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New products and corruption: evidence from Indian firms

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Abstract

It has been shown that corruption has a negative effect on firm productivity, but what about its impact on product innovation? We find that corruption, functioning as a bribe tax, diminishes the probability of new product introduction. We use a World Bank Enterprise Survey from India in 2005, with 1600 firms answering if they introduced a new product to the firm and on the average quantity of bribe paid by firms. Controlling for innovation determinants, firm characteristics, location choice, multi-product firms and other business environment variables, sector-location bribe averages have a negative and significant impact on product innovation.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2011/11033.pdf
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Bibliographic Info

Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11033.

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Length: 28 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:mse:cesdoc:11033

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Keywords: innovation; corruption; firm performance.;

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Cited by:
  1. Habiyaremye, Alexis & Raymond, Wladimir, 2013. "Transnational corruption and innovation in transition economies," MERIT Working Papers 050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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