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Is bribery a conscious, strategic and rational choice? Impact on firms’ growth in India

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  • Chhetri, Prabin Chauhan
  • S.N., Rajesh Raj

Abstract

This study, utilising data from the World Bank Enterprise Survey, probes the diverse effects of bribery on the growth of firms in India. The central question we ask is: what motivates certain firms to engage in bribery while others abstain? Employing the endogenous switching regression model, we aim to uncover the intricacies of this heterogeneity. Our findings suggest that bribery can facilitate growth, yet there is substantial heterogeneity in its impact on firms. The impact varies across firm groups: it positively influences those engaging in bribery, while non-bribers would have experienced adverse effects if they had engaged in bribery. Thus, we observe that firms’ decision to dis(engage) in bribery is influenced by the returns they derive from such a decision. This suggests that firms’ decision to (dis)engage in bribery is a conscious, strategic and rational one, driven by choice rather than coercion.

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  • Chhetri, Prabin Chauhan & S.N., Rajesh Raj, 2024. "Is bribery a conscious, strategic and rational choice? Impact on firms’ growth in India," Journal of Policy Modeling, Elsevier, vol. 46(5), pages 1000-1019.
    • Handle: RePEc:eee:jpolmo:v:46:y:2024:i:5:p:1000-1019
    DOI: 10.1016/j.jpolmod.2024.06.001
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    More about this item

    Keywords

    Manufacturing firms; Bribery; Firm growth; Endogenous switching regression;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East

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