Prague Economic Papers 2018, 27(3):251-269 | DOI: 10.18267/j.pep.647

Corruption - A Dark Side of Entrepreneurship. Corruption and Innovations

Marek Tomaszewski
Department of Innovation and Entrepreneurship, University of Zielona Gora

In this article, corruption is treated as an expression of human entrepreneurship, which does not fully fit in the commonly accepted moral and legal standards. Despite being negatively perceived, it is persistently present in the public, economic and political life of every country as evidenced by a number of press releases on corruption.
Research literature analysis reveals the existence of two conflicting opinions with regard to the way in which corruption affects innovative activity of companies and economic growth. The more morally correct theory, which can be dubbed the sand-the-wheels theory, assumes that corruption negatively influences innovative activity and economic growth. Whereas, the grease-the-wheels theory, which is inconsistent with the principles of social responsibility of business, argues for the positive influence of corruption on innovative activity of companies and economic growth. This article is a voice in that discussion.

Keywords: corruption, entrepreneurship, the sand-the-wheels theory, the grease-the-wheels theory, innovations, economic growth
JEL classification: D23, D73, L26, O31, O32, O38

Published: June 1, 2018  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Tomaszewski, M. (2018). Corruption - A Dark Side of Entrepreneurship. Corruption and Innovations. Prague Economic Papers, 27(3), 251-269. doi: 10.18267/j.pep.647
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Backer, G. S. (1983). The Theory of Competition among Pressure Groups Form Political Influence. Quarterly Journal of Economics, 98(3), 371-400, http://doi.org/10.2307/1886017 Go to original source...
    2. Bardhan, P. (1997). Corruption and Development: A Review of Issues. Journal of Economic Literature, 35(3), 1320-1346
    3. Beck, P. J., Maher, M. W. (1986). A Comparison of Bribery and Bidding in Thin Markets. Economics Letters, 20(1), 1-5, http://doi.org/10.1016/0165-1765(86)90068-6 Go to original source...
    4. Beck, T., Demirguc-Kunt, A., Maksimovic, V. (2005). Financial and Legal Constraints to Firm Growth: Does Firm Size Matter? Journal of Finance, 60(1), 137-177, http://doi.org/10.1111/j.1540-6261.2005.00727.x Go to original source...
    5. Blackburn, K. (2012). Corruption and Development: Explaining the Evidence. The Manchester School, 80(4), 401-428, http://doi.org/10.1111/j.1467-9957.2012.02314.x Go to original source...
    6. Blackburn, K., Powell, J. (2011). Corruption, Inflation and Growth. Economics Letters, 113(3), 225-227, https://doi.org/10.1016/j.econlet.2011.06.015 Go to original source...
    7. Börzel, T. A, van Hüllen, V. (2014). State-Building and the European Union's Fight against Corruption in the Southern Caucasus: Why Legitimacy Matters. Governance: An International Journal of Policy, Administration, and Institutions, 27(4), 613-634, http://doi.org/10.1111/gove.12068 Go to original source...
    8. Brunetti, A., Weder, B. (1998). Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures. Weltwirtschaftliches Archiv, 134(3), 513-533, http://doi.org/10.1007/bf02707928 Go to original source...
    9. Chang, J.-J., Lu, H-Ch., Tsai, H-F (2015). Corruption, Growth, and Increasing Returns to Production Specialization. International Journal of Economic Theory, 11(3), 329-345, http://doi.org/10.1111/ijet.12067 Go to original source...
    10. Cosenz, F., Noto, G. (2014). Dynamic Simulation Approach to Frame Drivers and Implications of Corruption Practices on Firm Performance. European Management Review, 11(3-4), 239-257, http://doi.org/10.1111/emre.12037 Go to original source...
    11. Dai, M., Sidiropoulos, M., Spyromitros, E. (2015). Fiscal Policy, Institutional Quality and Central Bank Transparency. The Manchester School, 83(5), 523-545, September, http://doi.org/10.1111/manc.12067 Go to original source...
    12. De La Croix, D., Elavallade, C. (2011). Democracy, Rule of Law, Corruption Incentives, and Growth. Journal of Public Economic Theory Democracy, 13(2), 155-187, https://doi.org/10.1111/j.1467-9779.2011.01497.x Go to original source...
    13. de Vaal, A., Ebben, W. (2011). Institutions and the Relation between Corruption and Economic Growth. Review of Development Economics, 15(1), 108-123, http://doi.org/10.1111/j.1467-9361.2010.00596.x Go to original source...
    14. Donadelli, M., Fasan, M., Magnanelli, B. S. (2014). The Agency Problem, Financial Performance and Corruption: Country, Industry and Firm Level Perspectives. European Management Review, 11(3-4), 259-272, http://doi.org/10.1111/emre.12038 Go to original source...
    15. Du, J. (2008). Corruption and Corporate Finance Patterns: An International Perspective. Pacific Economic Review, 13(2), 183-208, http://doi.org/10.1111/j.1468-0106.2008.00396.x Go to original source...
    16. Dzhumashev, R. (2016). The Role of Income Uncertainty in the Corruption-Growth Nexus. The B. E. Journal of Economic Analysis & Policy, 16(2), http://doi.org/10.1515/bejeap-2015-0056 Go to original source...
    17. Frye, T. (2002). Capture or Exchange? Business Lobbying in Russia. Europe-Asia Studies, 54(7), 1017-1036, http://doi.org/10.1080/0966813022000017113 Go to original source...
    18. Gaitonde, R., Oxman, A. D., Okebukola, P. O., Rada, G. (2016). Interventions to Reduce Corruption in the Health Sector. Cochrane Database of Systematic Reviews, (8), http://doi.org/10.1002/14651858.CD008856.pub2 Go to original source...
    19. Habiyaremye, A., Raymond, W. (2013). Transnational Corruption and Innovation in Transition Economies. UNU-MERIT. Working Paper No. 50.
    20. Haque, M. E., Kneller, R. (2015). Why Does Public Investment Fail to Raise Economic Growth? The Role of Corruption. The Manchester School, 83(6), 623-651, http://doi.org/10.1111/manc.12068 Go to original source...
    21. Hellman, J. S., Geraint, J., Kaufmann, D. (2003). Seize the State, Seize the Day: State Capture and Influence in Transition Economies. Journal of Comparative Economy, 31(4), 751-773, http://doi.org/10.1016/j.jce.2003.09.006 Go to original source...
    22. Huntington, S. P. (1968). Political Order in Changing Societies. New Haven, CT: Yale University Press. ISBN 9780300011715.
    23. Ivanyna, M., Moumouras, A., Rangazas, P. (2016). The Culture of Corruption, Tax Evasion, and Economic Growth, Economic Inquiry, 54(1), 520-542, January 2016, http://doi.org/10.1111/ecin.12228 Go to original source...
    24. Iwasaki, I., Suzuki, T. (2007). Transition Strategy, Corporate Exploitation, and State Capture: An Empirical Analysis of Former Soviet States. Communist and Post-Communist Studies, 40(4), 393-422, http://doi.org/10.1016/j.postcomstud.2007.10.001 Go to original source...
    25. Jesen, N. (2002). Economic Reform, State Capture, and International Investment in Transition Eco nomies. Journal of International Development, 14(7), 973-977, http://doi.org/10.1002/jid.937 Go to original source...
    26. Keig, D. L., Brouthers, L. E., Marshall, V. B. (2015). Formal and Informal Corruption Environments and Multinational Enterprise Social Irresponsibility. Journal of Management Studies, 52(1), Januar, 89-116, http://doi.org/10.1111/joms.12102 Go to original source...
    27. Kunieda, T., Okada, K., Shibata, A. (2016). Corruption, Financial Development and Economic Growth: Theory and Evidence from an Instrumental Variable Approach with Human Genetic Diversity. Economic Notes, 45(3), 353-392, https://doi.org/10.1111/ecno.12061 Go to original source...
    28. Leff, N. (1964). Economic Development through Bureaucratic Corruption. American Behavioral Scientist, 8(3), 8-14, http://doi.org/10.1177/000276426400800303 Go to original source...
    29. Leys, C. (1965). What Is the Problem about Corruption? Journal of Modern African Studies 3, Go to original source...
    30. in Heidenheimer, A. J., Johnston, M., LeVine, V. T., ed., (1989), Political Corruption: A Handbook. Oxford: Transaction Books.
    31. Lien D. H. D. (1986). A Note on Competitive Bribery Games. Economics Letters, 22(4), 337-341, http://doi.org/10.1016/0165-1765(86)90093-5 Go to original source...
    32. Loung, P. J., Weinhal, E. (2004). Contra Coercion: Russian Tax Reform, Exogenous Shock, and Negotiated Institutional Charge. The American Political Science Review, 98(1), 139-152, http://doi.org/10.1017/s0003055404001054 Go to original source...
    33. Luhmann, N. (1988). Familiarity, Confidence, and Trust: Problems and Alternatives, in Gametta, D., ed., Trust: Making and Breaking Cooperative Relations. Oxford: Basil Blackwell
    34. Luo, Y. (2005). An Organizational Perspective of Corruption. Management and Organization Review, 1(1), 119-154, https://doi.org/10.1111/j.1740-8784.2004.00006.x Go to original source...
    35. Maddala, G. S. (1983). Limited Dependent and Qualitative Variables in Econometrics. Cambridge: Cambridge University Press. Online ISBN 9780511810176, http://doi.org/10.1017/cbo9780511810176 Go to original source...
    36. Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712, August, http://doi.org/10.2307/2946696 Go to original source...
    37. Méon, P.-G., Sekkat, K. (2005). Does Corruption Grease or Sand the Wheels of Growth. Public Choice, January, 122(1), 69-97, http://doi.org/10.1007/s11127-005-3988-0 Go to original source...
    38. Mo, P. H. (2001). Corruption and Economic Growth. Journal of Comparative Economics, 29(1), 66-79, http://doi.org/10.1006/jcec.2000.1703 Go to original source...
    39. Montiel, I., Husted, B. W., Christmann, P. (2012). Using Private Management Standard Certification to Reduce Information Asymmetries in Corrupt Environments. Strategic Management Journal, 33(9), 1103-1113, http://doi.org/10.1002/smj.1957 Go to original source...
    40. Myrdal, G. (1968). Asian Drama: An Inquiry into the Poverty of Nations, Vol. II, New York: Pantheon.
    41. North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Online ISBN 9780511808678, http://doi.org/10.1017/cbo9780511808678 Go to original source...
    42. OECD (2005). Oslo Manual Proposed Guidelines for Collecting and Interpreting Technological Innovation Data, 3rd Edition, Organisation for Economic Co-operation and Development, http://doi.org/10.1787/9789264013100-en Go to original source...
    43. Paunov, C. (2016). Corruption's Asymmetric Impacts on Firm Innovation. Journal of Development Economics, 118, 216-231, http://doi.org/10.1016/j.jdeveco.2015.07.006 Go to original source...
    44. Pellegrini, L., Gerlagh, R. (2004). Corruption's Effect on Growth and its Transmission Chan-nels. KYKLOS, 57(3), 429-456, https://doi.org/10.1111/j.0023-5962.2004.00261.x Go to original source...
    45. Pillay, S., Kluvers, R. (2014). An Institutional Theory Perspective on Corruption: The Case of a Developing Democracy. Financial Accountability & Management, 30(1), 95-119, February, https://doi.org/10.1111/faam.12029 Go to original source...
    46. Rodriguez, P., Siegel, D. S., Hillman, A., Eden, L. (2006). Three Lenses on the Multinational Enterprise: Politics, Corruption, and Corporate Social Responsibility. Journal of International Business Studies, 37(6), 733-746, http://doi.org/10.1057/palgrave.jibs.8400229 Go to original source...
    47. Rose-Ackerman, S. (1975). The Economics of Corruption. Journal of Public Economics, 4(2), 187-203, http://doi.org/10.1016/0047-2727(75)90017-1 Go to original source...
    48. Rose-Ackerman, S. (1978). Corruption: A Study in Political Economy. New York: Academic, Ch. 5. ISBN 978-0125963503. Go to original source...
    49. Rose Ackerman, S. (1999). Corruption and Government. Causes, Consequences and Reform. Cambridge: Cambridge University Press. Online ISBN 9781139175098, http://doi.org/10.1017/cbo9781139175098 Go to original source...
    50. Shaw, P., Katsaiti, M. S., Jurgilas, M. (2011). Corruption and Growth under Weak Identification. Economic Inquiry, 49(1), 264-275, January, http://doi.org/10.1111/j.1465-7295.2009.00276.x Go to original source...
    51. Shleifer, A., Vishny, R. W. (1993). Corruption. Quarterly Journal of Economics, 108(3), 599-617, http://doi.org/10.2307/2118402 Go to original source...
    52. Stigler, G. J. (1971). The Theory of Economic Regulation. The Bell Journal of Economics and Management Science, 2(1), 3-21, http://doi.org/10.2307/3003160 Go to original source...
    53. Tanzi, V. (1995). Corruption, Arm's-Length Relationships, and Markets, in Fiorentini, G., Peltzman, S., ed., The Economics of Organised Crime. Cambridge: Cambridge University Press, http://dx.doi.org/10.1017/cbo9780511751882.014 Go to original source...
    54. Tanzi, V. (1998). Corruption around the World: Causes, Consequences, Scope and Cures. International Monetary Fund. Working Paper, http://doi.org/10.5089/9781451848397.001 Go to original source...
    55. Thede, S., Gustafson, N. A. (2012). The Multifaceted Impact of Corruption on International Trade. The World Economy, 35(5), 651-666, http://doi.org/10.1111/j.1467-9701.2012.01436.x Go to original source...
    56. Tomaszewski, M. (2015). Influence of Customer Pressure on the Innovative Activity of a Company. Argumenta Oeconomica, 2(35), 203-219 Go to original source...
    57. Tonoyan, V., Strohmeyer, R., Habib, M., Perlitz, M. (2010). Corruption and Entrepreneurship: How Formal and Informal Institutions Shape Small Firms Behavior in Transition and Mature Market Economies. Entrepreneurship Theory and Practice, 34(5), 803-831, http://doi.org/10.1111/j.1540-6520.2010.00394.x Go to original source...
    58. Ugur, M. (2014). Corruption's Direct Effects on per Capita Income Growth: A Meta-Analysis. Journal of Economic Surveys, 28(3), 472-490, http://doi.org/10.1111/joes.12035 Go to original source...
    59. Ullah, B., Wei, Z. (2013). ISO Certification, Corruption and Firm Performance: A Cross-Country Study, Unpublished manuscript.
    60. Vian, T., Brinkerhoff, D. W., Feeley, F. G., Salomon, M., Vien, N. T. K. (2012). Confronting Corruption in the Health Sector in Vietnam: Patterns and Prospects. Public Administration and Development, 32(1), 49-63, http://doi.org/10.1002/pad.1607 Go to original source...
    61. Villoria, M., Van Ryzin, G. G., Lavena, C. F. (2012). Social and Political Consequences of Administrative Corruption: A Study of Public Perceptions in Spain. Public Administration Review, 73(1), 85-94, http://doi.org/10.111/j.1540-6210.2012.02613.x Go to original source...
    62. Williamson, O. E. (1991). Comparative Economic Organization: An Analysis of Discrete Structural Alternatives. Administrative Science Quarterly, 36(2), 269-296, http://doi.org/10.2307/2393356 Go to original source...
    63. Zaloznaya, M. (2015). Does Authoritarianism Breed Corruption? Reconsidering the Relationship between Authoritarian Governance and Corrupt Exchanges in Bureaucracies. Law & Social Inquiry, 40(2), 345-376, http://doi.org/10.1111/lsi.12076 Go to original source...
    64. Zaloznaya, M. (2014). The Social Psychology of Corruption: Why It Does Not Exist and Why It Should. Sociology Compass, 8(2), 187-202, http://doi.org/10.1111/soc4.12120 Go to original source...
    65. http://ec.europa.eu/eurostat/statistics-explained/images/5/53/Gross_domestic_expenditure_on_R%26D%2C_2003%E2%80%9313_%28%25_of_GDP%29_YB15.png
    66. http://knoema.com/UNESCOISD2014Aug/unesco-institute-for-statistics-data-august-2014?location=1000020
    67. http://www.enterprisesurveys.org/Methodology/

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content