Incentives versus Bribery

AuthorFabian Teichmann
PositionAttorney-at-Law and Public Notary, Teichmann International (Schweiz) AG
Vol. 3 No. 3
January, 2018
Balkan Journal of Interdisciplinary Research
IIPCCL Publishing, Graz-Austria
ISSN 2410-759X
Acces online at
Incentives versus Bribery
Dr. Dr. Fabian Teichmann
Aorney-at-Law and Public Notary
Teichmann International (Schweiz) AG
This article reviews the existing literature on incentives and bribery. Particular aention is paid
to goal seing, performance management and the characteristics of (monetary) incentives. A
signicant research gap is identied and suggestions for further research are outlined.
Keywords: Bribery, Corruption, Compliance, Incentives.
Incentives versus Bribery
Corruption continues to pose a signicant obstacle to multinational corporations
in Eastern Europe. One way of combaing corruption would be to implement
anti-bribery incentives. It is clear, regarding the relationship between bribery and
incentives in multinational corporations, that, while it has been investigated with
respect to the public sector, more research needs to be done concerning the private
sector. Furthermore, the existing literature seems to focus on providing incentives for
the parties receiving bribes. Addressing this research gap, the present article focuses
on multinational corporations, and, therein, on the party potentially paying the bribe.
In the past, it has been investigated whether the level of openness to bribery of tax
collectors could be increased through incentive systems (Besley & McLaren, 1993: 137;
Mookherjee, 1998: 103). In other research, it has been analyzed whether graders in
Burkina Faso were more or less likely to accept bribes under bonus or malus systems
(Armantier & Boly, 2014: 13). However, the overwhelming majority of the literature
on wages and bribery in the public sector has focused on adequate wages in general
rather than on incentives (Goel & Rich., 1989: 269 f.; Di Tella & Schargrodsky, 2003:
269 f.; Becker & Stigler, 1974: 6; Van Rckeghem & Weder, 2001: 307).
It has been argued in prior research that alternative payment schemes for tax
inspectors might be useful in a corrupt environment (Besley & McLaren, 1993: 119
f.). In the study, both the problems of adverse selection and moral hazard were
investigated, and three wage regimes were identied. Under the rst, tax inspectors
were simply paid their reservation wage, which was equivalent to the salary they
could have earned elsewhere. In the second model, a wage that deters bribery would
be paid, while, in the third, a wage inferior to the reservation wage would be paid.
In the laer scenario, only the dishonest would be expected to become tax inspectors
(Besley & McLaren, 1993: 119). In conclusion, the study found that eciency wages
are only preferable if there is an evenly distributed tax burden and strong monitoring
as well as a corrupt pool of potential tax collectors (Besley & McLaren, 1993: 137).
However, the model developed by Besley and McLaren (1993) is rather limited in its
potential application to the phenomenon of bribery in multinational corporations.

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