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Trust and Perceived Corruption Among Ukrainian Firms

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  • Elena Denisova-Schmidt
  • Yaroslav Prytula

Abstract

This article investigates how firms build trust with one another and with third parties in endemically corrupt environments where trust is usually very low and significantly affected by corruption. Based on a representative survey of firms operating in Ukraine, an endemically corrupt environment, the authors explore some mechanisms for building trust. The study outcomes suggest positive correlations between the perception of corruption and trust among firms (especially through such mechanisms as using patronage at all levels, inviting business partners to restaurants or parties, and introducing business partners to family and friends), while other mechanisms (such as showing expertise in the field, developing communication competencies, and using notaries and lawyers to secure contracts) demonstrate no significant links. Moreover, the results demonstrate that foreign ownership might influence corruption and trust among firms. From a policy perspective, the authors recommend more work on understanding why firms engage in specific corrupt practices and less on destroying their informal relationships. International exposure might be an additional tool for mitigating corruption in Ukraine.

Suggested Citation

  • Elena Denisova-Schmidt & Yaroslav Prytula, 2017. "Trust and Perceived Corruption Among Ukrainian Firms," Eastern European Economics, Taylor & Francis Journals, vol. 55(4), pages 324-341, July.
    • Handle: RePEc:mes:eaeuec:v:55:y:2017:i:4:p:324-341
    DOI: 10.1080/00128775.2017.1312455
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    References listed on IDEAS

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    1. Ronald Wintrobe, 2001. "Tax Evasion and Trust," University of Western Ontario, Departmental Research Report Series 200111, University of Western Ontario, Department of Economics.
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    Cited by:

    1. Thomas Herzfeld & Iryna Kulyk & Axel Wolz, 2018. "Is Agribusiness Different? Firm-Level Evidence of Perceived Corruption in Post-Soviet Countries," Eastern European Economics, Taylor & Francis Journals, vol. 56(6), pages 504-521, November.
    2. Julita E. Wasilczuk & Katarzyna Stankiewicz, 2022. "It is not OK but it works – unproductive entrepreneurship, the case of Poland," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2943-2959, December.
    3. Denisova-Schmidt, Elena & Prytula, Yaroslav, 2018. "Business corruption in Ukraine: A way to get things done?," Business Horizons, Elsevier, vol. 61(6), pages 867-879.

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