Gift-giving is the act of transferring a present, or gift, to another. Gift-giving occurs in both social relationships and economic or business exchanges. A gift is anything of value, however large or small in value. The gift can be money or something else of value such as personal goods, services, property, or in many cases entertainment.
In principle, a gift should be a voluntary free transfer not requiring any form of compensation or reciprocity. A voluntary gift is neither a gratuity or a tip, provided as full or partial compensation for some personal service (such as restaurant tipping), or a bribe, provided or offered to an agent in expectation of some desired opportunity. Customary gift-exchange occurs mostly at specified times of the year, such as Christmas, in ritualized social relationships.
Gifts and entertainment are typical aspects of business etiquette and marketing or promotion efforts in various countries. Business practices and national laws vary with respect to such activities. Multinational enterprises typically provide guidance to employees concerning gift-giving and entertainment to customers and from suppliers. Gift-giving, gift exchange, and gratuities are also established customs or traditions in various societies to express appreciation or as a sign of thoughtfulness. In some advanced economies, tipping for personal services is expected income in lieu of full wages.
Because the boundary between bribery and gift-giving may be ambiguous, the overlapping of economic and social relationships, varying by culture, is a problematic dimension of anti-corruption efforts. The Foreign Corrupt Practices Act (FCPA) of 1977, as amended, exempts facilitating payments (i.e., “grease”) under some circumstances and provides for certain affirmative defenses concerning marketing and promotion expenses including entertainment. All such expenses must be carefully reported. Some gifts, gratuities, and entertainment permissible under the FCPA may be illegal under local anti-bribery laws.
In practice, gift-giving may be a mandatory part of ritualized social and economic reciprocity. A transfer of value with the appearance of a gift might arise in a number of motives including appreciation, altruism, bribery or extortion, custom or tradition, gratuity, reciprocity, or tax incentive.
Reciprocity is an act or expectation of exchange between two parties. This reciprocity may be an established custom or tradition in some societies or communities. It may be traditional to provide some gifts, particularly entertainment and small tokens of respect or appreciation, in business settings. Corruption is bribery of or extortion by agents in which typically money, or some other item of value, is exchanged for a contract or other valuable opportunity. The key feature of corruption, demonstrated in the form of bribery, is that an agent accepts something of value from a third party to act contrary to the interest(s) of the agent’s principal(s).
Public employees in democracies and private enterprise employees are agents. Their principals are the citizens or the owners, respectively. With certain exceptions, it is not generally possible under this definition to bribe a principal. Some transactions with a hereditary sovereign, as a principal, might still be corrupt or unethical on some other basis. Gifts and entertainment expenses are important even in advanced market economies. The pharmaceutical industry is well known for company gifts to business customers, such as physicians. Reciprocal exchange relationships may be highly established in some societies, such as Japan and China. In Japan, ritual and courtesy are still very important in social and economic relationships. A classic instance of a gift economy is China. The guanxi networks of gifts, obligations, and reciprocity are reportedly important sources of personal influence in business and government circles. These networks are systems of trust relationships for mutual support through favors. Such networks may function in some circumstances as patron-client relationships, which were important in ancient Rome.
Multinational enterprises commonly have policies and guidelines governing gifts and entertainment expenses for customers and from suppliers. In general terms, for U.S. and European companies, some “reasonable and limited expenses” by employees may be acceptable for gifts, entertainment, and customer travel and living expenses in connection with promotion or contract execution. Employees may sometimes accept purely nominal-value gifts and entertainment expenses from suppliers. With respect to both customers and suppliers, there must be no appearance of impropriety and no improper advantage sought (a violation of the FCPA, as amended). Accurate records must be maintained and local anti-bribery laws, as well as the FCPA, must be obeyed.
- Allan K. K. Chan, Luther Denton, and Alex S. L. Tsang, “The Art of Gift Giving in China,” Business Horizons (v.46/4, 2003);
- Michael Conlin, Michael Lynn, and Ted O’Donoghue, “The Norm of Restaurant Tipping,” Journal of Economic Behavior & Organization (v.52/3, 2003);
- Josie Fisher, “Business Marketing and the Ethics of Gift Giving,” Industrial Marketing Management (v.36/1, 2007);
- Arvind K. Jain, “Corruption: A Review,” Journal of Economic Surveys (v.15/1, 2001);
- Harvey S. James, Jr., “When Is a Bribe a Bribe? Teaching a Workable Definition of Bribery,” Teaching Business Ethics (v.6/2, 2002);
- Catherine A. Marco et al., “Gifts to Physicians from the Pharmaceutical Industry: An Ethical Analysis,” Annals of Emergency Medicine (v.48/5, 2006);
- Marcel Mauss, The Gift: The Form and Reason for Exchange in Archaic Societies (Routledge, 2001 );
- Patricia E. Salkin, Ethical Standards in the Public Sector (American Bar Association Section of State and Local Government Law, 2008);
- C. Scott, “International Business: Global Gift Giving,” Business Education Forum (v.61/2, 2006);
- Mayfair Yang, Gifts, Favors, and Banquets: The Art of Social Relationships in China (Cornell University Press, 1994).
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