The Link between Corruption and Business Ethics 2
The Corruption Perceptions Index 3
The Classification: Types and Distinctions 4
Organizations Dealing with Corruption 5
Corruption from the Social Point of View 6
Integrative Social Contracts Theory 6
a) Violating a Microsocial Norm 7
b) Violating an Authentic Norm 8
c) Violating a Hypernorm 9Corruption from the Legal Point of View 10
The Main Players 11
a) The State 11
b) The Media 11
c) The Society 12
Corruption from the Economic Point of View 13
The theory of the Second Best 13
a) Irremovable Constraint 14
b) The Second Best Optimum 15
Principal-Agent Model and Rent-Seeking 16
a) Limitation of the Principal-Agent Model 17
b) Complementary Rent-Seeking Model 17
Why “SuhartoModel” is Wrong? 19
Corruption can be defined in various ways. Antonio Argandona describes corruption as the following: “The act or effect of giving or receiving a thing of value, in order that a person does or omits to do something, in violation of a formal or implicit rule about what that person ought to do or omit to do, to the benefit of the personwho gives the thing of value or a third party.”
When dividing the sentence into several parts the meaning of corruption may become clearer. “A thing of value” could be understood as money, a favour, a present, or a service. The “person” that “does or omits to do something” could be either active in the public sector such as a police officer or politician or be active in the private sector such asa manager or an employee of a company. The “violation of a rule” can for example be an action against the law or a moral value accepted in the society to the “benefit of the person” who gives the money or a relative or friend.
Transparency International, an organization fighting against corruption, defines corruption as the following: Corruption is “the abuse of entrusted power for private gain.”Furthermore, Transparency International divides corruption into “according to rule” and “against the rule”. The first one is a payment to speed up the process and to make the receiver treating the paying person with favour concerning the actions the receiver does by law, whereas the second one is a payment to a person in order to do something the person is not allowed to make available.
TheLink between Corruption and Business Ethics
Corruption is an unethical behavior and describes actions which are considered as wrong in the social opinion. Business Ethics deals with the question about right or wrong behavior relating to businesses. When dealing with right or wrong, a business person should refer to individual, corporate and social morals, values and rules.
Present-giving may be anormal social behavior in some cultures and may also be a form of negotiating and networking. However, it is a question of the dimension. No matter what culture, there are limits. If these limits are crossed, corruption is taking place and should not be accepted. Obviously using power for personal benefit or stealing public property for private gain is seen as corruption in every culture.Corruption can have various effects seen out of different point of views. It is a threat to economic, environmental, political, and social development. Corruption violates our ethical and moral standards, weakens democracy and the law, undermines the worldwide trade, destabilizes international security and also weakens political systems: when votes are not democratic, but instead only a question ofmoney, there will be no motivation to strike down the system that sustains poverty. Corruption impacts the most on poor people requiring them to step back in their poor living-standard to pay a bribe with their anyway low income in order to e.g. enable the child access to (free) education. Wherever corruption takes over control, human rights will fall short since no proper trial is possible as...