The Organisational Approach to Exchanges of Gifts and Hospitality

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The Organisational Approach to

Exchanges of Gifts and Hospitality

A Reflection on how Organisations’ Approaches

to these Practices have Changed Following the

Introduction of the Bribery Act 2010

Peter Warcup

Advanced International Business and Management (Dual Award)

Student Number: 070174126 (Newcastle); 2261928 (Groningen)

Supervisors: Dr Tracy Scurry Dr Ad Visscher

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Abstract

Exchanges of gifts and hospitality have a number of uses including fulfilling social norms, demonstrating appreciation, and building trust and relationships; however gifts and hospitality can also be misused in an attempt to induce improper behaviour. The Bribery Act 2010 seeks to ban such illegitimate exchanges and in so doing redefines the law regarding the exchange of gifts and hospitality; inadequate guidance and a lack of case law mean that what the Act actually prohibits remains a grey area, which has yet to be substantially explored. In order to investigate the impact that the Bribery Act has had on organisations’ approaches to giving and receiving hospitality and their ability to conduct their business, this study takes an exploratory approach that considers 15 depth interviews from private and public sector respondents from a range of industries. The results of the interviews are then thematically analysed, concluding that gifts play relatively little role for organisations and are typically eschewed as they were associated with bribery, except when they are low value tokens of gratitude. In contrast, hospitality was shown to be appreciated for its ability to aid informal communication and to foster stronger relationships; additionally it allows the assessment of a counterpart’s trustworthiness. The introduction of the Act was found to have had relatively little impact on exchanges of gifts, as organisations typically avoided it to begin with; hospitality was inhibited to a slightly larger degree, but respondents were adamant it had no impact on their ability to build relationships and trust. The reasons for the muted impact of the Bribery Act included changes to societal norms and financial pressures pre-dating the Act; the public sector also had to bow down to the more stringent requirements imposed by public scrutiny. Organisations’ perception of their risk exposure, regarding gifts and hospitality, was also shown to determine the level of due diligence they put in place.

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List of Tables and Figures

Figures

Figure 1: The link between exchanges of gifts and hospitality with relationships and

trust………..….15

Figure 2: The external environment’s effect of individuals’ ethical beliefs……….18

Tables

Table 1: Table of respondents……….…...27

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5.2 Pre-existing Influences on Organisations’ Approaches to Exchanges of Gifts and Hospitality

which Muted the Impact of the Bribery Act ... 48

5.2.1 The Pre-existing Factors for the Private Sector ... 48

5.2.2 The Pre-existing Factors for the Public Sector ... 50

5.2.3 Corporate and Industry Cultures ... 51

5.3 ‘Adequate Procedures’ ... 52

5.3.1 ‘Adequate Procedures’ and the Impact of the Bribery Act ... 53

5.3.2 Effective Procedures ... 56

6. Conclusion ... 58

6.1 Limitations and Further Study ... 60

References ... 62

Appendices ... 69

Appendix 1: Participant Consent Form ... 69

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Acknowledgements

I would like to take this opportunity to thank all of those people who have helped and supported me during my study, but particularly whilst I have been undertaking this thesis.

I would like to particularly thank my supervisors, Dr Tracy Scurry and Dr Ad Visscher for the generous support they have offered, and for making this thesis possible by consistently providing valuable advice and suggestions.

Without the goodwill of the respondents who took time out of their day to help me with my research, it would not have been possible to conduct this study, so I offer my thanks to them also.

Finally, I would also like to say thank you to my family and friends and to applaud them for bearing with my frustrations for as long as they have.

Peter Warcup

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1. Introduction

Exchanges in the form of gifts and hospitality are a near universal phenomenon, albeit one that features more strongly in the culture of some locales than others. Such exchanges play important social functions; they may constitute greetings, be given in thanks or be given in demonstration of appreciation and respect of one’s counterpart. Whilst they may not always be of significant economic value, it is the social value of the gesture that often matters most and which can convey a number of benefits to both giver and receiver, including building and strengthening relationships and developing trust. However an unfortunate bedfellow of these exchanges is bribery, that is to say where an exchange is intended to induce improper behaviour from the recipient (SFO, 2012a). This being the case, exchanges of gifts and hospitality are considered to exist in something of a legally grey area. The introduction of the Bribery Act 2010 in July 2011 led to the redefinition of the legality of exchanges of gifts and hospitality to reflect these concerns.

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prescribed boundaries. The text of the Bribery Act and the guidance issued by the Ministry of Justice (MOJ, 2012) and the Crown Prosecution Service (2011) have failed to provide adequate guidance on what precisely is prohibited, citing only proportionality, reasonableness and that exchanges must be made in good faith. This means that until a body of case law emerges, organisations have no reference point with which to assess the appropriateness and suitable proportionality of hospitality and gifts; this has led to widespread confusion amongst businesspersons as to what exactly is forbidden (Bean and MacGuidwin, 2012). Consequently, individuals are required to make a subjective assessment of this grey area, to establish what they believe to be prohibited by the Act.

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accepted (Kuchler, 2012). This risk of public scrutiny may not just exist in the public sector, as businesses are thought to increasingly be under scrutiny from social media (Croft, 2012). As such, organisations that are shown to engage in exchanges would be vulnerable to the interpretation that they have done something wrong under the Act, so may seek to alter their approach to gifts and hospitality.

1.1 Problem Formulation

As this is a new piece of legislation, its effects are not yet properly understood and have not been subject to empirical academic studies in any significant way, despite the fact that the Bribery Act may have a major impact on the way organisations approach gifts and hospitality. This study thus seeks to explore how the Act is interpreted and whether the prohibitions it has introduced have had implications for organisations’ ability to reap the honest benefits of exchanges of gifts and hospitality, such as relationship building and image promotion, which are permitted (MOJ, 2012). These issues have led to the research question underpinning this study:

“What are the reasons behind exchanges in gifts and hospitality and how important are these practices for organisations across sectors and industries, and how has recent legislation impacted upon their approach to, or views of these practices in the UK and abroad?”

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2. Literature Review

2.1 The Bribery Act

Bribery, where ‘one person influences the behaviour of another through financial payment’ is the subject of considerable and sustained academic focus (Ryznar and Korkor, 2011: 415). Although it is roundly understood to be a deleterious and unethical practice across the globe, it was up until recently permitted by many governments for companies to deduct bribes from their tax bill, as it was seen as a legitimate, unavoidable and even necessary business practice (Sanyal, 2005). This was still commonly the case until the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Organisation for Economic Co-operation and Development 1997, 2011) encouraged signatories to desist from permitting the tax deductibility of bribes. In order to comply with its obligation as a state party to the convention, the UK government introduced the Bribery Act 2010, which came into force in July 2011.

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organisations fail to do this, then they are liable for prosecution (Bribery Act, 2010). The Bribery Act is not limited to businesses, but applies across the full gamut of sectors and industries. Thus, the Bribery Act is arguably one of the most stringent systems in the world, alongside the US’ Foreign Corrupt Practices Act (USDJ, 2012); however the new act goes beyond even this in its scope, sentencing and its potential for leading to prosecution. Moreover, the fragmentary and ineffective laws preceding the Act in the UK mean that the it lacks any real precedent and organisations have not had to deal with such rigorous requirements until now. Consequently, the impact this has on organisations and how they conduct their day to day affairs remains to be properly investigated and provides a fertile gap in the research, which this study aims to examine.

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under the Act. It is also interesting to note that the Ministry of Justice has also failed to clarify what is sufficient and appropriate with regards to the ‘adequate procedures’ required by organisations for the prevention of bribery. Some of the procedures suggested in the literature are considered in section 2.6 and the approaches actually taken by organisations are explored in this study and are presented in 5.3.

In theory organisations may benefit from the Act, as they are not engaging in costly exchanges of gifts that may also be ethically and legally unsound. Whilst the positive outcomes of this legislation have been frequently argued by the Government (see for example Tyler, 2011), the potentially negative consequences for businesses must also be identified. For instance, without cross-border consensus, anti-corruption efforts are not likely to be effective and businesses operating out of the UK will continue to face the same issues in the global business environment, whilst having their actions limited by the Act. What is certain is that there are some limitations on what a firm may or may not do regarding exchanges of gifts and hospitality. It is for this reason that the importance of gift-giving and hospitality to organisations is assessed, along with their accounts of how their organisation has benefited or suffered as a consequence of the Act’s prohibitions.

2.2 The Role of Gift-Giving and Hospitality

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Steidlemeier (1999) likewise indicate that reciprocity is a universal norm, common to all societies, which serves to reinforce relationships. Gift-giving aids social cohesion universally, although this holds relatively more significance in some locales than others. High-context cultures such as those in Asia, the Mediterranean and the Arabic region tend to see gift-giving in business as essential due to the greater importance of relationships, which are typically longer-term and favour the closeness of kinship contacts. Conversely, low-context cultures, which tend to be more individualistic, tend to view gift-giving as a less essential practice, but one that is nonetheless highly desirable for business (Arunthanes et al, 1994). For example, UK companies that engage in social systems underpinned by gift-giving and hospitality can reap advantages including stronger interpersonal relationships and the heuristics such relationships bring, leading to lower transaction costs (Millington et al, 2005). In light of the prohibitions introduced by the Bribery Act the utility of hospitality and gift-giving to UK organisations’ day-to-day affairs is investigated in this study, with an eye on how this varies across cultures. Some of the benefits associated with gifts noted in the extant literature are examined presently.

2.3 How Exchanges of Gifts and Hospitality Promote Relationship Building and Trust

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trust will be diminished. Reciprocity strengthens the relationship by keeping its momentum going in order to make it increasingly meaningful, as well as providing a stabilising influence and making interactions more predictable. Having a close working relationship also has the obvious advantages of ensuring smooth transactions and responsiveness to the needs of the other party; hospitality and gifts clearly expedite this process by allowing actors to get to know one another on both an organisational and individual level and by making them aware of one another’s competencies.

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and hospitality can therefore be seen as heuristics which support relationship building; this has a number of benefits, not least of which is trust building. This dynamic is depicted in figure 1 below.

Figure 1.

2.4 Gift-Giving and Hospitality across Cultures

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obligation on the recipient, it may be perceived that this is done with the intention of inducing business or improper behaviour. How an exchange is perceived under UK standards is also dependent on when it takes place. In Asian countries, for example, gifts tend to pre-date business transactions as part of satisfying social mores, whereas in the West they are typically given after the transaction has taken place to signal gratitude. Those in the West may thus view gifts that pre-date the commencement of a business relationship as inappropriate, as it is thought to signal an expectation that they should reciprocate through business (D’Souza, 2003). More importantly, it is not always possible for businesspersons to tell if a gift is intended as a form of inducement. Respondents in Pedigo and Marshall’s (2009) study, indicate that when conducting business abroad it is often unclear if gift-giving constitutes part of the culture and is thus necessary for relationship building, or whether it is intended to influence and to establish an obligation. So, where exchanges of gifts and hospitality form a large part of how a culture’s social relationships operate, or where these practices are conducted in a manner different to in the UK, UK organisations may experience some difficulties in justifying the ethicality of their involvement in these practices based upon domestic legal standards. It may, however, be difficult for organisations to operate in cultures where there is an embedded expectation of gift-giving without engaging in these practices.

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2.5 The Reasons for Organisations Complying with the Bribery Act

The UK’s Serious Fraud Office (SFO) is the main body responsible for tackling and investigating fraud, corruption and bribery, and as such is responsible for enforcing the Bribery Act. In reality the SFO acknowledges that it is impractical to pursue smaller cases (SFO, 2012b), and due to the financial crisis, funds in the UK and abroad for combating bribery may be less than abundant (Ernst and Young, 2010). Crucially, however the enforcement of the law does not require prosecution ex post facto, as it may deter deviance ex

ante due to the perceived risk of prosecution. This may presently be the case as the SFO has

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what actually constitutes ‘adequate procedures’ (Bean and MacGuidwin, 2012). The lack of legal clarity on what precisely is prohibited means that organisations may perceive the threat of prosecution to be greater than it is with regard to their involvement in gift-giving and hospitality, so reduce their involvement in it to a minimum or zero. Organisations may also be unsure if they have in place ‘adequate procedures’, so take an overly cautious approach to instituting such measures. Conversely, the paucity of case law and the apparent lack of clarity in the law its guidance may result in complacency amongst organisations when it comes to putting in place procedures for the prevention of bribery. Should organisations not have in place the appropriate procedure they expose themselves to unlimited fines, extensive prison sentences and disbarment from contracts (Bribery Act, 2010).

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20 2.6 ‘Adequate Procedures’

The Bribery Act requires that firms have in place measures for the prevention of the organisation’s involvement in bribery, which by the Act’s definition covers gift-giving and hospitality. It is noted that such measures may act as a ‘shield’ against prosecution (Ryznar and Korkor, 2011: 444). This may be significant for firms, as it allows them to protect themselves against any excesses in these practices, which they or related third-parties may commit. As different organisation’s involvement in different sectors and industries may determine the degree to which they engage in hospitality and gift-giving and the degree to which they are exposed to potential excesses and breaches of the law, they require procedures which are commensurate to their particular level of risk (The Law Society, 2011). It will thus be useful to gain a cross-sector perspective to highlight any perceived differences in exposure to these risks and to assess if this is linked to procedures of different strength.

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3. Research objectives

This study aims to elucidate the purposes of exchanges of gifts and hospitality, their importance to organisations and how their approach towards these practices has been affected by the introduction of the Bribery Act, including what procedures firms are putting in place to protect themselves legally. With the evidence from the literature review in mind, this paper will investigate the following research objectives:

1. In what ways do organisations perceive that exchanges of gifts and hospitality have been

influenced by the Bribery Act?

2. Do these perceptions vary according to location, sector, size, or the nature of their

activities?

3. In what way do organisations perceive the ‘adequate procedures’ element of the Bribery

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4. Methodology

4.1 Research Design

It is the aim of this study to explore the practices of gift-giving and hospitality between organisations and to understand how recent legislation has affected these practices. In order to investigate this, a qualitative approach has been taken, using a series of 15 semi-structured interviews with a range of individuals from a broad selection of industries in the private and public sectors. As this is an exploratory study, this provides a holistic overview of these practices and any changes they have undergone. The study was approached inductively using an open research question and working from the empirical reality presented by the data to establish theoretically important findings.

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that is unavailable from one-dimensional statistical surveying. A qualitative methodology also allows the building of solid theoretical foundations, one which will adequately reflect the imperfections and contradiction of reality-that is to say the differing approaches of organisations generally and across cultures, sectors and industries.

The use of quantitative measures has the advantage of being able to assess correlations and offer statistical renderings of data, but it is beset by the pitfall of ‘measurement by fiat’ that leads to the narrowing of the investigative focus (Cicourel, 1964). Quantitative research’s positivist position promotes the natural science approach, which focuses on precision and the quantifiable (Bryman and Bell, 2011). The interpretivist perspective, however, suggests that this is inappropriate for the social world, as precision in measurement is often chimerical and such an approach in reality lacks suitable measures to capture the multifaceted dynamics and complexity of social reality. Moreover, the findings of each of the interviews conducted in this study can only be interpreted in light of the social context from which the data was collected (Whyte, 1953). There is however the need to balance between Geertz’s (1973) advocacy of ‘thick’ detailed description of social dynamics and how they relate to the context and Lofland and Lofland’s (2006) warning against immersing the analysis in a cloud of detail (Bryman and Bell, 2011). Creating a judicious balance between these dichotomous aims is essential, as without a clearly articulated and meaningful understanding of the contexts being investigated, the data’s true meaning will be lost. The methodology outlined presently is thought to strike such a balance.

4.2 Sampling Strategy

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their perceptions and experiences are what influence the organisations themselves. By considering this level of analysis, the study will be able to capture the perspectives of those involved in gift-giving and hospitality practices, in addition to how this impacts upon their organisation. Individuals and organisations as both the giver and as the receiver of gifts and hospitality are considered, as their experiences of either end of such exchanges offer valuable information.

A range of perspectives that includes different sectors and industries is needed to provide appropriate breadth to the data, as no one perceptible sample is evident. Where no clearly identifiable sample is available for the population, snowball sampling, a form of purposive (i.e. nonprobabilistic) sampling, offers an option to gain access to a sampling frame, albeit not a representative one (Bryman and Bell, 2011). So, in this study where there is no clearly defined population and where no obvious or previously developed sampling frame exists, snowball sampling is an appropriate and accepted heuristic to achieve a sampling frame. Snowballing further allows the researcher to take advantage of their bridging ties with a number of groups, providing access to otherwise inaccessible respondents.

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experiences of it. This attitude was accompanied by a general reticence when talking about this legally grey area, which may explain why those who were contacted to take part in this study were ultimately reluctant to do so, even when they had agreed to participate when initially asked. In addition, the actors who were targeted were necessarily in senior positions, as this was the level of seniority at which they would actually have experience of the practices in question; consequently potential respondents were often very busy and were therefore disinclined to give up their time to participate in the study. Furthermore, snowball sampling demonstrated less efficiency than expected, so was unable to produce as many additional potential respondents as anticipated. Table 1 also highlights the organisations that were contacted (25), in addition to noting whether they agreed to an interview (21) or actually participated (15). Organisation (Area of Operation) Role Agreed to Interview Actually Participated

Public Sector Org. 1 (UK) Senior Manager   Public Sector Org. 2 (UK) Relationship

Manager

 

Legal Firm (UK-Channel Islands)

Lawyer  

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Extracto Industries 2 (Korea) Legal Representative

Lawyerco 1 (UK) Lawyer   Lawyerco 2 (UK) Partner

IT Firm (Middle-East) Regional Director  Auto Manufacturer

(Japan/Malaysia)

Senior Executive 

Buildingco (UK) Managing Director   Investors in People

(UK-International)

International Contracts Manager

 

Federation of Small Business (UK)

FSB Representative  Confederation of British

Industry (UK)

Regional Director  Insuranceco (UK-Africa) Legal Representative  North-East Fraud Forum 1

(UK)

Academic/Consultant 

Healthcare Org. Fraud Investigator   Agrico Exporter

(UK-International)

Board Member   Auto Retailer/Race Course

(UK)

Managing

Director/Chairman

 

Pharmaco (UK-International) Relationships Manager

 

Higher Education Institute 1 (UK-International)

International Relations Manager

 

Higher Education Institute 2/ Public Sector Org. (UK-International)

Board Member/ Assistant Chief Exec.

 

Higher Education Institute 3 (UK-International)

Business Manager UK Trade and Investment

(UK-International)

International Trade Advisor

Auditco (UK) Auditor   Financial Recruitmentco (UK) Recruitment Manager   Total: 25 21 15 Table 1.

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supposedly representative sample, as it does not necessarily exist and is certainly not identifiable. Moreover the loss of generalisability is made up for by depth and richness of data generated. So, ultimately it is deemed that this is an acceptable sample size given the constraints on the availability of respondents noted above and because the nature of this study is to highlight pertinent information and to lay the foundations for more focused study.

4.3 Data Collection

Observational techniques were thought inappropriate due to the sporadic nature of gift-giving and the time and resource limitations of this study. Equally, focus groups are likely to be ineffective as they do not encourage full disclosure when there is the prospect that actions being recounted could involve the subversion of social norms, as participants are likely to wish to portray themselves in a positive light. Interviews, however, enable comparison between contexts, but also between respondents, which highlights contradictions and points of interest and allows the researcher to build up a more complete picture of what is occurring.

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when using quantitative methods, thus encouraging the extraction of latent themes that would otherwise not be apparent to the researcher. This freedom enables respondents to not only influence the agenda, but to create a spontaneous narrative stream which can be particularly revealing, as it highlights what is felt to be most noteworthy (Bryman and Bell, 2011). The lack of a formal structure allows the interviewer to refrain from interrupting this spontaneity and to deal with bypassed topics later, or add new questions based upon emerging data, meaning that it is more likely that the researcher will gain an insight into the true beliefs of the respondent.

Face-to-face interviews were aimed for where possible, as it is believed they offer an opportunity for greater insight due to ability to observe body language and more easily establish a rapport, as greater proximity allows investigator to gain a clearer understanding of the world-view of participants, whereas more abstract methods increasingly lose the ability to do this. However, telephone or Skype interviews offered cost and convenience benefits with regards to respondents who were not located in the country or locality. Given that this was the case with approximately half of the study’s respondents, it was deemed satisfactory that in some cases losing the ability to read physical signals was a necessary trade-off.

4.4 Researcher Influence

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importance of the relationship between interviewer and interviewee must be acknowledged, as it is reflective of the nature of the study’s research design, which can be adjusted in response to the emergence of new data.

Likewise, it is important to note that, as a researcher, my own biases and assumptions are shaped by my position within the UK’s cultural sphere, whose norms and ethics have become embedded in my own world-view. However, it is hoped that by recognising the relativist moral position and by having an awareness of the pitfalls of an imperialistic moral position, that researcher bias may be limited. Moreover, the study’s approach aims to be morally detached, refraining from making normative declarations by merely presenting factual data. Nonetheless, it must be acknowledged that to remove one’s own biases is likely impossible. Hence, objectivity lies at the heart of this study’s approach, but not necessarily in its outcome.

4.5 Ethics

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as appendix 1. Confidentiality is here understood to involve reassuring respondents that they will not be identified or made identifiable by their responses (Kvale and Brinkmann, 2009). Any instance in the data where respondents’ identity was evident was resolved. This was important when some of what was disclosed could be sensitive in nature. Moreover, participation, in some cases, may have only been forthcoming because the study was confidential and the promise of anonymity may have helped promote accurate disclosure.

4.6 Topic Guide

A topic guide is less structured than an interview schedule; it is more a list of prompts on topics to be addressed. Recommendations for constructing the topic guide include grouping prompts on a thematic basis; avoiding narrow or closed questions; using clear language to aid comprehension and avoiding leading questions (Kvale and Brinkmann, 2009; Bryman and Bell, 2011). Kvale and Brinkmann (2009) further recommend that the topic guide be ordered by topic, but ordering need not strictly be adhered to, given semi-structured nature of interview. As responses may well differ, the topic guide will be ordered by topic, but will have sub-questions should the interview become stilted. A copy of the topic guide is included as appendix 2.

4.7 Interview Technique

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been developed, which encouraged the respondent to offer their personal opinion. In addition, Kvale and Brinkmann’s (2009) recommendation was followed that, following each interview a review should be conducted by the researcher in order to address the positives and negatives of the interview, remedying any areas of concern and working towards improving future data collection.

4.8 Recording and Transcribing

Interviews were recorded using a digital recorder in the majority of cases, including for Skype and telephone interview. Where this was not possible detailed notes were instead made. This ensured accuracy and thoroughness, as well as reducing the possibility of interviewer bias (Bryman and Bell, 2011). The use of a digital recorder also allowed me to return to issues and listen to them again.

All transcripts were written-up verbatim by the researcher immediately following interviews, or as soon as was practically possible, to guarantee accuracy. It was also of great importance to reflect upon live interviews and to note down any incidents as they occurred, such as facial expressions or other body language, as this may help to contextualise the meaning of what was said (Kvale and Brinkmann, 2009). So, at this stage, remarks on intonation and so forth were added to the transcripts based upon notes made during interviews.

4.9 Coding

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Following the recommendation of Bryman and Bell (2011), transcripts were coded soon after data collection while the interview was still fresh in my mind and my understanding of it still clear. Coding as part of the broader analytic scheme is noted in the next section, however the basic questions which were considered when first coding can be found in table 2 (below), which come from Lofland and Lofland (2006).

When initially coding the following questions should be kept in mind (Lofland and Lofland, 2006).

-‘What is it? What does it represent?’ -‘What is it an example of?’

-‘What is going on?’ -‘What are people doing?’

Table 2.

4.10 Method of Analysis

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blown theory development. Equally thematic analysis may be used in either a deductive (top down) or an inductive (bottom up) manner (Braun and Clarke, 2006). As noted previously this study takes the latter approach in line with its exploratory nature. Thematic analysis further advocates the investigation of both semantic and latent (underlying) themes that exist, in order to promote interpretation rather than mere surface description. Braun and Clarke (2006) further note that research questions, the questions posed to respondents, codes and themes should not be confused as part of continuum, but should be considered independently so as to not limit or skew the final interpretation of the data. Other dangers to using thematic analysis include a lack of rigour in the analysis, and analyses which do not make sense, or are unconvincing. Any conclusions which are made must also be supported by data which truly reflects them. Most importantly, the purpose of the study must be clearly communicated and the themes must each revolve around this, adding significant meaning and understanding to this research area. By following the below recommendations, this study has successfully avoided these pitfalls.

Braun and Clarke’s (2006) six-stage process for thematic analysis:

1. Becoming familiar with the data. This enables the establishment of patterns and aides

early analysis. By being familiar with the whole data set, an overarching and rounded perspective can be achieved more easily, meaning codes and themes do not overlap or lack coherency.

2. Generating preliminary codes. This requires a systematic attitude, which gives value to

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in order to see how each of them combines to create meaning. Codes may be principal themes, may form sub-themes, or may even be rejected.

4. Reassessing themes. This stage involves an assessment of the internal coherence of each

of the themes; do they each make sense? It also requires an assessment of the distinctiveness of each of the themes in order to ensure clarity and validity. Bryman and Bell (2011) also recommend the periodic reassessment of categorisations in light of emerging data.

5. Refining and naming themes. Themes must not be too complex and must not attempt to

cover too many issues, if this proves to be the case, then they should be disaggregated into separate themes. At this point, a detailed analysis of each theme must be created to provide a narrative that accurately and sufficiently explains the theme. The identification of sub-themes is also helpful to add clarity and to aid the structuring of the analytical narrative.

6. Final analysis and production of study. This must satisfy the reader that the subject

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5. Findings and Analysis

The themes, which emerged from the 15 depth interviews conducted, are presented and interpreted in this section. They differ slightly from the research objectives presented in section 3, in that they reflect the emergent data. The first theme covers the main research objectives, considering what role gifts and hospitality play for organisations; gifts and hospitality were shown to be used and understood differently, so that is examined here. Interviewees noted a lack of clarity in what the Act prohibits, made worse by a dearth of case law; consequently how respondents judged what practices were acceptable is examined. This theme then considers the impact that the introduction of the Bribery Act has had upon gift-giving and hospitality and how this differs between sectors, both in the UK and when they are operating abroad. The second theme deals with how cultural changes and the on-going financial crisis have led to a reduction in gift-giving and hospitality, which has lessened the impact of the Bribery Act. The reasons for this differ between the private and public sector, so the sector-specific pressures for this are considered. The third theme looks at what due diligence, or ‘adequate procedures’, have been put in place by organisations and considers a number of factors that may influence this, in addition to the effect the Bribery Act has had on the procedures instituted.

5.1 The Use of Gift-Giving and Hospitality and the Impact of the Bribery

Act

5.1.1 Organisations’ Approaches to and Reasons for Engaging in Exchanges of Gifts

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meaningful or tangible benefits to organisations; moreover, the use of reciprocal gift-giving was thought more likely to undermine relationships than to build them, as there was the fear that business could become contingent on this. Respondents reported that when gifts of any value were received, this caused them to shy away from doing business with these people, as they interpreted the exchange as an attempt at inducement. Indeed, several respondents made an effort to distance themselves from any involvement with gifts, and in so doing highlighted their discomfort with them. Furthermore, it was felt giving or receiving gifts, if anything, proved to be more of an administrative headache than a tool to aid business, so it was simply easier not to engage in it.

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38 5.1.2 Organisations’ Approaches to and Reasons for Engaging in Hospitality

Amongst private sector respondents, hospitality was viewed as a way of giving or getting something back as a show of appreciation, suggesting that it is a ‘jolly for those people that you are taking along’. These same respondents also saw hospitality as being useful for brand development, as by, for example, hiring a box at the races, a business is signalling to customers and potential partners that it is doing well. Their ability to pay large sums of money for such a luxury indicates that they must therefore be a ‘big player’ in the market. This attitude is in contrast to the predominant view amongst some public sector interviewees that hospitality was a ‘necessary evil’, which they had to contend with; an opinion premised on the fact that when they were engaging in hospitality, it was typically with those people who they were contracting, whose intention was to secure further business. Conversely, it was believed amongst both private and public sector respondents, that hospitality that was incidental to the daily routine rather than purposefully organised, was not only legitimate, but important to do out of courtesy; ‘You’ve got people coming, let’s say to visit from half way round the world. …. giving them something to eat on one level is just polite’.

The informal atmosphere provided by hospitality was also shown to help to remove obstacles to business; though this was more strongly expressed by those in the private sector. An interviewee noted that following a meeting;

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was only four of us there, there was only two from my company and two from my customer’s company. So it wasn’t that there was a big, unusual dynamic with lots of different people competing in the room.

Certain things clearly need to be addressed in the meeting room, however in the less formal setting of the café, it was easier to get down to discussing what both parties were really after, without having to follow the customs of the meeting room and without an oppositional dynamic between the two groups hindering discussion. Likewise, business may not be conducted at informal events such as hospitality, but it may come afterwards as a consequence of getting to know somebody and their organisation better and thus developing greater trust.

Indeed, hospitality was widely acknowledged to have a major role in developing relationships, as it helps to dissolve personal barriers and to aid flows of communication between people. For example, when two very different kinds of people come together for a project, meeting face-to-face in an informal setting was said to enable them to find what was termed ‘commonality’; shared attributes and interests that enable them to establish a connection. In addition to this, meeting face-to-face allows individuals to get to know one another and to assess each other’s trustworthiness-something that is noted to be necessary prior to the commencement of a business relationship given that this person may be dealing with considerable sums of the organisation’s money.

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else is involved…to see who you’re mixing with’. The respondents noted that they used such opportunities to gather this sort of soft information to gauge their counterpart’s trustworthiness, as this would provide an indication of whether or not ‘they are going to do a certain deal with you and then walk away’. The acid test was whether they are respected by your industry peers and whether you would be happy to have them home sitting around your dinner table. These were also shown to be socially limited industries that had a clear in/out group distinction that focused on their core members, but made use of hospitality events to construct bridging ties with other groups, who may be from outside of their locale. It is interesting to note that the social focus of these industries (agriculture and auto showrooms) as well as the respondents’ use of bridging ties and informal information gathering about potential partners, is reminiscent of the characteristics of guanxi social networks (Zhou et al, 2007). The social and spatial closeness of these particular organisations may well have led to them following a similar approach to guanxi.

More broadly, relationships were shown to be subject to a law of movement, in that it was believed it was always necessary to have momentum in the relationship, lest it go stale. By showing appreciation for something and reciprocating through hospitality, it was felt that the relationship would move forwards. However, as hospitality tends only to be occasional, in between meetings;

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Both elements help to propel the relationship forwards, but it is hospitality that moves the relationship to the next level, from an organisational, to a personal interaction. One respondent noted;

I think it would be very difficult to build relationships between organisations without that personal interaction, and I think you can only get that, to a certain degree by hospitality… you’re always going to have a relationship, but… it’s not going to be a very strong relationship. I would imagine there are other ways [to build relationships], but I would say they are inferior.

This perspective is further demonstrated in other respondents’ language, when they refer not simply to hospitality’s ability to build or maintain relationships, but to its function in ‘sealing’ or ‘cementing’ relationships.

There are bidirectional benefits to having strong, long-term relationships, with a client for instance, as both parties receive benefits. The first receives business because the other party is aware of their abilities and trustworthiness, whilst the second is rewarded with reliability and the possibility of obtaining more favourable and suitable service. The downside to having a strong, on-going interpersonal relationship is that business decisions may not be made for the correct reasons, as sentimentality may inhibit judgement; this was a more prescient concern for public sector respondents, as they were using public funds for contracts and as such were subject to public scrutiny.

5.1.3 How Respondents Understood the Prohibitions of the Bribery Act

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regarding the giving and receiving of hospitality and gifts. Moreover, it was also felt that there was not enough case law or test cases that highlighted what specifically is prohibited under the Act, leading one respondent to comment ‘every time somebody says so can I do X or can I do Y, then we struggle to answer’, whilst another commented that it is ‘a very, very grey area, and until stuff comes to legislation, none of us will really know the full impact of it’. This has led to a feeling that organisations must simply do their best to comply, but that employees were having to tip-toe around the Act when it came to hospitality, making things more difficult on a day-to-day basis. It was also felt that there was insufficient clarity regarding what constituted ‘adequate procedures’; this is dealt with in section 3.

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43 5.1.4 The Impact of the Bribery Act on Exchanges of Gifts

The impact of the Bribery Act on the giving of gifts in the UK has been relatively limited in the instances considered by this study. There are some slightly more significant changes when operating internationally; however these are articulated in section 5.1.6, as are the changes in organisations’ approaches to hospitality when operating across cultures.

As some private sector respondents equated gift-giving, in any form, with bribery, gifts tended not to be major part of how their organisations operated. Where gifts were given, as noted earlier, they were typically branded corporate merchandise, in addition to the occasional thank you. Given the low value of these gifts, they could in no way be confused for bribes, so there has been relatively little impact on these behaviours as a direct consequence of the Bribery Act. However, some organisations that were giving gifts have seen the Act as a convenient excuse to stop, in a bid to save costs, even though they may be perfectly acceptable. Moreover, respondents indicated that the limited changes they have seen over recent years are more likely the consequence of a lack of funds due to the financial crisis, rather than due to the Bribery Act. There is some evidence that a small minority of individuals are taking the Act too seriously, and are frightened to accept even a corporate Biro. However, this seems minimal, as most organisations seem to be placing more sensible limits on what can be given or accepted; and as gifts tend to be small and infrequent anyway, this has made little difference to how they are exchanged.

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tokens of appreciation, which were used to fulfil a basic, but non-economic social norm, and could not be construed as anything other than that. When receiving gifts, respondents noted that due to public scrutiny through things such as the Freedom of Information Act (2000), they had to be careful of what they received prior to the Act; however it has made their position more comfortable, as they can use this to say no to dubious gifts.

5.1.5 The Impact of the Bribery Act on Hospitality

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down and is able to make the correct business decision, without feeling obligated to reciprocate through business.

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46 5.1.6 Gift-Giving and Hospitality across Cultures

Gift-giving interactions across cultures were shown to be much more frequent and significant for private sector organisations as a consequence of embedded cultural expectations of gifts in different countries. As such, exchanges of gifts with organisations from other cultures were described as being a ‘minefield’ for businesses to contend with following the introduction of the Bribery Act, as much of the cross-cultural exchanges of gifts that occurs could be perceived as bribery. Respondents noted that they were stuck between two competing demands, on the one hand exchanges of gifts is ‘in some cultures, absolutely critically important and to… refuse a gift would cause massive offence’, thus potentially harming the organisation’s business interests. On the other hand, organisations have an obligation to satisfy the legal requirements of the Bribery Act by not engaging in giving or receiving gifts that are intended to induce, or are of a size that may cause somebody to improperly perform their function.

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‘it needs to be presented nicely, with a nice ribbon and often they won’t even open that in front of you, as it’s seen as something quite personal’. In this situation it is the gesture of respect for one’s partner that is important, so it is possible to satisfy this cultural norm and to avoid the offence of not giving a gift. Another respondent with considerable experience of working in the oil and gas industry in Egypt noted that there was often an expectation that you should come ‘bearing gifts’, or that you may have to give people gifts to facilitate processes. Rather than proving inhibitory, the Bribery Act has provided the organisation with the strength to be able to resist such expectations, as they are able to state that the Act prevents them from giving anything. This position can be further strengthened by outlining from the outset what the organisation’s limits are with regards to gifts, so that ethically difficult situations can be avoided. Like the example about the Japanese context, it is possible to respond to the cultural norm but within reason. It was further noted by another interviewee, that third parties abroad were successfully able to say no to demands of gifts by making reference to their commitments under the Bribery Act as a resulting from their involvement with a UK-based organisation; thus it is clear that the Act can effectively be used as a talisman against expectations of excessive or inappropriate gifts, whilst still maintaining good relationships.

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environment, but the risk they pose can be mitigated, and it certainly appears that the Bribery Act acts as a useful tool for dealing with the problems posed by gifts and hospitality.

5.2 Pre-existing Influences on Organisations’ Approaches to Exchanges of

Gifts and Hospitality which Muted the Impact of the Bribery Act

The limited effect that the Bribery Act had on exchanges of gifts and hospitality was down to a number of factors that preceded its introduction. This section explains some of the changes that occurred prior to the Act’s introduction, which account for the reduction in the scale and frequency of exchanges, leading to the Act’s relatively muted influence. In the private sector in particular, the financial crisis has led to the cutting of budgets that would ordinarily be used to fund gifts and hospitality, as these practices are viewed as a luxury rather than a necessity. The private sector also appears to have undergone a cultural change, now more frequently eschewing excess. Public sector respondents noted that their organisations were already subject to a great deal of public scrutiny, so were wary of involving themselves in these practices to any significant degree. The specific influences on each sector’s approach to gifts and hospitality will now be discussed, before a brief consideration of the role played by corporate and industry cultures in limiting organisation’s involvement in these exchanges.

5.2.1 The Pre-existing Factors for the Private Sector

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disgust with excess, as organisations have become increasingly aware of public perception. This has led organisations to be increasingly worried about the risks to their reputation if they are associated with questionable exchanges. There are examples of industries that do not appear to have internalised these wider cultural changes, however this is dealt with in section 5.2.3. Organisations’ concerns about exchanges are thought to have been recently augmented by the Bribery Act, however it is clear that changes in societal norms pre-empted this.

Changes in organisations’ approaches to gifts and hospitality have been accelerated further by the financial crisis, which has highlighted that it is not appropriate participate in excess whilst others are tightening their belts. A financial services recruitment manager noted that previously they had free reign with their corporate credit card and was able to engage in brazenly generous hospitality where there was a tacit understanding that business would follow. The financial crisis, however, resulted in a reorientation of how hospitality was approached, with it becoming a more sober (literally), targeted and focused affair. In addition to this, as noted previously, businesses have used the Act as a mask to disguise their reduction in spending on these practices, lest it send an outward signal that the organisation is not doing well.

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misdeeds was such, that individuals were no longer able to rationalise acts that did not follow the social consensus.

5.2.2 The Pre-existing Factors for the Public Sector

Respondents in the public sector indicated that the reason that the Bribery Act had relatively little impact on the giving and receiving of gifts was potentially the economic climate, but was more likely down to increasing public expectations about the openness and fairness of public sector organisation’s conduct. This ‘evolution of scrutiny and transparency’ was thought to have led to a ‘gradual transition from a significant amount of hospitality to now virtually none’ over the previous two decades. As public sector funding comes from taxes and government grants, organisations’ integrity is determined by how they use this money. As funding tends to be tight and gifts and hospitality cannot typically be used to make a profit, these exchanges do not appear to the public to constitute a good use of public money. The public’s ability to dissect the rectitude of publicly funded organisations’ conduct has been particularly aided by the Freedom of Information Act which obligates public bodies to publish information in response to requests from members of the public and the press.

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Consequently the Bribery Act made little difference to respondents’ approaches to receiving and giving gifts and hospitality and was clearly not perceived to be as significant a risk to organisations as public scrutiny and reputation. There was, however, tightening of policies and procedures to reflect the prescription of the Bribery Act that organisations must put in place ‘adequate procedures’.

5.2.3 Corporate and Industry Cultures

Corporate or industry culture (it is not always possible to disaggregate the two based on the sample used) also helps to determine the propensity of organisations to give or receive hospitality and gifts and hence what impact the Bribery Act had on them. For example, a respondent from the pharmaceutical industry suggested that in comparison to other industries they had worked in, the cultural orientation was very much that it was inappropriate to engage in exchanges of hospitality and gifts. This was primarily premised on negative media attention in the US market, where;

One of the big tricks used to be conferences sponsored by big pharmaceutical companies, and they would invite all the doctors to those “conventions”… I’ve heard anecdotal evidence, that the budget per doctor for an event like that, which would include paying for their flights, accommodation, all of the meals, entertainment and small gifts to take home, would be in the region of $40,000 dollars.

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Moreover, the ethics of the organisation were very much informed by the products it was producing, which were intended to save lives; this resulted in a pervasive sense that there had to be ‘a very high moral standing in the way that we must operate and behave’ more generally. This heavily contrasted with the account provided by a respondent who had previously worked in the tobacco industry;

Hospitality was at another level; one of the events was a dinner at the palace of Versailles for 650 people and we were all given gifts on entering, you were treated to a seven-course banquet, there was any wine or drink you could imagine on offer, there was any cigar or cigarette on offer and you were given a goodie-bag on departure. That industry had a much more prevalent gift-giving culture.

Again the purpose of the products made by the organisation led to it generally being a ‘less morally ethical industry’, which enabled it to rationalise extremely extravagant hospitality and gifts such as watches. Furthermore the industry was said to be insular, so although it was the focus of scrutiny, it remained impervious to changing social norms. The industry’s historical ties with Asia, where gift-giving tends to be more prevalent, were also thought to have influenced its approach to giving and receiving. Interestingly, this is not the only case where exposure to opportunities to engage in gift-giving and hospitality adversely affected an organisation’s culture; departments in local government that were more outward facing and dealt with a larger number of contracts apparently had a more permissive attitude towards these practices.

5.3 ‘Adequate Procedures’

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attempting to put these procedures in place will also be considered, in addition to some of the successful procedures that have been used.

5.3.1 ‘Adequate Procedures’ and the Impact of the Bribery Act

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The private sector organisation with the most rigorous procedures was understood to have been particularly exposed because of the locations that it operated in, which included the Middle-East and Asia, where gift-giving and hospitality are an entrenched aspect of the business culture. As the company was involved in oil and gas extraction, it was also felt that attempts at inducement and requests for particularly excessive gifts were a potential issue, so stringent procedures were needed, including training and testing for those at a managerial level and above. Although it is a privately owned company, the organisation’s international presence and multi-billion dollar value made it a target for public comment. Its procedures were therefore affected by the wider change in cultural attitudes towards gift-giving and hospitality, so it needed to demonstrate best practice towards these issues. Despite the procedures that were already in place, the Bribery Act did in fact prompt a much more systematic response by all but the smaller companies. Some of the measures implemented included updates to policy and company handbooks, in addition to training and spending limits on hospitality and gifts. As smaller organisations felt they had less risk and also typically had fewer resources, they were reluctant to put in place more involved procedures, seeing them as costly in terms of time and effort and without benefit.

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necessarily be in breach of the law for there to be reputational damage, as it is how the public interprets the giving or receiving of hospitality and gifts that matters; exchanges may be seen as an attempt at inducement or as an improper use of public funds. Public scrutiny thus necessitates that sufficiently thorough procedures are instituted. The standard of conduct which public sector organisations aspire to was, by and large, already in excess of what the Bribery Act prescribes, with gift registers that needed to be signed regardless of whether the item was offered or accepted and extensive training and policies being the norm. As a result, the Act’s introduction promoted a tightening and reorientation of policies in line with the ‘adequate procedures’ requirement, rather than a wholesale transformation.

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56 5.3.2 Effective Procedures

It is also worth considering some of the procedures that have been put in place which have proven to be successfully applied, and which other organisations may be able to imitate with favourable outcomes.

As the use of a gift and hospitality register is taken by organisations to be the minimum procedure to have in place, it is essential it is used properly. It was recommended that even working lunches were recorded as well as gift and hospitality that was offered, even if it was not accepted; this demonstrates transparency and honesty, which is particularly important if the organisation is subject to external scrutiny. Staff can of course neglect to update the register, so it is also important to enforce its use with the threat of disciplinary action. One respondent in a large public sector organisation based in numerous locations, noted that in order to keep the register secure it was kept in one location. This, however, meant that it was inaccessible, so they implemented a standard form which could be submitted online; this resulted in an 8-fold increase in declarations. Making the register easier to use and access is clearly essential in larger organisations to ensure that oversight of employees’ activity is maintained.

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6. Conclusion

This study investigated the approach of organisations to giving and receiving gifts and hospitality, and the impact of the Bribery Act upon this through 15 in-depth interviews with respondents from a range of private and public sector organisations. The results of these interviews were thematically analysed, highlighting that there was a significant difference in the way in which gifts and hospitality were viewed and used. Gifts were thought to be related to bribery, so were rarely used; where they were exchanged they tended to be low value tokens of appreciation, but again this occurred infrequently and had little value. Hospitality was viewed more favourably and was appreciated for its ability to aid informal communication and to reinforce relationships. Hospitality further enabled the assessment of one’s counterpart’s trustworthiness, which was shown to be particularly important for socially and spatially limited businesses.

The Organisational Approach to Exchanges of Gifts and Hospitality