3 WAYS ENTREPRENEURS MANUFACTURE AND SUPPLY BRIBES

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‘Corruption is the misuse of position of authority for personal and private benefit’. It has various forms – bribery, favouritism, nepotism, fraud, embezzlement, extortion etc. Corruption has roots in the institutional and economic conditions of a nation. It is particularly rife in developing economies and it occurs because of factors such as a weak legal system, a predominant role of government in an economy, a get-rich-quick culture, rulers and officials who abuse their positions to self – enrich and endorsement of norms that legitimise such behaviours.

Typically, entrepreneurs in such environments cite corruption as a barrier to business investments. However, it is not in all cases that entrepreneurs are victims of corruption.
Bribery is a common form of corruption and manifests in two forms – demand-side and supply-side bribery. The former is the tacit use of intimidation and threats which results in the entrepreneur being a victim. The latter is a proactive and strategic choice purposively initiated by the entrepreneur to maximise self-interest.

Here are 3 behaviour characteristics that describe how entrepreneurs initiate bribery to maximise their business interest:

 

1. Choice
Founders/CEOs deliberately strategize for bribery opportunity. As architects of corruption, this strategy involves making use of connections with retired generals and politicians and giving of kickbacks to help facilitate access to government officials.

 

2. Use of Capture Strategies
This involves the deliberate and proactive supply of bribes to government officials to “capture” state budgets. The entrepreneurs devise a marketing plan which is focussed on producing and selling project ideas and finding homes for them in purposively selected Ministries, Departments and Agencies (MDA) and to influence the embedding of their projects in the MDAs budget.

 

3. Consent
This involves making voluntary bribe payments to officials in anticipation of future benefits.

 

Bribery

BRIBERY

 

Some entrepreneurs send envelopes (of money) to pay unsolicited bribes to officials to ensure favourable future procurement of government services e.g. an entrepreneur may send an envelope to a director of an inspectorate prior to an inspection.

 

These strategies are used by ‘capture entrepreneurs’, often elites who provide high-value products and services to government and who are familiar with the operations of the state allocative systems. They get rewarded with unmerited and lucrative contracts and force efficient and innovative firms to exit.

Read the full research paper here

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Categories: Entrepreneurship and Small Business

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