Corporate Contagion: Unveiling Dynamics of Horizontal Normalization in Corruption

This study delves into the mechanisms of horizontal corruption normalization across organizations, utilizing mimetic isomorphism and soft power theory as theoretical foundations. Leveraging a European regional-level database and employing panel analysis, we highlight the significant influence of firms possessing greater resources compared to others, whether tangible or intangible. These firms serve as benchmarks in terms of both the intensity and stability of horizontal corruption normalization. Our findings indicate that the vertical normalization of corruption in firms with prevalent material resources influences the normalization of horizontal corruption even in the presence of an efficient judicial system. This suggests that the influential firms not only set examples but also affect how incentives are perceived and acted upon within the realm of corrupt practices. Finally, some managerial and policy implications are discussed