•Home country legislation prohibits corrupt practices for inward FDI firms but in some environments this makes them uncompetitive with host country firms.•The propensity to engage in corrupt practices in emerging markets is the same for foreign and domestic firms if it is necessary to circumvent cumbersome bureaucracy.•This result is robust to the degree of foreign ownership of a firm.•Propensity score matching provides an unbiased method of comparing sub-groups.
World Development – Elsevier
Published: Jan 1, 2018
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