Does Corruption Grease or Sand the Wheels of Investment or Innovation? Different Effects in Advanced and Emerging Economies

49 Pages Posted: 5 Apr 2019 Last revised: 8 Feb 2021

See all articles by Yuna Heo

Yuna Heo

Rutgers Business School - Rutgers University

Fangfang Hou

Hong Kong Polytechnic University

Seongkyu Gilbert Park

Willamette University

Date Written: February 20, 2019

Abstract

We assess different effects of corruption on corporate activities depending on whether a firm operates in an advanced or emerging economy. In emerging economies, greater corruption is related to greater capital expenditures. In advanced economies, greater corruption is positively related to innovation. However, we do not find significant results regarding investment for advanced economies or regarding innovation for emerging economies. Our findings suggest that corruption leads firms to take more action in the areas that the economy has a competitive edge in.

Keywords: corruption; corporate investment; innovation; emerging markets; advanced economies

Suggested Citation

Heo, Yuna and Hou, Fangfang and Park, Seongkyu, Does Corruption Grease or Sand the Wheels of Investment or Innovation? Different Effects in Advanced and Emerging Economies (February 20, 2019). Available at SSRN: https://ssrn.com/abstract=3353254 or http://dx.doi.org/10.2139/ssrn.3353254

Yuna Heo (Contact Author)

Rutgers Business School - Rutgers University ( email )

Fangfang Hou

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

Seongkyu Park

Willamette University ( email )

900 Salem Street
Salem, OR 97306
United States

HOME PAGE: http://https://sites.google.com/site/skgilbertpark/

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