Requesting and pro­viding favors are a common part of doing busi­ness. But how are these ges­tures exe­cuted and what are their eth­ical impli­ca­tions in emerging mar­kets com­pared to devel­oped economies? Where does the line blur between favor and bribery?

These issues were the focus of the recent “Sym­po­sium on Man­aging Favors in a Global Economy” held at North­eastern Uni­ver­sity, drawing top inter­na­tional busi­ness scholars from seven U.S. states and three con­ti­nents. The event, orga­nized by pro­fes­sors Sheila Puffer and Daniel McCarthy, was spon­sored by the Col­lege of Busi­ness Administration’s Center for Emerging Mar­kets, and funded by the McKim-D’Amore Dis­tin­guished Pro­fes­sor­ship and the Cherry Family Senior Fellowship.

As emerging economies—particularly the so-​​called “BRIC” (Brazil, Russia, India and China) economies —become a more inte­gral part of global busi­ness, Puffer and McCarthy said now is the time for Western economies to ana­lyze busi­ness methods in these mar­kets, under­stand how inte­gral and com­mon­place favors are to doing busi­ness there, and make dis­tinc­tions about which prac­tices are ethical.

We think it is cru­cial to look at how people use their con­nec­tions and do favors for one another in these BRIC economies, because these are the growth engines of the global economy, and we can see com­pa­nies from devel­oped economies will be doing busi­ness with their coun­ter­parts in these [emerging] economies,” said Puffer, the Walsh Research Pro­fessor and Cherry Family Senior Fellow of Inter­na­tional Busi­ness at North­eastern. “We feel it is impor­tant to under­stand the use of favors and dif­fer­ences between favors and out­right bribery.”

Throughout the con­fer­ence, par­tic­i­pants com­pared the ben­e­fits and draw­backs of busi­ness favors, noting that favors are often used to facil­i­tate rou­tine busi­ness, yet may also impede busi­ness between devel­oped and emerging economies.

A major theme of the con­fer­ence, said McCarthy, is that whether favors are accepted and deemed eth­ical “is deeply based in the cul­ture.” Cer­tain actions that facil­i­tate busi­ness — in China or Russia, for example — are cul­tur­ally ingrained and there­fore accepted, but wouldn’t find the same accep­tance in Great Britain or the United States.

For instance, David Ahlstrom, a pro­fessor at the Chi­nese Uni­ver­sity of Hong Kong, out­lined one such cul­tural norm in China known as devel­oping “Guanxi”— “con­nec­tions” or “rela­tions” — and the roles gifts and favors play in forming these bonds and con­ducting business.

Within a con­text, it’s eth­ical. But when you move out­side of that con­text where you don’t have that same level of accep­tance, agree­ment and cul­tural back­ground, then it would not be eth­ical,” said McCarthy, the Alan S. McKim and Richard A. D’Amore Dis­tin­guished Pro­fessor of Global Man­age­ment and Inno­va­tion at Northeastern.

Founded in 2007, Northeastern’s Center for Emerging Mar­kets con­ducts research on how firms can leverage high-​​growth emerging mar­kets for global com­pet­i­tive advan­tage and dis­sem­i­nates best prac­tices for suc­cess in those economies. The center advances Northeastern’s aca­d­emic mis­sion as a global university.[media-credit id=25 align=“alignnone” width=“350”][/media-credit]