Strong Firms Lobby, Weak Firms Bribe: A Survey-Based Analysis of the Demand for Influence and Corruption

35 Pages Posted: 16 Nov 2009

See all articles by Morten Bennedsen

Morten Bennedsen

INSEAD - Economics and Political Sciences; University of Copenhagen - Department of Economics

Sven E. Feldmann

Melbourne Business School

David Dreyer Lassen

University of Copenhagen - Department of Economics

Date Written: November 9, 2009

Abstract

We use survey responses by firms to examine the firm-level determinants and effects of political influence, their perception of corruption and prevalence of bribe paying. We find that: (a) measures of political influence and corruption/bribes are uncorrelated at the firm level; (b) firms that are larger, older, exporting, government-owned, are widely held and/or have fewer competitors have more political influence, perceive corruption to be less of a problem and pay bribes less often; (c) influence increases sales and government subsidies and in general makes the firm have a more positive view on the government. In sum, we show that strong firms use their influence to bend laws and regulations, whereas weak firms pay bribes to mitigate the costs of government intervention.

Keywords: Lobbying, corruption, political influence, governance

JEL Classification: D72, D73, G38, O17

Suggested Citation

Bennedsen, Morten and Feldmann, Sven E. and Lassen, David Dreyer, Strong Firms Lobby, Weak Firms Bribe: A Survey-Based Analysis of the Demand for Influence and Corruption (November 9, 2009). Available at SSRN: https://ssrn.com/abstract=1503028 or http://dx.doi.org/10.2139/ssrn.1503028

Morten Bennedsen

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Sven E. Feldmann (Contact Author)

Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia
+61 3 9349 8171 (Phone)
+61 3 9349 8144 (Fax)

David Dreyer Lassen

University of Copenhagen - Department of Economics ( email )

Studiestraede 6
DK 1455 Copenhagen
Denmark
+45 3532 4412 (Phone)
+45 3532 4444 (Fax)

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