Corruption and management practices: Firm level evidence

Daphne Athanasouli and Antoine Goujard

Journal of Comparative Economics, 2015, vol. 43, issue 4, 1014-1034

Abstract: We argue that corruption can decrease aggregate productivity by deteriorating firm management practices. We investigate the impact of regional corruption on the management quality of firms within the manufacturing sector in Central and Eastern Europe. The empirical challenge is that bureaucrats’ bribing practices may evolve in response to firm behaviors, and that regional corruption is measured with error. To identify causal effects, our preferred specifications use a difference-in-differences methodology. We measure the manufacturing industries’ exposure to corruption using their level of dependence to contract institutions. Controlling for regional and manufacturing industry – country fixed effects, we find that firms in more contract dependent industries, located in more corrupt regions, tend to have lower management quality, a more centralized decision-making process, and a lower level of education among administrative staff. In more corrupt regions, contract dependent firms are also characterized by lower investment in R&D, and smaller product markets. We show that our findings are not likely to be driven by omitted variables, outliers, or reverse causality.

Keywords: Management; Institutions; Corruption; Firm governance (search for similar items in EconPapers)
JEL-codes: H11 K42 L2 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0147596715000335
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Corruption and Management Practices Firm Level Evidence (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:43:y:2015:i:4:p:1014-1034

DOI: 10.1016/j.jce.2015.03.002

Access Statistics for this article

Journal of Comparative Economics is currently edited by D. Berkowitz and G. Roland

More articles in Journal of Comparative Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().