دیدگاه "دست گیری کردن" و یا "کمک کردن" از فساد اداری: شواهدی از ورودی های بازار خارجی بانک

This study adopts a resource perspective to explore a non-linear relationship between corruption and two measures of bank foreign market commitment, the capital invested and the share of equity, on a sample of 131 bank entries in forty host countries. Our findings support a U-shaped relationship providing evidence of the “grabbing hand” view at low to moderate levels of corruption and, supporting the “helping hand” view at high levels of it. In addition, market-seeking motives are found to have a positive moderating effect on this relationship. This study contributes to the long-standing debate about the effects of corruption on FDI.

Corruption, defined as the abuse of public power for positive gain, is a prominent issue all over the world, intensified by the globalization of commerce. Even though corruption is believed prevalent in developing countries (Hellman, Jones, Kaufmann, & Schankerman, 2000), it is encountered at different degrees in all countries. Consequently, many international organizations and countries adopt coordinated measures to curb it. Nonetheless, reports from Transparency International show that corruption is still widespread. Most of the scholars studying the effects of corruption on Foreign Direct Investment (FDI) support the “grabbing hand” view of the phenomenon, arguing that corruption creates significant costs for foreign entrants and, as a result, negatively affects investment flows into a host country (Javorcik and Wei, 2009, Mauro, 1995, Voyer and Beamish, 2004 and Wei, 2000). This is a result of the uncertainty that surrounds corruption, which unpredictably increases the cost of setting up and operating in the host country and consequently the attractiveness of foreign investment (Demirbag et al., 2007, Uhlenbruck et al., 2006 and Wei, 1997). Another stream of research advances the opposing view: that corruption acts as a “helping hand” to commerce, a bribing mechanism which facilitates transactions, speeds up procedures and ultimately helps FDI (Egger and Winner, 2005, Lui, 1985 and Wheeler and Mody, 1992). Empirical findings are inconclusive, with studies reporting results in both directions (Al-Sadig, 2009, Barassi and Zhou, 2012, Egger and Winner, 2005, Habib and Zurawicki, 2002, Helmy, 2013, Nguyen and van Dijk, 2012 and Wheeler and Mody, 1992). An explanation which accommodates both theoretical arguments may be that the relationship between corruption and FDI is not linear and that, both theoretical views hold at different levels of corruption. Moreover, the current literature mostly focuses on the impact of corruption on FDI patterns across countries (Brouthers et al., 2008, Egger and Winner, 2005 and Habib and Zurawicki, 2002). Given that a key decisive attribute is the perceived uncertainty in the host country created by corruption, it may be appropriate to examine this relationship at firm level in order to consider firms’ strategic motives and managers’ perception of the local environment (Brouthers et al., 2008). Hitherto, scholars have paid little attention to MNE resource commitment strategies which deal with host country corruption (Rodriguez et al., 2005 and Uhlenbruck et al., 2006). A firm level approach may also shed light on the findings of some country-level studies which suggest that highly attractive markets tend to mitigate the negative effect of corruption on FDI (Voyer and Beamish, 2004 and Wei, 2000). The setting of this study is the banking industry. In the last two decades, banks faced with saturated local markets have looked overseas for growth (Petrou, 2009). However, Multinational Banks (MNBs) are susceptible to host country corruption because their operations are supervised by local authorities (Buch, 2003); a state of affairs which gives corrupt officials the chance to engage in bribery. Moreover, government officials try to control banks in order to influence lending decisions. In light of this, scholars put forward the following two competing theoretical arguments: (1) the “political” view, suggesting that corrupt government officials influence the funding of projects in favor of politically connected firms, thus contributing to the increase of bad loans; and (2) the “development” view, proposing that government officials aim to direct projects in line with their strategy for economic development, which helps banks where corruption is prevalent and information asymmetries are high to identify the best projects (La Porta, Lopez-de-Silanes, & Shleifer, 2002). Despite the theoretical and managerial challenges identified above, current research is silent about the influence of corruption on bank commitment to foreign markets. The objectives of the present study are two-fold: first, to investigate the effect of both views of corruption, the “grabbing hand” and the “helping hand,” on the relationship between corruption and FDI at firm level; and, second, to explore how market-seeking motives moderate this relationship. We consider Pagano (2008), who investigates a non-linear relationship between corruption and lending rates in relation to the “political” and the “development” views, and we test a non-linear relationship between corruption and MNB market commitment. We adopt a resource perspective and draw on the resource dependence theory (Pfeffer & Salancik, 1978) and institutional theory (DiMaggio and Powell, 1983 and Scott, 1995) to support our hypothesis that the effect of corruption on MNB commitment is U-shaped. In addition, we examine the moderating effect of market-seeking motivation, arguing that this dominates decisions about market commitment. We test our hypotheses on a sample of 131 bank entries in forty host countries. Data on bank motives are collected through a mail survey sent to 385 multinational banks identified in the 2004 issue of the Banker's Almanac. Corruption is measured using the Transparency International CPI Index and market commitment is measured by the capital invested in the host country. The findings support a U-shaped relationship. A significant and negative linear coefficient suggests that, at low to moderate levels of corruption, the “grabbing hand” view prevails, and a significant and positive quadratic coefficient indicates that, at high levels of corruption, the “helping hand” view dominates. In addition, there is a significant and positive interaction between market-seeking and corruption for both the linear and the quadratic terms, indicating that the relationship is positively moderated by market-seeking motives at both the descending and the ascending parts of the curve. Similar results are found when the share of equity is used as an alternative measure of market commitment, attesting to the robustness of our findings. This study makes a number of contributions. First, the findings indicate that both opposing theoretical arguments hold, but at different levels of corruption, a finding which may contribute to the resolution of a long-standing debate on the effect of corruption on FDI. Second, responding to calls to investigate firm strategies for dealing with corruption (Rodriguez et al., 2005), the study draws on the resource dependence theory and the institutional theory to examine how banks manage the costs of corruption through their capital investment decisions. This approach complements the transaction cost or institutional theory arguments of those scholars who examine the choice of mode of entry in conditions of corruption. Third, this study adds to our understanding of the types of risk and cost involved in bank foreign entries and the way in which these interplay with growth motives to influence market commitment. This is the first study to investigate how corruption affects bank strategies regarding foreign markets contributing this way to the literature on bank internationalization.

The findings indicate a U-shaped relationship between corruption and two measures of market commitment: the capital invested and share of equity. At low to moderate levels of corruption, there is evidence of the “grabbing hand” view and at high levels of corruption there is support for the “helping hand” view. We argue that the determining factor is the perceived uncertainty (Rodriguez et al., 2005), which is higher at moderate levels of corruption where bribery is opportunistic and random (Shleifer & Vishny, 1993) and lower at high levels of corruption where the bribing system is more organized and the “rules of the game” are known (Wei, 1997). MNBs which enter a host country find it hard to access resources (Mian, 2006), depending on the level of corruption in the host country. Moderate levels of corruption may be associated with the highest level of difficulty, thus constraining MNB capital commitment. However, at a high level of corruption it may be more obvious to the bank how to minimize the risks of entry, thereby committing more resources. These findings may raise important issues for host countries with moderate levels of corruption, such as Hungary and Malaysia, which may need to address corruption more radically than highly corrupt countries, such as Indonesia and Vietnam, as the potential loss of MNB capital is high (Clarke, Cull, Martinez Peria, & Sanchez, 2003). The findings also show that market-seeking motives positively moderate the relationship at both low to moderate levels of corruption and at high levels of corruption. We argue that, at moderate levels of corruption where uncertainty is high, the investment may be defensive in nature, aiming to protect the bank from the difficulties of corruption and safeguard the MNB's growth aspirations; whereas, at high levels of corruption where uncertainty is lower, investment may be offensive, aiming to develop the capacity to increase the loan portfolio and potential rewards. This finding is in line with country-level studies showing that market-seeking investment compensates for the costs of corruption (Brouthers et al., 2008 and Egger and Winner, 2005). However, this firm level study identifies the specific challenges for entrants. Banks may face problems with the quality of information, with gaining legitimacy, and with protecting contracts which may lead to higher loan defaults (Lensink et al., 2008 and Mian, 2006). This is a bigger problem at moderate levels of corruption and banks may invest in additional staff to enhance their ability to assess and monitor loans and in marketing to build external legitimacy. This study makes a number of contributions. First, it sheds light on the debate about the effects of corruption on FDI. The findings that both views hold but at different levels of corruption may help consolidate the current theoretical arguments and better interpret empirical findings. Moreover, the results suggest that depending on the level of corruption, multinationals may need to make different choices in managing corruption in host countries, thus opening up a new avenue of research on MNEs’ selection of a country and their foreign market entry strategies. Moreover, the study advances the firm internationalization literature by extending the limited research on the influence of corruption on foreign entry strategies. Drawing on the resource dependence theory and the institutional theory, we provide an explanation of resource commitment to the risks of host country corruption. By theorizing that banks’ growth motives dominate the risks of corruption and that banks invest additional resources in corrupt countries to mitigate these risks, the study advances our understanding of the types of risk and cost that MNBs experience in host countries and how the firms respond. This study complements current studies which employ transaction cost analysis or institutional theory to evaluate choices of mode of entry and acknowledges that government corruption is an important determinant of foreign entry decisions. Finally, this study contributes to the banking literature by examining corruption, a little studied phenomenon with significant implications for MNB growth. Corruption may create high potential costs for bank foreign operations, and this study discusses how banks manage at different levels of corruption through managing their resource allocations. This is an important issue for investors and host countries alike, given that MNBs through their capabilities and resources contribute to the efficiency of local banks and the funding of local institutions and businesses (De Haas & Naaborg, 2006). 6.1. Managerial relevance The study finds evidence for both the “grabbing hand” view and the “helping hand” view of corruption. Therefore, managers may need to decide how to manage corruption in the host country. Highly corrupt countries may pose an advantage for MNBs which are prepared to consider bribery demands. However, in countries with moderate levels of corruption, bribing is less effective and corruption carries a high price for all MNBs. Nevertheless, banks which pursue growth strategies may face bigger challenges since corruption significantly increases the liability of foreignness and exposes a firm's investment to systematic risk, i.e. to volatility in performance which managers cannot control. In this environment, entry strategy may not be driven solely by managers’ growth aspirations, but rather, by a pragmatic interplay of costs and benefits to establish the level of market commitment. The study identifies potential corruption costs which bank managers may consider when pursuing market-seeking strategies. 6.2. Limitations and future directions This study is not without weaknesses. First, due to the study's cross-sectional design, firms’ motivations and decisions are captured before each MNB experiences corruption in the host country. A longitudinal study may benefit from examining different stages of commitment as the MNB learns how to deal with corruption. The second weakness is that corruption is measured using the traditional notion of corruption, the bribery of government officials, which is too narrow to capture fully how corruption surfaces in private party dealings. Consequently, the demand to collect corruption data not only at government level but also at firm level is well substantiated (Reinikka & Svensson, 2005). Finally, the study examines a single industry and this may limit the generalization of the findings. As discussed above, banking is a highly regulated industry and corruption may significantly increase the risks and potential costs; our results may therefore present a worst case scenario. Given that this is the first study to examine a non-linear relationship between corruption and foreign market commitment more studies may follow this approach to assess the salient factors which affect entrants’ perception of the “grabbing hand” and the “helping hand”. Is there a learning effect? Do entrants change their market commitment strategies as they accumulate experience from entering other corrupt countries? And which countries may seem to be better learning grounds? Moreover, in this study we suggest that the potential costs of corruption may differ according to firm-specific factors such as firms’ strategic motivation, their monitoring of agency relationships and their level of legitimacy. Establishing empirically which parent characteristics may influence the magnitude of the corruption costs encountered by a local subsidiary may help foreign entrants to assess and manage corruption more effectively. In conclusion, we find evidence for both the “grabbing hand” view of corruption and the “helping hand” view. In addition, we find that corruption does not deter bank managers seeking growth from investing additional resources in the host country.