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Social networks and bribery: The case of entrepreneurs in Eastern Europe


  • Chavis, Larry


Using a survey of new firms in Poland, Romania, and Slovakia, I explore how an entrepreneur’s social networks affect the amount paid in bribes to government officials. Lower levels of bribe payments are associated with ownership by a former manager of a state-owned enterprise (SOE), with being a spin-off from a SOE, and with trade association membership. The results also suggest that these networks have a larger impact on bribe payments than do firm characteristics such as profits, sales, or resale value. For the average firm, having a former SOE manager as an owner can be expected to reduce bribe payments by over 50%, while, by contrast, doubling the firm’s profits results in only a 7% increase in bribe payments.

Suggested Citation

  • Chavis, Larry, 2013. "Social networks and bribery: The case of entrepreneurs in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 279-293.
  • Handle: RePEc:eee:jcecon:v:41:y:2013:i:1:p:279-293 DOI: 10.1016/j.jce.2012.11.002

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    References listed on IDEAS

    1. Johnson, Simon & Kaufmann, Daniel & McMillan, John & Woodruff, Christopher, 2000. "Why do firms hide? Bribes and unofficial activity after communism," Journal of Public Economics, Elsevier, vol. 76(3), pages 495-520, June.
    2. Hunt, Jennifer, 2004. "Trust and Bribery: The Role of the Quid Pro Quo and the Link With Crime," CEPR Discussion Papers 4567, C.E.P.R. Discussion Papers.
    3. Simon Johnson & John McMillan & Christopher Woodruff, 2002. "Property Rights and Finance," American Economic Review, American Economic Association, vol. 92(5), pages 1335-1356, December.
    4. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 207-230.
    5. Swamy, Anand & Knack, Stephen & Lee, Young & Azfar, Omar, 2001. "Gender and corruption," Journal of Development Economics, Elsevier, vol. 64(1), pages 25-55, February.
    6. John McMillan, 1990. "The Economics Of Section 301: A Game-Theoretic Guide," Economics and Politics, Wiley Blackwell, vol. 2(1), pages 45-57, March.
    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. Safavian, Mehnaz S. & Graham, Douglas H. & Gonzalez-Vega, Claudio, 2001. "Corruption and Microenterprises in Russia," World Development, Elsevier, vol. 29(7), pages 1215-1224, July.
    9. Hellman, Joel S. & Jones, Geraint & Kaufmann, Daniel, 2003. "Seize the state, seize the day: state capture and influence in transition economies," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 751-773, December.
    10. William Pyle, 2011. "Organized Business, Political Competition, and Property Rights: Evidence from the Russian Federation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(1), pages 2-31.
    11. David Lipton & Jeffrey D. Sachs, 1990. "Creating a Market Economy in Eastern Europe: The Case of Poland," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 75-148.
    12. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.
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    Cited by:

    1. Ma, Guangrong & Rui, Oliver Meng & Wu, Yiping, 2015. "A springboard into politics: Do Chinese entrepreneurs benefit from joining the government-controlled business associations?," China Economic Review, Elsevier, vol. 36(C), pages 166-183.
    2. Andrzej Cieślik & Łukasz Goczek, 2015. "Percepcja korupcji na poziomie przedsiębiorstw w krajach postkomunistycznych," Gospodarka Narodowa, Warsaw School of Economics, issue 2, pages 55-77.

    More about this item


    Corruption; Transition economies; Social networks; Property rights;

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal


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