The impact of petty corruption on firm innovation in Vietnam
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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.
KeywordsProcess Innovation Product Innovation Foreign Firm Informal Payment Firm Innovation
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.
Compliance with Ethical Standards
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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