The impact of corruption on the performance of newly established enterprises: empirical evidence from a transition economy

Vu Hoang Nam, Hiep Ngoc Luu, Minh Ngoc Nguyen, Duong Anh Nguyen

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    2 Citations (Scopus)
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    Abstract

    This paper investigates the effects of corruption on the performance of newly established enterprises. Using longitudinal data from enterprise surveys containing virtually all firms over the period from 2011 to 2015 in Vietnam, we find that corruption deteriorates firm financial performance, and subsequently exposes them to a greater failure probability. We further find that, while corruption imposes more harmful effects on the performance and survival of private domestic firms, it exerts no significant impact on state-owned firms. On the other hand, foreign firms are also able to take advantage of corruption to enhance their performance and survivability. In addition, our results suggest that the more mature firms are better at dealing with corruption and can eventually take advantage of it to enhance their performance. The results are robust after various model specifications as well as alternative classifications of newly established firms.
    Original languageEnglish
    Pages (from-to)383-395
    Number of pages13
    JournalBorsa Istanbul Review
    Volume20
    Issue number4
    Early online date8 Jun 2020
    DOIs
    Publication statusPublished - Dec 2020

    Keywords

    • Corruption
    • Newly established firms
    • Performance
    • Failure
    • Transition countries
    • Vietnam

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