Corporate Anti-corruption Policy, Investment Motives, and Foreign Location Choice

Abstract

This study examines the contingent impact of corporate anti-corruption policies on multinational enterprises’ foreign investment strategy. The authors propose that the differences in foreign investment motives will moderate the assumed deterrent effect of anti-corruption policies. Our analysis of overseas production investments by Japanese firms (2011–2017) supports some of the hypotheses. The authors find that the deterrent effect of anti-corruption policies may be diminished when a new subsidiary has an efficiency-seeking purpose. Conversely, the deterrent effect is more prominent when a new subsidiary has a competence-creating purpose. These results not only contribute to the research on control of corruption in international business, but also have implications for research on corporate self-regulation more generally.