Corruption in International Business: Does Economic Globalization Help?

Abstract

While many studies have shown that increased levels of economic globalization diminish the level of corruption among trading partners, there are studies that have raised doubts against this claim. In this article, we explore this relationship in a large sample of 138 countries and find that the effect of economic globalization on the level of corruption is not significant. The findings, however, are not indicative of the undesirability of economic globalization. In fact, we find that greater levels of economic development are associated with lower levels of corruption. Nevertheless, it does call for some precaution and monitoring as trade openness alone may not be the panacea for controlling corruption and other factors, for example, the importance of building of relevant institutions to curb corruption may need to be considered. Additionally, it is important to identify moderator and mediator variables that may change the strength and direction of the aforementioned relationship. We conclude by explaining the implications of our findings for international business (IB).

How far are we from understanding corruption? The effect of cultural distance on corruption perception

“…First, other corruption measures can be applied, at least, as robustness tests. Recently, scholars have used Corruption Index published by World Governance (Ozili, 2019; Mornah and Macdermott, 2018; Jiménez et al , 2017) and by International Country Risk Guide (Mukherjee, 2018). Further, some researchers have applied cultural distance measures as additional control variables.…”

Journalism and Corruption: Toward a Hierarchical Universal Theory of Determinants

“…However, he argues that this finding does not necessarily deny the importance of global trade engagement. Rather, it reflects that curbing corruption is not only an outcome of integration in global economy that stems from a nexus of complicated and hierarchical bureaucracy [132]. Consistent with this view, Gatti tested the conventional wisdom that international openness reduces corruption by analyzing whether the presence of obstacles to international trade and capital flows is correlated with higher level of corruption and found no evidence to support his hypothesis.…”

How business-related governance strategies impact paths towards the formation of global cities? An institutional embeddedness perspective

“…Therefore, corruption will impose uncertainty and costs for multinational enterprises to do business (Belgibayeva and Plekhanov, 2019) and is the main cause of government failure when government is intervening economy (Lalountas, Manolas, and Vavouras, 2011). A greater level of urban economic prosperity is associated with low degree of corruption (Mukherjee, 2018). Anticorruption reform, such as arresting corrupt officials and enhancing transparency of policy making and implementation, was often initiated around the world.…”