How do foreign entrepreneurs adapt to local corruption norms in the Middle East? Institutional multiplicities and individual adaptation

Liu, Kun; Asady, Ahmad Al; Fu, Kun

doi:10.1177/0266242620918823

Cited by 4 publications

(3 citation statements)

References 58 publications

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“…On the other hand, Fung a cov a et al (2015) found that SMEs often participate in corruption to bridge institutional voids. However, Liu et al (2020) found an inverse U shaped relationship between corruption propensity and SME performance. Our hypotheses are: JSMA 16,1 H1.…”

Section: Formal Institution and Smes' Performancementioning

confidence: 90%

Impact of institutional voids on the performance of small and medium-sized enterprises

Saha

Malesios

Chowdhury

et al. 2022

JSMA

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PurposeThere is a critical gap in assessing how institutional voids affect SMEs' growth, investment commitment and reputation. The purpose of this paper is to explain how institutional void affects these three dimensions of SME performance; and to develop an institutional void-SME performance framework that can be applied for strategising, resourcing and competency acquisition for better performance.Design/methodology/approachThe study used the Enterprise Survey Data of the World Bank, consisting of 118,763 firms from 140 countries. The structural equation modelling (SEM) is used to analyse the data, validate our analytical model and investigate the imposed theoretical claims of causality as indicated by specific research questions through correlation/covariation between the constructs of institutional void and SME performance.FindingsEvidence suggests that there is a strong positive correlation between formal institutional infrastructure (independent variable) and SMEs' reputation (dependent variable). Among the institutional sub-constructs, tax administration, business licensing and permits, access to a bigger market and skilled labour and informal competition are significant for the SME performance constructs. We find similar results while comparing SMEs with large businesses.Practical implicationsThe institutional void-SME performance framework developed from our findings will allow SMEs to manage institutional voids affecting their performance. The analytical framework can also be the foundation for future empirical research.Originality/valueThe originality of the study is embedded in its investigation of SMEs' investment commitment and reputation in relation to institutional voids. The latent relationship between the sub-constructs of institutional voids and SME performance adds new knowledge to the dynamic relationship between institutions and firm performance.

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Section: Formal Institution and Smes' Performancementioning

confidence: 90%

Impact of institutional voids on the performance of small and medium-sized enterprises

Saha

Malesios

Chowdhury

et al. 2022

JSMA

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“…Entrepreneurs in the Middle East may be local or foreign. Local entrepreneurs are those born and raised in the country in which they are now operating, whereas foreign entrepreneurs have travelled from their home countries to reside and seek entrepreneurial opportunities in the host country (Kulchina, 2016(Kulchina, , 2017Liu et al, 2020). These two groups of entrepreneurs differ in several respects.…”

Section: System Justification and Entrepreneurs' Attitudinal Change Toward Corruptionmentioning

confidence: 99%

A System Justification Theory of Entrepreneurial Attitudinal Change During a Crisis

Liu

Yang

et al. 2021

Entrepreneurship Theory and Practice

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Entrepreneurship resilience during a crisis is an important research area. However, prior research has not examined cognitive antecedents of entrepreneurial resilience. Using the 2014 oil price crisis in the Middle East as a natural experiment, we draw on system justification theory to understand why and how entrepreneurs differ in the extent of their attitudinal changes toward corruption. We find foreign entrepreneurs substantially increased their willingness to engage in corruption whereas local entrepreneurs did not. Among foreign entrepreneurs, corruption willingness increases more among those from countries where corruption is not the norm, than those from more corrupt home countries.

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“…The opposing camp views corruption as a corrosive disruption that destroys trust, distorts resource allocation and stifles economic growth (Boudreaux et al, 2018; Budak and Rajh, 2014; Dutta and Sobel, 2016; Zyglidopoulos et al, 2017). In either case, corruption is pervasive in many societies, particularly in emerging economies where institutional voids are common (Cuervo-Cazurra, 2006; Rodriguez et al, 2005; Liu et al, 2020; Liu et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

How would foreign entrepreneurs deal with pressures for corruption? A micro-foundational approach

Liu

Treviño

Asady

2022

International Small Business Journal: Researching Entrepreneurs

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Is corruption good or bad for entrepreneurship? Prior research has presented mixed results when exploring this question. This article takes a micro-foundational approach by focussing on how foreign entrepreneurs cognitively deal with corruption in the host environment. We argue that the entrepreneur’s motivational antecedent to engaging in corruption, or corruption propensity, represents a cognitive belief in the legitimacy and effectiveness of corruption. We find that higher corruption propensity leads to lower firm growth. In addition, the effects of corruption propensity are conditioned by the corruption difference between home and host countries. Finally, we discuss implications for research, practice and public policy.

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How do foreign entrepreneurs adapt to local corruption norms in the Middle East? Institutional multiplicities and individual adaptation

Cited by 4 publications

References 58 publications

Impact of institutional voids on the performance of small and medium-sized enterprises

Impact of institutional voids on the performance of small and medium-sized enterprises

A System Justification Theory of Entrepreneurial Attitudinal Change During a Crisis

How would foreign entrepreneurs deal with pressures for corruption? A micro-foundational approach

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