Human resource management as a tool to control corruption: Evidence from Mexican municipal governments
| Published date | 01 December 2022 |
| Author | Fernando Nieto‐Morales,Viridiana Ríos |
| Date | 01 December 2022 |
| DOI | http://doi.org/10.1111/padm.12782 |
ORIGINAL ARTICLE
Human resource management as a tool to control
corruption: Evidence from Mexican municipal
governments
Fernando Nieto-Morales
1
| Viridiana Ríos
2
1
El Colegio de México, Mexico City, Mexico
2
Harvard University, Cambridge,
Massachusetts, USA
Correspondence
Fernando Nieto-Morales, Camino al Ajusco
20, 14110 Tlalpan, Mexico City, Mexico.
Email: fnieto@colmex.mx
Abstract
Principal-agent models of corruption control that emphasize
rules, incentives, and sanctions as prime antecedents of cor-
ruption often stop short when evaluating how these general
principles translate into concrete Human Resource Manage-
ment (HRM) policies. Following a call to develop research
about how day-to-day public management operations
change incentives to be corrupt, we use data of 5.22 million
USD audited to 545 local Mexican governments over
3 years to test the correlation between the misappropria-
tion of public funds and specific HRM functions. Our results
suggest that HRM is a critical, underseen factor in under-
standing the risk of corruption. In line with previous find-
ings, we show that having merit-based recruitment can
prevent corruption. However, we also find that having per-
formance and departmental evaluations and a less unequal
structure of remunerations may also help local governments
effectively avoid the misappropriation of public money.
1|INTRODUCTION
Control of corruption is a metric for the adequacy of governments worldwide and an issue that lies at the cen-
ter of public administration as a professional field (Perry 2015). However, important aspects such as how
human resource management (HRM) influences corruption prevalence have not been sufficiently studied
(Sondang Silitonga et al. 2019; Meyer-Sahling & Mikkelsen, 2016). Analyses that tackle this aspect resort to
Agency Theory and Control of Corruption Theory (Kiltgaard 1988;Shapiro2005) and thus emphasize the role
played by incentives, monitoring, and sanctions. However, studies often fail to test how concrete implementa-
tion of these principles, either independently or in combination, could influence corruption within public
organizations.
Received: 12 August 2019 Revised: 23 August 2021 Accepted: 29 August 2021
DOI: 10.1111/padm.12782
Public Admin. 2022;100:1019–1036. wileyonlinelibrary.com/journal/padm © 2021 John Wiley & Sons Ltd. 1019
We build on the idea that HRM could be an essential tool to curb corruption. We use microdata of regis-
tries and administrative census data to explore this relationship in municipal governments. The notion that
HRM could be a relevant antecedent of corruption is not new. Several studies have shown a connection
between the management of people and ethical behavior in organizations. For example, when HRM practices
include moral reminders to reduce corruption, unethical behavior could drop (Shu et al. 2012). In addition, pub-
lic employees' compliance with regulation could be affected by managerial cues, such as exposure to dishonest
behavior (Hoeben et al. 2016), the degree of focus on monetary rewards (Gino & Mogilner 2014), intra-
organizational competition (Rigdon & D'Esterre 2015), and entitlement (Sah 2017). Studies have also shown
that challenging performance goals and time pressure may influence compliance (Belle & Cantarelli 2017).
Other studies have pointed to the importance of monitoring (Rixom & Mishra 2014;Welsh&Ord
oñez 2014),
whistle-blowing protection (Near & Miceli 1985), and wage management and discretion (Kwon 2012)astools
to control corruption (Belle & Cantarelli 2017).
In response to recent calls to find new ways to study corruption as a public management issue (Sondang
Silitonga et al. 2019; Meyer-Sahling & Mikkelsen, 2016; Oliveros & Schuster 2018;Perry2015), this study pro-
vides evidence on how public HRM may reduce the likelihood of corruption. We contribute to the literature in
three ways. First, we side with an emerging literature that posits that the best way to understand state capac ity
is to rely on administrative measures, not (only) surveys (Holt & Manning 2014). Most studies on corruption still
rely on perceptual or experience-based surveys (Meyer-Sahling & Mikkelsen 2016). However, elite concerns
influence these measures and are biased in favor of grand corruption. Our study explores corruption using
administrative data sources. Although there are some efforts (Bersch et al. 2017; Cullen 2012;Rose&
Peiffer 2015; Sundström 2016), this form of research remains limited due to the lack of reliable, comparable
information.
Second, we focus on studying the role that rules and practices within the different phases of the HRM cycle
could play in controlling corruption. According to principal-agent models of corruption, incentives and regulations
are the prime determinants of higher compliance levels. We use public HRM policies as a translation of principal-
agent models and, therefore, an angle to analyze corruption at the organizational and management level. Specifically,
we study how specific HRM policies are related to the prevalence of budget misappropriation among Mexican
municipal governments with comparable economic and institutional traits, including a similar structural risk for cor-
ruption (Cantu 2014; Langbein & Sanabria 2013).
Finally, our analysis focuses on differences in public management at the sub-national level rather than
cross-national comparisons. Arguably, many national public administrations worldwidehaveimprovedoverthe
last decades regarding control of corruption (Meyer-Sahling & Mikkelsen 2016;Santiso2015). Howev er, it
remains unclear whether the same can be said of subnational governments, particularly in places with weak
institutions (Charron et al. 2016; Nicholls-Nixon et al. 2011). Thus, our study provides an opportunity to exam-
ine how internal differences combine to influence corruption outcomes within these governments (cf. Belle &
Cantarelli 2017).
Following the recommendations of other scholars (Rose-Ackerman & Palifka, 2016; Lasthuizen et al. 2011; John-
ston 2005), we focus on analyzing a single type of measurable corruption: the misappropriation of public funds. We
define it as the displacement and potential embezzlement of public funds placed in trust or allocated to municipal govern-
ments. We focus on misappropriation because it allows us to study unethical behavior by tracing public records that
depend not on subjective evaluations but factual, public, and independent records. Furthermore, studying misappro-
priation enables us to examine concrete organizational practices related to “cultures of corruption”and administra-
tive incapacity.
This study was made possible due to the existence of two fine-grained datasets. First, we collected data on mis-
appropriations from audits to municipal governments in Mexico from 2014 to 2016. These audits trace the use of
5.22 million USD (99,163,380 MXN) and identify misuse of 426,873 USD in the period (about 8%). This is one of the
1020 NIETO-MORALES AND RÍOS
To continue reading
Request your trial