Download the following case, read it and answer the questions.

Galperin, B. L., Enueme, C. F., & Dixon, D. P. (2020). Pay the bribe or take the high road: dilemma of a young female Tanzanian entrepreneur, The Case Journal, 16(1), 75-96

Purpose: The purpose of this is to discuss management considerations for dealing with the issues of bribery and corruption when discussing or closing deals.

Requirement: Given the case you read, use Riggs' (1964) Prismatic-sala Model and discuss what King should do? Should she pay the bribe or not?

you must reference at least five pertinent sources

Please see the case below:

Galperin, B. L., Enueme, C. F., & Dixon, D. P. (2020). Pay the bribe or take the high road: dilemma of a young female Tanzanian entrepreneur, The Case Journal, 16(1), 75-96

Pay the bribe or take the high road:

dilemma of a young female Tanzanian

entrepreneur

Bella L. Galperin, Chinenye Florence Enueme and Deirdre Painter Dixon

Introduction

It was the summer of 2014, and Elisa King[1] was upset and hot; she could see her dreams

going up in smoke. Sitting in her office in Tanzania, Africa, she was faced with an ethical

dilemma concerning her soap business. Elisa created a soap-selling business, which

included bar soaps for body wash and clothing wash. The past 18months of hard work

were coming down to a critical decision: Should she pay a bribe to stay in business or not?

Elisa was no stranger to corruption - it was part of the business culture of her country - but

she had successfully avoided it until now and had stayed true to her personal values. She

needed to clear her head, cool off and decide whether she should commit bribery. By

taking the high road and staying true to her ideals, she would likely lose her business. The

bribe was just about $115; she could afford to pay it. However, was corruption the only way

to do business in her beloved country? Time was running out; the bribe had to be paid in

one week, or her business would be shut down.

Elisa was a unique individual. She was a female entrepreneur in her home country of

Tanzania. She was also a published author and had an accounting degree from a top US

business school. Elisa wanted to give back to her local community by opening a small

business and providing some employment in her neighborhood. Right now, her family had

invested too much money and time into the business for it to fail, Elisa thought. This bribe

could help solidify her business. It would also validate all the sacrifices she had made and

show all the naysayers that a woman could own a business in a supply chain dominated by

men, who frowned upon women. It had been a challenging 18months meandering through

the obstacles as an entrepreneur in Tanzania, and it had come down to one question:

Should Elisa King pay the bribe or take the high road? King had one week to decide

whether or not to pay the bribe.

Background

Tanzania, located in the eastern part of Africa, borders the Indian Ocean between Kenya

and Mozambique (Figure 1). Tanzania was a little over twice the size of California. Tanzania

was the most populated East African country, and its official language was Swahili, while

English was the commercial language. Tanzania became an independent country on April

26, 1964, with Julius Nyerere as president. Nyerere welcomed financial assistance from

other countries, however, he believed in the need for Tanzania to be self-reliant. This

perspective was formulated in the Arusha Declaration of 1967, which put forth the policy of

ujamaa (familyhood), a political concept that encouraged socialism and Tanzanian selfreliance.

In the 1970s, business activities in Tanzania were run primarily by the government.

This meant that major commercial investments were owned by the state with minimal

involvement of the private sector. Any for-profit venture was considered ulanguzi

(conmanship). Unfortunately, the country's sole reliance on the state's performance did not

improve the country's situation. High state involvement in business activities contributed to

further inefficiencies and bureaucracy, which led to large losses and drained government

revenue that could have been put to better use (Andrew and Jean, 2000). The

underperformance of the socialist system only led to the inefficiency of other production

entities making it harder for private businesses to succeed in a business system strongly

controlled by the government. Also, the domestic markets had a scarcity of basic

household goods such as soap, sugar, batteries and cigarettes. Town dwellers had to

become accustomed to rationing as a strategy to contain the unrest and the socialist policy

was widely blamed for the macroeconomic imbalance in Tanzania. To become more

efficient, Tanzania needed a complete structural transformation (Andrew and Jean, 2000).

In response to this necessity, the government created Economic Recovery Programs, which

focused on reforming the system of state control and promoting the expansion of the private

sector (Andrew and Jean, 2000).

Since the formal adoption of the Economic Recovery Programs in 1986, Tanzania had made

significant achievements in macroeconomic stability in the 1990s. The country's reform

process had been steady and sustainable (Muganda, 2004). Tanzania was ranked as the

11th fastest growing economy in 2015 (Elena, 2015) with a large proportion of its gross

domestic product (GDP) invested in education (Kushner, 2013). Nevertheless, Tanzania's

continued economic instability had particularly impacted the youth (those between the ages

of 15-34). In 2005, Tanzania housed more unemployed youths per capita than 109 other

countries (Kushner, 2013). Since there were 17.8 million young people between the ages of

15-34 in 2015, this was a significant problem for the country. Unfortunately, the issue of

youth unemployment was expected to continue as the number of individuals in this

demographic was projected to increase to 62 million by 2065 (African Institute for

Developmental Policy, 2015). In efforts to escape unemployment, an increasing number of

young people started their own business as a way out of poverty (Smedley, 2015).

Despite the attempted reforms, young Tanzania residents continued to face unemployment

as research showed a linkage between economic instability and youth unemployment in

Tanzania (Azeng and Yogo, 2013). Sadly, employers also contributed to youth

unemployment because of their lack of confidence in the skills that the youth possessed

(Mbalamwezi, 2015). While unemployment had been a major challenge for all youth in

Tanzania, young women faced additional challenges in finding a job because of their

severe under-education in comparison to men (Kushner, 2013).

The upstream battle: challenges women face in Africa

Studies have shown that gender was a key determinant of youth unemployment in Africa

(Msigwa and Kipesha, 2013). Women often faced more challenges when it came to finding

a job. In addition to the under-education of women in comparison to men, other challenges

women faced included:

Harassment;

Lack of appropriate resources and networks;

Corruption; and

Sociocultural practices.

First, Tanzanian women who were lucky enough to get the necessary education to be

candidates for jobs were often met with sexual harassment at work (Kushner, 2013). Second,

Tanzanian women were also disadvantaged when it came to having access to appropriate

resources and business-related networks. Third, approximately 55 per cent of Tanzanian women

in leadership positions were also affected by corruption (Jagero, 2011). For example, women

often were harassed by city authorities to pay bribes, and those who were unable to pay (or

refused to pay) had more difficulty in their businesses. Research showed that about 13 per cent

of women reported that they had to bribe officers during their business transactions (Mori, 2014).

Finally, The Tanzanian cultural environment posed more difficulty for women to start and run

enterprises. This was due to the traditional reproductive roles that had left women with little

time to juggle between raising a family, household duties and a job. Women in Tanzania

occupied only 5.3 per cent of paid employment, 10.7 per cent were self-employed and the

remaining 84 per cent were left with unpaid helper jobs (Mori, 2014).

It was evident that the difficulties faced by women had been influenced by the cultural

values and socio-economic state of Tanzania (Jagero, 2011). Impacted by the overall

cultural environment, Tanzanian business practices had further contributed to making it

more challenging for women to achieve their goals compared to men (Ibarra et al., 2013).

Women, such as Elisa King, had been faced with the upstream battle to overcome a

multitude of challenges and must face tough business decisions in a context of

unemployment and corruption.

Elisa King

Elisa King was born in 1989 in Dar-es-Salaam, Tanzania into a middle-income earning

family with a comfortable standard of living. Her father was a professor at a university, while

her mother worked as a financial analyst for a government agency. King obtained her

elementary and secondary education in Tanzania, she also started her college education in

Tanzania, but due to a major university strike, she decided to transfer to a university in the

USA to complete her college education.

During her undergraduate program in accounting, King gained work experiences interning.

She interned at a non-profit business where she handled accounts receivables and

payables. She also interned under faculty during her undergraduate program for three

years gaining some professional experience. Besides pursuing her education, King was

also a published writer, having written a poetry book.

In December 2011, King graduated Summa Cum Laude with a degree in accounting. She

returned to Tanzania to pursue a career in her field. She arrived home ready to join the

workforce. Being fresh out of college, King was eager to put her skills to use. She saw the

possibility of a bright future with growth and achievement ahead of her.

The job search

It was March, three months since King graduated. She had been on multiple interviews, but

all efforts to land a full-time position were unsuccessful. It became clear that finding a fulltime

job was not going to be an easy task. Since the full-time job search was not going as

planned, King started looking for internship positions in her field. Shortly after her internship

search began, she was able to secure a finance-related intern position. Although it was an

unpaid internship, King was happy for the opportunity to get her career started.

In April 2012, as King started her internship she felt welcomed because her hiring manager

was very supportive and believed in her potential and ability to excel at the position.

However, she did not have to report to this manager but instead was assigned to two

supervisors named Moses Yaro and Grace Aadila. During the week she started, there was

an ongoing training at the office. Yaro and Aadila had alternated turns attending the

training, which meant that King had to report to one supervisor at a time. King saw this as an

opportunity to leave a great first impression on each supervisor. King was excited to have a

job and did her best to produce great results on her assignments. However, she soon

realized that despite her hard work, her results were not being recognized.

It came to King's attention that Yaro had been assigning her tasks that were already

delegated to another employee. She had been doing repetitive work as the other

employee's work was already being used, and therefore, her work was not needed. This

was frustrating for King.

In the following weeks, Aadila returned and it was time for Yaro to begin training. King was

not bothered by the fact that she had to work with another supervisor so soon. Instead, she

was pleased about the idea of getting a fresh chance at showing her skills. She was also

optimistic because Aadila was female. She believed that since they were both females,

things would be different. On King's first day working with Aadila, she introduced herself

and updated her on her current progress. She asked Aadila whether more work could be

assigned to her. King felt optimistic and excited for what felt like a second chance at

proving herself. Aadila listened to her speak in excitement, and when King was done, she

responded by saying, "well, if you are looking for something important to do, go and mop

my house." Contrary to King's belief regarding a better work relationship with Aadila, she

was met with negativity.

As King progressed in her internship, she began to see that the work environment was not

meeting her expectations. She felt like she had learned so much in school and she wanted

to apply what she learned and produce results. Nevertheless, the people she worked with

were making it impossible for her to accomplish her goal. Although discouraged, she kept

working and learning what she could in her job.

After a few weeks, things slowed down at the office and King began to observe the

company culture. She noticed that the first two hours were spent eating breakfast then there

was a lunch break after a few hours. After the lunch break, employees gathered to read

gossip blogs and hold discussions about the latest gossip. Most of the day was spent being

unproductive, and King was not impressed by the work habits of the office as the work

culture did not mesh well with hers. She wanted a challenge.

In June 2012, King's internship term ended, and she was offered a full-time position. Based

on her experience over the past months, she knew that if she remained in the organization, it

would only be the same trend. She was not willing to give up her drive to work hard, and

therefore, declined the offer.

Intern turned entrepreneur

King had always dreamed of opening her own business, and after her recent employment

experience, she started thinking about what kind of business she could potentially start

while searching for other employment opportunities. Her frustration was escalating. King

explained, "Here I am, almost a year since I graduated, with all the time and effort spent in

college and nothing rewarding is happening." King expressed that her mother was also

getting worried and upset about all the investments she had put into getting a quality

education for her daughter.

According to King, her mother expressed her concerns and encouraged King to get a job.

King felt frustrated about her current situation and the pressure from her mother was not

helping. King wanted some space to think and told her mother: "Mum, can I just get a onemonth

break until July? Don't ask me about work. Don't throw newspapers with job

openings at me. Just leave me alone for one month." Since graduation, King had been

hunting jobs and needed time to gather her thoughts. Her mother agreed to her terms. King

spent the month trying to figure out what she was going to do. During this time, she sold her

book of poetry to earn money. Book sales went well for a while, but as July approached, she

still was not getting anywhere with the job search.

At the end of July 2012, King was able to get an interview for a job as a tutor at a university.

She scheduled her interview time with a professor and made a trip to the university. Five

hours had passed from the scheduled interview time and she was still waiting, during this

time she reflected on her journey and was mad that she could not create an opportunity for

herself. That moment of waiting embodied the frustration that King had been feeling all

along with the rest of the Tanzanian youth workforce. She felt that nobody took graduates

seriously. Her entire future rested on potential employers who were in a position to decide

whether or not she was "good enough" and this made her upset.

After a six-hour wait, her interviewer was finally available and at that point, King had

decided that she was not going to take the position no matter how the interview progressed.

During the interview, the professor acknowledged that King would be a good fit for the

position but soon after apologized saying that at the moment they couldn't hire any tutors

because "the government was broke." This came as no surprise to King as she was now

accustomed to the pattern of interviews.

When King got back home, she sat her mother down to talk. She said to her, "Mum, I am

sorry that I am probably going to disappoint you. I am not going to get a job, I am going to

start a business." King mother surprised, asked "What business?" King replied, "I am not

sure right now, but I am going to do some research." King also noted that her mother was

concerned about funding because she soon asked her, "What about capital?" King

answered, "I have a plan."

The reality was that King had no plan, and she was not sure what was going to happen in

the coming months.

The journey of an entrepreneur begins

Determined to start a business, King started researching start-up business ventures that

were most realistic and affordable. She knew that Tanzania was a growing economy with a

lot of underutilized resources. Due to the productivity imbalance in the country, some

resources were in high demand such as soap, clothing, edible oils, and so on (Andrew and

Jean, 2000). After doing some research, King strongly believed that manufacturing could

make a significant difference in the economy, especially in creating employment. She went

through several ideas during her period of research. She considered producing drinking

water; however, the business that resonated with her was soap manufacturing. Soap was a

relatively easy project to start given her inexperience, the availability of raw materials, and

the potential market. It was also the most realistic business she could afford to start. Given

the demand for soap, affordable classes were established in soap making, and the start-up

capital requirement was low with a high estimated short-term return on investment. These

factors encouraged King to manufacture soap.

With that conviction, King pitched the idea to her family since she needed their help with the

start-up capital. She explained all that was needed for her business - from the soap material

to setting up the garage with machinery for manufacturing - and then came up with an

estimated cost. She made a proposal to her family requesting that they all take shareholder

positions in her business. With their help, she would be able to get the business started,

and hopefully, make returns that could repay her family members' contributions. King

expressed that her mother, who had been worried about her unemployed status, was now

encouraged by her determination and was happy to see her daughter act. Although her

mother indicated her worry about the change in vision, she was willing to support King

through the process and decided to be an investor alongside the rest of her family.

The set-up process

King enrolled in a soap making course in November of 2012 offered by the Growing

Businesses Development Organization (GBDO) in Tanzania, where she gained the

necessary knowledge to help in product development. King hired manufacturers and

experienced production technicians to produce a quality soap brand, and with their

services, the Eco-fresh brand of soap was born. The product, "eco-fresh", was a natural

bathing soap made with avocado, cucumbers and aloe vera. She also made bar soaps with

lemon essence to be used for laundry and dishwashing.

According to King, starting and running a factory was a big task as it had to be set up

according to standards. To move forward with production, she required a license to

commence production in her factory. She also needed a patent for her soap brand to

protect and prevent the name from being used by other businesses. The process of setting

up the factory took well over six months from the time she began in January of 2013 due to

delays at the government offices, where she needed to obtain her business license. King

was frustrated by the delays caused by the unnecessary hold-ups made by the government

offices that granted the required permits. The government officers wanted to provide help

only if they could make a personal gain. Each office functioned in a comparable way,

administrators would say to King, "Well, this process will take a long time but if you pay me,

I can make it faster." This annoyed King as she did not want to have to pay a bribe for every

business task that she completed. King knew that refusing to pay the bribes meant longer

waits, but she did not feel that paying a bribe was the right thing to do. Nevertheless, she

was intrigued to see how much they could refuse her service if she did not pay at all. She

thought, "If I go to the office every day and demand service, would they really refuse me?"

Eventually, the officers got tired of her persistence and were forced to provide appropriate

services without the bribe. With the tasks at hand and the length of time taken, production

did not start for another year. King's family provided monetary support to her business, and,

in turn, received shares. She had just started in the business world and did not have the

financial history needed to be granted loans. This meant that she relied heavily on the

financial support of her family who served as her primary investors. The majority of the funds

she received from her family was geared towards setting up the business.

The process of setting up the factory had not even started; all efforts and time were put into

getting permits and patents. Her family began to have doubts about the success of the

business. They had invested about 22.6 million Shillings (equivalent to about US$13,082)

into the soap business, and the quick returns they envisioned did not seem in sight[2].

Some of her family members started to slow down contributions due to fear of investing their

funds in an unprofitable venture. Table I shows a breakdown of the investors' shares and

the number of shares in the soap business.

The process of acquiring permits was finalized in early July of 2013. It took an additional

three months to set up the factory. There were some incidents with workers that contributed

to the delay along with a full renovation of the factory space. One incident occurred when a

worker refused to work simply because a "woman" hired him. This worker demanded to

speak to either King's father or brother before he could begin the job. To avoid even more

time being wasted, King asked her brother to speak to the contractor about what tasks had

to be completed. This situation was degrading to King since she was the one putting in all

the work.

Dahlia enterprise soaps

In October 2013, King's soap manufacturing business was born. Dahlia Enterprise Soaps,

part of the Dahlia Enterprise holding company, was run independently. All information

provided in the case are for the DE soap business. It was now time to start production and

to open the doors of the DE soap business to the public. King had everything ready to start

production. Workers were hired, however, the working capital to start was unavailable. Her

family (excluding King herself) had already invested roughly about 22.6 million Shillings

(equivalent to US$13,082)2 into the opening of the factory, and they were reluctant to invest

more funds into the business with no guaranteed returns. King also received a loan from her

mother, who did not expect to receive payment anytime soon, since the loan served as an

initial investment to assist with the purchase of machinery for the manufacturing of soap.

At this point, King had already incurred some expenses that needed to be paid. She

hired some workers to assist with the day-to-day business operations, and this also

required some financial contribution. The balance sheet and income statement are

shown in Tables II and III. These financial statements illustrate operating expenses,

which include salaries paid. King's funding was mainly provided by her family, which

would no longer bury cash into her business and, as a result, King had to take on

another job as a contract program assistant, unrelated to her degree, to help pay the

bills. The paycheck that she earned from her second job was used as working capital.

King expressed, "I did not buy anything for myself. I had no life outside running my

business. I did not even date." King's efforts were focused on the success of her

business, and everything else was a distraction to her.

It was already December 2013. Two months went by, and all plans to increase soap sales

had failed. King had to find a way to get her product out to the people, as shop keepers

were not receptive. Consequently, she decided to go into auctioning her soap to the public.

As auctions could only be done during the weekend due to her busy schedule, King and

her employees would stand in front of churches on Sundays after service to sell soaps to

the departing crowd. They walked around the streets and auction areas with a megaphone

to sell the products. Sales were good on some weekends, but this process of selling was

not sustainable for the business because the customers were random, which often did not

translate into repeat sales. King said, "Auctions were not the easiest thing to do." She continued, "I had to sit under the

hot sun for hours on end to try to get someone to buy a piece of soap, not even a box." It

was not just difficult getting customers; it was also physically draining."

As King sold at the auctions, she knew this method of selling would not sustain the business

for long. Rather, Dahlia Enterprise Soaps needed a big client who would order in bulk at a

steady rate. King's new strategy was to search for clients who would buy in bulk. Getting a

client to buy her product was difficult since she was pitching an unknown brand. As a result,

big clients were reluctant to partner with DE Soaps. During the search for clients, King and

her employees still went out to auctions just to make ends meet. Finding a big client was a

huge task, which required more time and effort, and King needed more time to focus on her

business. Her second job was demanding because she was given assignments that were

beyond the scope of her job description, and she was not getting paid enough. When she

asked for extra pay for the additional assignments, her request was denied. The lack of

appreciation at her second job, coupled with the fact that she needed to spend more time

at her business, led King to decide that she was going to leave her job to focus on her

business.

The pressure rises

In February 2014, five months after opening her manufacturing business, King left her

second job to focus on her business. Everyone in King's immediate circle was questioning

her decision, and King felt little support from people in her community. In King's mind,

everything seemed to be going against the success of her business including the lack of

willing clients, the difficult business environment, insufficient funds, and a discouraging

community. Moreover, she was still under pressure to make a profit to pay back all the

funds invested by her family. As she left her other job to focus solely on her business, she

could no longer depend on her salary to pay her employees and had to rely on her business

returns to make payments. King knew that she needed to find a client and she needed to do

so quickly.

In addition to this, King was also facing problems with her suppliers. For example, the box

supplier decided to print boxes that she did not order but still insisted that she pay for them.

When she refused to pay, "he used profanities and called me names." King also had

another encounter with the palm oil supplier who tried to scam her by pretending to have

delivered six drums (a container holding 55 US gallons) of oil. This was impossible because

King only had the capacity for five drums. He insisted that she pay for the extra, and when

she refused, he sent her threatening messages. He also tried to undermine her work by

saying, "Girls do not know how to do business." Deciding not to engage, King ignored his

insults and suggested a solution of measuring the oil again and paying for the amount she

had. She wanted to maintain a professional relationship with the only palm oil supplier she

had at the time.

King knew that running a business as a young female entrepreneur would be challenging,

but she never expected the level of obstacles she faced. She needed nothing short of a

miracle.

Saida Ophelia

One fateful afternoon in March 2014, a woman in her 50s named Saida Ophelia walked into

King's factory location to make product inquiries. Ophelia explained to King that she worked

as a representative of a non-governmental organization (NGO). She had received

information about King's products from one of the community women's groups who recently

purchased from Dahlia Enterprise Soaps. Being a part of a women's group was a popular

practice in the community. Ophelia came prepared with questions. She wanted to know the capacity of the factory with

respect to production and storage and the timeline for completing an order. The factory

workers had never received this level of inquiry. So, with great excitement, they provided

Ophelia the information she requested. After Ophelia received the information, she

departed with a promise to contact Dahlia Enterprise Soaps once she relayed the

information to her superiors. A few days later, she gave the factory a call stating that her

company would love to do business with Dahlia Enterprise and immediately placed an

order worth 8,600,000 Tanzanian shillings (equivalent to US$4,956)3.

Out of the office

At the time the order was placed, King was out of the office running other errands. Her niece

had fallen ill with malaria and King had to take her to the hospital. On her way back to the

office, she received multiple calls from Zuwena, one of her employees. Not able to hide her

excitement, Zuwena, exclaimed, "There is a customer here and she wants to buy a lot of

soap." She had been with King from the beginning and she knew that the business

desperately needed this news. "Oh, my goodness; I am going to sell a lot of soap!" King

exclaimed in victory.

News of the offer brought excitement and relief to King. She felt that all her hard work was

not meaningless after all. Over the ensuing days, news of the business deal spread around

the community; excitement swept through the business and morale increased. Friends and

family saw the business developing and began to commend King on her huge deal. Even

bystanders began to comment; "Wow [. . .] your business is actually taking off now. You are

serious. You are actually a businesswoman."

The bribe

After making the offer, Ophelia connected King to her superior to close the deal. King

first exchanged formalities with him and proceeded to discuss the business at hand.

During their conversation, he informed King that to go forward with the business deal,

she had to facilitate the process with a bribe of 200,000 Shillings (equivalent to US

$115)[3].

As King stood on the other side of the line, she felt all her excitement crumble. She was

flooded with new emotions of anger, sadness, disappointment and doubt. She reflected on

all she had been through to get to this point. With the phone in her hand and the offer of a

lifetime, she was just inches away from making her dream turn into a reality. She could not

believe that once again she had to face corruption.

King was torn by this request, but she had to decide on whether or not to pay the

bribe. She was no stranger to corruption; the entire business community was deeply

rooted in it. Someone wanted a bribe in every agency she had to deal with. Until now,

King had stayed true to herself and conducted her business without engaging in

bribery. Although she wanted to build a reputable business and did not want to be a

part of the corruption, she also had a struggling business that was on the verge of

failing.

Paying $115 seemed like a small price when looking at the grand scheme of things.

She thought about her mother and the money she had put in the business. She

desperately wanted her mom to be proud of her. Previous coworkers had laughed at

her when she quit her job to pursue her business. Sealing this contract could really

put her on a road map to success and would validate every sacrifice she had made

until now. To succeed as a woman entrepreneur in the soap business was tough. The

entire supply chain was dominated by men who often looked down on her. King

wanted to be a success; she wanted to prove to everyone and to herself that indeed

she was an entrepreneur. She needed to close the deal with Ophelia and found

herself questioning her stand on corruption. It had been a challenging year and a

half meandering through the obstacles of entrepreneurship as a female in Tanzania.

What should King do? Should she pay the bribe or not?