Jul 10, 2019 in Business

Business Ethics in the Workplace: Corruption

Abstract

Corruption has been in existence since ancient times as the most prevalent and worst form of human behavior, which is unwelcoming when it comes to running the public affairs. In fact, it has become a constant issue of the discussion, thus gaining great deal of attention worldwide. The focus of this study is to survey and discuss issues concerned with how corruption comes by as well as likely remedial actions. It elaborates on the costs caused by corruption regarding economic growth. In addition, it gives emphasis to the fact that fighting bribery may not be cheap and cannot be sovereign from the transformation of the state. Therefore, if specific improvements are not implemented, corruption may end up being an issue despite the efforts directed at curbing it.

Introduction

Corruption is a universal problem that each country faces although the degree of its severity varies from one society to another.  It is a complex undertaking for the experts in their attempt to understand corruption in its entirety. It is evident that the definitions, forms, causes, as well as impacts of corruption are multifaceted and diverse. Notably, corruption is ill-disposed to the public administration in addition to violating the human rights, undermining democracy, and degrading the society’s moral fabric. The negative influences of corruption touch the whole society, but it excessively affects the most susceptible sections of the community. In fact, corruption tends to reinforce arbitrariness, discrimination, as well as exclusion. Corruption is a global problem, which undermines both the human rights and values.

Literature Review

According to Rose-Ackerman, corruption exists if an individual intentionally violates the principle of impartiality during the decision-making process to appropriate some benefit. The principle of equality explicitly states that interpersonal relations are insignificant and they should not influence the decision-making process since they result in corruptive activities. Additionally, Spector claims that corruption occurs when an individual decides to abuse the public power for personal benefits. Spector argues that corruption does not amount to fraud or even extortion and as such, people should differentiate corruption from any other form of pubic abuse. On the other hand, Wallace claims that for a corruptive activity to occur there has to be more than two parties involved in the act. It is notable that corruption does exist in the private sector and not only in the public domain.

According to Brytting, Minogue, and Morino, most disciplines use varying approaches to describing corruption. However, political science uses public opinion and public interest as well as a formal legal approach to define corruption. Firstly, most people consider any administrative official or political activity to be improper particularly when it contradicts the public interest. In effect, this approach implies that the public officials who support others at the expense of the public interest to obtain personal benefits are corrupt. Secondly, according to Campos and Pradhan, the promoters of the public opinion approach claim that corruption is what the public perceives as corruptive activities. Lastly, the formal legal approach defines corruption as any activities that tend to violate some of the specific rules, through which those in power perform the public duties. In addition, this method describes corruptive activities as any unlawful exchanges of political goods for personal benefits. However, Cockcroft argues that all the three approaches face the same problem of how researchers can apply them for empirical purposes across the nations with varying cultures.

According to Fletcher and Herrmann, corruption results from a nation’s weak governance, which occurs when an organization or individual possesses monopoly powers over certain commodities. In addition, corruption occurs when a person or organization has discretion over the decision-making process and when there is minimal or no accountability and low-income level in a country. According to the World Bank, economists define corruption as the act of abusing the public office in exchange for personal gains. Quah argues that in most developing countries, corruptive activities are more widespread within the public sector as opposed to the private sector. In effect, most experts attempt to establish the connection between corruptive activities and both economic and non-economic factors. However, Wallace claims that researchers rarely find consensus on the major causes of corruption. It is evident that bribery has a constructive correlation with variables such as the involvement of the government in the economic, political institutions as well as history and culture.

The involvement of the government in a country’s economy implies the extent to which the government, as well as its administrative machinery, controls the economic activities. According to Spector, the government officials have the power to make decisions on the allocation of the available resources, their quantity as well as the opportunities that arise. The success of the economy depends mostly on the ability to influence the concerned public officials as opposed to the market forces. Consequently, various institutions of the government are vital in determining the levels of corruptive activities in a country. Most scholars investigate variables such as economic integration, levels of economic development democracy, and freedom of the press in addition to the government’s involvement in the economy to determine corruption. According to Yadav, most previous studies have established that a positive correlation exists between the magnitude of the unofficial economy and corruptive activities in a country. On the contrary, other studies have found that state intervention tends to have a positive impact, which reduces corruption levels in a country.

According to Brytting, Minogue, and Morino, most of the weak government institutions are to blame for the increased corruptive activities in a nation. More to say, various inferences link the features of a country’s state structure and political systems to improved corrupt services. In most cases, lack of democracy, as well as institutions of a free society, tends to increase the levels of corruption in a country, particularly among the state officials. Further, the absence of adequate legal systems offers limited protection to private businesses, exposing them to greedy and corrupt government officials. Campos and Pradhan argue that a nation’s legal traditions may affect the implementation of private property rights and levels of state protection, which determines the levels of corruptive activities in a country.

There exists a positive correlation between corruption and the size of the state. In this regard, at times, the size of the state may influence the levels of corruptive activities within the public service. According to Cockcroft, if the government redistributes a larger share of the GDP, this may result in greater spoils for corruptive activities in the nation. Equally, if the government employs more officials in its administrative offices, this paves the way for potential bribery within the public sector. However, Fletcher and Herrmann claim that with sufficient internal regulations as well as bureaucratic philosophies the levels of corruption in a country may decrease.

Kawata states that experts within the industrial organizations argue that the internal structures of governance in a country largely influence the levels of corruptive activities. According to Kawata, with minimal internal disciplines and decentralization of bureaucracies, most officials tend to intensify their corruptive activities. According to Quah, one major cause of corruption within the American system is the desire to exchange favors to overcome the devolved authority. Political scientists claim that most political systems are corrupt since corrupt individuals only need to influence a section of the administration. In fact, in a disjointed political system, there seem to be minimal centralized forces as well as government agencies to enforce transparency and honesty. On the other hand, Rose-Ackerman suggests that corruptive activities are extensive at the local levels owing to the great intimacy as well as frequent interaction between the local officials and private individuals. In essence, the establishment of a new local administration tends to provide widespread prospects resulting in the expansion of new corrupt system run by the party in power.

According to Spector, numerous theorists attribute the varying levels of corruption in different countries to particular historical as well as cultural traditions. In effect, they believe that a range of different cultures spanning the globe plays a critical role promoting corruption. Wallace claims that the culture of corruption has always been there in almost all Asian countries and as such, the public offices always mean privileges. For instance, in India, corruption has been a tradition, convention, and necessity as well as a psychological need for a long time. In fact, most countries have turned corruption as a way of life as opposed to a social deviation. 

According to Brytting, Minogue, and Morino, most governments spends large amounts of the taxpayer’s money annually on the purchase of goods and services. The public goods may include the building of stadiums and airports, buying medicines for public hospitals and computers for schools. However, Campos and Pradhan claim that a large proportion of these funds ends up in the pockets of corrupt government officials through illegal exchanges. It is evident that the effect of corruptive actions has several dimensions that relate to economic, environmental, political as well as social effects. 

For instance, in the political domain, corruption tends to impede the rule of law and democracy in a country. As a result, the public offices and other institutions in a democratic system can lose their legality through the abuse of power for personal gains. According to Fletcher and Herrmann, corruption results in repetitive cynicism, reduced public participation in politics, political competition, political instability, and lack of transparency in the decision-making process among others.

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Examples of Incidences where International Companies have Engaged in Corruption

Corruption alters markets and generates unfair rivalry among companies. Organizations regularly rig bids or pay bribes to have an advantage on public procurement contracts. A majority of corporations engage in corrupt acts behind invisible subsidiaries and partnerships. Moreover, they may illicitly influence the political decision-making. Others construct cartels, exploit legal loopholes, or abuse tax laws.

An example of an international company where there is constant practice of corruption is Wal-Mart Company based in the USA. For instance, this giant retailer is a regular abuser of laws, particularly where it often bribes Mexican officials to acquire permits swiftly with the intention of opening new stores. Additionally, there are more than 81 public corporations under probe by the Exchange Commission and Securities or the Justice Department. The reason to this is going against the Foreign Corrupt Practices Act that causes bribery in international countries, which is punishable in the USA.

Corrupt acts in companies are evident. For instance, there is an increase in the number of firms that now place disclosures in their financial documents to encourage their workers to at times breach the overseas bribery law of the USA. The violation takes place despite the organizations’ consistent efforts to prevent it. Other corporations seem to be supportive of bribery acts were it not for the strict US laws barring them. An example of such a company is Lakeland Industries. The company is a New York producer of industrial garments used for safety purposes. The organization publicly asserted that its failure to pay bribes because of the following U.S laws has led to a decline in the sales of the company. They continued to state that its rival enterprises that fail to follow the U.S laws have kept making huge sales on the other hand.

Many corruption investigations are many years old, and there is the likelihood that some may never substantiate. However, numerous probes have been initiated in the past year. In the month that ended, Qualcomm Company disclosed that it had found out that the Justice Department examined the corporation for violation of FCPA in January.  Consequently, there may be some proof that the giant telecom company attempted to conceal these charges. Elsewhere at Hewlett-Packard, the authorities give a closer look into whether its past workers have engaged in corruption, tax evasion, and embezzlement.

The reason to this is to aid a former subsidiary of the company, which was located in Germany, to obtain an IT agreement in Russia. The inducements were offered to the office of General Prosecutor of the Russian Federation and they may have persisted for five years since 2001 to 2006. Corruption acts are also evident in Koch Industries, which is based in Europe, where they reportedly paid bribes to officials of the government and other persons with the aim of securing contracts in the Middle East, Africa, and India. The company laid off several workers, including the manager in charge of ethics who was previously in charge of the organization’s probing into the bribes.

Recommendation

Corruption is a major hindrance to the development, stability, and competitiveness of both developed and emerging economies. More to say, corruption negatively affects the economic growth of a country, democracy, voting decisions as well as the public service. Poor people in society are more vulnerable to corruptive activities because corruption stalls the delivery of services to the public since such people are too dependent on the government. As a result, the government should understand the scale of corruption and address this at the onset to avoid severe consequences in future. In effect, the government should encourage the public to play a crucial role in creating an environment where corruption cannot flourish.

Firstly, the government should implement strong internal levels of governance. The reason to this is to reduce discretion over the process of making decisions as well as domination power over certain goods and services among individuals and organizations. It is notable that the internal structures of governance in a nation affect the levels of corruptive activities. Moreover, the government should hold all public officials responsible for abuse of the public office to curb corruption. In effect, such a move would discourage the government officials from practicing corruptive activities or illegal exchanges for personal gains. Further, the government should appoint the private institutions’ agents in the fight against bribery since it is evident that corruption is rampant in the public institutions as opposed to the private sector.

The current administration ought to institute adequate internal disciplines as well as decentralize bureaucracies within the public service to discourage most public officials from engaging in corruption. Significantly, such a move would protect the US system from corrupt officials and organizations whose primary aim is to overwhelm the decentralized authority in their desire to exchange illegal favors for private gains. In the absence of a corrupt political system, it would be difficult for the corrupt public officials to influence a fragment of the government negatively. The current regime should put in place an organized political system to help in centralizing forces and enable various government agencies to administer honesty and transparency in government transactions. The government should desist from creating additional regional administrations to minimize extensive prospects that expand the corrupt systems in the ruling parties.

Secondly, the government, as well as its administrative machinery, should positively control the economic activities in the country in an attempt to minimize corruptive activities. In this regard, the government has the power and authority to direct its officials to make optimal decisions regarding the allocation of available resources and opportunities. As a result, the success of a country’s economy would largely depend on the market forces as opposed to the individual ability to influence the concerned government officials negatively. With strong economic institutions, the government can effectively fight corruption in the country since they enhance economic integration, economic development levels, and democracy among others. Further, the government should intervene to end the high levels of unofficial economic activities, particularly within the public sector, which tends to aggravate corruption levels in the country.

Thirdly, the current regimes ought to put in place strong public institutions to curb the increased levels of corruption in the country. In essence, a country with stable political structures and systems tends to win the war against corruption since there is political goodwill to establish institutions and implement laws to help in the fight against corruption. In most cases, the presence of democracy and public institutions that promote a free society in a country tends to discourage corruptive activities among the government officials. More to say, the government ought to have in place adequate legal systems in an attempt to provide maximum protection to legitimate private business activities. In this regard, such a legal system would deter greedy and corrupt public officials from extorting money from business people and the public, leading to decrease in corruption in the public service.

The presence of active legal systems and structures allows a country to increase and strengthen the levels of state protection as well as implement the private property rights, reducing the levels of corrupt activities in the country. The current power regimes should introduce effective internal regulations in addition to bureaucratic philosophies to help in the fight against corruption. The government should refrain from redistributing a large share of the GDP to discourage spoilt and corruptive systems in the country. In addition, the government should employ fewer public officials in its regime to revert chances of potential bribery in the public service.

Lastly, the government should strive to change certain historical and cultural traditions spanning across the nation that play a significant role in encouraging corruptive activities. A change in such cultures would change public official’s perception of the government offices as a means of accessing privileges. Moreover, such a move would ensure that corruption does not become a convention, necessity, tradition, or even a psychological need in society. Importantly, a change in such historical and cultural traditions would enable the public to view corruption as a social evil rather than the normal way of life.

The current regime ought to create a strong culture of civic engagement as well as a trust as opposed to spiritedness and distrust in an attempt discourages high levels of corruption in the public service. In addition, the reduction in the levels of suspicion as well as distrust among the public lowers corruptive activities in a country’s public offices, especially with private agents. Further, the administration should encourage the public and foreigners to form business partnerships by eliminating uncertainties, which obstructs legitimate business activities. Moreover, the government should institute strict measures and rules to discourage people from engaging in a commercial transaction with acquaintances and close family that promote illegal exchanges.

The administration should introduce civic education and engagement to sensitize the public to the adverse effects of corruption to reduce corruptive activities in the country. In effect, the public may be willing to expose corrupt individuals and organizations to the concerned authorities for prosecution. Consequently, this strengthens the societal organizations across the country, which enables the government to monitor and protest instances of abuse of government offices and resources.

Conclusion

Indeed, corruption is a universal occurrence that every society struggles with, although the degree of severity differs from one nation to another. Nevertheless, there is no sole definition of corruption despite its long history. In effect, this makes any attempt to understand corruption a complex undertaking. Nonetheless, most scholars agree that corruptive activities are unwelcoming to the administration, owing to the fact that corruption undermines democracy in addition to degrading the moral standards in society. It is evident that corruption variables such as government’s involvement in economic activities, political systems, and institutions in addition to historical and customary activities instigate corruptive activities in a nation. As such, it is the responsibility of those in power to identify, apprehend, and address the levels of corruption in the country to avert looming severe political and economic consequences. It is evident that the public can play a crucial role in the fight against corruption and as a result, the government should engage them in addressing the vice.

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