Corruption-related Decision-making in the Multinational Business Arena (2006)
AuthorsRoy, Achinto Mohanshow all
Corruption in business occurs in situations of a quid pro quo relationship between public officials and business managers representing corporations. Many a time, such corrupt situations can harm stakeholder interests. Managers, as decision-makers, in corruption-related situations may fail to understand the impact of their decisions in such situation for they operate from a position of "position-dependent objectivity" (Sen, 2002) focusing on economic objectives usually. They may fail to understand that their involvement in corrupt acts can lead to violation of fundamental stakeholder issues such as human rights as in the cases of Shell and Enron (discussed in this thesis). The thesis examines the meaning of corruption in relation to its stakeholder impact and proposes that corporate good governance in corruption-related situations is a matter of ethical decision-making, exceeding legal compliance. It explores the decision-making factors that operate within an individual manager while dealing with corruption-related situations in business and maps an analytical mental model of a decision-making manager in such situations. The thesis proposes 'Corruption-related Decision-making' (CRDM) as an orderly way of thinking for managers to deal with corruption-related situations in business. The CRDM concept is demonstrated through the use of a new Corruption-related Decision-making model that protects human rights, environmental issues, sustainable development and any other relevant stakeholder issue that one may wish to include. The relevance of the CRDM concept and the model was evaluated in a survey of forty-one multinational companies from Mumbai, India. The survey confirmed that none of the respondents used any decision-making tools while dealing with corruption-related situations. The survey revealed that 40 out of 41 companies experienced rent-seeking behaviour (bribes demanded) in India. Out of these 41 companies, 26 companies 'usually' lost business due to non-compliance with bribe demands and another 9 companies lost business 'sometimes.' The survey also explored the role of 'fear of loss of business' in the decision-making process and found that 'fear of loss of business' led decision-makers change stance from a state of passive corruption (facing demand) to a position of active corruption (making an offer), with 27 companies actually moving from a position of passive corruption to active corruption. All 41 companies, without a single exception, believed (when asked) that corruption can adversely affect stakeholder issues such as human rights. The survey findings confirm the relevance of the CRDM model as a decision-making tool and as a good practice document in corruption-related situations. The CRDM model can motivate an internal review of a manager's persona with a reminder that ethical decision-making and protection of stakeholder rights is possible in corruption-related situations. The concept of CRDM is a potential contribution in dealing with the illegitimate, the illegal and the oppressive aspects of international business.