Ch 5 Case Study

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1. What does the case suggest is the value of ethical behavior? What did Siemens gain by introducing controls to minimize the likelihood of corruption? The case suggests that while it may be tempting in the short run to engage in unethical business practices, in the long run it is essentially bad business. Siemens was involved in a large amount of corruption and bribery all over the world. While this did increase their profits, it ultimately led to a public image, millions of dollars in fines, and even jail time for some employees. Siemens had to work hard to bounce back from such a setback. However, the hard work has paid off, now that Siemens has more control over their international subsidiaries and a ethical code of business.

2. Most countries lack adequate laws or enforcement to deal with bribery and other forms of corruption. Why is this? How do countries benefit from a strong rule of law that minimizes corruption? Many developing countries do not have the legislation or the infrastructure to combat corruption. This is most likely because they have an ineffective or even corrupt government. Companies that engage in unethical activities may be drawn towards countries with weak or compliant governments that can be controlled or bought. While a company may provide jobs for these developing countries, if there is a lack of competition, bribery, or other forms of corruption taking place, all of the benefit generally goes to the company and not the workers. Without the proper legal system to outlaw this kind of corporate behavior, citizens may find themselves stuck with unethical organizations.

3. Do you think Siemens was penalized enough for its corruption? Why or why not? What can governments or other organizations do to discourage firms and others from engaging in corrupt behavior? I do believe Siemens was adequately punished for its corruption. While some of the penalties may be considered modest, I do not believe it’s about giving the harshest...
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