Corruption and the multi-national corporation

Abstract

This research aims at determining the host country-specific antecedents which prompt MNCs to break the hyper-norm of anti-corruption and pay bribes abroad. Using anomie theory conjectures, antecedents are divided into opportunities and conditions. Data on more than 1000 MNCs operating in 26 countries was obtained from the World Bank's Business Environment and Enterprise Performance Survey (BEEPS). A Multilevel model was constructed and hierarchical linear modeling (HLM) was used to determine the effect of country-level and firm-level antecedents on the MNC bribery activity. The results show that opportunities including achievement of competitive advantage, host countries' transition periods, and natural resource abundance have positive significant effects on MNCs' propensity to pay bribes. Additionally, host country conditions, such as the law's rigidity and legal system incompetence, also have a significant positive impact on an MNC's propensity to pay bribes. This study advances the literature on corruption in several directions. First, it studies the phenomenon from supply side (i.e. the bribe-payer). Second, it adopts the use of anomie theory which is still a novel approach for studying corruption. Third, it uses the MNC as the unit of analysis rather than country or local firms. Finally, it goes beyond recent studies by focusing on the host country's rather than home country's effect on a firm's bribery activity.