Search results

Purpose – This chapter examines the corporate social responsibility (CSR) of international businesses to combat commercial and governmental corruption. The focus is on multinational enterprises (MNEs) as key business actors globally.Design/methodology/approach – The methodology of the chapter is a combination of literature review, summary of international anticorruption accords, and analysis of available data sources. The literature review is not a systematic survey of academic literature but rather citation of key works bearing on the chapter's purpose. Greater emphasis rests on anticorruption accords and data sources to provide practical guidance to business managers and public officials.Findings – Corruption is global and ubiquitous although varying markedly by country and industry. Corruption occurs in multiple forms such as bribery, entertainment, extortion, facilitating payments, favors, gifts, gratuities, and travel. International anticorruption accords now constitute a formal global norm against bribery and extortion in commercial or governmental transactions. Economic and political costs of corruption are high. Active national enforcement is gradually increasing.Practical implications – The needed corporate policy is not to pay bribes, large or small, in any form for any reason. Such policy will in future extend to prohibit even minor facilitating payments. Businesses should define and enforce broadly applied anticorruption norms. The chapter cites key examples of prosecutions and anticorruption efforts.Originality/value of chapter – This chapter marshals available information from literature, anticorruption accords, and corruption data sources. The chapter is intended to be a useful guide for business managers and public officials.

Family businesses have several distinct features that distinguish them from other businesses. This aspect makes it imperative that scholars investigate issues with an additional focus on the interplay of family business dynamics. In this chapter, we explore the issues of power and corruption within family business, with the understanding that prior examinations of this phenomenon were primarily restricted to large public corporations that are not family owned. The key contribution of this chapter is to shed light on the dark side of family business, namely power enabled corruption. We do so by considering three dimensions that are unique to family firms, namely, ownership and control, generations, and governance. In particular, we highlight how these dimensions can facilitate corruption. It is possible that they may also challenge family business that try to detect, deter, and control corruption within their ranks. The lack of objective external evaluation, the ineffectiveness of internal checks, generational issues, family control, and the restricted nature of governance appear to contribute to exacerbating tensions that promote corruption becoming entrenched within family businesses. Following a case method approach, several illustrative examples of cases of power and corruption within family firms are provided, representing different geographic regions of the world, to showcase the widespread nature of this phenomenon. The three family business cases we illustrate (Grupo Odebrecht in Latin America, Sahara Group in South Africa and Foremost Maritime Group in China) represent multiple countries, continents, and geo-political frontiers. Each case illustrates how both corruption and power reinforce each other in family businesses. Implications of the magnifier effect of power on corruption in family business are discussed in terms of its impact, scale, and its enabling effect by providing a road map to corruption.

The Australia–China business relationship is immensely important for the economic prosperity and living standards of both the countries. There are major differences in business culture between the two countries – Australia from the Global South with Anglo Imperial business traditions and practices, compared with the fast-developing economic might of China, the largest country by population and economic scale in the Far East. China is currently experiencing a crackdown on corruption under President Xi Jinping which started in 2012. Gift giving, guanxi (significant relationships), bribery and corruption are some of the biggest business relationship management issues between Australia and China. Appropriate gift giving and guanxi are distinguished here from bribery and corruption. Guanxi has been associated in the business and academic literature with deterioration in business ethics practices, including bribery and corruption – however, the literature also notes that this does not need to be the case. Following a review of the institutional setting and the literature here, a series of research propositions are developed that provides a framework within the whole ethics of governance regime for a corporation to manage bribery and corruption challenges for corporations. This framework can be used for Australian Stock Exchange, Hong Kong Stock Exchange listed companies which have legal systems parented in the United Kingdom; elements of the model may be useful in the China business setting.

This study investigates how perceived political corruption, a generally overlooked corruption type, relates to firms' new product development (NPD) through perceived regulatory obstacles. It also examines firms' perceptions of business association support in this relationship, considering these associations' potential support for NPD.

This study conducted an empirical analysis of 1,663 firms in Turkey, a country noted for a history of legislative corruption, and in which there are strong business associations. Drawing the data from the World Bank's 2019 Enterprise Surveys Dataset, this study tested the hypotheses via the two-stage factor score regression method.

This study finds that perceived political corruption significantly relates to NPD negatively through perceived regulatory obstacles. It also finds that the perceived support of business associations to NPD is significantly greater when firms perceive regulatory obstacles but only slight political corruption.

As far as political corruption is concerned, this study reveals that corruption can also be the cause of regulatory obstacles, expanding the common view of corruption as a means of overcoming regulatory obstacles to NPD. In addition, it introduces the role of business associations in this relationship by revealing their support to NPD for different levels of perceived political corruption and regulatory obstacles.

The purpose of this paper is to investigate whether public corruption influences entrepreneurial activity in the USA. Because the true underlying level of corruption is inherently unobservable, it cannot be factored into business venturing decisions. The authors hypothesize, therefore, that new business venturing should be related to the expected corruption level.

The authors follow Cordis (2009) to calculate the expected rate of public corruption given observed levels of public corruption. The authors embed the expected level of corruption in a relatively standard model of business venturing, which the authors estimate using a cross section of the US states covering the period of 1986-2009.

Using a relatively standard model of business venturing that accounts for variation in predicted corruption levels, the authors find that entrepreneurs launch more businesses in states with higher predicted corruption.

To the knowledge, no one has previously tested the impact of expected corruption on entrepreneurial activity.

This paper aims to explore the relationship between corporate corruption risk and environmental, social and governance (ESG) reporting and if this relationship is moderated by business ethics.

Data from a sample of 347 European firms selected from the ESG Index between 2010 and 2020 were used to test the model using panel data and multiple regressions. This paper considered the feasible generalized least squares estimation for linear panel data models. A multiple regression model is used to analyze the moderating effect of business ethics on the association between corporate corruption risk and ESG reporting. For robustness analyses, the authors included the alternative measure of the dependent variable, and they applied the simultaneous equation model for the endogeneity test.

The empirical results reveal a negative relationship between corporate corruption risk and ESG reporting. Furthermore, the findings suggest that business ethics positively moderate the relationship between corporate corruption risk and ESG reporting.

This paper presents an enormous contribution to the various economic agents involved in the company. The results could attract the attention of socially responsible investors and, above all, corporate citizens. Moreover, the managers of corrupt companies could take into account the results of this study by being more committed to an optimized transparency strategy on ESG reporting.

To the best of the authors’ knowledge, this is the first study to investigate the moderating role of business ethics on the relationship between corporate corruption risk and ESG reporting in the European context. It is also the first study documenting that business ethics reinforce the relationship between firm corruption and nonfinancial information transparency. This study fills a research gap as it expands the existing literature, which generally focuses on the impact of corporate corruption on ESG reporting.

This paper seeks to discover whether and how a subsidiary located in a high‐corruption host country can pursue its parent's corporate non‐corrupt strategy, rooted in a low‐corruption home country. Theoretically, it aims to apply the construct of institutional duality. It also aims to argue that the subsidiary's strategic response is contingent to the relative strength of two sets of institutional demands: the articulation of the multinational company's (MNC's) corporate policy towards corruption; and the direct influence of the host country corruption on the subsidiary's daily business.

A qualitative analysis of interviews with executives of 27 Finnish companies (15 large MNCs and 12 small to medium‐sized enterprises (SMEs)) with subsidiaries in Russia was conducted.

The subsidiary's strategic response to host country corruption is contingent to the firm size and the respective resources. Large MNCs can implement their non‐corrupt policy also in their Russian subsidiaries due to their financial and relational resources. SMEs, which lack such resources, need to adapt to the demands from the corrupt environment. This is usually done by “outsourcing” situations prone to corruption to a local intermediary.

The empirical analysis is limited to one pair of countries (Russia and Finland) and selected locations in Russia (Moscow and St Petersburg).

The paper provides examples of business strategies that help to mitigate the negative consequences of host country corruption without giving up one's moral and ethical principles.

The paper enriches the literature on corruption in international business by identifying the firm size as a key determinant for strategic responses to host country corruption.

This study aims to investigate the level of business exposure to corruption in Malaysia. The authors estimate the effect of bribe requests from business establishments by public officials and identify the level of vulnerability of businesses to such requests.

This study uses firm-level data from the World Bank Malaysia Enterprise Survey 2014. The analyses are based on binary logit, tobit and generalized ordered logit regressions.

The authors find that one-fifth of firms applying for construction permits or had visits or meetings with tax officials were expected to pay bribes. Firms’ encounters with corruption were higher still when applying for import (29%) or operating license (24.7%). About 40% of the firms considered corruption an obstacle to their business operations to the degree of moderate, major and even severe. On average, 11% of firms’ total annual sales were apportioned for informal gifts or “speed money.” The authors also find that larger, younger and women-managed/owned companies were more likely to be targeted for bribe payments. The amount of bribe paid by foreign-owned firms was higher than the local firms. Manufacturing firms had lower incidences of bribe requests, but the amount paid was higher than services-related companies. Firms run or owned by women also, on average, paid a higher amount bribe.

These findings should be taken into consideration in the efforts to eradicate corruption affecting businesses in Malaysia.

This study is unique in the sense that it is based on firm-level data for a Malaysian case.

The purpose of this paper is to explore areas where business corruption in Russia affects distributors of foreign goods (both local and foreign owned) and whether its effects vary depending on whether the distributor is small or large.

The paper primarily employs a qualitative research technique of face‐to‐face interviews. The in‐depth semi‐structured interview method is chosen because it is the only option for collecting data on such a sensitive topic.

The findings reveal the areas of corruption where distributors of foreign goods in Russia are most likely to be affected and suggest that, though widespread in Russia, corruption may have far greater effect on smaller distributors as compared to large firms. Large distributing firms can avoid involvement in corruption in some of the areas explored. This in turn may limit small‐sized foreign manufacturers' capability to compete in this market, as they are most likely only able to contact small‐sized distributors.

The research could be extended to a broader sample of other sectors of the economy where distribution of foreign‐made goods takes place. Carrying out a study in other emerging economies to test findings of this research would also contribute to the limited body of research on business environment in emerging economies.

The paper presents findings that are based on primary sources – interviews with distributors conducting business in Russia. Hence, its originality and value to contemporary distributors, whether currently in business or conducting feasibility studies to distribute foreign goods in Russia. This research paper can also be considered a valuable platform for further research in this field.

In 2006 the German-based electronics company Siemens faced widespread corruption and bribery allegations. Investigations of the German state attorney’s office disclosed an amount of more than 2.3 billion of suspicious payments to foreign governments (Schubert & Miller, 2008). It turned out that Siemens had bribed governmental officials in order to secure contracts and to obtain favorable conditions over more than three decades (Schmidt, 2009). Though Siemens had a clearly stated anticorruption policy this did not prevent the company from getting involved in one of the largest corporate scandals in German business history.

A deeper analysis of the scandal reveals at least four fundamental shortcomings which enabled the corrupt practices on all organizational levels. First, most of the managers saw no alternatives to secure their foreign business, especially in countries where bribery payment has been a widespread practice. Second, the managers had created misguided bonds of loyalty believing that personal engagement in the corruption scheme was part of their dedication to the company. Third, due to corporate routines and commonly accepted practices, most managers lacked a clear sense of reality seeing corruption as part of the regular business at Siemens. Fourth, poor governance structures and a lack of clear regulations for doing business in a corrupt environment made it easier for managers to bypass official regulations.