New Products and Corruption: Evidence from I ndian Firms
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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Volume (Year): 50 (2012)
Issue (Month): 3 (09)
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