Today, when researchers and policymakers discuss strategies to effective business leading, the stage of implementation remains the most problematic one. The most sophisticated and well-considered plans will not work if the implementation stage is complicated by negative phenomena such as corruption, especially on the international level. This research is purposed to explore the dimensions of corruption and its effects on international business. Corruption is a negative phenomenon that puts at risk public trust and leads to economic growth reduction and political crises.
Definition of Corruption
One hindrance in combating corruption is the struggle with defining it. In many cases, the word ‘corrupt’ is used interchangeably with ‘illicit’ to imply that corrupt behavior infringes the principle of legality. Nonetheless, not all illegal activities are considered corrupt while not all corrupt activities are considered illegal. Rose-Ackerman (2011) asserts that a bribe is an unauthorized or illegal transfer of funds or any other form of substitute (p. 281). According to the Transparency International, corruption is the intentional abuse of power for personal gain. It is a harmful act where everyone whose livelihood depends on the honesty of individuals holding an authoritative position is affected in one way or the other (“Putting Corruption out of Business”, 2012). The definition of corruption allows one to focus more on abuses of power than the type of players who are involved in the corrupt behavior.
Implementation Stage and the Extent of Corruption in International Business
Implementation is a critical component of strategic planning. Organizations that create strategic plans should include a process for implementing the plan. The implementation phase involves putting marketing plans into action (Thompson & Stanton, 2010, p. 690). When putting the implementation phase into consideration, there are several strategies that would make it successful. However, while some businesses believe that corruption may be the only way to remain relevant on the competitive market, corruption has its own short-term and long-term effects on international businesses (Thompson & Stanton, 2010, p. 691).
Until recently, many nations have used foreign-paid inducements as tax deductions and still considered it legal. However, although legal, the act was certainly corrupt and unethical. Paying bribe was only a crime if it infringed the laws of the participating countries (Deming, 2010, p. 311). Most international firms have legal advocates to guide and establish anti-corruption policies. Legal advocates help international companies to uphold the laws and regulations of both foreign and their countries. However, legal advocates may not essentially help companies to dodge corruption scandals, since most corrupt practices may well be legal, for example, offering incentives for the purpose of winning a contract (Deming, 2010, p. 314).
Effects of Corruption
Corruption is a multi-faceted problem, and it is more widespread in some nations than in others (Lane & Simpson, 1984, p. 36). The global prevalence of corruption has had negative influences on all major sectors in a country. Economically, corruption depletes a state’s wealth, often sidetracking it to fraudulent officials. Many studies reveal that corruption inhibits economic growth (Baughn et al., 2010, p. 16). At its core, corruption develops unevenness in business transactions, granting the corrupt individuals the upper hand. Politically, corruption symbolizes a hindrance to democracy (Deming, 2010, p. 318). Undeniably, corruption is prevalent in the developing economies across the globe rather than in more developed countries. In the developing economies, corruption tosses economic development into turmoil and hinders foreign investment. For example, a 2011 Global Integrity Report by Business Anti-Corruption mentions Vietnam as one of the world’s fastest-growing economies (“Business Corruption in Vietnam”, n.d.). However, of the countries assessed in 2006, Vietnam has the second-most fragile anti-corruption framework (“Business Corruption in Vietnam”, n.d.). The feeble anti-corruption framework is a grave cause for concern, especially since the conclusions suggest that corruption in Vietnam is deeply rooted (“Business Corruption in Vietnam”, n.d.).
Bribery leads to substandard firms earning business over superior rivals. Offering substandard firms contracts and businesses has actual impacts across numerous sectors, such as the construction industry, telecommunications services, and the financial sector (Deming, 2010, p. 319). Businesses that offer bribes also affect procurement processes and policy makers, and these processes undermine governments, policies and disrupt unbiased competition in the global marketplace. Failing to take legal action on the corrupt individuals will eventually lead to complacency, making bribery a norm (Raoof & Butt, 1997, p. 25). Moreover, corruption diminishes the economic growth rate of international companies and shrinks private investment (Deming, 2010, p. 322). Additionally, corruption leads indirectly to decreased per capita income, increased illiteracy levels, and an increase in child mortality. In adition, corruption affects how nations plan their economic policies (Deming, 2010, p. 323). According to the Global Integrity Report mentioned above, corruption is associated with economies that rely on fuel exports, have unnecessary restrictive regulatory climates, and that are crippled with less trade reticence. On the other hand, the developed economies enjoy lower corruption rates, a significantly high percentage of women in administration, free press, and open trade economies (“Business Corruption in Vietnam”, n.d.).
In the globalized world, business and trade play essential functions in societies. Regardless of one’s social class, everyone is affected by the outcomes of corruption. From the lessons learned from the consequences of corruption, businesses and companies are eager to start and develop with integrity, uninhibited by the controlling effects of bribery. Most companies offer their employees vital guidance on corruption and anti-bribery. Even so, the global character of today’s business suggests that international companies may encounter complications when trying to push in policies in foreign countries. While creating a culture that inspires employees’ behavior and decision-making process can be an extensive and complicated process demanding resources, sensitivity, and patience, it might be the only way to prevent corruption from being embedded into an organization’s culture and be deemed an everyday business endeavor (Thompson & Stanton, 2010, p. 697).
In addition, tough decisions for international bodies frequently arise in everyday situations. A sales representative may encounter a bribe situation when traveling or transacting with customers and merchants. In other cases, a sales representative may face tough ethical decisions when accepting or offering gifts. In short, employees may offer or be presented an opportunity for a bribe. Therefore, businesses should be clear and succinct about what is acceptable and what may not be accepted in good business practice. With a thorough definition of bribes and baits used as bribes, international businesses can significantly reduce the risk of corruption by their employees (Thompson & Stanton, 2010, p. 698).
The private sector has had numerous instances of corruption cases. Stopping corruption in this sector is, therefore, critically important if corruption is to be curbed at both local and international levels. International organizations and governments have an essential task in designing a business environment that does not put up with any form of corruption. In addition, the government should effectively prosecute companies and individuals found participating in bribery. Nevertheless, organizations and employees also have their role to play to improve transparency, legally protect the whistleblowers, and set high standards of integrity in the company’s culture (Rose-Ackerman, 2011, p. 288).
In conclusion, contrary to a few decades ago, today’s companies are not confined by national boundaries. While the rules and regulations of business transactions were straightforward and recognized, today’s businesses stretch to multiple countries, each with a specific set of standards and regulations. Corruption has gone global, and managing corruption should be a primary concern in training business professionals. The people at the top, in the long run, determine the culture of an organization. It is logical, therefore, to believe that frontrunners who emphasize on ethical issues on a regular basis will have an encouraging impression on the organization’s culture. Insisting on employees to practice transparency, openness, and to uphold ethical standards will send the right message to employees, colleagues, and to the rest of the world. This message means that they take the fight against corruption seriously.