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Bribery in MNEs: The Dynamics of Corruption Culture Distance and Organizational Distance to Core Values

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Abstract

We examine how corporate bribery is impacted by cultural distance between multinational enterprises (MNEs) home and host countries, and organizational distance to core values between MNE entry modes and MNE headquarters. Tension between external and internal legitimacy helps to explain why cultural and organizational distances will affect MNE bribery. The empirical analysis used data from cross-border transactions by MNEs that were sanctioned by US regulatory officials between 1978 and 2011. We find statistical support for all hypotheses capturing main and moderating effects and suggest that MNEs may be seriously risking their legitimacies from transactions in corruption-prone host countries.

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Notes

  1. Adapted from Shearman & Sterling’s FCPA Digest (2015). Although Wyeth Pharmaceuticals was included in Shearman & Sterling’s FCPA Digest as an ongoing FCPA investigation, it was excluded from the sample because of the inability to find any publicly disclosed information, including firm disclosures that it was subject to an FCPA investigation.

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Acknowledgements

We are grateful to the feedback received from an earlier version of this manuscript, which was presented at the 2013 Academy of International Business conference. We also thank Siah Hwee Ang, Alvaro Cuervo-Cazurra, Yadong Luo and Robert Vambery for their insightful feedback while reviewing earlier versions of this manuscript.

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  1. John Jay College of Criminal Justice, City University of New York, 524 W59th Street, 53341 Haaren Hall, New York, NY, 10019, USA

    Vijay S. Sampath

  2. Lubin School of Business, Pace University, One Pace Plaza, W-411, New York, NY, 10038, USA

    Noushi Rahman

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Correspondence to Vijay S. Sampath.

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Sampath, V.S., Rahman, N. Bribery in MNEs: The Dynamics of Corruption Culture Distance and Organizational Distance to Core Values. J Bus Ethics 159, 817–835 (2019). https://doi.org/10.1007/s10551-018-3827-0

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