A Bitter Pill? Institutional Corruption and the Challenge of Antibribery Compliance in the Pharmaceutical Sector

Abstract

We investigate why top-down directives aimed at eradicating corruption are ineffective at altering on-the-ground practices for organizations that have adopted industry-wide “gold standards” to prevent bribery and corruption. Using interview and focus group data collected from leading multinational pharmaceutical firms, we unearth antecedents contributing to organizations’ systemic failure to embed their anticorruption policies in business practice. We identify two tensions that contribute to this disconnect: a culture clash between global and local norms, especially in emerging markets and a similar disconnect between the compliance and commercial functions. To overcome these tensions, we suggest that organizations are likely to find it easier to implement a no gifts policy if they cease to rely on local agents embedded in local norms and that there needs to be strong evidence of board-level commitment to antibribery programs, innovative ways of incentivizing compliant behavior, and a fundamental rethinking of organizations’ business model and remuneration practices.