Are top managers responsible for corruption in international business

¶ … bribing" unethical and illegal or just a cost of doing business?

Bribery is unethical and illegal in some societies and a regular part of business in others. Whether or not an activity is unethical is largely dependent on the culture, customs, norms, values, and laws of the country where the activity takes place. It's a matter of perspective. When you consider that the act of bribery is intended to supplement the income of underpaid officials or increase the power of a nation's governments, the outcome of the bribe is a negative one. Most economists and ethicists agree that bribery's effects are largely detrimental (Weber and Getz, 2004). If the effect of the act is detrimental, then it can be argued that it is unethical to engage in bribery even if it is only a cost of doing business.

There are different types of corruption: bureaucratic corruption where officials take bribes; political corruption where politicians take bribes using their positions of power; and grand corruption meaning misuse of public power by heads of states, ministers and top officials for private, pecuniary profit (Gerasimova, 2008). Bribery has opportunity costs because the money paid as bribes is not put to productive use and may lead officials to contract with inefficient firms for inappropriate goods or services (Weber and Getz, 2004). Bribery creates disincentives to foreign investment by increasing risk and uncertainty for firms, such that economic development is hindered (Weber and Getz, 2004).

The negative consequences of bribery on the local population should be considered by every company that engages in operations in that country. If the act of bribery causes the government to engage in unproductive projects that deteriment its citizens then it is unethical for companies to engage in bribery.

II. What other options do companies have to win business contracts without bribing?

Corruption is a symptom of other, deeper-seated factors, such as poorly designed economic policies, low levels of education, underdeveloped civil society, and the weak accountability of public institutions (Gerasimova, 2008). This makes it difficult for businesses to win contracts in countries where bribery is rampant. Depending on the level of corruption it may not be possible to win a contract without bribery. It is difficult to compete against other companies that are willing to pay the bribes to get the contracts despite the negative effects on the people of the country.

One way that businesses could win contracts may to offer to invest money in developing countries to increase economic development, build infrastructure and create jobs. This can only work, however if there are government officials of the country are willing to forgo bribes for the good of the country. Some countries have rampant bribery at all levels of government and other countries have more low level officials that accept bribes, but may have a level of government that a company can work with to avoid the bribes.

Another method of winning contracts without bribes would be for company's competing for contracts to all agree not to offer bribes. This is a difficult proposition because not all companies share the same values and the desire for profits may outweigh the desire to stop bribery. International organizations have suggested a two-sided approach to stopping bribery - to change attitudes toward multinational bribery in industrial countries and to increase awareness in developing countries of the costs of corruption (Gerasimova, 2008). Breaking the culture of bribery is the only real way for companies to compete fairly, because then all the companies competing would be on a level playing field.

Part B

I. What advantages does an understanding of local culture give managers in working in business competition?

Many businesses have failed due to a lack of understanding of local culture, especially concerning taboos. In the Middle East there are strict religious rule on how men and women interact, which must be taken into consideration when operating a business (Daniels, Radenbaugh and Sullivan, 2010). Managers who understand cultural differences will be more successful and less likely to make critical errors that can drive customers away.

Understanding cultural differences can help businesses to set appropriate days and hours to be open for business, structure shopping areas appropriate for women and men in deference to their religious or cultural beliefs, offer the right products and advertising that will most effective based upon the culture of the target market. Businesses will also be able to tap the local market for the best employees and manage their employee's more effectively with their awareness of cultural differences.

Mangers who understand cultural differences have the advantage of knowing the tastes of the local people for different products. This can help businesses offer the right kinds of products for local vendors without having to engage in expensive market research.

II. Which organizational processes are most affected by cultural differences?

The hierarchy and business structure of an organization is affected by the culture where the organization originates. In Latin cultures, inquiries into personal lives are often expected before business is transacted and it's assumed that business relationships will be built over time, based on trust (Nilsen, Kowske and Kshanika, 2008). In Japan management is based upon consensus and in China managers are seen as highly respected pillars of authority to which employees traditionally assign parental-like attributes (Nilsen, Kowske and Kshanika, 2008). In the Middle East, business has a strong social component, and personal and face-to-face communications are highly valued (Nilsen, Kowske and Kshanika, 2008).

These differences in management style and leadership lead to differing approaches to actions such as change management, communications, and implementation of business strategy, human resources, marketing, and decision making. The differences in behavior, time management and how different culture perceive relationships in business make a difference on how business transactions are conducted in different countries and cultures. Some countries and cultures are slow to adopt change and may have difficulty implementing new policies and practices. Other countries and cultures are orientated on short-term goals and do not focus on long-term effects. These differences can make or break a company that is looking to do business internationally if they do not understand how the business world works in other countries.