Corruption in International Business: Does Economic Globalization Help?

Abstract

While many studies have shown that increased levels of economic globalization diminish the level of corruption among trading partners, there are studies that have raised doubts against this claim. In this article, we explore this relationship in a large sample of 138 countries and find that the effect of economic globalization on the level of corruption is not significant. The findings, however, are not indicative of the undesirability of economic globalization. In fact, we find that greater levels of economic development are associated with lower levels of corruption. Nevertheless, it does call for some precaution and monitoring as trade openness alone may not be the panacea for controlling corruption and other factors, for example, the importance of building of relevant institutions to curb corruption may need to be considered. Additionally, it is important to identify moderator and mediator variables that may change the strength and direction of the aforementioned relationship. We conclude by explaining the implications of our findings for international business (IB).