Research from Jones School Dean Helps International Companies Avoid Corruption

Peter Rodriguez, dean of the Rice University – Jones Graduate School of Business, and a team of coauthors recently investigated the impact of corruption within a country on the foreign firms that operate there.

Governmental corruption within a country can often have far reaching impacts, although those effects are often underestimated by those impacted the most. Dean Peter Rodriguez and his team sought to investigate the true impacts of corruption on multinational firms, as well as develop strategies to handle it.

Although what “corruption” means can vary from country to country, for the purposes of study the scholars defined it as the abuse or misuse of governmental power for private or personal gain. Often in a corrupt government, the money expected from bribes and kickbacks can spell financial concerns for a company. Other costs can indirectly result from unproductive behavior and lost talent as a result of the corruption.

Across the globe, multinational firms have taken a number of approaches thus far to try and avoid the negative impacts of a corrupt government. Firms like Procter & Gamble simply shut down a Pampers plant rather than bribe customs, while companies like Honeywell have tried to avoid corruption by putting rigorous internal codes into place.

Other companies have chosen to combat corruption through international agreements, such as the Organization of American States and their recent drive to convince over 25 countries to sign a multilateral treaty which would criminalize bribing foreign officials.

Ultimately, Rodriguez and his team conclude that there is no perfect solution a company can employ to avoid the effects of governmental corruption. However, they argue, often a single solution won’t suffice, and it may be necessary for firms to try a mix of different solutions for staying afloat in a corrupt world.

regions: Houston

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