The study “Corruption and Entrepreneurship: How Formal and Informal Institutions Shape Small Firm Behavior in Transition and Mature Market economies” by Vartuhí Tonoyan, Robert Strohmeyer, Mohsin Habib and Manfred Perlitz, has been published in the 2010 September issue of Entrepreneurship Theory and Practice (ET&P).
This article explores the determinants of corruption in transition economies of the post-Soviet Union, Central-Eastern Europe, and Western industrialized states. The authors look in-depth at the East–West gap in corruption, and why entrepreneurs and small business owners become engaged in corrupt deals, utilizing the theoretical lenses of the New Institutional Economics and employing hierarchical linear modeling. Part of the answers lie in the country-specific formal and informal institutional make-up. The likelihood of engaging in corruption is influenced by the lower efficiency of financial and legal institutions and the lack of their enforcements. Also, viewing illegal business activities as a widespread business practice provides the rationale for entrepreneurs to justify their own corrupt activities. Moreover, closed social networks with family, friends, and national bureaucrats reduce the opportunism of the contracting party of the corrupt deal, thus providing breeding grounds for corruption.
About the journal:
"Entrepreneurship: Theory and Practice" is a leading scholarly journal in the field of entrepreneurship studies (2008 VhB Ranking: A), whose mission is to publish original papers which contribute to the advancement of the field.
About the authors:
- Dr. Vartuhí Tonoyan is assistant professor in management at the University of Mannheim and head of Entrepreneurship Research Division at the Mannheim’s Institute for SME Research. She is visiting research fellow at the Graduate School of Business at the Stanford University. Email: E-Mail or E-Mail.
- Robert Strohmeyer, Dipl.-Soz., is senior research fellow and PhD Candidate at the Mannheim’s Institute for SME Research.
- Dr. Mohsin Habib is Associate Professor in Management at the University of Massachusetts in Boston, US.
- Dr. Manfred Perlitz is Full Professor in International Management, Emeritus, at the University of Mannheim.