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Corruption and companies: The case of facilitating payments

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  • Argandoña, Antonio

    () (IESE Business School)

Abstract

Facilitating payments are a very widespread form of corruption. They consist of small payments or gifts made to a person -a public official or an employee of a private company- to obtain a favor, such as expediting an administrative process, obtaining a permit, license or service, or avoiding an abuse of power. Unlike the worst forms of corruption, facilitating payments do not usually involve an outright injustice on the part of the payer, as she is entitled to what she requests. That may be why public opinion tends to condone them; often they are assumed to be unavoidable and are excused on the grounds of low wages and lack of professionalism among public officials and disorganization in government offices. Many companies that take the fight against "grand" corruption very seriously are inclined to overlook these "petty" transgressions, which are seen as the "grease" that makes the wheels of the bureaucratic machine turn more smoothly. And yet, facilitating payments have a pernicious effect on the working of public and private administrations; all too often they are the slippery slope to more serious forms of corruption; they impose additional costs on companies and citizens; and in the long run they sap the ethical foundations of organizations. This article focuses on facilitating payments from the point of view of the company that makes the payment, either as the active partner (when it is the company that takes the initiative) or as the passive partner (when the official or employee is the instigator).

Suggested Citation

  • Argandoña, Antonio, 2004. "Corruption and companies: The case of facilitating payments," IESE Research Papers D/539, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0539
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    File URL: http://www.iese.edu/research/pdfs/DI-0539-E.pdf
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    References listed on IDEAS

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    Cited by:

    1. Xun Wu, 2009. "Determinants of Bribery in Asian Firms: Evidence from the World Business Environment Survey," Journal of Business Ethics, Springer, pages 75-88.
    2. Ahmet Ekici & Sule Onsel, 2013. "How Ethical Behavior of Firms is Influenced by the Legal and Political Environments: A Bayesian Causal Map Analysis Based on Stages of Development," Journal of Business Ethics, Springer, pages 271-290.
    3. John Luiz & Callum Stewart, 2014. "Corruption, South African Multinational Enterprises and Institutions in Africa," Journal of Business Ethics, Springer, pages 383-398.
    4. MUSCALU Emanoil & BĂDIȚĂ Silvana Nicoleta, 2016. "Ethics In Business - Multinational Organizations Need To Deliver Performance," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 68(5), pages 73-86, December.

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    Keywords

    bribery; corruption; extortion; facilitating payments; gifts;

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