THE IMPACTS OF CORRUPTION ON FIRM PERFORMANCE: SOME LESSONS FROM 40 AFRICAN COUNTRIESBUSINESS ENVIRONMENT – AN ECONOMETRIC ANALYSIS OF BUSINESS DECISIONS IN GHANA
Vol. Volume 21, Number 4 December/2016
Colin C. Williams & Abbi M. Kedir
The current evidence-base regarding the impacts of corruption on firm performance is based largely on studies of individual countries and contains mixed results. The aim of this paper, therefore, is to achieve a better insight into this relationship by reporting the results of a firm-level analysis of the impacts of corruption on firm performance using World Bank Enterprise Survey (WBES) data across 40 African countries. The clear result is that corruption significantly enhances rather than harms annual sales, employment and productivity growth rates. The outcome is to re-theorize participation in acts of corruption as beneficial for the individual firms engaged in such activity, whilst recognizing the wider evidence that this is not an optimal strategy at the aggregate country level. The outcome will be to advance knowledge about how corruption needs to be tackled. To eliminate corruption, it is here shown to be necessary for public authorities to recognize that corruption is an efficient strategy at the firm level and to adopt measures to alter the cost/benefit ratio confronting individual enterprises, and at the same time, to address the country-level formal institutional deficiencies that characterize many developing countries and result in the prevalence of corruption.
entrepreneurship; corruption; bribery; firm performance; institutional theory; development economics; Africa.