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Book part
Publication date: 4 March 2021

Guoliang Frank Jiang and Michael A. Sartor

This study examines the contingent impact of corporate anti-corruption policies on multinational enterprises’ foreign investment strategy. The authors propose that the differences…

Abstract

This study examines the contingent impact of corporate anti-corruption policies on multinational enterprises’ foreign investment strategy. The authors propose that the differences in foreign investment motives will moderate the assumed deterrent effect of anti-corruption policies. Our analysis of overseas production investments by Japanese firms (2011–2017) supports some of the hypotheses. The authors find that the deterrent effect of anti-corruption policies may be diminished when a new subsidiary has an efficiency-seeking purpose. Conversely, the deterrent effect is more prominent when a new subsidiary has a competence-creating purpose. These results not only contribute to the research on control of corruption in international business, but also have implications for research on corporate self-regulation more generally.

Details

The Multiple Dimensions of Institutional Complexity in International Business Research
Type: Book
ISBN: 978-1-80043-245-1

Keywords

Article
Publication date: 1 July 2014

Alex Kouznetsov, Mohan Dass and Peter Schmidt

The purpose of this paper is to examine whether political elements affect entry mode decisions of foreign small- to medium-sized manufacturing enterprises (SMMEs) into…

1043

Abstract

Purpose

The purpose of this paper is to examine whether political elements affect entry mode decisions of foreign small- to medium-sized manufacturing enterprises (SMMEs) into post-communist Russia.

Design/methodology/approach

The paper employs a qualitative research technique. The data were collected using confidential, semi-structured face-to-face interviews.

Findings

Smaller manufacturers are more sensitive to the political environment. More specifically, during face-to-face interview, corruption and ineffective law enforcement were found to be the factors of significant concern to SMMEs in Russia.

Research limitations/implications

The research on sensitive topics has limitations largely due to possible political implications for firms operating in Russia.

Practical implications

This study on Russia is significant particularly for foreign small and medium enterprises, it will also raise concerns for firms entry modes into emerging markets of former USSR members.

Originality/value

The paper presents findings that are based on primary sources – interviews with foreign firms currently conducting business in Russia. The research findings will be a valuable source of information to contemporary firms conducting feasibility studies with a view to doing business in Russia. In addition, this study contributes to the limited body of research knowledge on the business environment in Russia and the emerging markets of former USSR members.

Details

Baltic Journal of Management, vol. 9 no. 3
Type: Research Article
ISSN: 1746-5265

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Article
Publication date: 7 September 2018

Jinsil Kim, David H. Weng and Seung-Hyun (Sean) Lee

Drawing on the bribery literature, this paper aims to examine the effect of bribes paid in the home country on firms’ decision to internationalize through exports from transition…

Abstract

Purpose

Drawing on the bribery literature, this paper aims to examine the effect of bribes paid in the home country on firms’ decision to internationalize through exports from transition economies. It also investigates whether the effect of home country bribery may vary from new ventures to established firms, and from those firms that operate in an environment with high to low informal competition.

Design/methodology/approach

This paper tests several hypotheses using a panel data with fixed effects based on a sample of firms in transition economies from the Business Environment and Enterprise Performance Survey.

Findings

First, home country bribery in transition economies can make domestic markets more lenient and dampen firms’ motivation to seek opportunities abroad. Second, new ventures have a higher motivation to focus on their domestic markets after paying bribes. Finally, despite the benefits accrued in the home country through bribery, firms that face a higher level of informal competition in the home country are more likely to seek opportunities abroad.

Practical implications

Managers in transition economies should consider their home country bribery activities in their evaluation of foreign market opportunities. Firms that use money to influence home country government officials, especially new ventures, are advised to have a more holistic view in evaluating foreign market opportunities so they will not miss out on new opportunities.

Originality/value

This paper advances literature on home country institutions and the research on firm global strategies. Moreover, it also highlights several contingencies that shape the effect of home country bribery on firms’ foreign market focus.

Details

Multinational Business Review, vol. 26 no. 3
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 23 September 2019

Alice S. Fisher, Douglas K. Yatter, Douglas N. Greenburg, William R. Baker III, Benjamin A. Dozier and Robyn J. Greenberg

This paper aims to analyze the March 6, 2019 enforcement advisory in which the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or…

Abstract

Purpose

This paper aims to analyze the March 6, 2019 enforcement advisory in which the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or Commission) announced that it will work alongside the US Department of Justice (DOJ) and other agencies to investigate foreign bribery and corruption relating to commodities markets.

Design/methodology/approach

This paper explains the enforcement advisory and outlines key considerations for industry participants and their compliance teams, including the CFTC’s plan to investigate in parallel with other enforcement authorities, an expansion of the CFTC’s existing self-reporting, cooperation and remediation policy to address foreign corruption and the CFTC’s focus on market and economic integrity, and provides guidelines for commodities companies concerning anti-corruption compliance and training programs, investigating potential incidents of bribery and corruption, reporting obligations under the Commodity Exchange Act (CEA) and CFTC regulations, voluntary reporting of incidents of foreign corruption and whistleblowing.

Findings

The CFTC announcement adds a new dimension to an already crowded and complex landscape for anti-corruption enforcement. A range of industries, including energy, agriculture, metals, financial services, cryptocurrencies and beyond, must now consider the CFTC and the CEA when assessing global compliance and enforcement risks relating to bribery and corruption.

Originality/value

Expert guidance from lawyers with broad experience in white collar defense, investigations, financial services, securities, commodities, energy and derivatives.

Article
Publication date: 2 July 2018

Ted C. Moorman

The purpose of this paper is to identify the place of kleptocracy and foreign corruption within the broader framework of financial crime. This facilitates understanding the…

Abstract

Purpose

The purpose of this paper is to identify the place of kleptocracy and foreign corruption within the broader framework of financial crime. This facilitates understanding the importance of kleptocracy and foreign corruption as social problems. Two other aims are to better understand the most problematic components of a kleptocratic network and the most effective combatants of that network. A subsequent goal is to offer solutions from a broad range of interventions, including policy, technology, education, research and collaborative efforts.

Design/methodology/approach

Theoretical economic concepts are used to analyze the importance of kleptocracy and foreign corruption. A small in-depth survey of 15 experts is conducted to identify the most problematic components of kleptocratic networks and the most effective combatants of those networks. The proposed solutions are based on a combination of argumentation, econometric developments, application of trends in related fields and material from in-depth surveys.

Findings

This paper identifies kleptocracy and foreign corruption as one of the most, if not the most, devastating financial crime according to its impact on the total marginal utility of wealth. Experts identify foreign kleptocrats or corrupt foreign government officials as the most problematic entities in kleptocratic networks and the most effective combatant is identified as the US Department of Justice. By adding up fines and asset forfeiture related to corruption, penalties are found to be a small fraction of the problem in terms of monetary magnitude.

Research limitations/implications

The paper does not attempt to make causal claims because of the nature of the paper’s purpose and methodology.

Practical implications

The paper offers suggestions and methods for academic researchers who may wish to pursue a research agenda that is empirical and forensic with the aim of combatting kleptocracy and foreign corruption. The paper describes how information on kleptocracy and foreign corruption can be implemented into business and economics curriculum.

Social implications

Kleptocracy and foreign corruption are important problems, and creative solutions are desperately needed.

Originality/value

The paper shows how understanding and combatting kleptocracy and foreign corruption can be considered an interdisciplinary activity, touching on fields including technology, economics, business, ethics, education, law, policy, statistics and research methods.

Details

Journal of Financial Crime, vol. 25 no. 3
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 9 January 2024

Kaitlyn DeGhetto

There is an extensive research stream devoted to evaluating host country political risk as it relates to foreign investment decisions, and in today’s geopolitical climate, this…

Abstract

Purpose

There is an extensive research stream devoted to evaluating host country political risk as it relates to foreign investment decisions, and in today’s geopolitical climate, this type of risk is becoming increasingly salient to business leaders. Despite notable advancements related to understanding the importance of government-related risk, inconsistent conceptualizations and findings remain. Thus, the purpose of this paper is to offer a comprehensive overview of how host country political risk has been conceptualized, measured and studied in relation to multinational enterprises' (MNEs’) investment decisions. After reviewing the relevant literature, five major aspects of non-violent (government type, public corruption, leadership change) and violent (armed conflict, terrorism) political risk were identified. The organization and review of each aspect of political risk provide insights on fruitful directions for future research, which are discussed.

Design/methodology/approach

To identify research articles on political risk and foreign investment, 13 leading management and international business journals were searched using relevant keywords (January 2000 to January 2023). Moreover, reviewing articles from these journals led to locating and reviewing additional relevant articles that the authors cited. Keyword searches were also conducted on Google Scholar and Web of Science in an effort to identify relevant articles outside of the 13 targeted journals.

Findings

Both violent and non-violent aspects of host country political risk have been studied in relation to MNEs' investment decisions. Specifically, five major aspects of host country political risk were identified (government type, public corruption, leadership change, armed conflict and terrorism). Although the general consensus is that risk related to the government often creates obstacles for MNEs, conceptualizations, measures and findings in prior research are not uniform.

Originality/value

This paper provides a comprehensive overview of host country political risk and foreign investment. In doing so, the aspects of political risk are identified, organized and overviewed.

Details

Cross Cultural & Strategic Management, vol. 31 no. 1
Type: Research Article
ISSN: 2059-5794

Keywords

Book part
Publication date: 24 June 2015

José Godinez and Mauricio Garita

This study researched how corruption affects the attraction of foreign direct investment (FDI). With the help of a qualitative methodology, the results of the analysis show that…

Abstract

This study researched how corruption affects the attraction of foreign direct investment (FDI). With the help of a qualitative methodology, the results of the analysis show that firms headquartered in countries where corruption is high have an advantage when operating in a foreign country with a similar institutional environment. The reason for this advantage is that such firms may possess knowledge of how to cope with the arbitrary and pervasive dimensions of corruption at home. On the other hand, firms from countries with lower corruption levels than the host country are more affected by corruption in a highly corrupt host country. Finally, even though this study found evidence that all firms operating in a highly corrupt country might participate in corrupt deals, those headquartered in highly corrupt countries are more willing to do so. This claim is based on the fact that firms from less corrupt countries might face stronger pressures from their headquarters to not engage in corrupt deals, whereas firms from more corrupt countries might not encounter such pressures.

Details

Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

Keywords

Book part
Publication date: 9 November 2004

Lorraine Eden and Stewart R Miller

The costs of doing business abroad (CDBA) is a well-known concept in the international business literature, measuring the disadvantages or additional costs borne by multinational…

Abstract

The costs of doing business abroad (CDBA) is a well-known concept in the international business literature, measuring the disadvantages or additional costs borne by multinational enterprises (MNEs) that are not borne by local firms in a host country. Recently, international management scholars have introduced a second concept, liability of foreignness (LOF). There is confusion in the two literatures as to the relationship between CBDA and LOF, as evidenced in a recent special issue on liability of foreignness (Journal of International Management, 2002). We argue that LOF stresses the social costs of doing business abroad, whereas CDBA includes both economic and social costs. The social costs arise from the unfamiliarity, relational, and discriminatory hazards that foreign firms face over and above those faced by local firms in the host country. Because the economic costs are well understood and can be anticipated, LOF becomes the core strategic issue for MNE managers. We argue that the key driver behind LOF is the institutional distance (cognitive, normative, and regulatory) between the home and host countries, and explore the ways in which institutional distance can affect LOF. We operationalize our arguments by showing how institutional distance and liability of foreignness can provide an alternative explanation for the MNE’s ownership strategy when going abroad.

Details

"Theories of the Multinational Enterprise: Diversity, Complexity and Relevance"
Type: Book
ISBN: 978-1-84950-285-6

Article
Publication date: 26 October 2018

Hiep Ngoc Luu, Ngoc Minh Nguyen, Hai Hong Ho and Vu Hoang Nam

The purpose of this paper is to empirically investigate the impact of corruption on foreign direct investment (FDI) and its two major modes of entry: greenfield investment…

1073

Abstract

Purpose

The purpose of this paper is to empirically investigate the impact of corruption on foreign direct investment (FDI) and its two major modes of entry: greenfield investment (greenfield) and cross-border mergers and acquisitions (M&As).

Design/methodology/approach

Data are collected from 131 countries. Modern econometric techniques, including the generalized method of moments (GMM) estimator, two-stage least square estimator and two-step system GMM estimator, are used to evaluate the impact of corruption on FDI activities.

Findings

The empirical results illustrate that corruption is a deterioration factor that significantly hinders FDI inflows. However, this finding turns out to be contradictory when the two major components of FDI – greenfield investment and cross-border M&As – are separately examined. Specifically, while corruption consistently discourages cross-border M&As over time, it appears to exert positive effect on greenfield investments.

Originality/value

This is among the first to empirically examine the impact of corruption on FDI and its modes of entry in a number of countries spanning different time windows. In this sense, this paper also captures the changing nature of societies and economic conditions overtime and, therefore, enable academic researchers, policy-makers and business practitioners to draw broad inferences from the empirical results.

Details

Journal of Financial Economic Policy, vol. 11 no. 2
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 24 August 2021

Muhammad Shujaat Mubarik, Miao Miao, Muhammad Faraz Mubarak, Syed Imran Zaman, Syed Hasnain Alam Kazmi and Navaz Naghavi

The primary objective of this study is to investigate the impact of a host country's corruption on the autonomy of a foreign subsidiary from a country with lower tolerance for…

Abstract

Purpose

The primary objective of this study is to investigate the impact of a host country's corruption on the autonomy of a foreign subsidiary from a country with lower tolerance for corruption. In doing so, the study examines the moderating role of subsidiary-headquarters communication and multinational corporation's (MNC's) prior international experience in countries with a higher tolerance for corruption.

Design/methodology/approach

The data were collected from 182 foreign subsidiaries of 57 Malaysian MNCs operating in 16 host countries. The study employed ordinary least square (OLS) using Stata16.1 to analyze the modeled relationships.

Findings

The findings of this study reveal a significant positive association between the extent of corruption in the host country and the subsidiary's autonomy. The findings illustrate that an MNC's prior experience in the country with an increased tolerance for corruption does not moderate the association between corruption and subsidiary autonomy. However, the findings also confirm that the extent of headquarters-subsidiary communication negatively moderates the association between corruption and subsidiary autonomy.

Originality/value

The study uses unique data collected from Malaysian MNCs. Furthermore, the study contributes to the literature by bringing forth subsidiary autonomy as a counter strategy to potential risks that can arise due to weak institutions and widespread corruption in a host country.

Details

International Journal of Emerging Markets, vol. 18 no. 9
Type: Research Article
ISSN: 1746-8809

Keywords

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