A firm's approach to corruption depends on the individual running it: Harvard professor Paul Healy

Corruption is a pet subject with Harvard Business School's Paul Healy. Incidentally, his fascination with the subject was the result of an innocuous query by a student. "One of my students, who was Greek, asked me if I was looking at Siemens when they were having problems in 2007- 2008. I hadn't; so I started reading about it and we started working together on it," says Healy.
The Siemens bribery allegation in Greece was that the company's executives paid bribes to Greek government officials during the 2004 Summer Olympics in Athens. A few years after he started researching it, Healy got a call from Siemens saying that they were interested in writing a case on what happened and giving him access to the company. "What I found fascinating was that I felt like I got some insights into what was going on because the challenge of corruption is that no one wants to speak about it and no one wants to admit that they pay bribes," says Healy.

That wasn't the case here though, and Siemens was willing to openly discuss things with Healy, now the James R Williston Professor and Associate Dean of Research at HBS.


Harvard Business School's Paul Healy

So what are the conditions in which people behave badly? All companies face pressure from the top to perform and sometimes they don't really care how they achieve it. "It was enough that they were getting results," says Healy who was in India recently for one of Harvard's executive education programmes.

For most MNCs, the only way they can maximise profitability is when they can increase the number of countries they are present in.

"The last ingredient (of corruption) is that you tend to rationalise your behaviour. In Germany interestingly there was a law where you can pay bribes outside the country." But it was illegal in the countries they were operating in. Healy says it is easy to rationalise that they are doing it for the good of the company. After the Greek scandal, Siemens completely changed the way they operated and ramped up their policies on what the expectations are from their executives. They also took measures like installing 24x7 helplines for employees who needed help while facing situations like these.

To study how much firms appear to be fighting corruption based on the public policies that they disclosed, Healy and his colleague did some research on the top 500 MNCs of the world. "If you are listed in the US, you tend to care more about these things," says Healy, whose research topics include corruption, governance, mergers and acquisitions and business ethics.

But how do the companies fare when they fight corruption? Healy is of the opinion that they will still grow, but may be not as fast. There is a price that they pay, but they are marginally more profitable in what they do.

Even the best managed companies have instances of fraud. The question is, what is the company's position on that? It is about how much they are willing to look the other way. Healy points out, "If you speak to people in Siemens, they will say that prior to 2008, the company's policy was to look away."

He makes a slight demarcation between corruption as an entity and corruption as an individual. "There will always be bad apples who pay bribes in a company. The company should say if I see you doing this, you are out." Jeff Bezos of Amazon had once given a clear warning to his employees. "He said, 'if I catch you doing illegal things, not only you will be fired, we will deliver the documentation and information to the police and will make sure you will go to the worst prison possible'. He is making it very clear to people where he stands," says Healy.

Most companies, he says, don't have a strong stance on corruption and are usually willing to look away. A lot depends on the people who run the company. The leaders set the tone of the company. Some people have got strong values on these, some people don't. "They should not implicitly turn a blind eye to it," he says.

Companies who don't take a hard stand, would argue that if you are in this business in a particular country you have to pay bribes. Part of the logic is that people in business want to get things done quickly. "I think if you want to do things in a clean way, it takes longer time."

McKinsey once wanted a license to work in Nigeria. "They made it clear that they were not going to pay. It took them three years to get the license. Many companies would say it is not worth it and would pay what it takes," says Healy.

It's important to remember that people are paying bribes for their individual benefits, and according to Healy the solution for corruption ultimately lies in personal values.