Corruption, Norms, and Business Legitimacy

Abstract

Formal organizations in modern societies are based on contract relations that facilitate to rationalize organizational behavior according to the central norm of a functional system (economy, politics, law, religion, welfare, family, etc.). Beyond such functional regulations, business legitimacy reflects the social embeddedness of organizations and codifies the cultural norms of the organizational members’ internal and external behavior. Corruption, in common understanding, is a deviant behavior that breaks the fundamental norm of modern societies, that is, undermines the strict separation between the private and the public sphere. Management theory in general treats business legitimacy as means to regulate the relation between organizations and their social environment. On the basis of two empirical case studies two concepts of business legitimacy are distinguished: the classical formal business legitimacy as reactive and the substantial business legitimacy as proactive policy. It will be demonstrated that the understanding of business legitimacy correlates with the idea of management as steering respectively as reflexive management of regulation of self-regulation. Finally, the options in management and business legitimacy are discussed in the context of the paradigmatic shift from domination to governance in the transition from the Fordist to the Flexible Production model (for an overview, see: Thompson, Fordism, post-fordism, and the flexible system of production. Centre for digital discourse and culture. Virginia Polytechnic Institute and State University, Blacksburg, n.d.).