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Transnational corruption and innovation in transition economies

Author

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  • Habiyaremye, Alexis

    (Antalya International University)

  • Raymond, Wladimir

    (Institut National de la Statistique et des Etudes Economiques (STATEC), Luxembourg)

Abstract

In this paper, we examine how transnational corruption affects host country firms' innovation behaviour and performance in transition economies of Eastern Europe and Central and Western Asia. Using firm-level data from the Business Environment and Enterprise Performance Survey, we show that the involvement of foreign firms in corruption practices reduces the propensity of firms in host countries to invest in research and development and harms their ability to improve their existing products and services. Using a simultaneousequations recursive model and controlling for various innovation determinants, we also show that the reduction in innovation effort ultimately also hurts the host country's long-term ability to successfully bring new products on the market through indirect effects.

Suggested Citation

  • Habiyaremye, Alexis & Raymond, Wladimir, 2013. "Transnational corruption and innovation in transition economies," MERIT Working Papers 2013-050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2013050
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    References listed on IDEAS

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    Cited by:

    1. Roberto Iorio & Maria Luigia Segnana, 2022. "Is paying bribes worthwhile? Corruption and innovation in middle-income countries," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 475-504, September.
    2. Teimuraz Gogokhia & George Berulava, 2021. "Business environment reforms, innovation and firm productivity in transition economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 221-245, June.
    3. Shouro Dasgupta, Shouro & De Cian, Enrica & Verdolini, Elena, 2016. "The Political Economy of Energy Innovation," MITP: Mitigation, Innovation and Transformation Pathways 234939, Fondazione Eni Enrico Mattei (FEEM).
    4. Micheline Goedhuys & Pierre Mohnen & Tamer Taha, 2016. "Corruption, innovation and firm growth: firm-level evidence from Egypt and Tunisia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 299-322, December.
    5. Florent Silve & Alexander Plekhanov, 2018. "Institutions, innovation and growth : Evidence from industry data," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(3), pages 335-362, July.
    6. Loredana Fattorini & Mahdi Ghodsi & Richard Grieveson & Sandra M. Leitner & Armando Rungi, 2017. "Monthly Report No. 9/2017," wiiw Monthly Reports 2017-09, The Vienna Institute for International Economic Studies, wiiw.
    7. Nirosha Wellalage & Sujani Thrikawala, 2021. "Does bribery sand or grease the wheels of firm level innovation: evidence from Latin American countries," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 891-929, July.
    8. Kuzman Tanja & Bellos Sotirios K. & Đulić Katarina, 2018. "Determinants of Innovation-based Sustainability in Transition and Developing Economies," Economic Themes, Sciendo, vol. 56(3), pages 413-438, September.
    9. Valerija Botrić & Ljiljana Božić, 2015. "Innovators' vs Non-innovators' perceptions of corruption in European post-transition economies," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 8(3), pages 47-58, December.
    10. Houxue Xia & Qingmei Tan & Junhong Bai, 2018. "Corruption and Technological Innovation in Private Small-Medium Scale Companies: Does Female Top Management Play a Role?," Sustainability, MDPI, vol. 10(7), pages 1-18, June.
    11. repec:prg:jnlpep:v:preprint:id:647:p:1-19 is not listed on IDEAS
    12. Berulava, George & Gogokhia, Teimuraz, 2016. "Studying Complementarities between Modes of Innovation Strategies in Transition Economies," MPRA Paper 71277, University Library of Munich, Germany.
    13. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    14. Xu, Gang & Yano, Go, 2017. "How does anti-corruption affect corporate innovation? Evidence from recent anti-corruption efforts in China," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 498-519.
    15. Lin, Yongjia & Fu, Xiaoqing & Fu, Xiaolan, 2021. "Varieties in state capitalism and corporate innovation: Evidence from an emerging economy," Journal of Corporate Finance, Elsevier, vol. 67(C).
    16. Shouro Dasgupta & Enrica De Cian & Elena Verdolini, 2016. "The Political Economy of Energy Innovation," Working Papers 2016.35, Fondazione Eni Enrico Mattei.
    17. Marek Tomaszewski, 2018. "Corruption - A Dark Side of Entrepreneurship. Corruption and Innovations," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(3), pages 251-269.
    18. Wellalage, Nirosha Hewa & Fernandez, Viviana & Thrikawala, Sujani, 2020. "Corruption and innovation in private firms: Does gender matter?," International Review of Financial Analysis, Elsevier, vol. 70(C).

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    More about this item

    Keywords

    Transnational corruption; Innovation; Transition Economies;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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