Corruption from a Cross-Cultural Perspective

Compliance with anti-corruption legislation raises complex ethical dilemmas for corporations. It remains difficult to regulate ethical behavior when social and cultural norms vary significantly from country to country. Acts that are considered unethical in one country may represent a traditional way of doing business in another.

Rule-Based vs. Relationship-Based Cultures

Different cultures use radically different systems to get things done. While Western cultures are primarily rule based, many of the world’s cultures are relationship based. In wealthier countries with societies that enjoy the order that comes with the rule of law, citizens are more likely to trust the system. In some cultures, relationships based on personal honor, family bonds, friendship, or long-term mutual obligation can be for more important than the law. Loyalty based on personal relationships is sometimes viewed with suspicion in the U.S. but could represents high moral character in other parts of the world.

The classic example of the purchasing agent illustrates this point. A purchasing agent is someone who decides which vendor to do business with. In the U.S., a purchasing agent is expected to award contracts based on the quality of bids and transparently available financial information about the bidders. An agent who favors personal friends is viewed as corrupt, because favoritism is unfair in a transparency-based system. It creates a conflict of interest: a choice that is good for the agent and their friends may not be the best choice for the company.

In much of the world, however, that personal relationship is a foundation for trust. A purchasing agent does business with friends, because friends can be trusted. The purchasing agent may not even ask to see relevant financial information, since this could imply they do not trust their friend and be interpreted as an insult. It is assumed that friends will follow through on the deal, not because they fear a lawsuit, but because they do not wish to sacrifice a valuable relationship in an economy where relationships are the key to business. In such a system, it is in the company’s interest for the agent to do business with friends.

The Importance of Ethical Leadership and Personal Alignment

Throughout this module you learned about the legal and ethical challenges businesses face in today’s complex environment. Decisions about doing the “right thing” are not necessarily represented by a single big decision; rather, they are often a series of many apparently small decisions that can culminate in an organization finding itself on the wrong side of its stakeholders, society, and the law. Even corporate executives who have been imprisoned for unethical conduct later admit that they knew that what they were doing was wrong, but somewhere along the line they lost sight of their own standards of honesty and integrity.

Unfortunately, such behavior can have devastating consequences for the public, the environment, and the company—and it can cast a cloud on businesses that make good ethical, legal, and socially responsible choices every day.  As the public demands a higher level of corporate social responsibility, companies are adjusting their strategies to respond to the external environment and conduct business in a way that promotes trust and loyalty from their customers. In addition, the government has stepped in and enacted legislation intended to set forth stronger guidelines, processes, and even punishments for unethical business practices. When you leave school and begin to look for your first job, a new job, or even take a closer look at your current employer, one of the questions can now assess in more detail is whether or not the ethics of the organization are aligned with your own sense of right and wrong.