IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v10y2022i7p173-d866333.html
   My bibliography  Save this article

Does Corruption Impact Firm Innovation? Evidence from Portugal

Author

Listed:
  • Jorge Cerdeira

    (Centro de Economia e Finanças (CEF.UP), Faculdade de Economia da Universidade do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal
    Instituto de Sociologia, Faculdade de Letras, Universidade do Porto, Via Panorâmica, 4150-564 Porto, Portugal
    Centro de Inovação e Investigação em Ciências Empresariais e Sistemas de Informação (CIICESI), Escola Superior de Tecnologia e Gestão, Instituto Politécnico do Porto, Rua do Curral, Casa do Curral, Margaride, 4610-156 Felgueiras, Portugal)

  • Diogo Lourenço

    (Centro de Economia e Finanças (CEF.UP), Faculdade de Economia da Universidade do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal
    Departamento de Economia e Gestão, Universidade Portucalense, Rua Dr. António Bernardino de Almeida 541, 4200-072 Porto, Portugal)

Abstract

This paper aims to analyze the impact of corruption on firm innovation in Portugal, using data from the World Bank Enterprise Surveys on 1062 firms for 2019. We employ regression analysis and instrumental variables techniques to account for endogeneity in the corruption variable. Our results show that corruption fosters innovation in Portugal, regardless of the dependent variable we use to measure innovation. We have also analyzed the effect of corruption on innovation in foreign and domestic firms. While corruption boosts innovation for domestic firms, we found that the effect is not statistically significant for foreign firms. Our conclusions are of interest to policymakers, as any measure intended to fight corruption should consider its impact on firm performance. As this article shows, such an impact need not be negative. Nevertheless, if mitigating the impact of corruption is still intended, our results indicate that measures promoting foreign direct investment could help achieve this.

Suggested Citation

  • Jorge Cerdeira & Diogo Lourenço, 2022. "Does Corruption Impact Firm Innovation? Evidence from Portugal," Economies, MDPI, vol. 10(7), pages 1-10, July.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:7:p:173-:d:866333
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/10/7/173/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/10/7/173/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yuriy Gorodnichenko & Jan Svejnar & Katherine Terrell, 2010. "Globalization and Innovation in Emerging Markets," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 194-226, April.
    2. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
    3. Colin C. Williams & Abbi M. Kedir, 2016. "The Impacts Of Corruption On Firm Performance: Some Lessons From 40 African Countries," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-18, December.
    4. Christian Bjørnskov, 2011. "Combating Corruption: On the Interplay between Institutional Quality and Social Trust," Journal of Law and Economics, University of Chicago Press, vol. 54(1), pages 135-159.
    5. Jessie Zhou & Mike Peng, 2012. "Does bribery help or hurt firm growth around the world?," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 907-921, December.
    6. repec:cup:jfinqa:v:46:y:2011:i:06:p:1545-1580_00 is not listed on IDEAS
    7. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
    8. Ruohan Wu, 2019. "Firm Development and Bribery: An Empirical Study from Latin America," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 53-64, March.
    9. Ayyagari, Meghana & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2011. "Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(6), pages 1545-1580, December.
    10. Ha, Le Thanh & Thanh, To Trung & Thang, Doan Ngoc & Anh, Pham Thi Hoang, 2021. "Bribery, export decisions, and institutional constraints: Evidence from cross-country firm-level data," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 585-612.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petr Wawrosz, 2022. "How Corruption Is and Should Be Investigated by Economic Theory," Economies, MDPI, vol. 10(12), pages 1-23, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lurdes Martins & Jorge Cerdeira & Aurora A.C. Teixeira, 2020. "Does corruption boost or harm firms’ performance in developing and emerging economies? A firm‐level study," The World Economy, Wiley Blackwell, vol. 43(8), pages 2119-2152, August.
    2. Ha, Le Thanh & Dung, Hoang Phuong & Thanh, To Trung, 2023. "Bribery, global value chain decisions, and institutional constraints: Evidence from a cross-country firm-level data," International Economics, Elsevier, vol. 173(C), pages 119-142.
    3. Wu, Tao & Delios, Andrew & Chen, Zhaowei & Wang, Xin, 2023. "Rethinking corruption in international business: An empirical review," Journal of World Business, Elsevier, vol. 58(2).
    4. Ha, Le Thanh & Nam, Pham Xuan & Thanh, To Trung, 2021. "Effects of Bribery on Firms' Environmental Innovation Adoption in Vietnam: Mediating Roles of Firms' Bargaining Power and Credit and Institutional Constraints," Ecological Economics, Elsevier, vol. 185(C).
    5. Serigne Bassirou LO, 2021. "Effet de la corruption sur les exportations des entreprises manufacturières africaines," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 54, pages 9-30.
    6. Irfan Kurniawan & Riyanto, 2020. "Should I Bribe? Re-Examining the Greasing-the-Wheels Hypothesis in Democratic Post-Soeharto Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 66, pages 123-140, Desember.
    7. Nam Pham Xuan & Thanh Ha Le, 2023. "Bribery and firm survival in Vietnam: Moderating effects of market competition, credit, and institutional constraints," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1242-1269, May.
    8. Ullah, Barkat, 2020. "Financial constraints, corruption, and SME growth in transition economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 120-132.
    9. Mai Chi Vu, 2021. "Tensions and Struggles in Tackling Bribery at the Firm Level: Perspectives from Buddhist-Enacted Organizational Leaders," Journal of Business Ethics, Springer, vol. 168(3), pages 517-537, January.
    10. Vu Thi Hong Nhung & Nguyen Thi Hong Huong, 2022. "Overview of bribery giving behaviors: Determinants and influence on firm performance," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 12(1), pages 84-91.
    11. Tian, Ni & Zhang, Zongyi, 2018. "How do anticorruption measures affect executive incentive?," Finance Research Letters, Elsevier, vol. 24(C), pages 179-185.
    12. Ha, Le Thanh & Thanh, To Trung & Thang, Doan Ngoc & Anh, Pham Thi Hoang, 2021. "Bribery, export decisions, and institutional constraints: Evidence from cross-country firm-level data," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 585-612.
    13. Arvind K. Jain, 2011. "Corruption: Theory, Evidence and Policy," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(2), pages 3-9, 07.
    14. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
    15. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    16. Cai, Weixing & Hu, Feng & Xu, Fangming & Zheng, Liyi, 2022. "Anti-corruption campaign and corporate cash holdings: Evidence from China," Emerging Markets Review, Elsevier, vol. 51(PA).
    17. Pascal L. Ghazalian & Ali Fakih, 2017. "R&D and Innovation in Food Processing Firms in Transition Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(2), pages 427-450, June.
    18. Joshua Hall & John Levendis & Alexandre R. Scarcioffolo, 2020. "The Efficient Corruption Hypothesis and the Dynamics Between Economic Freedom, Corruption, and National Income," Journal of Developing Areas, Tennessee State University, College of Business, vol. 54(3), pages 161-175, July-Sept.
    19. Yu Yan & Shusen Qi, 2021. "I Know What I Need: Optimization of Bribery," Journal of Business Ethics, Springer, vol. 174(2), pages 311-332, November.
    20. Liam Wren-Lewis, 2015. "Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean," The World Bank Economic Review, World Bank, vol. 29(2), pages 353-384.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:10:y:2022:i:7:p:173-:d:866333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.