Familiarity does not breed contempt: curbing subsidiary corruption through a legitimacy-enhanced ownership structure

Jose  Godinez; Luis  Sanchez-Barrios; Rodrigo Bandeira de Mello; Mahmoud  Khalik

doi:10.1080/10978526.2021.1932518

Familiarity does not breed contempt: curbing subsidiary corruption through a legitimacy-enhanced ownership structure

Jose Godinez^*
, Luis Sanchez-Barrios
, Rodrigo Bandeira de Mello
, Mahmoud Khalik

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

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
Pages (from-to)	279-307
Journal	Latin American Business Review
Volume	23
Issue number	3
Early online date	3 Jun 2021
DOIs	https://doi.org/10.1080/10978526.2021.1932518
Publication status	Published - 2022

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 16 Peace, Justice and Strong Institutions

Keywords

Subsidiary-level corruption
Ownership structure
Resource dependence
Central America

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10.1080/10978526.2021.1932518

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
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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.",

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KW - Ownership structure

KW - Resource dependence

KW - Central America

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ER -

Familiarity does not breed contempt: curbing subsidiary corruption through a legitimacy-enhanced ownership structure

Abstract

UN SDGs

Keywords

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