Corruption as an obstacle for doing business in the Western Balkans: A business sector perspective

Abstract

In countries with a high prevalence of corruption, understanding attitudes towards corruption could help in designing effective measures to eliminate it as a barrier to doing business. Utilising original survey data from over 1800 business owners and managers in seven Western Balkans countries, this study explores businesspeople’s experiences and views on the ways that the business sector is dealing with corruption. A factor analysis produced three distinct factors: (1) understanding corruption as ‘greasing the wheels’; (2) individual action can contribute to curbing corruption; (3) corruption is a government-related issue. The results show that the country of origin strongly determines businesspeople’s attitudes towards corruption. Respondents with corruption experience tend to justify it as ‘greasing the wheels’ more than ‘clean’ respondents. Findings on the perceived role of private and government agents in curbing corruption enabled the study to suggest some specific policy recommendations.

Corruption Perceptions and Entrepreneurial Intentions in a Transitional Context–the Case of Rural Bulgaria

“…Some scholars argue that in the face of a restrictive regulatory environment, entrepreneurs can circumvent clumsy administrational procedures by offering a bribe and so increase the efficiency of their ventures by sealing deals which would not have happened otherwise (Blackburn et al, 2006;Budak and Rajh, 2014;Levy, 2007). This rationale is known as the 'greasing' argument.…”

“…Drawing on the literature (Blagojević and Damijan, 2013;Budak and Rajh, 2014) and our own previous fieldwork in the region, we constructed the corruption perceptions scale as consisting of seven 5-point Likert-type items, covering aspects potentially important for the intention to found a venture in a corrupt environment. After performing an exploratory factor analysis with varimax rotation and Kaiser-off criterion, we dropped two items ('Most of the businesses here have to bend the law in order to survive' and 'Here without connections one cannot run a successful business') because they loaded on a different factor.…”

The nature of corruption affecting entrepreneurship in transition economies: Some lessons from Montenegro

“…Extant research suggests that the institutions governing the economic environment in transition economies impose costly and bureaucratic burdens on entrepreneurs, which increase uncertainty as well as the operational and transaction costs of doing businesses (Aidis, Estrin, and Mickiewicz, 2008;Tonoyan et al 2010;Puffer, McCarthy, and Boisot 2010;Budak and Rajh 2014). This is particularly evident with respect to financial institutions.…”

“…The social norms and perceptions of behaviour associated with these informal institutions are important determinants of whether corrupt practices are accepted or not (Budak and Rajh 2014). For entrepreneurs, the likelihood of becoming embroiled in corruption is affected by the perception of how many other individuals in the society are engaged in corrupt arrangements (Andvig and Moene 1990).…”

The impact of institutions, law and corruption in business environment - Evidence for Kosovo

“…Then, according to (Council of Europe Report, 2016), corruption is the main obstacles in Kosovo business environment, it has achieved a broad extension in government procurement and to ensure a government contract from 2011 to 2014 business owners have to paid over 4 % of contract value, it is higher than in 2009 (the contract value is paid 1 %). Moreover, Kosovo needs to strengthen its fight against corruption because Kosovo has high rate of corruption (the highest rate in the region) and business owners have lower tendency to perceive corruption in Kosovo, (Budak & Rajh, 2011).…”