Corruption in Asia: Pervasiveness and arbitrariness

Abstract

How does one understand the differences and similarities of corruption among various Asian countries? We use a recent framework developed by Rodriguez, Uhlenbruck, and Eden ( 2005 ) to suggest that corruption has to be examined from two different dimensions: pervasiveness and arbitrariness. Using this framework, we ask why some Asian countries are able to achieve high levels of economic growth in the midst of high level corruption while other countries suffer from economic stagnation. We specifically suggest that more firms would bribe when pervasiveness is high, while fewer firms would bribe when arbitrariness is high. We also look into the implications on foreign direct investment. Copyright Springer Science+Business Media, LLC 2007Corruption, Pervasiveness, Arbitrariness,

An institution-based view of international business strategy: a focus on emerging economies

“…As research on political strategies in developed economies (Ring et al, 2005) indicates, some firms actively seek to shape the ''rules of the game'' in their favor. While it is natural to expect firms in emerging economies (including some foreign entrants) to act similarly, how they do that, in a generally nontransparent political and regulatory environment, is both a significant challenge and an interesting opportunity in pursuing this research further (Lee & Oh, 2007;Lewin & Kim, 2004).…”

“…Specifically, strategic choices are not only driven by industry conditions and firm capabilities, but are also a reflection of the formal and informal constraints of a particular institutional framework that managers confront (Bruton, Dess, & Janney, 2007;Carney, 2005;Chelariu, Bello, & Gilliland, 2006;Delios & Henisz, 2000;Hill, 2007;Khanna & Palepu, 2000Lee & Oh, 2007;Lee, Peng, & Barney, 2007;Lu & Yao, 2006;Ma, Yao, & Xi, 2006;Meyer & Nguyen, 2005;Ring et al, 2005;Rodriguez, Uhlenbruck, & Eden, 2005;Teegen et al, 2004;Wan & Hoskisson, 2003;Zhou, Tse, & Li, 2006).…”

The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared

“…Overall, as Table 3 shows, in terms of effectiveness, India fares poorly on the rule of law and corruption indices compared with the average in the sample, although the efficiency of the judiciary is good and the risk of expropriation is low. Lee and Oh (2007) distinguish between the pervasiveness and arbitrariness of corruption, arguing that pervasive corruption without arbitrariness does not detract from growth and investment, in that it is predictable and can be built into firms' calculations of cost. Arbitrary corruption on the other hand, even with fairly low levels of pervasiveness, is off-putting to investors, especially foreign investors, in that its uncertainty and unpredictability make dealings more hazardous.…”

Context, law and reinvestment decisions: Why the transitional periphery differs from other post-state socialist economies

“…Our study follows previous studies, in distinguishing between the two dimensions underpinning government corruption, namely, arbitrariness and pervasiveness (Lee & Oh, 2007;Meschi, 2009;Rodriguez, et al, 2005). We disaggregate the impact of government corruption on the reinvestment decision by focusing upon the influence of both pervasive and arbitrary corruption in the institutional context of the transitional periphery.…”

“…However, this arises not simply from the presence of corruption per se, but to how corruption manifests (Cuervo-Cazurra, 2008). The contribution of corruption to perceived levels of environmental uncertainty is underpinned by a number of factors, of which pervasiveness -corruption that is certain and widespread, and arbitrarinesscorruption that is uncertain, are key dimensions (Cuervo-Cazurra, 2008;Lee & Oh, 2007;Rodriguez, Uhlenbruck, & Eden, 2005;Uhlenbruck, Rodriguez, Doh, & Eden, 2006;Wei, 1997). The pervasiveness of corruption is seen as more of a deterrent to the initial investment decision because it increases the known costs of investing.…”