 Greasing or Grinding? Regulatory context and the productivity effects of corruption: Evidence from Vietnamese SMEsChiara Tomasi, Quoc Thai Le and Thi Ngoc Lan Nguyen European Journal of Political Economy, 2025, vol. 89, issue C Abstract: This paper investigates the heterogeneous effects of bribery on the productivity of small and medium-sized enterprises (SMEs) in Vietnam. Using panel data from the Vietnam Small and Medium Enterprise Survey (VSMES) and an instrumental variable approach to address endogeneity, we find that corruption generally reduces firm productivity. However, its impact varies across institutional contexts: the negative effect is stronger in provinces with efficient regulatory environments and weaker where firms face high bureaucratic burdens or identify government inefficiency as a key constraint. These findings support a weak form of the “grease the wheels” hypothesis, suggesting bribery may act as a costly coping strategy in poorly governed settings. The results highlight the importance of regulatory quality in moderating the effects of corruption and point to the need for reforms that address both corruption and bureaucratic inefficiencies. Keywords: SMEs; Firm productivity; Corruption; Regulatory burdens; Vietnamese micro-level data (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:89:y:2025:i:c:s0176268025000874 DOI: 10.1016/j.ejpoleco.2025.102727 Access Statistics for this article European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung More articles in European Journal of Political Economy from Elsevier |
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