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Business strategies and corruption in small‐ and medium‐sized enterprises: The impact of business group affiliation, external auditing, and international standards certification

Changwony, F.K; Kyiu, A.K

Business strategies and corruption in small‐ and medium‐sized enterprises: The impact of business group affiliation, external auditing, and international standards certification Thumbnail


Authors

F.K Changwony



Abstract

We examine the impact of three business strategies separately and in combination on the tendency for firms to engage in corruption. Using a sample of 56,827 firm-year observations for small- and medium-sized enterprises (SMEs) over the 2006–2018 period, we find that firms with business group affiliations are more likely to engage in corrupt practices in countries with low business freedom. However, those in countries with high business freedom are less likely to do so. We also find that firms that engage the services of external auditors and adopt international standards are less likely to be corrupt, especially in countries with weak financial reporting standards. Our results also show that corruption intensity reduces even more for firms that employ the three strategies, whether we consider institutional factors or not. This result holds when we use a three-way interaction term. We conclude that the three strategies are mutually reinforcing and that firm-level and country-level efforts complement each other in mitigating corruption.

Citation

Changwony, F., & Kyiu, A. (2023). Business strategies and corruption in small‐ and medium‐sized enterprises: The impact of business group affiliation, external auditing, and international standards certification. Business Strategy and the Environment, https://doi.org/10.1002/bse.3333

Journal Article Type Article
Acceptance Date Jul 3, 2022
Online Publication Date Jan 16, 2023
Publication Date Jan 16, 2023
Deposit Date Mar 14, 2023
Publicly Available Date Jul 19, 2023
Journal Business Strategy and the Environment
Print ISSN 0964-4733
Electronic ISSN 1099-0836
Publisher ERP Environment
Peer Reviewed Peer Reviewed
DOI https://doi.org/10.1002/bse.3333
Public URL https://durham-repository.worktribe.com/output/1178283

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Published Journal Article (2.3 Mb)
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Publisher Licence URL
http://creativecommons.org/licenses/by-nc-nd/4.0/

Copyright Statement
© 2023 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.






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