Companies can benefit from corrupt countries: research

Global companies in India that are watching with concern as multiple scams rock the country, may finally have a reason to smile. Corruption sometimes has a silver lining, new research suggests. Charu Sudan Kasturi reports.

Global companies in India that are watching with concern as multiple scams rock the country, may finally have a reason to smile. Corruption sometimes has a silver lining, new research suggests.

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Companies that succeed in a country with rampant corruption are more likely to also succeed in other corrupt markets against competitors wary of entering such markets, according to research published in the latest edition of the Journal of Management Studies.

The research – the most detailed review of findings on government-business interactions – by Roberto Martin M Galang from the Philippines, asserts that corruption is a major problem for the market at a macroscopic level.

But individual companies can benefit from the effects of corruption, Galang’s research concludes.

Operating in a corrupt country can help a company develop organisational capabilities that allow it to work successfully in such an environment without crossing the boundaries of the law. These capabilities can help the company when it invests in other highly corrupt countries, the research argues.

Though distasteful, corruption can be managed as a part of a company’s international investment environment, the research argues.

“The heterogeneous impact of government corruption on firm outcomes, is dependent not only on the power wielded by dishonest officials, but also influenced by firm characteristics, industry regulations, political structures, social norms and organizational culture,” it argues.

Both Houses of Parliament are tomorrow scheduled to debate cables between American diplomats – disclosed by Wikileaks – in which US officials here told Washington that the UPA tried to buy votes for the 2008 trust vote over the Indo-US nuclear deal.

The revelations are only the latest in a series of controversies that have rocked the government in recent months. India was ranked 87 in Transparency International’s Corruption Perception Index last year among 178 countries.