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Bribes in
Social norms, organizational emerging
learning and bribes in emerging economies

economies: a study of foreign

invested firms in Vietnam
Binh T.T. Vuong Received 30 November 2019
Revised 16 March 2020
Foreign Trade University, Hanoi, Vietnam 13 July 2020
22 September 2020
Thang V. Nguyen Accepted 25 September 2020

Institute for Sustainable Development,

National Economics University, Hanoi, Vietnam, and
Ngoc T. Phan
Duke University, Durham, North Carolina, USA

Abstract
Purpose – Drawing from institutional theory and organizational learning perspectives, the purpose
of this paper is to examine how social norms of corruption in home countries and those in host
localities influence firm bribery behavior. It also investigates factors that moderate the influence of
these norms.
Design/methodology/approach – The study is based on survey data of foreign invested firms (FIFs) in
Vietnam, conducted by the Vietnam Chamber of Commerce and Industry between 2010 and 2018 along with
Transparency International’s Corruption Perception Index. The authors run ordinary least squares regressions to
test the hypotheses.
Findings – The study provides evidence that social norms of corruption in both home countries and
host localities influence firms’ bribery behavior, but their effects are moderated by different sets of
factors. Specifically, the use of local leadership augments the impact of the host province’s corruption
norms on the firm’s bribe payments. By contrast, the relationship between the home country’s
corruption norms and a FIF’s bribe payment is weaker if local leadership is used, and stronger if the
FIF’s home country belongs to the Organization for Economic Co-operation and Development.
Research limitations/implications – Repeated cross-sectional data do not allow us to genuinely keep
track of the changing roles of home country and host province corruption norms over time.[AQ2] In addition,
the use of perception measures for corruption norms is subject to potential biases.
Practical implications – As the hiring of local executives weakens the impact of the home country’s
norms which are embedded in the MNCs’ general practices, a stronger learning measure and regular
review of the headquarters’ policies and practices is needed to ensure the overseas branch’s compliance.
For policymakers, it is critical to recognize that local corruption plays a role in shaping FIFs’ bribery
behavior.
Originality/value – While the effect of social norms of corruption on firm bribery behavior has been
recognized, to the best of the authors’ knowledge, this is the first study that examines the learning processes

The research is funded by the Foreign Trade University under the “FDI and Sustainable
Development” Project. The authors thank Thang Bach for his valuable comments. Multinational Business Review
Declarations of interest: The authors declare that they have no conflict of interests. © Emerald Publishing Limited
1525-383X
The authors contributed equally to the paper. DOI 10.1108/MBR-11-2019-0162
MBR FIFs may take to make sense of and cope with these norms, and also the first one to specify factors that
moderate the influence of these norms.
Keywords Vietnam, Emerging economies, Social norms, Bribery, Corruption, Organizational learning
Paper type Research paper

Introduction
Why do multinational corporations (MNCs) pay bribes in foreign markets? Scholars have
increasingly focused on the role of social norms in motivating and perpetuating bribery
(Cuervo-Cazurra et al., 2018; Dang, 2013; Frei and Muethel, 2017; Gao, 2011; He and Cui,
2012; Kostova, Roth, and Dacin, 2008; Spencer and Gomez, 2011; Tan, 2009). Rooted in the
sociology-driven institutional theory (DiMaggio and Powell, 1983; Meyer and Rowan, 1977;
Scott, 1995), this perspective points to the power of social norms in preventing (Fisman and
Miguel, 2007) or facilitating the rationalization of corrupt activities (Galang, 2012). Studies of
bribery among FIFs have focused on two sets of norms – those in the FIFs’ home countries
and those in the host localities. Traditional applications of the institutional theory suggest
that FIFs adapt to local norms to be isomorphic to the environment (Cuervo-Cazurra, 2016;
Frei and Muethel, 2017; Godinez and Liu, 2018; Kostova and Roth, 2002; Kostova et al., 2008;
Spencer and Gomez, 2011). On the other hand, norms in the home countries are internalized
into the companies’ values, structure and practices which are transferred to their overseas
operations (Cuervo-Cazurra, 2016; Frei and Muethel, 2017; Gao, 2011; Kostova and Roth,
2002; Orudzheva et al., 2018).
Recent studies, however, have shifted to the role of agents in interpreting and translating
institutional pressures into practices (Chandler and Hwang, 2015; Greve, 2005; Zhao et al.,
2014). While institutions put constraints on FIFs’ responses, it is also true that institutions
are created and inhabited by FIFs and by other actors, whose practices sustain and alter
existing norms. In the bribery game, FIFs may not mindlessly mimic other firms’ bribery
practices but could actively challenge existing orders. However, current studies have not
been explicit about what contribute to FIFs’ capacity to interpret and respond to corruption
norms.
To address this gap, this study asks two questions, including the following:
 How do corruption norms in home countries and host localities influence FIFs’ bribe
payments?
 What moderate the power of these norms in shaping FIFs’ (anti-)bribery behavior?

Following Kim et al. (2018), we define bribery as the act of making informal payments for
favors, while corruption refers to the overall tendency of public officials to engage in and
allow the abuse of power for private gains. We use sociology-driven institutional perspective
(Meyer and Rowan, 1977; Scott, 1995) and organizational learning (Argote, 2012; Crossan
et al., 1999; Cuervo-Cazurra et al., 2018; Fiol and Lyles, 1985) to propose that FIFs use
adaptation and transference learning mechanisms to cope with corruption norms in their
home country and host localities. We then test the hypotheses using a survey of FIFs in
Vietnam conducted annually between 2010–2018 by the Vietnam Chamber of Commerce
and Industry (VCCI). Vietnam is a highly relevant context to study this topic with its high
levels of corruption (Nguyen et al., 2020; TI, 2019) and considerable variation in the quality
of local institutions across provinces (Nguyen et al., 2013). In addition, Vietnam has emerged
as one of the most successful developing countries in attracting foreign direct investment
(FDI) from both industrialized and emerging economies (Jensen and Malesky, 2018). The use
of within-country variation in corruption norms helps control for national variables, such as
culture and geography (Cole et al., 2009; Lebedev and Peng, 2014; Malesky et al., 2015; Yang, Bribes in
2018). Scholars have argued that firms are more susceptible to local provincial practices emerging
than wider national norms of corruption (Haunschild and Chandler, 2008; Nguyen, Ho, Le,
and Nguyen, 2016; Zhan, 2012). To our knowledge, this is the first study that untangles the
economies
different logics behind how home countries’ and host localities’ corruption norms influence a
FIF’s bribery behavior. In this paper, the term “multinational corporations” indicates the
mother companies while “foreign invested firms” (FIFs) refers to firms with foreign capital,
including overseas subsidiaries of MNCs.
We use sociology-driven institutional theory to develop hypotheses that link FIFs’
behavior with corruption norms in their home countries and in their host provinces in
Vietnam. We then use insights from organizational learning to specify how these
relationships are moderated by local leadership, length of operations in Vietnam, and the
FIF’s home country. Research methodology and findings follow. Our paper concludes with a
discussion of theoretical and managerial implications.

Social norms of corruption for foreign direct investment firms

Corruption norms in the host province and foreign-invested firms’ bribery
Sociology-driven institutional theory suggests that a firm engages in malpractices such as
corruption not necessarily for reasons of efficiency but rather to follow the established “rules of
the game” and for isomorphic reasons (DiMaggio and Powell, 1983; Meyer and Rowan, 1977;
Scott, 1995). In other words, a firm’s corrupt behavior depends upon the informal conventions of
corruption in its surrounding environment (Cuervo-Cazurra, 2016; Kostova and Roth, 2002; Kwok
and Tadesse, 2006; Spencer and Gomez, 2011). In settings of rampant wrongdoings, government
officials may impose more coercive pressures on FIFs to participate in corrupt activities.
Moreover, if high performing local businesses also engage in corruption, there will be greater
mimetic pressure on FIFs to offer bribes in its business operations (Spencer and Gomez, 2011).
While most studies have focused on host countries’ corruption norms, the institutional
argument can equally be applied to the provincial level (Cole et al., 2009; Dang, 2013;
Lebedev and Peng, 2014; Malesky, 2008; Meyer and Nguyen, 2005; Nguyen et al., 2016;
Yang, 2018). In Vietnam, we argue that pressures from provincial social norms are even
stronger than those at the national level. First, under current decentralization policies, most
of administrative procedures relevant to the operations of FIFs are conducted at the
provincial level (Dang, 2013; Malesky, 2017; Meyer and Nguyen, 2005; Nguyen et al., 2013).
While major regulations are developed by the central government, the provinces have
considerable discretion in their implementation (Meyer and Nguyen, 2005; Nguyen et al.,
2013), which results in substantial variation in institutional quality within the country. FIFs
have to cope with institutional pressures in their host provinces more frequently than at the
national level. Second, geographic proximity allows managers to socialize more frequently
with their colleagues in the same provinces (Haunschild and Chandler, 2008; Hess, 2004;
Nguyen, Bruton, and Nguyen, 2016; Sorenson, 2005). The need to conform to common
practices and be “isomorphic” to the environment is most salient at the local level.
Therefore, we hypothesize the following:

H1. The more common bribery is in the host province, the higher the bribe payment a
FIF makes as a share of revenue.

Corruption norms in the home country and the foreign-invested firm’s behavior
Studies have demonstrated that MNCs also conforms to home country’s social norms, including
corruption norms (Brada et al., 2019; Frei and Muethel, 2017; Kwok and Tadesse, 2006). From an
MBR institutional perspective, the MNC conforms to home country’s (anti-)corruption norms to gain
legitimacy. Overtime, the institutional pressure is embedded in the MNC’s organizational
structure, system and routine (Kostova et al., 2008; Spencer and Gomez, 2011) and these elements
would be carried over to foreign markets. Therefore, if corruption is prevalent in its home country,
the MNC would develop capacity and skills in bribery (Brada et al., 2019; Cuervo-Cazurra, 2016).
How the MNC responds to corruption pressures in foreign markets will partially reflect practices
devised to conform to its home country institutional environment (Spencer and Gomez, 2011).
Therefore, we hypothesize the following:

H2. The more common bribery is in the home country, the higher the bribe payment a
FIF makes as a share of revenue.

Learning processes of corruption norms

Recent works on institutional theory have recognized a more active role of actors in making
sense of the contexts, choosing dominant set of values, norms and practices, and acting
appropriately to the chosen norms (Scott, 2014). As Scott (2014, p. 94) puts it, “between the
context and response is the interpreting actor,” implying that some learning must occur for
the actors to be able to cope with social norms. While institutional pressures put constraints
on the adoption of new practices, it is also true that firms can be proactive at interpreting
and responding to the complexity of their operating environment (Chandler and Hwang,
2015). Thus, adoption constitutes a mindful accomplishment that reflects degrees of
translations and interpretations. Conceptualizing the adoption of practices as a result of
learning helps explain organizational heterogeneity, given the same institutional
environment.
We believe that FIFs engage in some learning to make sense of and cope with corruption
norms (Brada et al., 2019; Cuervo-Cazurra et al., 2018; Tan, 2009; Tan and Wang, 2011; Zhao
et al., 2014). We also believe that this is not necessarily a mindless mimesis of corrupt acts
but also a mindful learning where firms seek to understand the norms and design practices
that best reconcile with the needs for legitimacy, moral values and efficiency (Chandler and
Hwang, 2015; Zhao et al., 2014). We turn to the organizational learning theory (Argote, 2012;
Crossan et al., 1999; Cuervo-Cazurra et al., 2018; Fiol and Lyles, 1985) for insights about how
a FIF learns and copes with corruption norms.
Organizational learning involves the tension between assimilating new learning and
using what has been learned (Argote, 2012; Fiol and Lyles, 1985), and firms develop
capabilities by accumulating experiential knowledge (Cuervo-Cazurra et al., 2018). Learning
can occur at individual, group and organizational levels, with cognition and action
interacting with each other (Crossan et al., 1999; Crossan et al., 2011; Nonaka and Takeuchi,
1995). These insights are relevant for explaining FIFs’ corrupt practices because bribery
involves both assimilating new learning (i.e. host province’s norms) and following what has
been learned (MNC’s policies that reflect home country’s norms), occurs at individual and
organizational levels and intermingles both cognition and behaviors.
The “model of heterogeneous interorganizational learning” (Greve, 2005, p. 1027)
provides insights on why firms respond differently to the same set of institutional pressures.
According to the model, the rate of learning from origin sources to a destination firm is
influenced by susceptibility, infectiousness and social proximity. Susceptibility refers to the
destination firm’s motivation and capacity to learn and adhere to institutional pressures.
Infectiousness indicates how much a source’s practices influence other firms. Infectiousness
depends on the availability of the new practices (availability), the extent to which new
practices are interpreted as causes of success (interpretation) and the status of the source.
Finally, social proximity refers to similarities in social, organizational and strategic Bribes in
characteristics of the source and the destination organization. Social proximity facilitates the emerging
transmission and interpretation of information on new practices (Greve, 2005). These factors
serve as filters that determine which information from external environment will reach the
economies
firm (Chandler and Hwang, 2015). The concepts of susceptibility, infectiousness and social
proximity have been used to study interorganizational learnings in different settings,
including information technology diffusion among US hospital (Angst et al., 2010), product
diffusion among Swedish mutual fund firms (Jonsson, 2009) and choice of open source
software (Singh and Phelps, 2013), among others.
Based on the literature, we distinguish two learning processes in which FIFs engage,
including learning to adapt to local corruption norms (hereafter: adaptation learning) and
learning to adhere to the mother companies’ cultures and practices (hereafter: transference
learning) (Table 1). We then rely on Greve (2005)’s model of interorganizational learning to
identify factors that moderate the adaptation and transference learning processes.

Adaptation learning on bribery

Local corrupt practices are among the most complicated norms for MNCs to ascertain and
accommodate. First, the definition of bribery and corruption may not be consistent across
countries, because there are important cultural differences in how corruption is viewed
(Cuervo-Cazurra, 2016). These differences are partly reflected in the variety of metaphors
used to refer to corruption (Tillen and Delman, 2010), including gift exchange (Xin and
Pearce, 1996), gratitude of appreciation (Zhan, 2012), lobbying (Yim et al., 2017) and/or a
relationship building practice (Nguyen and Rose, 2009; Peng and Luo, 2000), among others.
It is not always clear what a bribe is and how to separate it from what may be considered
normal business expenses, appreciation gifts and other culturally acceptable favors (Puffer
et al., 2013). Second, heterogeneity in law and enforcement also induce different meanings of
bribes. There can be situations in which payments to government officials are common
practices and thus not considered bribery (Argandoña, 2005; Bailes, 2006). The FIFs’
managers have to learn about public officials’ expectation of bribes in different situations to
avoid the risk of violating social norms (Kostova and Roth, 2002; Spencer and Gomez, 2011).
Widespread bribery by local firms would trigger the FIFs’ learning process about
corruption norms in the localities, which we name adaptation learning. The term
“adaptation” is used to refer to an MNC’s adjustment of its knowledge and practices to
adhere to local contexts (Webster and Piesse, 2018; Zhao et al., 2014). The objective of
adaptation learning on bribery is to understand the host local environment and use practices
that conform to local practices (Brada et al., 2019; Spencer and Gomez, 2011) and/or to satisfy
stakeholders’ demands (Zhao et al., 2014). The learning starts at the individual level – the
manager – then spirals up to the organizational level – the FIF itself. After some time, the
subsidiaries may develop capability and management practices that are isomorphic to
corruption norms in the host localities (Cuervo-Cazurra et al., 2018; Yim et al., 2017; Zhao
et al., 2014).
We rely on Greve (2005)’s three factors, i.e. susceptibility, infectiousness and social
proximity, to explain the heterogeneity among firms in adaptation learning on bribery.
As FIFs in the same province face the same level of infectiousness of local corruption norms,
susceptibility and social proximity are the two remaining factors that influence a firm’s
adaptation learning. We propose the use of a local executive and the length of operation in
Vietnam as two specific moderators.
Use of a local national to head the foreign-invested firms’ We argue that the use of a local
national to head the FIFs in developing countries like Vietnam would enhance susceptibility
MBR Adaptation Learning Transference Learning
Key ideas Selected studies Key ideas Selected studies

Pressures Regulative pressure: Frei and Muethel Home country laws Fisman and Miguel
Lack of laws, unclear (2017), Galang (2012) and norms: FIFs are (2007), Kwok and
regulations and weak accountable and Tadesse (2006)
enforcement constrained by their
home country
environment
Normative pressure: Tan (2009), Tan and
Cultural norms view Wang (2011)
some corrupted acts
as acceptable
Competitive pressure: Cuervo-Cazurra
Firms feel a need to (2008), (2016), Spencer
copy the behavior of and Gomez (2011)
successful firms in
their field/localities
Objectives Legitimacy: FIFs pay Frei and Muethel Compliance: FIFs Brada et al. (2019),
bribes to adhere to (2017), Cuervo- need to adhere to Cuervo-Cazurra
local norms and gain Cazurra (2016), mother companies’ (2016), Frei and
legitimacy Kostova and Roth practices and code of Muethel (2017), Kwok
(2002), Kwok and conduct and Tadesse (2006)
Tadesse (2006),
Spencer and Gomez
(2011)
Competitive reasons: Cuervo-Cazurra Competitiveness: Brada et al. (2019),
FIFs pay bribes to (2008, 2016), Frei and
FIFs follow mother Galang (2012)
avoid being in Muethel (2017) companies’ practices
disadvantageous to replicate the
positions success
Mechanisms Isomorphism: FIFs Chandler and Hwang Internalization in Kostova and Roth
try to adhere to the (2015), Gao (2011) MNCs’ structure, (2002), Spencer and
local norms. Three practices: The MNCs Gomez (2011);
mechanisms include design structure and
coercive, normative, practices to cope with
and competitive home country norms.
isomorphisms. These structure and
practices are
transferred to FIFs
abroad
Mimetic: FIFs imitate Chandler and Hwang Internalization in Brada et al. (2019),
behaviors of other (2015), Gao (2011), MNCs’ capability: Cuervo-Cazurra
firms in the localities Greve (2005) The MNCs develop (2016), Galang (2012)
Frequency-based: capacity to cope with
FIFs follow modal home country norms.
choice of other firms This capacity is
Outcome-based: FIFs transferred to FIFs
mimic practices that abroad
Table 1. have good outcome
Studies related to for other firms
foreign-invested Professionalization Orudzheva et al. Professionalization Orudzheva et al.
and socialization are (2018) and socialization are (2018)
firms’ adaption and two ways for FIFs to two ways for FIFs to
transference learning learn about local learn about MNCs’
of bribery norms norms
and social proximity, which in turn would foster the adaptation learning of host local Bribes in
corruption norms. First, the use of a local leader increases the FIFs’ susceptibility to local emerging
norms. At the individual level, acceptance of bribery practices may originate from pre-
socialization into corruption via previous professional experiences (Orudzheva et al., 2018).
economies
The manager first recognizes patterns in other local managers’ interactions with public
officials which contain possibilities of bribes. Through socializing with local peers, the
manager then gives meanings to these behaviors. He/she could then learn how local people
would view and name these behaviors as bribes, gifts or appreciation (Cuervo-Cazurra, 2016;
Tillen and Delman, 2010). For example, studies have shown that firms will learn from the
experiences of others to whom they are connected through various local and sectoral
networks (Haunschild and Chandler, 2008). Locally born and raised leaders have had more
time socializing with local stakeholders, and thus are more likely to internalize local values,
including corruption norms (Nguyen et al., 2016; Spencer and Gomez, 2011). Second, the use
of local leaders enhances social proximity. Local leaders have better knowledge and skills in
navigating the local business environment, especially where the latter is not transparent and
predictable (Zhao et al., 2014). They also possess better connections with local stakeholders,
including connections with government officials (Peng and Luo, 2000; Spencer and Gomez,
2011; Zhao et al., 2014), which allows them better access to related information. Foreign
managers, on the other hand, suffer from “liability of foreignness.” They have less time
socializing with local stakeholders which inhibits them from internalizing local norms
(susceptibility) and building connections with public officials (proximity).
Therefore, we hypothesize the following:

H3a. The positive relationship between local corruption norm and a FIF’s bribery will
be strengthened by the use of a local national to head the firm.
Length of operation in Vietnam. We argue that the length of operation in Vietnam will
strengthen adaption learning through enhancing the FIFs’ susceptibility to local norms. For
adaptation learning, an important challenge for the manager is to make sense of the local
context (Webster and Piesse, 2018; Zhao et al., 2014). The longer the FIF has operated in
Vietnam, the more its manager will understand the local norms, especially those that are
secret in nature. The next challenge is for the manager to share his/her understanding of the
local context with others in the FIF and in the headquarter (Hong and Nguyen, 2009; Kim
et al., 2018). While bribery is secret in nature, some level of shared understanding and
agreement among key managers within the organization is needed to make the payment
possible (Nguyen et al., 2016). Over time, practices that conform to local norms become
routinized and embedded in the FIF’s structure and system (Cuervo-Cazurra et al., 2018;
Godinez and Liu, 2018; He and Cui, 2012; Zhao et al., 2014). Thus, the longer a FIF operates in
a host province, the stronger the effect of local corruption norms on the FIF’s bribe
payments.
Therefore, we hypothesize the following:

H3b. The positive effect of local corruption norms on a FIF’s bribery will be
strengthened by the number of years for which the FIF has operated in the host
province.

Transference learning on bribery

We name the process of transferring (anti-)bribery practices from a home country to the host
localities transference learning of bribery. The MNCs internalize their experiences in dealing
MBR with corruption in home countries into organizational policies and practices which they then
pass down to subsidiaries in other countries (Cuervo-Cazurra et al., 2018; Galang, 2012). This
process occurs somewhat differently than adaptation learning described above. The
objective of transference learning is for the FIF’s manager to internalize the MNC’s policies
and practices and implement them in local contexts. Transference learning starts at the
organizational level and continues down to the individual level. As previously discussed, an
MNC develops (anti-)bribery practices to be isomorphic to its home country’s corruption
norms (Brada et al., 2019; Cuervo-Cazurra, 2016; Kwok and Tadesse, 2006). (Anti-)bribery
practices that are already embedded in the MNC’s structure and system need to be
understood and exercised by the FIF’s manager (Cuervo-Cazurra, 2016; Galang, 2012; Kwok
and Tadesse, 2006). Activities such as meetings, workshops, mentoring and social
gatherings are learning opportunities for the FIF’s manager to exchange ideas and concerns
with those from the headquarter and other countries (Nguyen and Hong, 2013). The FIF’s
manager then adapts headquarter practices to the local environment, by comparing and
contrasting how bribe-related behaviors are named and viewed in headquarters and local
languages (Hong and Nguyen, 2009). Over time, some of the MNC’s practices may be
internalized by the FIF’s manager and become tacit (Nonaka and Takeuchi, 1995).
In light of Greve (2005)’s model of interorganizational learning, we identify FIFs’ home
country’s OECD and the use of local leaders as two factors that moderate transference
learning. First, the influence of an MNC on its overseas branches depends on infectiousness.
The more an MNC makes its (anti-)bribery policies and practices explicit and transparent
(availability), as well as unequivocal (interpretation), the higher the chance for these norms
to be transferred and adopted by its FIFs in other countries.
Scholars have argued that anti-corruption regulations in the home country would
strongly impact the infectiousness of an MNC’s (anti-)bribery practices (Frei and Muethel,
2017; Godinez and Liu, 2018; He and Cui, 2012; Yim et al., 2017). A commonly cited
regulation is the Organization for Economic Co-operation and Development’s Anti-Bribery
Convention, or OECD-ABC (Jensen and Malesky, 2018; Spencer and Gomez, 2011; Webster
and Piesse, 2018). The OECD-ABC criminalizes the bribery of foreign officials. Specifically,
the act of bribing public officials abroad becomes a criminal act at home which means
individuals could be directly prosecuted in domestic courts for overseas bribery behavior
(Jensen and Malesky, 2018). Previous studies have shown that FIFs of OECD MNCs are
more likely to follow headquarter (anti-)corruption policies than others (Jensen and Malesky,
2018; Spencer and Gomez, 2011; Webster and Piesse, 2018).
Therefore, we hypothesize the following:

H4a. The positive effect of the home country’s corruption norms on a FIF’s bribery will
be strengthened if the mother company comes from OECD countries.
On the other hand, the use of local leaders may reduce the FIFs’ susceptibility and social
proximity to their headquarter’s policies, hindering the transference learning of home
countries’ ethical norms (Spencer and Gomez, 2011; Zhao et al., 2014). Local leaders from
developing countries are less accustomed to global ethical standards and the home norms of
(anti-)corruption, and it takes them longer to internalize the MNCs’ values and practices (He
and Cui, 2012; Zhao et al., 2014). The use of local executives may blunt the subsidiaries’
cultural sensitivities to local practices that are at odds with values and standards back home
(Zhao et al., 2014). As a result, the headquarters’ policies are less likely to be monitored and
enforced.
Therefore, we hypothesize the following:
 H4b. The positive relationship between the home country’s corruption norms and a Bribes in
FIF’s bribery will be weakened by the use of a local national to head the firm. emerging
economies
Research methods
Data
To test the relationship between different sets of norms and corruption, we take advantage
of the annual Vietnam Provincial Competitiveness Index (PCI) survey. The PCI survey is
well known in Vietnam and has been used by various scholars (Dang, 2013; Malesky et al.,
2015; Malesky and Taussig, 2017; Nguyen et al., 2013). The PCI’s objective is to rank
provincial governments on various dimensions of business environments, based on the
feedback from private firms. The survey applies a stratified random sampling strategy for
each province, based on the size, sector and age of firms. Every year, about 10,000
businesses, both domestic and foreign invested, respond to the survey. Among FIFs, 7% of
individuals who answered the survey were top managers, while the other 93% were people
in other managerial positions, such as chief accountants, HR managers or business
managers. For more detailed descriptions of the survey methodologies, please refers to
www.vietnampci.org. The survey of FIFs contain questions on the MNCs’ home countries,
the FIFs’ total bribe payments as a share of revenue and various FIFs’ characteristics,
including sectors, employment size and length of operation in Vietnam. The survey is not
designed to be panel data. We, therefore, integrate the foreign-invested component of the PCI
between 2010 and 2018 into a data set of nine repeated cross-sections of FIFs in Vietnam.
This allows us to capture changes in the corruption norms over the years and ensures that
results are not the artefact of a single-shot survey within a particular year.
Our initial sample is composed of 14,206 FIFs throughout the country’s 63 provinces
between 2010 and 2018. The number of FIF respondents each year ranged from 1,163 (2010)
to 1,952 (2011) firms, with an average response rate of about 25%. However, the sample
contains significant numbers of missing values in the variables of interests, with most
missing values in bribe payments (3,676), time spent interacting with local officials (2,872),
FIF home country (1,849) and employment size (1,670). As missing values in bribe payment
account for 25.8% of the total sample, potential selection bias caused by unreported bribe
payments needs to be addressed.

Measures
Bribe payment. Our dependent variable is the reported amount of bribes that firms pay as a
share of revenue. The survey question is borrowed from the World Bank’s Investment
Climate Analysis (ICA) survey, where firms are asked to respond on an eight-point scale [1].
The question was phrased indirectly, i.e. “do firms in your line of business” rather than
“does your firm”, to avoid implicating the respondent of wrongdoing. Measuring bribes in
terms of revenue also helps compare bribe payments to outlays for taxes and investment
expenses which are also standardized by revenue in the PCI survey. This, coupled with the
mail survey method and the confidentiality assurance of the PCI team, increases the
reliability of the responses. Certainly, the measure is still subject to a risk of social
desirability bias, i.e. firms may feel uncomfortable to reveal the true size of their payment.
On the surface, this does not appear to be a severe threat in our data. As we reported above,
75% of the respondents answered this question, of which 74% reported non-zero bribery
costs in the past year. Following Bai et al. (2019), we create a continuous variable by taking
the mid-point value of each of the eight option ranges, using 0.5% for the <1% category and
35% for the >30% category.
MBR Host province’s corruption norms. To measure the prevalence of corruption in the host
provinces, we take advantage of a PCI question which asks domestic firms whether
“informal charges” are common for firms like them [2]. We simply use the share of firms
agreeing with this question in each province to indicate the host province’s corruption
norms.
Home country’s corruption norms. We follow previous studies (Brada et al., 2019;
Cuervo-Cazurra, 2008; Spencer and Gomez, 2011) in using Transparency International’s
Corruption Perception Index (CPI) as a measure of home country’s corruption norms.
The CPI provides annual ranking of countries in terms of perceived corruption prevalence.
The CPI is a continuous scale variable, taking values from 0 to 10 (2010 – 2011) and from 0 to
100 (2012 – 2018), in which higher values indicate less corruption. We convert the CPI during
2010–2011 into a scale of 0 –100, and then subtracted the original index from 100 to rescale
the indicator so that a higher number indicates higher corruption and vice versa.
Local leadership. This variable is coded as “1” when the managing director is Vietnamese
and as “0” otherwise.
Time in Vietnam. The number of years for which the FIF had operated in Vietnam at the
time of the survey.
Organization for Economic Co-operation and Development. A dummy variable taking
the value of “1” if the FIF’s home country belongs to the OECD, and “0” otherwise.
Control variables. We control for firm characteristics and year-specific factors as follows:

 Size: The number of employees at the time of the survey as a proxy for the FIF’s
size.
 Sector: We create dummy variables to control for firms in manufacturing, service
and trading, and real estate and construction, agriculture, mining, finance and
banking.
 Year of survey: Since FIFs were surveyed in various years (from 2010 to 2018), we
control for year-specific factors by including the survey year in the model.
 Time spent interacting with local officials: The reported amount of time a FIF’s
senior management spent interacting with public officials. The survey question
asked respondents to report on a six-point scale, from 1 (below 1%) to 6 (above
50%) [3].
 MNC subsidiary: Whether the FIE is a subsidiary of an MNC (Source: PCI survey)
 Firm located in industrial zone: Whether the FIE is located in an industrial zone
(Source: PCI survey)

We also control for provincial socio-economic factors with data come from General Statistics
Office. These variables are:
 retail activities in province (billions USD): total value of retail and consumption
revenues;
 number of active FDI projects;
 cumulative licensed FDI (billions USD);
 urban population (millions);
 population (millions); and
 malnourishment at age 5 (%): fraction of children under age 5 that is malnourished
(by weight).
Analysis Bribes in
Every year, missing values account for about 26% of total observations for the bribe payment emerging
variable, raising a concern of selection bias. To address this problem, we use the Heckman
selection model (Heckman, 1979) . Following Jensen et al. (2010), we use home countries’ press
economies
freedom index from Freedom House, local leadership, length of operation in Vietnam and
business sector to estimate the probability of a FIF’s reporting bribe payment. The model
shows that press freedom is a significant predictor of non-response to bribery question (–
0.00108, p < 0.01), but the null hypothesis of no selection bias could not be rejected (inversed
Mill’s ratio = –0.413, SE = 2.129, p > 0.84) (Appendix 1, First stage model).
Our original dependent is an ordinal variable on an eight-point scale. According to
Snijders and Bosker (2011), “when the number of categories is rather large (5 or more), it
may be possible to approximate the distribution of the residuals by a normal distribution
and apply the hierarchical linear model for continuous outcomes.” (p. 310). We then follow
previous studies (Bai et al., 2019; Malesky et al., 2020) in creating a continuous variable for
bribe payment and run ordinary least squares (OLS) regressions to test our hypotheses. In
OLS regressions, Model 1 includes control and independent variables and is used to test the
main effects of home country’s and host province’s corruption norms (H1, H2). Interactions
are created by multiplying the two variables of interest and entered separately in the
subsequent models. From Model 2 to 5, we only take coefficients of the interaction terms to
test our HH3a, b, to 4a, b. In all models, standard errors are clustered by province.

Results
Descriptive statistics
The studied companies have an average of 7.79 years in operation and 66 employees at the
time of the survey. Most of the surveyed FIFs are in manufacturing (51.7%) and trading and
services (27.3%). The FIFs in the sample come from 70 countries, of which 27 belong to the
OECD (Appendix 4). The average reversed CPI of these countries is 42.10 out of 100. In an
average province, 60% of FIFs admitted to paying informal fees to public officials with a
level of 1.49 out of 8, which is approximately about 0.5% (Table 2).
The correlation matrix (Table 2) shows a normal pattern of correlations among variables.
When broken down by business sector, FIFs in manufacturing (–0.026, p < 0.01) bribe less,
whereas those in construction (0.018, p < 0.1), service and trading (0.025, p < 0.01) and
agriculture (0.024, p < 0.05) pay significantly more. There also appears to be significant
relationships between host province corruption norms and business sector. Businesses in
manufacturing (–0.18, p < 0.01) and agriculture (–0.03, p < 0.01) are less likely to be located
in provinces with high corruption norms, while the trend is opposite for construction (0.091,
p < 0.01) and services (0.165, p < 0.01). One anomaly is the significant and negative
correlation between home country’s and host province’s corruption norms (–0.11, p < 0.01),
suggesting that MNCs from countries with pervasive corruption tend to be located in
provinces where bribery is less common.

Hypothesis testing
Table 3 presents the results of hypothesis testing in OLS regressions.
All models are significant with and adjusted R2 equal to 0.031 to 0.034 (p < 0.01). We
found evidence of the impact of corruption norms in both host province and home country
on FIF’s behavior. In Model 1, corruption prevalence in the host province is positively and
significantly related to bribe payment (2.514, p < 0.01), supporting H1. Similarly, home
country’s corruption norm has a positive and significant association with bribe payment
(0.006, p < 0.01), lending evidence to H2. Of the control variables, time spent interacting
 MBR

Table 2.
Correlation matrix
Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11

Bribe payment 1.492 3.284

Host province corruption norm 0.595 0.104 0.041***
Home country norm (reversed CPI) 42.056 19.644 0.039*** –0.111***
Local leadership 0.092 0.29 0.019** 0.065*** 0.057***
Interactions w. officials 2.99 1.689 0.070*** –0.266*** 0.116*** 0.019**
OECD 0.326 0.469 –0.048*** 0.135*** –0.623*** 0.031*** –0.091***
Year –0.023** 0.228*** –0.213*** –0.009 –0.534*** 0.119***
Ownership 0.134 0.341 0.033*** 0.080*** 0.072*** 0.385*** 0.036*** –0.008 –0.038***
Employment (1000) 0.066 1.846 0.007 –0.034*** 0.030*** 0.026*** 0.105*** –0.018* –0.053*** 0.020**
Manufacturing 0.517 0.5 –0.026*** –0.180*** 0.051*** –0.107*** 0.097*** –0.037*** –0.219*** –0.171*** 0.012
Construction 0.063 0.243 0.018* 0.091*** 0.036*** 0.005 –0.050*** –0.043*** 0.029*** 0.040*** –0.009 –0.227***
Service/ Trading 0.273 0.445 0.025** 0.165*** –0.069*** 0.108*** –0.021** 0.078*** 0.002 0.179*** 0.001 –0.539*** –0.072***
Agriculture 0.029 0.169 0.024** –0.030*** 0.020** 0.026*** 0.017* –0.029*** –0.032*** 0.013 –0.002 –0.153*** –0.037***
Mining 0.004 0.066 0.013 0.012 0.051*** 0.041*** 0.034*** –0.021** –0.050*** 0.078*** 0.001 –0.045*** 0.005
Retail activities in province (billions
USD) 8.99 10.188 0.020** 0.307*** –0.153*** 0.109*** –0.141*** 0.153*** 0.221*** 0.116*** –0.021** –0.331*** 0.092***
Number of active FDI projects 3275.89 2806.56 0.022** 0.231*** –0.122*** 0.092*** –0.056*** 0.120*** 0.024*** 0.091*** –0.021** –0.274*** 0.087***
Urban population (millions) 2.23 2.293 0.023** 0.302*** –0.138*** 0.110*** –0.096*** 0.148*** 0.114*** 0.117*** –0.018** –0.318*** 0.095***
Cumulative licensed FDI (billions
USD) 25.64 14.231 0.011 0.147*** –0.138*** 0.060*** –0.042*** 0.094*** 0.018** 0.059*** –0.025*** –0.194*** 0.070***
Population (millions) 3.83 2.876 0.021** 0.416*** –0.128*** 0.129*** –0.075*** 0.165*** 0.051*** 0.133*** –0.013 –0.337*** 0.127***
Malnourishment at age 5 (%) 7.85 2.893 –0.004 –0.165*** 0.176*** –0.092*** 0.060*** –0.189*** –0.036*** –0.098*** 0.025*** 0.269*** –0.100***
MNC subsidiary 0.341 0.474 –0.002 0.023** –0.131*** –0.033*** 0.101*** 0.109*** –0.143*** –0.070*** 0.013 0.016* –0.020**
Firm located in industrial zone 0.499 0.5 –0.041*** –0.142*** –0.046*** –0.125*** –0.013 0.031*** 0.030*** –0.186*** –0.001 0.370*** –0.123***
Time in Vietnam (years) 7.79 5.184 –0.034*** –0.067*** –0.023*** –0.025*** –0.044*** 0.033*** 0.017*** –0.105*** –0.018** 0.078*** –0.042***
Notes: ***p < 0.01; **p < 0.05; and *p < 0.1
(continued)
Variables 12 13 14 15 16 17 18 19 20 21 22

Bribe payment
Host province corruption norm
Home country norm (reversed CPI)
Local leadership
Interactions w. officials
OECD
Year
Ownership
Employment (1000)
Manufacturing
Construction
Service/ Trading
Agriculture –0.090***
Mining –0.019** 0.007
Retail activities in province (billions
USD) 0.305*** –0.046*** –0.015*
Number of active FDI projects 0.293*** –0.060*** 0.020** 0.911***
Urban population (millions) 0.316*** –0.050*** –0.010 0.975*** 0.955***
Cumulative licensed FDI (billions
USD) 0.233*** –0.076*** –0.030*** 0.763*** 0.890*** 0.810***
Population (millions) 0.340*** –0.052*** –0.009 0.915*** 0.912*** 0.934*** 0.779***
Malnourishment at age 5 (%) –0.302*** 0.078*** 0.047*** –0.648*** –0.718*** 0.696*** 0.745*** 0.71***
MNC subsidiary 0.040*** –0.012 0.026*** 0.018** 0.031*** 0.035*** 0.022** 0.057 –0.023
Firm located in industrial zone –0.335*** –0.007 –0.031*** –0.338*** –0.343*** –0.355*** –0.239*** –0.371 0.289 0.038***
Time in Vietnam (years) –0.111*** –0.078*** –0.030*** –0.003 –0.034*** 0.018** 0.117*** –0.010 0.072*** 0.044*** 0.036***

Table 2.
economies
Bribes in
emerging
 MBR

Table 3.
Ordinary least
squares regressions
Variables Model 1 Model 2 Model 3 Model 4 Model 5 Full

Host prov. corruption norm 2.514*** (0.864) 2.223** (0.894) 1.231 (1.502) 2.560*** (0.871) 2.533*** (0.865) 0.969 (1.526)
Home country norm 0.00558*** (0.00167) 0.00547*** (0.00168) 0.00546*** (0.00167) 0.00118 (0.00224) 0.00696*** (0.00188) 0.00232 (0.00246)
Time in VN (years) –0.0105 (0.00803) –0.0111 (0.00806) –0.106 (0.0717) –0.0119 (0.00832) –0.0104 (0.00792) –0.112 (0.0720)
Local leaders 0.0395 (0.279) –2.747*** (0.756) 0.0329 (0.281) 0.0656 (0.273) 0.471 (0.358) –2.141** (0.804)
Interactions w. officials 0.357*** (0.0899) 0.360*** (0.0902) 0.355*** (0.0902) 0.356*** (0.0900) 0.357*** (0.0898) 0.358*** (0.0906)
Year 0.0687 (0.0481) 0.0697 (0.0481) 0.0697 (0.0485) 0.0622 (0.0480) 0.0698 (0.0483) 0.0652 (0.0485)
Ownership 0.197 (0.197) 0.188 (0.195) 0.196 (0.193) 0.207 (0.197) 0.227 (0.199) 0.226 (0.197)
Employment 0.0449 (0.104) 0.0485 (0.107) 0.0524 (0.105) 0.0444 (0.105) 0.0453 (0.104) 0.0561 (0.109)
Manufacturing 0.0341 (0.161) 0.0329 (0.161) 0.0304 (0.161) 0.0350 (0.162) 0.0392 (0.163) 0.0349 (0.164)
Construction 0.138 (0.106) 0.138 (0.104) 0.146 (0.105) 0.120 (0.102) 0.138 (0.106) 0.127 (0.0991)
Service 0.0497 (0.126) 0.0410 (0.125) 0.0579 (0.126) 0.0447 (0.128) 0.0500 (0.127) 0.0452 (0.130)
Agriculture 0.567* (0.328) 0.571 (0.333) 0.575* (0.326) 0.559 (0.333) 0.560 (0.327) 0.562 (0.333)
Mining –0.553 (0.347) –0.517 (0.351) –0.558 (0.350) –0.532 (0.354) –0.500 (0.343) –0.449 (0.354)
Retail activities (B. USD) –0.0265* (0.0140) –0.0267* (0.0139) –0.0279* (0.0147) –0.0263* (0.0142) –0.0264* (0.0140) –0.0280* (0.0149)
Number of active FDI projects 6.70e-05 (7.24e-05) 7.00e-05 (7.10e-05) 7.02e-05 (7.50e-05) 6.76e-05 (7.26e-05) 6.71e-05 (7.32e-05) 7.41e-05 (7.48e-05)
Cum. licensed FDI (B. USD) –0.00779 (0.00724) –0.00826 (0.00720) –0.00689 (0.00702) –0.00899 (0.00712) –0.00802 (0.00730) –0.00872 (0.00694)
Urban population (millions) 0.241*** (0.0590) 0.248*** (0.0595) 0.239*** (0.0585) 0.240*** (0.0603) 0.240*** (0.0593) 0.243*** (0.0608)
Population (millions) –0.153*** (0.0510) –0.160*** (0.0499) –0.152*** (0.0506) –0.149*** (0.0512) –0.152*** (0.0512) –0.153*** (0.0498)
Malnourishment at age 5 (%) –0.0191 (0.0290) –0.0197 (0.0293) –0.0163 (0.0292) –0.0246 (0.0288) –0.0204 (0.0292) –0.0236 (0.0294)
MNC subsidiary –0.0835 (0.0633) –0.0878 (0.0625) –0.0830 (0.0630) –0.0791 (0.0628) –0.0876 (0.0638) –0.0852 (0.0622)
Firm located in industrial zone –0.139 (0.0870) –0.139 (0.0876) –0.139 (0.0854) –0.127 (0.0903) –0.136 (0.0871) –0.124 (0.0895)
Host prov. norm * Local leaders 4.456*** (1.352) 4.219*** (1.324)
Host prov. norm* Time in VN 0.156 (0.115) 0.162 (0.115)
OECD –0.822*** (0.162) –0.844*** (0.149)
Home country norm * OECD 0.0233*** (0.00796) 0.0242*** (0.00741)
Home country norm * Local leaders –0.0110** (0.00445) –0.0112** (0.00405)
Constant –139.0 (97.14) –140.9 (96.98) –140.3 (97.74) –125.8 (96.97) –141.4 (97.57) –131.7 (98.09)
Observations 6,048 6,048 6,048 6,048 6,048 6,048
R-squared 0.031 0.032 0.031 0.032 0.031 0.034

Notes: Robust standard errors in parentheses; ***p < 0.01; **p < 0.05; and *p < 0.1
with local officials is positively related to bribe payment, which is consistent with previous Bribes in
findings in the literature (Lee and Weng, 2013). emerging
When it comes to the moderating factors, we found evidence corroborating H3a. As
shown in Model 2, the interaction between the provincial corruption norms and local
economies
leadership is significant (4.456, p < 0.01). This suggests that the effect of the province’s
corruption norms on the firm bribe payment is stronger for FIFs with local leadership. On
the other hand, in Model 3, the interaction between local corruption norm and number of
years operating in Vietnam is not significant. H3 b is not supported.
In Model 4, the interaction is positive and significant (0.023, p < 0.01), suggesting that
(anti-)corruption norm back home has a more salient influence on the bribery behavior of
FIFs if the MNC is from one of the OECD countries. This finding serves as evidence in favor
of H4a. In Model 5, the interaction between local leadership and the home country norms is
significant and negative (–0.011, p < 0.05). The use of local leadership weakens the
relationship between the home country’s corruption norms and FIFs’ bribe payment,
supporting H4 b. When we put all interactions in the full model (Full Model), the coefficients
slightly change but the results remain the same (Table 3).
Taken together, we found that FIFs’ bribe payments are influenced by both home
country’s and host province’s corruption norms, but these influences are moderated by
different sets of factors. Specifically, the influence of host province norms is strengthened by
the use of local leaders, whereas the influence of corruption norms back home is
strengthened if the home countries belong to the OECD, and is weakened by the use of local
leaders.

Robustness check
Sensitivity to measures. We test the models for sensitivity to alternative measures. We
create new continuous variables of bribe payments by taking the one-third and two-third
values of each of the eight option ranges. The results are similar. The results are also robust
when we re-run the regressions using the Control of Corruption variable from the
Worldwide Governance Indicator Project as an alternative measure of home country’s
corruption norm.
Sensitivity to selection bias. We check if our models are sensitive to selection bias by
running Heckman’s two stage models and find similar results (Appendix 1, Model 2a to 5a).
Sensitivity to regression technique. We re-run the models using order probit technique
(Appendix 2). Both home country’s and host province’s corruption norms have a significant
coefficient, supporting H1 and H2 (Model 1 b). The interaction between host local corruption
norm and local leader is positive and significant, supporting H3a (Model 2 b). Other
interactions are not significant but have consistent signs as predicted in our hypotheses.
Unbalanced panel data set. The FDI survey is not designed to be a panel data of MNCs’
subsidiaries in Vietnam. However, a closer look at firms’ names and locations reveals that
many firms completed the survey multiple times between 2010 and 2016 [4]. This allows us
to construct an unbalanced panel of FIFs that appeared at least twice in the data set. The
final panel data consists of 5,731 observations of 2,262 unique businesses. The majority –
1,351 of these firms – showed up in only two years of the data. We fit fixed-effect models
using within regression estimators to evaluate the impact of changes in corruption levels in
the host provinces and the home countries on firms’ behavior (Appendix 3) [5]. Corruption
norms in the host province have a significant influence on FIFs’ bribe payment (1.121, p <
0.05), supporting H1 (Model 1c). Furthermore, the appointment of Vietnamese managing
directors led firms to be much more in tune with local corruption norms (4.28, p < 0.1),
lending evidence to H3a (Model 2c).
MBR We do not find evidence that norms in the FIFs’ home countries affect their corrupt
dealings in Vietnam. These findings are not surprising because fixed-effect models with
within estimators use time-demeaned measures. In other words, the results indicate the
impact of variation over time in the explanatory variables on variation over time in
bribe payments. While FIFs from corrupt countries tend to bribe more in Vietnam in
absolute terms, their behavior is unlikely to be affected by changes in their home country’s
CPI score over a span of seven years. It is reasonable, however, to expect FIFs to be sensitive
to changes in the business environment where they operate. Therefore, we expected to see
supporting evidence for H1 and H3a only. In general, the robustness checks confirmed
important findings from the main analysis.

Discussion
How do corruption norms in home countries and host localities influence FIFs’ bribery? Our
answer is that FIFs engage in different learning mechanisms to make sense of and respond
to these norms. Integrating the sociology-driven institutional theory (Meyer and Rowan,
1977; Scott, 1995) and the organizational learning perspective (Argote, 2012; Chandler and
Hwang, 2015; Crossan et al., 1999; Cuervo-Cazurra et al., 2018; Fiol and Lyles, 1985),
we argue that FIFs’ managers cope with these norms through adaptation and transference
learning of bribery. Based on data from a sample of FIFs in Vietnam, we found that the
influence of host province corruption norm on a FIF’s bribe payment is stronger if FIF uses
local leaders. By contrast, the influence of home country corruption norm on a FIF’s bribe
payment is weaker under local leadership and is stronger if FIF’s home countries belong to
the OECD.
Readers should be cautious of several limitations of this research. First, our cross-
sectional data do not allow us to genuinely keep track of the changing roles of home country
and host province corruption norms over time. The unbalanced panel data set we created for
robustness check contains a risk of selection bias. As explained, the survey is not designed
to be a panel data of FIFs in Vietnam. Each year a different set of firms is invited to answer
the survey. Among firms that get invited again, those who choose to respond more than
once may contain different attitudes and behaviors of bribery. Second, the use of perception
measures for corruption norms is not ideal as it is subject to potential biases. Third, because
of constraints regarding the availability of data, we do not have specific measures for the
level of FIF’s autonomy, slack resources, or R&D investment to include as control variables.
Despite these limitations, we believe the study has theoretical contributions to the literature.

Theoretical implications
This study contributes to the literature first by providing more evidence to support the
social norm perspective of corruption (Cuervo-Cazurra, 2016; Fisman and Miguel, 2007;
Nguyen et al., 2016; Venard, 2009). We distinguish two sets of norms, i.e. home country’s and
host province’s corruption norms, and find evidence that both have effects on FIFs’ bribe
payment. However, the two sets of norms influence FIFs’ bribery behaviors through
different mechanisms. While conforming to local norms serves to gain external legitimacy in
the host localities, conforming to home country’s norms is simply to follow practices that
have been internalized in the MNC’s structure and policies. While local norms put a direct
pressure on the FIFs’ bribery behaviors, home countries’ norms have an indirect influence
on FIFs through the mother companies’ policies and practices. The two sets of norms could
represent very different orientations on (anti-)bribery, creating a dilemma for FIFs’
managers on how to reconcile these norms (Cuervo-Cazurra, 2016; Hong and Nguyen, 2009;
Kostova et al., 2008; Kwok and Tadesse, 2006; Webster and Piesse, 2018).
 Second, we contribute to the institutional theory by specifying how FIFs ascertain and Bribes in
respond to social norms. While the institutional theory emphasizes the need for a firm to emerging
conform to social norms (DiMaggio and Powell, 1983; Meyer and Rowan, 1977; Scott, 1995),
compliance does not occur mindlessly and/or uniformly among firms. We integrate
economies
institutional and organizational learning theories to identify two learning mechanisms that
FIFs engage in to cope with host local and home country’s corruption norms, i.e. adaptation
and transference learning of bribery. We also demonstrate that the two learning
mechanisms are influenced differently by the use of local leadership, length of operation in
host localities and whether the FIF’s home country belongs to the OECD. These findings
show that an integration of institutional theory and organizational learning perspective
would help us better understand the FIFs’ complex learning processes in coping with
conflicting norms from home countries and host localities.
Finally, the study contributes to international business literature by demonstrating that
FIFs can manage to learn and respond to different sets of norms simultaneously. The fact
that both home country and host local norms of corruption influence FIFs’ bribe payments,
and that these influences are moderated by different sets of factors, supports this point. This
raises a puzzle of how a FIF copes with conflicting sets of norms. This question is of
particular relevance for studying FIFs in emerging economies where market institutions are
underdeveloped and corruption is prevalent (Cuervo-Cazurra, 2008; Welter and Smallbone,
2011; Wright et al., 2005). FIFs, especially those from developed countries, face high
complexity in reconciling vastly different norms (Spencer and Gomez, 2011; Tan and Wang,
2011). How do these FIFs manage these learning mechanisms to gain legitimacy in host
localities, and at the same time, adhere to mother companies’ anti-corruption practices? One
future research direction is to use institutional logics perspective (Scott, 2014; Thornton and
Ocasio, 2008) to explain how FIFs cope with contending pressures from home countries and
host localities. For example, Tan and Wang (2011) argue that an MNC develops its core
values and peripheral components of institutional logic. On the one hand, the MNC responds
to home country’s norms of corruption by sustaining its core values. On the other hand, the
MNC also adheres to host local norms by borrowing commonly accepted practices from host
localities and blending them to its peripheral components of institutional logic. Thus, home
country and host local norms influence different components of a FIF’s institutional logics,
which in turn affect its bribe payments. Another direction is to explain the existence of
competing demands in the cognitive, normative and regulative pressures (Cuervo-Cazurra,
2016). For example, a FIF may be compelled to implement the same type of anticorruption
standards as at home country and/or around the world. It may also face different normative
pressures in what is considered an ethical practice. The relative salience of cognitive,
normative and regulative pressures helps explain the variation in FIFs’ actual bribery
behaviors.
Managerial implications. We have demonstrated that norms from the home country,
embedded in the MNCs’ practices, may exert a weaker impact when the FIF is under local
leadership. This suggests that, in such situations, a stronger learning measure and regular
review of the headquarters’ policies and practices is needed to ensure the FIFs’ compliance.
For FIFs in Vietnam, some effort to make sense of the local corruption norms, such as the
prevalence, languages, forms and mechanisms, would help design the most effective
practices to cope with these norms. However, too much emphasis on the local context, often
from local managers, slows down the transfer of the MNCs’ anti-bribery code of conducts
and limits the MNCs’ contribution to local development.
For policymakers, it is critical to recognize that local corruption among domestic firms
have a salient effect on FIFs’ bribery behaviors. If the provincial governments want to
MBR attract quality foreign direct investment, developing a clean and fair business environment
among domestic firms is necessary. In addition, the study also suggests that when possible,
the local government could use corruption norms in MNCs’ home countries as one selection
criterion. MNCs from non-corrupted countries could serve as “agents of change” (Kwok and
Tadesse, 2006) that contribute to the government’s anti-corruption agenda.

Notes
1. “On average, what percentage of revenue do firms in your line of business typically pay per year
for informal charges to public officials?” 1. 0%; 2. Less than 1%; 3. From 1 to under 2% 4. From 2
to under 5%; 5. From 5 to under 10%; 6 From 10 to under 20%; 7. From 20 to 30%; 8. Above 30%
2. Do you agree with this statement: “Firms in my line of business usually have to pay extra
‘informal payments.’? 1) Strongly agree; 2) Agree; 3) Disagree; 4) Strongly disagree.
3. “What percentage of senior management’s time per year is spent interacting with government
officers in order to understand and comply with administrative procedures?” 1. Below 1%; 2.
From 1 to under 5%; 3. From 5 to under 10%; 4. From 10 to under 15%; 5. From 15 to under 50%;
6. Above 50%.
4. Unique information identifying firms is only available between 2010 and 2016.
5. These fit fixed models used fewer control variables than the main models to retain an adequate
number of observations.

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 models
MBR

Table A1.
Heckman’s two-step
Variables First stage Model 1a Model 2a Model 3a Model 4a Model 5a
Appendix 1

Host province corruption norm 2.517*** (0.498) 2.235*** (0.508) 1.252 (0.874) 2.588*** (0.498) 2.536*** (0.498)
Home country norm 0.00575** (0.00290) 0.00550* (0.00290) 0.00576** (0.00290) 0.00213 (0.00320) 0.00711** (0.00301)
Time in VN (year) 0.00140 (0.00269) –0.0105 (0.00871) –0.0109 (0.00869) –0.105* (0.0546) –0.0137 (0.00930) –0.0104 (0.00870)
Local leaders –0.0654 (0.0486) 0.0449 (0.185) –2.637*** (1.011) 0.0447 (0.185) 0.135 (0.197) 0.479 (0.314)
Interactions w. officials 0.359*** (0.0297) 0.362*** (0.0297) 0.357*** (0.0297) 0.360*** (0.0298) 0.359*** (0.0297)
Year 0.0682*** (0.0262) 0.0696*** (0.0262) 0.0688*** (0.0262) 0.0587** (0.0265) 0.0694*** (0.0262)
Ownership 0.193 (0.139) 0.184 (0.139) 0.190 (0.139) 0.203 (0.139) 0.222 (0.140)
Employment 0.0451 (0.105) 0.0479 (0.105) 0.0531 (0.105) 0.0497 (0.104) 0.0454 (0.105)
Manufacturing 0.0620* (0.0363) 0.0197 (0.148) 0.0257 (0.148) 0.00970 (0.149) –0.0370 (0.157) 0.0262 (0.148)
Construction 0.0747 (0.0605) 0.110 (0.207) 0.119 (0.207) 0.110 (0.207) 0.0224 (0.221) 0.110 (0.207)
Service 0.121*** (0.0392) 0.0272 (0.217) 0.0330 (0.217) 0.0233 (0.218) –0.0920 (0.231) 0.0298 (0.217)
Agriculture –0.0164 (0.0872) 0.563** (0.266) 0.566** (0.266) 0.571** (0.267) 0.567** (0.283) 0.555** (0.266)
Mining –0.280 (0.227) –0.515 (0.884) –0.513 (0.883) –0.490 (0.886) –0.208 (0.934) –0.467 (0.884)
Retail activities (B. USD) –0.0263 (0.0233) –0.0266 (0.0232) –0.0277 (0.0233) –0.0255 (0.0233) –0.0263 (0.0232)
Number of active FDI projects 6.57e-05 (7.48e-05) 6.86e-05 (7.47e-05) 6.89e-05 (7.48e-05) 6.62e-05 (7.48e-05) 6.59e-05 (7.48e-05)
Urban population (millions) 0.247* (0.135) 0.253* (0.135) 0.244* (0.135) 0.243* (0.135) 0.245* (0.135)
Cum. licensed FDI (B USD) –0.00812 (0.00720) –0.00853 (0.00720) –0.00720 (0.00722) –0.00952 (0.00723) –0.00837 (0.00720)
Population (millions) –0.157*** (0.0459) –0.163*** (0.0460) –0.155*** (0.0459) –0.153*** (0.0461) –0.156*** (0.0459)
Malnourishment at age 5 (%) –0.0207 (0.0242) –0.0212 (0.0241) –0.0178 (0.0242) –0.0267 (0.0243) –0.0221 (0.0242)
MNC subsidiary –0.0829 (0.0865) –0.0869 (0.0864) –0.0824 (0.0865) –0.0785 (0.0865) –0.0870 (0.0865)
Firm located in industrial zone –0.138 (0.0948) –0.138 (0.0948) –0.138 (0.0948) –0.127 (0.0949) –0.135 (0.0948)
Press Freedom –0.00108*** (0.000381)
/mills lambda –413 (2.129) –0.287 (2.873) –0.0693 (2.871) –0.478 (2.878) –2.106 (3.044) –0.249 (2.872)
Host prov. norm * Local leaders 4.276*** (1.585)
Host prov. norm * Time in VN 0.154* (0.0876)
OECD –0.847** (0.383)
Home country norm * OECD 0.0232 (0.0142)
Home country norm * Local leaders –0.0111* (0.00649)
Constant 0.424*** (0.0428) –137.8*** (53.20) –140.6*** (53.17) –138.4*** (53.18) –117.4** (53.81) –140.3*** (53.20)
Observations 8,977 8,977 8,977 8,977 8,977 8,977

Notes: Standard errors in parentheses; ***p < 0.01; **p < 0.05; *p < 0.1
 Appendix 2
Variables Model 1b Model 2b Model 3b Model 4b Model 5b Full

Host province corruption norm 2.332*** (0.516) 2.210*** (0.516) 1.656* (0.904) 2.348*** (0.526) 2.343*** (0.517) 1.507 (0.918)
Home country norm 0.00447*** (0.00104) 0.00442*** (0.00107) 0.00442*** (0.00103) 0.000609 (0.00153) 0.00512*** (0.00117) 0.00109 (0.00142)
Time in VN (year) 0.000510 (0.00514) 0.000248 (0.00516) –0.0497 (0.0469) –0.000783 (0.00554) 0.000573 (0.00511) –0.0557 (0.0470)
Local leaders 0.0800 (0.0604) –1.095** (0.513) 0.0760 (0.0609) 0.0981* (0.0563) 0.288** (0.137) –0.831 (0.559)
Interactions w. officials 0.177*** (0.0448) 0.179*** (0.0446) 0.176*** (0.0451) 0.175*** (0.0456) 0.177*** (0.0447) 0.176*** (0.0456)
Year –0.0180 (0.0326) –0.0176 (0.0326) –0.0176 (0.0329) –0.0196 (0.0325) –0.0176 (0.0325) –0.0185 (0.0327)
Ownership 0.0105 (0.0695) 0.00552 (0.0684) 0.00955 (0.0684) 0.0133 (0.0722) 0.0250 (0.0743) 0.0212 (0.0751)
Employment –0.0611 (0.0894) –0.0610 (0.0892) –0.0570 (0.0909) –0.0619 (0.0890) –0.0601 (0.0895) –0.0563 (0.0904)
Manufacturing 0.270*** (0.0752) 0.270*** (0.0755) 0.269*** (0.0749) 0.277*** (0.0719) 0.273*** (0.0755) 0.277*** (0.0720)
Construction 0.243*** (0.0748) 0.244*** (0.0743) 0.246*** (0.0741) 0.223*** (0.0743) 0.243*** (0.0750) 0.227*** (0.0734)
Service 0.0458 (0.0632) 0.0429 (0.0629) 0.0504 (0.0638) 0.0418 (0.0615) 0.0462 (0.0630) 0.0444 (0.0621)
Agriculture 0.359** (0.178) 0.362** (0.180) 0.364** (0.176) 0.352** (0.179) 0.356** (0.177) 0.355** (0.179)
Mining 0.0235 (0.456) 0.0406 (0.454) 0.0155 (0.458) 0.0628 (0.465) 0.0421 (0.453) 0.0873 (0.465)
Retail activities (B USD) –0.0352** (0.0154) –0.0350** (0.0154) –0.0359** (0.0158) –0.0353** (0.0160) –0.0350** (0.0155) –0.0359** (0.0165)
Number of active FDI projects 6.53e-05 (8.30e-05) 6.71e-05 (8.21e-05) 6.71e-05 (8.42e-05) 6.46e-05 (8.45e-05) 6.53e-05 (8.39e-05) 6.86e-05 (8.57e-05)
Cum. licensed FDI (B USD) –0.00210 (0.00860) –0.00233 (0.00853) –0.00161 (0.00855) –0.00369 (0.00846) –0.00222 (0.00866) –0.00349 (0.00843)
Urban population (millions) 0.130* (0.0739) 0.132* (0.0741) 0.129* (0.0744) 0.127 (0.0776) 0.129* (0.0744) 0.127 (0.0790)
Population (millions) –0.0339 (0.0363) –0.0370 (0.0357) –0.0332 (0.0366) –0.0247 (0.0370) –0.0339 (0.0365) –0.0268 (0.0369)
Malnourishment at age 5 (%) 0.00946 (0.0206) 0.00935 (0.0206) 0.0109 (0.0202) 0.00285 (0.0205) 0.00894 (0.0206) 0.00388 (0.0201)
MNC subsidiary –0.0699 (0.0595) –0.0717 (0.0596) –0.0696 (0.0598) –0.0671 (0.0589) –0.0725 (0.0602) –0.0709 (0.0598)
Firm located in industrial zone –0.0772 (0.0929) –0.0769 (0.0932) –0.0776 (0.0932) –0.0620 (0.0955) –0.0758 (0.0933) –0.0610 (0.0965)
Host prov. norm * Local leaders 1.885** (0.827) 1.792** (0.860)
Host prov. norm * Time in VN 0.0815 (0.0741) 0.0887 (0.0745)
OECD 0.267 (0.209) –0.279 (0.196)
Home country norm * OECD 0.000549 (0.00775) 0.00104 (0.00721)
Home country norm * Local leaders –0.00530 (0.00366) –0.00487 (0.00382)
Observations 6,048 6,048 6,048 6,048 6,048 6,048

Notes: Robust standard errors in parentheses; ***p < 0.01; **p < 0.05; *p < 0.1

Ordered probit
economies
Bribes in

models
Table A2.
emerging
 (CPI)
MBR

Table A3.

with fixed effects

Panel regressions
Appendix 3

Variables Model 1c Model 2c Model 3c Model 4c Model 5c

Host province corruption norm 1.121** (0.480) 0.684 (0.518) 1.343 (1.016) 1.122** (0.480) 1.247** (0.473)
Home country norm 0.00526 (0.00464) 0.00463 (0.00451) 0.00530 (0.00460) 0.00368 (0.00633) 0.00829* (0.00443)
Time in VN (years) –0.0436 (0.0495) –0.0423 (0.0505) –0.0293 (0.0816) –0.0440 (0.0494) –0.0430 (0.0492)
Local leaders 0.0833 (0.893) –2.551 (1.807) 0.0825 (0.894) 0.0921 (0.887) 1.393 (0.971)
Interactions w. officials 0.172** (0.0686) 0.165** (0.0672) 0.172** (0.0689) 0.175** (0.0686) 0.173** (0.0705)
Year 0.0425 (0.114) 0.0385 (0.115) 0.0429 (0.114) 0.0413 (0.115) 0.0405 (0.114)
Ownership 0.276 (0.852) 0.267 (0.833) 0.281 (0.862) 0.271 (0.863) 0.296 (0.846)
Employment 0.222 (0.226) 0.216 (0.230) 0.223 (0.225) 0.225 (0.224) 0.225 (0.224)
Manufacturing –0.124 (0.347) –0.129 (0.345) –0.125 (0.349) –0.121 (0.351) –0.159 (0.359)
Construction –0.244 (0.357) –0.224 (0.345) –0.247 (0.357) –0.234 (0.349) –0.278 (0.377)
Service –0.349 (0.456) –0.359 (0.459) –0.353 (0.461) –0.344 (0.456) –0.363 (0.464)
Agriculture 1.999* (1.128) 2.006* (1.129) 2.001* (1.131) 2.015* (1.130) 1.906* (1.060)
Mining 1.167 (0.858) 1.188 (0.862) 1.165 (0.861) 1.185 (0.840) 1.327 (0.894)
Host prov. norm * Local leaders 4.283* (2.400)
Host prov. norm* Time in VN –0.0231 (0.0744)
OECD –0.861 (0.682)
Home country norm * OECD 0.0304 (0.0206)
Home country norm * Local leaders –0.0304 (0.0222)
Constant –85.01 (229.2) –76.54 (231.2) –85.88 (228.6) –82.57 (230.0) –81.17 (228.4)
Observations 3,196 3,196 3,196 3,196 3,196
R2 0.021 0.023 0.021 0.021 0.024
Number of ID panel 1,806 1,806 1,806 1,806 1,806

Notes: Robust standard errors in parentheses. ***p < 0.01; **p < 0.05; *p < 0.1
Appendix 4 Bribes in
emerging
Non-OECD OECD economies
Anguilla Australia
Argentina Austria
Bahamas Belgium
Belize Canada
Brunei Czech Republic
Brunei Darussalam Denmark
Bulgaria Finland
Cambodia France
Cayman Islands Germany
China Hungary
Costa Rica Ireland
Cuba Israel
Cyprus Italy
El Salvador Japan
Hong Kong, China Luxembourg
India Netherlands
Indonesia New Zealand
Korea (Republic) Norway
Kuwait Poland
Kyrgyzstan Slovak republic
Laos Slovenia
Macau Spain
Malaysia Sweden
Mauritius Switzerland
Monaco Turkey
North Korea United Kingdom
Pakistan United States
Panama
Philippines
Romania
Russia
Samoa
Saudi Arabia
Seychelles
Singapore
South Africa
Sri Lanka
Swaziland
Table A4.
Taiwan
Thailand List of home
Ukraine countries of the
UAE foreign-invested
Vanuatu firms

Corresponding author
Thang V. Nguyen can be contacted at: nguyenvanthang@neu.edu.vn

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