As a manager in a foreign subsidiary, how can you reconcile local expectations of questionable payments with the Foreign Corrupt Practices Act What is your stance on the problem of "payoffs" How does the degree of law enforcement in a particular country affect ethical behavior in business
The Foreign Corrupt Practices Act was enacted to prohibit U.S. companies from making unlawful payments including gifts and political contributions with the intention of influencing business decisions.
The proliferating international business opportunities have raised expectations of performance and delivery. The competition is also intense and often challenges many international managers especially when the rules of the game are fair and transparent. This is not always the case as corruption, kickbacks and all kinds of shady deals happen in many of the third world countries.
There are many examples in International business, where MNCs and large companies have refused to be a party to "payoffs". Many MNCs have walked out of talks, where they suspect that the deal may not be clean. Initially, there may be difficulties and irritants in carrying out the subsidiary's business. Once all the parties concerned in the transaction realize that integrity issues are non-negotiable with a particular MNC subsidiary, most of the time the "wheelers and dealers" would leave that subsidiary alone.
The manager of a foreign subsidiary has to use his own discretion to judge and differentiate between maintaining a cordial relationship with business associates and host government officials and carrying out illegal and corrupt business practices. In general, the degree of law enforcement in a particular country tends to influence the conduct of the subsidiary manger. This should not be so, since once a regime change happens, there is a high probability of investigations of the wrongdoings of the earlier regime.
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