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Corruption, transaction costs, and innovation in Africa

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  • Laura Barasa

Abstract

This paper examines the relationship between corruption, transaction costs as measured by asset specificity, and innovation in Africa. We hypothesize that in the context of developing countries in Africa, corruption is positively associated with innovation. In addition, we hypothesize that this relationship is mediated by physical asset specificity and human asset specificity. These hypotheses are tested by means of a multiple mediation model. The product of coefficients approach and bootstrapping techniques are used to estimate firm-level data from the 2013 World Bank Enterprise Survey and 2013 Innovation Follow-up Survey. The results from the estimations reveal that corruption is positively associated with innovation, and that physical asset specificity mediates this relationship. There is no evidence suggesting that human asset specificity mediates the relationship between corruption and innovation. We conclude that the positive relationship between corruption and innovation offers support to the hypothesis that corruption ‘greases-the-wheels’ of innovation in Africa. Furthermore, physical asset specificity increases the likelihood of innovation in a business environment characterized by a high degree of corruption.

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  • Laura Barasa, 2018. "Corruption, transaction costs, and innovation in Africa," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 10(7), pages 811-821, November.
    • Handle: RePEc:taf:rajsxx:v:10:y:2018:i:7:p:811-821
    DOI: 10.1080/20421338.2018.1519061
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    Cited by:

    1. Dokas, Ioannis & Panagiotidis, Minas & Papadamou, Stephanos & Spyromitros, Eleftherios, 2023. "Does innovation affect the impact of corruption on economic growth? International evidence," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 1030-1054.
    2. Essiane, Patrick-Nelson Daniel, 2020. "De l'Ancienne Economie Institutionnelle à la Nouvelle Economie Institutionnelle: une introduction à quelques débats [Old Institutional Economics and New Institutional Economics: an Introduction to ," MPRA Paper 102858, University Library of Munich, Germany.
    3. Nirosha Wellalage & Sujani Thrikawala, 2021. "Does bribery sand or grease the wheels of firm level innovation: evidence from Latin American countries," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 891-929, July.
    4. Roberta Troisi & Gaetano Alfano, 2023. "Proximity and inter-firm corruption: A transaction cost approach," Small Business Economics, Springer, vol. 60(3), pages 1105-1120, March.
    5. Hung Quang Doan & Nam Hoang Vu & Binh Tran-Nam & Ngoc-Anh Nguyen, 2022. "Effects of tax administration corruption on innovation inputs and outputs: evidence from small and medium sized enterprises in Vietnam," Empirical Economics, Springer, vol. 62(4), pages 1773-1800, April.

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