Questionable Payments Abroad

Abstract

One important issue that international managers must face is questionable payments abroad. What is acceptable in terms of culture and law varies greatly around the world, and managers must come to grips with the inevitable and often conflicting demands that will be made on them in foreign markets. There are, essentially, three sources that spell out what payments are, or are not, proper in global business: the Foreign Corrupt Practices Act of 1977 (amended in 1988), the Convention on Combating Bribery of Foreign Public Officials of the Organization for Economic Cooperation and Development (OECD) of 1997, and the codes of conduct of virtually all multinational corporations. Excerpt UVA-G-0550 Questionable PaymentS Abroad One important issue that international managers must face is questionable payments abroad. What is acceptable in terms of culture and law varies greatly around the world, and managers must come to grips with the inevitable and often conflicting demands that will be placed on them in foreign markets. The following describes the rationale for combating bribery: Corporate bribery is bad business. In our free-market system, it is basic that the sale of products should take place on the basis of price, quality, and service. Corporate bribery is fundamentally destructive of this basic tenet. . . . Foreign bribery affects the very stability of our overseas business. Foreign corporate bribes also affect our domestic competitive climate when domestic firms engage in such practices as a substitute for healthy competition for foreign business. In sum, eliminate anticompetitiveness in international business. Essentially, three sources spell out what payments are, or are not, “proper” in global business. They are the 1977 Foreign Corrupt Practices Act (amended in 1988), the 1997 Convention on Combating Bribery of Foreign Public Officials of the Organization for Economic Cooperation and Development (OECD), and Codes of Conduct of virtually all multinational corporations. . . .