Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region

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Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region

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Title: Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region
Author(s):
Lee, Seung-Hyun;
Hong, Sungjin J.
Sponsors: Naveen Jindal School of Management
Date Created: 2009-04-22
Format: Text
Item Type: Article
Keywords: Show Keywords
Abstract: Would multinational corporation (MNC) subsidiaries be more profitable in host countries where corruption is less severe? Would MNC subsidiaries be more profitable in less corrupt countries if they focused on local sales? This paper examines the impact of the level of corruption on the profitability of US MNCs’ profitability in the Asia Pacific region. Using foreign direct investment (FDI) data archived by the US Bureau of Economic Analysis and corruption data reported by the World Bank, we find that MNC subsidiaries located in countries with a lower level of corruption are more profitable. In addition, MNC subsidiaries with a greater focus on local sales are more profitable when the corruption level is low. This study contributes to the literature by showing that when local sales are important to MNC subsidiaries, a lower level of corruption by host countries positively affects the profitability of the MNC subsidiaries.
Alternative Title: Corruption & subsidiary profitability: US MNC subsidiaries in the Asia Pacific region
Publisher: Asia Pacific Journal of Management
Persistent Link: http://hdl.handle.net/10735.1/2138
http://dx.doi.org/10.1007/s10490-010-9214-8
Bibliographic Citation: Lee, Seung-Hyun and Hong, Sungjin J. 2010. “Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region.” Asia Pacific Journal of Management.
Terms of Use: © Springer Verlag. The final publication is available at www.springerlink.com

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