Friday 30 September 2011

Business corruption - a brief note

Corruption is defined as "Wrongdoing on the part of an authority or powerful party through means that are illegitimate, immoral, or incompatible with ethical standards. Corruption often results from patronage and is associated with bribery". (http://www.businessdictionary.com/definition/corruption.html). Corruption involves an abuse of power (Neelankavil, year unknown). In this case, an agent betrays the interests of its principal by accepting gifts from a client before offering the client a favour. Causes of corruptions can be classified into 3 main areas: environmental (e.g. excessive adminstrative power concentration among a few), individual (e.g. individual greed), and firm-related (e.g. bribing officials in a foreign country during the corporate market expansion process) (Neelankavil, year unknown).

There are two types of corruptions, namely, business corruption and political corruption (Neelankavil, year unknown) and I mainly focus on business coruption here. In this case, examples of business corruption include: bribing officials, insider trading, tax evasion, and embezzlement, etc. (Neelankavil, year unknown).
Some useful e-resources on business corruption
  1. A thesis on business corruption: http://bora.nhh.no/bitstream/2330/1400/1/soreide%20tina%202006.pdf
  2. A framework on international business corruption: http://www.aueb.gr/deos/EIBA2002.files/PAPERS/W74.pdf
  3. Corruption prevention in HK: http://www.unafei.or.jp/english/pdf/PDF_rms/no56/56-26.pdf
  4. On anti-corruption strategy: http://www.pwc.com/gx/en/forensic-accounting-dispute-consulting-services/business-case-anti-corruption-programme.jhtml
  5. Recent development in anti-corruption efforts in Hong Kong: http://www.kwok-manwai.com/Speeches/Recent_Development_in_Anti-corruption_Efforts_in_Hong_Kong.html

In the business realm, corruption very often takes place in major development activities, such as large scale industrial, commercial and infrastructure projects. The main impacts of business corruption are: (i) increase in cost of transactions, (ii) further neglect of business concerns, e.g. quality management problems which include choosing wrong suppliers, and (iii) moral damage, including a breach of trust and damage of firm reputation, etc. (Chan, year unknown).


References
  1. ICAC: http://www.icac.org.hk/en/home/index.html
  2. Chan, T. "Corruption prevention - the Hong Kong experience", Resource Material Series No 56, ICAC.
  3. Corruption defined: http://cartledged.blogspot.com/2006/01/corruption-defined.html
  4. Dattu, R., Boscariol, J.W. and Goh, T.Y. (2000) "A proactive step against bribery and corruption", Ivy Business Journal, September-October, pp, 72-74.
  5. Judge, W.Q., McNatt, D.B. and Xu, W. (2011) "The antecdents and effects of national corruption: A meta-analysis", Journal of World Business 46, pp. 93-103.
  6. Neelankavil, J.P. (year unknown) "International Business Corruption: A Framework of causes, effects, and prescriptions", Zarb School of Business, Hofstra University.

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