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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

Suggested Citation

  • Felipe Starosta de Waldemar, 2011. "New products and corruption: evidence from Indian firms," Documents de travail du Centre d'Economie de la Sorbonne 11033, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:11033
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    Keywords

    innovation; corruption; firm performance;
    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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