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Drinking poison to quench thirst: Does bribery foster firm performance in China?

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  • Zhou, Kevin Zheng
  • Wang, Kui
  • Xu, Dean
  • Xie, En

Abstract

Whereas the damage of bribery on economic development is well recognized, controversy exists regarding whether it can benefit firm-level performance. By integrating the “grease” and “sand” views of bribery, this study offers the novel proposition that even though bribery may provide a means to deal with institutional voids, such that it fosters firms’ short-term performance (i.e., sales growth), it hinders long-term performance reflected in market capitalization. Moreover, the positive effect of bribery on sales growth decreases and its negative impact on market capitalization increases when the level of institutional development is higher. A longitudinal data set of Chinese listed firms lends strong support to our predictions, which in turn offer novel insights into bribery and its performance implications.

Suggested Citation

  • Zhou, Kevin Zheng & Wang, Kui & Xu, Dean & Xie, En, 2022. "Drinking poison to quench thirst: Does bribery foster firm performance in China?," Journal of Business Research, Elsevier, vol. 147(C), pages 505-517.
    • Handle: RePEc:eee:jbrese:v:147:y:2022:i:c:p:505-517
    DOI: 10.1016/j.jbusres.2022.04.038
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