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Corruption, Bribery and Innovation in CEE: Where is the Link?

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Abstract

This study investigates the influence of formal and informal institutions on firm innovation in transitional economies of Central and Eastern Europe (CEEs) by explicitly differentiating between corruption and bribery as distinct informal institutions. We integrate institutional theory and legitimacy theory to explain that the failure of formal institutions creates an environment of corruption which encourages firms to use bribes to facilitate economic exchange. We test our hypotheses on the innovation performance of a sample (n = 1603) of firms in 11 CEEs. The results show that weak rule of law and ineffective business regulations in CEEs propagate the perception of corruption that inhibits firm innovation. However, the use of bribery enables firms to transform this environment of corruption into innovation outcomes. The policy and managerial implications of our research for differentiating between corruption and bribery and our findings that bribery acts as the glue that binds formal and informal institutions are fully discussed.

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Authors and Affiliations

  1. Deakin University - Melbourne Burwood Campus, Melbourne, VIC, Australia

    Doren Chadee & Banjo Roxas

  2. Torrens University Australia, Flinders Street, Melbourne, VIC, Australia

    Alexandre Kouznetsov

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  1. Doren Chadee
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  2. Banjo Roxas
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Correspondence to Doren Chadee.

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It is with great sadness that we dedicate this paper in memory of our dear friend and colleague Dr Alexandre Kouznetsov who suddenly and unexpectedly passed away in 2020. A native of Russia, Alex was a brilliant scholar who was passionate about Russian history, institutions and geo-politics. He will be fondly missed by his friends, colleagues and students for his selflessness and enthusiasm for teaching and research in international business.

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Chadee, D., Roxas, B. & Kouznetsov, A. Corruption, Bribery and Innovation in CEE: Where is the Link?. J Bus Ethics 174, 747–762 (2021). https://doi.org/10.1007/s10551-021-04925-x

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