Is bribery a strategy to enter international markets? Is it ethical?

Please share!

 

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It depends on the culture you grow up in to classify a specific amount as either bribery or easing business and probably building relationships. Couple of classes before I was asked about how business is done in my home country and I described it as partnering with some officials involuntary. Others might describe this as a type of bribery.

I agree that bribery is unethical, however if a certain attractive market requires a business to enter into such untraditional actions, should the company do them? About two years ago, a news report came out about Walmart paid bribes to Mexican officials obtain permits in virtually every corner of the country.

 

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Walmart said: “We do not believe that these matters will have a material adverse effect on our business”. They probably believe that doing such acts is necessary to do business in Mexico. They don’t believe that they violated the Foreign Corrupt Practices Act, a federal law that makes it a crime for American corporations and their subsidiaries to bribe foreign officials.

The US law is clear regarding US companies paying bribes for foreign officials. This clearly makes the Mexican market a lost opportunity.

Walmart as an example going to Mexico should adapt to the way business is done there and formulate strategies that coop with the country. Bribery should be a taboo of practicing business in any place. Walmart could have lost the opportunity to enter the Mexican market, however it would have not risked its reputation in the US market that compromise most of its revenue (around 70% of sales based on the last quarter report).

Walmart runs from a more regulated country compared to other countries. Laws such as the Foreign Corrupt Practices Act and others, discourage companies to engage in such acts. Other companies on the other hand that run from different unregulated countries could have the short-term financial advantage. However, in my opinion this will not translate in long-term profits. I believe that companies willing to engage in unethical and illegal acts such as bribery might be willing to engage in acts that are not in their customers best interest. The Mexican market as an example could be hard to enter without such acts but that does not mean it is impossible (especially in the long term). A market system that relies a lot on bribes could easily suck companies’ earnings by asking more with time.

Please share!