Winning a Prestigious Award and Unethical Behaviors of Chinese Pharmaceutical Firms

Building on institutional theories of legitimacy, this study explores the effect of winning a prestigious award on firms’ unethical behaviors. We argue that enhanced legitimacy of a subgroup in an industry due to a prestigious award can lead firms in such a subfield to commit fewer bribery activities because increased legitimacy can bring more resources to these firms and the need for bribery as an alternative channel for acquiring resources is reduced. In the context of Youyou Tu’s Nobel Prize win in 2015, where the use of traditional Chinese medicine (TCM) in her research was emphasized, we find empirical support for our theoretical hypotheses as our results reveal that compared with firms focusing on Western medicines, TCM firms tended to commit fewer bribery acts after the announcement of the Nobel Prize win. We also demonstrate that factors affecting the supply and demand of bribery, including state ownership, firm profitability, regional marketization, and regional memory of foreign influences, could moderate the impact of Nobel Prize winning on a firm’s tendency to commit bribery. This study emphasizes the important role of legitimacy gained from winning a prestigious award in firms’ choices of unethical actions. It makes significant contributions to the literature on legitimacy, prestigious awards, and firm ethics.