Search results

This study aims to examine the relationship between cultural distances between countries and their scores in the Corruption Perception Index (CPI), which is the most commonly used measure of corruption in international business (IB) research.

The authors applied fixed-effect (generalized least squares) statistical modeling technique to analyze 1,580 year-country observations.

The authors found that the CPI score is determined to a large extent by cultural distances between countries, specifically the distance to the USA and to Denmark.

CPI is often used as a sole measure of state-level corruption in IB research. The results show that the measure is significantly influenced by cultural differences and hence it should be applied with great caution, preferably augmented with other measures.

To the best of the authors’ knowledge, this is the first study to look at cultural distances as determinants of CPI score. The authors empirically test whether the CPI is culturally biased.

The purpose of this paper is to measure the influence of corruption distance (CD) on foreign direct investment (FDI) with the characteristics of the value function from the Prospect Theory (PT) such as loss aversion and diminishing sensitivity.

Data are derived from Transparency International and the Organisation for Economic Co-operation and Development (OECD) and tested on the countries China, Germany, Italy, Japan, Korea, Russia, Spain and the UK and are analysed with a natural log (LN) regression model.

The findings indicate a negative asymmetric relationship for China, Germany, Korea, Spain and Russia. This means that negative performance on CD will not have greater impact on FDI outflows than positive performance on CD in the same country. Loss aversion, as well as diminishing sensitivity, as suggested by the PT, cannot be supported with the empirical results.

Its originality lies in contributing and extending knowledge on CD on FDI in several ways. First, it analyses the data of emerging and industrialized countries, namely, Russia, China, Germany, Italy, Japan, Korea, Spain and the UK. Second, a potential asymmetric impact is explained by the characteristics of the hypothetical value function of the PT. Third, it seeks empirical evidence by applying an econometric model developed to analyse the variables CD and FDI.

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.

This paper aims to investigate the relationship between the GLOBE (Global Leadership and Organizational Behaviour Effectiveness) project national cultural dimensions of values and practices and the Corruption Perception Index (CPI).

Most empirical research on culture dimensions and corruption is based on Hofstede's dataset of culture conducted more than 25 years ago. Evidence from a more recent dataset of culture dimensions is needed before current generalizations can be made. The GLOBE project is based on the perceptions of 18,000 individuals.

The results provide empirical support for the influence of uncertainty avoidance values, human orientation practices, and individual collectivism practices on the level of corruption after controlling for economic and human development, which, in turn, adds to the efforts to build a general theory of the culture perspective of corruption.

The findings offer valuable insights on why cultural values and cultural practices should be distinguished as they relate to corruption.

International policy makers as well as managers at multinational corporations can benefit from the findings of this research study.

The research reported is among the first to investigate the issue of corruption from the perspective of national cultural values and practices.

This study aims to examine the link between power distance culture and whistleblowing intention or propensity in the African context.

The study achieves its aim by reviewing literature on power distance culture and whistleblowing, and it draws on the outcomes of relevant previous studies. It then reflects on some cultural practices in Africa in relation to the topic and uses examples from Ghana to exemplify the discussions.

It is considered unacceptable and disrespectful for subordinates to challenge or question their superior’s actions and decisions in high power distance societies. High power distance culture increases the perception of the negative consequences of whistleblowing, as whistle-blowers are regarded as traitors instead of civic heroes. These issues consequently provide major disincentives to subordinates engaging in whistleblowing, leading to low whistleblowing propensity in high power distance societies and implications for the increasing rate of corruption in Africa.

The study findings imply that high power distance culture creates a “culture of silence”, which in turn provides fertile grounds for corporate crimes and unethical conducts. Authorities in high power distance societies should therefore institute adequate incentive schemes and shields to encourage and safeguard the safety of whistle-blowers.

In this era, where corporate scandals have become the order of the day and indeed a global canker, this study brings to the fore the destructive and limiting roles of culture, specifically power distance culture on the global war against unethical corporate practices and scandals.

The research question is how home country corruption and nationalism may affect operations of BRIC multinational enterprises. BRIC composition permits a comparison of two authoritarian regimes and two constitutional democracies. Each BRIC features a different combination of corruption and nationalism. The chapter adds South Africa information for two limited reasons. First, from 2010 South Africa is a member of the BRIC summit process. South Africa is an important entry point to Africa, for BRIC multinationals and particularly for China. Second, concerning corruption and nationalism South Africa is analytically useful as a control context that helps illustrate but does not appear to change highly exploratory BRIC findings.

The chapter draws on limited literature and information concerning corruption and nationalism in BRICs to suggest tentative possibilities. Transparency International provides bribe payers index estimates for 28 large economies, with important multinational enterprises, and corruption perceptions index estimates including those 28 countries. These estimates include the four BRICs and South Africa. The available sources suggest some suggested findings about varying impacts of home country corruption and nationalism on operations of BRIC multinationals.

China and Russia are authoritarian regimes in transition from central planning-oriented communist regimes. They are global military powers, expanding influence in their respective regions. Brazil, India, and South Africa are constitutional democracies. India, a nuclear-armed military power, seeks a regional leadership role in South Asia. Brazil and South Africa are key countries economically in their regions. BRIC multinationals are positioned between home country and host country conditions. Chinese and Russian multinationals may reflect a stronger nationalistic tendency due to home country regimes and ownership structure.

The chapter is an original but highly exploratory inquiry into impacts of corruption and nationalism on BRIC multinationals. Extant BRIC literature tends to understudy effects of home country corruption and nationalism on managerial mindset and incentives in either commercial or state-owned enterprises.

Purpose – The paper addresses the MNCs’ sensitivity to corruption which varies across economic sectors depending on the interaction between sectoral characteristics and home-country formal institutions’ strength.

Design/methodology/approach – A theoretical framework is proposed based on the economic sector and host-country's institutional factors. The framework is empirically tested using 245 cross-border FDI valuations. Given that the energy sector is representative of high levels of industry concentration and government involvement – the sectoral characteristics considered to be moderating the relationship between corruption and FDI – the focus of the paper is on the energy sector. The study also tests the moderating effect of corruption distance.

Findings – The results indicate a lack of evidence that MNCs are deterred by corruption when investing in the energy sector of emerging and developing economies.

Research limitations/implications – The study provides a starting-point for further research of how economic sector characteristics can moderate the relationship between corruption and FDI. A key practical implication is that international anti-corruption measures are likely to be insufficient for some economic sectors.

Originality/value – The paper has proven to be of interest to the US State Department for studying the effectiveness of the international foreign bribery laws, such as the Foreign Corrupt Practices Act. The framework can assist in identifying economic sectors likely to be resistant to comply with the foreign bribery laws when conditions of weak host-country formal institutions are present. The study challenges and complements the prevailing theory that host-country corruption has a negative effect on inward FDI.

The purpose of this paper is to advance knowledge about factors that influence the location of Russian foreign direct investments. In particular, it focusses on the role of institutional distance (represented by corruption perception distance, political distance and cultural distance) as a moderator of the relationships between traditional investment motives and the number of M&A deals made by Russian companies in a specific country.

The analysis is conducted on panel data of Russian cross-border M&As launched in 46 countries during the period 2007-2013. The final data set includes 322 observations. Due to the nature of dependent variable and the results of pre-tests, negative binomial regression is used in the main analysis.

The key finding of the study reveals the importance of institutional distance, in particular, the moderating effect of different dimensions of institutional distance on the relationships between internationalization motives and the number of Russian M&As. Corruption, political and cultural differences show different effects in terms of both direction and strength, but all three were found to be significant.

The major concern stems from the type of secondary data used in the paper. This indicates the necessity to improve data collection methods which could allow for better transparency of Russian foreign investments, would facilitate more sophisticated research and probably more accurate business forecasts.

By conducting a systematic examination of Russian cross-border M&As the authors contribute to the literature on emerging markets firms by addressing the important yet under-researched domain of Russian foreign direct investments. Building on the macroeconomic and institutional logic proposed in this study, future research on Russian cross-border activities could add to the understanding by providing more generalizable and critical evidence. The study provides a point of departure from prior studies on Russian outward FDI which the authors hope to inspire future research to further analyze the drivers of Russian M&As and foreign investments in general.

The purpose of this paper is threefold: it examines and analyzes the extent to which corruption and bribery have become the quintessential problem of international business and economies; analyzes the effect of corruption and bribery on international business at the macro level; and recommends specific action-oriented sustainable initiatives to help mitigate corruption and bribery.

This paper has conducted an in-depth global analysis of extant literature on corruption and bribery affecting international business.

This paper provides a succinct analysis of corruption and bribery relevant and critical to international business. It shows that corruption undermines democracy and the rule of law; leads to violations of human rights; distorts markets; erodes the quality of life; and allows organized crime, terrorism and other threats to human security.

This paper realizes that not all corruption and bribery have the same degree of impact on all countries and economies. This issue is not discussed, as it is outside the scope of the paper.

This paper serves as a good reference for international business community, anti-corruption agencies, law enforcement and for pedagogy in the classroom.

Provides a concise macro level of pertinent corruption and bribery issues useful as a learning material for international business, trade and development and corporate social responsibility.

This study aims to analyse the efficiency effects of institutional distance on Chinese outward foreign direct investment (FDI) in Africa.

The study utilised the true fixed-effect stochastic frontier analysis (SFA) model. Data from 2003 to 2016 (14 years) were acquired from 42 targeted African countries, which are included in the analysis.

The results reveal that FDI flow efficiency can be maximised with a high institutional distance between China and African countries. Contrariwise, comparable institutional distance, measured by the rule of law, regulatory quality and government effectiveness between the host and home countries, reflected a significant positive impact for Chinese outward foreign direct investment (OFDIs), indicating Chinese MNEs can invest directly in a country with comparable institutional characteristics.

There have been limited exceptional studies that assessed the effect of institutional distance between emerging countries. However, none of these studies investigated the effect of institutional distance between China and Africa at a national level. Using the advantage of the SFA model, this study assesses the efficiency effects of institutional distance between the host and home country.