The Dark Side of Enterprise Performance in Transition Economies: Corruption an Obstacle or a Second Best Solution?
Topalli, Margerita
The Dark Side of Enterprise Performance in Transition Economies: Corruption an Obstacle or a Second Best Solution? - 2023.
56
This research paper examines the relationship between corruption, privatization, security costs, and enterprise performance in the Central, Eastern, and South-Eastern Europe (CESEE) region. Using firm-level panel data from the Business Environment and Enterprise Performance Survey (BEEPS) covering 19 transition economies over the period 2002-2019, the study investigates the impact of corruption on enterprise performance while controlling for firm and country characteristics.The findings reveal a negative association between corruption and enterprise performance, indicating that corruption acts as a significant obstacle to firms’ growth and profitability. The results also show that foreign-owned enterprises and those established from state-owned enterprises exhibit improved economic performance compared to domestic and non-privatized enterprises. Moreover, there is a positive relationship between security costs paid by firms and their economic performance, suggesting that investing in security measures can mitigate the negative impact of corruption on business performance.The findings underscore the importance of addressing corruption, promoting a level playing field for all types of enterprises, and creating a transparent and secure business environment. Policymakers should focus on effective anti-corruption measures, enforcement of laws, and the development of institutions that promote transparency and accountability. These efforts can lead to enhanced firm performance, economic growth, reduced income inequality, and improved societal well-being.
The Dark Side of Enterprise Performance in Transition Economies: Corruption an Obstacle or a Second Best Solution? - 2023.
56
This research paper examines the relationship between corruption, privatization, security costs, and enterprise performance in the Central, Eastern, and South-Eastern Europe (CESEE) region. Using firm-level panel data from the Business Environment and Enterprise Performance Survey (BEEPS) covering 19 transition economies over the period 2002-2019, the study investigates the impact of corruption on enterprise performance while controlling for firm and country characteristics.The findings reveal a negative association between corruption and enterprise performance, indicating that corruption acts as a significant obstacle to firms’ growth and profitability. The results also show that foreign-owned enterprises and those established from state-owned enterprises exhibit improved economic performance compared to domestic and non-privatized enterprises. Moreover, there is a positive relationship between security costs paid by firms and their economic performance, suggesting that investing in security measures can mitigate the negative impact of corruption on business performance.The findings underscore the importance of addressing corruption, promoting a level playing field for all types of enterprises, and creating a transparent and secure business environment. Policymakers should focus on effective anti-corruption measures, enforcement of laws, and the development of institutions that promote transparency and accountability. These efforts can lead to enhanced firm performance, economic growth, reduced income inequality, and improved societal well-being.
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