Institutional pressure and MNC compliance to prevent bribery: empirical examinations in South Korea and China

Abstract

Drawing on an institution-based view, this study proposes that external and internal institutional factors influence the extent to which multinational corporation (MNC) subsidiaries comply with anti-bribery measures. We survey subsidiaries in South Korea and China, analyze the resulting data using ordinary least squares (OLS) and logistic regressions, and then conduct complementary interviews with subsidiary CEOs in Korea. We find that the primary determinants deterring MNC subsidiary bribery in China are cognitive influences and the guidance of MNC parent firms, whereas those in South Korea are all the external institutional influences in terms of regulatory, normative, and cognitive pressures. Findings contribute to the international business (IB) literature by enlarging our understanding of the relationship between the extent of perceived institutional pressures and firm-level strategic responses to the pressures. This study also offers practical implications not only for local governments but also for MNCs.