Dimension of corruption and firm performance: an empirical analysis from BEEPS survey

Abstract

Purpose
The link between corruption and firm performance has received considerable critical attention. However, until now, far too little attention has been paid to different dimensions of corruption and their relationship with firm performance. The aim of this paper is, therefore, to examine the relationship between dimensions of corruption and firm productivity.

Design/methodology/approach
This paper uses the fifth wave of Business Environment and Enterprise Performance Survey, which is based on the survey questionnaire with senior managers of 16,566 randomly selected firms across 32 developing countries. Empirical analysis employs structural equation modeling (SEM) and instrumental variable two-stage least square (IV 2SLS) estimation techniques.

Findings
Our results revealed that political corruption and red tape have a positive relationship with firm productivity. We also found that perceived extent of bribe and corruption experience are positively related to the firm productivity.

Practical implications
Findings suggest that multifaceted dimensions of corruption exist. Therefore, policymakers should develop anticorruption measures by taking into account these dimensions. In addition, policymakers should focus on improving institutional quality by reforming laws and measures to detect and punish government officials.

Originality/value
So far only few studies have looked at the dimensions of corruption; therefore, this study seeks to examine the effect of different dimensions of corruption together on firm performance in postcommunist countries.