Procurement Misconduct and the Dynamics of Unethical Behavior in Organizations

Abstract

Procurement is a complex organizational role encompassing supplier selection, contract definition, and ensuring competitive pricing, quality, and delivery. However, these responsibilities often lead to diverse managerial stereotypes, ranging from passive followers of market dynamics to self-serving negotiators prioritizing personal gain over organizational interests. This chapter presents a unique single-case study on procurement fraud and misconduct, leveraging publicly available data. It explores the intricate nature and consequences of misconduct, including legal penalties, contract losses, and erosion of stakeholder trust. The study identifies control gaps that enable personal gain, and value of integrity-driven culture. Managers play a pivotal role as ethical exemplars, upholding standards, and mitigating risks. In response to misconduct, organizations take decisive action by terminating involved individuals and implementing new procedures, controls, and training programs. The findings underscore the need for continuous vigilance in promoting ethical practices within procurement.