One of the more vexing challenges faced by U.S. corporations doing business in certain emerging markets is the seeming pervasiveness of corruption by mid- to low-level government officials. U.S. managers frequently hear reports from their colleagues in these markets about demands from government officials for graft payments and about the competitive disadvantage encountered by companies playing by “U.S. rules” in markets where competitors are doing things the “local way.”
Compounding this problem is an intuitive sense shared by U.S. managers that not all graft payments are the same: A corrupt payment made to win a new contract “feels” much more illegal than a graft payment extorted by the local Customs officer who makes it clear that the U.S. company will be disfavored if it does not play ball.
