Abstract
Using a sample of firms prosecuted under the Foreign Corrupt Practices Act (FCPA) we examine how investments to produce more sought-after offerings and firm performance relative to aspirations are associated with propensity to engage in illegal bribery. Results suggest that investments in marketing and R&D reduce the incidence of bribery. Performance improvements decrease the incidence of illegal bribery for firms performing above aspirations, but increase it for those performing below aspirations. Jointly the results suggest that managers in firms pushing to achieve nearby goals who must “make do” should be most on guard against the pressure to engage in bribery.
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