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

Abstract

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.

The perpetuation of bribery–prone relationships: A study from Vietnamese public officials

“…Firstly, we focus on individuals' emotional discomfort and rationalization when they face with bribery situations. Much of the literature has focused on non-individual factors that promote and condition bribery, including underdeveloped market institutions (Aidt, 2009;Kaufmann, 1997;Rose-Ackerman, 1978), authority discretions (Khan, 2006;Rose-Ackerman, 1978), competition (Alexeev & Song, 2013;Diaby & Sylwester, 2015;Malesky et al, 2020), and/or social norms (Fisman & Miguel, 2007;Vuong et al, 2020). We argue that these factors, while important, are not sufficient to explain the engagement in corrupt acts of public officials.…”

“…Second, the literature has largely focused on external, nonindividual conditions for bribes, including political regime (Diaby & Sylwester, 2015;Goel et al, 2012;Ivy, 2013), regulations (Dal Bó, 2006;Khan, 2006;Rose-Ackerman, 1978), competitions (Alexeev & Song, 2013;Diaby & Sylwester, 2015;Malesky et al, 2020), social norms (Fisman & Miguel, 2007;Nguyen et al, 2016;Vuong et al, 2020), and/or organizational settings (Collins et al, 2009;De Jong et al, 2012;Pinto et al, 2008). While the role of agents in interpreting and translating external pressures into practices has been well acknowledged (Scott, 2014;Thornton & Ocasio, 2008), individual psychological processes leading to bribery acts have rarely been examined in the literature (Fernando & Bandara, 2020;Gebel, 2012;Moore, 2008;Smith-Crowe & Warren, 2014).…”

Overcoming institutional challenges in cross-border acquisitions: how home- and host-country acquisition experiences shorten the deal completion phase

“…The cognitive frames and institutional capabilities are more effective when the institutional environments in the home and host countries are more similar. On the contrary, institutional differences elevate internal and external learning barriers and increase the difficulties in sharing information and exchanging knowledge, as well as the need for adjustment and adaptation of organizational routines (Vuong et al, 2020). To be effective in the host institutional setting, the organizational routines formed from past home-country acquisition experiences need to be unlearned and redeveloped according to the demands and characteristics of the host institutional environment (Ahworegba, 2018;Kostova and Roth, 2002;Vuong et al, 2020).…”

“…On the contrary, institutional differences elevate internal and external learning barriers and increase the difficulties in sharing information and exchanging knowledge, as well as the need for adjustment and adaptation of organizational routines (Vuong et al, 2020). To be effective in the host institutional setting, the organizational routines formed from past home-country acquisition experiences need to be unlearned and redeveloped according to the demands and characteristics of the host institutional environment (Ahworegba, 2018;Kostova and Roth, 2002;Vuong et al, 2020). Because of the idiosyncrasy of institutional differences, foreign acquirers need greater organizational resources and information processing capacities to select useful pieces, tease out inappropriate pieces from a mixture of old organizational routines and new information and weave them into effective routines to seal the deal (Levinthal and March, 1993;Levitt and March, 1988;Lin et al, 2020).…”

Firm performance in the financial industry: the role of foreign entrants and their origin

“…The country has rapidly integrated into the regional and global economies by participating in an increasing number of bilateral and multilateral agreements on trade and investment liberalization, including the recently signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) [1]. Furthermore, Vietnam has risen as MBR 29,3 one of the most favored locations for multinationals from both developed and developing countries (Jensen and Malesky, 2018;Vuong et al, 2020). As shown in Figure 1, FDI inflows rose markedly from 107 projects (US$735m registered capital) in 1990 to 3,147 projects (US $38.02bn registered capital) in 2019.…”