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New Products and Corruption: Evidence from Indian Firms

Author

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  • Felipe Starosta de Waldemar

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

It has been shown that corruption has a negative effect on firm growth, but what about its impact on product innovation? I find that corruption, functioning as a bribe tax, diminishes the probability of new products being introduced. I use a World Bank Enterprise Survey conducted in India in 2005, with 1,600 firms answering both whether they introduced a new product to the firm, and whether and how much was paid in bribes. Controlling for innovation determinants and firm characteristics, sector-state bribery averages have a negative and significant impact on product innovation.

Suggested Citation

  • Felipe Starosta de Waldemar, 2012. "New Products and Corruption: Evidence from Indian Firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00966301, HAL.
    • Handle: RePEc:hal:cesptp:hal-00966301
    as

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    Keywords

    Bribe; Bribery; Corruption; Firm; Firms; Innovation;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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