Bribes and problem in expanding countries

Bribery can be an old theory with long history. In recent years, it has more and more become an intense issue all around the globe. When referring to the bribery, corrupt politics scandals in history or some current governments might often be engaged. However, with the development of international trade, bribe has permeated in the international business. Every once in awhile, some famous companies, from to Lockheed to Siemens, are accused of bribing to officers. Multinational companies tend to offer bribes to local representatives to exchanges some benefits in business or get some good orders in local government. Especially, they tend to offer bribes to officers or government authorities of developing countries, where problem is common and bribe is also necessary. Bribe has been thought to be immoral and even illegal in many countries. However, as the old expressing goes: living is rational. Although many countries and international organizations want to prevent and reduce bribes, the bribe activities never stop, this means a strong inspiration prior to the bribe activities. The inspiration is the instinct of company: going after the maximization of pursuits. The author regards that although bribe is wii situation, it is necessary to provide a bribe using situations, especially in the countries where bribe is popular. Therefore, bribe is essential to maximize the go back of investment using situations. However, in Austria, bribe is unlawful. In Austria, bribe is not essential, for the laws and laws could be implemented strictly by most of businessmen. A fair market competition could be guaranteed. Therefore, firms do not need to bribe. In a few growing countries, many companies offer bribes to officials to get requests (Geva, 2006). In that situation, overseas company usually selects to provide bribe to get orders in local area. In this article, the author will firstly describe why bribe is necessary for companies in certain situations. And the writer will retort some people`s proven fact that bribe is not necessary to maximize passions with cases.

In some countries, offering bribes is an behavior of adapting to local environment (Bishop, 2004). As the old declaring goes, When in Rome, do as the Romans do. Almost all countries possess the circumstances of bribe, especially in producing countries, where people are poor and the law or regulations aren't followed well. You will find three main factors cause bribes.

Firstly, unfair trade plans require companies to provide bribes in a few situations. Beck and Maher (1989) presumed that high taxes or customs tasks could cause bribes easily. Foreign companies have a tendency to offer bribes to get a series of favor policies to reduce their costs and then increase earnings. Furthermore, many officials in federal government of producing countries earn little money. When facing the bribe of companies, it is hard for these officers to refuse. In this manner, someone sends plus some other one accepts, and therefore bribe activity is performed. In such countries, bribe is common and popular. Some representatives even lay claim bribes of international companies. If some company does not meet their satisfaction, it will lose opportunity to getting orders or contracts in the country. Or the company cannot get an equal market position with other companies who offer bribes. From viewpoint of function and instinct of company, it isn't wrong for company to offer bribes to obtain additional market stocks or orders (Andrade, 1985). Especially in some developed countries, where bribe is the concealed rule, proper bribe is a kind of version to local business environment. Otherwise, the company will have no chance to compete with other companies in the neighborhood markets. The smart way of companies is to check out local environment to get more income. What`s more, producing countries are usually large market segments, with large numbers of demands and cheap natural resources. If some company will not fit for the environment, it'll be be rid of local market by its competitive rivals. Therefore, if one company chooses to open up market in such countries, it pays for it to offer bribe.

From the point of view of firms, bribe is essential when facing unfair trade plans. In certain situations would save a lot of attempts and money, which plays a part in the maximization of come back of invest. For example, if some famous international brand want to open up new market segments in expanding countries, it must face the high tariff and local protectionism. Such high tariff and local protectionism aren't reasonable in current period of free trade. However, they just can be found and limit the fair competition in local market. In this situation, offering bribe could help foreign companies decrease the admittance threshold and admittance costs, and thus help them obtain the equal market position with local companies. On the contrary, if the business will not offer bribe to conquer these unreasonable and unfair trade protection, it must pay high tariff, high duty and accept demanding supervision of local government. In this way, the operating costs are much higher than local business, which make the business in a unadvantageous position in tournaments. What`s more, the purchasing potential of people in expanding countries is not strong. The high price, brought on by high costs, of the company will destroy its sales amount in local market. Therefore, it is necessary to pay bribe when facing the unfair protective regulations in international trade to offset the negative affects of unreasonable environment.

Secondly, if almost all of competitive rivals offer bribes in a few countries packed with corruption and bribes, it is necessary to pay bribe to contend with them in the same starting lines. If in a single country many foreign companies are paying bribes, it is wise for the company to follow to get at least an equal position with them. Considering the huge demands of the market in some expanding countries, the marketing professionals cannot permit the company miss it. To be able to get advantages in the special market, they need to get the same starting lines with other companies at least. Others may offer bribes to get a series of tax preference or lower interests of bank loan. Such benefits could be gathered and cause the final competitive advantages. If the company doesn't have the same advantages, it'll be left out in market day by day and finally will be be rid of local market by other rivals. In addition, in a few countries, keeping a good relationship with representatives or governments could help the company get a higher endorsement in local consumers, for the representatives could use the tools of public view, like newspapers, or TV news, to broadcast the merchandise or accomplishments of the business (Weber and Getz, 2004). Which is a highly effective advertising in reality. In this way, the company could easily get a more substantial market talk about and have more come back of investment.

However, some individuals demand that bribe is immoral and companies don't need to offer bribe to obtain additional profits. Some experts have provided some evidences to confirm their idea. For instance, some researchers thought that respecting the rule of market current economic climate is the fundamental way of making the most of the go back of investment. They directed that the marketplace guideline could incent companies to work hard to improve efficiency of processing and management. And then the business could make good products to obtain additional market shares and then more gains. In addition, various other researchers assumed that the bribe could affect the reputation of companies and then cause negative affects to the business in other countries where bribe is not popular. What`s more, other experts believed that the cost of bribe will be used in the consumers.

Although these arguments sound reasonable to some extent, they aren't practical in certain environment, especially in a few developing countries full of corruption and bribes. For the first group of researchers, who imagine companies could boost the return of investment by following market guidelines, their idea is infeasible in a few areas full of corruption and bribes. market self-control is not omnipotent. The concept of market failure has been intended to describe the situation that market cannot play its role well. According to financial theory, free competition will end with monopoly. The invisible side of market should be restricted by the visible side of macroeconomic management. The neighborhood government, in reality local officials, manages the macroeconomic management. That means the local officials control the energy of allocating resources to some extent. When market failure occurs, it could be said the local officials are in charge of the destiny of companies. For instance, if one company need mortgage from local standard bank to expand business, it has to consider the influence of related officials. In some countries packed with problem or bribe, the officials in key positions may ask for bribe of companies. In this example, if the business does not offer bribe, it will have no mortgage to improve its technology or management.

For the researchers, who argued bribe could harm the reputation of companies, they disregard what customers demand. Customers need products or service with high quality and lower prices. They worry much for the life span or price-off of certain products rather than the reputation of the company producing the merchandise. In addition, the writer has mentioned that bribe is necessary using environment, not in every environment. In some countries with good restrictions and laws, rigorous guidance and audit system, and high-quality officials, companies could remain competitive in a good platform provided by market self-discipline. They don't need to bribe. In this situation, companies should make an effort to improve product quality and reduce price to extend its brand popularity. However, in a country filled with bribe and problem, people will feel no strange to see company offering bribes, which means the effect on reputation is very little.

And last but not least, for the individuals who problems customers would carry the costs of bribes, they neglect to see customer`s loss in a culture full of bribes or corruption. In some producing countries, the neighborhood companies still use unsafe or old profitable technologies, which cause the merchandise harmful to consumers (Warren and Dunfee, 2004). Furthermore, these companies offer bribe to local officers to go the sanitary study of local government. These detrimental products stream into local market, triggering various health issues to local consumers. In case the foreign products produced by advanced and healthy systems could be unveiled to local market, no subject through normal channels or bribes, the loss of local consumers will be less. Furthermore, in the countries packed with bribes and problem, if the international products could break right into the local market through bribes, the strong competitiveness will induce local companies to boost their solutions and increase the quality. Therefore, in a long-term, it is benefit for the neighborhood consumers.


Although bribe is extensively regarded as immoral and even illegitimate in some countries, it might play positive jobs in certain situations. Especially in a few developed countries where bribes and corruptions are popular, it is necessary for company to provide bribe to local official to increase the come back of investment. Unfair trade regulations require companies to offer bribes in a few situations. If most of competitive competitors offer bribes in a few countries packed with problem and bribes, it is necessary to pay bribe to contend with them in the same starting series. Some analysts argues that bribe is not necessary for company to maximize return of investment. They fail to see some particular situations in current international trade. In short, when in Rome, do as the Romans do. It really is sensible for company adjust to the neighborhood environment. Once again, the author stress bribe is essential in certain special situations, not absolutely all.

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