Comparative Business Ethics

1. Comparative Business Ethics Samantha Pinto 301087184 Jiaxiao Zhang 301173206

2. Discussion What are some reasons why you think a person might engage in corruption? What are some examples?

3. Corruption Definition: use of power by an individual for a private benefit by motivating another person to act dishonestly. Examples: Bribing public officials, kickbacks in public procurements, and embezzling public money

4. Article 1 “Corruption and culture: An experimental analysis” by Abigail Barr and Danila Serra

5. Claim:likelihood of corruptive behavior by individuals, is related to their own countries’ level of corruption and culture. Hypothesis: people coming from a more corrupt country are more likely to act corruptly than individuals who grow up in societies where corruption is rare.

6. Studies conducted • Two experiments based on a bribery game in 2005 and 2007 • Undergraduate and Graduate students from Oxford University, London • Level of corruption based on country CPI score

7. Results of 2005 • Proved hypothesis among the undergraduate students but failed among graduate students • Two factors • cultural selection -Selection is when an individual moves to another country or culture of their preference since their values and beliefs differ from their native land. • secondary socialization-as time passes, the new country’s culture would prevail over the individual’s original culture.

8. Study & Results- 2007 Revised Hypothesis- only undergraduate students and not graduate students from more corrupt countries are more likely to engage bribery • Proved original findings and explained using the two factors • corruption is a cultural phenomenon • must not be prejudged because of these two factors

9. Scope & Limitations • secondary socialization can vary among individuals • corruption in certain situations vary among individuals • university students with no experience in a government atmosphere • when is culture not the only factor

10. Article 2 “Corruption Across Countries: The Cultural and Economic Factors" by Rajib N. Sanyal and Subarna K. Samanta

11. Sanyal and Samanta’s extension on factors of Corruption Purpose: study economic factors along with cultural factors of corrupt practices in a country to aid policy makers and business people in their efforts to minimize corruption. Economic factors: bribery is likely to occur under specific legal and institutional conditions, such as using legal criteria to allocate scarce benefits. Cultural factors: every nation has significant cultural differences which affect people’s values, outlook and behaviour. “Other factors” that are important in explaining the level of corruption in a country, such as political factors, but they are not included in the study.

12. Sanyal and Samanta’s extension on factors of Corruption • Four cultural hypotheses • designed based on Hofstede’s cultural variables • assume that countries characterized by a high degree of Power Distance, Collectivism, Masculinity and Uncertainty Avoidance are likely to have higher levels of corruption. • Three economic hypotheses • two of them assume that countries with higher level of per capita income and with higher proportion of GDP accounted for by foreign trade are likely to have lower levels of corruption. • For the third factor related to a country’s income disparity, there is no clear assertion on its impact on the level of corruption. • CPI scores were used to measure national corruption

13. Sanyal and Samanta’s extension on factors of Corruption Results - Four significant variables, two from each of the cultural and economic factors. Countries with a high degree of Power Distance and Masculinity are more likely to have a higher degree of corruption. Countries with a higher level of per capita income and higher disparity of income distribution are perceived to be less corruptive. Proven to be equally important in explaining the perceived level of corruption. In conclusion, the typical characteristics of a corruptive country are high degrees of Power Distance, Masculinity, and low Income inequality and Per Capita Income. However, the authors do not stress enough that culture and economics are not causes but rather factors associated with corruption.

14. Scope & Limitations Sanyal and Samanta’s research study Exemption of “other factors” • identified as one of the three major factors associated with corruption • mainly composed of political and legal factors • indicate the risks of engaging in corrupt behaviour in a country and can alter the perceived level of corruption in a country. • no reasons why they chose not to include this important factor in their study

15. Scope & Limitations Sanyal and Samanta’s research study Application of Hofstede’s cultural dimensions. • ignored Hofstede’s fifth dimension, “Long-Term Orientation”, • did not consider the cultural differences that exist within different parts of the country. differences in perceived level of corruption, • some key countries, such as China and Russia, were not included in Hofstede’s study, so they could not study these countries in their research.

16. Accuracy test on China China: • Culture: high in Power Distance; moderate to high in Masculinity. • Economic: low in per capita income; high in income disparity. • CPI score: 39. moderate to high level of corruption - Except income disparity, all the other three variables support their findings of high corruption. - Therefore, basically valid and reliable but perfection is also required.

17. Common Limitation of Both Articles Perceptions over facts. • CPI scores were based on surveys of elite business people and assessments by country analysts. • Does not measure actual levels of corruption. • Input data may not be fully accurate • May be the most reliable and accurate scores available • Critiquing from a pure scientific point of view and hoping that future studies develop more objective measurements of corruption.

18. Q & A