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Market-Based Solutions to Vital Economic Issues
Research
Feb 1, 2013

Social Networks and Bribery: The Case of Entrepreneurs in Eastern Europe

Abstract

Using a survey of new firms in Poland, Romania, and Slovakia, I explore how an entrepreneur’s social networks affect the amount paid in bribes to government officials. Lower levels of bribe payments are associated with ownership by a former manager of a state-owned enterprise (SOE), with being a spin-off from a SOE, and with trade association membership. The results also suggest that these networks have a larger impact on bribe payments than do firm characteristics such as profits, sales, or resale value. For the average firm, having a former SOE manager as an owner can be expected to reduce bribe payments by over 50%, while, by contrast, doubling the firm’s profits results in only a 7% increase in bribe payments.

Citation

Chavis, L. (2013). Social networks and bribery: The case of entrepreneurs in Eastern Europe. Journal of Comparative Economics, 41(1), 279-293. doi:10.1016/j.jce.2012.11.002


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