AIB 2012 Conference Proceedings - Academy of International ...

TUESDAY
economies. The paper offers strong theoretical foundations and a detailed methodology that is expected to
empirically indicate that in addition to the host-home country corruption distance, MNC's entry is influenced by
host country natural resources, while the technology spillovers following that entry are largely influenced by
host country corruption levels. Corruption is expected to be increasing the cost of FDI for the MNCs but
decreasing the cost of imitation for the recipient of knowledge once the MNC has been located in the host
country. By examining corruption, an informal institution, and its effect on FDI and the resulting knowledge
spillovers, this paper extends the literature on the effect of institutions on international technology transfer. (For
more information, please contact: Neli Kouneva Loewenthal, George Washington University, USA:
nelik@gwmail.gwu.edu)
Effects of Corruption on MNEs' Reinvestment Decisions
Martina McGuinness, University of Sheffield
Mehmet Demirbag, University of Sheffield
Nizamettin Bayyurt, Fatih University
A range of studies have found that corruption has a significant impact upon FDI decisions, however to date
there has been little investigation into longer term investments made by firms. Utilising 2005 World Bank
Enterprise Survey data, this study explores the relationship between corruption and MNEs' strategic decision to
reinvest profits. Drawing together institutional and transaction costs approaches, we find variation in the
different dimensions of corruption and their impact upon relationship between corruption and reinvestment. We
find that pervasive corruption impacts negatively upon reinvestment whilst bribery in not found to be significant.
Perceived robust legal institutions have a positive correlation with reinvestment. Firm level attributes of
increased size and age are important factors in positive reinvestment decisions. (For more information, please
contact: Mehmet Demirbag, University of Sheffield, United Kingdom: m.demirbag@sheffield.ac.uk)
Domestic Firms' Strategic Responses to Government Corruption: A Cross-Country Comparison
Sungjin J. Hong, University of Texas at Dallas
Seung-Hyun Lee, University of Texas at Dallas
Mike Peng, University of Texas at Dallas
How do domestic firms develop strategic alternatives other than simply complying with bribery requests from
their home country's government officials Drawing on the property rights theory and institution-based view of
strategy, we propose two strategic alternatives determined by firms' incentives vis-à-vis those of government
officials: partial avoidance strategy and manipulation strategy. We predict that a partial avoidance strategy
created via foreign market reliance will decrease a firm's perceived need to bribe, while a manipulation strategy
constructed via government ties will increase a firm's perceived need to bribe. We also argue that the effect of a
partial avoidance strategy will be weaker under a high level of policy discretion, while the effect of a
manipulation strategy will be greater under a high level of policy discretion. We test our hypotheses using a
multilevel modeling approach on the Business Environment and Enterprise Performance Survey dataset, and our
results overall support the predicted relationships. Our study provides an important implication for scholars and
managers in that the benefits gained from domestic firms' manipulation and partial avoidance strategies would
vary by the country where they are embedded. (For more information, please contact: Sungjin J. Hong,
University of Texas at Dallas, USA: sungjin@utdallas.edu)
The Ethical Challenges of the UN's Clean Development Mechanism in the Solid Waste Management Sector
Candace A. Martinez, Saint Louis University
J.D. Bowen, Saint Louis University
This paper examines the ethical implications of the Clean Development Mechanism (CDM), the United Nation's
climate change initiative that provides incentives to countries and firms in developed countries to motivate
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