Bribery and Corruption in International Business - Essay Example

Bribery and corruption in international business (Name) (Course) (Institution) (Instructor’s name) (Date) Introduction In the recent past, the global economies have seen tremendous growth and reliance on international business. International business relates to the global business or commercial dealings among different global economies (Chipman, 1965). International business offer both private and public organizations an opportunity to increase their market share owing to the global market platform to display capital, products and services produced, hence registering increase profitability and brand loyalty (Jolly, 2003). The increased development in interpersonal business has been associated with advancement in new technologies hence improving the telecommunication and transport infrastructures, elimination of international trade barriers, increased consumer knowledge about imported products and services, widespread market competition, improved political stability across continents and international teamwork and trade agreements (Chipman, 1965). Be it as it may, bribery and corruption is a practice and a culture that has infiltrated international business, since, more investors and transacting business are involved in horse-trading to evade long business contractual agreements and reducing the amount of time, energy and finances used to complete international regulations and conforming to international standards of transacting business (Olsen, 2010). This report will critically analyze whether international business can succeed without bribery and corruption, since it has been mentioned that corrupt practices are a part of the ‘culture’ of doing businesses. Unless companies conform to such practices, in many cases, international business cannot be, transacted. Bribery and corruption Corrupt practices have been with us since decades ago, as individuals seek to downplay policies, guidelines and the rule of law. Corruption refers to asking for, offering, providing and agreeing, directly or obliquely, a bribe or any favor thereof, that which alter the appropriate performance of public service (Olsen, 2010). This report critically disputes the statement that unless organizations conform to corrupt practices, in many cases, international business cannot be, transacted. Bribery is the commonest of corrupt practices in international business. Bribery refers to situations when an individual offers, pledges or provide a service, favor or money with the intention to persuade a public servant to be lenient in carrying out her official responsibilities (Sayed, 2004). For bribery to take place there is a mutual interest between the briber and the public service officer (Cache, 2007). Bribes present in areas such as custom personnel who demand bribes in order to allow entry or exit of goods on border lines, smuggled goods are bribed for in order to gain entry or exit, and bribes are demanded when the briber want to circumvent regulations, standards and guidelines. According to recent reports, the international business has seen its fair share of corrupt deals (Olsen, 2010). Global organizations and nations have been, crippled for engaging in corrupt practices. This however, has not deterred some international entrepreneurs from engaging in the practice (Cache, 2007). The question that begs an answer therefore is why international businesses find it favorable to engage in corruption when they well know the consequences. This question brings into light the fact that increased global competition and the greed to make easy buck, push managements to bribe public officials in order to win contracts, government tenders, evade tax payments and have favorable business environments. Businesses that are in market environments where rivals are involved in corrupt deals; it makes it hard for them to say no to the same propositions (Olsen, 2010). Nevertheless, there is no excuse to engaging in corruption. According to the World Bank, more than 6000 pounds are, paid in bribery practice annually. This signifies a 12% additional cost on transacting trade end up to 27% on procurements contracts in third world countries. Tolerating, complacency and embracing the corrupt culture within international business have seen stringent measures and interventions from global economies to combat the practice (Cache, 2007). Among such campaigns and organizations, facilitating anti-corruption in international business includes OECD initiatives (Organization for Economic Co-operation and Development) and among others the Foreign Corrupt Practices Act (FCPA) (Pieth, et al., 2007). The limitations to bribery and corruption heavily outweigh the benefits. Among the negative effects of corrupt practices in international business includes erosion of the capacity of public service institutions since procedures are, ignored, resources are, drained off and the element of democracy, fairness and transparency in business trading is, extinguished (Olsen, 2010). Corrupt practices increases the price of doing trade through the costs of making unlawful payments, costs of bargaining with officials and the threat of contravening trade agreements (Sayed, 2004). Violation of labor laws, rights of workers, rights of children against child labor are among areas, which will be, negatively affected when officials accept bribes from mal-practicing organizations/ businesses. Is it possible to do international business without tolerating, complacency and agreeing to corrupt practices? It is possible. This calls for universal agreement and solidarity to dissociate and limit international businesses from economies that indulge in offering and accepting bribes. This as recently observed can be a reality. Corrupt businesses and public officials found guilty of the offence are eligible for their contracts to be, cancelled, exposing corrupt parties such as employees, agents, business associates, and advisers, investors, imposing stringent business, and economic sanctions, and allowing the corrupt parties to face the legal implications. This includes incarceration, payment of substantial fines, and incurring legal and accounting expenditures (Cache, 2007). Although corruption offers an easy way out for businesses that do not meet international standards and those that do not conform to international standards of ethics, there is an increased need to say no to bribery. This however calls for individual and corporate responsibility by each business partner (Olsen, 2010). This is especially hard to do when dealing with nations that their public officials would not execute their duties without demanding for bribes. This is common for institutional officials who are accustomed to performing their duties with influence of bribes. More so, in economies that request tough legislative and business entry operations requirements (O.E.C.D. 2000). Such a culture although hard to break and to do away with, it is fundamental and integral to do so. This is because; bribery and corrupt practices within international business weaken economic growth of involved parties and alter the global competition by gravely misallocating resources (Sayed, 2004). Although an enticing practice for those involved in international business, corruption can be, averted and diminished within trade structures and business frameworks (Jolly, 2003). How can this be, done? One would ask. Among ways to discourage and bring an end to bribery and corruption in international business is through changing the corporate culture within organizations that require all participants and stakeholders agree not to involve themselves in corrupt dealings and instead uphold honesty, transparency and reliability (Pieth, et al., 2007). Internationally, there is need to not only establish but also implement FCPA and OECD policy guidelines and frameworks by continuously communicating the same by training workforces and agents about them. Anti-corruption practices can be, enforced by conducting thorough financial accounting and reporting and integrating discipline among professionals as compliance to professional codes of ethics (Sayed, 2004). Curbing violations of the anti-corruption and anti-bribery laws and policies in international business are achievable by business partners internationally being diligent and ensuring inclusion of anti-bribery clauses in business contracts and agreements with third parties and establishing monitoring measures to ensure correct entry and maintenance of information and business production and operations records (O.E.C.D. 2000). Performing regular audits among member parties of economies signatory to international anti-bribery conventions and statutes, in order to ensure anti-bribery policies are, fully implemented (Grimwade, 2000). It is crucial for global governments to facilitate proper functioning institutions and governing systems in order to establish ethical behavior in the public service (Sayed, 2004). Business organizations that are not complacent and are not tolerant to corruption, safeguards their future investments, since corrupt business organizations are eligible for sanctions and in the end, damage their reputation. It should be, noted that any individual who motivates, support, encourages and approves bribery and corrupt practices during international business transactions is liable to a criminal offence punishable by law (Shiozawa, 2007). When dealing with bribery and corruption within the environment of international businesses saying yes may seem unavoidable and inevitable with increased recognition of business organizations that are corrupt and openly admits it, and having effective business organizations but have, ineffective practices and are compliant to bribery (Olsen, 2010). There are organizations that have effective business strategies and practices but the internal structures are reluctant to implement the strategies and effective organizations that sometimes are, faced with occasional case of bribery, due to mistake of one or two employees (Pieth, et al., 2007). Non-compliance and lack of tolerance to bribery within international business can be, realized upon development and implementation of policies given through statements of anti-bribery cultures wholly and openly sustained across corporate levels, upholding ethical values, personal responsibility and ensuring clear definitions of gifts and other hospitable terms and gestures are understood by all (Shiozawa, 2007). This is to avoid misinterpretations of bribes and the gifts. Furthermore, employees across all levels of business organizations should have a platform on which they can voice their concerns regarding corruption and bribery issues within the organizations and suitable and consistent application of disciplinary procedures and actions (O.E.C.D. 2000). Presently, although there has been full co-operation among international business partners to safeguards business processes, structures and operations against bribery and corruption, there remain challenges that are yet to be determined (Olsen, 2010). This includes bribery activities concerning political bodies, utilization of offshore monetary centers, bribe payments within the private sector, safeguarding whistleblowers of corruption malpractices within business circles and dealing with business procedures that bar efficient probing and impeachment of corrupt business dealings (O.E.C.D. 2000). Among organizations mobilizing for non-compliance with bribery and corrupt acts are the Council of Europe, International Monetary Fund, European Union, World Bank, United Nations Development Program, Organization of American States, World Trade Organization, International Labor Organization, Asian Development Bank, and the World Customs Organization (O.E.C.D. 2000). Among non-governmental institutions is the Open Society Institute and the Transparency International (Shiozawa, 2007). Joining forces between global economies, trade unions, governments, the private sector, the media and global aid organizations, will ensure wide spread mobilization of the public about the negative effects of bribery and corruption and setting up technical support in planning sufficient and competent anti-bribery measures and initiatives (Grimwade, 2000). The media plays a major role in not only creating public awareness but also in exposing corrupt dealings, partners and organizations and promoting responsibility in offering public service (McKenzie, 1954). This will consequently dilute and breakdown the perception and notions that corrupt practices are a part of the ‘culture’ of doing businesses and that unless companies conform to such practices, in many cases, international business cannot be, transacted. Conclusion International business relates to transacting products and services between different national economies under a global business platform. International business, which has caught up very fast in the 21st century, has helped business accrue enlarged market shares hence increased profitability. With international business, permeation of bribery and corruption in the way organizations internationally, transact has emerged. This has been, necessitated by greed to make quick money, having corrupt cultures within government and corporate sectors and lenient policies and laws regarding bribery and corruption matters. However, modern business organizations are finding it hard to indulge in the practice, as they are, held responsible for their actions. Policies and measures are already in place to dissociate corrupt nations and businesses, they are eligible to imprisonment, paying huge fines, and commercial and economic sanctions are, imposed on them. With collaboration between governments, trade unions, media, the private sector, non-governmental organizations and the public, bribery and corruption will not have roots in international business, and therefore, the practices will wither and become extinct. References Cache, N.E. 2007. Bribery in public procurement: methods, actors and counter-measures. London: OECD Publishing. Chipman, John S. 1965. A Survey of the Theory of International Trade: Part 1, the Classical Theory. Econometrica, vol. 3 no. 3, pp. 477-519. Grimwade, N. 2000. International trade: new patterns of trade, production & investment. London: Routledge. Jolly, A. 2003. OECD economies and the world today: trends, prospects, and OECD statistics. London: Kogan Page Publishers. McKenzie, Lionel W. 1954. Specialization and Efficiency in the World Production, Review of Economic Studies, vol. 21 no. 3, pp. 165-180. O.E.C.D. 2000. No longer business as usual: fighting bribery and corruption. London: OECD Publishing. Olsen, W.P. 2010. The Anti-Corruption Handbook: How to Protect Your Business in the Global Marketplace. New York City: John Wiley and Sons. Pieth, M., Low, L.A., & Cullen, P.J. 2007. The OECD convention on bribery: a commentary. Cambridge: Cambridge University Press. Sayed, A. 2004. Corruption in international trade and commercial arbitration. Melbourne: Kluwer Law International. Shiozawa, Y. 2007. A New Construction of Ricardian Trade Theory—A Many-country, Many-commodity Case with Intermediate Goods and Choice of Production Techniques—, Evolutionary and Institutional Economics Review vol. 3, no.2, pp. 141-187. Read More