Corruption and the Ownership Composition of the Multinational Firm at the Time of Entry: Evidence from Turkey

17 Pages Posted: 22 Mar 2006

Date Written: March 31, 2006

Abstract

This paper is an empirical assessment of the relationship between corruption and the ownership structure of foreign direct investment. In particular, two forms of ownership structures are considered: joint venture and wholly owned subsidiary. The results indicate a strong negative impact of corruption on joint ventures, particularly for the ones originating from the developed countries. As the degree of corruption dissimilarity between the source country and Turkey gets deeper, the share of foreign ownership declines. This lends support to the transaction cost approach which emphasizes the costs of sharing ownership that are expected to increase in corrupt environments.

Keywords: Foreign Direct Investment, Entry, Corruption, Discrete Choice

JEL Classification: F23, K4, R38, C25

Suggested Citation

Tekin-Koru, Ayca, Corruption and the Ownership Composition of the Multinational Firm at the Time of Entry: Evidence from Turkey (March 31, 2006). Available at SSRN: https://ssrn.com/abstract=890764 or http://dx.doi.org/10.2139/ssrn.890764

Ayca Tekin-Koru (Contact Author)

TED University ( email )

Department of Business Administration
Ziya Gokalp Bulvari No: 48
Ankara, 06420
Turkey
+90 312 535 0034 (Phone)

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