Isomorphic effect and organizational bribery in transitional China

Gao, Yongqiang

doi:10.1057/abm.2011.6

Cited by 12 publications

(6 citation statements)

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“…Finally, our findings may have important implications for MNCs in emerging countries. For these MNCs, formal and informal institutional support in the external environment is generally lacking or ineffective (Agnihotri and Bhattacharya, 2021; Estrin and Prevezer, 2010; Peng et al , 2004), and decision makers, such as CEOs, generally have a great influence on firms’ strategic choices (Gao, 2011; Ting et al , 2017). Thus, it may be particularly important to understand the role of decision-makers in MNCs’ performance heterogeneity.…”

Section: Discussionmentioning

confidence: 99%

“…CEOs, as the most powerful actors in a firm’s top management team (TMT), are supposed to have considerable influence on a firm’s strategic choices (Kim et al , 2016; Lee and Lim, 2021; Powell and Lim, 2021). In emerging countries, such as China, where formal and informal institutional support is lacking or ineffective (Agnihotri and Bhattacharya, 2021; Estrin and Prevezer, 2010; Peng et al , 2004), CEOs may have a greater influence on firms’ strategic choices (Gao, 2011; Ting et al , 2017). This study suggests that CEOs could influence the effectiveness of taking advantage of multinational switching options and, thus, affect downside risk reduction from multinationality.…”

Section: Introductionmentioning

confidence: 99%

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CEO characteristics, multinationality and downside risk: evidence from Chinese multinational corporations

Chao

2022

MBR

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Purpose Real options theory posits that multinationality provides additional operating flexibility and helps firms reduce downside risk. This study aims to explore the effects of chief executive officer (CEO) characteristics on the downside risk implication of multinationality in Chinese multinational corporations (MNCs). Design/methodology/approach This study gathers a sample of Chinese MNCs from 2009 to 2020 and deploys a Tobit panel estimation model with fixed effects in the empirical analysis. Findings This study finds that multinationality has a significant negative effect on downside risk. The downside risk reduction effect of multinationality is stronger in firms led by older CEOs, women CEOs, CEOs with overseas experience or broader functional backgrounds or those with higher educational levels. Additionally, the above effects of CEO characteristics on the downside risk reduction effect of multinationality are more pronounced in firms with smaller top management team (TMT) sizes. Hence, the findings show that the multinational network constructed by Chinese MNCs could offer great operating flexibility, and CEO characteristics and the CEO–TMT interface play an important role in achieving real options flexibility from multinationality. Originality/value This study shows that multinationality could be an effective way for emerging market firms to reduce business risk. This study helps identify CEO characteristics that are associated with real option performance and emphasizes that CEO personal attitudes and abilities could influence the real options flexibility obtained from multinationality. This study also contributes to the understanding of micro foundations in international business by focusing on the role of CEO characteristics and the CEO–TMT interface in the downside risk implications of multinationality.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

CEO characteristics, multinationality and downside risk: evidence from Chinese multinational corporations

Chao

2022

MBR

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“…Why do multinational corporations (MNCs) pay bribes in foreign markets? Scholars have increasingly focused on the role of social norms in motivating and perpetuating bribery (Cuervo-Cazurra et al, 2018;Dang, 2013;Frei and Muethel, 2017;Gao, 2011;He and Cui, 2012;Kostova, Roth, and Dacin, 2008;Spencer and Gomez, 2011;Tan, 2009). Rooted in the sociology-driven institutional theory (DiMaggio and Powell, 1983;Meyer and Rowan, 1977;Scott, 1995), this perspective points to the power of social norms in preventing (Fisman and Miguel, 2007) or facilitating the rationalization of corrupt activities (Galang, 2012).…”

Section: Introductionmentioning

confidence: 99%

“…Traditional applications of the institutional theory suggest that FIFs adapt to local norms to be isomorphic to the environment (Cuervo-Cazurra, 2016;Frei and Muethel, 2017;Godinez and Liu, 2018;Kostova and Roth, 2002;Kostova et al, 2008;Spencer and Gomez, 2011). On the other hand, norms in the home countries are internalized into the companies' values, structure and practices which are transferred to their overseas operations (Cuervo-Cazurra, 2016;Frei and Muethel, 2017;Gao, 2011;Kostova and Roth, 2002;Orudzheva et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Social norms, organizational learning and bribes in emerging economies: a study of foreign invested firms in Vietnam

Vuong

Nguyen

Phan

2020

MBR

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Purpose Drawing from institutional theory and organizational learning perspectives, the purpose of this paper is to examine how social norms of corruption in home countries and those in host localities influence firm bribery behavior. It also investigates factors that moderate the influence of these norms. Design/methodology/approach The study is based on survey data of foreign invested firms (FIFs) in Vietnam, conducted by the Vietnam Chamber of Commerce and Industry between 2010 and 2018 along with Transparency International’s Corruption Perception Index. The authors run ordinary least squares regressions to test the hypotheses. Findings The study provides evidence that social norms of corruption in both home countries and host localities influence firms’ bribery behavior, but their effects are moderated by different sets of factors. Specifically, the use of local leadership augments the impact of the host province’s corruption norms on the firm’s bribe payments. By contrast, the relationship between the home country’s corruption norms and a FIF’s bribe payment is weaker if local leadership is used, and stronger if the FIF’s home country belongs to the Organization for Economic Co-operation and Development. Research limitations/implications Repeated cross-sectional data do not allow us to genuinely keep track of the changing roles of home country and host province corruption norms over time.[AQ2] In addition, the use of perception measures for corruption norms is subject to potential biases. Practical implications As the hiring of local executives weakens the impact of the home country’s norms which are embedded in the MNCs’ general practices, a stronger learning measure and regular review of the headquarters’ policies and practices is needed to ensure the overseas branch’s compliance. For policymakers, it is critical to recognize that local corruption plays a role in shaping FIFs’ bribery behavior. Originality/value While the effect of social norms of corruption on firm bribery behavior has been recognized, to the best of the authors’ knowledge, this is the first study that examines the learning processes FIFs may take to make sense of and cope with these norms, and also the first one to specify factors that moderate the influence of these norms.

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“…Those include both grand corruption that occurs at the highest levels of government and petty corruption that can both serve as a blocker and enable citizens' access to healthcare and education. Some researchers also utilize questionnaires and interviews to measure corruption (Gao, 2011;Luo, 2006;Petrou, 2015), and focus on one or small number of countries or single region.…”

Section: Research Backgroundmentioning

confidence: 99%

Corruption distance and FDI location choice.

Rodina¹

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Corruption is a complex, multifaceted phenomenon, often functioning as a ‘critical institution’ filling institutional voids. The topic of corruption has attracted widespread attention in economics, management, and international business since the end of the 20th century. Some argue that it negatively affects countries’ economic growth, FDI inflows and distorts the allocation of public spending on healthcare and education. Others believe that corruption can serve as ‘grease’ to the wheel of commerce. In my thesis, I explored the interlinkages between pervasive corruption (i.e., stable, known) and the location choice MNEs make through applying corruption distance with direction and magnitude to the relationship. Additionally, I included VUCA conditions dominating our world today – volatility, uncertainty, complexity, and ambiguity. By matching them to the institutional factors – political stability, government effectiveness, policy uncertainty and arbitrary corruption (i.e., unpredictable, unknown); I enhanced the understanding of the effect of institutions on a firm’s location decision in a worldwide contextThis research applied a quantitative approach and analysed 940,485 observations – investments made by 1,113 firms in 169 countries over five years. I chose the Healthcare sector because of its importance in today’s world of epidemics, pandemics and the ageing population. Through the logistic regression analysis, this thesis found that corruption indeed acts as ‘grease’ and attracts firms instead of repulsing them. Moreover, the larger the corruption distance is, the more likely the firms will invest. Additionally, it was found that policy uncertainty has a significantly negative moderating effect on the relationship between corruption distance and FDI location choice. My research findings contribute to both institutional theory and location choice literature by answering the puzzling question of the true nature of the relationship between corruption and FDI location choice. My research also contributes to the literature incorporating VUCA dimensions. It emphasises the importance of including them in any modern study focusing on current global issues and the ever-changing environment increasingly affected by VUCA factors.

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Isomorphic effect and organizational bribery in transitional China

Cited by 12 publications

References 65 publications

CEO characteristics, multinationality and downside risk: evidence from Chinese multinational corporations

CEO characteristics, multinationality and downside risk: evidence from Chinese multinational corporations

Social norms, organizational learning and bribes in emerging economies: a study of foreign invested firms in Vietnam

Corruption distance and FDI location choice.

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