Political regime change and firm bribery

초록

The current study investigates the impact of a political regime change in Central, Eastern Europe and Central Asian (CEECA) countries on firm bribery. We argue that regime change prompts firms to increase bribery. In countries where governments wield significant control over important resources and where market institutions are less developed, a regime change can amplify firms' resource dependence on the state. This is because competition intensifies for government resources as the relevance of existing government relationships diminishes, and uncertainty in the 'rules of the game' heightens. In addition, the incoming government may demand higher bribes due to their recent assumption of power. We further examine the moderating effects of government contracts, subsidies, and firm performance that may influence firms' dependence on the government. Drawing from a survey dataset covering 27 countries in CEECA, we found empirical results that support our hypotheses.

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