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The impact of petty corruption on firm innovation in Vietnam

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Abstract

Corruption has been found to have complex effects on firm innovation. Limited theoretical and empirical evidence to date has been rather inconclusive. This study employs econometric estimation techniques to analyze data from small and medium manufacturing enterprises in Vietnam to assess the impact of petty corruption on firm innovation. The empirical results tend to support the “greasing” impact of corruption on innovation. Specifically, informal payments by Vietnamese firms are shown to encourage overall innovation, product improvement, innovation and new innovation. In view of the commonplace business practice of paying small informal fees to speed up transactions in the inefficient public sector in Vietnam, this finding is not entirely unexpected, though troubling.

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Notes

  1. The high costs of tax compliance in terms of time have been highlighted, for example, in: http://baobaohiemxahoi.vn/vi/tin-chi-tiet-thu-tuong-chinh-phu-chi-dao-ve-cai-cach-thu-tuc-hanh-chinh-thue-bhxh-a7d518cb.aspx

  2. The questionnaire contains three important items asking about a firm’s innovation activities during the last three years: (i) Has the firm introduced new product groups; (ii) Has the firm introduced new production processes; and (iii) Has the firm made any improvements of existing products.

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Acknowledgments

The authors would like to thank Lien Nguyen, Edmund Malesky, the conference and symposium organizers and participants, and the guest editors of this special issue for their valuable comments.

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Authors and Affiliations

  1. Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam

    Ngoc Anh Nguyen, Quang Hung Doan & Ngoc Minh Nguyen

  2. IPAG Business School, Paris, France

    Ngoc Anh Nguyen

  3. Foreign Trade Univesity, Hanoi, Vietnam

    Quang Hung Doan

  4. RMIT International University, Ho Chi Minh City, Vietnam

    Binh Tran-Nam

  5. University of New South Wales Australia, Sydney, Australia

    Binh Tran-Nam

Authors
  1. Ngoc Anh Nguyen
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  2. Quang Hung Doan
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  3. Ngoc Minh Nguyen
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  4. Binh Tran-Nam
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Corresponding author

Correspondence to Ngoc Anh Nguyen.

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Financial support

Financial support from the Department for International Development (DFID) Vietnam is also gratefully acknowledged. The views expressed in this article are those of the authors and do not necessarily reflect those of DFID Vietnam or DEPOCEN.

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Nguyen, N.A., Doan, Q.H., Nguyen, N.M. et al. The impact of petty corruption on firm innovation in Vietnam. Crime Law Soc Change 65, 377–394 (2016). https://doi.org/10.1007/s10611-016-9610-1

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