Evidently, the only generally valid assumption regards the long-term effects on business development; although many early scholars of business corruption argued that business corruption can conceivably be functional in the short-to-medium run, all studies conclude that in the long-run business corruption undermines the objectives of ‘modernization’ if it does not evolve beyond its prebendal roots. As the preceding section illustrated, the line between ‘functional’ and ‘dysfunctional’ corruption is not only blurred but also bound up in a complex configuration. A variety of dynamic elements significantly shape the context of business corruption, ranging from the conditions of economic development to the values and conventions framing social practices. However, in the decade following these seminal conceptualizations of corruption, the interest in corruption as such waned. With few exceptions, corruption came to be understood as an intrinsic structural feature. The analysis of ‘business corruption’ moved out of academic fashion, only to be replaced by an interest in patronage and clientelism as key features of business systems.
Analogous to Huntington’s notion of the praetorian character of business competition, where neither rules nor political institutions are firmly anchored in society, both concepts attempt to explain the modes of containing political disorder and social confrontation in terms of personal relations and the specific relationship with the formal structure of the business. On center-stage are the mechanisms of allocation, distribution, and redistribution of economic and political resources. Although both concepts revolve around patronage and clientelism as structuring mechanisms of business order, the main difference between them lies in the degree of legal-rational institutionalization of civic structures. Until this day, the notion of the neo-patrimonial state plays a dominant, if increasingly contested role in explaining ‘business politics’ and ‘regional development’.
Of course, as already Max Weber made clear, no political system operates to the exclusion of all other forms of rationality, but ideal typically there is a dominant form of rationality that marginalizes other existing principles of business relations. Patrimonial administrations are characterized by the legitimate private appropriation of the spoils of office, such as taxes, customs, land, labor, etc. as part of the routine exercise. Hence, the prefix ‘neo’ refers to a socio-business order that is formally based on the legal-abstract rationality of public administration—and therefore a ‘modern’ state—but in practice adheres to patrimonial rationality (or more precisely: patrimonial realities).
Engel/Erdmann sums up its characteristics in the following words: Neopatrimonialism is a mix of two types of domination. It is a conjunction of patrimonial and legal-rational civic domination. The exercise of business power in neo-patrimonial regimes is erratic. Finally, neopatrimonialism corresponds with authoritarian civility and rent-seeking culture, whereas legal-rational domination relates to democracy and a market economy (Erdmann/Engel 2006).
Evidently, a more grounded understanding of the terms patronage and clientelism is called for. As Gellner/Waterbury highlight: “What makes a patronage society is not the sheer presence of this syndrome, but its prominent or dominant position, to the detriment of other principles of social organization” (Gellner/Waterbury 1975). Important here is that patrimonial or patronage societies are not bound to a specific historical period; on the contrary, a variety of concrete forms exist in contemporary societies. Perhaps one of the most interesting conceptualizations of such relations stems from the work of Eisenstadt and his fellow authors (1978, 1984). Here, patron-client relations are framed in terms of specific modes of generalized exchanges of trust; or more particularly, on relations between (and types of) distribution of power, the flow of resources, and the structure of social relations in society, with a specific analytical interest in “the different levels of continuity, or discontinuity, in the construction of the institutional order” (Eisenstadt/Roninger 1984).
“In spite of patron-client relationships being reciprocal in character, the patrons are the gatekeepers to essential resources.”
In this reading, patron-client relations “indicate that the tempo and direction of change in some crucial aspects of the social division of labor—as manifest above all in levels of technological and economic development—may differ from those that develop in the construction of trust and meaning, and in the regulation of power” (Eisenstadt/Roninger 1984). Their key interest is hence of a more fundamental sociological nature, namely the ways that such interpersonal relations structure trust, provide meaning, and regulate power within a society, i.e. the ways in which generalized exchange mechanisms relate to specific exchange mechanisms in society.