Policy Solutions: Women’s Economic Empowerment Also Fights Corruption

Emerging markets and developing democracies often struggle with both corruption and gender inclusion. However, strategies to address these issues frequently ignore how these problems interact and compound, according to new research. CIPE worked with Dr. Jozsef Peter Martin, the executive director of Transparency International Hungary, to understand how the private sector can work collectively to make leadership more inclusive and fight corruption at the same time. PPL published this work in a recent report called Women, Empowerment, and Corruption.

 

The study explores Hungary through policy trend analysis, statistical analysis, and semi-structured interviews to make the case that higher female participation in politics and business correlates with lower levels of corruption. Increasing women’s participation in business and government not only creates inclusive decision-making, it concludes, but also mitigates corruption.

 

Gender and Corruption are Linked

The paper’s three main findings address the relationships between gender norms, workplace inequality, and corruption:

Though women have advanced in political and business roles in some regions, they remain underrepresented in both. In Europe, workplace gender inequality is a persistent challenge. According to Martin’s research, 44 percent of companies in Central and Eastern Europe had no women on executive teams as of 2019.

Gender inequality as defined in the paper has declined in Hungary, but women continue to face barriers to public and private leadership. Despite these overall challenges, Hungarian women have made specific gains in business leadership. The data indicates that women have higher participation rates in managerial roles and business ownership compared to the European Union average. However, social norms contribute to broader gender inequality in other areas.

Public sector resources are often allocated to connected directors rather than through a competitive and transparent process. In Hungary, women made up less than 7 percent of private sector board members according to a 2022 report. Martin states that studies show a strong positive correlation between discrimination in the workplace and high levels of corruption. Conversely, increasing women’s participation in business decision-making tends to reduce corruption. Martin posits that the reason for this relationship is a different set of incentives – survey data frequently show that women value capable institutions and effective social policies more highly than individual benefits.

 

Martin suggests avenues for both individual businesses and business membership organizations, such as industry associations and chambers of commerce, to lead the way in inclusive practices:

Individual Businesses:

• Implement neutral language in policies and initiatives, such as support for “parents” rather than just support for “mothers.”
• Promote work-life balance initiatives.
• Encourage an inclusive culture through organizational practices like flexible work hours, parental leave, and childcare, which can be expanded to include support for those with disabilities or elder care requirements.

 

Business Membership Organizations:

• Encourage corporate compliance measures with measures such as the European Union’s work-life balance directive through technical assistance and training.
• Promote merit-based and transparent processes that benefit both men and women, allowing businesses to leverage organizational policy to shape norms.
• Conduct policy advocacy for work-life balance, family care, and pay transparency.
• Work with members to boost the prevalence of women in managerial roles and business ownership.
• Create awareness campaigns to highlight the importance of gender diversity and its benefits to business and the public sector.

 

How can advocates work together to put these recommendations into play? CIPE has a successful model for anti-corruption networks that can be tailored to answer these challenges. In 2021, CIPE collaborated with the Corporate Governance Center in Armenia to establish the Business Integrity Club. The Business Integrity Club was the first anti-corruption collective initiative in Armenia and a pivotal step in uniting diverse business leaders on shared issues. The collective promotes transparency within and outside the network through compliance progress reports and guiding implementation of the ISO 37000:2021 Governance of Organizations standard. Additionally, the Business Integrity Club established a professional forum for business ethics discussions and engagement across different sectors of the Armenian economy through conferences, workshops, and advocacy. To leverage inclusive business leadership and its mitigating effect on corruption, the Business Integrity Club model, focused on women in business, is an opportunity to fight an interconnected problem.

 

Final Thoughts

Research on the interplay between gender and corruption in emerging markets and democracies shows that increasing inclusion reduces corruption. Despite some advances, systemic gender inequality persists, and women remain underrepresented in leadership roles. This lack of inclusive leadership undermines its potential to mitigate corruption, but this challenge is also an opportunity to combine inclusive leadership with anti-corruption initiatives.

Policy and Program Learning’s (PPL) Applied Research Unit works with CIPE’s leadership to identify knowledge gaps in CIPE’s programmatic priorities, creating a learning agenda through PPL’s expanding network of international scholars and in-house research. The Policy Solutions series synthesizes recent research findings that intersect with core CIPE practice areas.