Photo: Seabamirum on flickr
No wonder businesses are willing to take the risk to bribe: if they don’t get caught, they stand to gain $11 in market value for every $1 they spend on bribing government officials for contracts.The bribery return on investment was calculated based on 166 cases of bribery studied by Yan Leung Cheung and P. Raghavendra Rau at Hong Kong Baptist University.
Bribery is common too. In a 2011 survey, 40 per cent of companies said they’d lost business to a bribing competitor, according to the study.
The researchers studied 166 cases of bribery at public companies around the world including Siemens, Mitsubishi, Nomura, Lockheed Martin and IBM. The average bribe size was $2.5 million.
The return on investment for bribes made in the US was $14 per dollar, higher than the international average of $11.
Companies bribe because it’s the only way to get a leg up on the competition, according to the study. Even getting caught can be cheaper than following extensive government procedures. This study raises questions about whether regulations currently in place keep businesses from making money.
NOW WATCH: Ideas videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.