Perception of corruption as a business obstacle, generalized trust and relation centrism in low- and middle-income nations: the moderating influence of governance

Tolu Olarewaju (), Jagannadha Pawan Tamvada (), Sharin McDowall-Emefiele () and Raymond Swaray ()
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Tolu Olarewaju: Keele University
Jagannadha Pawan Tamvada: Kingston University
Sharin McDowall-Emefiele: University of Birmingham
Raymond Swaray: University of Hull

Review of Managerial Science, 2025, vol. 19, issue 6, No 1, 1599-1635

Abstract: Abstract We examine regional differences in how generalized trust and relation centrism influence how 16,785 firms across 20 lower- and middle-income countries perceive corruption as a business obstacle. Using the machine learning method LASSO, our empirical findings indicate that higher out-group generalized trust is associated with increased perceptions of corruption hindering business operations. Conversely, higher in-group friend centrism aligns with reduced perceptions of corruption as an obstacle. Interestingly, regional disparities highlight that family centrism generally outweighs friend centrism in firms' perceptions of corruption obstacles. Furthermore, while legal institutional and regulatory quality partly mitigate this effect, political stability consistently plays the most significant role in weakening this association.

Keywords: Business; Corruption; Governance; Norms; Social; Values (search for similar items in EconPapers)
JEL-codes: A13 D73 G3 M1 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11846-024-00802-9

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