Corporate Bribery and Business Ethics - Literature review Example

Other (s) Corporate Bribery and Business Ethics Claim: It is Unethical for U.S companiesto engage in Bribery in Countries that permit such Acts Many American multinational business companies are increasingly facing the dilemma of whether to get involved in acts of bribery in countries and cultures that permit it. According to McKinney (104), more than 18 American companies are currently under investigation by the department of Justice for violating the U.S foreign Corrupt Practices Act and engaging in bribery related deals. The major companies that have been adversely involved in bribery in their foreign dealings include Wall-Mart, Hewlett-Packard (HP), Qualcomm Telecommunications Company and Las Vegas Sands among many others. The case of Wal-Mart’s recent bribery allegations in Mexico particularly raised the question of whether bribing public officials should be justified from ethical or economic point of view. On the other hand, Lindsey Manufacturing has also been recently accused of engaging engaged in a corporate bribery scandal worth millions of dollars with the Mexican utility electric company but it is alleged to have bribed the employees of the later to win contracts. Despite the controversy of bribery and the potential risk of heavy penalties, corporate bribery remains a common practice in many parts of the world. Many governments particularly in the Latin America, Asia and the Middle East are still unable to protect their citizens from the potential abuse of public resources that may arise due to corporate bribery. However, due to different cultural perceptions, there are a number of grey areas when dealing with the issue of bribery in business organizations. For example, it is often difficult to differentiate legitimate political donations or gifts to a business partner from bribes. Many multinational companies working in such areas often use various forms of bribery as a way of competing with other corporate organizations in the particular countries. Some of the advantage of corporate bribery includes hefty profits for companies, better relationships with foreign officials, and achieving business gains without need for superior services or products. Reasons for the Claim There are a number of reasons why it should be impermissible for U.S companies to engage in Bribery in Countries that permit such Acts. Despite the numerous benefits and profits that come with bribery as well as the costs of not engaging in it in countries that permit it, bribery is against the universal fundamental business ethics and should not be tolerated due to the following reasons. 1. Corporate Bribery Undermines Economic Development One of the reasons for the claim is that the payment of crimes and other corruption deals by corporations may significantly undermine the economic development in the countries where such acts are still practiced. For example, when bribery as opposed to merit is used to award tenders, economic development may significantly be affected because the companies will not be able to deliver the quality of services expected. 2. Bribery Leads to Abuse of Public Resources Corporate bribery also exposes the citizens of the affected countries to the risks of potential abuse of public resources that may arise due to corporate bribery. Although many business companies argue that bribery is unavoidable in some societies, their involvements in acts of bribery have a number of negative effects on the society and are, therefore, against business ethics. Cleveland (213) suggests that many companies often use bribes to avoid rules and regulations that may protect the citizens against potential corporate exploitation. 3. Bribery in Business promotes inequality and unfairness Another important argument for the claim that bribery is wrong is that bribery enables companies practicing it to attain undeserved advantage over the straight forward and honest business rivals and this is against the principles of business ethics. For example, the use of bribes to secure business opportunities often results in an unequal business playing field. As a result, it is arguable that bribery is unethical because it violates the fundamental notion of business equality and undermines the role of the institutions affected. 4. Corporate Bribery corrodes democratic accountability and Civil Society Bribery allows companies to escape the standards of ethical practice in the countries where it such practices are permissible. As a result, bribery is considered as an unethical business practice because it undermines the democratic accountability of governments to their citizens. In this regard, bribery is against the universal fundamental business ethics and should not be tolerated due to the following reasons. Reasons against the Claim Various arguments have been used by companies practicing bribery to justify their activities particularly in the developing countries where bribery is socially permissible. I. The When in “Rome” argument As earlier been noted, there are a number of places in the Latin America, Asia and the Middle East where bribery is considered a normal business practice. Proponents of “do what the Roman’s do when in Rome” argue that failing to engage in bribery or following ethical standards in such places make them disadvantaged compared to their competitors. Most of the arguments against the claim are primarily based on the assumption that ethical principles are relative to locations and therefore bribery should respected on the basis of different cultural perceptions. II. Ethical standards are costly Many multinational companies working in areas where bribery is permissible often use various forms of bribery as a way of competing with their market rivals in the countries where bribery is not illegal. They often argue that failing to pay bribes may make them lose out to the other scrupulous competitors in the market. Some of the advantage that may be derived from bribery includes hefty profits for companies, better relationships with foreign officials, and achieving business gains without need for superior services or products. III. Bribery Improves efficiency and Bargaining Outcomes Another common argument among proponents of corporate bribery is based on the belief that bribery sometimes allows companies to by pass a number of inefficiencies created by unnecessary bureaucracies. For example, they argue that in countries like China where corruption is still institutionalized, it may be difficult for corporate companies to win businesses and pass through bureaucratic requirements without using bribery. IV. Bribery is a form of Tax In countries where the tax laws encourage various forms of bribery, many proponents of the practice argue that Bribery can be written off as a business cost and should not be regarded as an unethical business practice. For example, some companies such as JP Morgan argue that the only difference between bribery and tax is that bribery is usually done in secret (Bullock 39). As a result, some companies have demanded that bribery should be legalized in order to transform bribes into a form of public revenue. This is particularly when bribery does not violate the laws of the countries where it is practiced such as China. Decision In my opinion, although corporate bribery offers some business advantages such, hefty profits for companies, better relationships with foreign officials, and allowing companies to by pass bureaucracies, the reasons for the claim significantly outweigh the reasons for the support of corporate bribery. As opposed to cultural values such as etiquette and customs, business ethics have nothing to do with cultural bias but are based on a set of ethical principles that people from all parts of the world tend to agree with. This is particularly because corporate bribery is against the universal fundamental business ethics that should apply to all businesses regardless of their countries of operations (Fitzgerald 68). Additionally, bribery skews the operating field of different firms then can attract organizations with lower abilities to undertake projects and such a practice will certainly affect the quality of delivery and the efficiency of varied services and products. According to Arvind (46), bribery is still prevalent in most American companies due to lack of clear cut boundary on what should be considered as a bribe. For example, what a person could treat as a bribe would to another person be a cost of a business endeavor. Rebuttals There are a number of counter arguments against the arguments that support the practice of corporate bribery by American companies in some parts of the world. I. The when in Rome argument is often rebutted on the grounds that ethical principles are not relative to specific any location. For example, corporate bribery is against the universal fundamental business ethics that should apply to all businesses regardless of their countries of operations. II. A counterargument to the second reason against the claim is that although doing business according to ethical principles may be costly; there is a strong correlation between ethical business dealings and increased long term shareholder values of companies. III. With regard to the argument that bribery improves the efficiency of doing business in countries like China, it is important to note the most important thing for businesses is their relationships with their customers and not government officials. As a result, companies should instead focus in developing good relationships with the target consumers instead of engaging in acts of bribery (Weber 698). IV. Lastly, although some proponents of corporate bribery argue that bribery is a form of tax, this is often untrue because bribes usually end up in the pockets of private individuals and do not benefit the public. Various ethical theories such as utilitarianism and Kantianism argues that ethical decisions should be based on making decisions that result in the greater good of the society. Works Cited Arvind V. Phatak. International Management. Concepts and cases. Cincinnati, Ohio: South Western College Publishing 2006. Print. Bullock, Mark P. “New China anti-corruption laws follow long arm jurisdiction trend.” Journal of Business Ethics 104.3(2011): 36-42. Print. Cleveland, Owens C. Trends in the international fight against bribery and corruption. Journal of Business Ethics 90.2(2009): 199-244.Web.14 Nov. 2013. Fitzgerald, A. Ernest, “The Pentagonists.” Houghton Mifflin, 2009.Web.14 Nov. 2013. McKinney, Moore C. “International bribery: Does a written code of ethics make a difference?” Journal of Business Ethics, 79.1(2008): 103-111. Print. Weber, J.Getz. “Buy bribes or bye-bye bribes: The future status of bribery in international commerce.” Business Ethics Quarterly 14.4(2004): 695-711. Print. 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