The effect of market competition on bribery in emerging economies: An empirical analysis of Vietnamese firms

Abstract

© 2020 Elsevier Ltd Studies of firm bribery have not fully examined how market competition conditions the effects of social norms on firms’ bribe payments. We suggest that firms pay bribes to obtain abnormal rents and/or to conform to accepted rules of corruption. These motivations operate differently, depending on the level of market competition. Using data from an annual survey of 10,000 Vietnamese firms between 2006 and 2017, we find that in environments characterized by open competition, bribery is positively associated with long-standing norms in the business social context, while in closed-competition environments, bribe payments are functions of rents that accrue from uncertainty in policy-making.