Bribery environments and firm performance: Evidence from CEE countries

Hanousek, Jan; Kochanova, Anna

doi:10.1016/j.ejpoleco.2016.02.002

Cited by 82 publications

(74 citation statements)

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“…Moreover, since the existing literature has largely focused on how corruption affects within-firm productivity (e.g. Hanousek and Kochanova 2015;De Rosa, Gooroochurn and Görg 2010), our contribution to the literature is to assess whether bribes may affect TFP growth via the alternative misallocation channel, which we next focus on. We therefore explore how corruption affects one of the determinants of TFP growth, input misallocation, according to alternative model specifications.…”

Section: The Baseline Resultsmentioning

confidence: 99%

“…Most of the empirical literature has focused either on the effect of firm-level bribery on within-firm productivity (for example, De Rosa, Gooroochurn and Görg 2010; Hanousek and Kochanova 2015) or on the impact of total-economy corruption on a country's aggregate economic performance (for instance, Mauro 1995;Tanzi and Davoodi 1997). In this paper, instead, we use firm-level data on corruption and investigate its relationship with a measure of within-sector misallocation of inputs, in turn a driver of sectorial TFP growth.…”

Section: Introductionmentioning

confidence: 99%

“…The existing evidence on corruption and firm size is inconclusive. On the one hand, there is some evidence that smaller firms are less affected by bribes, possibly because they are exempt from some regulatory standards (such as reporting and keeping records for inspection, but also labour market legislation) and taxes, and therefore encounter demands for bribes less frequently (Hanousek and Kochanova 2015), or simply because larger organizations are more visible to bureaucrats and cannot evade regulations easily (Fisman and Svensson 2007). On the other hand, small and medium-sized firms may operate in markets that are local in nature and therefore this reduces their ability to use a relocation threat in dealing with corrupt officials (O'Toole and Tarp 2014).…”

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confidence: 99%

“…7 Fungacova, Kochanova and Weill (2015) and Hanousek and Kochanova (2015) define the BEEPS questions on bribery we employ in this paper as the most neutral and less subject to perception bias. The BEEPS questionnaire also includes a question asking whether the interviewed firm perceives corruption as a major obstacle for the operation and growth of its business.…”

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confidence: 99%

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Is Corruption Efficiency-Enhancing? A Case Study of Nine Central and Eastern European Countries

et al. 2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may CompNet AbstractWe investigate the role of corruption in the business environment in explaining the efficiency of withinsector production factor allocation across firms in nine Central and Eastern European countries in the period [2003][2004][2005][2006][2007][2008][2009][2010][2011][2012]. Using a conditional convergence model, we find evidence of a positive relationship between corruption growth and both labour and capital misallocation dynamics, once country framework conditions are controlled for: the link between corruption and input misallocation dynamics is larger the smaller the country, the lower the degree of political stability and of civil liberties, and the weaker the quality of its regulations. As input misallocation is one of the determinants of productivity growth, we further show that the relationship between changes in corruption and TFP growth is indeed negative. Our results hold when we tackle a possible omitted variable bias by instrumenting corruption with two instrumental variables (the percentage of women in Parliament and freedom of the press).Keywords: bribes, capital misallocation, labour misallocation, total factor productivity JEL codes: D24, D73, O47ECB Working Paper 1950, August 2016 1 Non-technical summaryIn this paper we investigate how changes in corruption in the business environment may affect total factor productivity (TFP) growth by influencing the efficiency of the allocation of both capital and labour across firms in nine Central and Eastern European (CEE) countries in the period 2003-2012.The macroeconomic impact of corruption is well documented in the literature. Empirical studies show mixed results, supporting both the view that (i) corruption has the potential to foster economic development in that it constitutes the necessary "grease" to lubricate the stiff wheels of rigid government administration and legal framework, as well as the alternative view that (ii) the rent-seeking behaviour of corrupt officials might reduce economic performance, as promoted by the "sand-the-wheels" advocates.There is also a vast, yet inconclusive, literature on the possible impact of corruption on TFP via the input allocation channel. While some authors argue that corruption may promote allocative efficiency since only the most efficient and profitable firms can afford to pay bribes to obtain government services, others point out that corruption might promote sub-optimal choices with regard ...

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Section: The Baseline Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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confidence: 99%

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Is Corruption Efficiency-Enhancing? A Case Study of Nine Central and Eastern European Countries

et al. 2016

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“…Capital is proxied by total fixed assets plus working capital, which is defined as current assets minus current 11 This approach helps us to deal later with potential endogeneity between corruption and efficiency, unobserved firm level heterogeneity and selection bias that cannot be properly addressed when using BEEPS alone, as the dataset does not have a panel structure. A similar approach has been used by Commander and Svejnar (2011), Hanousek and Kochanova (2016), and Fungáčová et al (2015). 12 See Aigner et al (1977) and Meeusen and van Den Broeck (1977) for stochastic frontier analysis and Schmidt and Sickles (1984), Kumbhakar (1990), andGreene (2005) for panel data application to stochastic frontier analysis.…”

Section: Firm Efficiency -Stochastic Frontier Analysismentioning

confidence: 99%

Firm Efficiency, Foreign Ownership and CEO Gender in Corrupt Environments

Hanousek¹,

Shamshur²,

Trešl³

2017

SSRN Journal

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We study the effects of corruption on firm efficiency using a unique dataset of private firms from 14 Central and Eastern European countries from 2000 to 2013. We find that an environment characterized by a high level of corruption has an adverse effect on firm efficiency. This effect is stronger for firms with a lower propensity to behave corruptly, such as foreign-controlled firms and firms managed by female CEOs, while local firms and firms with male CEOs are not disadvantaged. We also find that an environment characterized by considerable heterogeneity in the perception of corruption is associated with an increase in firm efficiency. This effect is particularly strong for foreign-controlled firms from low corruption countries, while no effect is observed for firms managed by a female CEO.

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Gender of a manager and firm performance in Africa: Does the business environment play a moderating role?

Okumu,

Nathan,

Bbaale

2024

J of Intl Development

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This study explores the moderating role of the business environment in the relationship between top manager gender and firm performance, using firm‐level data from 29 African countries. Controlling for endogeneity and country fixed effects, we find that female‐managed firms generally underperform male‐managed firms, except among large firms where female managers excel. The performance gap is exacerbated by a weak business environment, highlighting the need for reforms to close the managerial gender gap in Africa. Strengthening the business environment is essential for improving female‐led firm performance and by extension promoting gender equality in African business leadership.

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Bribery environments and firm performance: Evidence from CEE countries

Cited by 82 publications

References 44 publications

Is Corruption Efficiency-Enhancing? A Case Study of Nine Central and Eastern European Countries

Is Corruption Efficiency-Enhancing? A Case Study of Nine Central and Eastern European Countries

Firm Efficiency, Foreign Ownership and CEO Gender in Corrupt Environments

Gender of a manager and firm performance in Africa: Does the business environment play a moderating role?

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