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Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?

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  • Patrik Karpaty
  • Patrik Tingvall

Abstract

We analyze how service offshoring by Swedish firms is affected by corruption in source countries. The results suggest that firms avoid corrupt countries and that corruption reduces the volume of service offshoring. Analyzing firm heterogeneity, we find that large and internationalized firms are the ones that are the most sensitive to corruption. In addition, sensitivity to corruption tends to increase with falling income in source countries. These results suggest that the gains from reduced corruption may be the greatest for poor countries. Copyright Springer Science+Business Media New York 2015

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  • Patrik Karpaty & Patrik Tingvall, 2015. "Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 363-381, December.
    • Handle: RePEc:kap:jincot:v:15:y:2015:i:4:p:363-381
    DOI: 10.1007/s10842-015-0197-5
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    More about this item

    Keywords

    Corruption; Services; Offshoring; Gravity model; Firm level data; C23; D22; F23; L24;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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