At what point should a company be required to wear an ankle bracelet?
It seems like Wal-Mart, the bad boy of Bentonville, keeps getting called out for some misdeed or another. This weekend, the New York Times reported that it had “found credible evidence that bribery played a persistent and significant role in Wal-Mart’s rapid growth in Mexico.” Moreover, when this pattern of bribery was uncovered by the company’s internal investigators, “top Wal-Mart executives focused more on damage control than on rooting out wrongdoing.”
Now, Peter Drucker did have some sympathy for companies that must navigate different and unfamiliar ethical terrain when they’re in other countries. For instance, in Japan, companies routinely pay retired government officials who have helped the business, and businesses that fail to do this are considered unethical. That creates an unfair headache for U.S. firms. “The American company in Japan that abides by a practice the Japanese consider the very essence of social responsibility is pilloried in the present discussion of business ethics as a horrible example of unethical practices,” Drucker observed in The Ecological Vision.
There’s also the question of what’s bribery and what’s extortion. Defenders of Wal-Mart might argue that the company didn’t create the corruption in Mexico as much as adapt to it—by recognizing that absent bribes nothing would get done, or at least not quickly. “No one ever has had a good word to say for extortion, or has advocated paying it,” Drucker pointed out. “But if you and I are found to have paid extortion money under threat of physical or material harm, we are not considered to have behaved immorally or illegally. The extortioner is both immoral and a criminal. If a business submits to extortion, however, current business ethics considers it to have acted unethically.”
In the end, however, there’s little doubt that Drucker would have disapproved of Wal-Mart’s alleged behavior—above all because of the disconnect between stated principles and actual conduct. “The final proof of the sincerity and seriousness of a management is uncompromising emphasis on integrity of character,” Drucker asserted. “This, above all, has to be symbolized in management’s people decisions.” And what of Wal-Mart’s people decisions? The Times reports that H. Lee Scott Jr., Wal-Mart’s former chief executive, “rebuked internal investigators for being overly aggressive,” and the supposed chief briber got a promotion.
What do you think: How much criticism does Wal-Mart deserve for its alleged behavior in Mexico?