International business

Bribery and corruption is a way of life in many countries. These practices affect the way international business is regularly conducted. However, in most of these countries, it is illegal to offer or receive bribes or engage in corrupt practices. Yet corrupt practices are a part of the ‘culture’ of ‘doing business’. Unless companies ‘conform’ to such practices, in many cases, international business cannot be transacted. The extent to which corrupt practices is perceived among businesses in different cultures and the code of ethics applied to justified such practices when reasonable.

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International Business is all commercial transactions – private and governmental – between two or more countries (Daniels & Radebaugh, 2004). When dealing with these transactions internationally culture is a major factor, which influence on the way business is perceived from both parts. In some countries, compliments in the form of cash, gifts, entertainment, or any other form of acknowledgment of a good business deal can be seen as bribes. They may find bribery and corruption as common practices in some countries. However, at what extent can small gifts be seen as a persuasion to influence decisions in order to benefit the interests of the donating party?

A person may find morally incorrect to accept any kind of incentive, which can lead to the concept of bribery. A bribe is remuneration for the performance of an act that is inconsistent with the work contract or the nature of the work one has been hired to perform (Shaw & Barry, 2001). This essay will examine the ethics and moral issues existing in the world of international transactions. It will discuss whether companies find ‘normal’ the acceptance of bribes, the considerations of moral and practical dilemmas and the implications for engaging in such practices. As part of a short literature review it will also assess the major ethical systems of dedication by Adam Smith, John S. Mill and others.

In many countries ethics are guided by local religions beliefs. It can be said that for these cultures businesses would never commit acts of bribery because of their genuine religions belief. However it can also be argued that one does not need to pursue a religion belief in order to promote morality within their organisation. Immanuel Kant (Shaw & Berry, 2001) wrote that the ‘basis of obligation, must not be sought in human nature, [nor] in the circumstances of the world. The principle claimed by Kant will go against any ‘motive’ such as religion – that can be seen as a base to promote (or excuse) good ethic practices. Kant reveals that factual knowledge should not be the basics of reasoning morality but the consequences of promoting good will.

Milton Friedman suggests that ”in a free economy there is only one responsibility for business: to use its resources and engage in activities designed to increase its profit as long as it stays within the rules of the game… without deception or fraud”. The pursuit of profit from organisations benefits the economic system and consequently the lives of individuals. (Ehrenfeld, 2005). He also emphasises that corporations should not held responsible for activities that are primarily, of the government responsibility. Levitt (Ethics and Business, 2004). postulates that ”in the end, business has only two responsibilities – to obey the elementary canons face-to-face civility (honesty, good faith and so on) and to seek material gain”

Adam Smith concept of the invisible hand postulates – in the wealth of Nations – (Invisible Hand, 2007) that the pursuit of self-interest of each individuals is done undoubtedly if they are left alone to do so, which interestingly also provides the well being of all. The capitalist approach of observing individuals also challenges the morale, which is taking in consideration here. Should Smith theory of ‘invisible hand’ be proven to be true, then Kant basis of obligation to promote the general good will enter in conflict with the Smith theory’s pursuit of self-interest.

As for the renowned hand-of-government concept economists argue that corporations should not be addressed as moral identities and that Smith’s views is not approved in the context. The hand-of-government argument would assume that increased profits would only benefit corporations. For that reason, societies need the presence of the government as a first aid. Hence, the need of creating consistent systems that will supervise and keep track of external activities that are performed by corporations, (Moral responsibility and Corporations, 2007).

John Stuart Mills and the injustice concept show that no justice involves the violation of the rights of some identifiable person. Ethically, on the grounds of a utilitarian point of view, Mill explains that an individual right to obtain something in the society is protected by laws and that should be no objection for an individual to posses a claim since warranty is included on that law. (Hamburger, 1961). In discordance to Kant the fact that an action can be said as right or wrong will be dependant to the entitlement that rules created provides. In the other hand, Kant’s approach remains that an action is wrong because is reasonably wrong and not because God or any Law has imposed to societies to be said wrong and finally that duties should be conducted regardless.

Further, Kant’s concept is also exemplified by atheists who see morality as part of common sense and are not guided by any other influences apart from what it is reasonably acceptable in societies. Cases of bribery and corruption usually occur between two countries that maintain very a very close relationship in the area of business dealt. This relationship induces the practice or bribery in large scale.

In a different concept of good practices in ethics David Hume postulated the Agent, Receiver, and Spectator in Moral Sense Theories. Moral agents are the entities who perform a immoral action, such as offering bribes, the receiver are potential business competitors affected by those bribes and the spectator is the person or entity who witnesses the acts of bribery (David Hume (1711-1776), Moral Theory).

Hypothetically, a case of bribery can be demonstrated as follow: Pegasus is a corporation, which provides fast communication through circuits, computer peripherals and other means of media. Pegasus International Inc sees China as a growing fast market and identifies the lack of wireless communications in this country. Willing to develop and introduce such service in great mass for the Chinese population, Pegasus initiated an internal project to put this service running.

The only problem would be that China only accepts franchises of local districts, and from region by region, city by city. Implementing such service in these regions from a overseas source will require Pegasus Inc. to apply for a License, which is mainly denied for external business. (Hackworth ; Shanks, 2007). The payoff required to obtain a ‘license’ has been done by unknown companies in the form of bribes, which now the Pegasus Inc. would have to decide whether it undertakes or not. The revenues for having the service introduced in China are of millions of dollars a year.