MNEs and corruption: the impact of national institutions and subsidiary strategy

Abstract

We argue that the pressure MNE subsidiaries face to engage in corrupt practices in their host country varies positively with the institutionalization of corrupt practices in both host and home country environments. We further argue that the relationship between an MNE's home country environment and the pressure it faces in the host country is moderated by its localization strategy. Results suggest a positive relationship between the host country corruption environment and the pressure subsidiaries face to engage in bribery locally. Mixed results emerged concerning MNEs from home countries participating in the OECD Convention for Combating Bribery. Results concerning the impact of the home country corruption environment are best viewed in light of significant moderating effects. When MNEs did not have local partners, firms from less corrupt home countries reported less pressure to engage in corrupt practices locally; however, the presence of local partners eliminated this relationship. Results will help managers understand the pressures their firm is likely to face when operating in corrupt host country environments, and also offer guidance concerning how the firm might reduce its exposure to those local institutional pressures.

Corporate reporting on corruption: An international comparison

“…The mean number of employees for companies included in this study is 30,856; the median value is 5,623. Secondly, there are complex dynamics with regard to the various host contexts in which these companies operate, which in turn are likely to influence their anti-corruption engagement (Spencer & Gomez, 2011;Spicer, Dunfee, & Bailey, 2004 These limitations open up a number of avenues for future research. To start with, future research could examine the link between the communication of anti-corruption initiatives and actual levels of corporate engagement in this area.…”

Determinants of reverse marketing knowledge transfer potential from emerging market subsidiaries to multinational enterprises’ headquarters

“…If, however, the HQ wants to ensure corporate alignment, it may implement control mechanisms, such as home-country nationals overseeing operations or moving decision-making to HQ (Spencer & Gomez, 2011). It is therefore possible that lack of trust will yield RKT potential through formal control and reporting; however, trust as a concept goes both ways.…”

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

“…These corrupt In his study, whilst Hines (1995) did not find an overall negative correlation between corruption and inward FDI, he did find that American business activities in bribe-prone countries decreased sharply after the enactment of the U.S. Foreign Corrupt Practices Act (1977). However, Spencer & Gomez (2010) reported more mixed results with respect to MNEs from home countries which were signatories to the OECD Convention. Having said that, there is evidence that an MNE's readiness to pay bribes is lowest when such illicit activities are not tolerated in its home country (Baughn, Bodie, Buchanan, & Bixby, 2010).…”