Corruption in the arms- and defense industry : a comparative study of the largest American and European arms dealers
Abstract
This thesis compares American and European arms-and defense companies and their level of
exposure to corruption risk. Through an empirical study, we analyze the companies’ exposure
to corruption risk based on their countries of operations, and the initiatives they have
implemented in order to mitigate said risk. The objective of the research is to investigate
whether there is a difference between the level of exposure between American and European
companies.
In order to investigate this matter, two indexes are created: The Corruption Risk Index and the
Transparency Index. The Corruption Risk Index measures the companies’ relative exposure to
corruption risk based on their countries of operation, while the Transparency Index considers
the companies’ transparency regarding anti-corruption programs and organizational aspects.
The findings in the Corruption Risk Index imply that there is no significant difference between
the American and the European companies regarding their exposure to corruption risk. Still,
the scores allocated to each group were quite low, indicating a high exposure to corruption risk.
Furthermore, the Transparency Index revealed that the American companies disclosed more
information overall compared to the European companies. High levels of transparency may
indicate more ethical behavior and less secrecy. The best explanatory factor for the difference
is found to be a company’s attitude towards business ethics.
As the consequences of corruption in the arms- and defense industry is comprehensive, the
thesis also stresses the need for a harmonized legal framework within this area, as well as the
need for public awareness regarding this matter.