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Business ethics

In many countries the giving gifts or bribes to secure work is considered acceptable business practice. American business firms are not allowed to give gifts above a certain amount of bribes and complain that they cannot compete with firms from other countries who do bribe. Is the giving gifts and bribes acceptable or should all countries ban their businesses from giving gifts and bribes?

Business ethics, one of the most topical issues all over the world nowadays, is the study of business situations, activities and decisions addressing whether an issue is right or wrong (Crane, A. and Matten, D. , 2007, p5). Therefore, concerned with the morality, giving gifts or bribes is one of popularly business ethical issues that have raised a lot of debates and disagreements in perspective of not only domestic companies but also firms associated with different cultures.

Some opinions are pointed out that giving gifts above a certain amount or bribery can lead to unfair competitions among companies operating in different countries under their own law, such as the United States with hard legislation. However, others regard gift-giving and bribery as a part of doing business internationally and suppose that companies aiming to expand globally have to know

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“When in Rome, do as the Romans do”. This essay will deal with the business ethical issue of giving gifts and bribes, the benefits and drawbacks behind this topic in the view of cultural relativism.

Kaikati, J. G. & Label, W. A. (1980, p38) defined the legal essence of bribery as “a payment voluntarily offered for the purpose of inducing a public official to do or omit doing something in violation of his lawful duty, or to exercise his official discretion in favor of the payer’s request for a contract, concession, or privilege on some basis other than merit. “.

On the other hand, the survey about “The share of respondents evaluating certain type of behavior as unethical, wrong behavior (in %)” (Bucar, B.et al, 2003, p273) indicated while accepting gifts is considered highly unethical, giving gifts is more acceptable in doing business in some societies and that the Americans state the highest level of refusal on the issue of gifts and bribes.

The well-known Foreign Corrupt Practice Act (FCPA), passed in 1977, prohibited American companies from making illegal payments, promises, offers or gifts to officials of foreign governments (Tsalikis, J. & Nwachukuru, O., 1991, p85). However, giving gifts, payments or bribes is among the business ethical issues that are too difficult to draw the line between acceptable and unacceptable practice. Controversies, questions and conflicts of interest therefore have been raised. For example, as employees of a firm, purchasers expected to get the best deal for the firm can be swayed to make the decision when he receives personal benefits from the sellers (Crane, A. and Matten, D., 2007, p367).

Donaldson (1989) argued that a number of debates in bribery, which have been conducted, tend to be empirical and perhaps miss out the normative dimension (cited in Wood, G. , 1995, p10). What’s more, some of the arguments for the bribery listed by Laczniak and Murphy (1993, p213) include (1) the accepted practice in different countries; (2) a form of commission paid to helpful intermediaries; (3) the only way to compete in overseas markets.

By contrast, they also indicated three arguments against this term supposing that the bribery is (1) inherently wrong; (2) develop corruptions in government and business practice; (3) able to deceive the shareholders of the company as to “the true nature of some payments”. One of the most well-known bribery scandals globally is The Lockheed scandal the payments of which spread across the world to Indonesia, Iran, the Philippines, the Middle East, Japan, Italy, Germany and Holland (Leigh, D. & Evans, R. , 2007).

As a typical example, the Lockheed scandal in Japan, the worst political scandal in this country, broke in 1976 (www. bookrags. com). Lockheed Aircraft made illegal payments to a number of airlines in Japan and other countries as well in order to boost airline sales and avoid bankruptcy (www. bookrags. com). Consequently, a prosecution of 17 people was also reported, especially the situation of Tanaka, former Liberal Democratic Party prime minister with 4 year sentence and 500 million yen fine, which he had received.

And the Lockheed case was said to come up with the term of “structural corruption” among politicians, businessmen and bureaucrats which underlined the need for political reform. The bribery issue actually raises a lot of conflicts, questions and confuses in making decision which one to choose between a bribe with corporation prospers and no bribe associated with corporation suffers. For instance, contribution industry is familiar with political payoffs if a company wants to take advantages of contributions, favours, hiring certain people, retaining special consultants (Baker, M.J. , 2001, pp. 221-222).

Retailing industry is another chosen argument by the author that companies operating in this field depend much on food broker distribution channel, then need relationships with buyers or purchasing agents. The action of giving gifts or bribes here is considered as a way to secure business practice, even more popular in international business. Therefore, this term relates to the problem of different cultures with their own legislations which are able to create competitive disadvantages. Moving to the case of American firms will illustrate in more details.

Along with what mentioned above, The Wall Street Journal (1979) indicated that the FCPA made American firms loose sales worth millions of dollars while Japanese and European competitors, who didn’t suffer from this Act, picked up additional abroad market share (cited in Kaikati, J. G. & Label, W. A. , 1980, p39). One of the results is these American firms’ balance-of-payment deficit which made up the temptation for them to avoid and cope with this law (Kaikati, J. G. & Label, W. A. , 1980, pp. 39-40). In some countries, similarly foreign payments are not outlawed, even encouraged.

In Germany, for example, although bribing domestic officials and politicians is illegal, the law allows to make payments which are deducted as business expenses for tax purposes to foreign ones (Wood, G. , 1995, p13). Kaikati (1980, p40) cited Business Week’s example (1977) of Asmara Oil Corp. Ltd. , a Canadian firm specializing in drilling operation outside Canada reporting that it could continue to make facilitating payments and disclose them. In general, the author wanted to conclude that U. S. businesses must be allowed to compete on an equal footing with the majority of other nations.

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