Corruption and corporate innovation in Tunisia during an economic downturn

Abstract

This article studies the innovation behavior of the Tunisian firms using the database collected by the World Bank Enterprise Surveys in 2020. The modeling strategy used allowed us to assess the adequacy of the main regression models and the robustness of the results. Besides the firms’ characteristics, we highlight the role of institutions by considering the infrastructure and corruption that affect the firms’ incentives to innovate. We show that the firm innovation is negatively related to the gifts or informal payments to public officials to gain advantages in the drafting of laws, decrees, regulations or other binding government decisions. Petty corruption, by officials at lower levels, can grease the wheels of innovation activities, speed up the procedures for obtaining the required administrative permits and “get things done”, since the Tunisian economy is characterized by a relatively mediocre quality of governance.