Corruption and the ethical context of country-level entrepreneurship

ISSN： 1742-5360

Source： International Journal of Entrepreneurial Venturing, Vol.4, Iss.4, 2012-10, pp. : 391-408

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Abstract

By marrying the ethics literature with classic entrepreneurship ideas, we conceptualise corruption as a form of business risk and draw parallels between societal ethical standards and uncertainty. We propose that important insights into understanding ethical standards may be developed by comparing the levels of perceived and actual corruption. We use cross-country comparisons as our level of analysis and employ data from 64 countries over the period of 1996-2002, collected from multiple reputable international organisations. Statistical support is found for an inverted U-shaped relationship between the level of ethical standards and domestic innovative activities, as well as net inflows of foreign direct investments. Our results suggest that moderate levels of ethical standards are most conducive to both domestic innovative activities and foreign involvement into economic life of a country.