Coping with Corruption in Foreign Markets

Academy of Management Executive, Vol. 17, No. 3, 2003

Posted: 5 Jan 2009

See all articles by Jonathan P. Doh

Jonathan P. Doh

Villanova University - School of Business

Peter L. Rodriguez

University of Virginia - Darden School of Business; Rice University - Jones Graduate School of Business

Klaus Uhlenbruck

affiliation not provided to SSRN

Jamie D. Collins

Sam Houston State University

Lorraine Eden

Dept of Management, Mays Business School, Texas A&M University ; School of Law, Texas A&M University

Abstract

Government corruption is a pervasive element of the international business environment and has damaging effects on governments, firms, and the broader society in which it takes place. Recently publicized scandals in Russia, China, Pakistan, Lesotho, South Africa, Costa Rica, Egypt, and elsewhere underscore the extent of corruption globally, especially in the developing world. Yet, the impact of government corruption on foreign investment has received limited attention. In this article, we examine how multinational firms respond to corruption when investing in foreign markets, especially developing countries. The article begins with a discussion of the direct and indirect costs of corruption to business and provides illustrations of corruption's impact on firms that invest in foreign markets. We employ a framework that incorporates two basic dimensions of government corruption -- pervasiveness and arbitrariness. We then propose five broad strategies that multinationals should consider in responding to corruption and give examples of organizations that use these approaches. Corruption involves costs that firms investing abroad are likely to misjudge or ignore. A clear understanding of corruption's nature creates value for decision makers and allows for a strategic analysis of responses to corruption pressures.

Keywords: government corruption, pervasiveness, arbitrariness, coping strategies

Suggested Citation

Doh, Jonathan P. and Rodriguez, Peter L. and Rodriguez, Peter L. and Uhlenbruck, Nikolaus (Klaus) T. and Collins, Jamie D. and Eden, Lorraine, Coping with Corruption in Foreign Markets. Academy of Management Executive, Vol. 17, No. 3, 2003, Available at SSRN: https://ssrn.com/abstract=1321823

Jonathan P. Doh

Villanova University - School of Business ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States

HOME PAGE: http://www62.homepage.villanova.edu/jonathan.doh/

Peter L. Rodriguez

Rice University - Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

HOME PAGE: http://https://business.rice.edu/person/peter-rodriguez

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/rodriguez.htm

Nikolaus (Klaus) T. Uhlenbruck

affiliation not provided to SSRN

Jamie D. Collins (Contact Author)

Sam Houston State University ( email )

Box 2056
Huntsville, TX 77341
United States

Lorraine Eden

Dept of Management, Mays Business School, Texas A&M University ( email )

Dept of MGMT, TAMU 4221
College Station, TX 77843-4221
United States
979-777-3489 (Phone)

HOME PAGE: http://mays.tamu.edu/mgmt/

School of Law, Texas A&M University ( email )

1515 Commerce St.
Fort Worth, TX Tarrant County 76102
United States
9797773489 (Phone)

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