Monday, January 18, 2010
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.
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.