Familiarity does not breed contempt : curbing subsidiary corruption through a legitimacy-enhanced ownership structure
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.
Citation
Godinez , J , Sanchez-Barrios , L , Bandeira de Mello , R & Khalik , M 2021 , ' Familiarity does not breed contempt : curbing subsidiary corruption through a legitimacy-enhanced ownership structure ' , Latin American Business Review , vol. Latest Articles . https://doi.org/10.1080/10978526.2021.1932518
Publication
Latin American Business Review
Status
Peer reviewed
ISSN
1097-8526Type
Journal article
Rights
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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