The impact of petty corruption on firm innovation in Vietnam

Nguyen Ngoc Anh, Doan Quang Hung, Nguyen Ngoc Minh and Binh Tran-Nam
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Nguyen Ngoc Anh: Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam
Doan Quang Hung: Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam
Nguyen Ngoc Minh: Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam
Binh Tran-Nam: School of Taxation and Business Law, Business School, University of New South Wales, Sydney, Australia

No 184, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: Corruption has been found to have complex effects on firm innovation. Limited theoretical and empirical evidence to date has been rather inconclusive. This study employs econometric estimation techniques to analyze data from small and medium manufacturing enterprises in Vietnam to assess the impact of petty corruption on firm innovation. The empirical results tend to support the "greasing" impact of corruption on innovation. Specifically, informal payments by Vietnamese firms are shown to encourage overall innovation, product improvement, innovation and new innovation. In view of the commonplace business practice of paying small informal fees to speed up transactions in the inefficient public sector in Vietnam, this finding is not entirely unexpected, though troubling.

Pages: 21 pages
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:0216

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