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The Impact of Corruption on Firm’s Compliance Behavior as the Institutional Development Level: Positive and Negative Isomorphism

  • Journal of Asia-Pacific Studies
  • Abbr : JAPS
  • 2024, 31(4), pp.261-301
  • DOI : 10.18107/japs.2024.31.4.009
  • Publisher : Institute of Global Affairs
  • Research Area : Social Science > Social Science in general
  • Received : November 15, 2024
  • Accepted : December 16, 2024
  • Published : December 30, 2024

WOOYOUNG YANG 1,  Han Byoung Sop 2

1군산대학교
2전남대학교

Accredited

ABSTRACT

This research aims to identify how corruption affects firms’ behavior in the process of institutional development. In particular, the study empirically examined the relationship between institutional development and corruption, also analyzed the moderating effect of corruption in firms’ compliance behavior following institutional development. The main variables in this study are the institutional development level, the corruption level, and corporate social responsibility activities. The target country for analysis is China, and the analysis divided the target region into 31 provinces and cities to reflect regional characteristics. The observation period is a total of 8 years from 2009 to 2016, and 2,597 samples of 863 firms listed in the Chinese A market were obtained. The study found that the institutional development level is higher, the corruption level is lower. In particular, it was confirmed that a firm’s compliance level was higher with the institutional development, as the corruption level was lower. In general, corruption causes firms to engage in illegal actions, thereby degrading a firm’s image, and acting against the institution negatively affects a firm’s financial performance by incurring institutional punishment. Therefore, it seems that firms are increasing the CSR activities level to minimize the negative impact of corruption. This study has academic significance in that it examines how firms respond according to the institutional development and corruption level, and identifies the differences in firms’ behavior patterns depending on the institutional environment. In addition, by subdividing the target region into 31 provinces and cities in China, practical implications are presented by demonstrating the firms’ response behaviors according to the corruption level in each region.

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This paper was written with support from the National Research Foundation of Korea.
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