Three critical issues for firms in emerging economies : understanding corporate bribery, learning-by-exporting, and designing the R&D strategy

Abstract

Are higher-performing firms more or less likely to bribe? Drawing on the behavioral theory of the firm and institutional theory, the first study examines how performance aspiration (i.e., performance relative to social aspirations, which equals performance minus social aspirations) is related to the likelihood of bribery and how political stability, business freedom, and Corruption Perceptions Index moderate the relationship between performance aspiration and the likelihood of bribery. Based on the cross-country multi-level analysis on a sample of 19,749 firms from 39 emerging economies, I find that (1) the likelihood of firm bribery decreases with positive performance aspiration (it equals performance minus social aspirations, when performance is above social aspirations; it equals zero, otherwise); (2a) the likelihood of firm bribery increases with negative performance aspiration (it equals performance minus social aspirations, when performance is below social aspirations; it equals zero, otherwise) when political stability is low but (2b) decreases with negative performance aspiration when political stability is high; (3a) the likelihood of firm bribery increases with negative performance aspiration when business freedom is low but (3b) decreases with negative performance aspiration when business freedom is high; and (4a) the likelihood of firm bribery increases with negative performance aspiration when Corruption Perceptions Index is low but (4b) decreases with negative performance aspiration when Corruption Perceptions Index is high.

In the second study, drawing on organizational learning theory and institutional view, I posit and examine the curvilinear relationship between exporting (measured by export intensity) and product innovation. The analysis of 182,493 local Chinese firms shows that exporting is curvilinearly (inverted U-shaped) related to product innovation. This indicates that a moderate level of exporting may be optimal for product innovation, whereas relying too heavily on exporting could be detrimental to product innovation. Moreover, I find that the positive effect of export intensity on product innovation is enhanced and endures much longer in firms with higher firm age and higher R&D intensity and in firms operating in regions where intermediate and legal institutions development is better. Overall, the findings provide a more nuanced understanding of learning-by-exporting by suggesting a contingent view of the value of exporting on product innovation.

Both internal and external R&D have been viewed as potential drivers of product innovation, whereas understudied is whether and how they differ in their role in determining product innovation. Drawing on organizational learning theory, attention-based view, and institutional view, the third study examines the interplay and the contingent effects of internal and external R&D. According to the analysis of a sample covering 401 private domestic manufacturing firms in China, I find that (1) internal R&D intensity is positively related to product innovation; while external R&D intensity is curvilinearly (inverted U-shaped) related to product innovation; (2) the inverted U-shaped relationship between external R&D intensity and product innovation is more pronounced when internal R&D intensity or intermediate and legal institutions development is high rather than low, while such inverted U-shaped relationship is less pronounced when industry-specific experience of the top manager is high rather than low.