Paying the Price. A Study into the Corruption of the Multinational Corporation

Abstract: Contemporary research universally shows that corruption is an alarming issue, hindering socio-economic development across the globe. Realizing this, the international community fights a constant battle to prevent companies from engaging in bribery with foreign governments. Even so, new scandals surface each year, involving corporations from countries all over the world. This thesis examines the underlying motives of managers of multinational companies choosing to break the law in this way. Are these simply corrupt individuals, is the related legislation wanting, or is in fact the corrupted environment to blame? Looking at some of the larger public scandals of recent years, we try to identify what in the encounter between a global MNC and a foreign government that allows this issue to persist, despite the compelling proof that it should not. Analyzing these cases, we find that the search for profits in the less developed world often puts the manager in an impossible situation, wedged between moral expectations, and those of the employer. We therefore argue that companies need to change their policies when internationalizing to countries that are known to be pervasively corrupted, providing all employees with clear frameworks for the likely encounters with corrupt government officials. We also argue that caution should be exercised when allowing local adaptation of overseas business units, ensuring that the corrupted culture of a country does not infect the corporation.