There is remarkable consensus transcending national boundaries that bribery is a morally repugnant business practice, as evidenced, for example, by last year's G20 commitment to develop an anti-corruption action plan. Yet, bribery is all too prevalent. The World Bank estimated in 2004 that more than $1 trillion, or 3% of the world gross domestic product (GDP), is paid annually in bribes, stymieing economic growth and threatening democratic and moral values. What is more, the new (5th) edition of the Bribe Payers Index published by Transparency International on November 2, 2011 shows that there are big differences between countries in their propensity to bribe. The index rates 28 leading exporting countries by the likelihood of their firms to bribe abroad and is based on a survey of 3,000 business executives from countries that do business with firms from the 28 rated countries.
What causes the difference between how, for example, a firm from Russia and a firm from the Netherlands approach a business in the U.S.?
A colleague of mine, Pankaj Aggarwal from the University of Toronto, and I recently asked exactly that question. We used the 2008 Bribe Payers Index and tested the correlation between the degree of collectivism present in a national culture and the propensity of that country's firms to offer bribes abroad while controlling for the country's wealth. Our simple model was able to explain about 75% of the variation between the countries. Perhaps not surprising, we found that the wealthier a country, the lower its firms' propensity to offer bribes abroad. That is, wealth was negatively correlated with the propensity to bribe but it was not the only factor: Controlling for wealth, we found that the degree of collectivism explained over half of the residual variability in the propensity to bribe. In particular, we found that the more collectivist a country, the higher its firms' propensity to offer bribes abroad. We used two different, well-known measures of collectivism: one from the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study, another by Hofstede—and both times we got the same results.
We then went ahead and conducted a study with business students in the laboratory and what we found, in a nutshell, was that collectivism promoted bribery in a business context with foreign partners by mitigating individuals' perceived responsibility for their actions. This finding is in line with other research showing that individuals in collectivist cultures, relative to those in individualist cultures, tend to hold more favorable attitudes toward sharing responsibilities, they perceive risky actions as less risky because they see their group or society as providing a "cushion" that would protect them from harm, they make situational rather than dispositional attributions, and have a weaker sense that they themselves—rather than society—determine who they are. Together, these characteristics should make it easier for a business person, who might benefit from offering a bribe abroad, to diffuse his/her responsibility and thereby selectively disengage regulatory self-sanctions from detrimental conduct.
I do want to emphasize that our findings do not imply that collectivist practices promote immoral acts across the board. In fact, several studies show that collectivist cultures are more humane than individualist cultures; its members are more likely to help and care for other people. So, the interesting question then is, why do we find that collectivism promotes bribery? I believe that this is because we focused on a particular context: offering bribes in an international and business context rather than contexts involving one's in-group (i.e. people within one's own country or culture) or personal circumstances.
Bribery is a serious global threat and is undermining the wealth and development of nations. It is important to have an open, unbiased, and careful look at its complexities in different contexts. Increasing the magnitude of punishments for offering bribes and the likelihood of being caught through stricter rules and regulations, bolstering law enforcement, and promoting greater transparency in the handling of transactions are important measures. However, it is perhaps equally important to pay attention to people's internal psychological processes and cultural aspects in order to design a richer and more effective, complementary set of policies to curb the supply side of corruption and its staggering costs.
