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1997

The Influence of Culture on Bribery: Some Ethical, Socio-political and Economic Considerations
By Paul Herbig

Introduction
As individuals and enterprises conduct business transactions across different cultures, different attitudes regarding the acceptability of bribery create ethical conflicts. Because culture shapes the ethical values of people, managers from one culture will have different attitudes about bribery than managers from other cultures. To help managers understand and resolve contrasting attitudes towards bribery, cross-cultural research studies and academic theories reveal that such attitudes vary according to the ethical, social, and economic dimensions of a culture. Attitudes towards bribery stem from the definition of the practice in a culture. Not only the definition, but the agents, conditions, limits, purposes, and laws pertaining to bribery vary among countries in the Americas, Europe, Africa, and Asia.
Hofstede’s identification of work-related values among cultures offers some insight into how culture affects ethical decision making. Nevertheless, these values alone cannot explain the greater prevalence of bribery in some cultures rather than others. While various surveys identify some countries as more corrupt than others, the influence of and extent of interaction among Hofstede’s values in each culture cannot be determined. Instead, informal social networks and large, government bureaucracies, which both reflect and shape the ethical attitudes of a society, offer additional explanation for cultural variations in bribery.
Social networks in Sub-Saharan Africa, China, and other parts of the world often require bribery by both foreigners to penetrate the arrangements and by network members to honor obligations. The persistence of massive, inefficient bureaucracies in many countries such as India, China, and nations of East Asia, Africa, Latin America, and Eastern Europe may encourage bribery by offering inadequate salaries to civil servants and by poorly controlling commercial activities.
Nevertheless, economic progress also initiates ethical changes in a culture. Though often overwhelming the norms of developing societies and initially encouraging corruption, economic development ultimately may reduce a culture’s tolerance for corruption and bribery by revamping consumer-seller relations and by encouraging individual concern for fair competition. Perhaps as world incomes equalize, ethical standards will also converge.
Finally, though bribery remains rampant throughout the world, international business managers may be comforted by the reductions worldwide in the number of cases of bribery resulting from fairer international competition, increased media exposure of corruption, and mobilizing multinational actions against bribery. Additionally, the convergence of social, economic, and ethical norms foretells the eventual global curtailment of bribery through international ethical standards.
The individual and corporation that conduct business in diverse foreign environments should adopt and enforce business ethics standards. Standards regarding gift giving, grease payments, middlemen commissions, and other forms of bribery will not only remove the ambiguity of cross-cultural encounters but may also help change the ethical attitudes of foreign individuals and societies.

Bribery around the world
The world is shrinking. Today, unprecedented amounts of foreign direct investment link companies and countries in global relationships of interaction and interdependence. Though collectively participating in global business transactions, countries with different cultures may not conduct business according to similar ethical standards. As a result, often with little guidance from their firms, business managers must individually attempt to reconcile corporate and personal business practices and ethical standards with those of foreign businesses and individuals.
Nevertheless, bribery [the offering of a payment in service or cash to another for the purpose of influencing an action or decision in favor of the offeree] represents an ethical dilemma. The fairness and legitimacy of bribery, coupled with its moral balance of benefits and the nature of the action (means vs. ends issue), challenge the fundamental ethical standards of a people. Of course, because the unethicalness of bribery varies among nations, businesses may be asked to resolve the ethical dilemma in different ways. For many firms, different ethical perceptions of bribery in foreign nations represent the most problematic cultural difference in conducting business in foreign markets (Armstrong et al., 1990; Solomon, 1996). To help overseas managers identify and resolve ethical conflicts, the following analysis asserts that bribery represents a cultural phenomenon that varies according to the ethical standards, socio-political institutions, and economic conditions of a people.

Bribery Across Cultures
Unfortunately for the business manager, the concept of bribery remains as nebulous as its morality is variable. The numerous names for bribery, such as the mordida in Mexico, the dash in South Africa, the baksheesh in Africa, the Middle East, India, and Pakistan, the schimengeld in Germany, and the bustarella in Italy, parallel its numerous forms. For example, offering trips to London or to beach resorts in Europe entice officials in the Middle East. In countries such as China, Nigeria, Zaire, and Zimbabwe, large, valuable, modern appliances such as televisions, facsimile machines, cars, and airplanes make especially effective bribes. Eastern European countries appreciate cash and Western goods (Piturro, 1992). West European and South American officials and executives welcome discreet cash payments in brown bags (like the bustarella of Italy) or attache cases, or funds deposited in Swiss bank accounts in the names of relatives. Housing and transportation allowances, airplane tickets, and college scholarships for officials’ children to US or European schools represent persuasive bribes in India, Thailand, Malaysia, and Indonesia (Piturro, 1992). Finally, in Japan, South Korea, Singapore, and Hong Kong bribery of a local official or executive may involve educational support for an accepting party’s child, the provision of a “company” car, or an evening at extravagant restaurants (“Hard Graft in Asia”, 1995).

What is Bribery?
Nevertheless, because the perception of bribery varies among cultures, a universal definition of bribery remains elusive. Does a cash payment to a government official constitute influence peddling or merely a tip to ensure promptness and fairness of service? (Harris and Moran, 1996). How can an overseas manager distinguish a gift from a bribe? Unfortunately, every culture often appears to offer different answers. In fact, bribery seems to occupy a continuum of acceptability based on the identities of the parties, the nature of the bribe, the intentions of the parties, and finally, the ethical standards and laws of the home countries of both parties.
Nevertheless, despite its aggressive attempts to create international legal prohibition against bribery, the United States cannot clearly and consistently identify bribery. For example, though cash contributions to politicians and political parties represent legal donations in America, other countries regard such payments as bribes. Further, when foreign individuals contribute to the campaigns of domestic politicians, such as the highly-publicized Indonesian contribution to President Clinton’s re-election campaign, then Americans tend to regard these donations as illegal and unethical foreign bribes. The U.S. government, though, further exacerbates the confusion about bribery by permitting “facilitating”, or grease, payments and indirect, “unintentional” payments of foreign agents but outlawing direct, “intentional”bribery (Singer, 1991). Moreover, the vagueness of the U.S. Foreign Corrupt Practices Act forces American managers overseas to individually determine the limits of bribery.
Additionally, the context and circumstances of bribery vary among cultures. In many countries, such as Italy, India, Mexico, and numerous others, policemen, customs officials, and low-level bureaucrats frequently, directly, and sometimes publicly request cash payments to expedite routine transactions. Because such payments merely help ensure that a minor official performs his/her duties, such as the release of goods from customs or the installation of a telephone, and because the transaction creates no obligation for either party, many managers, firms, and governments (including the U.S. government through the amended FCPA) regard grease payments as acceptable bribes (Wood, 1995).
However, often the stakes are much greater. Higher-level bribes may require more discreet incentives such as reciprocal buying/selling agreements, special services, nepotism arrangements, revolving-door-hiring, family favors, and other informal arrangements. In addition, foreign corporations may discreetly pay multi-million dollar commissions to middlemen and agents who can solicit sales in “a non-routine manner” (La Placa, 1978). For example, though prohibited by Royal Decree #38, Saudi officials routinely accept facilitating payments. Moreover, despite Royal Decree M/14, Saudi agents of foreign companies, perhaps sometimes to the ignorance of the foreign firm, often bribe middlemen or other institutional entities to acquire government business contracts (Hendon and Herbig, 1996).
Also, foreign firms may directly bribe politicians. Companies may contribute to foreign political parties to influence national agendas, such as Gulf Oil Corporation’s $3 million payment to South Korea’s Democratic Republican Party in 1971. Other companies channel millions of dollars through dummy corporations or discreet Swiss bank accounts to entire government ministries for favorable tax treatments, such as United Brand’s $2.5 million payment to Honduran officials for reduction of an export tax on bananas (La Placa, 1978).
Finally, bribery also characterizes the diplomatic coercion of some countries on others. Some national governments from developed countries bribe governments of developing nations for political and/or economic reforms in return for economic aid. For example, the United States government frequently offers bribes to foreign governments to obtain political and/or economic concessions from those governments (Daniels and Radebaugh, 1994). Additionally, the U.S. Department of Commerce estimates that in 1994, for more than $45 billion in contracts for which U.S. firms also offered bids, government involvement enabled foreign companies to win 80 percent of the contracts (Borrus et al., 1995). Other examples of government bribes include France’s demand for 20 percent of Vietnam’s telecommunication market in exchange for economic aid and Airbus Industrie’s threat to block Turkey and Malta’s admission to the European Union unless those countries purchased the consortium’s planes (Borrus et al., 1995).
The following comparison of American (North and South), European, African, and Asian attitudes towards bribery reveals not only the extent of bribery in the international marketplace but more significantly, the differences and similarities in the role of bribery across cultures. Recognition of these cultural variations may enable international business managers to determine the appropriateness of bribery in international business environments.

BRIBERY ACROSS CULTURES
United States
Because bribery challenges the moral, political, and economic character of the country, the United States has championed the global curtailment of bribery (Harris and Moran, 1996). First, bribery contrasts the Judeo-Christian condemnation of theft and greed. Additionally, America's Protestant work-ethic, while suspected by some to compel the self-interest that perpetuates bribery, emphasizes hard work and fairness (Puffer and McCarthy, 1995). Second, bribery opposes the principles of equality, justice, individualism, and the sanctity of personal property. Third, bribery undermines the market efficiency and fair competition of capitalism (Longenecker et al., 1988).
In addition, whether from self-righteousness or from a desire for accountability of business leaders, Americans publicly oppose bribery in American business activities overseas. In 1977, following the revelation of Lockheed's more than twelve million dollars in bribes to Japanese government officials and business executives, Congress satisfied the public's contempt for bribery by passing the Foreign Corrupt Practices Act (FCPA) (Singer, 1991). The FCPA represents unique legislation because it regulates the foreign business activities of its citizens. Fines up to one million dollars and/or up to five years of incarceration punish U.S. firms convicted of making payments to foreign officials or political candidates for the purpose of obtaining, retaining, or directing business to any person (Piturro, 1992; Sundaram, 1995). However, since amended by the 1988 Trade Act, the FCPA now allows managers to make "nominal" payments to foreign officials to expedite the performance of routine functions such as the issuance of permits, approval of licenses, processing of government papers, and other activities (Czinkota, 1996; Piturro, 1992).
Of course, aside from codifying American repugnance of bribery, the FCPA has influenced the ethical practices of U.S. and foreign business managers. First, the FCPA offers moral guidance to American managers. The FCPA's criminalization of bribery compels American managers to personally view the practice as illegal and unethical. This "forced ethicality" may partially explain the apparently more ethical behavior of Americans relative to business managers from other countries in research studies involving attitudes towards bribery (Fritzsche et al., 1995). Second, the FCPA, through its unique extraterritorial application to U.S. businesses worldwide, has shaped foreign attitudes towards bribery. The pervasiveness of U.S. commercial activities, coupled with the diplomatic efforts of the U.S. government to develop international laws against bribery, have proliferated the American (and Western) norm against bribery (Singer, 1991).
However, despite strict enforcement of the FCPA by the FBI, U.S. companies continue to participate in bribery in foreign markets. Some U.S. companies attempt to thwart the FCPA by offering foreign officials lavish entertainment trips, job offers, educational support for the officials’ children, and other incentives (Borrus et al., 1995). Ironically, Lockheed Martin Corporation, the firm whose bribery scandal in Japan instigated the FCPA, recently witnessed the conviction of a former vice-president for inappropriately influencing an Egyptian parliament member (Borrus et al., 1995). Additionally, Argentinian courts recently accused IBM for illicitly offering bribes to Argentina's largest bank, Banco de la Nacion, to obtain a computer contract worth $250 million (“Bribery Allegations”, 1996).
Finally, under increasing pressures from international competition, American managers remain divided between defending American morality or engaging in cultural conformity. Many managers contend that the moral absolutism of the FCPA jeopardizes the competitiveness of American firms in countries where bribery is commonplace (Sundaram, 1995). Nevertheless, one survey suggests that American managers generally support the morality of the FCPA. The survey of American business managers revealed that though less than one-half of respondents considered an act of bribery as immoral, almost one-half of respondents expressed some disapproval of bribery and nearly one-third of the managers regarded bribery as never acceptable (Longenecker et al., 1988).
Europe
Nevertheless, though other Western nations cannot match the U.S.' statutory criminalization of international bribery, the English commonwealth nations closely resemble the United States in business ethics. With their shared heritage and common political, relgious, legal, and economic institutions, the United Kingdom, Australia, Canada, and other Commonwealth countries share America's condemnation of bribery. For example, ethical attitudes of Australian managers generally mirror the attitudes of U.S. managers (Armstrong et al., 1990). Additionally, a 1987 Deloitte and Touche survey of the perception of U.S. business executives, member of Congress, and business school deans of foreign ethical standards ranked the United States as the most ethical nation in the world and the United Kingdom and Canada as the second and third most ethical nations respectively (Singer, 1991).
Other European nations, though, differ markedly from the United States in the acceptace of bribery. Northern and Western European countries such as Germany, Holland, France, Belgium, and others, deplore domestic bribery but tolerate bribery of foreign officials (Wood, 1995). In fact, these countries permit domestic firms to treat foreign bribery costs, which are often labelled "consultant fees", as legitimate, tax-deductible business expenses. Perhaps reflecting their greater historical experience with managing global cultural differences through their empires, their tendency for non-involvement in foreign affairs, less government interference in business practices, or even an ethnocentric expression of the righteousness of their own values, European nations condemn bribery within their borders but choose not to enforce the unethicalness of the practice abroad.
Unfortunately, this double standard in bribery laws may serve to encourage overseas bribery (Wood 10) among even large, prestigious firms. For example, the German firm Siemens allegedly won seven of eleven bids from 1987 to 1994 because of bribes offered to foreign government officials (Borrus et al., 1995). Of course, with dozens of other large German firms employing bribery to obtain business contracts overseas, bribery represents a staggering expense for German industry. German firms alone annually pay approximately U.S.$ 3.35 billion in foreign bribes (Kaltenhauser, 1996)
Unlike their Northern and Western neighbors, though, Southern European countries such as Spain, Italy, and Greece seem more tolerant of bribery in domestic business transactions. Though neighbors with the North, the Southern countries of Europe behave more like distant cousins (Singer, 1991). Their less-advanced industrial economies and large, decentralized bureaucracies encourage informality and corruption in business practices. Nevertheless, extensive social networks in these countries, which survive through the financial obligations of members and which encourage subterfuge through nepotism, cronyism, and other informal, “back-door” arrangements, may also contribute to the prevalence of bribery.
Moreover, the greater tolerance for bribery in Southern Europe likely will persist among future business managers, too. For example, a survey of American and Greek business students revealed that while Americans and Greeks both condemn the bribery of a domestic official by a foreigner and virtually condone bribes offered by domestic business managers who are coerced by foreign officials, the students share different perceptions about the ethicality of domestic bribery. The Greek students viewed the bribery of a local government official by a local businessman as more ethical than their American counterparts (Tsalikis and La Tour, 1995).
Nevertheless, despite the large involvement of European firms in international bribery, these firms generally escape notoriety for their bribery activities. Instead, the legacies of large, colonial trading companies and the greater prestige of businesses afforded by the traditional social hierarchies in Europe have instilled a noblesse oblige in European firms. European firms view themselves and are generally perceived by foreigners as more respectable, more socially-responsive, and less greedy than their American, "Wall Street" counterparts (Singer, 1991). Additionally, the disinclination of most European firms to litigation not only requires the firm to emphasize trust and personal relations in business transactions, but may foster the acceptability of bribery as a business arrangement alternative to litigation.
Russia
Finally, though strongly influenced by ancient Asian cultures and uniquely shaped by its recent communist heritage, Russia challenges the international business manager with its dynamic business environment. In addition to political and economic barriers to foreign investment, arbitrary Russian business ethics constitute a formidable obstacle to foreign business participation in Russia (Puffer and McCarthy, 1995). The disappearance of traditional government supervision and a general lack of confidence in government laws and policies require Russian business managers to use personal judgement in making business and ethics decisions. (Puffer and McCarthy, 1995). Additionally, a business owner’s paternalistic care for his employees often compels the owner to place the welfare of himself and his employees above law and morality. Moreover, because of their unfamiliarity with market economics and the absence of viable commercial laws, Russian managers commonly employ bribery to facilitate business transactions. Russians rely on blat, or the solicitation of favors from personal relationships with influential people, to accomplish business goals and resolve ethical ambiguities (Puffer and McCarthy, 1995).
Latin America
Though geographically part of the Western Hemisphere, the nations of Latin America contrast sharply with the typical "Western" nations of the United States, Canada, and the European nations. From small grease payments such as the Mexican mordida handed to petty traffic cops to the large, multi-million dollar payments offered by foreign corporations to high-ranking government officials, bribery pervades all levels of Latin society. Numerous cases of bribes made by firms to government ministries to participate in bidding for government contracts, grease payments to bureaucratic administrators for permits, and political contributions to politicians in return for favors characterize most Central and South American nations.
In addition, the less-developed economies, notorious corruption, and political instability of most Latin American nations create a distinctly "Southern" identity. Massive government bureaucracies and heavily-regulated, inefficient economies survive because of and encourage bribery. Additionally, perhaps the high masculinity, uncertainty avoidance, and power distance of Latin societies (in Southern Europe, too) encourage unethical behavior. Materialism and aggressiveness (characteristic of Latin machismo), status consciousness, and strong social networks likely make bribery more acceptable in Latin America relative to the United States and to other countries in the Western Hemisphere.
Africa
Bribery plagues most of the continent of Africa. From the earliest recorded cases of bribery of administrators in ancient Egypt to the overt corruption of modern African governments, bribery in Africa has earned a notorious reputation. Of course, bribery in Africa remains as variable as the continent's cultures. For example, in Sub-Saharan Africa where tribal government prevails, bribery serves to financially support extended family networks (See Socio- Political Context).
Nevertheless, though bribery normally, though illegally, intervenes in business transactions in many African nations, a double standard characterizes may African attitudes about bribery. For example, like their American and Greek counterparts, Nigerian business students find bribery involving local parties more acceptable than the bribing of a local official by a foreigner (Tsalikis and Nwachukwu, 1991). Nigerians tend to accept bribery as a "fact of life" but are intolerant of foreigners partaking in the practice in Nigeria (Tsalikis and Nwachukwu, 1991).
Asia and the Far East
The international business manager working with Asian markets must also confront cultural variations in the practice of bribery. Though Western managers tend to perceive Asia, and particularly East Asia, as culturally homogeneous, some Asian nations possess very different standards regarding bribery (Fritzsche et al., 1995). Variability in the pervasiveness of corruption and the degree of ethical and legal hostility to bribery differentiate Asian nations.
First, Asian nations are not all equally corrupt. A survey conducted by the Hong Kong firm PERC (Political and Economic Risk Consultancy) of the perceptions of expatriate managers in Asia of corruption in Asian countries identified China, India, and Indonesia as the most corrupt nations in Asia. Hong Kong, Japan, and Singapore received the most favorable ratings relative to the other Asian nations ("Hard Graft", 1995). Of course, graft severely plagues many other Asian nations such as Afghanistan, Burma, Mongolia, North Korea, and Vietnam whose insignificant presence of foreign companies relegates stories of corruption to mere travelers’ tales.
Second, because some Asian nations enforce anti-corruption laws, foreign business managers must approach bribery on a country-to-country basis. For example, Hong Kong legally prohibits bribery in its Prevention of Bribery Ordinance (“Gist of Anti-Corruption”, 1996). Though graft remains endemic in Cambodia and in Sri Lanka, the governments aggressively pursue foreigners who attempt to bribe government officials (Dunung, 1995). Additionally, in Laos, Brunei, and particularly in Singapore, where social norms remain intolerant of corruption, even gift-giving, which is common in Asia, may be perceived as bribery (Dunung, 1995). Finally, foreign business managers in Malaysia, Singapore, India, or Indonesia should not assume that members of different ethnic groups and religious systems share identical attitudes towards gift giving and towards bribery. For example, during Ramadan in Indonesia, Muslim government officials and police officers, in order to meet their religious obligation to give gifts to friends and family, may extract bribes from locals and foreigners (Dunung, 1995). Chinese and Indian populations in Indonesia scorn such overt bribery.
Sometimes, even though graft may be commonplace in society, foreign managers may be surprised by sudden anti-corruption efforts resulting from changing government administrations. For example, South Korea, Thailand, and China often initiate anti-corruption efforts by new administrations against previous political leaders. Though usually short-lived, these political moves jeopardize foreign companies who maintain personal relationships, although normal in these countries, with ousted officials ("Hard Graft", 1995). In China, particularly, periodic anti-corruption campaigns often serve primarily to assist political elite in “monopolizing the corruption market” (Lui, 1996).
Third, a comparative study of the ethical decisions of American, Japanese, Korean, and Taiwanese managers not only reflects the heterogeniety of Asian ethical attitudes but also contrasts the ethical perceptions of bribery between the "East and West". According to the study, while most American managers regard bribery as illegal or unethical, Asian managers consider bribery less an ethical dilemma but more a cost-benefit investment decision (Fritzsche et al., 1995). Additionally, while many American and Taiwanese managers view bribery as acceptable in other countries, Japanese and Korean respondents unanimously reject the acceptability of bribery for overseas business transactions. Finally, the study also suggests that, relative to the other respondents, similar levels of economic development may explain the shared concern for the legal and economic risks of bribery among Japanese and American managers (Fritzsche et al., 1995).

East versus West
Of course, for Western managers, such as those from Latin, Anglo, Germanic, Slavic, and Scandinavian societies, the Eastern societies (from Asia, East Asia, and the Pacific) pose unique cultural challenges. The individualism of the “West” fundamentally contrasts the collectivism of the “East” (Hofstede, 1984; Wood, 1995). Western managers tend to place their interests and their personal values above those of their corporations while Eastern managers attempt to preserve group harmony and save face by closely adhering to organizational goals and social norms (Tse et al., 1988). The desire to preserve dignity and respect (“face”) and avoid undue attention to themselves or to their company (or government office) perhaps compel most East Asians to keep bribery a discreet arrangement between themselves and local representatives of a foreign enterprise.
Nevertheless, their collectivist orientation, coupled with their avoidance of uncertainty and historical xenophobia, may compel Asians to behave differently among themselves than with foreigners. For example, a comparative study of the retail ethical perceptions of American and Malaysian business students reveals that Malaysians, while displaying “high” ethical behaviors in personal situations, exhibit “low” ethical standards in external business transactions with customers (Burns and Brady, 1996). Similarly, a survey of marketing managers in Thailand suggests that business managers in Thailand perceive less ethical conflict in bribery than their American counterparts. The authors of the study hypothesize that the collectivism, masculinity, high power distance, and high uncertainty avoidance of East Asian nations may encourage managers from such cultures to perceive bribery as more ethically acceptable than managers from individualistic, more feminine, low-power-distance and low-uncertainty-avoidance cultures (Singhapadki et al., 1994).

Bribery and Gift Giving
Of course, differences regarding gift giving exacerbate the ethical confusion of Westerners in Asia. While Western business manager generally scorn overt gift giving (Daniels and Radebaugh, 1994 ), in many Asian nations gift giving not only cordially heralds the establishment of a new relationship but may lead to the creation of long-term mutual obligations. Obligations emerge from a mutual dependency created through what appears to the Western manager as an apparently endless cycle of offering and accepting gifts in exchange for favors. In an environment accustomed to offering gifts in exchange for favors, Asians may perceive bribery, like gift giving, as an acceptable business arrangement.
Nevertheless, when dealing with Asian government officials and business executives, Westerners often cannot distinguish a gift from a bribe. In Indonesia, Japan, China, and South Korea, where gift giving represents requirements for conducting and concluding business arrangements, only specific rules of etiquette unique to each country differentiate gifts from bribes. In Japan, monetary gifts signal the intention of a party to bribe the other (Dunung, 1995; Donaldson, 1995). In China and Indonesia, where gift giving and bribery are particularly close, even the extravagance of a gift may fail to distinguish an expression of gratitude from a request for a favor (Daniels and Radebaugh, 1994; Dunung, 1995).

CULTURE AND ETHICS: AN EXPLANATION
The role of culture in shaping the ethical standards of a nation, its firms, and its citizens implies the cultural basis for bribery. Because culture shapes the nature of interpersonal relationships and societal institutions by providing a common set of shared beliefs, attitudes, and values (Burns and Brady, 1996), the ethics of a group of people, that is, their standards of fairness, justice, and “right and wrong”, contribute to the cultural identity of that people. Numerous studies validate culture’s powerful influence on ethical decision-making (Ferrell and Gresham, 1985; Ferrell et al., 1989; Hunt and Vitell, 1986, 1992; et al.). Of course, because of the diversity of world cultures, variations of ethics, and particularly attitudes towards bribery, mirror the variability of the numerous cultures (Foot, 1982; Rachels, 1986).
While most international business managers recognize cultural differences in international business environments, they often fail to appreciate the extent of culture’s influence on business ethics. Some researchers maintain that Hofstede’s cultural dimensions of individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity may predict the ethical values of a culture.
First, the value system of a culture affects its perception of ethical dilemmas. Individuals from collectivistic, high-power-distance, high-uncertainty-avoidance, and highly masculine cultures likely conform closely to informal and formal professional, industry, and organizational ethical standards in business situations. This adherence to established norms reduces the likelihood that the individual will perceive ethical problems in business decisions (Vitell et al., 1993). However, the researchers suggest that business managers from highly individualistic, relatively masculine nations with low power distance relations and low uncertainty avoidance more often experience ethical conflicts because they tend to assert personal values over social norms.
Second, certain individual values may more strongly influence ethical behavior than other values. For example, the tendency for managers from individualistic cultures to place self-interest above group benefits may encourage these managers to engage in unethical behavior without regard to the negative consequences of their actions on a corporation or society. In addition, with their respect for ambition, competition, and materialism, managers from highly masculine cultures may not even consider, unlike those from more feminine cultures, some business decisions as ethical problems (Vitell et al., 1993).
Nevertheless, the greater prevalence of corruption in some countries reflects international variations in business ethics and more importantly, suggests the particularly powerful influence of masculinity, femininity, collectivism and individualism on a culture’s ethical behavior. A survey by Transparency International, a Berlin-based, non-governmental coalition against international corruption, of the perceptions of expatriates in fifty four countries of the corruption in those countries evidences the variations in ethics among different cultures. Foreign managers regarded Nigeria as the most corrupt nation and Pakistan, Kenya, Bangladesh, China, Cameroon, Venezuela, Russia, India, and Indonesia as the subsequent most corrupt respectively (“India Ninth”, 1996). While these countries share high uncertainty avoidance and power distance, their relatively masculine and collectivistic orientations reinforces the role of these cultural dimensions on ethical behavior.
In addition, the ranking of New Zealand, Denmark, Sweden, Finland, Canada, Norway, Switzerland, Singapore, Netherlands, and Australia as some of the least corrupt nations suggests a moderating influence from femininity and individualism on ethical behavior. Interestingly, America, with its very strong individualism and relatively high masculinity, appears as the fifteenth least corrupt nation among international managers (“India Ninth”, 1996).
Of course, because the strength of individual values and the extent of interaction among several cultural values vary among cultures and even within cultures (national differences), many questions remain. For example, why does a collectivistic, high-uncertainty-avoidance, high-power-distance, highly masculine society like that of Singapore not display the same level of corruption as other East Asian nations like Indonesia and China which share similar cultural values? Additionally, with its high individualism and moderate masculinity, why does not the United States demonstrate greater unethical behavior? Moreover, given their cultural similarities, does Canada’s more feminine orientation alone make corruption less prevalent than in the United States? Thus, because certain of Hofstede’s work-related values do not stand out among others as predictors of unethical behavior, then perhaps other external cultural dimensions, such as socio-political institutions and economic conditions, influence unethical behavior, and particularly, the acceptance and practice of bribery.

BRIBERY AND THE SOCIO-POLITICAL CONTEXT
While differences in local ethical standards help explain the occurrence of bribery in different international environments, the social and political institutions of countries also contribute to the prevalence of bribery. For many nations, bribery helps citizens to survive in informal social networks and to cope with large, inefficient bureaucracies.
Bribery in Social Networks
Because of its role in social networks, bribery commands not condemnation but acceptance in some countries. For example, in the Sub-Saharan Africa, where clans stratify societies and traditional customs persist in the face of slow technological change and reluctant exposure to Western influences, bribery helps enforce communal distribution of wealth and preserve extended families (Logan, 1995). For Sub-Saharan tribes, excess funds obtained from demanding bribes and from imposing differential pricing from non-clan individuals serve to supplement family incomes and uphold social obligations.
Additionally, in China and in Taiwan, often foreign business managers must resort to bribery both to penetrate the feudalistic bureaucracy, whose myriad administrators control government functions and rule over local territories, and to participate in China’s institutionalized yet informal social network, or guanxi, that dominates business relationships. With its emphasis on “using the back door” to honor mutual obligations, guanxi encourages bribery in business relationships (Copeland and Griggs, 1985). Additionally, guanxi promotes graft because those who have connections often try to profit from them (Dunung, 1995). Of course, even poor members of Chinese society willingly offer bribes to government officials in exchange for trust and preferential treatment (Kwong, 1996) and unreservedly rely on personal relations with influential Chinese for support. For both Chinese and foreigners, then, guanxi represents the essence of business (Copeland and Griggs, 1985).
Additionally, in the Middle East, to obtain work permits, by-pass government formalities, and win government business contracts, family or friendship connections are essential (Copeland and Griggs, 1985). And in Latin America and Southern Europe, business managers often spend more time attempting to wield influence and exploit personal connections than developing competitive business strategies.
Bribery and Bureaucracy
Nevertheless, while bribery persists in part because of the strength of social networks in many countries, political structures also encourage the practice of bribery. Both informal economies and bribery represent remedies to the inefficiency and corruption of monolithic, state bureaucracies (Singer, 1991; Lui 1996). Though international business managers sometimes must engage in bribery to penetrate social networks, most often managers must offer facilitating payments to government officials to “pay for efficiency within an inefficient system” (Singer, 1991). For example, in China, the absence of comprehensive commercial laws (and enforcement), requirements for superflous commercial permits, and inordinate delays in processing of requests for such licenses (permits), requires local and foreign firms to “bribe their way around regulations” by “wining and dining” government officials (Kwong, 1996). Interestingly, the absence of personal relations (guanxi) with foreigners does not obviate the need for bribery, rather, the Chinese officials simply find it more difficult to ask for a bribe (Kwong, 1996).
Additionally, in many countries bribery serves to tax individuals and corporations to subsidize the salaries of public officials (Daniels and Radebaugh, 1994). For example, in Ghana motorists feel almost charitable in succumbing to bribes demanded by police. Corruption among the border police, though, seriously impairs the cross-border movement of citizens and jeopardizes the ongoing attempts at economic integration by the Economic Community of West African States (ECOWAS) (“Bribery Oils Wheels”, 1996). Moreover, in India, “speed money”, or baksheesh, plagues each level of India’s enormous bureaucracy. U.S. businesses disgustedly confess that India’s endemic bureaucratic corruption require them to bribe government officials in order to expedite even the simplest transactions and to comply with arbitrary business regulations (Donaldson, 1996). Moreover, in both India and Indonesia, jobs of greater status are believed to command greater wealth. As a result, college graduates often pursue prestigious government, military, and law enforcement jobs and expect to supplement their low salaries with bribes and gifts from people seeking favors (Dunung, 1995).
BRIBERY: THE ECONOMIC CONTEXT
Aside from the ethical standards which determine the appropriateness of bribery and the socio-political institutions which perpetuate the practice, the economic conditions of a country may best explain the greater prevalence of bribery in some cultures.
Economic Development and Ethical Change
Within a nation, changing economic realities resulting from increased international trade and stronger economic growth may introduce business situations beyond the control of social norms or government legislation. When the ethical standards of a country fail to adjust to economic changes, moral “free space” emerges. Eventually, ethical standards, to offer guidance to individuals, must fill the ethical void resulting from economic transformation. To govern more complex economic activities, ethical standards become more complex. Local norms, as opposed to hypernorms, create new ethical rules and overturn old and incompatible social norms (Fritzsche et al., 1995). For example, Americans used to consider discrimination against women in the workplace an acceptable practice. The mass entrance of women into the American workforce, though, has made such practice unacceptable (Fritzsche et al., 1995). Additionally, international exposure and economic growth have helped reverse historical social acceptance of practices such as concubinage and revenge killings in Papau New Guinea (Daniels and Radebaugh, 1994). Donaldson (1996) cautions, though, that cultural traditions rooted in deep religious sentiments, such as Saudi Arabia’s prohibition of female corporate officers, may not yield to economic changes.
Finally, stemming from the city’s substantial international business exposure and rapid economic growth, business managers from Hong Kong display some very different values than their other Asian managers. Contrasting the typical East Asian emphasis on organizational loyalty, group harmony, social cohesion, and seniority, Hong Kong managers also value entrepreneurship, competitiveness, openness, and merit (Dunung, 1995). Interestingly, though, and perhaps reflecting the primary role of cultural values on ethical standards, Hong Kong managers, like their East Asian counterparts, tend to perceive bribery as more acceptable than Western managers (Armstrong and Sweeney, 1994).
Nevertheless, because social norms and ethical standards of a culture change slowly, economic development may initially foster unethical behaviors. Without guidance from local norms, modernization and market economics inadvertently encourage corruption by endowing individuals, such as government bureaucrats, with power over dynamic and immensely profitable industrial endeavors. In rapidly growing developing countries, individuals may subordinate morality to the promise of (self-enrichment) economic opportunity. For example, the Minister of Finance in Indonesia, Mr. Siswono, compares contemporary Indonesia to the United States of the late 19th/early 20th centuries, when rapid modernization witnessed the emergence of crime syndicates and government corruption (“Serious Obstacles”, 1996). Additionally, the dramatic transitions of the former Soviet Union and Eastern Bloc countries to market economies such as Poland, the Baltic states of Latvia, Lithuania, and Estonia, the Czeck Republic, Slovenia, Hungary, and other nations in Eastern Europe have allowed corruption and bribery to thrive in the void left by the dismantling of the state apparatus and the absence of comprehensive and enforceable commercial laws. In other countries, though, such as Chile, Mexico, Hong Kong, China, and Japan, modernization and trade-based economic growth, while perhaps partially encouraging corruption among government officials dealing with international corporations, has also exposed graft and has spurred legislation to combat corruption.
Market Economics and Bribery
Of course, economic development generally helps retard corruption by reducing market imperfections and encouraging more complex commercial legislation. Where governments frequently and severely intervene in economies, such as in many developing countries of Africa, Latin America, Asia, and Eastern Europe, bribes to government officials or businesses, by helping to restore the price mechanism and improve allocative efficiency, may represent the optimal response of citizens to market distortions (Lui, 1996). Corruption continues to persist in these societies as long as their governments distort the pricing and resource-allocating features of free-market economics. However, as their economies metamorphosize into market-based economies, economic competition encourages individuals and firms to demand standards regulating fairness in business transactions.
Additionally, the economic arrangements which exist in many less industrialized countries, which generally feature the importance of bargaining (price negotiation) and a seller’s control over a market, encourage bribery and the social perception of business as a zero-sum game. With both consumer and seller attempting to wrestle the most favorable result from a transaction, buyers learn to mistrust sellers, sellers to exploit buyers, and both to expect concessions in all business transactions. Of course, limited product availability, which encourages predatory selling practices, and absent or unenforced consumer protection policies make consumer buying very risky (Burns and Brady, 1996). Moreover, given their virtually complete control over product availability, quality, and pricing, sellers often perceive their chicanery not as unethical behavior but as a game (Thorelli, 1983).
However, with the increased diversity and availability of products accompanying economic growth (and international trade) power shifts from supplier to buyer. Eventually, sellers court buyers and the “zero-sum game” mentality of suppliers and buyers disappears (Thorelli, 1983).

Economic Opportunity and Individual Morality
Perhaps, too, economic growth diminishes the propensity for individual immorality. Economic achievement may ultimately engender greater concern in the individual for fair competition, advancement based on merit, and obedience to commercial laws and business ethical standards. Of course, increased cultural exposure with foreign business executives, products, and promotions, encourages individuals to reconsider traditional cultural values. Thus, economic equalization may change traditional social and ethical tolerance of bribery and help align the business ethics standards of cultures.
Of course, though manifest in different forms, bribery continues to infest developed nations, too. While in many developing economies bribery remains endemic, in developed economies bribes pass through more sophisticated but less visible channels (Harris and Moran, 1996). Nevertheless, as economic inequalities disappear and commercial legislation emerges in international business environments, ethical standards may begin to converge to universally condemn the practice of bribery.

TO BRIBE OR NOT TO BRIBE: SOME ETHICAL FRAMEWORKS
Fortunately for the business manager, several perspectives may permit the development of a standard ethical approach to bribery. First, cultural relativism, which espouses “when in Rome, do as the Romans do”, suggests complete, unreserved compliance with local business practices, even if those practices ethically and legally conflict with home-country standards (Rogers et al., 1995). Contrarily, moral absolutism asserts the universality of fundamental moral principles (ie. honesty, dignity, etc.) and claims that cultures may not alter these values (Wood, 1995). Utilitarianism, however, which requires a manager to weigh the costs and the benefits of bribery to all those affected by the action, claims that actions which produce the greatest good for the largest number of people can be morally justified (Rogers et al., 1995).
Of course, all three theories suffer serious shortcomings. Cultural relativism compels a manager to disregard the morality of cultural practices and to deny the existence of universal standards for ethical behavior, and worse, may lead to the ethnocentric assumption, ironically, that values and ethics of the home country are superior (Wood, 1995). Moral absolutism completely disregards cultural differences. Finally, because its cost-benefit analysis primarily focuses on corporate welfare, utilitarianism also fails to provide sufficient moral guidance for the international manager (Rogers et al., 1995).
Instead of the extreme positions of relativism, absolutism, and utilitarianism, the Social Contracts Theory offers the business manager a better method to resolve the cross-cultural ethical dilemma of bribery. Donaldson and Dunfee’s Social Contracts Theory of Economic Ethics, a hybrid of relativism and absolutism, claims that distinct and variable local ethical values may coexist with common global values. According to the Theory, humanity enjoys a macro social contract, which is similar to Aquinas’ notion of natural law or Confucius’ idea of universal law, that consists of “hypernorms”, or global norms, that apply equally to all persons. Hypernorms uphold the sanctity of “core rights” such as personal freedom, physical security, and human dignity among others (Donaldson and Dunfee, 1994). Perhaps bribery, through its “disregard for personal freedom and disruption of social life”, constitutes a hypernorm (Fritzsche et al., 1995).
Of course, other researchers support the distinction between primary and secondary norms. For example, Michael Hoffman, executive director of the Center for Business Ethics at Bentley College, contends that different cultures, rather than possessing entirely different ethical values, share largely identical “solid ethical building blocks” (Solomon, 1996). Also, Kohls and Buller advocate the existence of core values as distinct from “peripheral values” (1994).
Nevertheless, according to the Social Contract Theory, local “economic communities” such as corporations, industries, professions, and political entities (ie. cities, states, etc.), create micro social contracts which may outline local moral norms in addition to the hypernorms. But local norms, which pertain only to the people in the community, must not conflict with hypernorms, which apply to all people (Fritzsche et al., 1995). Differences between community norms and hypernorms may result in contrasting moral behavior among cultures even though those cultures share identical hypernorms (Dubinsky et al., 1991). Moreover, the presence of community norms may even create different moral behavior within a culture. Finally, Kohls and Buller suggest that universal values may not prevail equally among all nations; some universal values may be common in one culture but subdued in another (1994).
Of course, for the international business manager there are several implications of the dichotomy between universal and local ethical values. First, when individuals adhere more closely to community values rather than to universal hypernorms, ethical conflicts in international settings may occur (Fritzsche et al., 1995). Kohls and Buller argue, though, that separating peripheral from core values will enable managers to reconcile conflicting ethical values (1994). To adapt successfully to foreign cultures, business managers may choose to sacrifice less important, offending peripheral values but should refrain from infringing on core values such as health, family, human dignity, and liberty.
Second, the business manager must consider the context of each ethical decision. For instance, bribery, though perceived as unethical by both the community and universal norms of a people, may persist as a necessary response to social, political, religious, and economic conditions of the people (Solomon, 1996). Nevertheless, Kohls and Buller suggest that universal values may justifiably be imposed on those cultures which disregard them (1994).
Nevertheless, though cultural differences require international business managers to respond to bribery with cultural sensitivity, these managers must also practice moral consistency. Multinational corporations, whose unique social “contract” with society entitles them to citizenship status, share the ethical obligations of individuals in respecting universal norms (Rogers et al., 1995). Thomas Donaldson suggests that by carefully distinguishing personal, corporate, and home-country attitudes and laws from local attitudes and laws regarding bribery, managers may separate foreign practices which are merely different from those that are simply wrong (1996). He posits that managers should respect both the context of a business decision and the universality of certain morals, by resolving two questions:
1) Is a practice essential to conducting business in a particular country; and
2) Does the practice violate a core human value? Firms that can answer negatively to both considerations may choose to participate in that business practice.
Of course, even though most countries condemn bribery (Harrison and Moran, 1996; Delgado, 1996) managers should not assume that bribery is not essential to conducting business in a particular country. Instead, variations in local norms and laws across cultures require a manager to reconcile the roles of informal and formal business practices in every business environment. While some corporations have adopted corporate codes of ethics which define bribery and corporate ethical standards, many companies and individuals continue to walk precariously through international business environments with no defined ethical response to bribery.
CONCLUSIONS
As firms expand their international business operations, ethical conflicts will increase. To clear customs, expedite routine government functions, obtain government contracts, influence politicians, receive tax breaks, and earn access to foreign markets, international firms will increasingly confront bribery. While understanding the influence of the different value systems, socio-political institutions, and economic realities of a culture will help individuals and firms better prepare for and resolve cross-cultural variations in the acceptability of bribery, only greater research into these cultural dimensions can identify the extent of the influence of and interaction among these factors.
Fortunately, the decline in cases of private and public bribery may limit the international manager’s exposure to bribery. Additionally, converging ethical attitudes among the world’s cultures promise to reduce the prevalence of bribery in international business. Moreover, corporations may help discourage bribery by their overseas managers and representatives by clearly identifying appropriate corporate responses to bribery.
Bribery on the Decline
Moreover, bribery is disappearing from international business. First, some research studies conclude that though bribery behaves like a Ricardian problem; that is, though bribery pervades most countries, perhaps only a few international companies participate in bribery. Second, international competition, standardization, consumer expectations, and shared technology and management practices ensure that most international businesses transactions are decided on the basis of quality, performance, delivery, and price rather than as a result of unethical inducements (Wood, 1995; Tse et al., 1988). Moreover, the last few years have witnessed a substantial drop in the incidences of government corruption in some countries such as Bulgaria, Romania, Poland, Hungary and in African nations such as Egypt and Ethiopia. Additionally, an increase in the conviction of such corruption in nations such as India, China, Mexico, and South Korea, while perhaps reflecting growing corruption, though, suggests the increased prosecution of bribery worldwide. Moreover, where bribery persists but is officially prohibited, the practice has largely been relegated to a private and clandestine existence (Singer, 1991). Finally, mass media coverage and increasing international cooperation promise to retard bribery’s malignant role in international business.
Increased International Cooperation. Increased international cooperation may engender a global attack on bribery. For example, at the 1995 Summit of the Americas, representatives from thirty-four Latin American nations, some of which boast the most serious problems of corruption in the world, promised aggressive ant-cooperation efforts in their countries and jointly challenged the international community to assemble international standards against bribery in “all financial and commercial transactions in the Hemisphere” (Skol, 1996). Additionally, the economic modernization, trade liberalization, privatization, and decentralization of some Latin American nations like Mexico, Chile, Brazil, and Venezuela promise to reduce corruption by replacing “arbitrary decision-making” with “the market mechanism” (Skol, 1996). Finally, international organizations such as the International Chamber of Commerce (ICC) and the Organization for Economic Cooperation and Development (OECD) also promote universal ethical guidelines against international bribery.
The Mass Media. In addition, the media helps promote international awareness and disapproval of bribery. John Noonan, professor of Law at the University of California at Berkeley, predicts that bribery “will go the way of slavery” as press coverage of international bribery scandals mobilizes global agreement on the evil of bribery (Harris and Moran, 1996). Additionally, the media plays an important role in exposing the hypocrisy of governments which espouse ethical behavior at home but which tolerate corruption overseas (Skol, 1996).
Converging Ethical Attitudes
The convergence of international ethical standards is at hand. An almost unanimous condemnation of bribery among countries evidences humanity’s consensus of the immorality of corruption. Additionally, hypernorms already unite cultures. For example, the “Golden Rule” represents the ethical foundation in virtually all world cultures (Donaldson, 1996). Moreover, though Western and non-Western cultures differ, these paradigms share fundamental ethical truths such as respect for human dignity, respect for basic rights, and good citizenship (Donaldson, 1996).
Perhaps condemnation of bribery, too, may become a universal ethical value. The fall from power of Japanese Prime Minister Kakuei Tanaka following exposure of his acceptance of Lockheed payoffs and the departure of India’s Rajiv Gandhi from office after disclosure of bribes from the large Swedish firm, ABB, suggest the presence, albeit sometimes disregarded, of a universal repugnance for bribery (Fritzsche et al., 1995).
Of course, converging political, economic, and social ideals facilitate the exchange and acceptance of ethical standards. Though suppressed by dictatorships or communism in these regions just ten years ago, freedom, democracy, and market economics now characterize most societies in Latin America, Eastern Europe, and former Soviet Republics. Moreover, the proliferation of the environmental ethic of the green movement and the economic ethic of consumerism reflects the universalism of these values (Buller and Kohls, 1991). Nevertheless, the expansion of international trade, the emergence of economic and political linkages among nations (trading blocs such as NAFTA and economic unions such as the EU), and the deployment of mass communications and quick transportation create opportunities for cultural interactions and ethical change.
In addition, numerous research studies attest to the similarities in the ethical standards of individuals from different cultures. For example, comparative studies of the attitudes of Greek, Nigerian, and American students towards bribery highlight their shared contempt for bribes offered by foreign business managers. Other studies find little ethical differences among managers of different cultures. For example, studies of British and Chinese managers from Hong Kong, and comparisons between Americans, Australians, Israelis, Danes, and New Zealanders display considerably similar ethical attitudes (Lee 1981; Armstrong et al., 1990; Preble and Reichel, 1988; Lysonski and Gaidis, 1991, respectively).
The Corporation and Global Ethics
Finally, because their personnel, products, services, promotions, and resources influence foreign companies and societies, multinational firms may help eliminate bribery on a global scale. International business managers represent the vanguard of globalization. Their daily confrontations (and resolutions of) with foreign ethical standards compel them to reconcile conflicting values and to transmit the synthesis to personal, corporate, and societal value systems (Buller and Kohls, 1991).
Nevertheless, because of their power, size, and resources, societies expect greater ethical leadership from firms than individuals in international business activities (Rogers et al., 1995). Firms may demonstrate moral leadership by adopting and enforcing corporate codes of ethics. By clearly defining bribery, expressing top management’s attitudes towards bribery, and outlining the limits of gift giving, grease payments, and middlemen payoffs, corporate ethical standards enable overseas business managers to determine the appropriateness of bribery. For example, Caterpillar and IBM remove ethical ambiguities from international business situations for its managers through worldwide enforcement of strict ethical codes (Wood, 1995). Then, through the contact of their managers with foreign business managers and government officials, multi-national corporations may export their ethical standards (which usually mirror those of their home countries) and consequently, become agents of ethical change.

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