Linking entry mode choices of MNCs with countries’ corruption. A review
AbstractDespite voluminous literature on corruption and the entry mode choices of MNCs in isolation, a comprehensive account which details the mechanisms through which corruption impacts on MNCs’ entry modes is lacking. To overcome such a gap, we systematically review and provide an up-to-date overview of the empirical literature on corruption and the entry mode choices of MNCs. The review demonstrates that, in general, when in presence of markets with high levels of corruption, MNCs prefer low equity (i.e., joint-ventures with local partners) or non-equity (namely exports and contracting) entry mode choices. Nevertheless, it also reveals that, in some specifi c cases, such as cultural proximity, even when there is pervasive corruption, MNCs may enter via wholly-owned subsidiaries. Such conclusions uncovered an interesting path for future research by exploring a rather neglected context: entry mode choices of MNCs from developed countries in African countries with which these developed countries possess historical and cultural ties.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by OBEGEF - Observatório de Economia e Gestão de Fraude & OBEGEF Working Papers on Fraud and Corruption in its series OBEGEF Working Papers with number 008.
Length: 30 pages
Date of creation: Oct 2011
Date of revision:
Contact details of provider:
Corruption; Entry modes ; MNCs;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rafael Moner-Colonques & Vicente Orts & José J. Sempere-Monerris, 2008. "Entry in Foreign Markets under Asymmetric Information and Demand Uncertainty," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 1105-1122, April.
- Mutinelli, Marco & Piscitello, Lucia, 1998. " The Influence of Firm's Size and International Experience on the Ownership Structure of Italian FDI in Manufacturing," Small Business Economics, Springer, vol. 11(1), pages 43-56, August.
- Theo Eicher & Jong Woo Kang, 2004.
"Trade, Foreign Direct Investment or Acquisition: Optimal Entry Modes for Multinationals,"
CESifo Working Paper Series
1174, CESifo Group Munich.
- Eicher, Theo & Kang, Jong Woo, 2005. "Trade, foreign direct investment or acquisition: Optimal entry modes for multinationals," Journal of Development Economics, Elsevier, vol. 77(1), pages 207-228, June.
- Stähler, Frank & Ryan, Michael & Raff, Horst, 2007.
"The Choice of Market Entry Mode: Greenfield Investment, M&A and Joint Venture,"
Economics Working Papers
2007,19, Christian-Albrechts-University of Kiel, Department of Economics.
- Raff, Horst & Ryan, Michael & Stähler, Frank, 2009. "The choice of market entry mode: Greenfield investment, M&A and joint venture," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 3-10, January.
- Bianchi, Constanza C. & Ostale, Enrique, 2006. "Lessons learned from unsuccessful internationalization attempts: Examples of multinational retailers in Chile," Journal of Business Research, Elsevier, vol. 59(1), pages 140-147, January.
- Javalgi, Rajshekhar (Raj) G. & Deligonul, Seyda & Ghosh, Amit K. & Lambert, Douglas M. & Cavusgil, S. Tamer, 2010. "Foreign market entry mode behavior as a gateway to further entries: The NAFTA experience," International Business Review, Elsevier, vol. 19(3), pages 209-222, June.
- Horstmann, Ignatius J & Markusen, James R, 1996.
"Exploring New Markets: Direct Investment, Contractual Relations and the Multinational Enterprise,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 1-19, February.
- Ignatius J. Horstmann & James R. Markusen, 1995. "Exploring New Markets: Direct Investment, Contractual Relations and the Multinational Enterprise," NBER Working Papers 5029, National Bureau of Economic Research, Inc.
- Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2009. "Equity-based entry modes of emerging country multinationals: Lessons from Turkey," Journal of World Business, Elsevier, vol. 44(4), pages 445-462, October.
- Goel, Rajeev K. & Nelson, Michael A., 2010.
"Causes of corruption: History, geography and government,"
Journal of Policy Modeling,
Elsevier, vol. 32(4), pages 433-447, July.
- Goel, Rajeev K. & Nelson, Michael A., 2008. "Causes of Corruption:History, Geography, and Government," BOFIT Discussion Papers 6/2008, Bank of Finland, Institute for Economies in Transition.
- Galina An & Keith E. Maskus & Thitima Puttitanun, 2008. "Duration of Rent Extraction and the Entry Mode Decision of Multinational Enterprises," Review of Development Economics, Wiley Blackwell, vol. 12(4), pages 861-876, November.
- Serena Fatica, 2010. "Investment Liberalization and Cross-Border Acquisitions: The Effect of Partial Foreign Ownership," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 320-333, 05.
- Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
- Jiahua Che & Giovanni Facchini, 2007.
"Cultural Differences, Insecure Property Rights and the Mode of Entry Decision,"
Economics Discussion Papers
645, University of Essex, Department of Economics.
- Jiahua Che & Giovanni Facchini, 2009. "Cultural differences, insecure property rights and the mode of entry decision," Economic Theory, Springer, vol. 38(3), pages 465-484, March.
- Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
- Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 334-64, October.
- Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June.
- Donna L Paul & Rossitza B Wooster, 2008. "Strategic investments by US firms in transition economies," Journal of International Business Studies, Palgrave Macmillan, vol. 39(2), pages 249-266, March.
- Edwards, Ronald W. & Buckley, Peter J., 1998. "Choice of location and mode: the case of Australian investors in the UK," International Business Review, Elsevier, vol. 7(5), pages 503-520, October.
- Shih-Fen S Chen, 2010. "A general TCE model of international business institutions: Market failure and reciprocity," Journal of International Business Studies, Palgrave Macmillan, vol. 41(6), pages 935-959, August.
- Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.
- Dey, Harendra Kanti, 1989. "The genesis and spread of economic corruption: A microtheoretic interpretation," World Development, Elsevier, vol. 17(4), pages 503-511, April.
- Ayca Tekin-Koru, 2009. "Technology transfers and optimal entry strategies for the multinational firm," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(4), pages 553-574.
- Pennings, Enrico & Sleuwaegen, Leo, 2004. "The choice and timing of foreign direct investment under uncertainty," Economic Modelling, Elsevier, vol. 21(6), pages 1101-1115, December.
- Klitgaard, Robert, 1989. "Incentive myopia," World Development, Elsevier, vol. 17(4), pages 447-459, April.
- Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2004.
"Corruption Around The World: Evidence From A Structural Model,"
- Dreher, Axel & Kotsogiannis, Christos & McCorriston, Steve, 2007. "Corruption around the world: Evidence from a structural model," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 443-466, September.
- Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2007. "Corruption Around the World: Evidence from a Structural Model," Discussion Papers 0702, Exeter University, Department of Economics.
- Yadong Luo, 2001. "Determinants of Entry in an Emerging Economy: A Multilevel Approach," Journal of Management Studies, Wiley Blackwell, vol. 38(3), pages 443-472, 05.
- Qiu, Larry D. & Tao, Zhigang, 2001. "Export, foreign direct investment, and local content requirement," Journal of Development Economics, Elsevier, vol. 66(1), pages 101-125, October.
- Assaf Razin & Efraim Sadka, 2007.
"Introduction to Foreign Direct Investment: Analysis of Aggregate Flows
[Foreign Direct Investment: Analysis of Aggregate Flows]," Introductory Chapters, Princeton University Press.
- Suhejla Hoti & Michael McAleer, 2004. "An Empirical Assessment of Country Risk Ratings and Associated Models," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 539-588, 09.
- Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment - A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, 02.
- Mudambi, R. & Mudambi, S. M., 2002. "Diversification and market entry choices in the context of foreign direct investment," International Business Review, Elsevier, vol. 11(1), pages 35-55, February.
- Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
- Chen, Haiyang & Hu, Michael Y., 2002. "An analysis of determinants of entry mode and its impact on performance," International Business Review, Elsevier, vol. 11(2), pages 193-210, April.
- Drogendijk, Rian & Slangen, Arjen, 2006. "Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises," International Business Review, Elsevier, vol. 15(4), pages 361-380, August.
- Klaus E Meyer, 2001. "Institutions, Transaction Costs, and Entry Mode Choice in Eastern Europe," Journal of International Business Studies, Palgrave Macmillan, vol. 32(2), pages 357-367, June.
- Tseng, Chiung-Hui & Lee, Ruby P., 2010. "Host environmental uncertainty and equity-based entry mode dilemma: The role of market linking capability," International Business Review, Elsevier, vol. 19(4), pages 407-418, August.
- Jean-Fran�ois Hennart, 2009.
"Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets,"
Journal of International Business Studies,
Palgrave Macmillan, vol. 40(9), pages 1432-1454, December.
- Jean-Fran�ois Hennart, 2009. "Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets," Journal of International Business Studies, Palgrave Macmillan, vol. 40(9), pages 1591-1591, December.
- Sumon Kumar Bhaumik & Stephen Gelb, 2005. "Determinants of Entry Mode Choice of MNCs in Emerging Markets : Evidence from South Africa and Egypt," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 41(2), pages 5-24, March.
- Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
- Shaomin Li & Kiran Karande & Dongsheng Zhou, 2009. "The Effect of the Governance Environment on Marketing Channel Behaviors: The Diamond Industries in the U.S., China, and Hong Kong," Journal of Business Ethics, Springer, vol. 88(3), pages 453-471, October.
- X Martin & R Salomon, 2003. "Knowledge transfer capacity and its implications for the theory of the multinational corporation," Journal of International Business Studies, Palgrave Macmillan, vol. 34(4), pages 356-373, July.
- Li, Jing & Rugman, Alan M., 2007. "Real options and the theory of foreign direct investment," International Business Review, Elsevier, vol. 16(6), pages 687-712, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rui Henrique Alves).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.