Industry structure and organizational deviance: Multinational corporations and questionable foreign payments

Abstract

Questionable foreign payments (QFPs) by multinational corporations (MNCs) are examined in the context of world industry structures. Corporate claims and existing theory view QFPs as a function of extortive corporate-governmental relations. There are three industry conditions cited which make extortion possible: competitive pressure, foreign dependence and governmental leverage. Top U.S.-based MNCs (N=197) which have and have not made QFPs are compared on indicators of world industry structure to test for these conditions. Findings show that corporations making QFPs are more heavily involved in foreign economies, but are less susceptible to competitive pressure and no more subject to governmental leverage than nonpaying corporations. Specifically, paying corporations are likely to be leading corporations in fairly concentrated, U.S. dominated, and high-technology markets. Paying corporations, then, are in better positions to control their environments than nonpaying corporations. We conclude that changes in world industry structures beginning in the 1960s have increased the likelihood of QFPs, especially for U.S. MNCs in high-tech industries.