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The MNC as an agent of change for host-country institutions: FDI and corruption

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  • Chuck C Y Kwok

    (Moore School of Business, University of South Carolina, Columbia, SC, USA)

  • Solomon Tadesse

    (Stephen M Ross School of Business, University of Michigan, Ann Arbor, MI, USA)

Abstract

Most empirical research examines how the institutional environment of corruption shapes the behavior of multinational corporations (MNCs). In this study, we would like to highlight the other side of the picture: how the presence of MNCs may shape the institutional environment of corruption over time. We propose three avenues through which the MNCs may have an impact on its host institutions: regulatory pressure effect, demonstration effect, and professionalization effect. Based on extensive data on foreign direct investment and corruption for a large sample of countries over the last 30 years, the empirical results are generally consistent with our hypothesis. Such findings provide a glimmer of hope for the future of the host country where corruption is prevalent. Journal of International Business Studies (2006) 37, 767–785. doi:10.1057/palgrave.jibs.8400228

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 37 (2006)
Issue (Month): 6 (November)
Pages: 767-785

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Handle: RePEc:pal:jintbs:v:37:y:2006:i:6:p:767-785

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Cited by:
  1. Chen, Dong & Newburry, William & Park, Seung Ho, 2009. "Improving sustainability: An international evolutionary framework," Journal of International Management, Elsevier, vol. 15(3), pages 317-327, September.
  2. Meyer, Klaus E. & Thein, Htwe Htwe, 2014. "Business under adverse home country institutions: The case of international sanctions against Myanmar," Journal of World Business, Elsevier, vol. 49(1), pages 156-171.
  3. Lee, Seung-Hyun & Yamakawa, Yasuhiro & Peng, Mike W. & Barney, Jay B., 2011. "How do bankruptcy laws affect entrepreneurship development around the world?," Journal of Business Venturing, Elsevier, vol. 26(5), pages 505-520, September.
  4. Jamie Collins & Klaus Uhlenbruck & Peter Rodriguez, 2009. "Why Firms Engage in Corruption: A Top Management Perspective," Journal of Business Ethics, Springer, vol. 87(1), pages 89-108, June.
  5. Mina Glambosky & Kim Gleason & Joan Wiggenhorn, 2011. "Joint ventures between US MNCs and foreign governments," International Journal of Managerial Finance, Emerald Group Publishing, vol. 7(3), pages 238-258, June.
  6. Duanmu, Jing-Lin, 2011. "The effect of corruption distance and market orientation on the ownership choice of MNEs: Evidence from China," Journal of International Management, Elsevier, vol. 17(2), pages 162-174, June.
  7. Judge, William Q. & McNatt, D. Brian & Xu, Weichu, 2011. "The antecedents and effects of national corruption: A meta-analysis," Journal of World Business, Elsevier, vol. 46(1), pages 93-103, January.
  8. Wang, Danny T. & Gu, Flora F. & Tse, David K. & Yim, Chi Kin (Bennett), 2013. "When does FDI matter? The roles of local institutions and ethnic origins of FDI," International Business Review, Elsevier, vol. 22(2), pages 450-465.
  9. Diana Robertson, 2009. "Corporate Social Responsibility and Different Stages of Economic Development: Singapore, Turkey, and Ethiopia," Journal of Business Ethics, Springer, vol. 88(4), pages 617-633, October.
  10. Beugelsdijk, S. & Hennart, J.M.A. & Slangen, A.H.L. & Smeets, R., 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3982853, Tilburg University.
  11. Riddle, Liesl & Brinkerhoff, Jennifer, 2011. "Diaspora entrepreneurs as institutional change agents: The case of Thamel.com," International Business Review, Elsevier, vol. 20(6), pages 670-680.
  12. Gueorguiev, Dimitar & Malesky, Edmund, 2012. "Foreign investment and bribery: A firm-level analysis of corruption in Vietnam," Journal of Asian Economics, Elsevier, vol. 23(2), pages 111-129.
  13. Holtbrügge, Dirk & Berg, Nicola & Puck, Jonas F., 2007. "To bribe or to convince? Political stakeholders and political activities in German multinational corporations," International Business Review, Elsevier, vol. 16(1), pages 47-67, February.
  14. Zwinkels, Remco C.J. & Beugelsdijk, Sjoerd, 2010. "Gravity equations: Workhorse or Trojan horse in explaining trade and FDI patterns across time and space?," International Business Review, Elsevier, vol. 19(1), pages 102-115, February.
  15. Wiig, Arne & Kolstad, Ivar, 2010. "Multinational corporations and host country institutions: A case study of CSR activities in Angola," International Business Review, Elsevier, vol. 19(2), pages 178-190, April.
  16. Charles Koerber, 2009. "Corporate Responsibility Standards: Current Implications and Future Possibilities for Peace Through Commerce," Journal of Business Ethics, Springer, vol. 89(4), pages 461-480, March.
  17. Daphne Athanasouli & Antoine Goujard & Pantelis Sklias, 2012. "Corruption and firm performance: Evidence from Greek firms," International Journal of Economic Sciences and Applied Research (IJESAR), Technological Educational Institute (TEI) of Kavala, Greece, vol. 5(2), pages 43-67, August.
  18. Ioanna Boulouta & Christos Pitelis, 2014. "Who Needs CSR? The Impact of Corporate Social Responsibility on National Competitiveness," Journal of Business Ethics, Springer, vol. 119(3), pages 349-364, February.
  19. Zhao, Meng, 2013. "Beyond cops and robbers: The contextual challenge driving the multinational corporation public crisis in China and Russia," Business Horizons, Elsevier, vol. 56(4), pages 491-501.

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