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Honor Among Thieves: A Transaction-Cost Interpretation of Corruption in Third World Countries

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  • Husted, Bryan W.

Abstract

This paper views corruption as a form of contracting amenable to analysis from the viewpoint of transaction-cost economics. Concepts such as transaction, bounded rationality, opportunism, and asset specificity are shown to apply to cases of corruption. Both market and parochial corruption are hypothesized to vary in accordance with changes in the specificity of assets invested to support the corruption transaction. Evidence from a number of different studies tends to support the hypothesized relation. The implications of the transaction-cost perspective are developed for policy makers and directions for future research are suggested.

Suggested Citation

  • Husted, Bryan W., 1994. "Honor Among Thieves: A Transaction-Cost Interpretation of Corruption in Third World Countries," Business Ethics Quarterly, Cambridge University Press, vol. 4(1), pages 17-27, January.
    • Handle: RePEc:cup:buetqu:v:4:y:1994:i:01:p:17-27_01
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    Cited by:

    1. Fox, Stephen, 2016. "Open prosperity: How latent realities arising from virtual-social-physical convergence (VSP) increase opportunities for global prosperity," Technology in Society, Elsevier, vol. 44(C), pages 92-103.
    2. Graf Lambsdorff, Johann, 2010. "Deterrence and constrained enforcement: Alternative regimes to deal with bribery," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-60-10, University of Passau, Faculty of Business and Economics.
    3. Jiménez, Alfredo & Hanoteau, Julien & Barkemeyer, Ralf, 2022. "E-procurement and firm corruption to secure public contracts: The moderating role of governance institutions and supranational support," Journal of Business Research, Elsevier, vol. 149(C), pages 640-650.
    4. Humphry Hung, 2008. "Normalized Collective Corruption in a Transitional Economy: Small Treasuries in Large Chinese Enterprises," Journal of Business Ethics, Springer, vol. 79(1), pages 69-83, April.
    5. Habib, M. & Zurawicki, L., 2001. "Country-level investments and the effect of corruption -- some empirical evidence," International Business Review, Elsevier, vol. 10(6), pages 687-700, December.
    6. José Pena López & José Sánchez Santos, 2014. "Does Corruption Have Social Roots? The Role of Culture and Social Capital," Journal of Business Ethics, Springer, vol. 122(4), pages 697-708, July.
    7. Maria Kravtsova & Aleksey Oshchepkov, 2019. "Market And Network Corruption," HSE Working papers WP BRP 209/EC/2019, National Research University Higher School of Economics.
    8. Alain Verbeke & Liena Kano, 2013. "The transaction cost economics (TCE) theory of trading favors," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 409-431, June.
    9. Ram Mudambi & Pietro Navarra & Andrew Delios, 2013. "Government regulation, corruption, and FDI," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 487-511, June.
    10. João Martins & Linda Veiga & Bruno Fernandes, 2023. "Are electronic government innovations helpful to deter corruption? Evidence from across the world," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 1177-1203, November.
    11. Fredriksson, Anders, 2014. "Bureaucracy intermediaries, corruption and red tape," Journal of Development Economics, Elsevier, vol. 108(C), pages 256-273.
    12. Michael A. Sartor & Paul W. Beamish, 2020. "Private Sector Corruption, Public Sector Corruption and the Organizational Structure of Foreign Subsidiaries," Journal of Business Ethics, Springer, vol. 167(4), pages 725-744, December.
    13. Hugh van der Mandele & Arjen C. van Witteloostuijn, 2013. "Free to Fail," Books, Edward Elgar Publishing, number 15112.
    14. Utz Weitzel & Sjors Berns, 2006. "Cross-border takeovers, corruption, and related aspects of governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 786-806, November.
    15. Lurdes Martins & Jorge Cerdeira & Aurora A.C. Teixeira, 2020. "Does corruption boost or harm firms’ performance in developing and emerging economies? A firm‐level study," The World Economy, Wiley Blackwell, vol. 43(8), pages 2119-2152, August.
    16. Pierre-Xavier Meschi, 2009. "Government corruption and foreign stakes in international joint ventures in emerging economies," Asia Pacific Journal of Management, Springer, vol. 26(2), pages 241-261, June.
    17. Vartuhí Tonoyan & Robert Strohmeyer & Mohsin Habib & Manfred Perlitz, 2010. "Corruption and Entrepreneurship: How Formal and Informal Institutions Shape Small Firm Behavior in Transition and Mature Market Economies," Entrepreneurship Theory and Practice, , vol. 34(5), pages 803-832, September.
    18. Schramm, Matthias & Taube, Markus, 2003. "Evolution and institutional foundation of the hawala financial system," International Review of Financial Analysis, Elsevier, vol. 12(4), pages 405-420.
    19. Sebastian Forkmann & Jonathan Webb & Stephan C. Henneberg & Lisa K. Scheer, 2022. "Boundary spanner corruption: a potential dark side of multi-level trust in marketing relationships," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 889-914, September.
    20. Frédéric Boehm & Johann Graf Lambsdorff, 2009. "Corrupción y anticorrupción: una perspectiva neo-institucional," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 11(21), pages 45-72, July-Dece.
    21. Lambsdorff, Johann Graf, 2002. "Making corrupt deals: contracting in the shadow of the law," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 221-241, July.

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