Doing business internationally involves more than just the difference in currency, time, and language.

Different communities have different expectations about how things are done—what is allowed and
what is not. Add to that the differences in political and legal systems and competitive pressures, and the
line between honest and dishonest business practices can be challenging to identify. This section will
discuss ethical issues operating in the global environment and laws, organizations, and groups working
to enforce codes of conduct and hold businesses accountable for their business processes and the
health, safety, and well-being of employees throughout their supply chain.

If a large company decides to enter a foreign market, it usually has to protect the number of licenses,
permits, registrations, or other government permits. Certain types of business may or may not be
legitimate unless the company can obtain changes or adjustments to the country's laws or regulations.
Since the power to authorize foreign affairs is in the hands of local politicians and officials. As companies
acquire significant financial resources, it should be no surprise that some corporate executives turn to
financial incentives to influence foreign officials. While certain economic benefits, such as promises to
invest in local infrastructure, may be legitimate, any direct payment mechanism by an outsider who
intends to influence that official's public decisions will cross the line into bribery.

Bribery is one of the oldest examples of corporate misconduct. Business bribery can cause many
problems. First, it is illegal—all countries have laws that prohibit bribery of government officials—so a
bribery company puts its directors, officers, and employees at significant legal risk. Second, rules and
regulations that avoid bribery often have a legitimate public interest so that a company may undermine
the local public interest and harm local competitors. Third, bribery can inflame a culture of corruption in
another country, which may be hard to eradicate. Fourth, in terms of laws such as the US Foreign
Corrupt Practices Act (FCPA) and the Organization for Economic Co-operation and Development (OECD)
Convention against Corruption, bribery is illegal in the country targeted and in their home country of
organization. Fifth, a company that is officially accused or convicted of illegal conduct may have a severe
deterioration in public relations.

Despite these significant setbacks, experts report that business corruption worldwide is showing no
signs of slowing down. Transparency International (TI), a leading anti-corruption organization based in
Berlin, estimates that 1 in 4 people worldwide paid a bribe in 2009. Moreover, the total cost of bribery
continues to rise every year. In 2011, the World Economic Forum estimated that the cost of corruption
was more than 5% of global GDP (the US $2.6 trillion), with more than $1 trillion in bribes paid each
year.

Governments and partner organizations have redoubled their efforts to combat the perceived increase
in global corporate corruption. Globalization, which has increased in the last decades of the twentieth
century, is often cited by experts as contributing to the spread of corruption. Companies and businesses
have become increasingly reliant on global networks of providers, partners, customers, and
governments. Increased communication between organizations in different countries doubles the
chances of groups seeking benefits from illegal profits and benefits. Although direct bribery is unethical
and illegal, many behaviors fall into a gray area that may be difficult to analyze in terms of one global
standard. For example, when does a business gift become a bribe? What is the level of business
entertainment "right" or "wrong"? For the past two decades, governments and regulators have sought
to define specific types of behavior considered illegal and illegal.

Another factor that has increased the sense of urgency among regulators is the magnitude of recent
corruption cases (many of which are detailed below). The cost to shareholders, stakeholders, and the
community appeared to be enormous. As a result, governments and international organizations have
intensified their efforts to enforce anti-corruption laws and demand tougher sanctions, sometimes
imposing fines of hundreds of millions of dollars. As a result of these efforts, many international
companies have developed internal policies to ensure compliance with anti-corruption laws.

Corruption From a Cultural Perspective

Compliance with anti-corruption legislation raises ethical issues in companies. It is not always easy to
control good behavior when social and cultural norms vary significantly from country to country. Acts
considered illegal in one country may represent the ordinary course of business in another. One legal
expert explains the difference as follows:

A common misconception in the Western world and the developing world, even among many
researchers, is that corruption is rampant. Values, such as values, define rules, but both are not the
same. [1]

Every Western nation likes to look at the world the way they do: Every society works or should work in
the same way. Its business processes, for example, should be based on a transparent market system and
governed by rules that apply to everyone. A country that fails to comply with this model appears
underdeveloped or malfunctioning. It follows the theory that corruption is similar in Sweden and Sudan.

The truth, however, is that different cultures use very other systems to make things happen. For
example, although Western cultures are primarily based on laws, most of the world's cultures are based
on relationships. Westerners trust the program, while non-Westerners are strengthened by personal
dignity, child labor, friendship, or a long-term bond. Loyalty to friends is questionable behavior in the
West but represents high moral standards in much of the world.

What is corrupt in the West may be accepted elsewhere. An old example of a buying agent illustrates
this point. A Western buying agent is expected to award contracts based on bidding quality and
available financial information about bids. The agent who loves personal friends is considered corrupt
because cronyism destroys this publicly based system. In addition, it creates a conflict of interest: the
option for the agent and his friends may not be suitable for the company.

1. Sharon Eiher, "Corruption in International Business: The Challenge of Cultural and

Legal Diversity," Wichita, KS: Friends University, accessed October 29,
 2013, http://www.ashgate.com/pdf/SamplePages/Corruption_in_International
_Business_Ch1.pdf. 
2.