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Corruption, Bribery and Innovation in CEE: Where is the Link?

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  • Doren Chadee

    (Deakin University - Melbourne Burwood Campus)

  • Banjo Roxas

    (Deakin University - Melbourne Burwood Campus)

  • Alexandre Kouznetsov

    (Torrens University Australia)

Abstract

This study investigates the influence of formal and informal institutions on firm innovation in transitional economies of Central and Eastern Europe (CEEs) by explicitly differentiating between corruption and bribery as distinct informal institutions. We integrate institutional theory and legitimacy theory to explain that the failure of formal institutions creates an environment of corruption which encourages firms to use bribes to facilitate economic exchange. We test our hypotheses on the innovation performance of a sample (n = 1603) of firms in 11 CEEs. The results show that weak rule of law and ineffective business regulations in CEEs propagate the perception of corruption that inhibits firm innovation. However, the use of bribery enables firms to transform this environment of corruption into innovation outcomes. The policy and managerial implications of our research for differentiating between corruption and bribery and our findings that bribery acts as the glue that binds formal and informal institutions are fully discussed.

Suggested Citation

  • Doren Chadee & Banjo Roxas & Alexandre Kouznetsov, 2021. "Corruption, Bribery and Innovation in CEE: Where is the Link?," Journal of Business Ethics, Springer, vol. 174(4), pages 747-762, December.
    • Handle: RePEc:kap:jbuset:v:174:y:2021:i:4:d:10.1007_s10551-021-04925-x
    DOI: 10.1007/s10551-021-04925-x
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    Cited by:

    1. Roberto Iorio & Maria Luigia Segnana, 2022. "Is paying bribes worthwhile? Corruption and innovation in middle-income countries," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 475-504, September.
    2. Ming-Chang Huang & Tian-Jyun Gong & Shih-Ping Sun & Ping-Hsin Lin, 2023. "Obstacles or catalysts? A balanced view of formal institutional risks on FDI location choice," Asian Business & Management, Palgrave Macmillan, vol. 22(5), pages 2077-2105, November.
    3. Koveshnikov, Alexei & Dabija, Dan-Cristian & Inkpen, Andrew & Vătămănescu, Elena-Mădălina, 2022. "Not running out of steam after 30 years: The enduring relevance of Central and Eastern Europe for international management scholarship," Journal of International Management, Elsevier, vol. 28(3).
    4. Teichmann, Fabian & Boticiu, Sonia, 2022. "Corruption in eastern European judicial systems and its effects on proceedings in other countries," SEER Journal for Labour and Social Affairs in Eastern Europe, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 25(2), pages 251-264.
    5. Anna Soulsby & Anna Remišová & Thomas Steger, 2021. "Management and Business Ethics in Central and Eastern Europe: Introduction to Special Issue," Journal of Business Ethics, Springer, vol. 174(4), pages 739-746, December.

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