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Does bribery help or hurt firm growth around the world?

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  • Jessie Zhou

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  • Mike Peng

    ()

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    Abstract

    Does bribery help or hurt firm growth? Some suggest that bribery greases the wheel of commerce, while others believe that bribery sands the wheel of growth. We argue that firms endogenously choose their level of bribery according to their environments and that the benefits and costs may differ for different types of bribery. Specifically, small firms are more likely to be forced to engage in bribery, while big firms may strategically engage in bribery. Utilizing a large, cross-country survey sample involving 2,686 firms in 48 countries, we find that firms choose a higher level of bribery when embedded in under-developed market-supporting institutions. After controlling for endogenous bribery choices, bribery hurts firm growth for small and medium-sized firms, but not for large firms. Copyright Springer Science+Business Media, LLC 2012

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    File URL: http://hdl.handle.net/10.1007/s10490-011-9274-4
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    Bibliographic Info

    Article provided by Springer in its journal Asia Pacific Journal of Management.

    Volume (Year): 29 (2012)
    Issue (Month): 4 (December)
    Pages: 907-921

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    Handle: RePEc:kap:asiapa:v:29:y:2012:i:4:p:907-921

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    Postal: P.O. Box 17, 3300 AA Dordrecht, the Netherlands
    Web page: http://www.springerlink.com/link.asp?id=106589

    Related research

    Keywords: Institutional environments; Bribery; Firm size; Firm growth;

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    Cited by:
    1. Sheila Puffer & Daniel McCarthy & Alfred Jaeger & Denise Dunlap, 2013. "The use of favors by emerging market managers: Facilitator or inhibitor of international expansion?," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 327-349, June.
    2. Lau, Chi Keung Marco & Demir, Ender & Bilgin, Mehmet Huseyin, 2013. "Experience-based corporate corruption and stock market volatility: Evidence from emerging markets," Emerging Markets Review, Elsevier, vol. 17(C), pages 1-13.

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