Is there any connection between corruption and a country’s cultural characteristics? To answer it, the researcher examined the relationship between Hofstede’s cultural dimensions and corruption. Gert Hofstede (1980) classified the national cultures in terms of four dimensions i.e., Power Distance, Uncertainty Avoidance, Masculinity/Femininity, and Individualism/Collectivism. Hofstede’s cultural index Power distance, individualism, and masculinity were observed to explain a significant part of the variance in perceived corruption.
The survey conducted by Gallup International found that in 60 countries where corruption is at its worst, disenchantment with democracy is at its highest. The recent numerous studies in the field of economics show corruption are closely attached to terrible economic costs.
The cost of corruption as evaluated by the economists shows that due to corruption operating costs of corporations increase by 10 to 20 percent, reduce profits by about a third, and lower public welfare, furthermore, corruption acts as a tax on foreign direct investment and may raise the tax rate by over 20 percent.
The World Bank, in its memo as reported by The Economist (1999), pp.22-24, indicates that 20–30 percent of the World Bank’s loans to Indonesia ended up in the pockets of local officials and their friends. Based on data and analysis by the World Bank, it has been identified that corruption is the single greatest hindrance to economic and social development, as corruption distorts the rule of law and weakens the institutional foundation on which economic growth depends.
Gert Hofstede explained national culture as “the collective mental programming of the human mind that distinguishes one group of people from another. This programming influences patterns of thinking that are reflected in the meaning people attach to various aspects of life and which become crystallized in the institutions of society”. The following section will show how the researchers relate corruption to Hofstede’s National Culture four-dimension index.
It measures how society accepts unequal distribution of power, as in every society power is not distributed among the members of the society. However, import thing is how members of society take this inequality. For example. societies high on power distance have norms, values, and beliefs and they perceive inequality as fundamentally good as,
· Most people are dependent on a leader.
· The powerful are entitled to privileges.
· The powerful should not hide their power, and there should be a hierarchy of power.
In those countries where superiors and subordinates are more likely to regard one another as equal in power, this results in more harmony and cooperation and potentially less corruption. For example, low-power distance countries are Denmark, Finland, and New Zealand. On the other side, Mexico, Indonesia, India, Pakistan, Poland, and the Philippines are those countries where people demonstrate high power distance. Hence, in these countries, the employees acknowledge the boss has legitimate power; they would seldom bypass the chain of command, and more corruption prevails in these countries.
The following table depicts the Corruption Perceptions Index (CPI) that is published by Transparency International in its annual report and ranks the above-stated countries as follows:
According to Uncertainty avoidance, people in a society feel threatened by uncertain situations and, therefore, do their best to avoid ambiguous situations by providing greater certainty and predictability. In such a society’s norms, values, and beliefs such as laws are very important; deviant people and ideas should not be tolerated; experts and authorities are usually correct, and conflict should be avoided. Countries such as Greece, France, and Korea have a high level of uncertainty avoidance and a strong sense of nationalism. In such societies, strict bureaucratic rules prevail to avoid uncertainty and bureaucratic structures encourage managers to behave unethically.
The countries with lower levels of uncertainty avoidance such as Denmark, Great Britain, and Sweden’s nationalism is less noticeable, and protests and other such activities are accepted. As a result of which it leads to lower anxiety and job stress, and less emotional resistance to change. In these countries company activities are less structured and less formal, managers tend to take more risks, and job mobility is also higher. There is no restriction to challenge laws and regulations and deviation from the norm is not considered threatening to society.
Those societies where tough values of assertiveness, materialism, and lack of concern for others prevails are considered as Masculine societies. The tough values tend to be associated with men’s roles of power and property; therefore, the label of “masculine” was used for such societies. Societies high on masculinity have norms, values, and beliefs such as gender roles should be clearly distinguished; men are assertive and dominant; machismo or exaggerated maleness is good; work takes priority over other duties such as family; advancement, success, and money are important.
Countries like Austria, Japan, and Venezuela are ranked highly masculine and may encounter proportionately more situations of potential corruption. In such societies, women are generally expected to stay home and raise a family. Opposite to masculinity are Feminine societies or where there is a low level of masculinity, they place importance on “tender” values such as personal relationships, care for others, quality of life, and service, so that social needs could dominate over productivity.
As these qualities tend to be associated with the female role, the dimension is termed “feminine.” Finland and Sweden tend to value cooperation, friendly atmospheres, employment security, and group decision-making. The low masculinity or femininity suggests a society of caring, compassion, and sympathy, one can hypothesize that corruption would be low since corruption typically would include taking advantage of another for personal gain.
Individualism is the tendency of people to look after themselves and their immediate family only and neglect the needs of society. Countries with a high level of individualism are those that care.
· norms, values, and beliefs such as individual achievement are ideal,
· people are responsible for themselves,
· and people need not be emotionally dependent on organizations or groups.
All highly developed countries are those that prize individualism, such as the United States, Australia, and Great Britain. Individual initiative, private opinion, competition, achievement, and democracy are highly valued in such societies. In these countries, individuals are expected to focus on satisfying their own needs. Businesses use an appraisal system that places an emphasis on performance. Individualist societies control their members more through internal pressure (guilt).
The norms, norms, values, and beliefs of Collectivist societies are such as,
· That every individual’s identity is based on group membership,
· Group decision-making is best.
· Groups protect individuals in exchange for their loyalty to the groups.
The collectivist societies such as Pakistan, Panama, and Korea tend to prefer strict social frameworks, emotional dependence on belonging to “the organization,” and a strong belief in group decisions. Loyalty to Group is valued above efficiency. These practices in which “Family” connections in selection might encourage corruption. “The network of friends and family may create lasting relationships that would facilitate abnormal or illegal transactions. In exchange for favors to members of their own social group, public officials may be tempted to accept bribes. Because a single standard does not exist in a collectivist society, one would expect perceptions of corruption to be higher”.