Monday, January 18, 2010

Bribery and Corruption


In many countries, bribery and corruption are part of the business lifestyle. “Greasing the wheels” is expected for government services.
Decades ago, U.S. companies doing business in other countries played by those rules, paying bribes or doing favors for government officials in exchange for lucrative contracts. A different perspective – one that argued that U.S. companies should provide ethical and moral leadership – emerged in the mid-1970s and forced passage of the Foreign Corrupt Practices Act (FCPA), making it a crime for U.S. companies to bribe officials in other countries to obtain contracts.

While it is certainly the more ethical way of doing business, there’s no question that this puts U.S. firms at a disadvantage when competing for business in markets where bribery and corruption are the norm. In fact, research conducted in the years after the anti-bribery act was passed revealed that U.S. business in regions where government officials routinely accepted bribes declined significantly. The problem is one of ethics versus practical needs. Some argue that one country shouldn’t apply its moral principles to other societies, especially when the gap is wide, but that argument doesn’t do much for U.S. companies – they would be breaking their home country’s law if they acted on that viewpoint. In addition, a system that operates on bribery can lead to shoddy performance or materials, which in turn undermine the reputation of the company responsible for the end result.
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This is a preview of my new book, Global Business: Positioning Ventures Ahead to appear with Taylor and Francis in June of 2010. I will be posting little snippets from the book every once in a while. I encourage you to read, comment, share, and add your thoughts to the comment section. And look for the book in June.

2 comments:

  1. There appears to be much under the surface. Perhaps such activities have only become less visible, but are just as nefarious.

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  2. Xiaoqing (Amber) RenJanuary 29, 2010 at 3:30 PM

    I agree with the viewpoint that a system which operates on bribery can lead to second-rate performance or materials. However, such a system does not only damage its company’s reputation but also put people’s life at risk. For instance, many steel manufactures in China bribe engineers in order to pass the safety standard test. As a result, engineers and architects built a large number of substandard houses on the market. These houses which are built with poor quality materials create potential safety hazard that can lead to the death of many innocent lives. At times like this when moral values conflict with monetary benefits, one has to recognize that human lives should always be prioritized.

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