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
Collections
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