Who Cares about Corruption - Essay Example

Who Cares about Corruption? Business ethics is aimed to create rules of moral values that guide decision making by groups and individuals. Ethics can be explained as a statement of what a busi­ness expects in the way of ethical behavior. It can serve as a guide for employee conduct to help employees determine what behaviors are acceptable. Since the purpose of ethics is to let everyone know what is expected and what is considered right, it should be included in an employee handbook. Today, many businessmen are faced with moral and ethical problems in the developing countries where command economies tend to put larger and more permanent concentrations of power into the hands of the central authorities than market economies put into the hands of large firms and unions. Many businessmen, like Pavlo Zhuk, have to choose between their personal ethics and business rules of their countries and the local rules of a foreign country. In many countries, like Ukraine, if markets are not to deal with allocation of people to jobs and of outputs to consumers, then some centralized coercive power is necessary to do the same thing1. Such power creates incen­tives for bribery, corruption and allocation ac­cording to the tastes of the central admini­strators2. If, at the going prices and wages, there are not enough flats or plum jobs to go around, the local bureaucrat will often allocate some to those who pay the largest bribe, some to those with religious beliefs, hairstyles or political views that he likes, and only the rest to those whose names come up on the waiting list. During the final quarter of this century, increasing attention has been given to ethics concerns3. If Zhuk refuses to pay-off the tax officials, his friends and employees will loose their jobs and substantial sources of income. Taking into account facts and statistical results of the Third World countries, it is evident that Zhuk should pay off the tax officials to save his business in Ukraine. Corruption of officials is of concern to many throughout the world. Corruption can affect the international marketer in many ways, both positive and negative. Following Cuervo-Cazurra (1996): “the official has an incentive to ask for a bribe to increase his or her income in exchange for a good that has little cost to him or her”4. Countries are using many measures to fight corruption with the intent of control, reduction, and ultimately elimination. Yet, there is not evidence of much success from such attention. It appears that codes of ethics, mission statements that begin with the importance of high ethical behavior, and well-worded pronouncements of chief executive officers (CEOs) have not been sufficient to ensure the kind of ethical behavior a fair and just society desires. Also, it is important to take into account that the cultures of countries in which a business operates can be of particular importance. The culture of a country consists of the values, attitudes and beliefs of its people. These, in turn, will affect the way that they act and behave. There are important cultural differences between all countries5. Zhuk should take into account that in seeking to maximize long-term owner value, the business cannot ignore the interests of any of its stakeholders, because whether they are employees, customers, suppliers, lenders, or shareholders, they all affect the operations of the business. If Zhuk sticks to strong personal values and moral principles, he will violate rights and interests of his employees6. Given the very different views of the various stakeholders worldwide, it is not surprising that businesses vary as much as they do. Nevertheless, operating within a market framework and a presumption in favor of legal compliance, the teleological approach offers a system of business ethics which can be seen to be applicable everywhere and always--which is valid across all geographical, cultural, and temporal boundaries. A bribe is an incentive offered to encourage someone to break the rules of an organization he nominally represents and deliver an (unfairly) favorable outcome7. Although commonly associated with governments and the Third World, bribery is a problem which can equally afflict private organizations in all locales. By hypothesis, the benefit (e.g., the contract to do the business, the access to confidential information) is awarded in exchange for the bribe, not on the relevant merits of the case8. For Zhuk, it is crucial to remember that when companies operate abroad in the absence of home-country legal con­straints, they face a continuum of choices concerning company ethics. At one extreme, they can maintain home-country ethics worldwide with absolutely no adjustment or adaptation to local practice. At the other extreme, they can abandon any attempt to maintain company ethics and adapt entirely to local conditions and circumstances as they are perceived by company managers in each local environ­ment. Between these extremes, one approach that companies may select is to utilize varying degrees of extension of home-country ethics. Wesley comments that: “Thomas Hobbes and David Hume sought to demonstrate why rational individuals living in political society had an interest in acting in accordance with moral rules. In arguing that effective political action often requires acting outside of the conventions of common morality”9. Alternatively, Customer Strategy solution may adapt in varying degrees to local customs and practices. What should a U.S. company do if competitors are willing to offer a bribe? Two alternative courses of action are possible. One is to ignore bribery and act as if it does not exist. The other is to recognize the existence of bribery and evaluate its effect on the customer's purchase decision as if it were just another element of the marketing mix. The overall value of a company's offer must be as good as, or better than, the competitor's overall offering, bribe included. It may be possible to offer a lower price, a better product, better distribution, or better advertising to offset the value added by the bribe10. The best line of defense is to have a product that is clearly supe­rior to that of the competition. In such a case, a bribe should not sway the purchase decision. Alternatively, clear superiority in service and in local representation may tip the scales. There is much discussion of the breakdown of moral standards as the reduced barriers to trade provide instant revelations of questionable ethical behavior among those esteemed in the society11. Integrity and honesty should be basic principles underlying all areas of a company's concerns, including economic, social, environmental, and political. In addition, relations with the public, customers, investors, vendors, the community, and various governmental authorities should be included in the code. Corporate social responsibility must be accepted by personnel throughout the organization, regardless of level of responsibility. Restrictions apply largely to the law enforcement/operations division and to a lesser extent to the prevention, advisory, publicity, and educational activities12. The latter activities have, however, effected achievements in the wider domain of ethical attitudes. In the face of all these actual variations, and the common but fundamentally mistaken view that tolerance presupposes ethical relativism, proponents of business ethics have typically been unwilling to make universal pronouncements13. To some extent this reflects an appropriate diffidence: if all they have to assert is a personal or a national preference, or a codification of local practice, then attempts to impose those attitudes universally would indeed be presumptuous. But, however becoming such diffidence may be, it should not extend to doubting the possibility of transnational business ethics. The fact that it does, reflects a fundamental confusion about what business ethics is. Business ethics is much more than an expression of taste, however strongly felt. Properly understood, business ethics is in fact about moral principles; indeed, it is the application of ethics to, or in, specifically business situations and activities14. Customer Strategy Solution should pay off the tax officials because bribery in Ukraine is a result of command economy and low wages15. Following Nautze (2007): “Still, the country is plagued by many serious challenges, among the most important of which is widespread corruption”16. When local principles are duly observed, and the rewards are allocated in accordance with local rules, then what is involved in operating in those systems will not be bribery. If the characteristic local purpose is maximizing family influence, power, or prestige, then even ostensibly commercial transactions will be conducted on the basis of contributions to those other, nonbusiness, ends. Not only may benefits due the business be difficult to identify and enforce, but if what is done even looks like bribery, it may well, albeit unjustly, diminish both the briber's and the bribee's reputation with those who find bribery objectionable. Zhuk should pay off the tax officials to continue his business in Ukraine and save work places. Where corruption is endemic, bribery may perhaps seem the only way to proceed. Even then, however, the question is not whether circumstances can make bribery right, for they cannot. Instead, the proper question is whether those are appropriate markets, countries, or societies in which to be attempting business. Endnotes Read More