Abstract
We analyze how the choice of firm ownership structure mitigates the effect of high dependence on a corrupt host government when investing abroad. We draw on a unique dataset of subsidiary-level engagement in corruption of 175 foreign subsidiaries entering three Central American countries. We found that there are two mechanisms to mitigate corrupt behavior when a subsidiary is dependent on a corrupt host government: internal legitimacy that accrues to wholly-owned subsidiaries, and external legitimacy built through a strong regional presence. The effect of dependency on a corrupt host government can be mitigated by enacting internal and external legitimacies.
| Original language | English |
|---|---|
| Journal | Latin American Business Review |
| Volume | Latest Articles |
| Early online date | 3 Jun 2021 |
| DOIs | |
| Publication status | E-pub ahead of print - 3 Jun 2021 |
Keywords
- Subsidiary-level corruption
- Ownership structure
- Resource dependence
- Central America
Access to Document
- 23.3 - Familiarity does not breed contempt- Author approved
Copyright © 2021 Taylor & Francis Group, LLC. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1080/10978526.2021.1932518