The purpose of this paper is to investigate the role of multinational enterprises’ (MNEs) home country corruption in their decision to bribe officials in foreign host countries.
A model that predicts MNE bribing by controlling for a multitude of foreign host country factors is used. The information contained in the orthogonal residuals from this model is exploited to see whether MNE’s home country factors, particularly the level of public corruption, work to amplify illegal behavior by respective MNE in abroad.
MNEs pay more in bribes when the foreign officials they face are more corrupt. This behavior worsens when MNE’s home country has more corruption.
All UN member countries are signatories to the UN Convention against Corruption that proscribes the bribing of foreign public officials by respective MNEs. The Convention’s reliance on home country enforcement of stipulations against the bribing of foreign officials by respective MNEs exposes its efficacy of the malfeasance of home country public officials.
This paper extends the literature to an examination of MNE’s use of bribes in a world with a global anti-corruption regime. Additionally, it ties MNE behavior in foreign countries to corruption in MNE’s home country.
