“Business leaders must remember that, left unchecked, corruption will eventually undermine the very legitimacy of capitalism,” says Paul Healy, James R. Williston Professor of Business Administration and Senior Associate Dean for Faculty Development at HBS. His research looks at the effects of corporate anti-corruption efforts on business performance, determining that high anti-corruption efforts pay off. Healy compares the world’s largest companies to each other on self-reported attempts to combat corruption (with collaborator George Serafeim). Companies that report high anti-corruption efforts are having a real impact, with fewer allegations of corruption appearing in the media. Companies with low anti-corruption efforts, while enjoying faster sales growth in corrupt markets, have lower profit margins and return on equity.

Healy also studies the remarkable array of citizen attempts to fight corruption. “These citizen-driven initiatives are raising public awareness as never before and demand that CEOs pay attention,” he says. In Russia, thousands of anonymous contributors identify corrupt government procurement processes through an online service called RosPil. In India, people can share their experiences on IPaidaBribe.com. In its first six months, the website received 250,000 hits and logged 5,000 bribery reports.

Healy urges business leaders to take action by enforcing strong anti-corruption policies that will reduce corruption, lead to better return on equity, and create goodwill.

(Published April 2014)

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