2009 Academy of Management Meeting, Chicago, US

Dr. Vartuhí Tonoyan, Institute for SME Research at the University of Mannheim, presented a paper on the role of trust for entrepreneurs' and small business owners' actual involvement in corrupt deals in a cross-national comparison of 22 European countries at the 2009 Academy of Management Meeting in Chicago, US.


Tonoyan, V. (2009) Entrepreneurial Decision to Commit Corruption: On the Role of Trust. Evidence from European Social Survey. Paper presented at the 2009 Academy of Management Meeting, August 7-11, Chicago, US.

Generalized trust toward anonymous others and state-run organizations do not explain the business actor’s actual involvement in corruption in a sample of 22 Western, Southern and Eastern European countries. Only trust toward police is significantly and negatively associated with lower probability of the entrepreneur’s engagement in corrupt deals while the opposite is true for particularized trust, i.e. trust which is person and situation specific. A cross-national comparison corroborates this adverse association, suggesting that particularized trust represents the “dark side of trust”. A possible reason for this finding rests on the need of self-employed and entrepreneurs for securing economic exchange. High particularized trust toward family and friends reduces transaction costs associated with corrupt arrangements (e.g. costs for searching corrupt partners, negotiating and enforcing corrupt deals), thus becoming fertile ground for corruption. However, particularized trust is also an integral part of the country-specific culture, a result which largely explains higher incidence of corruption in Central-Eastern Europe compared to the lower incidence of corruption in Scandinavian countries.
Female self-employed are not the fairer sex when it comes to the initiation of corrupt deals, a result which contradicts prior evidence. Moreover, females are less likely to be forced to pay bribes by national bureaucrats. In a similar vein, solo self-employed, i.e. self-employed without employees, are less likely to be extorted to bribe payments than employer firms, and they also less often initiate corrupt deals themselves.

Key words: corruption, entrepreneurship, international comparison of 22 European countries, multi-level analysis, Blinder-Oaxaca decomposition



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