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The Foreign Corrupt Practices Act: Why It Fails to Deter Bribery as a Global Market Entry Strategy

Author

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  • Miriam Weismann
  • Christopher Buscaglia
  • Jason Peterson

Abstract

Recent studies (Cragg and Woof, Bus Soc Rev 107(1):98–144, 2002 ; Weismann, J Bus Ethics 88:615–66, 2009 ) revealed that in the first 28 years of its existence, the Foreign Corrupt Practices Act was not enforced by the federal government. The Weismann study further concluded that the FCPA, designed by Congress as a self-regulatory model of corporate governance, failed to achieve the regulatory goal of deterring global bribery by U.S. companies. The current article addresses the reasons that the FCPA remains an ineffective measure to control bribery as a global market entry strategy despite the highly publicized 2006 Department of Justice initiative to increase prosecutions and tighten enforcement efforts. The failure arises out of both the increased use of informal dispositions of case prosecutions, (including non-prosecution and deferred prosecution agreements), which has made “getting caught” merely an increased “cost of doing business” and the failure to close the regulatory gaps in the statute that permit violators to slip through the enforcement net. The article updates and compiles the case prosecution data for every reported case prosecuted between 1977 and 2011. That data are then compared to the results of a 2010 integrity risk survey performed by Deloitte Financial Advisory Services and Forbes which reveal a widely held global business perception that compliance and integrity risks appear to be rising sharply and that the FCPA is ineffective in deterring bribery and corruption in foreign markets. The article aims to serve as a predictive tool for policy makers and business professionals in assessing risk in the global markets, particularly as commerce intensifies in the BRIC countries, notable for bribery and corruption. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Miriam Weismann & Christopher Buscaglia & Jason Peterson, 2014. "The Foreign Corrupt Practices Act: Why It Fails to Deter Bribery as a Global Market Entry Strategy," Journal of Business Ethics, Springer, vol. 123(4), pages 591-619, September.
  • Handle: RePEc:kap:jbuset:v:123:y:2014:i:4:p:591-619
    DOI: 10.1007/s10551-013-2012-8
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    References listed on IDEAS

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    1. Alan Greenspan, 2002. "Corporate governance," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(03), pages 3-6, October.
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    Cited by:

    1. Olczak, Wioleta, 2021. "The foreign corrupt practices act: How investors respond when violation severity and corresponding penalty (mis)match," Advances in accounting, Elsevier, vol. 54(C).
    2. Vijay S. Sampath & Noushi Rahman, 2019. "Bribery in MNEs: The Dynamics of Corruption Culture Distance and Organizational Distance to Core Values," Journal of Business Ethics, Springer, vol. 159(3), pages 817-835, October.
    3. Barkemeyer, Ralf & Preuss, Lutz & Ohana, Marc, 2018. "Developing country firms and the challenge of corruption: Do company commitments mirror the quality of national-level institutions?," Journal of Business Research, Elsevier, vol. 90(C), pages 26-39.
    4. Stelios Zyglidopoulos, 2021. "On Becoming and Being an Ethical Leader: A Platonic Interpretation," Journal of Business Ethics, Springer, vol. 173(1), pages 1-11, September.
    5. Chen Ma & Maoyong Cheng & Gerald J. Lobo, 2024. "How Do Tax Agents Respond to Anti-corruption Intensity?," Journal of Business Ethics, Springer, vol. 190(1), pages 137-164, February.
    6. Michael A. Sartor & Paul W. Beamish, 2020. "Private Sector Corruption, Public Sector Corruption and the Organizational Structure of Foreign Subsidiaries," Journal of Business Ethics, Springer, vol. 167(4), pages 725-744, December.
    7. Kouznetsov, Alex & Kim, Sarah & Wright, Chris, 2019. "An audit of received international business corruption literature for logic, consistency, completeness of coverage," Journal of International Management, Elsevier, vol. 25(4).
    8. David Mest & Richard J. Hunter Jr., 2015. "An Update on Major Enforcement Actions: Under The Accounting Provisions of the Foreign Corrupt Practices Act or FCPA," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 6(4), pages 176-186.

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