Bribery and firm survival in Vietnam: Moderating effects of market competition, credit, and institutional constraints

Abstract

AbstractThis paper examines the relationship between bribery and firm survival when facing different levels of market competition, credit constraints, and other institutional limitations. Using panel data from surveys of small‐ and medium‐sized enterprises in Vietnam over a 10‐year period and a semi‐parametric Cox proportional hazards model approach, we provide empirical support for the “greasing‐the‐wheels” hypothesis of firm survival. Effects are found to be more pronounced for formally registered and larger firms, explained by their greater bargaining power vis‐à‐vis public officials. Moreover, bribery as a “risk‐of‐exit” reducing strategy is found only for firms not institutionally or financially constrained and for firms operating in sectors with low levels of competition.