ARCHIVES Danyliw Seminar 2016
University of St Gallen (Switzerland)
Elena Denisova-Schmidt is a Lecturer at the University of St Gallen in Switzerland. Before moving into academia, Denisova-Schmidt worked for the VSMPO-AVISMA Corporation in Russia. Her current research interests cover corruption and informal practices in various settings in Russia and Ukraine. She recently published the chapter “The Shadow Economy and Entrepreneurship in Ukraine.”
Corruption in Ukraine: A Way to Get Things Done?
There are not many studies on corruption at the firm level, much less on how to deal with it. This does not mean that the problem does not exist, but rather the opposite: it has just remained under-researched. Since 2011, Elena Denisova-Schmidt and Yaroslav Prytula have been working on business corruption in Ukraine. In their data sets from 2013 (n=600) and 2015 (n=120) they observe two types of corruption: one type, defined as “the abuse of power by either individuals or groups for private gain,” and another in the form of the abuse of power by CEOs and general managers not obviously for their own private gain, but for the gain of other individuals or groups. Moreover, they argue that this abuse of power, either within or beyond the existing rules, laws and norms, is often the only way to get things done in the country.
Corruption among Ukrainian firms seems to be acceptable if it helps to get things done and to survive; it is less acceptable if it leads to profit maximisation. In their 2015 survey, they asked the CEOs and general managers of 120 companies the following question: ‘Would you break relations with a company that pollutes the environment through corrupt practices in doing business?’ and offered two possible answers: 1) no, if this is a question of this company’s survival; 2) yes, if this company maximises its profits by doing this”. The scale ranged from 1 (“will never break relations”) to 5 (“surely will break relations”). Respondents showed statistically significant differences when answering these questions, indicating a higher level of support for companies that resort to such practices in order to survive.
Can anything be done about business corruption in Ukraine? Yes, if anti-corruption reforms would consider the functions that corruption serves and develop alternative solutions based on this understanding. Business-friendly laws that simplify bureaucracy as well as international exposure might be additional instruments to mitigate corruption. Traditional approaches to fighting corruption in the country might have the opposite effect and could even “promote” it.