African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4120

Review

Entry mode choices of multinational companies (MNCs) and host countries’ corruption: A review

Aurora A. C. Teixeira1* and Marlene Grande2
1CEF.UP, Faculdade de Economia, Universidade do Porto, INESC Porto, OBEGEF, Portugal. 2Faculdade de Economia, Universidade do Porto, Portugal.
Email: [email protected]

  •  Accepted: 16 February 2012
  •  Published: 11 July 2012

Abstract

Despite voluminous literature on corruption and the entry mode choices of multinational companies (MNCs) in isolation, a comprehensive account which details the mechanisms through which host country corruption impacts on MNCs’ entry modes is lacking. To overcome such a gap, we systematically review and provide an up-to-date overview of the empirical literature on corruption and the entry mode choices of MNCs. The review demonstrates that, in general, when in presence of markets with high levels of corruption, MNCs prefer low equity (that is, joint-ventures with local partners) or non-equity (namely exports and contracting) entry mode choices. Nevertheless, it also reveals that, in some specific cases, such as cultural proximity, even when there is pervasive corruption, MNCs may enter via wholly-owned subsidiaries. Such conclusions uncovered an interesting path for future research by exploring a rather neglected context, where the entry mode choices of MNCs are made from developed countries in Africa possessing historical and cultural ties.

 

Key words: Corruption, entry mode.