The collapse of Bear Stearns and Lehman Brothers in 2008 has triggered debates on the role of executive compensations in inducing risk-taking behavior. The implication is far-reaching given that executive pay reforms have been proposed to prevent another financial crisis.
It is a commonplace that bribery seems rife in the developing world. In richer countries, however, legal lobbying is the preferred method of operation for those trying to overcome rules. As a country’s industry advances, the preferred mode of transaction might naturally switch to lobbying. So why does corruption seem more stubbornly persistent in the developing world, despite economic progress?
The concept of corporate social responsibility (CSR) — the idea that companies directly contribute to the common good — is gaining adherents throughout the business world. However, what constitutes responsible corporate behavior is open to interpretation by the firms themselves and the larger cultures in which they operate.
The need to “put a face” on a humanitarian crisis and give it individual particularity is premised on a well-established phenomenon: As the numbers of a group experiencing suffering increases, the level of compassion felt for that group typically decreases. However, the mechanism behind this apparently counterintuitive dynamic — declining compassion as the level of suffering increases — has long resisted understanding.
On September 19 BP’s Deepwater Horizon well was officially declared sealed after having poured nearly 5 million barrels of oil into the Gulf of Mexico. Coincidentally, the following day the National Bureau of Economic Research announced that the recession that started in late 2007 had ended in June. While these two crises are now ostensibly over, their effects are likely to be felt for years.
