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Chapter 19

International Business Oded Shenkar and Yadong Luo. Chapter 19. Ethics and Corruption In the Global Marketplace. Do You Know?. The main elements of the Multinational Enterprise code of conduct? The characteristics of nations that predispose them to corruption?

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Chapter 19

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  1. International Business Oded Shenkar and Yadong Luo Chapter 19 Ethics and Corruption In the Global Marketplace Chapter 19: Ethics and Corruption In The Global Marketplace

  2. Do You Know? • The main elements of the Multinational Enterprise code of conduct? • The characteristics of nations that predispose them to corruption? • The drawbacks of corruption? • The most common corrupt practices in international business? Chapter 19: Ethics and Corruption In The Global Marketplace

  3. Corruption and The Shell Group • The Shell Group operates in more than 130 countries. They frequently face demands for “facilitation payments” from junior officials, and for “bribes” from more senior people. • Shell has a clear anticorruption policy: it does not sanction giving or receiving any type of bribery or illegal payment; an employee who is found to have done so is instantly fired and prosecuted. Chapter 19: Ethics and Corruption In The Global Marketplace

  4. Corruption in International Business • Corruption is an exchange between two partners that has an influence on the allocation of resources and involved the use or abuse of public or collective responsibility for private ends. • Corruption is difficult to measure, but The Economist projects that corruption may be measured at approximately $9 trillion per year. Chapter 19: Ethics and Corruption In The Global Marketplace

  5. The Origin of Corruption Corruption is proposed to come from two key factors: • Developing or transitional economies which have weak infrastructure, weak legal systems, and inadequate enforcement • A high level of government involvement with industry and business and a low public sector payment amount • Culture is also attributable to corruption. It correlates with receptivity toward questionable accounting practices, uncertainty avoidance, and masculinity Chapter 19: Ethics and Corruption In The Global Marketplace

  6. Drawbacks of Corruption • Corruption slows progress • Corruption obstructs firm growth • Corruption causes misallocation of capital • Corruption produced distorted information • Corruption undermines trade and foreign direct investment • Corruption undermines trade liberalization Chapter 19: Ethics and Corruption In The Global Marketplace

  7. Corruption Rankings • The CPI has these as the five highest and lowest corruption countries. • Highest: Bangladesh, Nigeria, Paraguay, Madagascar, Angola. • Lowest: Finland, Denmark, New Zealand, Iceland, Singapore. The United States rates 16th lowest, the United Kingdom 10th. Russia is 71st, and Mexico is 57th. Chapter 19: Ethics and Corruption In The Global Marketplace

  8. Types of Corrupt Practices • Smuggling • Money Laundering • Piracy and Counterfeiting • Bribe Paying Chapter 19: Ethics and Corruption In The Global Marketplace

  9. Types of Corrupt Practices Exhibit 19-3: Examples of movie piracy Chapter 19: Ethics and Corruption In The Global Marketplace

  10. Types of Corrupt Practices Exhibit 19-4: The Tranparency International Bribe Prayers Index 2002 Chapter 19: Ethics and Corruption In The Global Marketplace

  11. Types of Corrupt Practices Exhibit 19-5: “Hands under the table” in the former Soviet republics Chapter 19: Ethics and Corruption In The Global Marketplace

  12. The Foreign Corrupt Practices Act (FCPA) • The FCPA of the United States makes corruption and corrupt practices illegal in the United States. Chapter 19: Ethics and Corruption In The Global Marketplace

  13. The Globalization of the Fight Against Corruption • The OECD has a policy statement in the OECD Guidelines outlawing corruption and corrupt practices. Chapter 19: Ethics and Corruption In The Global Marketplace

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