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  • July 2008 (Revised June 2012)
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Corruption in Germany

By: Rawi E. Abdelal, Rafael Di Tella and Jonathan Schlefer
  • Format:Print
  • | Pages:24
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Abstract

Why do managers become corrupt? Does corruption ever pay? When do friendly relations cross into bribery? How can CEOs manage and prevent outbreaks of corruption? These and other questions are raised by three short case studies of corruption in Germany: at the global engineering firm Siemens, the automaker VW, and the chemical giant BASF. While German law not only permitted overseas bribery but even made it tax deductible until 1999, it was not welcomed in some nations where Siemens did business such as the United States-or in Germany after 2000-but old practices continued. Cooperative management-labor relations, often seen as key to the post-World War II German industrial powerhouse, went sour at VW, as a top manager secured key concessions by paying for union leaders' lavish foreign travel and visits to prostitutes. After vitamin prices sagged in the late 1980s, BASF and the Swiss chemical firm Hoffmann-La Roche plotted a global cartel that lasted a decade and raised the prices of many vitamins 50 percent or more. In the end, even after record criminal fines and jail time for some executives, some observers argued, such practices were likely to recur.

Keywords

Crime and Corruption; Law; Managerial Roles; Practice; Conflict of Interests; Germany

Citation

Abdelal, Rawi E., Rafael Di Tella, and Jonathan Schlefer. "Corruption in Germany." Harvard Business School Case 709-006, July 2008. (Revised June 2012.)
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About The Authors

Rawi E. Abdelal

Business, Government and the International Economy
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Rafael M. Di Tella

Business, Government and the International Economy
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Related Work

    • July 2008 (Revised June 2012)
    • Faculty Research

    Corruption in Germany

    By: Rawi E. Abdelal, Rafael Di Tella and Jonathan Schlefer
Related Work
  • Corruption in Germany By: Rawi E. Abdelal, Rafael Di Tella and Jonathan Schlefer
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