An Empirical Investigation on Firms Proactive and Passive

Motivation for Bribery in China

Xiaoyu Zhou

Yi Han

Rui Wang
Received: 7 May 2012 / Accepted: 10 December 2012 / Published online: 21 December 2012
Springer Science+Business Media Dordrecht 2012
Abstract This research investigates rms bribery moti-
vations in China. Based on resource dependence theory and
anomie theory, we identify resource conditions as rms
proactive motivation to bribe and rms perceived institu-
tional environment as their passive motivation to bribe. We
use the data from 2002 World Business Environment
Survey, collected by the World Bank, to investigate rms
bribery in the worlds largest emerging market, China.
We employ a multi-level logistic model to test our
hypotheses. The results show that unsatisfactory general
and task environmental conditions may trigger rms to
bribe in order to compete for better resources and oppor-
tunities; institutional conditions such as the security
expenditure and anomie climate may make rms perceive
bribery as a common phenomenon and thus induce rms to
bribe. This research provides some insights to understand
business bribery behaviors in emerging market. It also
discusses some managerial implications and guidelines for
policy-making from the ndings.
Keywords Emerging market Bribery
Proactive motivation Passive motivation
Introduction
One of the most important concerns for doing business in
emerging markets is the bribery issue. Business bribery
increases the costs of doing business (Wu 2009). It is esti-
mated that corruption adds 5 % to the costs of doing busi-
ness in Asia (Kraar 1995). Therefore, it is very important to
understand bribery behaviors in emerging markets. Most
research to date examines bribery from the perspective of
macroenvironment conditions such as national culture
(Fritzsche 2000; Sanyal 2005), social norms (Powpaka
2002) and cross-national contexts (Chen et al. 2008; Cullen
et al. 2004). However, the roles of institutional environment
and task environment are left unexamined in the literature.
The institutional theory emphasizes the profound inuence
of institutional environment in shaping an organizations
legitimacy and performance (Meyer and Rowan 1977). The
economic and strategic approaches call the attention to the
organizations task environment where the organizations
compete to acquire and control scarce resources in order to
survive (Pfeffer and Salancik 1978). Following the logics
on these two perspectives, we attempt to address this
research gap by examining different motivations for rms to
bribe driven by these two environmental conditions.
Strategic decision making is suggested as the pivotal
result of the alignment between organizations and their
environment (Bourgeois 1980). In this vein, rms briber-
ies result from the alignment of organizations and their
environment. Therefore, we take environment into account
in our research in order to examine the motivation of the
rm bribery as a strategy. The resource dependence theory
accentuates the importance of the interactive relationship
between a rm and its environment in terms of resources
(Casciaro and Piskorski 2005; Pfeffer and Salancik 1978).
Moreover, this theory investigates the proactive role of a
X. Zhou R. Wang
Department of Marketing, Guanghua School of Management,
Peking University, Beijing 100871, Peoples Republic of China
e-mail: xiaoyuzhou@pku.edu.cn
R. Wang
e-mail: rwang@gsm.pku.edu.cn
Y. Han (&)
Department of Organization Management, Guanghua School
of Management, Peking University, Beijing 100871,
Peoples Republic of China
e-mail: hanyi@gsm.pku.edu.cn
1 3
J Bus Ethics (2013) 118:461472
DOI 10.1007/s10551-012-1596-8
rm in dealing with its environment. The anomie theory,
from another perspective, lays emphasis on the social and
group inuence for rms in the social environment, and
further sheds light on the rms passive following behav-
iors (Martin et al. 2007; Messner and Rosenfeld 1997).
Based on these two theories, we argue that resource con-
ditions may motivate a rm to bribe proactively and
institutional conditions make the rm bribe passively. That
is, the resource dependence theory proposes that rms
make strategies in order to seek resources in the environ-
ment; while the anomie theory argues that the unethical
rm behaviors are actually fostered by the local institu-
tional environment.
The resource dependence theory describes rms depen-
dence on the environment for resources. It is very likely that a
rm would experience the constraints of its environment,
including its general and task environmental factors.
According to resource dependence theory, a rm should act
proactively in response to the environment. If the environ-
mental conditions for rms are not satisfactory such that
rms cannot obtain valuable resources via legal approaches,
it is likely that rms would gain access to these resources via
illegal approaches such as bribery. Therefore in emerging
markets where the opportunity to access to resources is often
unfair, rms bribe to avoid or reduce taxes, secure public
procurement contracts, bypass laws and regulations, or to
block the entry of potential competitors into desirable mar-
kets (Powpaka 2002; Rose-Ackerman 2002).
On the other hand, the institutional environmental con-
ditions would also inuence rm bribery behaviors. In the
environment where corruption and bribery are considered
as normal practice, rms may give gifts and make informal
payments for government services that they otherwise
cannot access. This is in line with the anomie theory which
describes the breakdown of social norms and values as a
common phenomenon in a society (Messner and Rosenfeld
1997). People in such societies have no moral qualms about
choosing any means necessary to achieve their goals
(Cullen et al. 2004, pp. 411412). In emerging markets,
managers tend to normalize their anomie behaviors such as
bribery where corruption is assumed normal in the society.
Therefore, anomie theory can help explain the bribery
behaviors.
In this research, we test our theoretical hypotheses with
data from the World Business Environment Survey in the
year of 2002. We apply a logistic regression model to
examine our theoretical model. We nd that factors sug-
gested by the resource dependence theory (i.e., the invest-
ment climate and perceived consistency and predictability
of government ofcials policy interpretations) have sig-
nicant impacts on rms bribery behaviors. Meanwhile,
factors suggested by the anomie theory such as the security
expenditure and anomie behavior climate also signicantly
inuence rms bribery behaviors. The ndings also provide
some insights on implications for rm managers as well as
for the policy makers in emerging markets.
Theoretical Background and Hypotheses Development
Firm strategy can be viewed as the alignment of organi-
zation-environment, and this alignment process has been
heavily emphasized in both the business policy and orga-
nization theory literature (Bourgeois 1980). Literature on
business policy provides a perspective that views strategic
management as a proactive or opportunistic agent of the
rm in the environment (Hatten et al. 1978). This view
emphasizes the proactive motivation of rm strategy.
This proactive motivation refers to the propensities of
rm to seek out or avoid certain kinds of stimuli; these
propensities, in return, inuence rm behaviors and per-
formances (Katzell and Thompson 1990). The proactive
motivation of rm strategy toward the environment would
prompt the rm to take control and bring about the changes
to improve the rm strategies and their t with the envi-
ronment (Parker et al. 2010). And this proactive motivation
performs more effectively in the emerging market where
the institutional environment is immature (Grifn et al.
2007). The rms, in this vein, have to act proactively to do
something to avoid the uncertainties and get the rewards
(resources) from the environment to survive.
Institutional and organizational environment theories,
from another angle, propose a more passive stance by
viewing the environment as a deterministic force to which
organizations respond (Anderson and Paine 1975; Duncan
1972; Lawrence and Lorsch 1967). Hall and Soskice
(2001) found that political and social institutions determine
the nature of rms, while rms collectively support the
institutions that they rely on. In particular, the emerging
market, where the political and social institutions have
greater power due to the fragmentary law and market
system, would induce the rms passive actions to follow
the environmental climates. In this sense, the rms have to
behave in accord with their peers and follow the social
norms to prevent being kicked out of the game.
Bribery is a kind of the rm strategy in dealing with
social environment. The environment stimulus triggers the
proactive motivation of rm to bribe in order to acquire the
necessary resources. If the environmental conditions for
rms are not satisfactory such that rms cannot obtain
valuable resources via legal approaches, it is likely that
rms would like to gain access to these resources via illegal
approaches such as bribery. Therefore in emerging markets
where the opportunity to access to resources is not equal or
fair among all rms, managers may bribe to avoid or
reduce taxes, secure public procurement contracts, bypass
462 X. Zhou et al.
1 3
laws and regulations, or to survive. Meanwhile, the social
norms also induce the passive motivation of rm bribery.
In the environment where corruption and bribery are con-
sidered as normal phenomena, rms may have no other
choice but to give gifts and pay informal payments for
government services that they are actually entitled to. The
individuals have high levels of discretion, goals are not
clearly specied, the means for achieving them are
uncertain, and attainment is not clearly linked to rewards in
the emerging market (Mischel and Shoda 1995). The rms
in emerging market thus would follow the social norms,
however abnormal, and act like the peer rms to bribe.
In sum, we adopt the resource dependence theory and
the anomie theory to examine rms different motivations
to bribe. Specically, in the proactive model, we apply the
resource dependence theory to investigate that rms may
proactively bribe in order to gain access to better resources.
In the passive model, we inspect the whether the rm is
induced to bribe given the social anomie climate. To
illustrate our theoretical thinking, we build up our analyt-
ical framework for this research in Fig. 1.
Proactive Motivation
The resource dependence theory posits that the environ-
ment is a source of scarce resources which are sought after
by competing organizations (Pfeffer and Salancik 1978).
The theorys central proposition is that organizational
survival hinges on the ability to procure critical resources
from the external environment (Casciaro and Piskorski
2005). According to this theory, the rm has to perform
actively in response to the environment requirement and
struggle to obtain the resources in order to survive and
further to achieve success. Besides, Aldrich (1976) pro-
posed that in an environment of limited resources, in order
for an organization to survive and to maintain its devel-
opment, it must obtain those scarce resources from other
organizations. To obtain resources, there must be transac-
tions with other organizations, thereby creating interde-
pendence. In this vein, the rm itself cannot obtain
the necessary internal resources so that it needs to
exchange complementary resources with other organization
to maintain its competitive advantage in such an open and
changing environment. The theory highlights the vital role
that the environment and relationship among the other
related organization play in terms of developing the rm
strategy. As a result, the environmental impacts should be
taken into account when examining the motivation of rm
strategic behaviors.
Organizational theory conceptualizes the rm external
environment as having several sectors that exist in two layers
(Bourgeois 1980; Dill 1958). The layer closest to the orga-
nization is the task environment which includes sectors that
have direct transactions with the organization. The task
environment inuences daily organizational operations and
goal attainment, and includes sectors such as competitors,
suppliers, and customers. The outer layer is called the gen-
eral environment and refers to sectors that affect organiza-
tions indirectly. The general environment often includes
social, demographic, and economic sectors (Daft et al. 1988).
Oliver summarizes the general environment and task
environment dichotomy in terms of the divergent pressures,
constraints, and relevant constituents in these respective
environments that are predicted to be causally predominant
in shaping organizations structure and performance. The
general environment emphasizes the survival value of con-
formity and the advisability of adhering to institutional rules
and norms. Institutions in the general environment refer to
regulatory structures, government agencies, rules, laws, and
professions (Oliver 1997). And the key constituents pre-
dicted to inuence organizations in general environments are
not purveyors of scarce production factors but representa-
tives of the state and, to a lesser extent, professional asso-
ciations that dene or enforce the public or collective rules
governing an organizations actions. The mechanisms of
environmental control over organizations are not exchange
dependencies, but rules, regulations, and inspections (Meyer
et al. 1983). The requirements of the general environment
specify the organizational structures and activities that are
publicly or collectively viewed as appropriate, legitimate, or
socially acceptable. Therefore, the organizational behaviors
in general environments would be less determined by the
acquisition of task resources than by the public conferral of
legitimacy and approbation on an organizations processes
or outputs. The bribery behaviors thereby are strongly
affected by the government and the institutional authorities.
Literature on bribery shows the important role of the gov-
ernment in both the economic perspective (the demand side)
(Beets, 2005) as well as the managerial perspectives (Pope
and Vogl 2000; Quah 1999). Accordingly, the perceptions of
government should be treated as the vital indicator to reect
the rms general environment. The effective and efcient
government would have less ambiguous regulations and deal
with ofcial affairs in the formal way, which would leave no
roomfor the rmto bribe. In that sense, the rmwould not be
willing to bribe the government. Therefore, we hypothesize
the general environments impacts on rm bribery: Fig. 1 Theoretical framework
Investigation on Firms Bribery Motivations in China 463
1 3
Hypothesis 1 The more rms interpret the government to
be consistent and predictable, the less likely rms would
bribe.
The task environment conceptions, however, tend to
emphasize the technical interdependence of organizations and
environments, the scarcity of environmental resources, and
the competitive pressures imposed on organizations to
design efcient work arrangements, to manage problematic
exchange dependencies, and to acquire and control critical
input resources (Dill 1962; Lawrence and Lorsch 1967;
Pfeffer and Salancik 1978; Thompson 1967). A task envi-
ronment perspective also coincides approximately with
economists conception of the classic competitive market
(Scott 1983). From this perspective, key constituents in an
organizations taskenvironment include those whocontrol the
critical factors of economic production, such as land, labor,
capital and supplies that are essential to the organizations
core work activities (Jacobs 1974). In this vein, the rm
behaviors in the task environment are dependent on the
acquisition of scarce resources and the effective management
of task interdependencies in a competitive market context.
Task environment focuses on the rms own resources
and capacities. In the previous research on bribery, task
environment was often ignored. Yet, according to the
resource-based view, the rms resources can be changed
into the rm capacities in order to get the competitive
advantages in the task environment. Therefore, we argue that
the rmwith valuable and scarce resources (e.g., innovation,
nancial, and marketing) in accord with the task environ-
ment would have more competitive advantages than its
competitors. In that sense, the rm with resources needs not
to adopt the informal channels, such as bribery, to get things
done. Therefore, we hypothesize on the task environments
impacts on rm bribery:
Hypothesis 2 The more rms interpret the task-related
resources to be limited, the more likely rms would bribe.
Passive Motivation
The anomie theory refers to a situation in which there is an
apparent lack of t between the cultures norms about what
constitutes success in life (goals) and the cultures norms
about the appropriate ways to achieve those goals (means).
And the term anomie means personal feeling of a lack of
social norms or the situation of normlessness, and describes
the breakdown of social norms and values. This theory
denotes some of common diseases of modern society,
which describes the mismatch of legitimate goals and ille-
gitimate means due to the dramatic societal changes
(Durkheim 1893). A number of scholars applied the idea of
anomie to study social anomie behavior, such as crime. For
example, Messner and Rosenfeld (1997) extended Mertons
anomie theory (1938) by treating both economic and non-
economic institutions of a society as the structural drivers in
promoting anomie behaviors. In their opinion, Merton (1938)
paid enough attention on social and cultural drivers of anomie
behaviors, but not on the institutional level factors. However,
since institutions and organizations in a society are intercon-
nected, failing in one institution can cause the problems in
another institution, for example, failing in education can cause
failingineconomic performance, be it competitive advantage,
technological innovation, or business ethics. Cullen et al.
(2004) identiedthat institutions like economy, polity, family,
and education can all have a signicant inuences on the rm
managers willingness to justify ethically suspect behaviors.
The application of anomie theory has been extended to cross-
national context and continues to investigate cultural and
institutional drivers of bribery, the effects of interplay of
culture and institutions (Martin et al. 2007). However, they
failed to trace the late development of anomie theory and thus
failed to achieve its full potential.
The late development of anomie theory, especially the
application in the organizational studies, moves anomie
theory to next level by treating organization, in addition to
institution and societal culture, as a universe for the creation
of anomie, deviance, and crime. Furthermore, it unpacks the
mechanism of accepting anomie by taking into consider-
ation the individuals perception of the anomie.
Other things being equal, organizations may still be dif-
ferent in terms of their organizational behaviors including
anomie organizational behavior. Vaughan (1998) and Per-
row (1999, 2007) studied technical and other accidents,
which were caused by organizations, and concluded that
organizational anomie are collectively constructed; when
organizations become the complex system and they consist
of different components and parts, the failure in one part
would be often neglected or left unnoticed until it causes a
big trouble, or even an apparent serious accident in the
society. And these unusual practices and anomie behaviors
in organizations may be contagious. When organizations
perceive the anomie behaviors as common practice
around, they may normalize their anomie behaviors in order
to make sense of these behaviors and t in the environ-
ment. Specically, bribery is in many nations considered as
worse than the anomie behavior, a crime. If rms perceive
crime to be a common issue, and public security is not a
concern here, they may take severe anomie organizational
practices, including bribery, as the common practice:
Hypothesis 3 The more severe the social disorder, theft,
and crime, the more likely rms would bribe.
Furthermore, unusual or anomie behaviors may even get
normalized inside organizations, i.e., people in organizations
may interpret some anomie behaviors to be normal. It is due
to the people see these anomie behaviors frequently; these
464 X. Zhou et al.
1 3
behaviors do not seem to cause problems, furthermore, they
may be quite helpful in archiving organizational goals.
The individuals, e.g., rm managers, perceive norms
subjectively, and interpret them and act upon them differ-
ently. The personal educational experience, value, and
attitude may predispose an individual to internalize a norm,
but the ways they perceive the norm or anomie will be
different. Individuals may act rationally in their own terms,
but the consequential behaviors are different. In this vein,
an individual who strives to attain the common goals of a
specic society yet being unable to reach these goals
legitimately because of the structural limitations in society
would exhibit anomie behavior (Merton 1938). Caruana
et al. (2000) conrm a link between anomie on academic
dishonesty among university students and suggest that
universities needed to foster codes of ethics among students
in order to curb it. Therefore, the anomie can be treated as
the push factor in the social disorder. Bribery is obviously a
type of anomie behaviors because the bribing rms focus
only on the ends (get something done) but ignores the ethic
means (formal channels). Thus we hypothesize that:
Hypothesis 4 The more the rms perceive social anomie
climate as normal, the more likely rms would bribe.
Methodology
Data
The illicit nature of bribery poses serious challenges for
data collection in rm level. Managers may refuse to talk
about bribery in their rms. We thus have to adopt an
indirect measure to examine the bribery motivation of
rms. The international institutions provide us an oppor-
tunity to conduct bribery research in rm-level via their
large-scale cross-country surveys (e.g., the World Business
Environment Survey, the Enterprise Environment Survey,
and the World Value Survey). These surveys investigate the
institutional environment in different countries and issue at
the bribery-related activities, thereby providing unique new
data on rm-level bribery that can be used for empirical
research (Reinikka and Svensson 2006; Svensson 2003).
We obtained our research data from the World Business
Environment Survey (WBES), conducted by the World
Bank, to determine the constraints that businesses confront
and investment environment worldwide (Wu 2009). The
surveys were launched in the period from 2002 to 2006
across 97 countries. The World Bank researchers located
in these countries conducted personal interviews with pre-
qualied rm representatives. Survey instruments were
translated and back-translated to ensure consistency. The
surveys contained items involving corruption in local
practices, including the prevalence of bribery. Further
information regarding the WBES refers to the World Bank
Governance Group (www.worldbank.org).
WEBS data are particularly suitable for comparative
analysis of bribery activities in worldwide (Martin et al.
2007). The WBES appears to be the only survey to record
information on corruption and bribery from individual rms
across most of the countries in the world. The survey
includes several important questions directly related to
corruption and bribery in rms business environment. For
example, it asks the respondents how often the individual
rm must make additional payment to public ofcials to
get things done, and it elicits the amount of bribes paid as a
percentage of the rms revenues. The research data are
from the WBES database in the period of 20022006. Data
are collected mostly though personal interviews conducted
at the managerial level, and in this research, 21,157 rms
from 28 industries participated in this survey. For our
research purpose, we only used the Chinese sample which
includes 700 rm observations.
Variable Measures
Dependent Variable: Bribery Behavior
The survey contains several important items directly linked
to bribery in rms business environment and bribery. In
the survey, participants are requested to directly indicate
the percentage of annual sales value would be cost by the
gift or additional payment to public ofcials to get
things done. In the survey, the 39th question reads: On
average, what percent of annual sales value would such
expenses cost a typical rm like yours? The responses for
this question are all in percentage type. In this research, we
treat this percentage number as our dependence variable to
capture the Chinese rms bribery. We transformed the
percentage into a binary format in analysis. That is, we kept
the rms of zero percent and encoded the other non-zero
percent rms into 1. Therefore, we have a binary variable
to measure whether or not the rm has a bribery behavior.
Our bribery measure has the substantive theoretical
bases that resonate with the previous bribery and ethics
studies (Morgan 1993). Recent research has reported
extensive validation for several components of the WBES
bribery items (Uhlenbruck et al. 2006).
Resource Dependence Variables: General Environment
Perceived consistency and predictability of government
ofcials policy interpretations (Policy Interpretation)
The perceived consistency and predictability of govern-
ment ofcials policy interpretations portrays the rms
Investigation on Firms Bribery Motivations in China 465
1 3
perception of the government policy interpretations. The
question 35th in survey describes In general, government
ofcials interpretations of regulations affecting the estab-
lishment are consistent and predictable. Participants are
required to express their agreements toward this statement,
with a six point scale ranging from fully disagree to fully
agree. According our hypothesis 1, we expect the perceived
consistency and predictability of government ofcials
policy interpretations has a negative effect on rm bribery.
Resource Dependence Variables: Task Environment
Exporter
The rms ability to sell its product to the foreign market
can be treated as an indicator of its competitive capacities.
Bernard and Bradford Jensen (1999)s study of US rms
reveals that, in addition to having higher productivity,
exporting rms also have higher employment, shipments,
wages, and capital intensity than non-exporters. Clerides
et al. (1998) found that exporting rms have higher pro-
ductivity levels on average than non-exporters in several
developing countries. In addition, the exporting is sup-
ported by Chinese government (Luo et al. 2010). There-
fore, if exporting rms can have the access to resources via
their supports from government, they dont need to bribe.
We adopt the data from question 11th that reects the
percent of sales that sold domestically or exported. In this
research, we transform the data into a binary variable to
measures whether rms sales are exported (directly or
through a distributor). We used 1 to identify the rm that
has exported activities and 0 to represent non-exporter.
According our hypothesis 2, we expect the exporter to have
a negative effect on rm bribery.
Financial Resource
The nancial resource enables rm to compete with other
competitors. Question 28th in survey depicts the rms
ability to achieve nancial resource via an overdraft facility
or line of credit. This variable is a dummy variable. The 1
indicates that the rm has the overdraft facility or line of
credit (the nancial resource), and 0 stands for rms that
did not have overdraft facility. According our hypothesis 2,
we expect the nancial resource to have a negative effect
on rm bribery.
External Auditor
This variable represents the importance of corporate gover-
nance in determining the propensity for bribery, especially
indicates whether a rms annual nancial report receives an
external audit. We use the data fromquestion 32nd in survey
to capture this governance situation. This variable is also in
the binary type: 1 means rms have an external auditor and 0
stands for rms that without an external auditor. According
our hypothesis 2, we expect the external auditor to have a
negative effect on rm bribery.
Location Size
The location size represents the economic status and insti-
tutional environment. Previous research shows that the
economic condition contributes to the bribery behaviors
(Sanyal 2005). In particular, developed regions have less
bribery issues than the developing regions. We adopt this
variable to measure of location size in order to control for
economic factors. According to the question 7th in the sur-
vey, the location size is an ordinal variable scaling from1 to 5
(1 = capital city; 2 = city (except capital city) of over 1
million population; 3 = city of 250,0001 million; 4 = city
of 50,000250,000; 5 = town or area with less than a pop-
ulation of 50,000). According our hypothesis 2, we expect
the location size to have a positive effect on rm bribery.
Anomie Variables
The anomie climates of business are measured in two
aspects: one is the actual spending on protection of busi-
ness from crimes, and another is the perceived anomie
climate constraints.
Security Expenditure
This variable is measured by the percentage of the rms
cost spent on security and protection payments. WEBS data
provide these types of information (e.g., to organized crime
to prevent violence), respectively: Please estimate your
establishments costs (as a percent of its total sales) of
providing: protection payments (e.g., to organized crime to
prevent violence). We adopted this variable to measure
rms costs on prevention from crimes, either minor or
organized crimes.
Anomie Climate
The WBES investigates the investment climate constraints
for an establishment. The climate issues listed in the survey
are composed of 18 items, ranging from telecommunica-
tions to legal system/conict resolution. The data measure
the perceptions of rm on the extent to which the issues are
an obstacle to business activity (metric variables ranging
from no obstacle to very severe obstacle). We use
several indicators to capture the climate of anomie in the
social environment: whether a rm perceived Corruption,
and Crime, Theft, and Disorder as obstacles in its business
466 X. Zhou et al.
1 3
operation. According to previous research, the tax admin-
istration plays the inuential role in the investment climates
(Wu 2009). We followed this paradigm and choose the Tax
Administration as an indicator of investment climate.
The security expenditure and the perception of crime,
theft, and disorder measure the level of social anomie. In
accord with hypothesis 3, the more severe social anomie of
crime, theft, and disorder, the more likely rms to bribe.
We expect the security expenditure to have a positive
effect on rm bribery. In a severe social anomie environ-
ment, people passively accept the social severe anomie
behaviors (e.g., crime, theft, and disorder) as normal. We
expect the perception of crime, theft, and disorder to have a
negative effect on rm bribery.
The normalization of social severe anomie would also
trigger other anomie behavior (e.g., corruption) to be made
acceptable. According to hypothesis 4, we expect a positive
relationship between corruption perception and bribery.
This positive relationship reects the normalizing process
of corruption in rms. In accord with pervious research, we
expect the tax administration to have a positive effect on
rm bribery (Wu 2009).
Control Variables
The control variables in this research are rm age, rm
size, ownership, and industry. Firm age measures how long
the rm has established. Firm size is measured by the log-
transformation of the average number of workers 1 year
ago. Ownership is a dummy indicating whether the rm is
domestic or foreign-owned. The value 1 refers to the
domestic rm, and 0 refers to foreign-owned. Finally,
Industry is also a categorical variable that reects the
industry that rm belongs to. In statistical analysis, indus-
try is treated as a dummy variable in order to control for the
industry effect.
Statistical Model
To further study rm bribery behavior, we examined the
bribery motivation by adopting a binary variable as our
dependent variable. We used a multi-level logistic model
(Hierarchical Generalized Linear Model, cf. Raudenbush
and Bryk 2002) to test our hypotheses. The rationale behind
using this method is as follows. The rms idiosyncrasies
(e.g., rm size and perceived consistency and predictability
of government ofcials policy interpretations) are embed-
ded in the context of industry. Organizational theorists have
used systems theory to describe the prevalence of open
systems wherein environmental inuences (e.g., industry
norms, government regulation) affect and are affected by
rms and their leaders (Scott 1998). In addition, contextual
factors such as strategic groups and industry trends place
certain constraints on the rm (Rousseau and Fried 2001).
As such, we should take the industry context into account
when examining our hypotheses. Multi-level models pro-
vide a useful tool to take care of the data with such complex
patterns of variance, i.e., nested structures (Luke 2004).
Particularly, the hierarchical linear modeling method
(HLM) allows researchers to estimate the multiple level
effects simultaneously and capture the heterogeneity within
the each level (Hofmann 1997).
We use hierarchical linear model of logistic distribution
because our dependent variable, bribery motivation, is a
binary variable. In the hierarchical logistic model, we
consider two levels of analysis (i.e., rm levellevel 1 and
country levellevel 2), and allow the effects of rm-level
variables to vary among industries and control for the
industry effect on the rm level variables.
The model at level-1 is expressed as:
log Bribery
ij
b
0j
b
1j
FirmSize
ij
b
2j
FirmAge
ij
b
3j
Domestic
ij
b
4j
PolicyInterpretation
ij
b
5j
Exporter
ij
b
6j
Financial Resource
ij
b
7j
External Auditor
ij
b
8j
LocationSize
ij
b
9j
SecurityExpenditure
ij
b
10j
Corruption
ij
b
11j
Crime
ij
b
12j
Tax
ij
e
ij
1
where b
0j
is the log-transformation of intercept of rm is
bribery probability in industry j. b
qj
is the coefcients of
independent variables of rm i in industry j for q = 112.
e
ij
represents the error term of the level-1 model, and fol-
lows the logistic distribution.
In level-2, the model incorporates the unobserved
industry-level heterogeneity, which is modeled with ran-
dom effects.
The models at level-2 are expressed as:
b
0j
c
00
u
0j
; u
0j
N0; s
0
2
where c
00
is the model intercept or E[b
qj
] when all of the
non-dummy explanatory variables are set to the mean and
all of the dummy variables are set to 0u
0j
* N(0,s
0
) is
the residual random effect associated with industry j.
Our model treats all the level-1 slopes as xed. There-
fore, the level-1 coefcients are:
b
qj
c
q0
; for q 1 12: 3
Finally, we use a full maximum likelihood approach
(Raudenbush 1993) to estimate this model that combines
both levels with the specied within-level interactions.
Investigation on Firms Bribery Motivations in China 467
1 3
Results
The descriptive and correlation analysis results are reported
in the Table 1. In this research, our sample contains 700
Chinese rms in 11 industries.
All of the model analysis results are reported in Table 2.
All of the four regression models contain only 686 out of
700 rms. The reason why we have only 686 observations
included in our regression analysis is that these 16 obser-
vations have missing value in variables of rm age and
ownership. The statistic software automatically drops these
observations during the analysis process.
First column of Table 2 reports the coefcients and
standard errors of null model. Results show that the own-
ership has a positive effect on bribery behaviors (b(own-
ership) = .76, exponential value = 2.14, p \.01); The
exponential value is larger than 1, which suggests that the
relative likelihood ratio to bribe for domestic rms over
foreign invested rms (Prob(domestic rms)/Prob(foreign
invested rms)) is higher. That is to say, the domestic rms
are more likely than foreign invested rms to bribe.
In the second column, we tested our hypothesis 1 of
resource dependence theory. We found that the general
environmental factors and the task environmental factors
both play an inuential role here. In particular, in the general
environment, the perceived consistency and predictability
of government ofcials policy interpretations has a signif-
icant negative effect on bribery behavior (b(policy inter-
pretation) = -.22, exponential value = .80 \1, p \.01).
The exponential value suggests that the more rms interpret
the government to be consistent and predictable, the less
likely rms would bribe. The reason for this phenomenon is
that rms would face the institutional uncertainty with an
inconsistent and unpredictable governmental authority.
Specially, in the emerging market, the social institution is
not mature and government decision is quite arbitrary. In
order to deal with this uncertainty, rms have to act proac-
tively to bribe or make gifts to government so that they can
easily get things done. It also sheds light on the role of
bribery that provides rms with a mean to get in touch with
governmental authority in order to get some benets.
Therefore, this result supports the hypothesis 1.
For task environmental factors, the variables all signi-
cantly inuence bribery behaviors. Specically, the Expor-
ter and Financial Resource have negative effects on the
bribery (b(exporter) = -1.01, exponential value = .36,
p \.01; b(nancial resource) = -.55, exponential
value = .58, p \.05). The exponential values (smaller than
1) reveal that the more capacities and resource the rm
owns, the less likely it would go to bribe. The negative
effects also reect that the shortage of rm resources con-
tributes to rm bribery. If a rm lacks of the task related
resources, it would act proactively to commit bribery. The
coefcient of Location Size is positive (b(location) = 1.09,
exponential value = 2.97 [1, p \.01), and the impact of
location size reveals that rms in small areas are more likely
to bribe than other rms in large cities. It is consistent with
our prediction that small area that has limited institutional
restriction would boost the bribery climate. Firm would act
proactively in order to make up for its shortage in the task
related resources. Besides, The External Auditor has a
negative coefcient (b(external auditor) = -.71, exponen-
tial value = .49 \1, p \.01). That is, the external auditor
existing in the organization would decrease the likelihood
for rm to bribe. These results are in accord with the
hypothesis 2 that the worse the task environment conditions
are, the more likely rms would bribe. In addition, we
conducted a Delta likelihood Chi square test to measure the
effects of resource dependence theory. The result shows that
a signicant increase between the null model and resource
dependence model with Delta Chi square equals to 53.79
(p \.01).
Table 1 The correlation table
1 2 3 4 5 6 7 8 9 10
1. Bribery
2. Business-government -.07*
3. Exporter -.19*** -.08**
4. Financial Resource -.10*** -.04 .13***
5. External Auditor -.17*** -.03 .23*** .13***
6. Location .12*** .06 .02 .01 0
7. Security Expenditure .11*** .04 0 -.02 -.01 -.01
8. Corruption .05 -.14*** .05 .01 .06 0 -.01
9. Crime, Theft, and Disorder 0 -.10*** .05 -.03 .04 -.03 .02 .75***
10. Tax Administration -.01 -.14*** .11*** .11*** .13*** -.05 .01 .48*** .44***
To test for multicollinearity, the variance inationary factor statistics are computed. The results indicate that theres no signicant collinear
relationship among these independent variables all of our regression models with all the VIFs are below the score of 5 (Studenmund 2001)
* p \.10, ** p \.05, *** p \.01; N = 700
468 X. Zhou et al.
1 3
Model 3 reects the impacts of social anomie. The
social anomie means that people treat the social anomie as
normal and concern only the ends while regardless of the
ethic means. According to model 3 results, the Security
Expenditure contributes to rm bribery signicantly, and it
has a positive effects (b(security expenditure) = .25, expo-
nential value = 1.28 [1, p \.01). Security expenditure
reects the environmental anomie condition. The results
show that the more the rm spends on the security, the
worse the environment anomie is. This positive coefcient
also implies that rms in the anomie environment would
passively follow the anomie norms and treat the bribery as
a normal behavior. In this vein, rms would tend to bribe in
the environment that needs high security expenditure.
In terms of anomie climates, the perception of Crime,
Theft, and Disorder indicates the levels of social anomie.
Results show that the less rm perceives the crime, theft,
and disorder as obstacles in business, the more likely the
rm would bribe (b(crime, theft, and disorder) = -.18,
exponential value = .84 \1, p \.10). Thereby people, in
consequence, would passively regard the anomie behaviors
to be acceptable so that they have a passive motivation to
conduct these anomie behaviors. The results provide sup-
port for the hypothesis 3 that the more the rms spend on
security to prevent from disorder, theft, and crime, the
more like rms would bribe.
The results also express that the Corruption has a
positive impacts on rm bribery (b(corruption) = .25,
exponential value = 1.28 [1, p \.05). This result means
that the more rms perceive the corruption as an obstacle
in business, the more motivation rms would have to
bribe. According to institutional anomie theory, a rm is
rather difcult to change the corruption climate of anomie
but have to act passively to recognize it and do something
to t the environment needs. In that sense, rms would
react to the environment and try to make some strategies
to in accord with the social norms. It is in accord with the
hypothesis 4 that the more rms perceive corruption as a
severe obstacle to business, the more likely they would
bribe. Thus, hypothesis 4 is supported. However, the Tax
Administration is not signicant here (b(tax administra-
tion) = -.07, exponential value = .93 \1, p [.10). One
possible reason for this concern is in China 2002, the tax
administration is a long stand and general accepted regu-
lation and all of the rms have to obey this rule. There-
fore, the tax administration doesnt have effects on rm
bribery. Similarly, we test the incremental likelihood Chi
square to examine the effects of anomie theory. Result
shows that the anomie model is signicantly more effec-
tive than the null model and the Delta Chi square is 13.08
(p \.05), which in turn provides the supports for
hypotheses 3 and 4.
Table 2 Hierarchical
generalized linear modeling
analysis results
* p \.10, ** p \.05,
*** p \.01
Variables Bribe or not
Null model Resource dependence Anomie Full model
Constant .16 (.32) .69 (.53) .09 (.34) .60 (.56)
Control variables
Firm age 0 (0) 0 (0) 0 (0) 0 (0)
Firm size .07 (.06) .21 (.07)*** .06 (.07) .19 (.07)***
Ownership .76 (.20)*** .22 (.24) .73 (.21)*** .18 (.24)
Resource dependence variables
General environment
Policy Interpretation -.22 (.08)*** -.22 (.08)***
Task Environment
Exporter -1.01 (.24)*** -1.06 (.25)***
Financial resource -.55 (.22)** -.55 (.22)**
External auditor -.71 (.23)*** -.70 (.23)***
Location size 1.09 (.31)*** 1.08 (.31)***
Anomie variables
Security expenditure .25 (.10)*** .26 (.10)***
Corruption .25 (.11)** .21 (.11)*
Crime, theft, and disorder -.18 (.11)* -.17 (.11)
Tax administration -.07 (.08) -.02 (.09)
Log likelihood -393.32 -366.42 -386.78 -36.31
Delta LR chi2 53.79*** 13.08** 66.01***
Obs 686 686 686 686
Investigation on Firms Bribery Motivations in China 469
1 3
Model 4 is the full model that includes the overall effects
of resource dependence and social anomie. Results of full
model reveal that nearly all the independence variables
have signicant effects on rm bribery, and the valences of
effects are consistent with the resource dependence model.
But for the anomie variables, the variable of Crime, Theft,
and Disorder is insignicant in full model (b(crime, theft,
and disorder) = -.17, exponential value = .84 \1, p [
.10). This discrepancy can be explained that the perception
of crime, theft, and disorder is based on rm resources. In
this vein, when we added the resource dependence variables
into full model, the effects (variances) of the crime, theft,
and disorder perception have been interpreted by the
resource dependence variables. In general, the results of
model 4, the full model, provide extra supports for all of the
hypotheses. The Delta Chi square test also demonstrates
signicant integrated effects of resource dependence theory
and anomie theory. The delta likelihood Chi square is 66.01
(p \.01), which reects greater incremental improvement
compared to the null model.
Robustness Test
We have shown that the resource dependency theory and
social anomie theory help to explain the proactive and
passive motivation of rm bribery in the emerging market.
To further investigate the nature of rm bribery motivation
in a broader context, we conducted a post hoc analysis to
examine these two theories by extending our sample to
include other Asian countries. Many Asian countries have
been consistently rated as having high levels of corruption
for the most current decade and some of them (Myanmar
and Bangladesh, for example) are perceived as among the
most corrupt countries in the world (Wu 2009). Therefore,
the Asian countries would be very appropriate for this
extended investigation.
To be consistent with previous studies of other researchers
(Wu 2009), our post hoc analysis sample contains ten Asian
countries, which are listed in Table 4 in Appendix of this
article. We conduct the same transformations to the Asian
countries data, and we eliminate the observations with
missing value in dependent variable. We thus have an
extended sample includes 5,670 observations from nine
countries. Appendix Table 4 illustrates the sample coverage
in different countries. We adopt a same hierarchical logistic
full model (i.e., model 4, see Eqs. 1, 2) to examine the two
theories effects in Asian countries. In addition, we control
for the GDP effects among these countries in order to control
for the country economic difference (i.e., country effect). We
also use industry dummies to control the industry effects.
The post hoc hierarchical logistic analysis results reveal
supports for the anomie theory. Table 3 elaborates the
results of post hoc analysis. We nd in Table 3 that the
social anomie climates play a signicant inuential role in
bribery (b(security expenditure) = .04, p \.10; b(corrup-
tion) = .25, p \.01; b(crime, theft, and disorder) = -.12,
p \.05; b(tax administration = .08, p \.10). These results
conrm the importance of passive motivation in Asian
countries, and in return, reect the similarity of social
anomie climates among Asian countries. But for the
resources dependency theory, the post hoc analysis results
are inconsistent with our predications. Only exporter has a
signicant negative effects (b(exporter) = -.46, p \.01).
One possible reason for this inconsistency may results from
the variations of government and legitimacy system in these
countries.
Discussion and Conclusion
Literature shed light on the role of macro cultural values
and social norms in bribery. Some literature also tried to
corporate macro cultural, economic, and micro rm level
factors to explain the bribery behaviors. Yet, previous
research is mainly conducted in the cross-national context,
and literature overlooks the important linkage between
macro environment and micro rm resources. This research
addresses the gap between macro and micro link in the
emerging market context. Research ndings reveal some
important conditions for rms bribery in the context of
emerging markets.
The ndings of this research have important manage-
rial implications and the guidelines for policy making.
From the aspect of the management, rms in the
emerging market are vulnerable to general environment
and task environment. Therefore, when doing business in
the emerging market, practitioners should pay more
attentions to general environment and to their relation-
ships with government. But it is not the whole story.
Firms should also make full use of its own resources,
especially the task environment-specic resources. The
task-specic resources can supply rms with competitive
advantages and further decrease the probability to con-
duct the anomie behavior by unethical means. Another
important concern is the social anomie level. The prac-
titioners should take the social anomie level into account
when starting business in the emerging market. The
acceptance of anomie behaviors would play a pushing
role here that induces rms to bribe due to the normal-
ization of social anomie. From the aspect of the policy
making, government should be careful to make policies
in order to create a friendly investment atmosphere to
attract more investors. More importantly, it is also the
obligation of governments to be aware of the social
470 X. Zhou et al.
1 3
anomies; they need to set up clear and functional legis-
lations and regulate rms business activities including
their perceptions of the anomie behaviors.
As for the future research on rm bribery, researchers
can further extend this framework and examine more indi-
cators from the perspectives of the two theories. Another
intriguing point raised by this research is the emerging
market context. Many researchers are interested in probing
the drivers of rapid economic growth in emerging markets;
business ethics in the emerging market are concerned but
have not received enough systematic investigation. This
research intends to make a contribution towards this
direction.
Acknowledgments The authors appreciate the constructive com-
ments from two anonymous reviewers. The authors also feel thankful
to research funding supports from National Natural Science Foun-
dation of China (71032001; 70902013; 71272006).
Appendix
See Table 4
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