Distinguishing Two Types of Corruption Behaviors: An Empirical Study of Chinese and Indian Firms

Abstract

While a large number of scholars has started paying more attention to firms’ corruptive behaviors, extant literature regards all corruption in a uniform manner thereby neglecting the fact that there may exist multiple types of corruptive behaviors driven by different motors. In this study, we distinguish between “collusive” (by which a firm proactively provides informal payments and/or gifts to government officials for its strategic/tactical purposes) and “coercive” (by which a firm is forced to provide informal payments and/or gifts to government officials to continue its business) corruptive behaviors. We develop theoretical arguments to account for each type of corruption separately, using institutional theory, agency theory, and behavioral theory of the firm. The empirical analysis with data from 6673 firms in China and India provide results that provide support for most of our theoretical hypotheses. Our study contributes to the literature by disentangling the finer nuances of firm corruption and cla...