Bribery in emerging economies: an integration of institutional and non-market position perspective

In this paper we build on the residual control theory and examine the interdependence of countries' institutional environment and firms' nonmarket positions towards firm corruption. Based on World Bank data from emerging economies spanning from 2006 to 2018, we find that the interaction between lower quality market-supporting institutions and firm's weaker positions makes firms more vulnerable to bribery requests, consequently leading to their involvement in bribery. This mediated interaction effect occurs due to the interplay between the demand- and supply-side of corruption, highlighting how firms' relative nonmarket positions and the institutional context jointly shape the firms' incentive for bribery activities.