0This study answers the questions of why firms bribe government officials and why some firms pay higher bribes than other firms. Using insights from residual control theory, we examine how governments exercise residual rights of control through regulation or state ownership of firms, and how these rights affect the payment and size of bribes by firms. 0 We argue that firms vary in their exposure and vulnerability to residual rights of control by government officials, depending on the firms' characteristics and circumstances. Differences in firms' exposure and vulnerability to corruption affect their threat point (i.e. ability to walk away) and thus affect which firms pay bribes and bribe size. 0Our results show that, at the firm level, bribe size depends on how much a government can exercise residual rights of control and the firm's threat point. At the same time, at the country level, the type of corruption matters; pervasive corruption is positively related, while arbitrary corruption is negatively related, to bribes paid.
How does one understand the differences and similarities of corruption among various Asian countries? We use a recent framework developed by Rodriguez, Uhlenbruck, and Eden ( 2005 ) to suggest that corruption has to be examined from two different dimensions: pervasiveness and arbitrariness. Using this framework, we ask why some Asian countries are able to achieve high levels of economic growth in the midst of high level corruption while other countries suffer from economic stagnation. We specifically suggest that more firms would bribe when pervasiveness is high, while fewer firms would bribe when arbitrariness is high. We also look into the implications on foreign direct investment. Copyright Springer Science+Business Media, LLC 2007Corruption, Pervasiveness, Arbitrariness,
I examine how the corruption distance affects MNE subsidiaries' bribing patterns in 24 transition economies. This study challenges the conventional conceptualisation of institutional distance in prior research by adopting asymmetric features of corruption distance. The study finds that the higher the corruption difference, the less likely an MNE subsidiary is to bribe government officials when the subsidiary comes from less corrupt countries, but the more likely the subsidiary is to bribe when it comes from more corrupt countries than the host countries. It indicates that the distance effect of corruption distance is not symmetric but asymmetric.
How does an MNE choose its ownership structure when it enters into transition nations where the level of corruption is largely high? This paper examines how uncertainty stemming from corruption affects an MNE's choice of governance forms using the data of 463 MNEs in 24 transition countries. Drawing on two theoretical perspectives such as TCE and real options logic, this study proposes two sets of competing hypotheses regarding firms' selection of ownership structure. Results show that TCE predictions have a better explanatory power on the choice of governance forms over those of real options logic as a whole. In particular, this study finds that an MNE is more likely to adopt wholly owned subsidiaries in highly arbitrary environment of corruption whereas they intend to cope with a joint venture form of governance under highly pervasive corruption environment. Consistently, an MNE which has more familiar with corruption tends to adopt a joint venture form of governance.
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