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Linking entry mode choices of MNCs with countries’ corruption. A review

  • Marlene Grande

    ()

    (Faculdade de Economia, Universidade do Porto)

  • Aurora A. C. Teixeira

    ()

    (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF.)

Despite 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.

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Paper 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.

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Length: 30 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:por:obegef:008
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