Revisiting the relationship between corruption and innovation in developing and emerging economies

  • Muhammad Faraz RiazEmail author
  • Uwe Cantner


This study estimates the relationship of institutional (judicial and political) and monetary (petty and grand) dimensions of corruption with six different types of innovations. Using cross country firm level data from World Bank Enterprise Survey for 16 developing and emerging economies, the study reveals that, in most of the cases, monetary dimensions of corruption grease the wheels of the innovations involving interactions with public offices and have an insignificant or negative association in opposite cases. Results show that corruption is disproportionately associated with the innovative activities of firms operating in different industrial groups devised as per Castellacci (Research Policy, 37(6), 978–994, 2008). Interestingly, both monetary dimensions of corruption are positively correlated with major innovation indicators in SMEs. Large firms are more the victims of the monetary corruption. Furthermore, innovation in the services sector is more harmed by petty corruption than is innovation in the manufacturing sector. Services firms seem to be taking advantage of grand corruption. Judicial corruption is found to be positively associated with most of the innovation indicators, highlighting the loopholes in the judicial system. Moreover, political corruption benefits both SMEs and large firms in most of their innovative activities. In the end, the study provides important policy insights from the analysis.

Subject classification codes

D02 D22 D23 L25 L60 L80 O30 


Supplementary material

10611_2019_9867_MOESM1_ESM.pdf (733 kb)
ESM 1 (PDF 733 kb)


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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Faculty of Economics and Business AdministrationFriedrich Schiller University JenaJenaGermany
  2. 2.GC University FaisalabadFaisalabadPakistan
  3. 3.Department of Marketing and ManagementUniversity of Southern DenmarkOdenseDenmark

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