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

Binh T.T. Vuong (Foreign Trade University, Hanoi, Vietnam)
Thang V. Nguyen (Institute for Sustainable Development, National Economics University, Hanoi, Vietnam)
Ngoc T. Phan (Duke University, Durham, North Carolina, USA)

Multinational Business Review

ISSN: 1525-383X

Publication date: 26 October 2020

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.

Keywords

Acknowledgements

The research is funded by the Foreign Trade University under the “FDI and Sustainable Development” Project. The authors thank Thang Bach for his valuable comments.

Declarations of interest: The authors declare that they have no conflict of interests.

The authors contributed equally to the paper.

Citation

Vuong, B.T.T., Nguyen, T.V. and Phan, N.T. (2020), "Social norms, organizational learning and bribes in emerging economies: a study of foreign invested firms in Vietnam", Multinational Business Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MBR-11-2019-0162

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