We evaluate the efficacy of "the Financial Action Task Force (FATF) Recommendations 2012", which set the global standard on combating money laundering and terrorist financing. We exploit the staggered adoption of the FATF recommendations in 16 East and South African countries. Using trade gap, a trade-based illicit financial flows measure as a proxy for money laundering activity, we find that countries adopting the FATF recommendations reduce money laundering activity by 15.3%. The adoption of the FATF recommendations do not affect international trade and exchange rate volatility. Our findings contribute to a lively policy debate surrounding the efficacy of anti-money laundering regulations.

This paper aims to identify the determinants and impact of foreign-invested firms’ (FIFs) choice of bribery in corrupt contexts. An analytical framework is built based on an interaction of institutional and resource-based constructs, and tested using firm-level data from 2210 FIFs operating in Africa. Controlling for FIFs’ self-selection to bribe, our findings, based on the Tobit, OLS and IV regression results, indicate that the heterogeneity of FIF resources and perceived corrupt pressures lead to differing bribery strategies in response to host country corruption, and these two variables then interactively moderate the impact of bribery on FIF performance. We find that FIFs’ perceived level of host country corruption produces a positive effect on their choice of bribery. But FIFs’ home-country anti-corruption levels, and their holding of internationally recognized quality certification (IQC) reduce FIFs’ willingness to pay bribes. A more interesting finding is that, after controlling for FIFs’ perceived pressures of corruption in host countries, FIFs’ home-country anti-corruption levels and FIFs’ holding of IQC negatively moderate bribery’s effectiveness on performance.

Corruption is a global phenomenon which has been part of doing business for centuries and will probably continue so. This paper deals with the constructs and links high corruption levels to cultural behavior. The cultural dimensions of the GLOBE study and the wealth measure of GDP/capita are aligned with the Corruption Perception Index of a selection of developed, emerging and developing countries with high and low corruption. The country cases are identified to highlight the proneness to corruption in Venn Diagrams. We use the fuzzy set Qualitative Comparative Analysis (fsQCA) approach as an appropriate tool to allow for a configurational analysis of cultural dimensions leading to corruption. Our findings show that hierarchy, group behavior, performance- and future-orientation are necessary and sufficient conditions for corruption and will have an impact on behavior in Multinational Enterprises (MNEs) and other cross-border activities. Corruption is both a reflection of individualistic self-interested behavior, but also a sign of collectivist in-group behavior.

Multinational enterprises (MNEs) are often assumed to be engaged in a ‘quest for legitimacy’ – where substantial and far-reaching efforts are made to establish and protect this ‘hard won’ and ‘easily lost’ resource. However, variance in - and breaches of - corporate social responsibility (CSR) expectations across international markets indicate that even those MNEs deemed most ‘socially responsible’ may not always ‘prize’ and ‘protect’ legitimacy according to the ways in which theory suggests. In order to deepen our understanding, this paper draws on theories of legitimation to explore the entry mode choices of multinational firms into markets with varying CSR distance. We theorize that firm motivations to ‘protect’ versus ‘build’ legitimacy reflect two distinct legitimation processes, with significant consequences for the entry modes choices implemented by the MNE. Building on these insights, we unpack how increased/decreased levels of corporate social performance (CSP) shape firm legitimation and FDI behaviors in ways not widely reflected in the extant international management literature. Utilizing a comprehensive sample of 44,720 FDI events between 2013-2019, this paper contributes to advancing theory on the quest for legitimacy in international business and management.