An Eastern Approach to the Global Challenge of Corruptibility

The Global Problem Of Corruption

Achieving ethical performance in business is a global issue. Well-known scandals in the U.S. include Adelphia Communications, Enron, Arthur Andersen, and WorldCom (Patsuris, 2002). International examples of corporate corruption and its negative economic impacts include Parmalat in Italy, where $10 billion of assets disappeared (O'Rourke, 2004), and Banco Intercontinental, a commercial bank in the Dominican Republic whose 2003 demise resulting from fraud and political corruption helped send the Dominican economy into a steep decline.

Corruption is the abuse of entrusted power for private gain (Transparency International, 2010). Corruption manifests in both individual and corporate violations and in actions which damage both the enterprise and societal interests. Economic crimes against corporations, generally perpetrated by their own employees and executives, are on the rise. The Global Economic Crime Survey by PricewaterhouseCoopers (2007) of over 5,400 companies located in 40 countries that average loss due to fraud per company has increased nearly 40% compared to 2005. This study also reports experts’ perceptions that corporations need to be alert to significant risks associated with levels of corruption, staff integrity and the weak legal environment in emerging markets. Corruptibility can also be seen in the tendency of some global corporations to exploit communities and the natural environment in the pursuit of their own interests (Banerjee 2007). Laszlo (2008) describes how some corporate strategies pursue shareholder returns in ways that destroy value in less developed countries—which in the end leads to loss of reputation and financial value for the firm itself.