International Dimensions of Organizational Behavior 5th Edition by Nancy Adler ,Allison Gundersen

Exercise 11

In a certain Asian country the only way companies can get raw materials, parts, and finished products through local customs is to use a local freight-forwarding agent at the airport, seaport, or other point of entry. These agents charge forwarding fees that seem extremely high to many outsiders. The explanation, though hard to pin down, appears to be that the freight-forwarding agents use some of the money that companies pay them to make under-the-table payments to local customs officials. When agents make such payments, shipments appear to clear customs more quickly, thus helping to reduce the companies' cycle time.
Business has long been conducted in this way in this country, ostensibly because the government underpays local customs officials and offers them annual raises that do not keep pace with inflation. According to common knowledge, the government assumes that officials will receive part of their income from direct payments from companies and individuals needing customs assistance.
When Prestige, a North American-based global company, originally entered this country some years ago, it did not believe that the government allowed this practice, or that it even took place. However, in the intervening years, the political milieu changed, along with a certain loosening of discipline among civil servants, due in part to surging inflation. Recently, expatriates working for Prestige in this country have become increasingly convinced that the situation has become unacceptable, that such payments do not reflect good ethical practice, and that therefore they do not reflect good business practice.
What should Prestige's policy be toward such payments in this country? In all countries?