Family businesses in Eastern European countries: How informal payments affect exports

Abstract

This article investigates the effect of corruption on the export share of family firms in Eastern European countries. Using the Business Environment and Enterprise Performance Survey and panel data methods, we find that, in contrast to non-family firms, family firms are rather sensitive to corruption. In particular, the export share of family firms is positively associated with informal payments that aim to facilitate business operations. There are at least three compelling explanations for these results. First, if family firms are more risk averse than non-family firms, informal payments may represent additional export risk insurance. Second, informal payments may help family firms compensate for the lack of managerial capabilities to export. Finally, when institutional inefficiencies obstruct business, corruption may be a tool for family firms to protect their socioemotional wealth

Family business and regional science: “Bridging the gap”

“…The first article that opens this series is titled "Family Businesses in Eastern European Countries: How Informal Payments Affect Exports" (Bassetti, Dal Maso, & Lattanzi, 2015). Using a firm-level database from Eastern European countries, the authors pursue an interesting and timely research question related to the contingent effect of corruption in the relationship between type of firms (based on the ownership and management regime, such as family and non-family firms) and export share.…”

“…In other words, policies to support family firms and/or regional development, similar to general entrepreneurship policies, need to be contextualized (Welter & Smallbone, 2011, p. 239), taking into account the place-specific role of family firms in regional development. Bassetti et al (2015), for example, show that internationalization (export share) in family firms is positively associated with corrupt practices, such as informal payments in transitional economies. This empirical evidence could have different interpretations, but as Bassetti et al (2015) sustain, if the lack of strong and efficient institutions force family firms to pay additional costs to facilitate business operations, effective anti-bribery policies could selectively damage export-oriented activities in family firms.…”

“…Bassetti et al (2015), for example, show that internationalization (export share) in family firms is positively associated with corrupt practices, such as informal payments in transitional economies. This empirical evidence could have different interpretations, but as Bassetti et al (2015) sustain, if the lack of strong and efficient institutions force family firms to pay additional costs to facilitate business operations, effective anti-bribery policies could selectively damage export-oriented activities in family firms. Additionally, one example why a one-size-fits-all philosophy may not apply for regional development is given by Cucculelli and Storai (2015).…”

The Bribery Paradox in Transition Economies and the Enactment of ‘New Normal’ Business Environments

“…As interest in studying entrepreneurship in transition economies has grown (Aidis et al, ), research has started to consider family and nonfamily firms’ propensity to pay bribes. While some research suggests family firms may be more willing to pay bribes than nonfamily firms (Bassetti et al, ), other evidence suggests that family firms are less likely to pay bribes (Ding et al, ). Although research like this is important in understanding why family firm owners may support or abhor bribery, it assumes that both family and nonfamily firm owners perceive bribes as contributing to a strategic advantage and a way to lessen business obstacles.…”

Shaped by location? A spatial panel analysis of Romanian family businesses

“…The novelty of this study is multi-faceted. First, by addressing Romanian FBs, our research adds to a limited but opportune strand of literature, revealing FB particularities in the former communist countries of Eastern Europe (Bassetti, Dal Masob, & Lattanzic, 2015;Donckels & Lambrecht, 1999;Poutziouris, O'Sullivan, & Nicolescu, 1997).…”