Who Cares about Corruption?

Journal of International Business Studies, Vol. 37, pp. 803-822, 2006

20 Pages Posted: 7 Dec 2007

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Abstract

This paper examines the impact of corruption on foreign direct investment (FDI). It argues that corruption results not only in a reduction in FDI, but also in a change in the composition of country of origin of FDI. It presents two key findings. First, corruption results in relatively lower FDI from countries that have signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This suggests that laws against bribery abroad may act as a deterrent against engaging in corruption in foreign countries. Second, corruption results in relatively higher FDI from countries with high levels of corruption. This suggests that investors that have been exposed to bribery at home may not be deterred by corruption abroad and instead seek countries where corruption is prevalent.

Keywords: corruption, foreign direct investment, international management

JEL Classification: F21, F23, K42

Suggested Citation

Cuervo-Cazurra, Alvaro, Who Cares about Corruption?. Journal of International Business Studies, Vol. 37, pp. 803-822, 2006. Available at SSRN: https://ssrn.com/abstract=1060221

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

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