FDI, Institutional Quality, and Bribery: An Empirical Examination in China

Kum-Sik Oh,Yeon-Sik Ryu

doi:10.3390/su11154023

Kum-Sik Oh, Yeon-Sik Ryu

Open Access

https://doi.org/10.3390/su11154023

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Journal: Sustainability	Publication Date: Jul 25, 2019
Citations: 8	License type: CC BY 4.0

Affiliation: Pukyong National University, Hongik University

Abstract

This study attempts to identify the key factors inhibiting the bribery practices of multinational enterprise (MNE) subsidiaries directed at local managers in China. During the experiment, this study employs an institutional theory, identifies primary determinants on the phenomenon, and compares the main components between old versus young subsidiaries. Data were collected through a questionnaire survey and both regression and spearman rank order correlation analyses were used as statistical techniques. Through the analyses, we found that a cognitive pillar is a crucial element contributing to the inhibition of bribery practices, the enhancement of institutional quality, and the promotion of sustainable development in the emerging economy. We expect that the results will provide useful implications for MNE managers planning to invest in China and for policy makers enacting institutional environments.

Highlights

As global competition continues to intensify, foreign direct investment (FDI) is increasingly becoming the crucial strategic option for multinational enterprises (MNEs) to win against other competitors
To reiterate, based on the expected benefits of FDI, a common perception is that the attraction of FDI is its role as a shortcut leading to institutional evolution, which again results in a decrease in bribery by businesses, including MNEs
We propose the following three hypotheses: Hypotheses 1 (H1): The extent of the regulatory pillar positively influences the inhibition of MNE bribery in local markets

Summary

Introduction

As global competition continues to intensify, foreign direct investment (FDI) is increasingly becoming the crucial strategic option for multinational enterprises (MNEs) to win against other competitors. A number of studies have explored corruption (e.g., [5,6]) and bribery (e.g., [7,8]), to our best knowledge, no one has examined the issue by connecting institutional quality with MNE bribery, in the international business domain We believe that this topic can attract scholarly attention as bribery and informal payments are virtually illegal in all countries but remain prevalent in every corner of the world [9], though ironically this has not been cemented by prior literature [10]

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Results

Conclusion