Clifford and Greenhouse (2012) Outline an Ethical

Clifford and Greenhouse (2012) outline an ethical situation that occurred with Wal-Mart in Mexico. The company found that its subsidiary, Wal-Mex had commonly used bribery in order to pay off public officials in order to have their stores built. In such situations, Wal-Mex was seeking to expand rapidly in Mexico, but in each location the company had to get permission from the local authorities. Local managers decided to speed the process along by paying the bribes that were requested of them. The bribes in many cases were not illegal in Mexico, but they do contravene the Foreign Corrupt Practices Act, and they also are against most ethical sensibilities in the United States, where bribery is substantially less common than in Mexico.

Ethical management involves, first and foremost, paying attention to the law and working within its confines. The situation here is a grey area in that Wal-Mex is a subsidiary, so it operates at arm's length from head office. However, ethical management also holds that bribery is unethical, because it is essentially stealing from your employers to pay or accept a bribe. Moreover, bribery is something that weights down economies, with the result being that the people of Mexico suffer from all the bribery in their country because the economic markets do not function as efficiently.

So in terms of ethical management, it is essential that the manager at Wal-Mex does the right thing and awaits the permit, even if that permit gets delayed a bit because of the bribery. To go through the legal procedure without bribery is better for the Mexican economy and the Mexican people, and it starts to change the culture that exists with some small-time government officials in Mexico of setting policy based on who gives them the most money.

To prevent this type of thing from happening again requires a couple of different steps. One of the most important steps for a company is to build an ethical culture, which allows for managers to have a higher standard of ethical principles, which in turn will reduce the likelihood of incidents like this. Companies usually need to institute training in ethics to ensure that everyone in the organization understands the standards of conduct expected of them (ECOA, n.d.). This is especially true with overseas subsidiaries, as different cultures have different ethical standards and local managers need to understand that it is the company's ethical standards that are most important.

In addition, there could have been cash controls as well. When there are tight cash controls, it is harder for a manager to use company funds for things like bribery, because each peso needs to be accounted for. That might not have been the case with Wal-Mex, the cash controls might have been insufficient to catch bribery -- or it could be that an audit is where head office discovered the bribes.