Is corruption sand or grease in the wheels of corporate sustainability?

Abstract

Applying the institutional logics perspective, we examine how pervasive corruption influences the economic, social and environmental dimensions of corporate sustainability. We argue that pervasive corruption functions as an institutionalized logic, whose compatibility with the stakeholder accountability logic, underpinning corporate sustainability practices, varies across sustainability dimensions, and that this relationship is moderated by stakeholder pressure, financial slack and institutional ties. Using time-lagged survey data from CEOs (t1) and sustainability managers (t2) in 242 domestic firms in Ghana, we find that pervasive corruption has a negative relation with environmental sustainability, a negative but insignificant, thus negligible, relation with social sustainability and a positive relation with economic sustainability. Firms’ financial slack and institutional ties strengthen the negative relations, while pro-sustainability stakeholder pressure weakens the negative relations, but has not significant influence on positive relations. Our study extends the corruption–sustainability debate by highlighting its multidimensional nature and the conditions that perpetuate corruption and shape how pervasive corruption interacts with corporate sustainability.