The influence of arbitrary and pervasive corruption on FDI inflows and the moderating effect of corruption distance: evidence from Latin America

Authors

  • Daniel Mendes Pessegueiro Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal
  • Manuel Portugal Ferreira Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal Universidade Nove de Julho, PPGA, UNINOVE, São Paulo, SP, Brazil
  • Nuno Rosa Reis Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal
  • Cláudia Frias Pinto Universidade do Oeste de Santa Catarina, PPGA, UNOESC, Chapecó, SC, Brazil

DOI:

https://doi.org/10.18568/1980-4865.13150-62

Keywords:

Arbitrary corruption, Pervasive corruption, Corruption distance, Foreign direct investment, Latin America

Abstract

There is no consensus in the literature on the negative effect of corruption on countries’ ability to attract foreign direct investment (FDI). Some countries simultaneously have high levels of corruption and FDI flows. In this study, we distinguish the effect of two types of corruption – arbitrary and pervasive – and the moderating role of corruption distance between the investor and host country on the ability to attract FDI. In an empirical study of FDI flows into Latin American countries, the results show that high pervasive corruption reduces the attractiveness of FDI and that corruption distance attenuates the negative effect of arbitrary corruption on FDI. The study contributes to the research on the effects of corruption and particularly to understanding the differentiated effects of the types of corruption and of corruption distance on FDI flows.

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Author Biographies

Daniel Mendes Pessegueiro, Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal

Master in International business. Researcher at the globADVANTAGE. Consultant in management and information systems. Research interest in international business environments and their influence on the internationalization of firms.

Manuel Portugal Ferreira, Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal Universidade Nove de Julho, PPGA, UNINOVE, São Paulo, SP, Brazil

Professor of Strategy and International Business. Ph.D in Management by the University of Utah, USA. Post doctorate by the University of Sao Paulo. His research interests lie on an institutional perspective on emerging economies, including the role of the government, business groups and the strategies of emerging multinationals, especially from Latin America.

Nuno Rosa Reis, Escola Superior de Tecnologia e Gestão, Instituto Politécnico de Leiria, ESTG-IPL, Leiria, Portugal Centre of Applied Research in Management and Economics, CARME, Leiria, Portugal

Professor of Strategy and International Business. Ph.D in Management by the University of Coimbra. His research interests include the impact of institutional differences on the decisions and performance of multinational enterprises.

Cláudia Frias Pinto, Universidade do Oeste de Santa Catarina, PPGA, UNOESC, Chapecó, SC, Brazil

Professor in the Master and Doctoral Program in Management at Unoesc. She teaches courses in the areas of Strategy and International Business. PhD in Management by the Fundação Getulio Vargas - FGV/EAESP. Her research focuses on the strategies and behavior of multinational firms from emerging countries and cross-border acquisitions.

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Published

2018-01-08

How to Cite

Pessegueiro, D. M., Ferreira, M. P., Reis, N. R., & Pinto, C. F. (2018). The influence of arbitrary and pervasive corruption on FDI inflows and the moderating effect of corruption distance: evidence from Latin America. Internext - International Business and Management Review, 13(1), 50–62. https://doi.org/10.18568/1980-4865.13150-62

Issue

Vol. 13 No. 1 (2018): January/April

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Article

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