Economic Issues 6 Chapter Economic Issues Issues Corruption Ethical Consumption Ethical Sourcing Microfinance Profit Supply Chain * * 1. Corruption Corruption is a fact of life, it includes dishonesty, exploitation, bribery, fraud etc. * Costs associate with corruption:Operational costs: Corruption adds additional expense throughout the corporate value chain and can lead to costly operational disruptions.Legal risks: Corporations face substantial consequences if they engage in corrupt business conduct, including large fines and disqualification from future government procurement. For instance, the German engineering conglomerate Siemens recently agreed to pay a record amount in fines to settle bribery cases against the companyCompetitive risks: Companies can also be at a competitive disadvantage if they refuse to pay bribes. Companies that adhere to strict principles against corruption can find themselves losing business to less ethical competitors who are willing to pay to influence the procurement process. * Corruption also exerts significant costs on: society (including reduced government services for the disadvantaged, constraints on foreign direct investment in high-corruption countries, and crime and instability resulting from decreased trust in government). Corporations can play a greater leadership role and improve results in the broader anti-corruption effort by treating corruption as a strategic CSR issue and seeking proactive solutions to social problems critical to the business. * 1. Corruption Companies can perform specific actions against corruption like: i. influencing legislation: Companies can force the government to introduce new anticorruption laws. ii. Organizing workshops: that include government, private sector, and civil society in an open discussion of anti-corruption reform. • iii. Building capacity. Companies can lend expertise and help build skills in financial management, technology, or ethics (e.g., transparent procurement practices) to public agencies, or NGOs supporting public agencies. * 1. Corruption 1. CorruptionHow legitimate is it for companies to operate with different standards in different countries and cultures? Corruption means different things to different people. Some people argue that political campaign contributions are just another form of corruption. What is your reaction to this statement? Why do you think corruption is more prevalent in some countries than others? What should a company do when operating in such an environment? Is it better to abide by local custom or try to impose standards and values from home? * * 2.Ethical consumptionBeing an ethical consumer means buying products which were ethically produced and/or which are not harmful to the environment and society. Products which fall into the ethical category include organic produce, fair trade goods, energy-efficient light bulbs, electricity from rene ...