The Business Case for Complying with Bribery Laws

Abstract

This article addresses a gap in the common understanding of corruption. The rules regarding corruption at both the macro- and the micro-level are well known, as are the consequences at the macro-level. The consequences at the micro-level, however, particularly for business firms, are not well understood. With respect to rules, at both the macro-and micro-levels the rules are very clear: do not pay bribes. At the macro-level the consequences are well known: corruption has devastating effects on societies and economies. Although not often referred to in most corruption literature, the consequences at the micro-level can be discussed. This article begins with the direct and indirect costs imposed on firms that pay bribes. Firms that pay bribes spend more time and money dealing with governments, and bear the costs of distortions of internal resources. The article then examines the negative effects of corruption on existing relationships within the firm and potential relationships with parties outside of the firm. Finally, the article examines potential criminal and civil liability that a firm exposes itself to when it pays bribes. The totality of these costs and liabilities strongly suggest that the consequences for any given firm of paying a bribe would burden rather than benefit the firm.