Obedience or escape: Examining the contingency influences of corruption on firm exports

Abstract

This article examines the relationship between corruption and export in emerging economies. Considering the institution-based view (IBV) and the specificities of emerging markets, we propose a U-shaped relationship between firm corruption and exports. A moderate level of corruption may dampen firms' inclination to export, but excessive expenditures on corruption will drive firms to resort to an export strategy as a way to escape institutional constraints and inefficiencies in their home markets. We further examine the moderating roles of political instability, regulatory burden, and threats of competition from the informal sector in the relationship between corruption and export. Based on a multi-country sample of firms from emerging economies, our empirical results confirm a U-shaped relationship between firms' corruption and exports and show that in a business environment with high levels of political instability, regulatory burden or threats of competition from the informal sector, the relationship between corruption and exportation is strengthened to varying degrees.