Chapter 12: Leadership Corruption: Influence Factors, Process, and Prevention

In this contribution, we will explore leadership corruption as one particularly harmful case of “leadership gone wrong.” Corruption, that is, the misuse of an organizational position or authority for personal, subunit and/or organizational gain (Ashforth & Anand, 2003), like no other form of wrongdoing in organizational context jolts society. It not only results in financial losses (directly through bribery and embezzlement, or indirectly through distortion of fair market structures and competition etc.). Corruption also causes physical harm to employees (e.g., through unsafe working conditions), customers (e.g., through defective or hazardous consumer goods) and the environment (e.g., through illegal environmental pollution by radiation, waste or emissions or depletion of resources) (cf. McKendall & Wagner, 1997; Szwajkowski, 1985). Because of the manifold consequences of corruption, it is impossible to quantify its costs. Bribes for example are not exclusively monetary and the monetary ones are by their very nature not publicly recorded. The indirect financial consequences like harm to competitors and fair market structures are also hard to quantify. Likewise, the nonfinancial consequences such as injuries or even casualties of employees or customers or environmental damage are not quantifiable in dollar value (Transparency International, 2008).