Institutional change and corruption of public leaders: A social capital perspective on Indonesia

Incidents of corruption by local public leaders have increased in Indonesia in the era of a decentralized democratic regime, in which regional governments enjoy greater power and autonomy to manage regional resources. Previous research suggests that the shift of formal power from the central government to regional governments resulted in new actors at the local level becoming involved in corruption. Building on ideas from social capital theory, the current study attempts to complement previous work by analyzing the shifts of public leaders’ corruption behavior under the decentralized democratic government. We suggest that besides formal power relations, informal relations are important for initiating and sustaining corruptive transactions, and corruption requires a different social capital base in different institutional settings. The objectives of this paper are (1) to organize current knowledge on institutional change and corruption, (2) to extend current thinking on public leaders’ corruption in Indonesia and beyond, and (3) to suggest a framework for future empirical study. We present an empirical study on the link between institutional change and corruption, based on a unique data set of real corruption cases as they were reported in Indonesian public newspapers. Based on this first exploration—which indicates that indeed the nature of corruption networks in Indonesia has altered since decentralization—the proposed theoretical framework is deemed of value for further empirical investigation.