International Business Management

EXECUTIVE MBA

PROGRAM

INTERNATIONAL BUSINESS MANAGEMENT

Topic no. 1

Patrick L'Espoir Decosta, PhD

Kraków 2012

Topic 1.

The result of increasing globalization in the contemporary world is often the economic presence of the enterprises in many countries. When planning the location of its business unit in the selected country, the company must take into account the specific socio-economic conditions prevailing in it. This applies especially to countries located in other continents, other kinds of socio-cultural, economic system, as well as political, or historical circumstances. All of these have an influence on how they will conduct business in the country. One of the areas to be taken into account in the context of business is potential occurrence of corruption due to local customs in the country.

Russia finds itself at the bottom of over twenty assessed countries—one place below China—in the latest Transparency International Bribe Payers Index, aimed at measuring corporate bribery abroad.

It is the TI's attempt to measure the perception of corporate corruption rather than the perception of public sector corruption reflected in the aggregate Corruption Perception Index, where in 2010 Russia is placed 154 out of 178 countries with an absolute score 2.1 on the low side of the 1 to 10 scale.

The IKEA founder Ingvar Kamprad, called the situation in Russia as a "something in a class of its own".

Its clear that Russia is not missing the specific laws, but there problem is connected with the application of the law in the post communistic society that is used to not obeying the law and finding the workarounds.

As John Browne, ex-CEO of BP observes in his memoirs, "the problem is not the lack of laws, but their selective application. This is what creates the sense of lawlessness. While bureaucratic legalistic processes are the hallmark of Russia, you never know whether someone will turn a blind eye or whether the laws will be applied to the hilt."

Definition of word "corruption" in economy is payment for services or material which the recipient is not due, under law. This may be called bribery, kickback, or, in the Middle East, baksheesh. The corruption exist Corruption exists in the world in many areas, basically almost free from it are only countries in Western Europe and northern America. As a vice-president of Manufacturing at MicroKey company, a major producer of computer