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Strong Firms Lobby, Weak Firms Bribe: A survey-based analysis of the demand for influence and corruption

Author

Listed:
  • Morten Bennedsen

    (INSEAD)

  • Sven E. Feldmann

    (University of Melbourne)

  • David Dreyer Lassen

    (Department of Economics, University of Copenhagen)

Abstract

We use survey responses by firms to examine the firm-level determinants and effects of political influence, their perception of corruption and prevalence of bribe paying. We find that: (a) measures of political influence and corruption/bribes are uncorrelated at the firm level; (b) firms that are larger, older, exporting, government-owned, are widely held and/or have fewer competitors, have more political influence, perceive corruption to be less of a problem and pay bribes less often; (c) influence increases sales and government subsidies and in general makes the firm have a more positive view on the government. In sum, we show that strong firms use their influence to bend laws and regulations, whereas weak firms pay bribes to mitigate the costs of government intervention.

Suggested Citation

  • Morten Bennedsen & Sven E. Feldmann & David Dreyer Lassen, 2009. "Strong Firms Lobby, Weak Firms Bribe: A survey-based analysis of the demand for influence and corruption," EPRU Working Paper Series 2009-08, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:09-08
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    Cited by:

    1. Parra, Daniel, 2020. "The Role of Suggestions and Tips in Distorting a Third Party’s Decision," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11(2), pages 1-21.
    2. Roy Cerqueti & Raffaella Coppier & Gustavo Piga, 2021. "Bribes, Lobbying and Industrial Structure," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(3), pages 439-460, November.
    3. Abbas Khandan, 2022. "Externalities in the rent-seeking strategies of lobbying and bribery," Public Sector Economics, Institute of Public Finance, vol. 46(3), pages 421-450.
    4. Noman Shaheer & Jingtao Yi & Sali Li & Liang Chen, 2019. "State-Owned Enterprises as Bribe Payers: The Role of Institutional Environment," Journal of Business Ethics, Springer, vol. 159(1), pages 221-238, September.
    5. Andrei Govorun, 2013. "The choice of lobbying strategy: direct contacts with officials or mediation via business associations," HSE Working papers WP BRP 24/EC/2013, National Research University Higher School of Economics.
    6. Addis G. Birhanu & Alfonso Gambardella & Giovanni Valentini, 2016. "Bribery and investment: Firm-level evidence from Africa and Latin America," Strategic Management Journal, Wiley Blackwell, vol. 37(9), pages 1865-1877, September.
    7. Halil D. Kaya, 2023. "The Global Crisis And Corruption: Retailers, Government Contracts And Licensing," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 99-104, October.
    8. Halil D. Kaya & Engku Ngah S. Engkuchik, 2021. "The Impact Of The 2008-2009 Global Crisis On Corruption: Evidence From Manufacturers In Central Asia And Eastern Europe," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 4-14, June.
    9. Halil Dincer KAYA & Engku Ngah S. ENGKUCHIK, 2021. "Did Corruption Decrease Post-Crisis? The Case of Wholesalers across Less-Developed Economies," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 22(4), pages 570-578, October.
    10. Martin Gregor, 2011. "Corporate lobbying: A review of the recent literature," Working Papers IES 2011/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.
    11. Amore, Mario Daniele & Bennedsen, Morten, 2013. "The value of local political connections in a low-corruption environment," Journal of Financial Economics, Elsevier, vol. 110(2), pages 387-402.

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