Research Proposal: A CRITICAL ANALYSIS ON THE
IMPLICATIONS AND EFFECTS OF CORRUPTION IN THE
SOUTH AFRICAN ECONOMY AND HOW IT CAN BE MANAGED

About the writer: Tyson Thamsanqa Sibanda
Rosebank College South Africa: Bachelor of Business Administration 3 (2015)
Contact details; Tyson.msimanga@gmail.com
0027786500000 / 0027815993434

BACKGROUND AND ORIGIN
Corruption in South Africa has been so widespread that, unless it is decisively tackled in this presidential term, there is a real danger that it will become embedded as a ‘normal’ aspect of life in our country. Once it becomes part of the ‘culture’ of our society, it will be almost unmanageable to uproot. Corruption is generally defined as the abuse of public office for private gain. It usually comes in two forms. Firstly, the alleged ‘big-time’ corruption which take place when public officials bend the rules to channel patronage to relatives, friends and associates, or accept bribes; as well when private agents bribe public officials to give them exclusive advantages or privileges. Secondly, there is the quiet corruption, which occurs when public servants purposefully neglect their duties to provide public services or goods. Quiet corruption may not involve an exchange of money, but involves providers of public services such as teachers, nurses or other government officials, twisting the rules for their own private welfares. This includes, for example, public servants, such as a minister or nurses not turning up for work when they should. Big-time corruption taking place without consequences consistently encourages quiet corruption. . (Tienie Ehlers and Kobus
Lanzenby, 2013:p67).
South Africa experienced more than 300 years of colonial rule, racial domination and apartheid. Through conquest, colonialism, dispossession and institutionalised racial discrimination, the ruling elite nullified to themselves power, wealth and exclusive access to state resources (land and other economic resources) and utilised significant authoritarian mechanism over all aspects of life. As in other closed, autocratic states, corruption flourished. (Frieda Rieger, 2015:p106)
Rieger (2015) believes that, it is unfortunately that some South Africans view corruption as a new phenomenon that began to affect this country only since 1994. For some, the issue is racialised. South Africa is often compared to other African and developing countries that have struggled with corruption, on the notion that majority rule inevitably led to corruption due to the fundamental features of African culture.
South Africa slipped down in Transparency International’s 2013 Corruption Perceptions
Index. According to the index, an international survey of public corruption, South Africa ranked 54 out of 178 countries listed. Zwelinzima Vavi, the Congress of South African Trade
Unions general secretary by then said recently, South Africa was in danger of becoming a
‘predator state’ where a new tier of leaders believed it was their turn to ‘feed’. Why has the cancer of corruption spread so quickly, and can anything be done about it?
Theorists such as Edwards (2007) and Camerer (2001) have revealed that a decline in ethics and morality are most commonly cited as the reason for an increase in corruption in South
Africa.

THE RESEARCH PROBLEM
Corruption undermines the delivery of public services: houses, health, water, electricity and so on. It diverts investment or financial and other resources that could have been used for growing the economy, development, job creation and poverty alleviation. It weakens the capacity of the state to deliver effective services equally.
THE RELEVANCE OF MY RESEARCH PROPOSAL TO BUSINESS ADMINISTRATION
The research problem will be beneficial to business administration because it will give an insight on how to manage corruption and understand its implications to the business if it is neglected or not well managed. Corruption is relevant to business Administration because of its impact on businesses as it results in investors taking out their money or withdrawing from the economy of a country to other businesses in other countries, this often leads to a decrease in the GDP of a country causing businesses to shut down their operations which also incorporates to an increase in unemployment, and other social related problems such as poverty, crime and violence, prostitution and an increase in HIV/AIDS.
RESEARCH QUESTION
What is the effect of corruption in the South African economy and how it can be effectively managed? Qualitative Study: the objectives of the research
The objective or purpose of the research is to explore and uncover the causes and motives of corruption in the South African economy in general and to provide recommendations and solutions on how to control corruption in the country.
Theoretical Approach
Economists’ Perspective- Classical theories of corruption are dominated by economic treatments that focus on identifying structures of incentives that make corruption likely and assessing the impact of corruption on economic efficiency (Granovetter, 2004:152). The most dominant of such theories is that of the principal-agent relationship(or incentive theory) that point to the existence of a superior principal who supervises an agent carrying out delegations and directives that should serve the interests of the principal. In this principal-agent relationship, corruption arises when an agent (junior civil servant); who has advantage over access to critical administrative information more than the principal (senior civil servants and government auditors), allegedly goes in contradiction of the wishes of the principal to lobby extra payoffs of which s/he never forwards to the principal (RoseAckerman, 1978; Granovetter, 2004). Thus, the relationship is primarily well-defined by how incentives are settled, and the actors are otherwise indistinguishable or representative individuals. Moreover, an agent can be either senior government officials or other public officials, whereas the principal can be voters or the government. Furthermore, it is of

essence for the managers and economists to critical define and understand the implications that are paused by corruption to the business environment and the general economy of the country. In the context of the existence of corruption in the economy or external business environment, it is arguable that there is no single best way to manage it, this theory propose that a method that is highly effective in one economic problem may not work in another, management has to decide whether to use the principles of the scientific, bureaucratic, administrative, behavioural or quantitative approaches or the combination of these (Ehlers and Lanzenby. 2013:p65). Nevertheless the economic approach or theory recognises that every organisation, every department or unit within the same organisation, is exceptional.
Every organisation exists in a unique environment with its own unique inconstant variables that affect the business or economy either positive or negative. With the issue of corruption posing threats to the economy, the management has to bargain unique ways and recommendations to the Politicians on how to combat corruption and get rid of its implications to the business environment or economy as a whole. (Smit PJ et al. 2013:p41).
Based on corruption as an economic problem, it is imperative for managers to understand the characteristics and the causes (of corruption) and its effects on the organisation`s external environment (corruption and degree of complexity) and managers and workers
(their values, goals, skills, and attitudes).
Literature Review and conceptualisation
Although corruption is certainly not indigenous to South Africa, with states such as Uganda,
Kenya, China and the United States of America having experienced and dealt with corruption attitudes and behaviour. Furthermore before these nations could address the issue of corruption their GDP went down drastically and caused these states to be in debts with the World Bank and the International Monetary Fund in order to rebuild the economy.
However based on the past corruption in South Africa that occurred during the so called apartheid , it left the country in a massive economic depression combined with the world`s economic depression which resulted in a disruptive decline in GDP (Shindodola 2009:p12).
However, these countries addressed the problem upfront and engaged in effective communication to resolve the fundamental issues. (Jacobs 2005:p7). Sporadic or individual corruption occurs irregularly and therefore it does not threaten the mechanisms of control nor the economy as such. It is not crippling, but it can seriously undermine morale and sap the economy of resource (Michael Johnston, 2014:p14).
Mayy Johnston (2005:p32) posits that many nations which have launched democratic and market transitions experienced corruption and scandal. As a result of the change in political order according to Johnston (2005:p32), the established elite gave way to a more uneven approach whilst new economic and political opportunities began to open up. Likewise new opportunities and possibilities for corruption also presented itself although the scope and implications will vary from case to case. Johnston (2014:p15) also defines High level or
“grand” corruption as a corruption that takes place at the policy formulation end of politics.

In tackling corruption in Nigeria, Omotola (2006:p214) asserts that many African countries find themselves in a situation of crisis and contradiction. This crisis is deep-rooted and multidimensional. Omotola (2006:p214) further claims that this crisis entails leadership questions, the succession and legitimacy crisis, political violence and ethno-religious conflict. In addition to this predicament, transitional states are also confronted with several vulnerabilities. At the heart of these crises one would find the difficult of corruption as one of the prime contributing factors.
Zimbabwe and Nigeria are typical cases of such African countries as being considered in the preceding statement. The selection of the afore-mentioned African specific countries is based on the fact that political histories of the above mentioned states have similarities to the South African situation in that all were under British rule. Furthermore, these countries were involved in wars aimed at gaining political independence, although South Africa and
Zimbabwe in a conventional war and Nigeria in civil war. Prior to the implementation of the change process, these countries also boasted well-established economies and growing sectors such as mining and agriculture. Duvenhage (2003:p44) argues that change does not always have a positive outcome and can often be associated with political decay of which
Zimbabwe and Nigeria are clear examples.
Furthermore, in countries where the incomes are low, the marginal value of money is higher than in the wealthier countries. It can thus be expected that lower average incomes increase the propensity both to offer and accept corrupt payments. Like with so many acts of corruption, competing for the top honours, it seems as if favouritism/cronyism is an important role-player Harris B (2002:p25).
Corruption is a worldwide phenomenon and it has been with every kind of society throughout history. Although corruption manifests more in some countries than in others, it spans over colour, creed and culture. Furthermore, corruption does not discriminate against developed, underdeveloped or developing countries as its objective of destruction remains the same everywhere. Corruption is an activity which is being planned and executed by human beings. Whenever human behaviour is at play, ethics and morality features are normally compromised.
With an enlarged awareness of the unfavourable effects of corruption on development and strategies to fight it is now a top priority in policy circles around the world. Since Africa is home to most of the thoroughly corrupt countries in the world, it is no coincidence that the
African continent has been the major target of this movement. To date, however, few successes have resulted from the investment. Moreover in South Africa corruption seems to have become more entrenched in step with the efforts to curb it. Drawing upon the case of
South Africa when it comes to the problem of corruption and anti-corruption reforms, it is arguable that the contemporary anti-corruption reforms in Africa have largely failed because they are based on a mischaracterisation of the problem of corruption in contexts with systematic corruption. However, the proposal or analysis discloses that while

contemporary anti-corruption reforms are based on a conceptualisation of corruption as a principal-agent problem, in the African context corruption relatively seems to resemble a collective action problem, making the short-term costs of fighting corruption outweigh the benefits. However, principal–agent problem it is defined as a situation that occurs when one person or entity is able to make decisions on behalf of, or that impact, another person or entity: the "principal". The dilemma exists because sometimes the agent is motivated to act in his own best interests rather than those of the principal. Therefore, even if most individuals morally disapprove of corruption and are fully aware of the negative consequences for the society at large, very few actors or people show a constant willingness to fight it. According to, Rodger Fiedler (2015:Pg 195), Ethics or Moral are perceived as a study of human behaviour as a consequence of beliefs about what is right or wrong, or good or bad, insofar as that behaviour is useful or effective. In a sense, a moral is the study of what is thought to be right and what is generally done by a group, society, or a culture. This, in turn, leads to a breakdown of any anti-corruption reform that builds on the principalagent framework. The roots of corruption lie in the unequal distribution of resources in a society. Corruption thrives on economic inequality. Inequality is described as the unfair situation in a society when some people have more opportunities, or money, than other people: Economic inequality provides a fertile breeding ground for corruption and, in turn, it leads to further inequalities. In other words it must be concluded that corruption is clearly an obstacle to development. Lastly, values are described as important and lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable. Values have major influence on a person's behaviour and attitude and serve as broad guidelines in all situations. Some common business values are fairness, innovation and community involvement (Fielder. 2015:Pg193). Furthermore, Johnston (2014:p15) further describes and define another form of corruption which is political corruption as any transaction between private and public sector actors through which collective goods are illegitimately converted into private-regarding payoffs. Political or grand corruption takes place at the high levels of the political system, when politicians and state agents entitled to make and enforce the laws in the name of the people, are using this authority to sustain their power, status and wealth. Political corruption not only leads to the misallocation of resources, but it also perverts the manner in which decisions are made. Political corruption is when the laws and regulations are abused by the rulers, side-stepped, ignored, or even tailored to fit their interests.
Key words: Corruption; anti-corruption reform; grand corruption; individual corruption; principal-agent theory; collective action problem; inequalities; economic inequality; South
Africa; African continent; values; society; development; moral and ethics; political corruption. Research Methodology

The research paradigm that will be used to analyse the implications and effects of corruption in the South African economy is the positivism because it will be used to discover causal relationships in order to predict and control corruption in the economy, to get valid knowledge that can be gained from objective, observable (empirical) evidence and the testing of assumptions (hypothesis) of corruption. This tradition must therefore find evidence to either support or reject these hypotheses. Moreover, in this regard experimental groups and control groups in order to establish the relationships between corruption and the economic growth of the country. Another reason why I have chosen positivism is that it will allow me to observe and measure reality and also allow me to discover the laws that govern reality in which reality has order and regularity. Moreover, the positivists are of the opinion that a given cause has the same effect on all people meaning that as corruption has a negative impact on the overall economic performance it will also negatively affect everyone in the economy. Additions to the reasons, according to Du PlooyCilliers et al. (2014) Positivists asserts that, by establishing causal relationships and by meeting the conditions of the cause, certain predictions can be made in terms of the effects and therefore take action to manipulate or control corruption. For example I could hypothesise that if there is corruption in South Africa, it will spontaneously leads to a radically decrease in the economic growth and development. Therefore this tradition will also be used to record facts in terms of quantities or numbers that can be processed by using statistical techniques. Nevertheless, quantitative research will be used as a research approach that gives emphasis to quantification in gathering and analysis of data.
The units of analysis, target and accessible population, and population parameters/ characteristics; According to Du Plooy-Cilliers et al posits that the unit of analysis or measurements in quantitative research are associated with numerical measurements. The units of the
International System of Units, known as SI units will be used in this study. However, it is imperative to ensure that the units of analysis or measurements are recorded for reference, both for the researcher and others who may wish to utilise the data later, either for their own study of a different phenomenon or for reproducing the results of the study.
The targeted population for this study will be all politicians and everyone who is working in government departments and people who are employed by different kinds of businesses mainly registered and formal businesses. However, our accessible population/ population parameters/ characteristics will be specific individuals who work for or part of the following organisations; National Executive government officials
Provincial Executive government officials
CEOs and MDs of public, non-profit and private organisation

Executive and Non-Executive directors of both private, non-profit and public organisation
Local community leaders
The reason why we are going to include the above accessible population is that the people involved in that study they have an in-depth understanding of corruption. They also have a high degree to know the implications and effects of corruption in their businesses, in their governmental departments, in their communities as well in the economy of the country as a whole. Moreover, some of the respondents are learned individuals such as Economists people who will be able to provide us with guidelines and directions of where the corrupt country or businesses is going if corruption persist. Lastly some of the respondents are actually the victims and suspects of corruption.
Probability sampling, sampling method and sample size
A sample is a finite part of a statistical population whose properties are studied to gain information about the phenomenon (Webster, 1985). When dealing with people, it can be defined as a set of respondents (people) selected from a larger population for the purpose of a survey. In case of corruption probability sampling will be used in which Du Plooy-Cilliers et al (2014) define probability sampling as to whether or not each unit in the population has an equal opportunity to be part of the sample. This method of sampling is effectively used in quantitative studies because it removes human bias from the sampling process by using methods that are random and systematic meaning that it follows a strict step-by-step procedure. Du Plooy-Cilliers et al they further describe human bias as a situation whereby researchers select a sample that does not reflect the population accurately. Therefore, this can happen when researchers choose to draw a sample population parameters or characteristics over others.
Subsequently corruption is a national or country widespread problem; therefore multi-stage cluster sampling will be used to study this phenomenon though the cost of reaching each element of a sample is very high. Multi-stage sampling involves dividing the population into groups (or clusters). Then, one or more clusters are chosen at random and everyone within the chosen cluster is sampled. In this regard the multi-stage sampling will help to access all the respondents across the country who are affected by corruption (based in all the nine country`s nine provinces that is Eastern Cape, Free State, Gauteng, KwaZulu Natal, Limpopo,
North West, Northern Cape, Mpumalanga and Western Cape that is the sample size). We will target two females and two males in each organisation that will be accessed and all in all we will have 20 (thirty) people from each province which will equal to 180 people to be included in our sample.
Data collection method
Quantitative research is used for research designs which seek structured and quantifiable responses. This approach is descriptive in nature and usually presents the findings in

numbers, figures or statistical parameters (Cant & Van Heerden, 2013). However, there are a variety of techniques that will be used to collect data in quantitative research study.
Nonetheless, all of them are geared towards numerical collection. This numerical data will be collected by the means of surveys or interviews, measurements instruments such as
Likert scale, questionnaires consisting of closed-ended questions and correlational studies
(data collection methods will be further discussed in the next section). Nevertheless the data collected will then be recorded systematically and organised so that they can be entered into a computer data base.
Personal Interviews – the targeted and accessible respondents will be interviewed face-toface basis by the researcher. This type of an interview can be conducted in the respondent`s work place, home or elsewhere, preferable at a public venue such as a shopping centre. The good thing about personal interviews is that the researcher is directly involved which represent a low degree of data misinterpretation. Though this method is expensive and involving extensive planning there are benefits that it presents such as, respondent`s cooperation increases, special visual aids and scoring devices can be used, the researcher or interviewer can record observation data and CAPI (computer assisted personal interviewing) can be used to speed up the process and increase accuracy of data.
Telephone surveys – the researcher will be able to complete a questionnaire through interviewing the respondents. The researcher also has an opportunity to clarify the questions to respondents if they do not understand. This method will help to access the hard-to-reach respondents by calling back repeatedly since the sample size is big, respondents from all nine provinces can be interviewed without dramatic increases in cost of travelling, CATI (computer-assisted telephone interviewing) allows responses to be entered directly into a computer file, so as to reduce error and cost and the researcher or interviewer bias is reduced.
Mail/ email surveys – this will be the form of communication between the researcher and the respondents. The questionnaires will be sent to individuals in the sample which they will fill at their leisure time and return by a given date.
Questionnaires – the questionnaire will use closed- ended questions, checklists and rating scales. The questionnaire will allow the researcher collect large amounts of information from specific number of people in a short period of time in a relatively cost effective way.
The data collected will be analysed using statistical analysis techniques such as multivariate analysis and statistical regression. Since our sample is geographical wide spread the questionnaires will be sent to respondents using mail, email, internet to make sure that the required information is generated or gathered.
The Likert scale - is an ordered scale from which respondents choose one option that best aligns with their view. It will be used to measure respondents' attitudes by asking the extent to which they agree or disagree with a particular question or statement which is corruption.

This method will be useful for example evaluating a respondent’s opinion of the implications and effects of corruption. In these cases the scores obtained will be used to create a chart of the distribution of opinion across the population. For further analysis, we will cross tabulate the score mean with contributing factors.

Questionnaire: Implications and Effects of Corruption in the South African
Economy
(Your input will be greatly appreciated)
1. Do you feel do consider corruption? Yes☐

No ☐

2. Do you think corruption is unethical? Yes ☐

Maybe ☐
No☐

3. Have you ever been involved in corruption or bribery activities? Yes ☐

Maybe☐
No ☐

4. What would motivate or cause one to be involved in corruption?
Personal greed ☐
Decline of personal ethical sensitivity ☐
Decline of personal ethical sensitivity Cultural environments that condone corruption ☐
Lack of transparency, especially at the institutional level ☐
Regulations and inefficient controls and slow judicial processes ☐
Lack of moral criteria in promotions ☐
5. What are the general implications of corruption? Undermines democracy and the rule of law ☐
Hampers the development of markets, economy and drives away investments ☐
Leads to loss of confidence in institutions and the de-legitimisation of government ☐
Increases costs of services/products and lowers the quality of services as contracts are not ordinarily awarded to the appropriate bidder ☐
Allows organised crime, terrorism and other threats to human security to flourish☐
6. What should be the consequences of a corrupt individually? Imprisonment ☐ Expulsion ☐
Suspension ☐ Disciplinary hearing ☐
7. For how long do you think an individually guilty of corruption should be sentenced or punished?
Two years ☐ One month ☐ One year ☐ less than six months ☐ Should not be tolerated ☐
8. What is the cost of corruption to both businesses and government departments? Do you agree or disagree that corruption pose costs to businesses, economy and government departments?
Strongly agree ☐
Agree ☐
Disagree ☐
Strongly disagree ☐
9. Which of the following measures should be implemented to reduce or stop corruption in the economy as a whole? Expulsion ☐ Disciplinary hearing ☐ Imprisonment ☐
10. Which industries are mostly affected by corruption? Private organisation ☐ organisation☐ Government departments ☐
Non – profit organisation ☐
11. Have you ever been involved in bribery or corrupt activities? Yes ☐ No ☐
Thank you

Maybe ☐

Public

The data analysis procedures
Quantitative data analysis, uses numbers to discover and describe patterns in your data, is the most elementary use of social statistics nonetheless, Statistical techniques are also used to describe and analyse variation in quantitative measures. A statistic, in ordinary language usage, is a numerical description of a population, usually based on a sample of that population. (In the technical language of mathematics, a parameter describes a population, and a statistic specifically describes a sample.) Some statistics are useful for describing the results of measuring single variables or for constructing and evaluating multi-item scales.
These statistics include frequency distributions, graphs, and measures of central tendency and variation, and reliability tests. Other statistics are used primarily to describe the association among variables and to control for other variables, and thus, to enhance the causal validity of our conclusions. Cross-tabulation, for example, is one simple technique for measuring association and controlling other variables. All of these statistics are termed descriptive statistics, because they describe the distribution of and relationship among variables. Statisticians also use inferential statistics to estimate the degree of confidence that can be placed in generalizations from a sample to the population from which the sample was selected (Milbrath & Goel 1977:92–95; Salisbury 1975:326; Verba & Nie
1972:126).
Statistics analysis will set out to arrive at a set of summaries of the data sets and attempts to discover patterns that may exist hidden within data (Du Plooy-Cilliers et al, 2014:p206).
These summaries of the data create information that may then be used to inform decisions such as change in people`s behaviour towards corruption. Steps that are used in statistics to analyse data are;
1. Gathering data- it comprises formulating questionnaires, encoding the data and recoding data; 2. Analysing data- contains finding basic characteristics of the data set, exposing patterns within the data and identifying the relationships between gathered data and external parameters; 3. Interpreting the data- embraces attributing patterns within the data to the external parameters; 4. Formatting and presenting the data – includes data summaries and graphical representation; 5. Projections derived from the data- contains forecasts, predictions and systems modelling.
(Du Plooy-Cilliers et al, 2014:p206).

For example from the data that is analysed government can use the statistic results for policy making decisions for corruption and business can as well use them to make operational and investment decisions.
Hypothesis will also be used as a starting point for further investigation which takes form of statements of proposed alternatives facts or states of affairs. Two types of hypothesis will also be used to analyse data which involves the null hypotheses which is described as a statement supporting the status quo and the alternative hypotheses which is defined as a statement supporting a change in status quo such as supporting a new discovery or better technique (Du Plooy-Cilliers et al, 2014:p207-209).
Describing the data- descriptive statistics will be used to summarise the data and allows some basic questions to be answered for example, the range, central point and the mean of the data.
Drawing conclusions from data- Du Plooy-Cilliers et al posits that once the data has been gathered, the researcher can use it to draw conclusions or draw inferences from the data, using inferential statistics. For example, if we want to know what will be the effects of corruption in South Africa in ten years’ time we would use inferential statistical techniques to arrive at an estimate. Such an estimate will be based on the researcher`s knowledge of previous year`s effects of corruption. However, gaining new knowledge will require us to draw inferences from set data both old and newly gathered data, and data that data will be the results of our own worker that of others.
Lastly, hypothesis will also be tested using the four step process for hypotheses testing;
Step 1: stating the hypotheses;
Step 2: Setting the decision criteria;
Step 3: Computing the test statistic and
Step 4: Recording the decision.
(Du Plooy-Cilliers et al, 2014:p221-223).

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