Mechanics of corruption(Part I)

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I HAVE spent the last four years studying a phenomenon of interest using classic grounded theory methodology, resulting in a classic grounded theory (CGT) called invisible entrepreneuring. It is only in the last few weeks that I have realised that Harvard management professor’s latest work on corruption published in his book titled The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty was linked to the phenomenon of invisible entrepreneuring.

Invisible entrepreneuring is located at the intersection of economics and corruption.

Invisible entrepreneuring emerged from a constant comparison of interview, observational, conversational, and secondary data, the initial data set coming from Zimbabwe and South Africa’s commuter taxi industry. Conceptually, it emerged through the study that what bothered the invisible entrepreneurs the most is how to optimise private economic gain within the constraints of a hierarchically ordered set of economic targets, operational rules and personal needs.

This is the very essence of Christensen’s three reasons why people hire corruption. It also emerged that the most problematic issue (optimising private economic gain) is resolved by hiring invisible entrepreneuring (core variable). Invisible entrepreneuring is a set of complex social psychological behavioural strategies leveraged on by invisible entrepeneurs to outwit their principals or asset owners.

A CGT is a conceptual model, meaning that its applicability and relevance cannot be restricted by time, geography and people. Put simply, the model of invisible entrepreneuring will apply anywhere, to any group of people and anytime as long it is established that the main problem being faced is optimising private economic gain within the constraints aforementioned.

Put formally, a CGT transcends time, geography and time. In coming up with invisible entrepreneuring, I was unwittingly also unpacking the mechanics of corruption. Invisible entrepreneuring is the mechanics of corruption.

The mechanics of corruption is a complex mix of interrelated thirty-two (32) behaviours namely: targetising, mid-point tension, tit-for-tat games, dayism, social structuring, rule-setting, normative share defending, assymetring, apprenticing, compete-collaborate with rival, micro-margin sensitivity, temporal micro-margin sensitivity, spatial micro-margin sensitivity, monetary micro-margin sensitivity, invisible pay-structuring, invisible dividending, invisible performance bonus, calculated bets, personal margin protection bets, strategic loss acceptance, forced loss acceptance, strategic loss recovery, engineered windfall bets, unanticipated windfall bets, resiliencing, normalising abnormality, over-tending, body-guarding, margins of pleasure, perpetual alliancing, spasmodic alliancing and scaled alliancing.

I will unpack each of these behavioural patterns in a series of articles, done once a month. The overall behaviour is that of oscillating between competition and collaboration among the corruption practitioners. In the model, this phenomenon is named economic realpolitik. When it suits their personal interests, invisible entrepreneurs (corruption practitioners) can collaborate.

Today we will look at the pattern of targetising and its three sub-patterns in depth. Targetising is the causal mechanism driving corruption (invisible entrepreneuring). It is the prioritisation of a corrupt person (invisible entrepreneur)’s personal economic objectives in order to fund a mix of private individual and social needs.

Targetising represents a nuanced playing out of a corrupt entity’s shared self-interest moderated by the asset owner’s expected economic benefits. It is this moderation of a corrupt entity’s elf-interest that births the paradox of simultaneity of competing and collaborating. Specifically, targetising makes the co-existence of competition and collaboration possible in that a corrupt entity strives to balance their personal income targets and those of the entities they are creaming off.

An invisible entrepreneur cleverly hierarcharises operational targets, with those targets enabling operations to continue undisturbed placed atop the pecking order. The invisible entrepreneur (corrupt entity) shrewdly includes a share of income due to the asset owner as part of prioritised operational targets. However, this owner’s income share is what the invisible entrepreneur deems reasonable and is set lower than what the asset-owner expects. Corrupt entities do not arbitrarily set this asset-owner’s economic benefit target. It is set by a de facto social structure comprising operational crew in an operational cluster such as a route.

Invisible entrepreneurs are more loyal to this de facto socio-political structure than to asset-owners or their principals.

As a result, a sort of social-psychological political tug of war breaks out as the sub-pattern of mid-point tension.

Mid-point tension is the adversarial mind-set emanating from the suspicion by asset-owners that the self-interest of the invisible entrepreneur trumps the asset owner’s.

The mid-point is an imaginary psycho-economic cut-off point serving to externalise the asset owner’s frustrated concession that they suspect they are being creamed off in an enterprise they are to own and call the shots. Mid-point tension expresses a concession on the part of asset owners that invisible entrepreneurs are effective in hiding operational information or covering their corruption tracks.

Mid-point tension shares similarities with Glaser and Strauss’s awareness context grounded constructs, in particular, suspicion and open awareness.

In suspicion awareness, patients believe nurses and doctors know they are dying and believe that these healthcare givers are purposely hiding the truth from them. In open awareness, patients believe that they are dying but remain ignorant about the manner and timing of their death. In our case, the invisible entrepreneurs would be the equivalent of Glaser and Strauss’s nurses and doctors. The asset owners (principals) are the equivalent of Glaser and Strauss’s patients.

Mid-point tension spawns tit-for-tat games, a sub-pattern of targetising.

Tit-for-tat games are strategic reactions by invisible entrepreneurs to restore their preferred income position when asset owners try to recover suspected or invisible losses. Invisible entrepreneurs strive to re-appropriate the power and dominance they deem are entitled to but seem to be losing to invisible entrepreneurs. The asset owners try to recover alleged losses by pulling away invisible entrepreneurs over the imaginary mid-point economic benefit. This invokes a tug of war game.

A recent example is the 2% intermediate transactions tax – people reacting by demanding cash to avoid the tax or charging premiums for electronic payments. Invisible entrepreneurs react to mid-point tug losses by adopting a collective defensive attitude that patterns out as dayism.

Dayism is the invisible entrepreneur’s ever-present disposition to sacrifice long-term productivity for short-term gains. As a result of mid-point tension and tit-for-tat games, invisible entrepreneurs tend to take an ultra-short term view that tends to serve their immediate self-interest.

What is the take-away from the pattern of targetising? First, from a farm worker, shop-keeper, senior business executive to a government minister, the mechanics of corruption are the same – if their personal income exceeds their personal economic costs, they are more than likely going to engage in corruption.

Second, in a constrained economic environment like ours, we expect the incidents of targetising to be rampant and widespread. Third, in a poor economic environment like ours, invisible entrepreneurs will work with a more determined effort and ingenuity to outwit asset owners(employers, the public , for example) as the numerous invisible entrepreneurs spawned by the harsh economic environment compete and collaborate to survive and meet their personal economic targets.

There are more invisible entrepreneurs than legitimate entrepreneurs in a dysfunctional economy, hence widespread opulence in a sea of poverty, top-end vehicles driving along pot-holed roads.

Brett Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer-reviewed international journal. — brettchuluconsultant@gmail.com.

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