Bribery and Corruption Abroad: Impact on Global Business - Essay Example

? Bribery and Corruption Abroad: Impact on Global Business By Introduction Globalization has led to anexpanded communication and flow of information between people of diverse backgrounds. These diverse people have different interests, some, which are highly conflicting. Similarly, globalization has led to the uniting and interaction of western capitalists with a like mind to interact with other capitalists in the developing countries. These capitalists might be like-minded, but their interpretation of honesty, trust, and other important values might differ. This is because of their different cultures and belief systems, which shape their perception of vices and virtues. In addition, globalization has led to conflicts between officials in the private and public sectors, individuals, and different groups, interacting at different levels. This is also mainly because these individuals and groups have varying backgrounds, thus their ways of perceiving virtues and values vary. Corruption and bribery are some of the major vices experienced in the business environment today. However, different cultures have different ways of interpreting these phenomena. Nonetheless, these undermine the aspect of business ethics, and therefore should be eliminated in the business environment. Different NGOs and international agencies have put in efforts to ensure the creation of awareness on these business malpractices, thus leading to a new definition of bribery and corruption. Nonetheless, the fact that companies today do not operate within their national boundaries has resulted in the misunderstanding of business rules. For this reason, addressing corruption and bribery is paramount n the present business environment, in order to promote effective multicultural management (Baughn et al 2010). Nonetheless, this paper explores the aspects of corruption and bribery in the present business world, and identifies the influence of these on international business. Analysis of the Field The field of multicultural management is important in the present era highly globalized world. This helps in the understanding of national cultural differences and the role of culture in business. This therefore, helps to develop the cultural competence of individuals, as well as critical thinking skills, which is important in order for a multicultural manager to analyze and work with individuals from diverse cultural backgrounds in a culturally complex business environment today. Companies today operate in global economy, and a multicultural world. However, the ability of companies to operate effectively has been threatened by cultural misunderstandings between companies. There have been different cases of failed mergers between companies, and other failed forms of partnerships between companies due to their cultural differences. For this and other reasons, the field of multicultural management must fulfill the role of equipping multicultural managers with skills, and knowledge on understanding the importance of culture in organization (Egan & Bendick, 2007). The field of multicultural management contributes to the present management education thinking. This must impart in individuals personal competencies that are paramount in working and managing the present global companies. The most important personal competencies, which multicultural management should teach include tolerance for ambiguity, flexibility, and resourcefulness. Other important personal competencies necessary include cultural self-awareness, cross-cultural negotiations, multicultural leadership, global thinking, and cultural consciousness (Egan & Bendick, 2007). All these personal competencies enable one to manage an international company in the global business world. Multicultural management today is taught in International Business, because individuals wishing to work in global companies need to be well equipped with global competencies in order for them to be efficient in their work. With reference to national cultures, it is clear that nations today differ in their culture, leadership, and relationship orientations. Basing on past work of Hofstede, there are different researches that have been conducted in the field of multicultural management as per today. Researches in this field therefore have contributed to the field’s body of knowledge. Despite various criticisms directed at the mandate of this field, multicultural management remains a pillar of ensuring global competencies among business individuals. There are different important issues in the field of multicultural management. This field bases on different past and current researches in teaching global competencies. This also draws from comparisons of different national cultures today in order to explore national cultural differences. However, there are important issues that have arisen in this field, with regard to its approach. First, different criticisms are directed at the research approach of scholars in the field of multicultural management, on national cultures, and how some generalized their findings to different individuals. It is important to note that Hofstede warned that the findings of his research should not be generalized to individuals. However, in 2006, Kirkman et al conducted a review of 180 empirical studies, which based on Hofstede’s framework. The results showed that most of the studies had ignored Hofstede’s warning, and analyzed individuals, groups, and companies, instead of nations (Kirkman et al, 2006). Therefore, Kirkman et al argue that when aspects of national cultures are used to predict individual or group behaviors, ““…the relatively low amount of variance explained by the cultural values in many studies underscores the existence of the many other forces besides culture (which) determine the behavior and attitudes of individuals in societies” (Kirkman et al. 2006: 313). Therefore, this is an important issue in the field of multicultural management, as the approach employed in a field is important to knowledge contribution. The approach of generalizing national cultures to individual and group behaviors is considered to have resulted in stereotyping. Egan & Bendick (2007) argue that this has raised important concerns from most social psychologists. In this context, stereotyping refers to the application of generalizations of a greater entity, such as nation, to individuals or groups. In the scholarly world, stereotyping is considered a mental shortcut for people, who want to avoid addressing complexity. However, in this case, this results in false judgments and misconceptions, since generalizations lack the ability to determine individual and group behaviors. Egan & Bendick (2007), therefore argue that in order to study individual or group behavior, these individuals and groups should be assessed in a research. Nonetheless, the approach of multicultural management has come under scrutiny. This is however, important, as the approach in the field determines how different issues will be addressed. Research Topic This paper aims at exploring the aspects of corruption and bribery, and their impact on global business. Therefore, the research question that this paper seeks to answer is, “What is the impact of corruption and bribery on global business?” In order to answer this, special focus will be given to the terms; corruption’ and ‘bribery.’ This will help in the understanding of these aspects, which will also contribute to the understanding of their impact on global business. According to Eicher (n.d), it has become problematic to bring corruption to end, because of the challenges involved in its definition, as there lacks an internationally agreed upon definition of the term. Nonetheless, according to Transparency International (2003), corruption is a secret agreement between two parties, which might be individuals or companies that is aimed at securing a business or personal favor. For instance, when a certain company bribes a different overseas company in order to gain advantage over other companies in a competitive advantage, this then qualifies as corruption. Transparency International (2013) also defines bribery as an act of offering, promising, giving, accepting, or soliciting an advantage as an inducement for an illegal or unethical action, or a breach of trust. This also involves receiving or offering a valuable thing such as gift, reward, loan, or business advantage, in order to influence a business transaction (SF0, 2013). A common characteristic between bribes and corruption is their focus on short-term gain at the expense of long-term stability. However, Lianju & Luyan (2011) consider bribery to be a manifestation of corruption. International business is important, as this influences the global economy. Therefore, the aspects of corruption and bribery are important and deserve special focus, as this highly impact on global business. According to Transparency International (2013), corruption and bribery in the international business have detrimental effects. These mainly undermine the rule of law and the tenets of fair competition between business individuals and companies. By undermining the rules of fair competition, bribery and corruption can be considered criminal in nature, thus requiring legal redress. This also means that bribery and corruption are unethical business practices, as these flaunt the ethical considerations in the business environment. Today, corruption and bribery in the international business environment are prevalent, and this remains a serious challenge to the upcoming markets and the overall global market. However, in order to contribute to the redress of these unethical practices, governments of different countries and various international NGOs have pulled in efforts to ensure that these vices are eliminated. The responsibility of addressing the vices of corruption and bribery should not be solely left to governments and the NGOs. Instead, companies and individuals too have a role to play. When this role is played in a collective manner, the probability of achieving positive results is high. The international business is paramount to global economy; thus anything that influences it negatively will also have detrimental effects on individuals in different parts of the world. This research topic is therefore important, as this contributes to the redress of corruption and bribery through research. The mechanisms of corruption and bribery can be explored using different theories. Lianju & Luyan (2011) explored bribery, based on the game theory. These conducted cost-benefit analysis between the briber and the bribe. During the action of bribery, the involved parties exchange their interests. The briber is interested in benefits that outweigh their cost, while the bribee is interested in the bribee’s ‘gift.’ Both parties are considerate of each other’s decision, in order to maximize their own profits. As in the static game, a bribery act involves two players, namely, the briber and bribee. These have two major strategies to choose, which include bribery and no bribery, and their different combinations of strategies determine the payment value. However, depending on the chosen strategies, both players experience different consequences. The briber will experience mental torture for bribery. He risks material cost, moral cost, and risk cost if they give out to bribery. The bribee on the other hand suffers behavioral risk and psychological torture when they accept bribes (Lianju & Luyan, 2011). Alford (2012) applied the perspective of “broken windows” of international corruption to corruption. He argued that when a broken windows approach is applied to corruption, this would change the legal landscape and anti-bribery laws through various ways. First, this approach will qualify corruption as disorder and distrust, which in turn will increase the importance of corruption as a public trust issue, which is paramount to the rule of law. Additionally, this would heighten the fight against corruption, and put emphasis even on the smallest acts of bribery. This is important in fighting corruption, since most of the anti-corruption laws today have primarily focused on large-scale and high profile corruption cases. Finally, if a broken windows approach is utilized, this would encourage collaborations between the public and private sectors in combining efforts in fighting corruption. This way, corruption is addressed in the local context, with an aim of alleviating effects in specific countries (Alford, 2012). There are different areas of debate, with regard to corruption and bribery. There has been an argument about the economic importance of corruption and bribery, and whether these practices should be accepted. Some have argued that people give bribes due to the unfavorable economic, bureaucratic, and social conditions, and that failure to give in might lead to losses in business, when a certain important service is denied. Therefore, there continues to be a debate on this issue, which is named ’survival’ corruption. There is also the justification of corruption in the argument that this vice is inevitable for international companies operating in countries where corruption is prevalent, with low opportunities for business development (Mckinney & Moore, 2008). There are also debates about the inefficiency of international efforts alone to fight corruption in different countries. It is argued that, when a country has high corruption rate at its national level, then international efforts alone will not be effective in fighting this corruption, when the citizens, civil societies, and government of the country lack the political will of changing the situation. This therefore, points to the failure of OECD Convention on Combating Bribery of Foreign Public Officials to investigate all major corruption cases. Thus, the political will of OECD most countries to combat corruption is wanting (Nadipuram, 2013). Finally, the role of culture in corruption and bribery is debated today. Values, norms, and beliefs vary in different countries. In most non-western countries, it is cultural to offer or take gifts in public as a sign of gratitude. In other countries, business negotiations and relationship building processes involve giving gifts (Olatunde, 2011). This aspect has therefore, led to criticism of efforts of the western countries, which target non-western countries with such cultural traits. Corruption and bribery have existed for a long time. These also fall within a wide context, as they can be practiced between individuals, groups, or companies. Therefore, the applicability of this topic is wide, ranging from interpersonal relations to relations between different companies. With regard to multicultural management, this topic applies to all international companies. This has a positive impact on these companies, as the knowledge will help companies to embed management of corruption and bribery in their cultures. Furthermore, this will help companies to prevent corruption, detect corruption, and develop investigative strategies for corruption. As seen, international companies incur loses through corruption and bribery, therefore, this topic might enable the companies to develop organizational processes that will frustrate or hamper any attempted corruption or bribery. Nonetheless, in order to maximize the positive effects of this topic, more research needs to be conducted on these aspects. Additionally, more awareness among the masses will go a long way in helping companies to realize more positive impacts. Future Research and Directions Future research on corruption and bribery should explore the causes of corruption and bribery in international business environment. Additionally, further research should analyze the effectiveness of different anticorruption strategies that have been adopted today, as this would help multicultural managers to identify the successful strategies, which they might also apply in their companies. This topic has a positive impact on the field of multicultural management. Since corruption and bribery are unethical business practices that are experienced in all countries, this enables a multicultural manager to understand the different perceptions of corruption and bribery by different individuals from different countries. In addition, this topic will help to promote the adoption of anticorruption strategies that are global in nature. Furthermore, this enhances the understanding of corruption and bribery from the global perspective and realm. The future directions of multicultural management research in the next 3-5 years should aim at participating in more research aimed at identifying more unethical business practices in global business, exploring the importance of transparency, and accountability, and importance of strong and streamlined institutions to address corruption and bribery. Above all, multicultural management research should explore the influence of culture in corruption and bribery. This is because the aspect of culture is at the heart of multicultural management, thus influences most of the processes. Conclusively, global business is important to the world economy, therefore, this should not be left to suffocate in the hands of corruption and bribery, and result in global economic adversities. References Alford, R. P. (2013). A Broken Windows Theory of International Corruption. Ohio State Law Journal. Vol. 73, No. 5, p. 1253, 2012; Notre Dame Legal Studies Paper No. 1307. Baughn, C., Bodie, N. L., Buchanan, M. A., & Bixby, M. B. (2010). Bribery in international business transactions. Journal of Business Ethics, 92(1), 15-32. Eicher, S. (n.d). Corruption in International Business: The Challenge of Cultural and Legal Diversity. Retrieved from http://www.ashgate.com/pdf/SamplePages/Corruption_in_International_Business_Ch1.pdf Egan, M. & Bendick, M. (2007). Teaching Cultural Competence: What Multicultural Management Courses can Learn from Diversity. Washington, DC: Bendick and Egan Economic Consultants, Inc. Kirkman, B. L., Lowe, K. B., & Gibson, C. B. (2006). A quarter century of Culture’s Consequences: A review of empirical research incorporating Hofstede’s cultural values framework. Journal of International Business Studies, 37: 285-320. Lianju, S. & Luyan, P. (2011). Game Theory Analysis of the Bribery Behavior. International Journal of Business and Social Science. 2(8): 107-107. Mckinney, J. A., & Moore, C. W. (2008). International bribery: Does a written code of ethics make a difference in perceptions of business professionals. Journal of Business Ethics, 79(1-2), 103-111. Nadipuram, A. M. (2013). Is the OECD the answer? it's only part of the solution. Journal of Corporation Law, 38(3), 635-657. Olatunde, J. O. (2011). Corruption as an obstacle to development in developing countries: A review of literature. Journal of Money Laundering Control, 14(4), 387-422. SFO. (2013). Bribery & Corruption. Retrieved from: http://www.sfo.gov.uk/bribery--corruption/bribery--corruption.aspx Transparency International. (2013). Overseas Bribery. Retrieved from: http://www.transparency.org.uk/our-work/corruption-overseas/bribery Read More