Highlights :

• We shed new lights on the impact of corruption on foreign affiliates sales.
• We exploit the time-series of foreign affiliates of German multinational firms.
• We argue that corruption has a positive effect on firms that have gained experience on the foreign market.

 Abstract :
This paper investigates the impact of corruption on foreign affiliates’ sales of German multinationals that differ in their level of experience in the foreign market. We exploit the panel dimension of a detailed firm-level dataset to show that more experienced firms are less likely to suffer from the costs related to corruption. Controlling for persistent and unobserved factors at the country and firm levels, we show that corruption reduces unambiguously the sales of new entering firms, while having no impact on the sales of incumbents.

 Keywords : Multinational Firms | Corruption | FDI

 JEL : F44, F23