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Corrupt intermediaries in international business transactions: between make, buy and reform

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  • Johann Graf Lambsdorff

Abstract

Attempts to deter corruption have little recognized the operation of intermediaries. This study takes a New Institutional Economic-perspective, supported by a variety of case studies, to identify firms’ choices of when to engage corrupt intermediaries (buy) and how to approach reform. It argues that firms should be held unbendingly liable for the operation of their intermediaries. Reform may also focus on certifying “good” intermediaries and holding the certifier liable for the performance of its agents. Prohibiting intermediaries is not advisable, as intermediation can be either arranged in-house (make) or mixed with legal services. Registration and auditing of intermediaries provides a more promising avenue for reform. Legislators should balance the additional regulatory burden by granting a wage premium to registered intermediaries and denying legal recourse to unregistered competitors. Copyright Springer Science+Business Media, LLC 2013

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  • Johann Graf Lambsdorff, 2013. "Corrupt intermediaries in international business transactions: between make, buy and reform," European Journal of Law and Economics, Springer, vol. 35(3), pages 349-366, June.
    • Handle: RePEc:kap:ejlwec:v:35:y:2013:i:3:p:349-366
    DOI: 10.1007/s10657-010-9214-7
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    Cited by:

    1. Michael A Sartor & Paul W Beamish, 2018. "Host market government corruption and the equity-based foreign entry strategies of multinational enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(3), pages 346-370, April.
    2. Joseph Ouma Oindo, 2021. "Engaging in and Coping with Bribery by the Bodaboda Riders in Kisii town, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(3), pages 351-357, March.
    3. Bahoo, Salman & Alon, Ilan & Paltrinieri, Andrea, 2020. "Corruption in international business: A review and research agenda," International Business Review, Elsevier, vol. 29(4).
    4. Vita, Giuseppe Di, 2021. "Political corruption and legislative complexity: Two sides of same coin?," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 136-147.
    5. Bayar, Güzin, 2014. "Spurious middlemen in corrupt transactions," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-32.
    6. Mohammad Heydari & Kin Keung Lai & Victor Shi & Feng Xiao, 2023. "Public Health Risk Evaluation through Mathematical Optimization in the Process of PPPs," IJERPH, MDPI, vol. 20(2), pages 1-19, January.
    7. Andrews, Matt & Harrington, Peter, 2016. "Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them," Working Paper Series 16-009, Harvard University, John F. Kennedy School of Government.
    8. Oana Borcan & Nikita Grabher-Meyer & Stephanie Heger & Amrish Patel, 2023. "Right in the Middle: A Field Experiment On The Role Of Integrity Training And Norms In Combating Corruption," University of East Anglia School of Economics Working Paper Series 2023-05, School of Economics, University of East Anglia, Norwich, UK..

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    More about this item

    Keywords

    Trust; Opportunism; Enforcement; Liability; Regulation; Vertical integration; L14; K42;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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