Rebuilding Global Markets

· Shining A Light On Shadow Economies

· The Coming Sovereign Debt Crisis

· What Is Corruption? It's Not So Simple

· CQ: The Test Of Your Potential For Cross-Cultural Success

· How Deficit Hawks Could Derail The Recovery

·

Nepotism becomes corruption when elders don't exercise enough care in placing their relatives. Responsible nepotism, however, can be perfectly legitimate for a company in the right cultural setting, as Lee Kum Kee illustrates.

The same goes for cronyism. A purchasing agent in Taiwan may award a contract to an old friend rather than the lowest bidder because the friend can be trusted to deliver a good product. That kind of responsible cronyism (known as guanxi) has been a foundation of business in Taiwan for centuries. It becomes corrupt only when the agent favors friends simply because they are friends, rather than because they can be trusted to do the job right.

Many such cultural differences arise from the fact that Western cultures are built on rules and transparency, while most of the world's other cultures are relationship-based. Westerners trust rule-based institutions; others trust their friends and family far more and are therefore especially keen to cultivate strong relationships.

Gifts to officials can play an important role in relationship building. For example, Korean businessmen granted a meeting with an important official may bring an envelope full of cash as a token of gratitude. They may send the official a generous gift in observance of a wedding, or in condolence after a death in the family. Within limits, these gifts merely signal a commitment to the relationship. Personal connections of this kind have historically helped to align the powerful chaebol--family-owned firms--with government policies, and thus they have been a key to Korea's economic success.

Dugg on Forbes.com

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Дата добавления: 2015-10-26