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According to Goodman (2001) American companies recognize that a serious dilemma exist. On the one hand, the laws that govern international business for American companies have declared it illegal to provide bribes and kickbacks. Not only are the companies breaking the law but they are using deceitful tactics to break the law so that they will not get caught. On the other hand, "They are answerable to shareholders on Wall Street and home offices that demand a piece of an increasingly lucrative Chinese market (Goodman 2001) ." The author explains that in many cases shareholders have expectation that are not realistic. These expectations exist because of the size of the Chinese market and the rate of economic growth that has occurred in the country over the last decade.
This dilemma has proved to be a difficult one for multinational corporations. In the case of China, many have decided that the expectations of shareholders, the overall profitability of the company and remaining in the market are more important than the laws that have established the illegal nature of bribery and kickbacks.
In addition kickbacks are also a major problem. This is has been illustrated recently in cases involving government officials, and financial institutions. In these instances kickbacks were given to executives much to the chagrin of taxpayers who funded government bailouts to the same companies that are giving kickbacks.
Kickbacks occur on large and small scales. Kickbacks also involve many different types of organizations. For instance, just this month a former employee of home depot was charged with accepting kickbacks in return for purchasing certain supplies. The employee Anthony Tesvich
"was sentenced to 6 years and 6 months in federal prison on charges of conspiracy to commit wire fraud and filing false tax returns, the Justice Department said. The sentencing took place in Atlanta. Tesvich was also ordered to pay $8.29 million in restitution, the department said. Tesvich had pleaded guilty to taking kickbacks in exchange for putting some vendors' products in Home Depot stores and paying kickbacks to other employees both while he worked for Home Depot and after he left, the department said in a statement (Bartz, 2009)."
In this particular instance and in others the culprit was caught but there are other instances in which kickbacks are never found out. In another recent case a lawyer in Pennsylvania was charged with being involved in a $2.5 million kickback scheme with a two corrupt judges. This particular kickback was a cash-for-kids scheme involving a pair of juvenile court judges in Luzerne County. Powell's attorney requested the postponement Tuesday. According to federal prosecutors "Powell paid kickbacks to former judges Mark Ciavarella and Michael Conahan so they would place juvenile offenders in two private detention centers he owned (Bartz, 2009)." This is an instance where kickbacks involved public officials and juveniles who had committed crimes.
This particular form of kickbacks is problematic because it threatens the entire judicial system. These type of kickbacks undermine the judicial process because judges are no longer biased. When kickbacks are involved defendants, victims, the families of victims are not receiving fair justice.
Although many experts in business ethics believe that the line between right and wrong is a clear one, the scenarios presented above suggests otherwise. After all businesses operate with the expectation of making a profit. In the scenario presented above, not engaging in bribery and kickbacks would significantly impede or destroy altogether the ability of a company to realize a profit. This is particularly true in the Chinese market where there are so many companies that are present and who want to dominate the market.
The decision of the companies to engage in bribery and kickbacks is based on a teleological ethic which asserts that "the results or outcomes of decisions and acts determine what is ethical. In general, what is ethical is the action most likely to result in the most or the most significant good -- the best likely consequence (Deontology or Teleology")." That is, the ends justifies the means. In the scenario involving multinational corporations and China, the companies are taking the approach that the activities that they are engaged in are justified because not engaging in these activities would lead to substantial consequences.
It could be argued that in the long-term bribery and kickbacks could result in consequences that are not as beneficial as they are today. For instance if the public is made aware of the amount of bribery and kickbacks that are occurring within China and the efforts to conceal their activities, consumers in other areas of the world may stop purchasing the products. This can result in very serious losses that will end in poor profitability.
The teleology approach is often used to justify various business ethics issues that arise, particularly when it pertains to multinational corporations. This is a way for companies to justify the manner in which they conduct business and the types of activities that they engage in.
Instead of using a deontological approach to business ethics which embraces the idea that following rules or guidelines is the most ethical way to operate. That is an "ethical person identifies a duty or set of duties (for instance, the duty to tell the truth) and abides by it ("Deontology or Teleology…")." This is a more concrete and all encompassing approach to business ethics. This simply says that whatever the rules or guidelines have established must be abided by. Within the context of business ethics, these guidelines are to be abided by regardless of the country that the organization is conducting business in.
Ideally this type of approach to business ethics would be taken by all companies and organizations. However multinational companies have a more difficult time implementing this approach. The primary problem with this approach is that it does not take into consideration cultural norms. This approach paints everything with a broad brush. The problem with this is that companies operating globally are unable to compete in certain markets if they do not conform to certain norms such as bribery and kickbacks.
In addition, if the corporations do not conform it may be viewed as disrespect towards a different culture. Such disrespect can make it difficult for companies to excel in certain environments. In addition it might make it difficult for other companies from the same country to operate in the market.
Overall it seems that corporations must establish their own code of ethics and abide by this code. This code of ethics should be made clear before multinational companies even enter into foreign markets. Vendors in the foreign market should understand the boundaries of the company so that there will be no conflict.
Obviously this is a complex issue and it may continue to become more complex in the years to come as globalization expands. For this reason there must also be stringer effort by host countries and the international community to establish a code of ethics that does not give a competitive advantage to companies that practice bribery and kickbacks. More stringent laws in this regard can assist in assuring that business ethics improve throughout the world. Such laws would serve to make the global economy more sufficient because it would decrease the corruption that often leads to financial collapse. As such the adoption of more stringent laws should take place.
The purpose of this discussion was to examine bribery and kickbacks within the sphere of business. The research suggest that bribery and kickbacks are routine internationally and domestically. Within the context of business, bribery has different meanings depending on the part of the world in which business in being conducted. For instance, in the West bribery takes place but they are generally frowned upon. However in other parts of the world bribery is considered to be an aspect of doing business and it is actually expected. For instance in China, bribery and kickbacks are viewed as nothing more than a reciprocal act that is correlated with virtuous behavior established by Confucianism.
The research also focused on the utilization of different ethical theories, namely teleology and deontology. The research indicates that many multinational corporations use teleology to determine the manner in which business is conducted. That is corporations tend to make business ethics decisions based on the perceived consequences. In the case of multinational corporations in China it is perceived that the corporation will receive more benefit from offering bribes and kickbacks than from obeying the law. This is true even though the company is also exposing itself to certain risk that can lead to prosecution.
The research asserts that companies should simply develop a code of ethics and simply abide by this code. Establishing such a code clearly defines the standards of the company and…[continue]
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