[OUTLOOK]Business integrity key to survival

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[OUTLOOK]Business integrity key to survival

Major American corporations often use the phrases "nonnegotiable integrity" or "absolute integrity" as company credos. At first I thought this was done for commercial use, but companies like Hewlett-Packard and Johnson & Johnson actually try to practice such mottos. But because there appear to be situations where bribes might be necessary to do business, I asked certain American companies if they still abided by that principle of integrity even at the expense of losing orders?

The answer that I received was "yes," and the American corporate officials that I talked to added that there are two reasons why integrity is regarded as essential. One is that if a company tolerates corruption as practiced on the outside, it is hard to control corruption within. From time to time we hear on the news that there has been a slip-up in some bribery transaction. Since one doesn't obtain receipts when passing out bribes, it is difficult for a company to validate whether a bribe was properly transacted.

According to a company official, the other reason integrity is highly thought of is this: "It motivates the entire staff to meet the challenges to be competitive without resorting to bribery."

In short, integrity is connected with the competitive edge of a company, while corruption is directly linked to the destruction of a company's discipline.

Recently, scandals involving corruption have continuously erupted. If corruption and injustice are spreading in our society, as news reports say they have, not only will this bring down the efficiency of the entire national system, but it could lead to another financial crisis.

Looking back, our country has made a lot of improvements during the past 50 years.

In the 1960s, our nation's top priority was to resolve the hunger situation. In the '70s, people wanted nothing to do with government authority. It was only in the '80s that our country slowly opened itself to the world, and in the '90s the idea of democracy spread throughout the country. Such progress during the past 40 years has made Korea a respectable country in the global community. I think the next step for us is to construct a clean and transparent country free from corruption.

There has been some concern about the survival of our nation's economy if China's economy continues to expand at its current rate. Personally, I think "integrity and transparency" are the two major elements that distinguish Korea and China.

As I said, corruption only leads to inefficiency. Therefore, if Koreans would be more honest and if our society became more transparent, the value of our companies would go up and thus the treatment of our people would improve. The increase in value of Korean companies and the treatment of employees are also connected to an increase in income.

But to achieve such integrity and transparency is difficult, for nothing changes unless there is a modification in the system. A turnover of conscience alone would not make much difference.

I think there should be at least three changes in the system. The first change is to downsize political expenditures. It is estimated that a single legislator spends several billion won during an election campaign and much more during the four years he serves in office. If one takes the entire National Assembly, the expenses might reach trillions of won. If one adds on the expenditures of a presidential election, as well as those in local government elections, the expenses increase even more.

We must devise a plan to downsize the expenditures used in campaigns and other political purposes to half of what is spent today.

The second change in the system is to reduce government intervention in the market. The origin of the recent financial scandal involving technology start-ups was due to the system under which the government designated model start-ups. The government should have left the start-ups to expand on their own.

A lot of studies show that economic freedom and corruption are inversely proportional. A country that has little or no economic freedom has a corruption index that is high. If the government reduces its intervention in the market, the amount of corruption would decrease as well.

The last change that should take place is a firmer enforcement of the law. Those who do not abide by the law should definitely be punished for their crimes.

We must establish a system where those who have evaded taxation or have broken the law would suffer consequences. It would be difficult to create a "clean" nation with just slogans and mottos without modifying the system. Our country can become a leading nation if we reduce the corruption by half during the first 10 years of the 21st century.


The writer is a professor of business administration at Yonsei University.

by Jung Ku-hyun

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