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Business News/ Education / News/  Global consequences of corruption

Global consequences of corruption

Small, incremental bribes can create a moral climate where large-scale corruption becomes pervasive

A file photo of Nitin Nohria. Photo: BloombergPremium
A file photo of Nitin Nohria. Photo: Bloomberg

Over many years as a professor at Harvard Business School, one of my favourite cases to teach has featured N.R. Narayana Murthy, the founder of Infosys Ltd.

The case describes an incident from the company’s earliest days, when Murthy and colleagues had set up their first office and needed a telephone line. At that time, it was almost impossible to get a telephone installed in India without paying a small bribe to the installer. Murthy, who despised corruption and believed in holding himself and his company to the highest ethical standards, refused to pay.

For Infosys employees, this created a giant dilemma. Without company telephones, they had to walk to nearby pay phones to place business calls, and they had limited ability to leave a phone number so contacts could call them back. From a financial standpoint, this made no sense: The bribe was a trivial amount of money; it was causing Infosys to miss sales, and it would clearly impede the growth of the business when the very survival of the business was uncertain.

When I teach this case, I let the class discuss the various angles for a time. We talk about the difference between pig-headed and pragmatic morality. Then I ask them to vote: How many would pay the bribe, and how many wouldn’t?

Over the years, about two-thirds of my students typically say they’d pay a bribe to get a phone line, and the other third wouldn’t. (I’ve always suspected the one-third who wouldn’t are influenced by how successful Infosys went on to become.) Murthy’s story, and the vote, always create a lively debate.

Indeed, after years of teaching business ethics, I’m convinced that no subject creates more debate and disagreement than the practice of paying small bribes. While many ethical questions are black-and-white, management thinkers, business students and many practitioners tend to see small bribes in shades of grey—as technical infractions some might compare to a speeding ticket. Indeed, some observers view bribery and corruption as a natural part of economic development; both practices were prevalent in the US in the early 20th century, as they are in many of today’s emerging economies, including India’s.

But one day, following a discussion of the Infosys case in class, an Indian student asked to speak to me privately. He visited my office, and he was nearly in tears.

The student explained that his father was a customs official in India. Among customs officers, taking bribes was commonplace; many customs employees use these payments to supplement their low pay. My student’s father, however, believed this practice was wrong, so he declined to take part, and he was intolerant of colleagues who solicited bribes. As a result, he was ostracized by colleagues and repeatedly transferred. Due to these forced relocations, my student had attended 18 different schools during his 16 years of schooling.

“The problem with small bribes is they leave no place for a good person—a person who rejects that practice—to hide," the student explained. It can be tempting to dismiss small bribes as trivial, as a cost of doing business or a practical necessity. My student saw it differently. “Be careful, Professor Nohria, when you make a distinction between small bribes and large bribes. When any bribe is tolerated, goodness has nowhere to take root."

This conversation has stayed with me for more than 15 years, and it’s changed the way I think about corruption. I’ve come to see that even small, incremental bribes can have a corrosive effect, and create a moral climate where large-scale corruption becomes not only tolerated, but pervasive.

In this way, I’ve come to see similarities between corruption and pollution. If someone throws a single empty soda bottle in a river, it may seem a trifling offence, because the river is so large and the soda bottle so small. Repeated exposure to small acts of pollution makes such behaviour commonplace and socially acceptable. In that moral climate, if you go downstream, you will likely find the entire river clogged by plastic bottles. That’s visible evidence of how the accumulation of small misdeeds can imperil the ability of a system to function—whether the system is a river or, writ large, an economy.

The lesson I learnt from my student that day is just as relevant today at a moment when India is experiencing a new-found hopefulness at a time of new leadership. As much faith as people want to put in leaders, it is important to realize how much of what we experience actually depends on individual actions and collective responsibility. India, or for that matter any other country, will surely be more prosperous if it can shake its long-standing habit of corruption. But instead of looking only for leadership from the top to bring about that change, we all need to be leaders ourselves, by rejecting the small acts of daily corruption that at times feel so necessary.

Nitin Nohria is dean of Harvard Business School.

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Published: 13 Jan 2015, 05:29 PM IST
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