Country level corruption as a liability of foreignness: effects on staffing, incentives, and activities

Abstract

Past research examining country-level corruption found that corruption reduces foreign direct investment. However, this research lacks implications for multinational corporations considering operating in high corruption countries. Recent international research has examined subsidiary challenges beyond initial investment decisions, but has not addressed operational challenges posed by corruption. Research investigating country-level corruption as a liability of foreignness (LOF) is needed because this theoretical perspective specifically examines mechanisms for managing and controlling subsidiaries. This paper utilizes the LOF perspective, integrating learning, international human resource management, and agency theories, to understand how corruption affects subsidiary adaptation strategies.

Citation

Mezias, J.M. and Mezias, S.J. (2010), "Country level corruption as a liability of foreignness: effects on staffing, incentives, and activities", Timothy, D., Torben, P. and Laszlo, T. (Ed.) The Past, Present and Future of International Business & Management (Advances in International Management, Vol. 23), Emerald Group Publishing Limited, Leeds, pp. 267-291. https://doi.org/10.1108/S1571-5027(2010)00000230018