Greasing, rent-seeking bribes and firm growth: evidence from garment and textile firms in Vietnam
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Greasing, rent-seeking bribes and firm growth: evidence from garment and textile firms in Vietnam Thang V. Nguyen 1
& Ngoc
T. B. Le 2 & Ha L. H. Dinh 3 & Huong T. L. Pham 3
# Springer Nature B.V. 2020
Abstract Empirical studies on firm bribery do not distinguish different types of bribes. This obscures the complexity of bribes and contributes to the inconclusive findings on firm bribe–performance relationships. This study examines how greasing and rent-seeking bribes relate to firm growth in Vietnam. Based on data from a sample of garment and textile firms, the research shows that greasing bribes have a positive relationship with firm growth. By contrast, the relationship between rent-seeking bribes and firm growth is positive for state-owned firms, but not clear for private firms. The results suggest that anti-corruption strategies need to address the multifaceted nature of corruption.
Introduction What types of bribes do firms pay? How do these types of bribes relate to firm growth? Despites theoretical recognition that bribes (and corruption) can come in different forms [1–8], empirical research on corruption at the firm level often aggregates all types of bribes into one category. This approach overlooks the varied dynamics inherent to different types of bribes. This also obscures the complexity of bribe–
* Thang V. Nguyen [email protected] Ngoc T. B. Le [email protected] Ha L. H. Dinh [email protected] Huong T. L. Pham [email protected]
1
Institute for Sustainable Development, National Economics University, Hanoi, Vietnam
2
NEU Business School, National Economics University, Hanoi, Vietnam
3
National Economics University, Hanoi, Vietnam
Nguyen T. V. et al.
performance relationships and, arguably, contributes to the inconclusive findings in the literature regarding these relationships [9–11]. This paper addresses this problem by distinguishing greasing and rent-seeking bribes and examining how these types of bribes relate to firm growth. In the first type, a firm pays bribes to public officials to access standard administrative and public services that they are entitled to by law [1]. This type of payment acts as an additional cost to the firm, but does not exclude other firms from accessing the same services. In rent-seeking bribes, a firm pays bribes specifically to win a competition for access to an exclusive service, such as government contracts or business licenses in restricted areas. This type of payment, if successful, excludes potential competitors from the activity, and is aimed at generating net benefits for the firm in the form of rents. These two basic forms of corruption have different purposes, follow different logics, and yet are often merged together into a single metric by analysts of corruption. We ask two questions in this research, including 1) How do greasing and rentseeking bribes relate to firm growth? and 2) Are these relationships moderated by firm ownership? We develop a model linking firm ownership, greasing and rentseeking bribes with firm growth. The
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