Firm dynamics in corrupt environments: the case of the BRICS countries

Rania Missaoui () and Aymen Ajina ()
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Rania Missaoui: University of Sousse, Institute of Higher Business Studies
Aymen Ajina: University of Sousse, Laboratory of Research in Innovative Management, Risk, Accounting and Finance, Faculty of Economic and Management of Sousse

SN Business & Economics, 2026, vol. 6, issue 2, 1-38

Abstract: Abstract The main objective of this paper is to examine how corruption affects firm dynamics by exploring four key dimensions: financial performance (ROA), asset growth (GA), innovation, and competitiveness (HHI Index). Unlike previous research that typically focuses on one or two dimensions in isolation, our contribution lies in introducing a novel composite indicator, firm dynamic score, constructed through a statistical weighting process to provide a comprehensive view of firm development. Our paper is based on a panel of 945 firms from BRICS countries over the period 2010–2024, which also captures the impact of the COVID-19 pandemic. Using the High-Dimensional Fixed Effects (HDFE) estimator along with additional robustness techniques such as Two-Stage Least Squares (2SLS) and the Two-Step System GMM, we provide a comprehensive empirical assessment of how corruption influences various dimensions of firm dynamics. The results support the Sand the Wheels theory, which posits that corruption acts as a barrier to progress.

Keywords: Financial performance; Asset growth; Innovation; Competitiveness; Firm dynamic score; BRICS countries; COVID-19 pandemic; High-Dimensional Fixed Effects HDFE; Two-Stage Least Squares 2SLS; Two-Step System GMM; Sand the Wheels theory (search for similar items in EconPapers)
JEL-codes: G30 G39 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1007/s43546-026-01056-1

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