What Firms Must Pay Bribes and How Much? An Empirical Study of Small and Medium Enterprises in Vietnam

Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 9978)

Abstract

This paper uses panel data from the Small and Medium Enterprise Survey in Vietnam from 2005 to 2013 to investigate the incidence and size of corruption in Vietnam. The Heckman’s two-step model is employed to take into account censored nature of the data on bribes and sample selection bias. We find strong evidence that the propensity to bribe as well as bribe amounts are highly positively correlated with interaction level with government officials, firms’ ability to pay, and regulatory-type burdens imposed on firms. In addition, firms without official business registration licenses are more likely to avoid paying the informal costs. These results are robust when lagged values of profit are used as instruments for profit.

Keywords

Bribery Government bureaucrats Small and medium enterprises 

JEL Codes

C34 D22 G38 

References

  1. Amundsen, I.: Political corruption: an introduction to the issues. CMI Working Paper (1999)Google Scholar
  2. Batra, G., Kaufmann, D., Stone, A.: Investment Climate Around the World: Voices of the Firms from the World Business Environment Survey. World Bank, Washington, DC (2003)Google Scholar
  3. Beck, T., Demirguc-Kunt, A.S.L.I., Maksimovic, V.: Financial and legal constraints to growth: does firm size matter? J. Finan. 60(1), 137–177 (2005)CrossRefGoogle Scholar
  4. Bennedsen, M., Feldmann, S.E., Lassen, D.D.: Strong Firms Lobby, Weak Firms Bribe: A Survey-Based Analysis of the Demand for Influence and Corruption (2009)Google Scholar
  5. Cameron, A.C., Trivedi, P.K.: Microeconometrics with Stata. Stata Press, Texas (2009)MATHGoogle Scholar
  6. Dabla-Norris, E., Koeda, J.: Informality and bank credit: evidence from firm-level data. IMF Working Papers WP/08/94 (2008)Google Scholar
  7. Grosse, R.: The bargaining relationship between foreign MNEs and host governments in Latin America. Int. Trade J. 10(4), 467–499 (1996)CrossRefGoogle Scholar
  8. Harstad, B., Svensson, J.: Bribes, lobbying, and development. Am. Polit. Sci. Rev. 105(01), 46–63 (2011)CrossRefGoogle Scholar
  9. Heckman, J.J.: Sample selection bias as a specification error. Econometrica 47(1), 153–161 (1979)MathSciNetCrossRefMATHGoogle Scholar
  10. Hellman, J., Schankerman, M.: Intervention, corruption and capture: the nexus between enterprises and the state. Econ. Transit. 8(3), 545–576 (2000)CrossRefGoogle Scholar
  11. Hillman, A.J.: Politicians on the board of directors: do connections affect the bottom line? J. Manage. 31(3), 464–481 (2005)MathSciNetGoogle Scholar
  12. Kobrin, S.J.: Testing the bargaining hypothesis in the manufacturing sector in developing countries. Int. Organ. 41(4), 609–638 (1987)CrossRefGoogle Scholar
  13. Lecraw, D.J.: Bargaining power, ownership, and profitability of transnational corporations in developing countries. J. Int. Bus. Stud. 15(1), 27–43 (1984)CrossRefGoogle Scholar
  14. Lee, S.H., Oh, K., Eden, L.: Why do firms bribe? Manage. Int. Rev. 50(6), 775–796 (2010)CrossRefGoogle Scholar
  15. Luo, Y.: Are joint venture partners more opportunistic in a more volatile environment? Strateg. Manage. J. 28(1), 39–60 (2007)CrossRefGoogle Scholar
  16. Malomo, F.: Factors influencing the propensity to bribe and size of bribe payments: evidence from formal manufacturing firms in West Africa. In: Pacific Conference For Development Economics (2013)Google Scholar
  17. Mbaku, J.M.: Bureaucratic corruption as rent-seeking behavior. Konjunkturpolitik 38(4), 247–265 (1992)Google Scholar
  18. Pfeffer, J., Salancik, G.: The External Control of Organizations, A Resource Dependence Perspective. Harper and Row, New York (1978)Google Scholar
  19. Rand, J., Tarp, F.: Firm-level corruption in Vietnam. Econ. Dev. Cult. Change 60(3), 571–595 (2012)CrossRefGoogle Scholar
  20. Rohwer, A.: Measuring corruption: a comparison between the transparency international’s corruption perceptions index and the world bank’s worldwide governance indicators. CESifo DICE Rep. 7(3), 42–52 (2009)Google Scholar
  21. Svensson, J.: Who must pay bribes and how much? Evidence from a cross section of firms. Q. J. Econ. 118(1), 207–230 (2003)CrossRefMATHGoogle Scholar
  22. Tanzi, V.: Corruption around the world: causes, consequences, scope, and cures. IMF Staff Pap. 45(4), 559–594 (1998)CrossRefGoogle Scholar
  23. TI (Transparency International): Global Corruption Report (2014)Google Scholar
  24. UNCTAD: World Investment Report 2006: Transnational Corporations and the Internationalization of R&D. New York and Geneva, United Nations (2006)Google Scholar
  25. VCCI: The Provincial Competitiveness Index (PCI) 2014. Labour Publishing House, Hanoi (2015)Google Scholar
  26. Vernon, R.: Sovereignty at Bay: The Multinational Spread of US Enterprises. Basic Books, New York (1971)Google Scholar
  27. World Bank: Governance and Anticorruption. World Bank, Washington, DC (2011b)Google Scholar

Copyright information

© Springer International Publishing AG 2016

Authors and Affiliations

  1. 1.University of DanangKontumVietnam
  2. 2.International University - VNU HCMCHo Chi Minh CityVietnam

Personalised recommendations