BACHELOR THESIS
Corruption and Organizational Justice
Impact of corruption in the organization on the remaining
members’ perception of organizational justice
Supervisor: Dr. A.J.A.M. (Fons) Naus
Name: Titus Nugrahadi Dewandono
ANR: 322591
Words: 7000
Date: 11-06-2010
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Management Summary
Corruption is one of the most severe problems in organizations. Such practices have existed since time
immemorial. It happens ever since the period of Ancient Egypt, Babylon, Roman, Medieval, until now.
Corruption happens in every country even in well-developed one. Long time ago, when social was still
primitive, such strong social bond and effective social control allow corruption to be rarely happening.
As the economic and politic sector in society is growing, individuals’ interest to conduct corrupt
practices start to growing as well makes it hard to eradicate. Nowadays, organizations play an important
role in facilitating the development in society. Consequently, the possibility of corruption in the
organization will definitely huge. Thus, it arrives at serious question: How to eradicate corruption in
organizations? Instead of finding an answer on “how”, it is intriguing to find the answer from the
perspective of “why” and “what”. Why corruption can arise in certain organization? What is the main
cause of it? It is interesting to find the answer on such questions from the view of the members within
the organization itself especially the virtuous one. Injustice is the most possible feeling that can arise
from these members’ perception when discover corrupt practices in their organization. In this paper,
author tries to found what typical perceptions of injustice that will arise from remaining members,
which are virtuous, when they witness corrupt practices in their organization. By examining the various
types of organizational-level corruption, we will try to predict what perception will arise from the scope
of organizational justice that consists of distributive, procedural and interactional. The result suggests
that each type of organizational-level corruption would raise different perceptions of injustice. The
differentiation would depend on the amount of outcomes that remaining members receive, the
procedures used in determining their outcomes, and what kind of interaction that remaining members
experience within the organization. Hopefully, decision-makers can provide better solutions to eradicate
corrupt practices based on this finding. This paper is interesting since few of journal papers try to link
corruption with organizational justice. Most of the papers about corruption only provide general ways in
solving corruption without formerly discovering the point of view of organization’s members itself which
directly witness corrupt practices. This paper tries to discover about it.
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Table of Contents
Management Summary
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Chapter 1: Introduction
1.1 Problem Indication
1.2 Problem Statement
1.3 Research Questions
1.4 Research Design and Data Collection
1.5 Structure of the Paper
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Chapter 2: Corruption
2.1 Introduction
2.2 Corruption in General
2.3 Types of Organizational-Level Corruptions
2.3.1 Organizational of Corrupt Individuals
2.3.2 Corrupt Organizations
2.3.3 Comparison
2.4 Summary
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Chapter 3: Organizational Justice
3.1 Introduction
3.2 Distributive Justice
3.3 Procedural Justice
3.4 Interactional Justice
3.5 Summary
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Chapter 4: Corruption and Organizational Justice
4.1 Introduction
4.2 Perception of Justice
4.3 Organization-Level Corruption and Organizational Justice
4.3.1 OCI and Organizational Justice
4.3.2 CO and Organizational Justice
4.4 Summary
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Chapter 5: Conclusions, Limitations, and Recommendations
5.1 Conclusions
5.2 Limitations
5.3 Recommendations
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References
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Chapter 1: Introduction
1.1 Problem Indication
In world history, corruption has been one of the most serious crimes in organizations. Corruptions
comprise many actions such as bribery, fraud, patronage, embezzlement, nepotism, etc. The corruption
happens not only in the organization of the third world country, but also developed country with its
level of intensity for each country. One interesting thing is that corrupt practices can generate
perceptions among other of members of organization which are virtuous. These members tend to sense
something wrong or problems with institutions where they belong as a result of such corruption. These
problems can be many things like, for example, problems in the systems, rules and procedures, task
environment, structure/hierarchy, or even justice. In this paper, we will attempt to focus on the impact
of corruption on the perception of injustice from the point of view of the virtuous member as the
remaining members of the organization. Related to these perceptions, one relevant theory that able to
serve as a basis is the view of organizational justice. Since corruption is perceived as injustice (You, 2006),
theory of organizational justice will be able to enlighten the problem by deriving it into three types that
are distributive, procedural, and interactional justice.
People who involved in the corruption practice usually, indeed almost often, work to the organizations.
These organizations can be in the form of government bureaucracy, formal state institutions, companies,
profit or nonprofit organizations, and other form of organizations. Pinto, Leana, and Pil (2008)
distinguish different types of organizational-level corruption: organizations that consist of many corrupt
individuals and organizations that perceived as wholly corrupt. They take many attributes in
differentiating types of organizational-level corruption including perpetrator, beneficiary, victim, norms
violated, consequence of detection, etc. These levels can be a critical variable that differentiates the
perception of injustice in forms of distributive, procedural, and interactional justice. Later, in this paper,
the levels will used as a determinant for predicting the perception of injustice.
Much literature and many cases about corruption have written by many scholars in different types of
academic fields. This also applies to the research on organizational justice. However, scarce literature
covers the relation between corruption and perceptions of fairness from the point view of
organizational justice. Therefore, the problem statement is as follows:
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1.2 Problem Statement
“What is the impact of corruption in the organization on the remaining members’ perception of
organizational justice?”
1.3 Research Questions
These are research questions in order to explain the impact:
1. “What are the types of organizational-level corruption and attributes that differentiate them?”
First the meaning of corruption discussed. A description of the various types of corruption given and also
the impact from each of them will be explained.
2. “How are the concept and the different types of organizational justice explained within scientific
literature?”
Secondly organizational justice is looked upon. Different forms of organizational justice will be discussed.
3.
“How are different types of organizational-level corruption are perceived by the remaining
member in terms of organizational justice?”
Finally, we used this information to formulate an initial condition and perception for types of corruption
linked to different types of organizational justice.
1.4 Research Design and Data Collection
This paper will be a causal research on the field of corruption and organizational justice. Using some
literatures review from many sources, an attempt will made to answer the main questions of the
research. The substantial idea of this research will lie on several important concepts, such as the terms
of corruption from many fields of researches, the types of corruption viewed from the organizational
perspective, and different types of organizational justice and its perception of fairness. It is important to
clarify that this research about corruption terms will emphasize more on the organizational level.
Therefore, it can deliver the relation with the perception of justice also in the level of organizational. The
source of literatures will gathered from many sources such as UvT online journal database, Google
Scholars, books, and other relevant online journal available on the internet.
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1.5 Structure of the Paper
This paper will structured in the following parts; Chapter 2 will focuses on corruption in organization.
Chapter 3 will be discussing about organizational justice. Chapter 4 will described the relation between
types of corruption in organization and organizational justice. Finally, the fifth chapter will arrive at the
conclusions, limitations and recommendations.
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Chapter 2: Corruption
2.1 Introduction
Corruption is a very broad concept. So far there is no term of corruption which understood and accepted
universally. In this chapter, we will first define corruption in many interpretations which based on
research from some literatures. After that the different types of corruption in organization level will be
defined. The chapter ends with a summary of findings in this chapter.
2.2 Corruption in General
There is no one exact definition about corruption. Indeed, recently there have been much more
literatures took corruption as topic. Some of these literatures also try to put the definition of corruption
based on their own research. More recently, corruption and its variants have studied across a number of
disciplines, including psychology, sociology, economics, law, and political science. Typically, each
discipline tends to examine corruption from a particular level of analysis, for example, the individual
(e.g., psychology), the organization (e.g., sociology), or the economy (e.g., political science) (Pinto et al.,
2008). There are many definitions of corruption taken from literatures. The table below will show some
definitions of corruption based on some relevant literatures.
Source
Definition
Anand, Ashforth and Joshi (2005, ‘Misuse of an organizational position or authority for personal or
p.10)
organizational (or subunit) gain, where misuse in turn refers to
departures from accepted societal norms.’
Dwivedi (1967, p.245)
‘Corruption is end-product of a process of administration and is
preceded by maladministration’
Tanzi (1995)
‘Corruption is the intentional non-compliance with the arm’s-length
principle aimed at deriving some advantage for oneself or for
related individuals from this behavior.’
You (2006, p.1)
‘Breach of “formal justice” and a violation of “obligations of
fairness” by individuals for their private gain, which involves
betrayal of public trust.’
Rabl and Kuhlmann (2008, p.478)
‘Corruption is deviant behavior, which manifests itself, in an abuse
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of a function in politics, society, or economy in favor of another
person or institution.’
Treisman (1998, p.1)
‘Misuse of public office for private gain.’
Andvig et al. (2000, p.9)
‘The definition of corruption consequently ranges from the broad
terms of “misuse of public power” and “moral decay” to strict legal
definitions of corruption as an act of bribery involving a public
servant and a transfer of tangible resources.’
Khan (2004, p.2)
‘Corruption is a social, legal, economic and political concept
enmeshed in ambiguity and consequently encouraging controversy.’
Jain (2001, p.73)
‘Corruption refers to acts in which the power of public office is used
for personal gain in a manner that contravenes the rules of the
game’
Grieger (2005, p.6)
‘Collective deviant, especially criminal behavior or evil action on
behalf of and/or against the organization’
Johnston (1986)
‘Abuse of public roles and resources for private benefit’
Table 1: Definitions of Corruption
According to definitions above, we can conclude that in general, corruption defined as any form of
activities that can potentially damaging the public interest while in the other hand giving benefits to
private which usually come as a result of misuse or abuse of its power related to position in the
organization.
Corrupt practices can have two sided of coin for its consequence on society and environment. Goudie
and Stasavage (1998), for example, distribute view from government officials/politicians and individuals
in civil administration as two dimensions of organization that are important in shaping both the form
and impact of corruption. The impact of corruption on an organization and economy can be either
devastating or, on the contrary, helpful. Corrupt practices increase risks and costs to businesses,
harming investor confidence, and strangle growth. As a result, such activities will lead to the distortion
of the organization's allocation of resources, weaken legitimate business practices, and even lead to
bankruptcy (Balkaran, 2002). Begovic (2005) explain that corruption involved massive transaction costs
which can distort the opportunity cost of economic efficiency in many beneficial sectors. However, in
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addition, some authors have found some compelling fact about the positive impact of corruption to the
economy. Corruption can help entrepreneurs reduce uncertainty over excessive bureaucratic and
regulation by bribing them (Leff, 1979), speed up the complexity of bureaucratic activities when some
sort of waiting period or queue occurs (Bardhan, 1996; Andvig, 1991), and improve allocative efficiency
(Goudie & Stasavage, 1998).
2. 3 Types of Organizational-Level Corruptions
Organizations are usually the basic foundation in raising corrupt practice. Luo (2004) also mention this
as one of the main reason why organizational perspective towards corruption is essential. Pinto, Leana,
and Pil (2008) developed the categorization of corruption at the organizational level. They distinct these
types based on two dimensions which are the primary beneficiary and collusion among organizational
members. It consists of organization of corrupt individuals, where a significant proportion of an
organization’s member act in a corrupt manner primarily for their personal benefit (similar to the
economic perspective), and corrupt organization, which is a group who collectively acts in a corrupt
manner for the benefit of the organization (similar to the sociology perspective).
2.3.1 Organizations of Corrupt Individuals (OCI)
Pinto et al. (2008, p. 688) define organizations of corrupt individuals (OCI) as “an emergent, bottom-up
phenomenon in which one or more mesolevel processes facilitate the contamination and initiation of
personally corrupt behaviors that cross a critical threshold such that the organization can be
characterized as corrupt”. In OCI, corruption is conducted by some individuals within the organization
for the sake of their own personal benefits.
Therefore, at OCI, individuals as members of the
organizations are the main actors that will receive benefits. As much member of the organization
conducting corrupt practices, it will bring losses incurred by the organization. Therefore, concerning the
fact that OCI phenomenon will focus to individuals as primary benefits is particularly salient. Pinto et al.
(2008) describe OCI as the bottom-up type of organizational-level phenomenon. Deriving from the fact
above, OCI described as the organizational-level phenomenon for some reasons. First is that the
behaviors of corrupt individuals are widespread that it easily create judgment to the organization as a
whole. Second, internal processes of the organization are held for facilitating corrupt actions. (Pinto,
Leana and Pil, 2008).
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2.3.2 Corrupt Organizations (CO)
Pinto et al., (2008, p. 689) identified corrupt organizations (CO) as “top-down phenomenon which group
of organization members - usually, the dominant coalition, organizational elites, or top management
team - carrying out group and coordinated corrupt actions that give major benefit to the organization.
Usually it is directly or through their assistant”. Basically it is a group that consists of the large amount of
members conducting corrupt behaviors within organization. As a result, the external stakeholders (such
as government, competitors, environment, etc) of the organizations will perceive CO as the organization
that is corrupt rather than corrupt individuals within the organization. In this organizational-level
corruption, the organization is the main beneficiary. They can be charged with guilty even when the
individual members were also can be considered as guilty as well. Research by Ermann and Lundman
(2003) found that there is some tendency arises on CO phenomenon. They had found that when
organizations were investigated for corruption, the senior management will often try to defense their
position by denying the knowledge of corrupt behavior in his/her organization. This top management
even often attempts to bring their employees, who had been previously proved to be directly involved
in the corrupt behavior, to become scapegoat. Unfortunately, one thing that will aggravate the situation
within CO is that top management tends to socialize the corrupt practices into the beginner or fresh
members. Baker & Faulkner (1993) found that CO phenomenon can be a result of the decentralization
process within organization, making it difficult to disclose the network activities of the organization
subunits.
2.3.3 Comparison
Based on the several characteristics on the table, some differentiations can be derived between both
types of organizational-level corruptions. We will focus only on several main characteristics that can give
clear differentiation between both types of organizational-level corruption. The first main characteristic
to be explored is the main actor and its beneficiary of each organization-level corruption. It is important
because this is one significant differentiator between both types. On the OCI phenomenon, possible
actors can be either individuals or groups. It is essential to examine these groups as a small fraction of
organization as a whole. Corrupt individuals, who are members of this group, are working for the
organization. However, the existences of these groups existence were not in a legal form instead it
considered as the “illusion groups” that created as a result of perception among members or even
external stakeholder of organizations. Different from OCI, the only actor of CO was always the group. As
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it said before, this group is a significant representation of the organization as a whole. Therefore,
corrupt practices conducted in this group will be regarded as practices conduct by organization.
Table 2: Distinction between OCI and CO Phenomena (Pinto, Leana and Pil, 2008)
The level of collusion among organizational members is also another critical dimension besides primary
beneficiary. In OCI, it is not necessary to held collusion among members since corrupt individuals may
act independently. Corrupt individuals in OCI may be described as “thorn in the flesh” or just few
trouble-makers in the organization. In CO, these corrupt individuals are not trouble-makers again since
the organizations have normalized such corrupt actions. Therefore, collusion in CO is more considered
legal procedures than problems in the system.
Impact also differs between both types. In OCI,
organization considered a victim of the OCI behavior. As many corrupt individuals exist in the
organization, it will produce negative consequences to the persistence of organizations including its
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internal system, members’ relationships, and even reputation. In CO, corruption brought more wide
impact to entities outside organization making it its victim. For example, the organizations which
corrupting the fund of the project agreement with the external environment entity will bring the
negative effect. In this case, the negative effect will borne by the external environment entity which is a
second part of the agreement. In OCI phenomenon, corrupt acts arise from some individuals and
sometimes in contrast to the interest or system of the organizations. While in CO phenomenon corrupt
act arise from large numbers of members in organization, therefore it is often align with the interest or
system of the organization (Tenbrunsel & Messick, 1999). The CO phenomenon was also similar with a
situation of collective corruption (see Brief et al., 2001) which stated that this nature of corruption can
penetrate the organization becoming part of its structure.
2.4 Summary
In this chapter, several terms of corruption were examined. By looking at these several definitions,
personal understanding can be made in determining the terms of corruption. It is also important to
consider that corruption occurs mostly in the organizations, therefore studying corruption from the
scope of organization level is strongly recommended.
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Chapter 3: Organizational Justice
3.1 Introduction
In this chapter, definition and explanation about several types of organizational justice will be given. It
divides into three parts: distributive justice, procedural justice, and interactional justice. Furthermore,
this chapter will end with a summary of the overall insight about all of these types of organizational
justice. With regard to organizational justice, three terms of justice need to be considered. These terms
of justice are distributive justice, procedural justice and interactional justice. Distributive justice first
described by Adams (1965). Procedural justice was first described by Leventhal (1980). Finally, there is
interactional justice, which described by Bies and Moag (1986). It is important to consider that, in a good
organizational justice, we need to consider about the perception of fairness from a member of the
organization regarding the outcomes in organization. These different types of organizational justice and
its impact will be described in this chapter.
3.2. Distributive Justice
Before 1975, the study of justice was primarily concerned with distributive justice (Colquitt et al., 2001).
Distributive justice is the perceived fairness of the outcomes or allocations that an individual receives
(Folger & Cropanzano, 1998). Greenberg (1982) stated that distributive justice deals with the reactions
to overpayment or underpayment inequity. However, distributive justice judgment depends on the
people’s evaluation of whether an outcome is appropriate, moral or ethical. Employees look for
distributive justice because they believe that a fair distribution of income will always bring them the
benefits (Adams, 1965). Therefore, distributive justice deals with the fairness of outcome as its one of
the driving force.
Moreover, other than outcomes, equality is also to be deemed as another important factor of
distributive justice. The determination of outcome of justice cannot depends solely on what a person
receives but also ought to considered the outcome relative to some standard of comparison (Folger &
Cropanzano, 1998). Distributive justice considered being highly connected with Adams (1963, 1965)
theory of equity. Greenberg (1990), on his finding on the main ideas of the Adams’ equity theory,
reveals that people tend to compare the ratios of their work outcomes like compensation or rewards to
their work inputs like contributions. Externally, they also compare their ratio with the other
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corresponding ratios of a comparison other, for example, their working partners. Later the essential
concepts of distributive justice may be similar with what clarified on Adams’ equity theory.
Consequently, fair perceptions on equity comparison will also lead to the perception of equality towards
the distribution justice.
Another, important and relevant, factor beside outcomes and equality is the personal status of the
perceiver.
Personal status of the perceiver concerns various factors such as effort, education,
experience, age, attractiveness, etc (Adams, 1964). In other words, even the outcomes are fair; it will
rely on personal status dependant.
Outcomes
Equality
Distributive Justice
Personal
Status
Figure 1: Distributive Justice Key Concepts
3.3 Procedural Justice
Procedural justice refers to fairness of issues concerning the methods, mechanisms, and processes used
to determine outcomes (Folger & Cropanzano, 1998). As an additional, Leventhal (1980) describe
procedural justice as the “feeling of justice surrounding the procedures, for employees to receive the
rewards they should receive”. Therefore, if the procedures comprising methods, mechanisms, and
processes used to figure the form of allocation are perceived to be the fair system by most people, then
it concluded that procedural justice would perceived as fair. Deutsch (1975) concern that there is a lot of
attempts to create allocation standards based of use of the different rules such as different contexts
(e.g., work vs. family), different organizational goals (e.g., group harmony vs. productivity), and different
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personal motives (e.g., self-interest motives vs. altruistic motives). However, all of these rules have the
goal that is to achieve procedural justice. As a result, it is reasonable to conclude that fairness of
allocation standards as one of the relevant factors in perceiving procedural justice.
Beside allocation standards, control is also one of the important concepts leading to procedural justice.
Types of control divided into two parts which are process control and decision control. Process control
concern with the amount of control over the procedures used to resolve their problems while decision
control deals with the amount of control they had on the process of determining outcomes (Thibaut and
Walker, 1975). To make sure that outcomes were fair, it needs the ability to determine the outcome
through decision control (Thibaut & Walker, 1978). Greenberg and Folger (1983) discover those
procedures that compromise the control on process of outcome attainment will be perceived as fairer
than procedures without control. As a result, people viewed the procedure as fair if they perceived that
they had control over the procedures (Colquitt, et al., 2001).
Other important key concepts need to be considered is consistency. Leventhal, Karuza, and Fry (1980)
believe that, to considered procedural justice to be fair, organizations need to follow certain structural
guidelines such as making decisions in a consistent and unbiased way. Therefore, if the process and
control regarding the process transparency is combined with consistent working process, it will
positively correlate with fairness perception of procedural justice. Brockner & Wiesenfeld (2005) found
that the impact of procedural justice perceptions on employee reactions is typically more obvious when
employees receive unfavorable outcomes rather than favorable. These unfavorable outcomes may be a
result of such inconsistent procedures in determining the outcomes.
Leventhal’s (1980) theory of procedural justice judgments focused on six criteria that a procedure
required to meet if it is to be perceived as fair. Procedures should:
a. Be applied consistently across people and across time,
b. Be free from bias (e.g., ensuring that a third party has no vested interest in particular
settlement),
c. Ensure that accurate information is collected and used in making decisions,
d. Have some mechanisms to correct flawed or inaccurate decisions,
e. Conform to personal or prevailing standards of ethics or morality, and
f.
Ensure that the opinions of various groups affected by the decision have taken into account.
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Allocation
Standards
Control
Procedural Justice
Consistency
Figure 2: Procedural Justice Key Concepts
3.4 Interactional Justice
According to Folger & Cropanzano (1998), interactional justice is the quality of the interpersonal
treatment received by an individual. Differ from other types of organizational justice that emphasize
more on the organization’s system, interactional justice emphasize more on human interaction with its
behaviors usually within organizations. Numerous elements of human behavior have found related with
interactional justice such as truthfulness, the condition of an explanation, politeness, friendliness,
sensitivity, interest, honesty, empathy, assurance, directness, concern , and effort (Blodgett et al., 1997).
Greenberg (1993) proposed two components of interactional justice which are informational justice and
interpersonal justice. Informational justice refers to perceived justice of the adequacy of the information
used to explain how decisions made (Greenberg, 1993). Informational justice also refers to the degree to
which employees receive an explanation for the decisions made by the organization and its agents
(Skarlicki et al., 2008). In informational justice, perception of fairness will arise when the information
shared among the members of the organization perceived to be adequate, clear, reasonable, and
detailed. Additionally, the fairness informational justice is strongly valued based on the fairness of
feedback usually by the organization authorities (Roberson and Stewart, 2006). Therefore, if feedback
perceived to be accurate, then the information may be considered to be fair. As a result, we may
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conclude that informational justice deals with two key concepts, information sharing and favorable
feedback.
Interpersonal justice refers to the degree of treatment with respect and dignity that people experience
(Greenberg, 1993). Fischer (2008) stated that the essential of interpersonal justice is that the value of
dignity and respect should be held by decision-makers in treating their members. People that treated
fairly by their authority will increase their loyalties toward the organization, regardless of the
favorability of the decision outcome (Tyler and Lind, 1992). Greenberg (1993) acknowledged that
interpersonal justice reflects with issues such as sensitivity, politeness, dignified behavior, and respect.
As a result, we may conclude that interactional justice deals with personal treatment as the key
concepts.
Favorable Feedback
Information Sharing
Interactional Justice
Personal Treatment
Figure 3: Interactional Justice Key Concepts
3.5 Summary
Organizational justice can be seen as one of the most important subjects in organizational behavior. It
divides into three parts: distributive justice, procedural justice, and interactional justice. Types of
organizational justice have their own different main substantial. Distributive justice concerns with the
fairness of the outcomes. Procedural justice concerns with the fairness of the process on work
distribution in organizations. Interactional justice concerns with fairness of treatment by other
individuals in organizations. In conclusion, Bies & Tripp (1995a, 1995b) stated that, in organizations,
justice is about the rules and social norms governing how outcomes (e.g., rewards and punishments)
should be distributed, the procedures used for making such distribution decisions (as well as other types
of decisions), and how people treated interpersonally.
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Chapter 4: Corruption and Organizational Justice
4.1 Introduction
This section will identify organizational corruption to organizational justice. In the previous chapters,
information on these two different terms was given. Using this information, this chapter will provide an
insight to see how these perceptions of justice were affected by different types of corruption.
4.2 Perception of Justice
In maintaining the performance of the organizations, we need to bring convenient and stable state
within members of the organization by providing well-structured work systems and mutually beneficial
relationships between members. However, if the stability within organizations starts to be erratic due to
some circumstances, unfair perception will tend to follow. Therefore, it might noteworthy to note on
fairness perceptions of members to investigate their psychological taught toward the organizations
current condition. Distributive justice, for example, predicted to be related primarily to cognitive,
affective, and behavioral reactions to outcomes. Thus, when the outcomes are perceived to be unfair, it
should affect the person’s emotions (e.g., experience anger, happiness, pride, or guilt) (Weiss, Suckow,
& Cropanzano, 1999), cognitions (Adams, 1965) and ultimately their behavior (Austin & Walster, 1974;
Walster et al., 1978). As a result, concerns about fairness are prominent in the workplace (Alexander
and Ruderman, 1987)
Justice can be perceived in different ways depend on which individuals asked. One way to assess the
justice is by seeing the possibility of injustice regarding some situations. Deutsch (1975) distributes the
sense of injustice into four which are values underlying the rules governing the distribution (injustice of
value), the rules which are employed to represent the values (injustice of rules), the ways that the rules
are implemented (injustice of implementation), or the way decisions are made about any of the
foregoing (injustice of decision-making procedures). Nevertheless, we cannot only count on the
determinant of justice only to one of the types of organizational justice instead of looking as a whole.
Lind & Tyler (1988) argued that distribution and process regarding the rewards by which they were
allocated were both instrumental as a determinant of judging the fairness of justice. Cohen-Charash
and Spector (2001) stated that justice perceptions are considered to be influenced by several things
such as outcomes one receives from the organization, organizational practices (procedures and quality
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of interactions), and characteristics of the perceiver. These things will lead to the completeness of
justice attributes. For example, Thibaut and Walker (1975) have shown that even if some individuals do
not get the outcome they desired (distributive justice); they may be still satisfied if they perceive that
the procedures used in distributing that outcome were fair and also if interactional justice were positive.
As an additional, McFarlin and Sweeney (1992) found that the fairness of a firm's procedures may have a
greater impact on organizational commitment than the fairness of personal outcomes that workers
receive. Thus, if they see procedures as fair even if they dissatisfied with their outcomes, employees
may view the organization positively. Therefore, fairness of procedural justice are far more importance
to be receiving much more emphasizing regardless of distributive justice.
However, Lawler (1977) emphasize more on perceived fairness of distributive justice (in terms of reward
allocations than on the perceived fairness of procedural justice (in terms of the allocation process).
Krishnan (2001) found that social disadvantage is a critical determinant of justice perception especially
in real life on contexts that have close implications regarding distributive justice. Despite the important
of principle about the justice perception in organizations, there are little empirical investigations
analyzing the component elements of justice-fairness in real organizational settings (Alexander and
Ruderman, 1987).
As a result, perception of justice will depend majorly on the individual’s perception of situations and
comparisons that individuals make (Hegtvedt et al., 2003). This will create different filter of assessments
of justice which also lead to different evaluations of outcomes. From Figure 4below, result in terms of
action after perceiving justice can be derived in giving additional information of relation between
corruption and organizational justice.
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Figure 4: Perceptions of Justice (Cohen-Charash & Spector, 2001)
4.3 Organizational-Level Corruption and Organizational Justice
After explaining both terms of corruption and organizational justice, we can derive a matrix form to link
them based on some attributes. Corruption in an organization has an impact on the position of the
remaining employees of the organizations. The impact of different organizational-level corruptions
(Organization of Corrupt Individuals (OCI) and Corrupt Organizations (CO)) will described following to
the three types of organizational justice.
4.3.1 OCI and Organizational Justice
If some parts in organization, represented by several corrupt individuals, act in corrupt practice the
remaining employees will realize that faulty located more to the characteristic of corrupt individuals
itself rather than organization system as a whole. This perceived faulty will determine distributive justice.
Distributive justice concerns the outcomes such as wage and compensation someone receives for his or
her job. When remaining employees observe their partners gaining more outcomes through corrupt
practice, assuming no legal proceedings occurs; it leads to a situation in which there is a feeling of
injustice concerning distributive justice. Remaining employees will demand a fair compensation system
based on their performance. In another case, the remaining employees as a victim tend to do corrupt
action in order to claim greater rewards from other to restore justice (Blumstein & Weinstein, 1969).
20
The fact is that in OCI linkage between performance and compensation are often weak (Pinto et al.,
2008). However, distributive justice may be better captured by deceit rather than by spreading (income
gap) (You, 2005).
When OCI occurs in organization, procedural justice can also be affected. Procedural justice concerns
the working process that needed to be done to earning wage. Remaining employees will consider that
their partners have deceived the working process in the organization in order to gain additional benefits
from their corrupt act. Pinto et al. (2008) have consider that if organizations that have a relatively large
number of jobs that are autonomous and difficult to supervise/monitor will be more likely to considered
the OCI phenomenon. It is essential to concern that, in OCI, top management is not involved in corrupt
practice instead his/her employees who do that. Thus, OCI is a bottom-up corruption phenomenon.
Therefore, derived from considerations above, the remaining employees will perceive this situation as
an injustice in terms of procedural. They also recognize some weakness may happen during the process
and decision control which is one of the main variables to judging fairness in procedural (Lind & Tyler,
1988).
Interactional justice concerns the sharing of information between units in the organization through
communication. Corruption can also have a significant impact on perception of interactional justice
within an organization. Remaining employees will realize that there is informational asymmetry happens
in the organization where corrupt individuals have more information advantage compare to the rest.
This will lead to the perception of injustice in informational terms. It means that there is unfairness in
information sharing between stakeholders in organization. While both of them share the same working
process, corrupt individuals will tend not to share their information for the remaining employees who
already give their best performance but having less compensation than the corrupt individuals.
Mortelmans et al. (2006) consider it as what it is called the stakeholder’s information asymmetry. It is a
situation which critical information is not exchanged or is not appropriately exchanged between
stakeholders.
4.3.2 CO and Organizational Justice
Compare to the organization of corrupt individuals (OCI), corrupt individuals (CO) cover wider members
in the organization. According to characteristics of corrupt organizations, which described in Chapter 2,
21
the actors of CO are always groups. However, there is still few of remaining employees who does not
involved in corrupt practices.
If CO phenomenon occurs, remaining employees will rather recognize that the faulty is in the system of
the organizations than characteristics of each of corrupt individuals itself. It is align with corporate
illegality as the key metric for manifesting CO phenomenon. As much more individuals involved in
corrupt act, the remaining employees will perceive injustice in the organizational legality, especially on
the implementation of merit performance that already available in the organization. They will perceive
an inequality in the distribution of outcomes. In CO phenomenon, two possibilities regarding the
decision on remaining of employees will arise. As a result of organization shared beliefs, firstly, the
remaining employees will either start to be involved in corrupt act. Another possibility is that they
choose not to involve while remaining powerless to the complaint for such distributive injustice and the
violation of performance-compensation system. Therefore, despite strong linkage on the performancecompensation relation in CO phenomenon, distributive injustice perceived to be occurring in the
organization by the remaining employees.
Procedural justice can also be affected by the CO phenomenon. For remaining employees, feeling of
injustice on procedural will be much greater than OCI phenomenon. As corruption done collectively in a
higher scale, in corrupt organization, remaining employees will realize that the working process in the
organization has modified tremendously from what it supposed to be. Surely, the modification of the
working process occurs in order to give benefits (which result from corruption instead of performance)
to most of the groups within an organization. In the working process, there may also collusion among
corrupt members, which is essential, in corrupt organizations (Pinto et al., 2008). It is crucial to
understand that CO phenomenon is a top down phenomenon. It means that the corruption in the
organization was coordinated by the top elite of the organization. These top elite facilitate the
interaction between the organization and its other stakeholders and also facilitate communication
among stakeholder groups (Fombrun & Shanley, 1990). They also have the greatest power to affect
perceptions about the appropriateness of violating the organization’s actions (Price, 1989). Therefore, it
is appropriate to consider that culture in the organization was often set by their top management.
Gordon (1985) believes that to study culture in the organization we need to see through an upper-level
group of organization because the corporate values, which held by the management, reflected in
behavior throughout an organization. Pinto et al. (2008) considered this situation as a top-down working
22
process. As a result, there will be a perception of injustice among the remaining employees regarding
the fairness of the procedural or process which particularly set by top management.
Interactional justice may also be affected by the occurrence of CO phenomenon. In CO phenomenon,
corrupt actions are more overt than in OCI. Therefore, informational justice may not be significant to be
perceived because information in organization shared evenly among members. Thus, interpersonal
justice is more appropriate in this phenomenon. As the culture of corruption spread within the
organization, it is difficult for remaining employees to breaking through or snitching the corrupt system.
Otherwise, at least they are not involved in such “bad” system. Consequently, there is a tendency for
them to be excommunicated by corrupt members. Those who excommunicated tend to receive lower
supervisory evaluations of performance (Rotundo & Sackett, 2002), and will experience higher levels of
stress and anxiety (Schneider, Swan, & Fitzgerald, 1997). As a result of such situation, feeling of
interpersonal justice will arise (Blodgett et al., 1993). Perception of injustice in interpersonal treatment
can also trigger deviant behavior by generating “hot” emotions, such as anger, resentment, or moral
outrage (Bies & Tripp, 1998). The worst effects of this feeling injustice in interactional on CO especially
when remaining employees treated unfairly by their employers is that they will tend to show deviance in
working (Ambrose, Seabright, & Schminke, 2002; Greenberg, 1998; Hollinger & Clark, 1983; Skarlicki &
Folger, 1997).
As a result, the Table 3 below shown in forms of the matrix to give a clear interrelation between types of
organizational-level corruption and the types of organizational justice
23
OrganizationalLevel
Corruption
Organization of Corrupt Individuals (OCI)
Corrupt Organizations (CO)
Organizational
Justice

Distributive Justice
Perception of injustice on action of

corrupt individuals.

Realize
weakness
Perception
of
injustice
on
organization legality set by top
in
performance-compensation
management.
the
system

linkage
Realize
weakness
in
the
performance-compensation system
implementation.

Procedural Justice
Perception of injustice on bottom-up

working process.

Perception of injustice on top-down
working process.
Realize weakness in control and

supervision of the working process.
Realize weakness in working process
culture setting (usually set by top
management)

Interactional Justice
Perception
of
information
sharing
injustice
on
(information
Realize weakness in information
sharing
among
members
Perception of injustice on personal
treatment (excommunication)

asymmetry)


Realize weakness in shared beliefs
within organization
of
organization
Table 3: Organizational-Level Corruption and Organizational Justice
4.4 Summary
In this chapter, the perception of several aspects of organizational justice has been investigated and
explained. First, the OCI phenomenon will lead to perception of injustice regarding action of corrupt
individuals who gain more outcomes (distributive justice), regarding bottom-up working process
(procedural justice), and regarding information sharing (interactional justice). Regarding these
perceptions, remaining employees will derive some rationales behind the cause of OCI phenomenon in
24
their organization. They may realize weakness in organization’s merit system, process control within
working process, and information sharing will potentially leads to information asymmetry between
stakeholders especially employees. Furthermore, CO phenomenon will leads to perception of injustice
on organization legality (usually set by their top management), top-down working process, and personal
treatment concerning the possibility to be excommunicated. They will possibly recognize some
weakness such as implementation of organization’s merit system, cultural set by top management
regarding the organization’s working process, and shared beliefs within organization.
25
Chapter 5: Conclusions, Limitations, and Recommendations
5.1 Conclusions
The main object of this thesis is to clearly and adequately answering the main question: “What is the
impact of corruption in the organization on the member’s perception of organizational justice?” As we
have seen that, in the previous chapters, profound comprehension have given related to the terms of
corruption with its consequences, the corruption phenomenon on organizational-level, and types of
organizational justice. Based on content explained above, we derived the matrix table elaborating
different perception from the view of organizational justice with each of both types of organizationallevel corruption by viewing the structural differences between them. One important thing that was
discovered on this relationship is that the remaining members of organizations will derive their
perceptions from the weakness situation they watch in organizations. This weakness can be in terms of
currently prevailing organizational system and structures and/or the attributes of corrupt members. The
organizational system itself can be comprised of performance-compensation system, linkage as well as
implementation, working process, and interactional between members.
Based on the matrix table in figure 6, substantial different between OCI and CO can be concluded. OCI
emphasizes its problem on the controlling of justice within activities in the organization. This problem
also considered by the remaining members of organization as main weakness in organization. Implicitly,
rules and procedures within OCI have made appropriately with the objective of equality among all of the
members. However, problem arise when there is some individuals starts to breached the rules while, in
the other hand, the control process has not run as it should be. As a result, in OCI, realization of
weakness in performance-compensation linkage, control process and information sharing will lead to
perception of injustice on corrupt individuals action, bottom-up working process, and information
asymmetry. On the other hand, CO emphasizes to the problem of justice more on the setting of justice
within activities in the organization. From the beginning, rules and procedures within the organization of
CO have made inappropriately with the objective of equality among all of the members. Usually, such
“injustice” rules and procedures made by top management. Further this set of rules potentially may
enable to shape the culture in the organization. As a result, realizations of weakness in performancecompensation implementation, working process setting and shared beliefs will lead to injustice
perceptions on organization legality, top-down working process, and personal communication.
26
Ultimately both phenomena of organizational-level corruptions will lead to the perception of injustice as
the remaining members see an inequality of benefits that they have compared to corrupt members.
However, injustice in both organizational-level can be differing in outcomes distribution, task procedural
and internal communications. Eventually, the time and quality needed to recover justice in the
organizations will depends on how responsive and attentive the management reacts to the feeling of
injustice among remaining of his/her members would it be. The faster the management responds and
put attention to the feeling of injustice in his/her organizations, the higher the possibility that injustice
condition can be reduced.
5.2 Limitations
Limitations of this research contained in the amount of the extensive literature available in this field of
research. Few of literatures discuss the effect of corruption acts to perception of organizational justice
since there are many other intriguing subjects to associate with organizational justice beside corruptions.
Many literatures about organizational justice were easily found in several journal articles. It considered
being one of the most prominent theories to be learned when discussing organizational science field.
However, few of the literatures focus on perception of justice. On the other hand, despite the
abundance of literatures about corruption, few of them discuss the types of corruption from the point of
view of organizational structures, whereas organization is a strong point of departure when discussing
types of corruption. Most of the corruption literatures are about the general types of corruption without
emphasizing much on the types of medium that facilitates the corruption itself which is organizations.
5.3 Recommendations
Further research should be conducted in the field of corruption related to organizational justice. A
research should be set up to analyze the characteristics of organization that facilitate the practice of
corruption. Therefore, after research and analysis have conducted, the essential problems that raise
corrupt practices can be discovered and studied. It is also recommended conducting psychology studies
in helps determine the cause of corruption since corrupt practices happen mostly as a result of
individuals’ nature. This will give an insight on how to eliminate, or at least reduce corrupt practice in
organizations. Together with the endowment of organizational justice theory, the elimination process of
corruption can touch the problem within the systems of the organization.
27
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