Busted! Now what? A Study of how European Companies Respond to a Corruption Scandal

Bendik Prestvik & Sigurbjörg Helga Ingadóttir

Student thesis: Master thesis

Abstract

This thesis explores how European companies respond after being exposed for corrupt activity. A company’s response represents how the company conducts itself in the aftermath of the corruption scandal and what, if any, actions and measures the company takes to change its behavior. Based on theory of corruption, control mechanisms, and crisis management we craft a conceptual framework for analyzing corruption concepts and control mechanisms in five cases of corrupt conduct by European MNCs. The control mechanisms analyzed are corporate governance, code of conduct, transparency, compliance, and risk management, and we investigate what control mechanisms were in place and what measures the companies took in the short- and long-term after to identify their responses. We conducted qualitative research using secondary, archived data from the companies’ websites and annual reports to identify changes in the five control mechanisms. Additionally, we conducted a word search in the companies’ annual reports to measure shifts in focus on anti-corruption measures. We conclude that European companies respond by taking several measures to strengthen their control mechanisms in the short-term with ongoing focus on these in the long-term. There were several commonalities and only minor differences which imply a shared belief that these control mechanisms are important in combating corruption. Furthermore, we found no news of new corruption scandals in any of the five companies in the long-term after the control mechanisms were improved which suggest that the increased focus on anti-corruption and control mechanisms was successful. While the phenomenon of corruption is a well-known subject and plenty literature has been written about it, we did not find anything regarding direct response to corruption within a company. Therefore, we believe this thesis offers guidelines to practitioners to strengthen their anti-corruption mechanisms.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final ThesisMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages113
SupervisorsLarissa Rabbiosi