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Greasing the Wheels of Change: Bribery, Institutions, and New Product Introductions in Emerging Markets

By: Krammer, Sorin M. S.
Material type: materialTypeLabelBookDescription: 1889–1926 p.Subject(s): Corruption | Innovation | New products | Emerging economies In: DEBORAH E. RUPP JOURNAL OF MANAGEMENTSummary: Despite the consensus on the negative country-level implications of corruption, its consequences for firms are less understood. This study examines the effect of bribery on the innovative performance of firms in emerging markets as reflected by new product introductions. I argue that bribery may help innovators in these markets to introduce new products by overcoming bureaucratic obstacles, compensating for the lack of kinship or political affiliations, and hedging against political risk. I also propose that the relationship between firm bribery and new product introduction will be negatively moderated (i.e., weakened) by the quality of the formal and informal institutions in place. Employing data from over 6,000 firms in 30 emerging markets and a wide range of empirical tests, my results support these hypotheses. These findings extend transaction costs economics by showing that bureaucratic obstacles and uncertainty can drive firms into illegal cost minimization strategies. Moreover, they augment institutional theory by expounding upon the ways that norms and informal practices moderate the efficiency of firm strategies in emerging markets.
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Item type Current location Call number Vol info Status Notes Date due Barcode Item holds
Journal Article Journal Article Main Library
Vol 45, Issue 5/ 55510586JA5 (Browse shelf) Available 55510586JA5
Journals and Periodicals Journals and Periodicals Main Library
On Display
JRN/MGT/Vol 45, Issue 5/55510586 (Browse shelf) Vol 45, Issue 5 (01/05/2019) Not for loan May, 2019 55510586
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Despite the consensus on the negative country-level implications of corruption, its consequences for firms are less understood. This study examines the effect of bribery on the innovative performance of firms in emerging markets as reflected by new product introductions. I argue that bribery may help innovators in these markets to introduce new products by overcoming bureaucratic obstacles, compensating for the lack of kinship or political affiliations, and hedging against political risk. I also propose that the relationship between firm bribery and new product introduction will be negatively moderated (i.e., weakened) by the quality of the formal and informal institutions in place. Employing data from over 6,000 firms in 30 emerging markets and a wide range of empirical tests, my results support these hypotheses. These findings extend transaction costs economics by showing that bureaucratic obstacles and uncertainty can drive firms into illegal cost minimization strategies. Moreover, they augment institutional theory by expounding upon the ways that norms and informal practices moderate the efficiency of firm strategies in emerging markets.

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