Good Leadership and Organizational Structure Can Cut Corruption According to Stanford Business School Faculty

Business Wire, August 19, 2008

STANFORD, Calif. -- It's easier than most people realize for ordinary, well-meaning people to get caught up in activities they should have known were wrong. Yet, creating a structure that reduces the chances of cheating is not easy, requiring a balancing act between too few controls and too many, and between understanding why people cheat and intolerance for such behavior.

According to a feature story in the current issue of Stanford Business Magazine and reported in today's Stanford Knowledgebase, many people, including students at business schools, resist discussing how the influence of a group or a situation can lead good people to do bad things. It seems to excuse the behavior, and they want individuals to be held accountable for their actions. But research indicates that leaders who don't acknowledge that group pressure exists--so they can use that understanding to promote an ethical organizational culture and appropriate controls--may be setting their organizations up for bad behavior.

The idea that ordinary, good people can end up involved in corruption is counterintuitive to some. "We underestimate the power of a situation to control people's actions," says Deborah Gruenfeld, who is Moghadam Family Professor of Leadership and Organizational Behavior at the Stanford Graduate School of Business. "Most of us believe we're much more autonomous than we are."

Stanford Business School Accounting Professor Maureen McNichols teaches an elective course called Understanding Cheating. Among other things, the course helps students see how good leadership and the right organizational structure can cut down on the opportunities for corruption.

Social science research suggests leaders need to take into account group power, organizational structure, rationalization, and fear and confusion. For the full story, including related resources, visit: http://www.gsb.stanford.edu/news/knowledgebase.html.> (Stanford Knowledgebase is the free monthly information source for thoughts, ideas and research at the Stanford Graduate School of Business. For related research citations and to dig deeper, visit http://www.gsb.stanford.edu/news/knowledgebase.html.)