IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/5696.html
   My bibliography  Save this paper

The silence of corruption : identifying underreporting of business corruption through randomized response techniques

Author

Listed:
  • Jensen, Nathan M
  • Rahman, Aminur

Abstract

Research on the economic consequences of corruption has been hampered by the inability to directly measure corruption. Using an innovative methodology that allows respondents to report individual experiences with corruption while minimizing self-incrimination and an objective diagnostic to evaluate lying (false responses), this paper explores the extent of business corruption in Bangladesh. The analysis shows that traditional measures of corruption underreport the extent of business corruption in Bangladesh and existing strategies to evaluate and elicit truthful responses have limited effectiveness. The authors identify the types of firms that are associated with false responses and nonresponses to survey questions on corruption.

Suggested Citation

  • Jensen, Nathan M & Rahman, Aminur, 2011. "The silence of corruption : identifying underreporting of business corruption through randomized response techniques," Policy Research Working Paper Series 5696, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5696
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/06/21/000158349_20110621120150/Rendered/PDF/WPS5696.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Utz Weitzel & Sjors Berns, 2006. "Cross-border takeovers, corruption, and related aspects of governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 786-806, November.
    2. Freille, Sebastian & Haque, M. Emranul & Kneller, Richard, 2007. "A contribution to the empirics of press freedom and corruption," European Journal of Political Economy, Elsevier, vol. 23(4), pages 838-862, December.
    3. Jakob Svensson, 2003. "Who Must Pay Bribes and How Much? Evidence from a Cross Section of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 207-230.
    4. Chuck C Y Kwok & Solomon Tadesse, 2006. "The MNC as an agent of change for host-country institutions: FDI and corruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 767-785, November.
    5. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    6. Naci Mocan, 2008. "What Determines Corruption? International Evidence From Microdata," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 493-510, October.
    7. Regina Riphahn & Oliver Serfling, 2005. "Item non-response on income and wealth questions," Empirical Economics, Springer, vol. 30(2), pages 521-538, September.
    8. Gerty J. L. M. Lensvelt-Mulders & Joop J. Hox & Peter G. M. van der Heijden & Cora J. M. Maas, 2005. "Meta-Analysis of Randomized Response Research," Sociological Methods & Research, , vol. 33(3), pages 319-348, February.
    9. Peter Rodriguez & Donald S Siegel & Amy Hillman & Lorraine Eden, 2006. "Three lenses on the multinational enterprise: politics, corruption, and corporate social responsibility," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 733-746, November.
    10. Tomz, Michael & Wittenberg, Jason & King, Gary, 2003. "Clarify: Software for Interpreting and Presenting Statistical Results," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 8(i01).
    11. Omar Azfar & Peter Murrell, 2009. "Identifying Reticent Respondents: Assessing the Quality of Survey Data on Corruption and Values," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 387-411, January.
    12. Ray Fisman & Roberta Gatti, 2006. "Bargaining for Bribes: The Role of Institutions," Chapters, in: Susan Rose-Ackerman (ed.), International Handbook on the Economics of Corruption, chapter 4, Edward Elgar Publishing.
    13. Benjamin A. Olken & Patrick Barron, 2009. "The Simple Economics of Extortion: Evidence from Trucking in Aceh," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 417-452, June.
    14. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    15. ,, 1998. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 14(1), pages 151-159, February.
    16. Nathan M Jensen & Quan Li & Aminur Rahman, 2010. "Understanding corruption and firm responses in cross-national firm-level surveys," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1481-1504, December.
    17. Stokes, Susan C., 2005. "Perverse Accountability: A Formal Model of Machine Politics with Evidence from Argentina," American Political Science Review, Cambridge University Press, vol. 99(3), pages 315-325, August.
    18. Shang-Jin Wei, 1999. "Corruption in economic development - beneficial grease, minor annoyance, or major obstacle?," Policy Research Working Paper Series 2048, The World Bank.
    19. Klaus Uhlenbruck & Peter Rodriguez & Jonathan Doh & Lorraine Eden, 2006. "The Impact of Corruption on Entry Strategy: Evidence from Telecommunication Projects in Emerging Economies," Organization Science, INFORMS, vol. 17(3), pages 402-414, June.
    20. Olken, Benjamin A., 2009. "Corruption perceptions vs. corruption reality," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 950-964, August.
    21. Alvaro Cuervo-Cazurra, 2006. "Who cares about corruption?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 807-822, November.
    22. Suk H Kim & Sam Barone, 1981. "Is the Foreign Corrupt Practices Act of 1977 a Success or Failure? A Survey of Members of the Academy of International Business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 12(3), pages 123-126, September.
    23. Edgardo Campos, J. & Lien, Donald & Pradhan, Sanjay, 1999. "The Impact of Corruption on Investment: Predictability Matters," World Development, Elsevier, vol. 27(6), pages 1059-1067, June.
    24. Cheryl W. Gray & Daniel Kaufman, 1998. "Corruption and Development," World Bank Publications - Reports 11545, The World Bank Group.
    25. Paul M Vaaler & Burkhard N Schrage & Steven A Block, 2005. "Counting the investor vote: political business cycle effects on sovereign bond spreads in developing countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 62-88, January.
    26. Cheryl Gray & Joel Hellman & Randi Ryterman, 2004. "Anticorruption in Transition 2 : Corruption in Enterprise-State Interactions in Europe and Central Asia 1999-2002," World Bank Publications - Books, The World Bank Group, number 14957.
    27. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    28. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    29. Johann Lambsdorff, 2003. "How corruption affects persistent capital flows," Economics of Governance, Springer, vol. 4(3), pages 229-243, November.
    30. ,, 1998. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 14(5), pages 687-698, October.
    31. Raymond Fisman & Edward Miguel, 2007. "Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1020-1048, December.
    32. Recanatini, Francesca & Wallsten, Scott J. & Lixin Colin Xu, 2000. "Surveying surveys and questioning questions - learning from World Bank experience," Policy Research Working Paper Series 2307, The World Bank.
    33. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    34. John L Graham, 1984. "The Foreign Corrupt Practices Act: A New Perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(3), pages 107-121, September.
    35. Yadong Luo, 2006. "Political behavior, social responsibility, and perceived corruption: a structuration perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 747-766, November.
    36. Bhagwati, Jagdish N. & Srinivasan, T. N., 1982. "The welfare consequences of directly-unproductive profit-seeking (DUP) lobbying activities : Price versus quantity distortions," Journal of International Economics, Elsevier, vol. 13(1-2), pages 33-44, August.
    37. Escribano, Alvaro & Guasch, J. Luis, 2005. "Assessing the impact of the investment climate on productivity using firm-level data : methodology and the cases of Guatemala, Honduras, and Nicaragua," Policy Research Working Paper Series 3621, The World Bank.
    38. ,, 1998. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 14(3), pages 381-386, June.
    39. Mohsin Habib & Leon Zurawicki, 2002. "Corruption and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 291-307, June.
    40. ,, 1998. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 14(4), pages 525-537, August.
    41. Malesky, Edmund J. & Samphantharak, Krislert, 2008. "Predictable Corruption and Firm Investment: Evidence from a Natural Experiment and Survey of Cambodian Entrepreneurs," Quarterly Journal of Political Science, now publishers, vol. 3(3), pages 227-267, October.
    42. ,, 1998. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 14(2), pages 285-292, April.
    43. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    44. Geeta Batra & Daniel Kaufmann & Andrew H. W. Stone, 2003. "Investment Climate Around the World : Voices of the Firms from the World Business Environment Survey," World Bank Publications - Books, The World Bank Group, number 15143.
    45. 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.
    46. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    47. Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(2), pages 334-364, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Addis G. Birhanu & Alfonso Gambardella & Giovanni Valentini, 2016. "Bribery and investment: Firm-level evidence from Africa and Latin America," Strategic Management Journal, Wiley Blackwell, vol. 37(9), pages 1865-1877, September.
    2. Thomas Herzfeld & Iryna Kulyk & Axel Wolz, 2018. "Is Agribusiness Different? Firm-Level Evidence of Perceived Corruption in Post-Soviet Countries," Eastern European Economics, Taylor & Francis Journals, vol. 56(6), pages 504-521, November.
    3. Thorben C. Kundt & Florian Misch & Birger Nerré, 2017. "Re-assessing the merits of measuring tax evasion through business surveys: an application of the crosswise model," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(1), pages 112-133, February.
    4. Clarke, George, 2011. "Lying about firm performance: Evidence from a survey in Nigeria," MPRA Paper 35382, University Library of Munich, Germany.
    5. Friesenbichler, Klaus S. & Selenko, Eva & Clarke, George R.G., 2015. "How much of a nuisance is greasing the palms? A study on job dedication and attitudes towards corruption reports under answer bias control," MPRA Paper 67331, University Library of Munich, Germany.
    6. Clarke, George, 2012. "Do reticent managers lie during firm surveys?," MPRA Paper 37634, University Library of Munich, Germany.
    7. Kim, Sahrok & Praveen Parboteeah, K. & Cullen, John B. & Jeong, Nara, 2022. "Social institutions approach to women’s firm ownership and firm bribery activity: A study of small-sized firms in emerging markets," Journal of Business Research, Elsevier, vol. 144(C), pages 1333-1349.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jensen, Nathan M. & Li, Quan & Rahman, Aminur, 2007. "Heard melodies are sweet, but those unheard are sweeter : understanding corruption using cross-national firm-level surveys," Policy Research Working Paper Series 4413, The World Bank.
    2. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 27(1), pages 79-109, May.
    3. Cuervo-Cazurra, Alvaro, 2016. "Corruption in international business," Journal of World Business, Elsevier, vol. 51(1), pages 35-49.
    4. Hanousek, Jan & Shamshur, Anastasiya & Tresl, Jiri, 2019. "Firm efficiency, foreign ownership and CEO gender in corrupt environments," Journal of Corporate Finance, Elsevier, vol. 59(C), pages 344-360.
    5. Nelson Ramírez-Rondán & Saki Bigio, 2006. "Corruption and Development Indicators: An Empirical Review," Working Papers 2006-007, Banco Central de Reserva del Perú.
    6. Abhijit Banerjee & Rema Hanna, 2012. "Corruption [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
      • Hanna, Rema N. & Mullainathan, Sendhil & Banerjee, Abhijit, 2012. "Corruption," Scholarly Articles 8830779, Harvard Kennedy School of Government.
      • Banerjee, Abhijit & Hanna, Rema & Mullainathan, Sendhil, 2012. "Corruption," Working Paper Series rwp12-023, Harvard University, John F. Kennedy School of Government.
      • Abhijit Banerjee & Rema Hanna & Sendhil Mullainathan, 2012. "Corruption," Working Papers id:4952, eSocialSciences.
      • Abhijit Banerjee & Sendhil Mullainathan & Rema Hanna, 2012. "Corruption," NBER Working Papers 17968, National Bureau of Economic Research, Inc.
    7. Romero-Martínez, Ana M. & García-Muiña, Fernando E., 2021. "Digitalization level, corruptive practices, and location choice in the hotel industry," Journal of Business Research, Elsevier, vol. 136(C), pages 176-185.
    8. Hanousek, Jan & Shamshur, Anastasiya & Tresl, Jiri, 2015. "Is bread gained by deceit sweet to a man? Corruption and firm efficiency," CEPR Discussion Papers 10951, C.E.P.R. Discussion Papers.
    9. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
    10. Eugen Dimant & Guglielmo Tosato, 2018. "Causes And Effects Of Corruption: What Has Past Decade'S Empirical Research Taught Us? A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 335-356, April.
    11. Olayinka Oyekola & Martha A. Omolo & Olapeju C. Ogunmokun, 2023. "Are majority-female-owned firms more susceptible to bribery solicitations?," Discussion Papers 2311, University of Exeter, Department of Economics.
    12. Pierre-Guillaume Méon & Khalid Sekkat, 2007. "Revisiting the relationship between governance and foreign direct investment," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(1), pages 41-61.
    13. Manuel Portugal Ferreira & Helder Costa Carreira & Dan Li & Fernando Ribeiro Serra, 2016. "The Moderating Effect of Home Country Corruption on the Host Country’s Ability to Attract FDI," Brazilian Business Review, Fucape Business School, vol. 13(4), pages 94-117, July.
    14. Jan Hanousek & Anastasiya Shamshur & Jan Svejnar & Jiri Tresl, 2021. "Corruption level and uncertainty, FDI and domestic investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1750-1774, December.
    15. Nicholas A. Lash & Bala Batavia, 2019. "Corruption and Doing Business in Emerging Markets," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(11), pages 1279-1289, November.
    16. Chengguang Li & Jeffrey J. Reuer, 2022. "The impact of corruption on market reactions to international strategic alliances," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(1), pages 187-202, February.
    17. Judge, William Q. & McNatt, D. Brian & Xu, Weichu, 2011. "The antecedents and effects of national corruption: A meta-analysis," Journal of World Business, Elsevier, vol. 46(1), pages 93-103, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5696. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.