaviour is guided
by specific social institutions as well as by the general culture. Implicit values
and norms are derived from those with whom one has frequent face-to-face
contact and specify how things are done. The introduction of explicit anticorruption rules will have little effect if the implicit values and norms supporting
corruption are supported by powerful individuals and have become entrenched.
The practices of the past have become embedded in South Africas public
sector culture and organizations making it difficult to implement anti-corruption
measures.
This point was reinforced by ter Bogt (2008) in his research examining
accounting change in Dutch local government. He argued that routines are
rooted in the organizations values and traditions, and that the role of
individuals and subgroups in fostering or inhibiting change should not be
underestimated. Thus, it would be expected that the changes designed to
curb corruption as a result of a new South African constitution and anticorruption laws would be resisted by those in the public service who had
gained from the established organizational culture. Further, Modell (2001) has
shown that managers are likely to act proactively to counter externally imposed
requirements. Anti-corruption measures will not be supported, resources will
not be allocated to fight corruption and an anti-corruption culture will not be
encouraged.
Similarly, Ostergren (2006) concluded that the strength of the parties involved
in negotiating change seemed to be the most significant element in the process,
as the strongest party wins. Therefore, anti-corruption legislation will be ignored
if it is perceived to have little support from those with power. However, in the
case of Hong Kong and Singapore the opposite was true and powerful support

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was given to anti-corruption measures (Abdulai, 2009) thus institutionalizing

anti-corruption values and behaviour.
Misangyi et al. (2008) argued that the effective curbing of corruption
involved the interplay between institutional logics, resources and institutional
entrepreneurs. According to Thornton and Ocasio (1999) institutional logics
can be described as defining the content and meaning of institutions and
are concerned with shaping organizational structures which are shaped by
cultural rules and cognitive structures. They go on to argue that the focus
of institutional theory is not only on isomorphism but rather on the effects of
different institutional logics. Thornton (2004) points out that while institutional
logics shape rational behaviour, individual and organizational actors in turn
influence institutional logics.
Changing the institutional logics of an organization often requires the
involvement of an institutional entrepreneur. According to DiMaggio (1988)
institutional entrepreneurs are agents of legitimacy that help to create and
support institutions considered to be aligned with their interests, in this case a
pattern of behaviour that encourages and entrenches corruption. The creation
of institutions requires legitimacy, a condition resulting from the fact that
alternatives are perceived to be less appropriate, desirable or viable (Docin
et al., 2002). Misangyi et al. (2008) argue for the need to change organizational
logics to fight corruption through institutional entrepreneurs. In particular,
they insist that corruption will persist as long as identities and schemas that
guide practice are not addressed. In addition anti-corruption reforms must be
championed by institutional entrepreneurs who legitimate the new institutional
logic that supports anti-corruption reform. Finally, the reformers must have
resources, both symbolic and material, to sustain the new institutional logic.
The inter-play of these elements is described by Yadong Luos institutional
model.
LUOS INSTITUTIONAL MODEL OF CORRUPTION

Many studies of corruption have focused on the impact of the macro-environment

on state- level corruption. However, Luos study focused on influences in the
organizational environment that enable organizational corruption to develop.
Luo argued that corruption was encouraged when uncertainty and power
concentration occurred with regulation and institutional pressures, such as
opaqueness, injustice and complexity. Organizational architecture, resulting
from the interaction between culture, structure and system, determined how
effectively an organization can actively resist corruption. Without this architecture, organizations would be subject to organizational deficiency, strategic
impediment, competitive disadvantage and evolutionary hazards, all caused by
corruption.
According to Luo (2005) the task environment consists of information,
external resources or conditions that may affect the setting or attainment of

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strategy. The task environment is made up of oligopolistic intensity, which

refers to the market power of a company and is more appropriate in a business
setting. In the public sector it relates to the concentration power in government
agencies. Regulatory control relates to the degree of intervention by authority
into policies and the access to resources. Luo goes on to state that excessive
and poor regulatory control can lead to ambiguity for businesses dealing with
the public sector. But we argue that ambiguous regulatory control can lead to
confusion amongst public servants.
In Luos model structural uncertainty refers to the extent of an industrys
structural attributes that are subject to volatility because of government
interference or changes in government policy and implies a lack of sufficient
information. We have modified the definition of structural uncertainty to mean
the uncertainty within the public service as a result of changes in government
policy the lack of clear direction and the lack of information upon which to bases
actions.
The institutional environment facilitates or curbs organizational corruption
and is made up of three elements; transparency, fairness and complexity.
Transparency refers to the degree that regulatory systems are open and
easy to understand. Luo argues that opaqueness gives government agencies
and individual public servants the ability to interpret ambiguous rules and
requirements thus opening the way for corrupt behaviour. Fairness describes
the extent to which regulatory systems are applied in a just, impartial and
non-discriminatory manner while complexity refers to the complexity of both
the regulatory systems and the socio-cultural environments being complicated,
difficult to understand and to comply with. Such an environment encourages
malfeasant behaviours. Malfeasance is opposed to ethical behaviours and
violates the rules and corruption becomes manifest through various malfeasant
behaviours.
Luo lists four types of malfeasant behaviour:
1 System malfeasance that exists when corrupt and illegal acts take place
across the organization;
2 Procedural malfeasance exists when an organizations formalized ethics
procedures are not strictly adhered to by some employees at some levels;
3 Categorical malfeasance occurs when many corrupt practices occur in
one or two teams, departments, sub-units or functions;
4 Structural malfeasance occurs when most hierarchies are involved in
corruption that is relatively minor in quantity and gravity.
Malfeasant behaviours can result in the development of deterrent outcomes such
as the undermining of strategy, a lack of strategic focus and the organization
becoming weakened and unable to adequately respond to its environment.


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Figure 1
Luos Institutional Perspective of Corruption: A Theoretical Model
(p.121)
Institutional Environment
Shaping Corruption

Task
Environment
1. Oligopolistic
intensity

Institutional
Environment
1. Institutional
transparency

2. Regulatory
control

2. Institutional
fairness

3. Structural
uncertainty

3. Institutional
complexity

Institutional
Behaviour
Reflecting
Corruption

Institutional
Consequence
Generated by
Corruption

Malfeasant
Behaviour
1. System
malfeasance
2. Procedural
malfeasance
3. Categorical
malfeasance
4. Structural
malfeasance

Institutional
Architecture Resisting
Corruption

Deterrent
Outcomes that
may occur
1. Evolutionary
hazards
2. Strategic
impediment
3. Competitive
disadvantage
4. Organizational
deficiency

Anti-Corruption
System at the
Organizational
Level
1. Organizational
culture
2. Organizational
structure
3. Compliance
system

Figure 2
A Modified Institutional Perspective of Corruption
Institutional Environment
Shaping Corruption

Task
Environment
1. Power
concentration

Institutional
Environment
1. Institutional
transparency

2. Regulatory
control

2. Institutional
fairness

3. Structural
uncertainty

3. Institutional
complexity

Institutional
Behaviour
Reflecting
Corruption

Malfeasant
Behaviour
1. System
malfeasance
2. Procedural
malfeasance
3. Categorical
malfeasance
4. Structural
malfeasance

Institutional
Consequence
Generated by
Corruption

Institutional
Architecture Resisting
Corruption

Deterrent
Outcomes that
may Occur
1. Evolutionary
hazard
2. Strategic
impediment
3. Organizational
deficiency

Anti-Corruption
System at the
Organizational
Level
1. Organizational
culture
2. Organizational
structure
3. Compliance
system

In Luos model deterrent outcomes include evolutionary hazards, strategic

impediments competitive disadvantage and organizational deficiencies
The term evolutionary hazards refer to the legal consequences for corrupt
individuals and organizations; in particular the organizations tarnished image
resulting from the perception that corrupt behaviour is present in the organization. Strategic impediment includes the misallocation of resources, limitations
on capability, and a lack of confidence. Organizational deficiency results in a

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lack of innovation, efficiency, transparent and effective communication. We have

not included competitive disadvantage in our discussion simply because we are
dealing with the public sector, whereas Luo has based his model on business.
As shown in Figure 1 above, the final part of Luos model describes the
organizational anti-corruption system that includes culture, organizational
structure and the compliance system. Corporate (organizational) culture,
according to Luo, sets the moral tone in an organization and includes such
elements as vision statements, social rituals, values, role models, customs and
slogans. Of particular importance is a clear, detailed anti-corruption statement
that can be used by management in day-to-day decisions. Such statements are
seen as resources that can be used by institutional entrepreneurs (Misangyi
et al., 2008). Organizational structures can detect and correct misconduct as the
organizations structure determines the content of jobs, establishes monitoring
systems and regulates the way tasks and responsibilities are fulfilled. The
compliance system enables active resistance to corrupt practices through the
establishment of a code of conduct and a compliance program. According to
Luo, compliance programs consist of training, due diligence and formalized
procedures and should bring the behaviour of organizational members into line
with the shared ethical standards and regulations.
The encouragement of whistle-blowing can reveal malfeasant behaviour
against the compliance system. However, whistle-blowing will only occur if it
is supported by the organizations culture and leadership. Legislation alone
will not provide sufficient protection for a public official who wishes to make
a disclosure about wrongdoing (Fennely, 1998). Whilst whistle blowing has
enormous potential as a mechanism for exposing and controlling misconduct,
there are costs associated with the decision to blow the whistle. It can conflict
with an organizations culture, traditions of loyalty to superiors and solidarity
with colleagues. Indeed, reporting wrongdoing often backfires, whistle blowers
become victims, they are often considered disloyal and not team players, with
their careers usually suffering (Finn, 1995; and Glazer and Glazer, 1989). Coworkers who fear retaliation from managers may also avoid whistleblowers
(Miceli and Near, 1992) or feel that the whistleblower has revealed weaknesses
in the organizational structure. Luos model provides a multi-dimensional
framework with which to understand the interplay of forces that might impact
on anti-corruption measures such as whistle blowing and enables an assessment
to 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 corruption
through the introduction of anti corruption laws, and a new constitution which
is seen to be part of the principles of the African renaissance (Makgoba,
1999). However, the anticipated results expected from the introduction of
such measures, have not been forthcoming. The power of the entrenched

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informal structures is such that initiatives such as the principles of the African
renaissance, anti-corruption legislation, codes of conduct and the post apartheid
constitution have been resisted. Measures have been introduced to promote
accountability and good governance. Despite these developments, concerns
about public sector reform in South Africa have intensified in recent years
(Adebajo et al., 2007; and Mavuso and Balia, 1999). There have been calls for
greater efficiency, transparency, and integrity in public organizations driven
by the realization that poor governance in the SANPS contributes to the unequal
distribution of opportunities and that corruption threatens effective government.
In this regard, the distinctive nature of South Africas history cannot be
ignored. With the advent of inclusive democracy in 1994, the newly elected
government inherited a system of governance with institutions that were in
direct conflict with the imperatives of good government (Adebajo et al., 2007;
and Mavuso and Balia, 1999). In particular Lodge (1999) has contributed to the
ongoing discourse attempting to understand and document this crucial period
in the life of the country. Lodge noted that the failures of specific government
organizations had much to do with the countrys historical legacy. That is, most
of the provinces (states) that experienced administrative inefficiency and a slow
pace of service delivery came about through an amalgamation of previously
separated administrations. For instance, the merger of the former homelands,
Transkei and Ciskei into Eastern Cape required considerable work to ensure the
effectiveness of the new institution. Administrative inefficiency was reinforced by
the failure of the ruling party, the ANC, to effectively co-ordinate its provincial
structures, therefore reducing the ability of local networks to fight against
corruption.
Concerns about ineffective public administration and poor governance were
linked to various organizational environments. An example of this concern was
illustrated by the Ministry of Economic Affairs Reconstruction and Development
Program, an economic policy strategy focusing on poverty alleviation and
economic development. The policy did not live up to expectations of stakeholders.
Different sectors of society had a different understanding and interpretation of
the 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 development
through state intervention in the economy. On the other hand, for members
of big businesses, the RDP represented a less expensive state, and better
educated and productive workers. The expectations of the general public were
for more jobs, proper housing and access to basic infrastructure. Considerable
advances were made thus ensuring that at least basic needs like water supply
and electricity provision were met. However, many of the other objectives of the
RPD have not been met. The apparent lack of success of this program can be
linked to poor governance.
It has been noted through the years that the lack of co-ordination between
the different spheres of government, have hampered good governance (Pillay,

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2008). The lack of good governance has been manifested in various processes
such as municipal elections and the delivery of services. The problems associated
with poor governance provided the impetus for the reconstructive foundation of
an 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 Africas revival will only come
through the development of a liberal democracy (Makgoba, 1999). Mbeki (in
Makgoba, 1999) however, maintained that the whole concept of the renaissance
would be incomplete and unreal if important issues of corruption, continued
political instability, economic development and transformation, poor political
leadership and ill focused economic policies, were not addressed. The African
Renaissance was seen as an attempt to create a better future that would
overcome South Africas history, roots and current realities.
However, many politicians and public figures have difficulty defining the
concept. This was possibly because South Africas democracy was one where
disagreement around the broad national agenda and reconciliation versus transformation continues to plague the fledging democracy. Historical developments
led to the South African political economy inheriting three major characteristics:
a profound and racially skewed distribution of wealth; a typical developing
economy with the usual problems of poverty and an oversupply of unskilled
labour; and a narrow economic base. It is in this context that the issue of
corruption is important. A further challenge, closely linked to the above, was
for South Africa to overcome the vicious cycle of poverty where low savings and
investment, low capital accumulation, very low levels of productivity and low
average income were continuously impacting on and reinforcing one another.
The social, political, cultural, and economic realities of South Africa are
quite different from those found in many other developing democracies.
The causes of poor governance are thus contextually rooted in the countrys
bureaucratic traditions, political development, social history, and cultural
dimensions. Important governance issues in the South African public service
have included:
i. Undesirable social controls and antiquated laws. In the South African
public service, many individuals, who, because of injustices in the past,
have been deprived of a decent lifestyle, have aspirations to acquire a
lifestyle they felt entitled to. Often this is through weak social controls
and outdated laws.
ii. An inability to reduce inefficiency in the public service continues
particularly in terms of the inability to deliver services as a result of
excessive red tape and rigid bureaucracies.
iii. An excessive discretion for some in the public service. The more discretion
a person has, the more senior the post they occupy and the more authority
they exercise, the greater the opportunity for corrupt practices to occur.

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iv. Defective administrative arrangements (including inadequate controls).

The South African Public Service inherited a system where there was
a notorious lack of accountability. In addition, the previous exclusion
of many of the homeland public service agencies from resources and
the inferior education and training given to their staff resulted in the
unfortunate reality that many public servants were not adequately skilled
and experienced to handle their responsibilities (Mavuso and Balia,
1999).
Developments such as those described above help to explain how corruption
can 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 economists
can point to the societal causes of corruption they do not have the tools
to understand corruption in its organizational context. Organizations are the
basic unit of corrupt practice and unless organizations are prepared to actively
resist corruption it is impossible for a society to overcome corrupt behaviour.
The pervasiveness of corruption can be attributed to South Africas unique
history, ideologies, systems of governance and political structures and it can
be argued that these elements have helped institutionalize corruption in the
SANPS.
CORRUPTION AND THE SANPS

Early in 2011, South Africas national police chief was accused of spending
taxpayers money unlawfully. In another case, a Cabinet minister reportedly
used 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 investigated
in the 2009/2010 financial year (www.star-telegram.com).
Corrupt practices have become institutionalized and therefore entrenched
throughout the SANPS. Informal structures (networks that are not accountable
to anyone and that participate in illicit activities) have existed since colonial
times (Phatak et al., 2005) and have influenced the development of South African
society (Makgoba, 1999). South Africa is a recent developing democracy and
according to Transparency International (2009) remains one of the most corrupt
nations in the world. In post apartheid South Africa, attempts have been made to
address corruption through the introduction of anti corruption laws, and a new
constitution which is seen to be part of the principles of the African renaissance
(Adebajo et al., 2007; and Makgoba, 1999). However, the anticipated results
expected from the introduction of such measures, have not been forthcoming.
The power of the entrenched informal structures is such that they can resist
the principles of the African renaissance, anti-corruption legislation, codes of
conduct and the post apartheid constitution.


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Despite the introduction of the Constitution of the Republic of South

Africa, 1994, and the attempt to develop a public administration based on
democratic principles, many still perceive the South African public service
as 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 the
development of systemic malfeasance (entrenched wrong doing across the
system), procedural malfeasance (unfair and wrong procedures) and structural 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 government
departments. The SANPS is a complex organization because of its history,
culture and hierarchical structure. South Africa, as one of many African states
was born out of a colonial system which was based on corruption, nurtured by
institutions which violated human rights and thrived because of inequalities and
injustices (Lodge, 1999). It was often maintained that the ruling elite were more
committed to their own interests. To sustain the consumptive colonial lifestyle,
the ruling elite needed wealth which could not be made without domination
and exploitation of the very people they were expected to protect. Hence a nonaccountable and non-transparent government in which democratic principles
were ignored developed and became entrenched.
Whilst considering the relationship between corruption and South Africas
traditional society, observers often point to the customary exchanges of gifts as
an element in traditional life which has been thought to contribute to corruption
in modern times. There were and are many features of the traditional power
structures which in the context of colonial and post colonial society contribute
to the prevalence of corruption. South Africa has been unable to grow and
develop as other nations of the world largely as a consequence of the legacy of
colonialism (Mbeki, 2000). It has been argued that South African public servants
have attempted to adopt and internalize the qualities required for their roles
as administrators in modern liberal democracy, however, some have not been
completely successful. Often public servants are caught and squeezed precisely at
the point of conflict between the demands of modern government and traditional
power structures. It is in this context that the entrenched informal structures
and networks are able to resist the introduction of new norms of governance
thus undermining attempts to combat corruption.
Our research, using Luos institutional model, hopes to gain insight into
how corruption has become entrenched in the SANPS. Researching corrupt
behaviour, because it is illegal, is problematic (Luo, 2005). However, the
organizational conditions that allow corruption to develop, the consequences
of corrupt behaviour and the attempts to curb corruption can all be studied. We
choose to focus on the failure of new institutions in South Africa to impact


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on corruption in the SANPS by examining the weaknesses in the task and

institutional environments; the subsequent malfeasant behaviours and deterrent
outcomes.
RESEARCH METHOD

The ability of Luos model to provide insights into the entrenchment of

corruption in the SANPS can be gauged by seeking answers to the following
questions:
1 Does significant corruption exist in the SANPS?
2 Has there been structural uncertainty and lack of regulatory control in
the task environment?
3 Has there been a lack of institutional transparency and fairness and
complexity 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 by
Luo?
6 Are the SANPS organizational culture, organizational structure and
compliance systems adequate to resist corruption?
The answering of the above questions allows us to answer our research question:
1 Does Luos institutional model provide insights into the entrenched
nature of corruption in the SANPS?
A survey was conducted by distributing 1,500 questionnaires, designed to
determine the perceptions and attitudes of public servants towards corruption
as it influenced the organizations they worked in. Respondents perceptions
of anti-corruption measures were also sought. An attempt was made to
investigate the feelings and attitudes towards corruption held by respondents
and to understand the social and organizational conditions under which they
worked. Our two broad independent variables were task environment (power
concentration, regulatory control and structural uncertainty) and institutional
environment (institutional transparency, institutional fairness and institutional
complexity).
The survey instrument comprised closed and open questions with different
scales, that is, some questions were five scaled likert whiles others were three
scaled, Yes No and uncertain. The source of these questions ranged from
observations, informal conversations, South African literature such as Mavuso
and Balia (1999), Sangweni and Balia (1999) and other secondary sources related
to the topic of corruption. These questions were developed independently from


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any prior studies because of South Africas unique socio-political development.

The survey was pre-tested by ten public servants. Based on feedback from these
responses, some minor changes were made.
The unit of analysis was individual public servants located across nine
provinces. In the provinces of KwaZulu Natal (KZN) and Gauteng, the main
researcher physically handed the survey document to the respondents and
arranged to collect the completed survey documents in sealed envelopes a few
days 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 public
servants and it was felt that physically distributing and collecting the survey
documents would ensure a high response rate for these two provinces. With the
remaining provinces the survey document was posted with a return envelope.
In this case a lower response rate was observed. The sample was administered
across 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
North West
Mpumalanga
Northern Province
Western Cape
Free State
Eastern Cape
Gauteng
KwaZulu-Natal

0.7%
0.9%
1.9%
3.1%
3.3%
5.0%
6.6%
37.7%
40.9%

The survey was not directed at a particular rank, as public servants of every
rank are directly or indirectly affected by corruption. Senior management was
the smallest group of respondents which can be partially explained by there
being 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
Senior management
Middle management
Junior management
Other


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% Respondents
8.3%
30.6%
31.9%
29.2%

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Table 3
Employment Categories by Province
North West
East
Free
North North
KZN % Gauteng % Mpumalanga % West % Cape % Cape % State % Cape % Prov %
Other
Junior
Mgt
Middle
Mgt
Senior
Mgt

17.8
17.1

6.8
9.0

0.4
0.6

0.0
0.6

0.9
0.6

2.0
1.9

0.9
1.7

0.1
0.1

0.3
0.4

5.3

17.4

0.6

0.3

1.6

2.1

1.7

0.1

1.6

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 South
Africa and from different government departments. A total of 702 South African
national public servants completed the questionnaire. A total of 1,500 questionnaires were administered of which a total of 702 or 47% were returned. This
response was possible because the research tool assured respondents anonymity.
Corruption in South Africa was considered to be pervasive and could have
significant consequences for the public servants who responded to our survey.
Respondents were asked to indicate which forms of malfeasant behaviour were
most prevalent in their departments. Bribery, corruption and influence peddling
were considered to be the most common forms of behaviour (64.2%). While
accepting gifts for preferential treatment was reported as being the least
common type of malfeasant behaviour (4.7%) (see Table 4).

Table 4
Types of Corrupt Behaviour
A
B
C
D
E

Bribery, corruption, influence peddling

Financial transactions for personal gain
Favouring relatives and friends when awarding government contracts
Accepting gifts for preferential treatment
Other

64.2%
11.1%
11.3%
4.7%
7.7%

The data reported in Table 5 reveals that a majority of respondents considered

the 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 smaller
group of respondents (14.1%) believed that the current government was less
corrupt than its predecessor, therefore, the majority of respondents reported no
improvement in the level of corruption. When the results reported in Tables 4


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Table 5
Level of Corruption under the Current Government
Percentage
As corrupt as predecessor
More corrupt than predecessor
Uncertain
Less corrupt
Missing
Total

23.6%
42.6%
19.2%
14.1%
0.5%
100.0%

and 5 are considered together an impression is formed of significant malfeasant

behaviour being entrenched across government departments
WEAKENING OF THE TASK ENVIRONMENT

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

Table 6
Task Environment
Statement
Challenges of achieving good
governance
Government has been active
mobilizing civil society to monitor
governance
Aware of guidance counselling /
consultation available to public
servants to resolve ethical issues
The Constitution is an effective
protection against corruption
Lack of real political commitment
to fight corruption
Familiarity with appropriate
legislation
Undergone ethics and
accountability training


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Disagree

Uncertain

Agree

3.2%

3.4%

93.43%

57.5%

16.7%

25.8%

55.3%

7.5%

37.2%

54.7%

14.4%

30.9%

7.8%

16.1%

75.9%

56.3%

8.7%

35.0%

65.1%

5.1%

29.8%

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ethical issues. The constitution was considered to be effective against corruption

by only 30.9% of respondents, while most respondents believed that the South
African government lacked the political will to fight corruption (75.9%). The
majority of respondents (56.3%) disagreed that they were familiar with the
appropriate legislation and 65.1% reported not having undergone ethics and
accountability training. Most respondents (75.8%) agreed that there was a link
between poor remuneration and corruption. Results reported in Table 6 indicate
that there are no resources that an institutional entrepreneur could use to
change the institutional logics of the SANPS.
The findings indicate that regulatory control was perceived to be poor
while there appeared to be a high degree of structural uncertainty. The task
environment was seen to be encouraging corruption. The inadequacy of the
task environment is underscored by the results reported in Table 7 showing
that respondents believed there was a need for anti-corruption training and
implying that the current level of training was inadequate. A clear majority
of respondents agreed that there was a need for educational programs (38.2%
agreed, 52.4% strongly agreed) and by implication pointing out that the need
for anti-corruption education was unmet.

Table 7
Need for Educational Programs
Strongly disagree
Disagree
Uncertain
Agree
Strongly agree

0.7%
2.1%
6.6%
38.2%
52.4%

WEAKENING OF THE INSTITUTIONAL ENVIRONMENT

The institutional environment was also perceived by respondents as encouraging

corruption (see Table 8). The majority of respondents agreed that the political,
administrative and procedural systems were complex and had been associated
with corruption (75.5%). Secrecy was seen to be a barrier to the curtailment
of corruption by 80.1% of respondents. This is despite the introduction of the
Promotion of Access to Information and the Protected Disclosure Acts. An overwhelming
majority of respondents (94.9%) agreed that management was responsible for
developing and enforcing proper systems of governance. At the same time
respondents reported having concerns about the ethical standards of the current
leadership (72.5%) and they also believed that core public values had not
been communicated (50.0%). Most respondents agreed with the statement that
there was a need to strengthen law enforcement against corruption (96.1%).


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Table 8
Institutional Environment
Statement
Complexity of political, administrative,
procedures and systems
Secrecy is a barrier to curtailing
corruption
Management responsible for
developing and enforcing proper
systems of governance
Concern about ethical standards of
current leadership
Core public values have not been
communicated
Need to strengthen law enforcement
against corruption
Insufficient pressure on judicial
institutions to impose more
stringent penalties for corruption
Link between poor remuneration and
corruption

Disagree

Uncertain

Agree

11.1%

13.4%

75.5%

7.3%

12.6%

80.1%

2.0%

3.1%

94.9%

13.4%

14.1%

72.5%

37.9%

12.1%

50.0%

1.3%

2.6%

96.1%

29.3%

11.0%

59.7%

15.7%

24.2%

75.8%

Respondents also agreed with pressure being applied on judicial institutions to

impose more stringent penalties for corruption (59.7%). A lack of faith in the
ability of judicial institutions to curb corruption was strongly indicated when the
results of these statements are taken together. Again, these results show that
the institutional logics in the SANPS favour corruption.
The results reported in Table 8 show that most respondents believed that the
institutional environment is inadequate to fight corruption. This is underscored
by the results presented in Table 9 showing the reasons why public servants
were reluctant to blow the whistle. Whistle blowing is an important mechanism
for resisting corruption, not just because it helps law enforcement, but also
because it creates a potential link between the individual and the organization.

Table 9
Reasons for Reluctance of Public Servant Whistleblowers
Victimization
Loyalty to colleagues
Unaware of procedures to follow
Other
No response


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71.4%
13.8%
9.5%
3.9%
1.4%

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The attitude of those in authority towards whistle-blowers is an indication of the

attitude to corruption However, Table 9 shows respondents believed that there
were immense difficulties faced by whistle blowers, such as intimidation and a
lack of official support. Respondents indicated that the reasons for reluctance to
blow the whistle were victimization (71.4%), loyalty to colleagues (13.8%) and
lack of awareness of procedures to follow (9.5%) (see Table 9). These findings
point to a weak institutional environment and a lack of cultural resources that
an institutional entrepreneur could use against corruption.
Luos Model shows that there are organizational consequences flowing from
Malfeasant behaviours. In the case of the SANPS it would appear to be an
evolutionary hazard (see Table 10). The results reported in Table 10 clearly
show that respondents were aware of the consequences of corruption for the
economy and decision making within the SANPS. While the results revealed in
Table 7 strongly suggest strategic impediment.

Table 10
Deterrent Outcomes
Statement
Corruption in SA is a disincentive to
economic activity
Corruption distorts priorities

Disagree

Uncertain

Agree

4.8%

13.4%

81.8%

5.9%

13.4%

80.7%

DISCUSSION

Corrupt behaviour is opportunistic and can have devastating consequences

for individuals, organizations and nation states. Corruption takes place in
and through organizations and represents the establishment of institutions of
corruption that exist in shadow organizations having their own culture and
procedures that undermine the anti-corruption culture and procedures of the
official organization. By their nature corrupt transactions are hidden from
view and therefore cannot be studied directly. The consequences of corruption,
which Luo has labelled deterrent outcomes, can be observed however. The
respondents reported the existence of significant corruption in the SANPS
(see Tables 4 and 5) and unambiguously answered our first question in the
affirmative. The data reported in this paper points to widespread malfeasance,
particularly systemic, procedural and structural malfeasance. There also appears
to be evidence of categorical malfeasance with regard to the judiciary (see
Table 8)
The respondents in our study reported that corruption was pervasive and of a
serious nature (see Table 4). The introduction of a new democratic government,
a new constitution in 1994, anti-corruption laws and the African renaissance

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have had little impact on entrenched corruption in the SANPS (see Table 5). This
finding is consistent with Modell (2001), Chang (2006) and ter Bog, (2008) who
argued that imposed changes, if not supported by those in authority, would be
inadequate to change behaviour (institutions) and curb corruption. In addition
the reported persistence of corruption (see Table 5) indicates that the imposed
changes were not seen to be in the selfinterest of those benefiting from the
entrenched institutions supporting corrupt behaviour. The results also suggest
that potential institutional entrepreneurs did not have cultural or economic
resources to change the institutional logics (see also Table 7).
The results reported in Table 6 answer our second question indicating that
there has been structural uncertainty and a lack of regulatory control in the task
environment of the SANPS. The findings indicate that regulatory control was
perceived to be poor while there appeared to be a high degree of structural
uncertainty. Structural uncertainty results from a lack of transparency, a
concentration of power through steep hierarchical systems (see Table 2). While
the reported lack of familiarity with legislation, lack of political commitment
to 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 and
structural uncertainty in the task environment can also be answered in the
affirmative.
Our third question was also answered in the affirmative as the findings
reported in Table 8 suggest that there had been a lack of institutional
transparency and fairness while at the same time the institutional environment
was characterized by complexity. The results reported in Table 8 indicated that
participants believed it was impossible to curb corruption due to the complex
network of political, procedural and administrative systems. Respondents
reported secrecy and a lack of transparency. The respondents belief that
poor remuneration could lead to corruption and that the legal system did not
adequately deal with corruption suggests that the institutional environment also
lacked fairness (see Table 8).
The institutional environment did not support or encourage support for
whistleblowers, which would assist transparency and discourage corruption.
Support for whistle blowers would include an organizational culture that
encouraged disclosure of corrupt behaviour and accommodating the needs of the
person making the disclosure while at the same time protecting the rights of
individuals who are the subject of the disclosure. However, respondents reported
that the predominant reason for reluctance to whistle-blow was the fear of
victimization (see Table 9). In organizations where unfairness is perceived to
be systemic and procedures lack transparency the ability to resist corruption
will be limited (Mavuso and Balia, 1999). Similarly, Luo suggests that where
the task and institutional environments are weak malfeasance will develop. Our
findings confirm the link between a weak task and institutional environments
and the development of various forms of malfeasance. The results reported in
Table 4 point to wide-spread malfeasant behaviour. There appears to be evidence

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of system, procedural, structural and categorical malfeasance. The data would

indicate that the latter is present in the legal system given the perception that
the legal system is inadequate in fighting corruption (see Table 8).
This obviously has serious consequences for public support of criminal justice
agencies. An independent and efficient justice system is regarded as the primary
agent for controlling corruption (Mavuso and Balia, 1999). Whilst any corrupt
exercise of public office is likely to affect the social, economic and moral fabric
of the community, corruption in the judicial system is particularly harmful since
the 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 for
malfeasance, can be answered in the affirmative.
Finally, the consequences of corruption described by Luo as deterrent
outcomes were reported by the respondents. This is a further indication of the
entrenched nature of corruption in the SANPS (see Table 4) and also the failure
of the anti-corruption measures introduced so far. Despite the consequences of
corruption being recognized by public servants and the measures introduced
to curb corruption, respondents reported that corrupt behaviour had not
diminished. Respondents also reported that they understood the economic and
social consequences of persistent malfeasance (see Table 10). These findings
are indicative of evolutionary hazards and organizational deficiency described in
Luos model. Evidence for strategic impediments, that according to Luo are manifest in poor resource allocation and the deterrence of building capability, is to be
found 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 the
institutional level as it will be argued there is not the political will or insufficient
resources to enforce anti-corruption laws, properly train public servants, provide
adequate pay, promote transparency and strengthen the justice system to
combat corruption. However, those benefiting from corruption are in positions
to make decisions about the anti-corruption system and they will place limits on
that system. The corporate culture will accept the existence of corruption; the
organizational structure will remain unchanged, allowing the continuation of
malfeasant behaviours and the compliance system will lose legitimacy as it will
be seen as weak in preventing corruption. The question of whether the SANPS
organizational culture, organizational structure and compliance systems can
adequately 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.
Luos model, on the other hand, explains the development of corruption at an
organizational level by focusing on the adequacy of the task and institutional
environments. The findings presented in this paper indicate that both the task
and institutional environments in the SANPS were inadequate in actively curbing
corruption. Consistent with Luos model there was evidence that the weak
task and institutional environments had led to malfeasant behaviour and the
consequent deterrent outcomes.

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CONCLUSIONS

Our last question was concerned with the ability of Luos institutional model to
provide insights into the entrenched nature of corruption in the SANPS. While
the model seeks to explain the development in business organizations we have
shown that the broad categories are still relevant to the public sector. Most of
the elements in each category are appropriate for the analysis of corruption in
the public sector, with the exception of oligopolistic intensity, that clearly refers
to an industrys structure and can be renamed as power concentration. Similarly
competitive disadvantage, under deterrent outcomes is not applicable to the
public 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 and
institutional environments encourage malfeasant behaviour and deterrent
outcomes strengthens the model. The results reported in this paper suggest
that Luos institutional model does provide insights into how corruption can
become entrenched in an organization. The model gives a possible explanation
of why the new South African constitution, the anti-corruption legislation and
the African Renaissance have been ineffective in curbing corruption. They were
not supported by the task or institutional environments and were not seen by
potential institutional entrepreneurs as a means of changing the institutional
logics in the SANPS thus explaining why the organizational anti-corruption
system remains undeveloped. Conversely, it can also be argued that if Luos
model provides insights, it points to practical changes that could be made at the
organizational level to combat corruption. By changing the institutional logics
and strengthening the anti-corruption elements in the task and institutional
environments malfeasant behaviours should be curbed.
The findings presented in this paper justify the use of an institutional
perspective to study corruption. This is important for several reasons. First, it is
difficult for corrupt behaviour to be directly and accurately observed or recorded,
however, the impacts of corrupt behaviour on organizations and individuals can
be examined thereby revealing the means by which institutions are used and
changed enabling corruption to become established. Second, institutional theory
explains the role of symbols, values and organizational culture to the functioning
of an organization allowing us to see the influence of the informal structures and
institutions. Third, institutional theory throws light on the relationship between
organizations and the individuals working in them giving us an insight into
the impact of an individuals values on their role in an organization. The results
reported in this paper underscore the usefulness of Luos model in understanding
how corruption can become dominant in an organization. However, the data for
the research reported in this paper was gathered using a questionnaire and
is therefore subject to the weaknesses of that research method. We suggest
that further research be undertaken in various organizations using a qualitative
method.


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