Analysis Of Kwok And Tadesse s Regulatory Pressure Effect

Kwok and Tadesse suggest the regulatory pressure effect, demonstration effect, and the professionalization effect. Corruption exists in local governments in less developed countries across the globe, a circumstance that is extremely difficult to prevent. Since it is normal business practice for local businesses to engage in corrupt activity, it is difficult for them to refrain from doing so, since it is common practice. Most MNCs are unwilling to accept bribes in order for host countries to attain an advantage. For the sake of making things easier, let us focus on MNCs from the United States. Host institutions looking for business partners in the United States are presented a dilemma. Either they continue to divulge in corrupt practices in their local government, or they strive for internal legitimacy since these MNCs are likely to have adopted norms and practices that outlaw the use of corruption and bribery from their affiliates. This can be attributed to the observance of acts suc h as the US Foreign Corrupt Practices Act of 1977. The act outlaws US firms from coercing a host country’s government to enter into a business advantage through the use of materialistic items, such as money. Violating this act can be costly for individuals and firms alike. To add in 1997, 33 countries had signed the Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions. There is an agenda to combatting corrupt practices in global business. Regulatory