GRAHAM 000-15-8773 EBM642 MANAGERIAL INTERNATIONAL BUSINESS ASSIGNMENT 1 STRATFORD UNIVERSITY Running head: ACCOUNTABILITY FOR CORPORATE CONDUCT

& LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD ACCOUNTABILITY FOR CORPORATE CONDUCT & LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD 1

ACCOUNTABILITY FOR CORPORATE CONDUCT & LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD BY DEBORAH L. GRAHAM EBM642 MANAGERIAL INTERNATIONAL BUSINESS APRIL 10, 2013

GRAHAM 000-15-8773 EBM642 MANAGERIAL INTERNATIONAL BUSINESS ASSIGNMENT 1 STRATFORD UNIVERSITY ACCOUNTABILITY FOR CORPORATE CONDUCT & LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD 2 Recent concerns about ethics and social responsibility transcend national borders. When business is conducted across borders, the ethics and social responsibility programs take on added layers of complexity, and during this era of globalization, Multinational Corporations (MNC) must be concerned with how they carry out their business and their social role in foreign countries. Attempts to do this can become very especially problematic when multinationals operate in host countries that have different standards of business practice, are economically impoverished, have inadequate legal infrastructure, human rights are habitually violated, or the governments are corrupt as well. There are there are fundamental principles of right and wrong which transcend cultural boundaries, and multinationals must adhere to these fundamental principles or global values. The need for international accords and corporate codes of conduct has grown commensurately with the spread of international business. Various mechanisms to facilitate the incorporation of ethical values into international business behavior exist and must be adhered to. To begin with, all employees and managers of MNCs must be held accountable to the various laws and acts already set forth. Global initiatives and acts to combat corruption include:3 Foreign Corrupt Practices Act makes it illegal for U.S. firms and their employees to attempt to influence foreign officials through personal payments or political contributions, including such tactics as entertainment expenses or consulting fees Organization for Economic Cooperation and Development (OECD) Anti-

GRAHAM 000-15-8773 EBM642 MANAGERIAL INTERNATIONAL BUSINESS ASSIGNMENT 1 STRATFORD UNIVERSITY ACCOUNTABILITY FOR CORPORATE CONDUCT & LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD 3 Bribery Convention recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials. Many countries have signed this agreement, and these countries have agreed to cooperate by enforcing this agreement and outlaw bribery of foreign government officials, but it fails to outlaw most payments to political party leaders Inter-American Convention Against Corruption - originated by the Organization of American States (OAS) and monitored by them, ratified by 25 countries in the Americas and the Caribbean, and is similar to the OECD AntiCorruption Convention

Combating corruption should not stop with MNCs simply abiding by acts or laws. Translating ethical principles and values into practice in the international business domain is a start, and one that should begin with management. In an effort to sensitize managers to cultural diversity, and to accept the point that home practices are not necessarily the best or the only practices, emphasis in international business training and adapting to the way in which other cultures do business is a must.2 Some of the training that can be conducted can start with establishing codes of conduct that all employees would be held accountable to. These codes should include, but not be limited to:2

Codes of conduct committing MNCs to maintain certain standards

GRAHAM 000-15-8773 EBM642 MANAGERIAL INTERNATIONAL BUSINESS ASSIGNMENT 1 STRATFORD UNIVERSITY ACCOUNTABILITY FOR CORPORATE CONDUCT & LIMITING IMPACTS OF CORRUPTION AROUND THE WORLD 4

Codes help offset real or perceived concern that companies move jobs to avoid higher labor or environmental standards in their home markets

Contribute to raising standards in developing world by exporting higher standard to local firms in these countries

Code of conduct for businesses to work against all forms of corruption, including extortion and bribery

Moreover, taking a stand through credibility, involving people, responsible press, and improving institutions are also suggestions for holding corporations accountable and limiting the impacts of corruption around the world.1 For corruption, the offenders of a corrupt deal must be convinced that the government is serious about fighting corruption. Highly publicized trials and convictions of top management accomplish this by not only putting their credibility into question, but also letting others know that the actions will not be tolerated. Then there is involving people. Ordinary citizens have a lot of firsthand knowledge. They are a good source of information and their cooperation should be sought for a successful launch of anti-corruption initiatives. When people realize that sincere and genuine efforts are underway to combat corruption, they will respond and extend their full participation in resolving the problem. Further, responsible press put together to gather, analyze, present and disseminate information is vital in order to create greater public awareness and provide momentum for overcoming corruption. A responsible press plays an important role in exposing misconduct and serving as a

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watchdog to limit corruption and preventing it from becoming a bigger problem. Finally, improving institutions is key. This involves improving the legal framework, less time consuming and burdensome ways of dealing with the courts and administration of justice, and appointment of a very responsible inspector general to investigate and prosecute the offenders.1 The bottom line is that corruption around the world has been a huge problem and continues to be. . Corruption is a fundamental, economic, political and institutional shortcoming in many countries. However, there are various ways to combat this and other issues, and hold those responsible accountable for their actions and deceptions. To be effective, emphasis must be on preventing corruption by identifying and tackling the root causes that allow it to be done and affect the economic, political and institutional reforms of these countries. Anti-corruption enforcement measures will not be effective unless there is a serious effort put towards addressing the causes.

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References Corruption: Causes, Consequences, and Cures. (December 2, 2000). Asia-Pacific Development Journal Vol. 7, No. 2. www.unescap.org/drpad/publication/journal_7_2/myint.pdf Luthans, Fred and Doh, Jonathan P. (2009). International Management: Culture, Strategy, and Behavior. McGraw-Hill / Irwin 7th Edition International Management: Culture, Strategy, and Behavior. Retrieved on: April 2, 2013. www62.homepage.villanova.edu/jonathan.doh/Chapter03_HLDRev.ppt