Journal of International Business Studies

, Volume 37, Issue 6, pp 767–785 | Cite as

The MNC as an agent of change for host-country institutions: FDI and corruption



Most empirical research examines how the institutional environment of corruption shapes the behavior of multinational corporations (MNCs). In this study, we would like to highlight the other side of the picture: how the presence of MNCs may shape the institutional environment of corruption over time. We propose three avenues through which the MNCs may have an impact on its host institutions: regulatory pressure effect, demonstration effect, and professionalization effect. Based on extensive data on foreign direct investment and corruption for a large sample of countries over the last 30 years, the empirical results are generally consistent with our hypothesis. Such findings provide a glimmer of hope for the future of the host country where corruption is prevalent.


foreign direct investment corruption 



We would like to thank the four guest editors of this special issue, the participants at the JIBS ‘Three Lenses’ conference, and our colleague Kendall Roth for valuable suggestions. We also gratefully acknowledge the support of the Center for International Business Education and Research (CIBER) at the University of South Carolina for this research project.


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Copyright information

© Academy of International Business 2006

Authors and Affiliations

  1. 1.Moore School of Business, University of South CarolinaColumbiaUSA
  2. 2.Stephen M Ross School of Business, University of MichiganAnn ArborUSA

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