In search of an institutional framework for anticorruption: Lessons from Scandinavia

• Author: Yongsun Paik,Morten Huse,Gillian Warner‐Søderholm
• Published date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.22028
• Date: 01 March 2019

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In search of an institutional framework for anticorruption:

Lessons from Scandinavia

Yongsun Paik

1

| Gillian Warner-Søderholm

2

| Morten Huse

2

1

Department of Management, Loyola

Marymount University, Los Angeles, California

2

Department of Communication and Culture,

BI Norwegian Business School, Oslo, Norway

Correspondence

Yongsun Paik, Department of Management,

Loyola Marymount University, One LMU

Drive, Los Angeles, CA 90045.

Email: yspaik@lmu.edu

Scandinavian countries continue to build strong reputations as the world's least corrupt coun-

tries. In this case study, in a search for an institutional framework that other countries and policy

makers can learn from, we explore sources of high transparency and anticorruption norms in

Scandinavia. The most important lesson from this study is that legislative, normative, and cul-

tural institutional pillars must be aligned to achieve the highest level of transparency and antic-

orruption. We made three main observations. First, adequate and comprehensive legislation in

addition to severe noncompliance consequences contribute to an ethical business environment

in Scandinavian countries. Second, a willingness to embrace integrity norms and standards

through active participation in international conventions and agreements on anticorruption

movements contributing to high transparency and integrity management in the Scandinavian

countries. Third, a national culture that emphasizes high governmental and civic trust makes

bribery and corruption less sustainable. Residents' high level of trust in public officials and police

in addition to high civil and media engagement in antibribery cases results in corruption being

“starved of oxygen”. The findings suggest high trust levels, enforced regulative legislation, small

country size, and high human development help craft a framework that drives a transparent

business environment.

KEYWORDS

anticorruption, culture, institutions, Scandinavia, transparency

1|ANTICORRUPTION AND

TRANSPARENCY IN SCANDINAVIAN

COUNTRIES

Why are organizations in Scandinavian countries less susceptible to or

less concerned about bribery and corruption than in other countries?

Do Scandinavian organizations have differing perceptions and princi-

ples about what is good or bad behavior? (Reilly & Kyj, 1990). Or, are

the penalties for corruption also an effective detriment? Using Scott's

institutional theory framework (2014), we explore these questions

and help identify the sources of transparency and anticorruption in

this cluster of countries. By Scandinavian countries, we mean Finland,

Denmark, Norway, and Sweden. In our search for an institutional

framework of anticorruption, we conducted in-depth interviews with

17 executives and senior-level managers from 10 major companies

based in Scandinavian countries. Through their stories, we attempt to

better understand the successes of these countries in terms of pro-

moting ethical business practices and transparency.

Corruption is most commonly defined as the misuse of public

power for private gain (Becker, Boeckh, Hainz, & Woessmann, 2016;

Svensson, 2005). It is likely to increase business costs, distort market

competition, and hurt innovation (Zeneli, 2015). A further negative

effect on businesses is that corruption creates uncertainty, which can

manifest as a pseudotax, increasing costs and reducing incentives to

compete (Cuervo-Cazurra, 2006; Cuervo-Cazurra, 2016). In the long

run, corrupt practices can damage a company's reputation and harm

corporate governance practices, which may affect overall perfor-

mance. Even more detrimental, corruption undermines security and

has devastating effects in poorer regions of the world (Zeneli, 2015).

Corruption is rooted in a lack of transparency and is one of the

key challenges for multinational corporations (MNCs) to overcome

when conducting business in foreign countries, where bribery and

DOI: 10.1002/tie.22028

Thunderbird Int. Bus. Rev. 2019;61:105–118. wileyonlinelibrary.com/journal/tie © 2018 Wiley Periodicals, Inc. 105