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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.

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.

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.

Conclusion of this chapter – the Eastern European countries are culturally not homogeneous. They are almost as diverse as the European Union (EU) in total.

Several publications about the three decades since the start of the transition in Central and Eastern Europe in 1989 conclude that the convergence with, what they called, developed Europe was slowing down. This is alarming what was predicted right before the countries' access to the EU, it would take 31–80 years before they would reach average income per person in EU 15 counties.

We show that as a result of privatization without a firm legislation the superficial layers of culture were polluted. The necessary trust between authorities and citizens, between bosses and employees, disappeared. This affected the ‘rules of the game’. Slowly this trust is restored. The EU is helping because of the pressure put on the single member states in staying within the boundaries set by the EU for democracy and the rule of law.

It is interesting to look at the connection between culture and corruption: the saying is ‘power corrupts, absolute power corrupts absolutely’. Analysis of the rule of law shows that human rights as part of the law system is something that is ‘natural’ for individualistic cultures. In collectivist cultures, morality is in first place for the people of the in-group. It can be shown that enforcements of the EU laws have a positive influence in the eyes of the citizens. Recent research by Pew Research Center is confirming this.

The digital economy, which heralds the start of the Fourth Industrial Revolution (IR4), is upon us. What can history teach international business scholars about how firms are likely to respond to this new form of technological change? Who are the likely winners or the likely losers? For 30 years, the author has lived through, studied, and written about the Third Industrial Revolution and other major environmental shocks, ranging from new entrants to academia to regional integration to outbreak of war, looking at the fundamental issues of how individuals, firms, communities, and countries respond to and are affected by life-changing events. In this chapter, the author tells seven brief stories about living through and studying “shocks and responses.” Perhaps, some of these stories may provide useful lessons to the scholars of IR4.

In this chapter, the author relates the historical trajectory of the Vietnamese revolution and its relentless willingness to build socialism despite external aggressions, first colonialist (France), then fascist (Japan), and finally imperialist (United States). The author traces the analysis back to the August (1945) revolution and the founding of the Democratic Republic of Vietnam. The author continues with the 30 years of wars for national independency, then with the two very difficult decades after the wars. The author studies the so-called “Doi Moi” (renewal) period and the economic advances it allowed, then the political aspects of the Vietnamese socialist system, before exposing the questions of international relations.

Corruption is a fundamental concern for all political regimes, but particularly for republics where power is vested primarily in a legislative body. While political thinkers across times and places have grappled with this perennial problem, this chapter focuses on the modern American republic and its founders. The authors begin with a brief historical sketch that illustrates the continuity and evolution of corruption discourse, spanning the distance between ancient political philosophy and modern political science. Turning to the American founding, and focusing particularly on the debates at the Constitutional Convention and the essays of The Federalist, the authors show how the framers of the US Constitution engaged with this tradition as they confronted the threat of corruption head on. Although these early American documents provide an ambiguous definition of corruption, the authors endeavor to parse the separate but intertwined meanings of corruption: constitutional, institutional, and moral. While the framers' system draws upon both ancient and modern approaches, their final position is that correct institutional design can provide the solution to political corruption. Ultimately for the framers, this comes down to the design of the legislature and its relationship to the other branches. The authors suggest that while contemporary readers may find much to be dissatisfied with in the framers' proposed solutions, their subtle and wide-ranging conceptualization of the problem of corruption might usefully inform contemporary theory building in this area.