Corruption and brand value

Abstract

Purpose Although multinational enterprises (MNEs) based in emerging economies arose quickly during the past decade, most of these firms lack marketing capabilities and strong brands. Emerging-economy MNEs that have tried to build their own brands have been largely unsuccessful. The purpose of this paper is to argue that corruption in the MNEs’ home countries has been detrimental to their brand values. Corruption makes it more difficult for consumers to govern their transactions with local firms, thus decreasing firms’ trustworthiness and brand values. Design/methodology/approach Data of the global top 500 most valuable brands of 2008 and 2014 and the Poisson regression model are used. Findings This study finds that firms based in countries with lower levels of corruption establish more valuable brands than those based in countries with higher corruption, even when GDP and GDP per capita are controlled. Practical implications Policymakers who want to help local firms increase their marketing capabilities and establish strong brands should strive to increase the trustworthiness of local firms by undertaking anti-corruption reforms aimed at protecting consumers. Originality/value Few studies have address the research question that why emerging-market MNEs lack marketing capabilities and strong brands. This study finds that institutional factors such as corruption at country level prevent them from establishing strong brands.