Faculty of Law & Management
Graduate School of Management
Lecturer: Richard Underwood
Bribery, giving and taking, is an unfortunate consequence of engaging in international trade but is necessary to pursue an organization’s objective of maximizing return on investment.
Student name: Vu Thi Hoang Yen
Student ID: 15994331
Bribery in international trade has become increasingly popular all over the world. When engaging in international trade, many businesses have to concern about whether bribery is an effective way to reach their target of profits maximization. This essay will discuss about the impact of ...view middle of the document...
The bribes such as monetary, material or social assets were given the government officials of the host countries by foreign companies which were willing to obtain a contract or a project to export or invest in those countries (Hung En-Sung, 2005). Bribery appeared in doing business abroad from mainly firms which belong to emerging economic giants, such as Russia which country was orders the last place on the 2008 Bribery Index, or China with a score of 6.5 out of a very clean 10, just above Russia (Transparency International Report, 2008). From one of the United State Export Strategy Report, it was showed that 80% of all contracts were made decision by bribery. (Scott et al, 2002). Due to its increasing rapidly, the OECD Working Group on Bribery in International Business Transactions, which is invented of the 30 OECD countries and 8 other countries who have accepted to sign the OECD Bribery Convention on Dec 9, 2009, to establish new measures, will emphasize efforts to eradicate, detect, investigate and punish foreign bribery (Kavanagh, S, 2010).
In the fact, bribery has brought frequent benefits to foreign firms that go ground to achieve their targets for three reasons. Firstly, the use of payments helps international companies to win good business opportunities, especially when they operate in the countries that bribery became a part of compensation system. Admittedly, paying bribes may be widespread and accepted as cultural norm in certain countries. For instance, the practice of bribery has traditionally been quite regular in Russia in the mid-1990s (Sanyal,R., 2005). Although most foreign enterprises are aware of the wrong of the bribery, they yet engage in it because simply “everybody do it”. If they do not connect in buying-off, there will be numerous other similar companies who will be ready to do it, as a consequence that they will lose the business opportunity and competitive advantage. A highlight example from BP operating in Angola in 2001 was cited by Bailes,R. (2006). Because of pressure from some domestic firms, such as Sonangol - the Angolan State oil company as well as the presence of other large firms for example Exxon-Mobil, Shell in the offshore oil of Angola, BP have to play their rules, otherwise they will get out. Consequently, BP made decision that they would establish all the payments for Angolan government to obtain the operation trade there. It is easy to understand their announcement that is because if they do not accept, their plan can not simply complete. Some firms who refused to engage in payoffs lost a number of good opportunities and some beneficial contracts. Take the US firms as an example. From 1994 to 2001, it was estimated more than 400 international business contracts which US firms was defected to by other foreign competitors that could use bribery to obtain (Hung En-Sung, 2005). In spite of the fact that US firms could be unlikely to have a weak standard of competitiveness, they resigned going out of...