Foreign bribery propensity is associated with proximate sales goals and noncompetitive offerings.

What is it about?

We study the way in which market expenditures, R&D expenditures, and performance relative to prior performance is associated with the likelihood of a company being involved in a Foreign Corrupt Practices Act infraction.

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Why is it important?

Most interesting is our finding that firms that are just above or below prior performance -- and not those falling way below and struggling, nor those doing great and potentially 'above the law' -- are the most likely to be involved in FCPA violations. Further, this likelihood is exacerbated by failure to spend on par with industry peers in terms of relative marketing and R&D investments. We propose that firms in this situation leave their sales teams in a situation where they must 'make do' with existing, noncompetitive offerings while stretching to meet sales goals, and that this pressure encourages bribery.