Bribery doesn't pay

It shouldn't be surprising that corruption doesn't actually pay for companies -- yet many, do it, despite having ethical policies in place. Greasing the wheel is prevalent -- not just limited to countries where bureaucrats expect rewards to speed the flow of commerce -- not that dealing with regulatory requirements is actually a bad thing, from a public interest perspective, it might be just the right thing to have in place -- greasing the wheel is very much prevalent in developed economies. Just look at the ratio of lobbyists to elected politicians in Washington. Lobbyists provide grease, as a result, businesses get their way with less regulatory impediment.

Research however, shows that bribery simply doesn't make sense. Not only does it take a psychological toll on those involved, but it also costs companies more money -- more so in the long term -- and it breeds an environment where delays occur as bribery becomes the norm, and bureaucrats habitually give businesses the shakedown.

Knowing all that, you've got to wonder -- just why does it continue to happen?

in reference to:

"And is “grease” really all that efficient? In a paper published by the World Bank, Daniel Kaufmann and Shang-Jin Wei subjected the “efficient grease” hypothesis to careful scrutiny. They found that companies that pay bribes actually end up spending more time negotiating with bureaucrats. The prospect of a pay-off gives officials an incentive to haggle over regulations. The paper also found that borrowing is more expensive for corrupt companies, probably because of the regulatory flux."
- Schumpeter: The corruption eruption | The Economist (view on Google Sidewiki)

Additional resources:

• Transparency International's Global Corruption Report, and,
• Global Corruption Barometer