Causes of Corruption in Public Sector Organization: The ...oaji.net/articles/2016/352-1456081046.pdf · department working in District Bahawalnagr, Punjab, Pakistan. Primary data

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*Corresponding author: Zahid Iqbal M.Phill Scholar, Visiting Lecturer, The Islamia University of Bahawalpur, Bahawalnagar Campus. E-Mail: zahid_luck21

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Management and Administrative Sciences Review

Volume 4, Issue 6

Pages: 837-845

November 2015

e-ISSN: 2308-1368

p-ISSN: 2310-872X

Causes of Corruption in Public Sector Organization: The Study of District Bahawalnagar, Punjab

Zahid Iqbal1*, Hassan Ahmad2, Muhammad Ahmad Mushtaq3, Shahid Iqbal4

1. M.Phill Scholar, Visiting Lecturer, Department of Commerce, The Islamia University of Bahawalpur, Bahawalnagar Campus.

2. M.Phill Scholar, Visiting Lecturer, Department of Commerce, The Islamia University of Bahawalpur, Bahawalnagar campus.

3. MBA Scholar, The Islamia University of Bahawalpur, Bahawalnagar Campus.

4. M.Com Scholar, The Islamia University of Bahawalpur, Bahawalnagar Campus.

The core objective of this study is to observe the causes of corruption in government

department working in District Bahawalnagr, Punjab, Pakistan. Primary data for this

study is collected from the entire administrative department working in district

Bahawalnagar through a questionnaire. Non-Probability (Conveyance) sampling techniques

used for data collection. All the variables of study Corruption (Dependent variables) and

independent variables including personal financial problems (PFP), lack of legalization

(LOL), forced corruption (FC) and Other reasons (OR) divided into different relevant

dimensions. According to results of study positive and significant relation observed between

corruption (CR), personal financial problems (PFP), lack of legalization (LOL), forced

corruption (FC), whereas negative relationship found between corruption (CR) and others

reasons (OR).

Keywords: Lack of legalization, personal financial problems, forced corruption

INTRODUCTION

The core objectives of this study are to observe the

reasons due to that corruption growing rapidly in

Pakistan especially in District Bahawalnagar.

According to Taghavi et al (2011) transfer of public

interest to private people for their personal

benefits is called corruption. In this study

corruption is dependent variable that is

operationalized into further three elements

including demand of money besides salary, not

observing office timing and underutilization of

specific skills by the government employees.

According to Chang-Golden (2004) negative

relationship between employee’s salaries, office

timing and appointment of inefficient people on

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key post was observed. Personal financial

problems (PFP) are independent variable that is

operationalizing into different dimension

including low salary, employee’s intention to get

the higher status and appointment of people on

reference basis. According to Persson et al. (2003)

low salaries or low income is the major cause of

increasing corruption in developing countries.

People also involve in corruption as they are get to

higher status in society. Some people also do

corruption as they are appointed through unfair

means. Second variable, which is being used in this

study to measure the corruption, is lack of

legalization (LOL) that was operationalized into

three dimensions including lack of accountability,

poor legal system, lack of education and poor

political system.

According to Myint (2000) corruption lies in every

organization including private sector, public sector

and even in non-profit organization of both

developed and developing countries and its major

reason is the lack of accountability, poor

legalization system and corrupt politicians. Third

independent variable of the study is the forced

corruption (FC) that was divided into three

dimensions including pressure from higher

authorities, pressure of co-workers and corrupt

behavior of client. La Porta et al (1999)

Government servants is the major beneficiaries of

corruption in developing countries as they

involved some time in corruption due to the

pressure of higher authorities, enforcement of

coworkers and also due to the client of specific

department. Last independent variables of this

study is the other reasons (OR) that was divided

into three further dimensions including lack of

latest technology, inefficiency of anti-corruption

department and low literacy rate is the cause of

increasing corruption. According to Treisman

(2000) one of the major reasons of increasing

corruption in developing countries is low literacy

rate that can be improved through economic

development. According to Lambsdorff (2001)

inefficiency and male administration institutions

that are being established to reduce the corruption

are major source of increasing corruption in

developing countries but no correlation of between

corruption, literacy rate and technology observed.

LITERATURE REVIEW

1. Illegal use of official position, rank of status for

personal benefits or for the benefits of their friends

and family member in shape of any form is called

corruption (U-Myint, 2000).

2. Melgar et al (2009) mention that misuse of public

power or authorities for their personal and private

gain is called corruption.

3. Gadit (2011) mentioned that misuse of public

office for their personal political gain is called

corruption.

4. According to Javaid (2010) misuse of powers

that are associated with specific post for the

personal benefits or for the benefits of their close

friends and family members.

5. As discussed by Glynn et al. (1997) corruption

survives in all developed and developing countries

like a cancers. Almost every segments of society is

suffering from corruption.

6. According to Amundsen (1999) corruption

increasing and becoming a part of our cultural and

negatively affect the political and economic system

of our country.

7. According to Theobald (1990) there are two

main approaches to determine the corruption. One

any political party or administration prefer to their

personal interest at the cost of public interest,

second when an Government official illegally

support to anyone at the cost of public interest.

8. According to La Porta et al. (1999) majority of

Government servants do corruption due to poor

political and judicial system as they know they

cannot be arrested or being caught.

9. As discussed by Banfield (1958), religious factor

is also associated with corruption. More religious

people are not corrupt as compare to others person

that are not associated with religion.


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10. Major causes of corruption in developing

countries are the influence of religious scholar,

democratic government, political leaders and

corrupt government employees (Geddes, 1997).

11. Corruption is also an outcome of weak

administration besides this individual and

departments that are establish to counter the

corruption becomes a cause of enhancing the

corruption as they do not fulfilling their

responsibilities (Klitgaard, 1998).

12. In developing countries corruption increasing

in public sector organization as compare to the

private sector. Not only economic factors but non-

economic factors also associated with increasing

corruption trend in developing countries (Alt &

Lassen, 2003).

13. As discussed by Ali and Isse (2003) preventive

measures from government can reduce the level of

corruption.

14. According to Brunetti-Weder (2003) corruption

becomes a culture in most of developing countries.

15. Haarhuis and Leeuw (2004), mention that all

types of corruption including moral, social,

political, economic, writhers, scholars and

intellectual’s corruption exist in developing

countries especially that lies in Asia.

16. As discussed by Lambsdorff (2004) mentioned

that corruption have various aspects including

misuse of state resources, illegally favoring friends

and family members and sometimes give

preference to his family members or kinfolk over

the others people especially for appointment of

different key posts in government sector.

17. According to Lipset (1960) democratic set is

also associated with corruption. Corruption

increasing in those countries where political

system is stronger.

18. Income inequality and various non-economic

factors including new technology and low literacy

rate is cause of increasing corruption in

government sector organization of developing

countries (Laza Kekic, 2007).

19. A negative relationship between political

administration of country and corruption observed

(Lederman et al, 2005).

20. Taghavi et al (2011) trend of corruption

increasing day by day due to over interference of

government in economy, poor administrative

system, excessive bureaucracy and complexity,

governmental and private monopolies, non-

transfer regulations, weak management, unequal

distribution of income, lack of accountability of

government and prominent politicians. In public

sector organization phenomena of bribery,

embezzlement, fraud, extortion, favoritism and

nepotism exist that is a big hurdle in the way of

good governance. Phenomena of corruption exist

in all types of government including district level

government, provincial level and also in federal

level (Khan et al, 2004).

21. Qadir (2003) reported that corruption in

Pakistan is so pervading in that it has destroyed

the very fabric of our society and during the last 10

years all elected Governments fail due to

enhancing political corruption.

22. A negative relationship between particular

religion and corruption was found in developing

countries (Herzreld-Weiss, 2003).

23. In most of developing countries development

project suffer from corruption especially in those

countries that lies in Asia and Pacific region (U-

Myint, 2000).

24. Trend of corruption was developed by the

British government in Pakistan before the

independence by awarding of lands, titles and jobs

to specific group. Corruption is a part of culture as

inherited before the independence. After the

independence white-collar crimes had its roots in

form of settlement of refugee claims, industrial

sanctions, and allotment of agriculture lands and

mechanics of money making giving rise to

rampant corruption (Qadir, 2003).

METHODOLOGY


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Theoretical Framework

Hypothesis of the Study

TABLE 1 HERE:

Sampling Techniques

For this study non-probability sampling

(Convenient sampling techniques) used and all

level of Govt. Employees working in District

Bahawalnagr use as sample size that comprises on

150 employees.

Data Collection Method

After getting approval of all the higher authorities

of respective department, primary data collected

from all level of employees including lower level

employees from BPS 1-10, middle level employees

from BPS 11-16 and higher level employees BPS

17-22.

Response Rate

Two hundred questionnaires were distributed

among the all level of Govt. Employees working in

District Bahawalnagar out of which 150

questionnaires were return back by the employees.

TABLE 2 HERE:

Data Analysis Techniques

To achieve the objective of this study and to

observe the causes of corruption in Pakistan SPSS

used and following steps were adopted to analyze

the available data and finding out the results of the

study.

Reliability Analysis

Reliability analysis used to measures the reliability of each item of scale regarding causes of corruption that including dimension like corruption (Dependent variable), and independent variables including Personal financial problem (PFP), lack of legalization (LOL), forced corruption (FC) and Other Reasons (OR).

Correlation Analysis

Correlation analysis techniques used to observe the relationship between dependent variable Corruption (CR) and independent variable including Personal financial problem (PFP), lack of legalization (LOL), forced corruption (FC) and Other Reasons (OR).

Multiple Regression

To test the hypothesis of the study, multiple regression analysis techniques used. For this purpose average of all items of each dimension was computed and finally this average was used in multiple regressions to test the hypothesis dependent variable Corruption (CR) and independent variable including Personal financial problem (PFP), lack of legalization (LOL), forced corruption (FC) and Other Reasons (OR). FINDING AND CONCLUSION Reliability Analysis

TABLE 3 HERE: Reliability analysis used to measure the reliability of scale that is being used for data collection. Cronbach’s Alpha value is scale is 0.946, it means scale is highly reliable and can be used for data collection and further analysis.

Correlation Analysis

TABLE 4 HERE:

Above cited correlation matrix indicated the positive and significant relationship between dependent variable Corruption (CR) and independent variable including Personal financial problem (PFP), lack of legalization (LOL), forced corruption (FC) and Other Reasons (OR) at 0.01 level.

Co

rru

pti

on

(CR

)

Personal Financial

Problem (PFP)Lack of

Legalization (LOL)

Forced Corruption (FC)

Others Reasons

(OR)


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Model of the Study

TABLE 5 HERE:

The Model Summary table indicates that the correlation coefficient (R), using overall model is 0.935 (R2 = 0.875) and the adjusted R2 is 0.872, it means that 87.2% variance in dependent variable Corruption (CR) can be examined through the independent variable including Personal financial problem (PFP), lack of legalization (LOL), forced corruption (FC) and Other Reasons (OR).

TABLE 6 HERE:

The ANOVA table shows that F=203.388 and is

also significant. It means model is good fit and

successfully predict the dependent variable

through independent variables.

TABLE 7 HERE

The coefficient table indicates the standardization

of beta coefficient that is interpret similarly to

correlation coefficient. The t-value and P-value of

independent variable personal financial problem

(PFP), lack of legalization (LOL) and forced

corruption (FC) is 0.000, it means these three

independent variables significantly contribute to

predict the corruption (CR) whereas insignificant

relationship between other reasons (Independent

variable) and corruption (CR) observed.

Summary of Results

TABLE 8 HERE

CONCLUSION

The basic purpose of this study is to observe the

factors or variables that are associated with

corruption. The results of the study shows that

personal financial problem (PFP), Lack of

Legalization (LOL) & Forced Corruption (FC)

having positive association with corruption where

as Other Reasons including lack of technology, low

literacy rate and inefficiency of anti-corruption

department not having any correlation with

corruption.

REFERENCES

Ali, M. Abdiweli and Hodan Said Isse. (2003), “Determinants of Economic Corruption: A Cross-Country Comparison”. Cato Journal 22(3): 449-466.

Alt, James E. and David Dreyer Lassen. (2003), “The Political Economy of Corruption in American States”. Journal of Theoretical Politics 15(3): 341-365.

Banfield, E.C., 1958. The Moral Basis of a Backward Society, The Free Press, New York Brunetti, Aymo and Beatrice Weder. (2003), “A

Free Press is Bad News for Corruption”. Journal of Public Economics 87:1801-1824.

Chang, Eric CC and Golden, Miriam A. (2004), “Electoral Systems, District Magnitude and Corruption”. Paper presented at the 2003 annual meeting of the American Political Science Association, August 28-31, 2003

Gadit, Amin A. Muhammad (2011) “Corruption in medical practice: How far have we gone?, Opinion and Debate, Vol. 61, No. 1, January 2011

Geddes, B., (1997), “The political uses of corruption and privatization”. Paper prepared for presentation at the annual meeting of the APSA, Washington DC.

Glynn, Patrick, Stephen J. Kobrin, and Moises

Naim. (1997), "The Globalization of Corruption." In Kimberly Elliott (ed.), Corruption and the Global Economy, pp. 7-27.

Herzfeld, Thomas and Christoph Weiss. (2003), “Corruption and Legal (In)- Effectiveness: An Empirical Investigation”. European Journal of Political Economy 19: 621-632.

Javaid, Umbreen (2010) “Corruption and its Deep Impact on Good Governance in Pakistan” Pakistan Economic and Social


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Revie, Volume 48, No. 1, pp. 123-134 (Summer 2010).

Khan, M. Kakakhel, N. & Dubnick, M. (2004). Prosecuting Corruption: The Case of Pakistan. Working Paper for the Ethics Forum held by the American Society for Public Administration, Portland. [Online], Available from http://unpan1.un.org/intradoc/groups/ public/documents/APCITY/UNPAN019 113.pdf, [Accessed on 5 June 2010).

Klein Haarhuis, C.M., Leeuw, F.L. (2004). Fighting government corruption: the new World Bank programme evaluated. Journal of International Development, pp. 547-562.

Klitgaard, Robert (1998), “Controlling Corruption”. Berkeley: University of California Press. La Porta, R.; Lopez-De-Silanes, F.; Shleifer, A.;

and Vishny, R. (1999) “The Quality of Government.” Journal of Law, Economics and Organization 15 (1): 222–79.

Lambsdorff, Johann Graf (2001a), “Background Paper to the 2001 Corruption Perceptions Index: Framework Document”. Transparency International and Gottingen University.

Lambsdorff, Johann Graf. (2004). Between Two EvilsInvestors Prefer Grand Corruption! Diskussionsbeitrag Nr. V-31 05, Volkswirtschaftliche Reihe ISSN 1435- 3520.

Laza Kekic (2007), “Index of democracy”, by Kekic, director, country forecasting services, The Economist Intelligence Unit.

Lederman, Daniel, Norman V. Loayza, and Rodrigo R. Soares. (2005) ”Accountability and Corruption: Political Institutions Matter”. Economics and Politics. 17: 1-35.

Lipset, S.M., 1960. Political Man: The Social Bases of Politics. Anchor Books, Garden City.

Lipset, S.M., Seong, K., Torres, J.C., 1993. A comparative analysis of the social requisites of democracy. International Social Science Journal 136 (2), 155-176.

Melgar, Natalia, & Piani, Giorgina & Rossi, Máximo. (2009), Are there differences between perception of corruption at public and private sector? A multicountry analysis. Document No. 01/09

Myint, U. (2000) Corruption: Causes, Consequences and Cures, Asia-Pacific Development Journal,7(2).

Persson, Torsten and Guido Tabellini. (2003), “The Economic Effects of Constitutions”. Cambridge, Mass.: MIT Press.

Qadir Mansoor (2003) “Report on present situation, problems and solutions in the legal system related to corruption control and corruption cases in Pakistan”, International Review of Penal Law, Vol. 74, 2003/1, pp. 515-525.

Taghavi, M. H. Nikoomaram, S. Tootian (2011) “Comparing Impact of Administrative Corruption on Economic Growth in Developing Countries”, International Journal of Management and Business Research, Vol. No. 2, pp. 93-98, Spring 2011 © IAU

Theobald, Robin. (1990), “Corruption, Development, and Underdevelopment”. Houndsmills, Basingstoke, Hampshire, UK: Macmillan.

Treisman, Daniel. (2000), “The Causes of Corruption: A Cross-National Study”. Journal of Public Economics 76: 399-457.

U-Myint (2000) “Corruption: Causes, Consequences and Cures, Asia-Pacific Development Journal Vol. 7, No. 2, December 2000, pp. 33-58

Van Rijckeghem, Caroline and Beatrice S. Weder. (1997), “Corruption and the Rate of Temptation: Do Low Wages in

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the Civil Service Cause Corruption?” IMF Working Paper WP/97/73.ss

APPENDIX

TABLE 1: HYPOTHESIS OF THE STUDY

1

H0: There is no relationship between Corruption (CR) and Personal Financial Problems (PFP).

H1 There is a relationship between Corruption (CR) and Personal Financial Problems (PFP).

2 H0: There is no relationship between Corruption (CR) and Lack of Legalization (LOL). H2 There is a relationship between Corruption (CR) and Lack of Legalization (LOL).

3 H0: There is no relationship between Corruption (CR) and Forced Corruption (FC). H3 There is a relationship between Corruption (CR) and Forced Corruption (FC).

4 H0: There is no relationship between Corruption (CR) and Other Reasons (OR). H4 There is a relationship between Corruption (CR) and Other Reasons (OR).

TABLE 2: RESPONSE RATE

Total Questionnaires Distributed

Total Questionnaires Collected Back

Completed Questionnaires

200 N (%) N (%)

150 75% 150 75%

TABLE 3: RELIABILITY STATISTICS

Cronbach's Alpha No. of Items

0.946 20

TABLE 4: CORRELATIONS

PFP LOL FC OTHER CR

PFP

Pearson Correlation 1

Sig. (2-tailed)

N 150

LOL Pearson Correlation .650** 1

Sig. (2-tailed) .000


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N 150 150

FC

Pearson Correlation .599** .687** 1

Sig. (2-tailed) .000 .000

N 150 150 150

OTHER

Pearson Correlation .843** .533** .527** 1

Sig. (2-tailed) .000 .000 .000

N 150 150 150 150

CR

Pearson Correlation .758** .890** .761** .593** 1

Sig. (2-tailed) .000 .000 .000 .000

N 150 150 150 150 150

**. Correlation is significant at the 0.01 level (2-tailed).

TABLE 5: MODEL SUMMARY

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .936a .875 .872 .78840

a. Predictors: (Constant), OTHER, FC, LOL, PFP

TABLE 6:ANOVAB

Model Sum of Squares df Mean Square F Sig.

1 Regression 633.711 4 158.428 254.879 .000a

Residual 90.129 145 .622

Total 723.840 149

a. Predictors: (Constant), OTHER, FC, LOL, PFP

b. Dependent Variable: CR.

TABLE 7: COEFFICIENTS

Model Unstandardized Coefficients

Standardized Coefficients t Sig.

B Std. Error Beta

1 (Constant) -.026 .474 -.055 .957

PFP .373 .060 .379 6.207 .000

LOL .585 .045 .571 12.882 .000

FC .221 .042 .219 5.209 .000

OTHER -.175 .065 -.147 -2.687 .008


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TABLE 8: SUMMARY OF RESULTS:

Sr. #

Hypothesis Results/Finding

s

Hypothesis-1

Ho: There is no relationship between Corruption (CR) and Personal Financial Problems (PFP).

Reject

Hypothesis-2

Ho: There is no relationship between Corruption (CR) and Lack of Legalization (LOL).

Reject

Hypothesis-3

Ho: There is no relationship between Corruption (CR) and Forced Corruption (FC).

Reject

Hypothesis-4

Ho: There is no relationship between Corruption (CR) and Others Reasons (OR).

Fail to Reject

s

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Causes of Corruption in Public Sector Organization: The ...oaji.net/articles/2016/352-1456081046.pdf · department working in District Bahawalnagr, Punjab, Pakistan. Primary data