Scandinavian Working Papers in Economics

Working Papers,
Örebro University, School of Business

No 2011:2: Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?

Patrik Karpaty () and Patrik Gustavsson Tingvall ()
Additional contact information
Patrik Karpaty: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Patrik Gustavsson Tingvall: Stockholm School of Economics and Centre of Excellence for Science and Innovation Studies (CESIS)

Abstract: In this paper, we analyze how the offshoring of services by Swedish firms is affected by corruption in target economies. The results suggest that firms avoid corrupt countries and that corruption reduces the amount of offshored services. In addition, the sensitivity to corruption is highest for poor countries, and large and internationalized firms are the ones that tend to be the most sensitive to corruption.

Keywords: Corruption; Services; Offshoring; Gravity model; Firm level data

JEL-codes: C23; D22; F23; L24

22 pages, First version: January 18, 2011. Revised: May 28, 2012.

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