Modelling the Impact of Organization Structure and Whistle Blowers on Intra-Organizational Corruption Contagion

Abstract: We complement the rich conceptual work on organizational corruption by quantitatively modelling the spread of corruption within organizations. We systematically vary four organizational culture-related parameters, i.e., organization structure, location of bad apple, employees propensity to become corrupted (corruption probability), and number of whistle-blowers. Our simulation studies find that in organizations with flatter structures, corruption permeates the organization at a lower threshold value of corruption probability compared to those with taller structures. However, the final proportion of corrupted individuals is higher in the latter as compared to the former. Also, we find that for a 1,000 strong organization, 5 percent of the workforce is a critical threshold in terms of the number of whistle-blowers needed to constrain the spread of corruption, and if this number is around 25 percent, the corruption contagion is negligible. Implications of our results are discussed.