Corruption Behaviours and MNCs Assignment Help

Corruption Behaviours and MNCs Assignment Help

Introduction

The best practices of multinational organisations are analysed in this assessment. The method by which the multinational organisation aligns to the corruption present in any country is analysed in this report. Corruption can be referred to as the exploitation of a high rank so as to take undue advantage. Corruption takes place because of the vested interests of the parties involved who seek to get their work done in exchange for something of value, which usually is money.

Corruption Behaviours and MNCs

Corruption is not a national problem, rather it is spread across nations and borders. A research conducted by the Organisation for Economic Cooperation and Development scrutinized 427 cases involving corruption by foreign companies recorded between 1999 and 2014 and found out that corruption is practised on a regular basis between multinational companies and bureaucrats in developing as well as developed countries (Ferdman, 2014). 

Adidas case 

The government of many countries have implemented the policy of ease of doing business. It provides an opportunity for the organisation to do business easily in any country. The officials that are part of providing legal assistance of opening a business in any country are involved in the corruption. They do corruption with the employee of the organisation jointly. This can be understood with the help of evidence. Before 2005 Reebok was the leader of sports apparel and accessories in India. In 2005 German company Adidas took over Reebok. The whole joint organisation operated by Subhinder Singh Prem. it was found by Adidas in the year 2013 that this person is involved in the practice of defrauding this organisation (Wharton, 2018). Fraud of 169 million is it done by this person along with the senior employees of this organisation. The government officials are also involved in providing assistance so that fraud can be possible with the help of irregularities. It is the correct practice that is done by multinational companies like Adidas because of the corrupt system present in India. It is also necessary for such multinational companies not to involve in such practice and follow Business Ethics.

Walmart case

Adidas is not the one example. Another example of Walmart can be taken into consideration. This organisation was benefited greatly after the permission of foreign direct investment for retail in India. Disorganization suspended its CFO because he was involved in corruption practice. this company also involved in the practice of lobbying with two of the member of parliament of Lok Sabha or the lower house of Parliament of India (Lee & Hong, 2012). Lobbying is illegal in India. This organisation supports financially to this Member of Parliament for giving the vote in favour of foreign direct investment in retail for the voting in Parliament.

These are the practices that show that not only the MNC but the system also support the MNC to do corrupt practices. It is the corporate responsibility of the organisation also to implement such business policies. The system should be strong enough that will not allow doing bad practices of corruption. The officials those are included in the corruption whether from multinational company side or from government side are not having any fear of legal action. This is also a curse for the Indian economy (Hussain, et. al., 2013). The current anti-corruption reform in 2018 is very strict to stop such type of corruption.

Countries, MNCs and Corruption

Multinational Organisation in the United States of America, Russia, Hungary, Columbia, Argentina, Mexico, South Korea, South Africa is also involved in corruption. A survey was conducted for the companies of these countries. It was found that all such countries are also facing corruption in the context of the multinational organisation. The countries that are having less corruption are Australia, Switzerland, Austria, and Sweden. Multinational companies of these countries follow proper ethics. Most of the companies in these countries are not involved in corruption.

In the words of Gani & Clemes, (2015), there are various types of reasons that are associated with corruption accomplished by multinational companies. One of the reasons behind the corruption of these companies is non-effective anti-corruption law implementation. The Bureaucracy of many countries is corrupted at that extent that they do not perform any legal practice without corruption. Mariene & Teixeira, (2012), Emphasis on multinational companies is involved in the money laundering process. This is the main reason behind the corruption that is done by a multinational organisation. Therefore it is very necessary to enforce the law that checks whether the companies are involved in money laundering or not. Money laundering cases can be tackled strictly by the companies.

In the words of Zhu (2017), the Legal structure of some companies involves tenders. Any bureaucrat and politician can favour 1 company for approving tenders. This will be beneficial for multinational companies. It will make the business more profitable for the multinational companies. A favour by politician or bureaucrat involves bribe that is given by MNC to politician and bureaucrat. In this way, corruption is accomplished by any NMC. On the other side Teixeira & Gr (2012), argues that less freedom to media is encouraging corruption in different countries. People are unable to know about the corruption of multinational companies and they purchase the product of these companies. If people are able to know about the real facts of bureaucrats, politicians and MNC then they will not support any one of them. Lee & Hong (2012), emphasis on most of the people is less interested in reporting corruption even after knowing the corruption of any MNC. People think that it will be a time-consuming process to go through a judiciary for reporting a corruption and fighting a case against MNC. Any employee of MNC can know about the corruption of MNC. It is the duty of any citizen of any country that corruption should be reported to the concerned authority. But the corruption is not reported by these employees because of time and cost consuming process of the judicial result.

I do not agree with the idea of multinational corporations supporting corruption at the local level. The first and foremost reason is that indulging in corrupt practices puts the top officials of the company including the board of directors, managers, and others in the organisation at severe legal risk. Corruption carried out by the government officials tends to weaken the economic growth of the country, as the economic growth falls, the MNC does not have the scope to grow either. Apart from this, corruption is also inclined towards damaging the internal management of the firm as the firm that practices bribery does not follow the code ethics (Grin, 2013). 

MNC corruption & effects 

Another important aspect to note here is that as corruption leads to public spending distortion, and makes it difficult to invest in the economy and hence the growth is discouraged. The economy underperforms which makes the government and the international market participants liable and at the danger of being reprimanded by the international forum. Getting involved in corruption fosters the culture of bribery in the home country of the MNC which might become difficult to eliminate. Not only that, laws such as the Foreign Corrupt Practices Act of the United States and the OECD Anti-bribery Convention make it corruption illegal not only in the home country but the host country as well, a violation of these laws might result in the elimination of the MNC altogether. Another major argument which can be discussed in this context is that, once the MNC is found guilty or is convicted due to their corrupt practices, the reputation of the firm would decline drastically and the public relations of the company will suffer a backlash.  

As per a research conducted on the Asian economies, under which the relationship between corruption and multi-national corporations was defined, the results indicated that the more significant corruption level is, the more is the possibility that the MNC will abort International Joint Venture. Joint Venture taken up by the MNC enable the company to learn about the culture and attitudes of its target customers and when the joint venture strategy is opted out from, it hinders the performance of the MNC in the host country (Meshi, 2009). 

Conclusion

Corruption is present in many countries. The system of corruption empowers the MNCs to do corruption in the non-domestic country. This is the unethical behaviour that is accomplished by the organisation. There are many reasons for corruption by MNCs like less power to media, inefficient enforcement of the law against corruption. Corruption by MNCs is making a big loss to the different countries.

References

Gani, A. and Clemes, M.D., 2015. Natural resource exports and corruption. International Advances in Economic Research21(2), p.239.

Grin.com. (2013). GRIN – The Effects of Bribery and Corruption on Multinational Corporations. [Online] Available at: https://www.grin.com/document/340648 [Accessed 26 Oct. 2018].

Hussain, A., Khan, A. and Ahmad, S., IMPACT OF FDI ON RETAIL ENVIRONMENT OF INDIA AND FACTORS INFLUENCING THE CONSUMER ATTITUDE & BEHAVIOUR TOWARDS ONLINE AND OFFLINE SHOPPING.

Lee, S.H. and Hong, S.J., 2012. Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region. Asia Pacific Journal of Management29(4), pp.949-964.

Lee, S.H. and Hong, S.J., 2012. Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region. Asia Pacific Journal of Management29(4), pp.949-964.

Mariene, G. and Teixeira, A.A., 2012. Corruption and multinational companies’ entry modes: Do linguistic and historical ties matter?. South African Journal of Economic and Management Sciences15(3), pp.269-280.

Meschi, P. (2009). Government corruption and foreign stakes in international joint ventures in emerging economies. [Online] Ideas.repec.org. Available at: https://ideas.repec.org/a/kap/asiapa/v26y2009i2p241-261.html [Accessed 26 Oct. 2018].

Teixeira, A.A. and Gr, M., 2012. Entry mode choices of multinational companies (MNCs) and host countries corruption: A review. African Journal of Business Management6(27), pp.7942-7958.

Wharton, 2018. Corruption in India: Multinationals Join the Accused. [Online] Wharton. Available at: http://knowledge.wharton.upenn.edu/article/corruption-in-india-multinationals-join-the-accused/. [Accessed: 26 October 2018].

Zhu, B., 2017. MNCs, rents, and corruption: Evidence from China. American Journal of Political Science61(1), pp.84-99.