Title

The Effect of Corruption on Japanese Foreign Direct Investment

Document Type

Article

Publication Date

2004

Publication Title

Journal of Business Ethics

Volume

50

Issue

3

First Page

211

Last Page

224

DOI

10.1023/B:BUSI.0000024737.57926.bf

Keywords

Foreign Direct Investment, corruption, Japan

Abstract

In an effort to reduce risk and uncertainty, we hypothesize that investors avoid countries where high corruption exists. We investigate this issue by examining the relationship of levels of perceived corruption on Japanese Foreign Direct Investment (FDI) in both industrialized and emerging economies. The analysis presented utilizes a sample of 29,546 investments in 59 countries. Results suggest that in emerging nations, where comprehensive legal and regulatory frameworks do not exist to effectively curtail fraudulent activity, corruption serves to reduce FDI. Managers need to consider the level of perceived corruption in their assessment of any market prior to potential investment.

Comments

This article was first published in the Journal of Business Ethics. Copyright, Kluwer Academic Publishers.