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The impact of corruption on the performance of newly established enterprises: Empirical evidence from a transition economy

Year: 2020

Type: article

Abstract: This paper investigates the effects of corruption on the performance of newly established enterprises. Using longitudinal data from enterprise surveys containing virtually all firms over the period from 2011 to 2015 in Vietnam, we find that corruption deteriorates firm financial performance, and subsequently exposes them to a greater failure probability. We further find that, while corruption imposes more harmful effects on the performance and survival of private domestic firms, it exerts no significant impact on state-owned firms. On the other hand, foreign firms are also able to take advantage of corruption to enhance their performance and survivability. In addition, our results suggest that the more mature firms are better at dealing with corruption and can eventually take advantage of it to enhance their performance. The results are robust after various model specifications as well as alternative classifications of newly established firms.

Source: Borsa Istanbul Review

DOI: 10.1016/j.bir.2020.05.006

Authors: Vu Hoang Nam, Minh Ngoc Nguyen, Duong Anh Nguyen, Hiep Ngoc Luu

Institutions: Foreign Trade University, University of St Andrews

Language: English

Topic: Corruption and Economic Development

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,500