A comparative analysis on the nexus between corruption and firm performance for a selection of Western Balkan countries
| Date | 16 June 2023 |
| Pages | 583-593 |
| DOI | https://doi.org/10.1108/JFC-04-2023-0082 |
| Published date | 16 June 2023 |
| Author | Ermira Kalaj,Ela Golemi |
A comparative analysis on the
nexus between corruption and
firm performance for a selection
of Western Balkan countries
Ermira Kalaj
Department of Finance, University of Shkodra Luigj Gurakuqi,
Shkoder, Albania, and
Ela Golemi
Department of Economics, Aleksander Moisiu University, Durres, Albania
Abstract
Purpose –This paper aims to focus on analyzing the level of corruption of small- and medium-sized
enterprisesand their economic performance impact in Western Balkan countries.This study uses survey data
from Enterprise Surveys (ES) from 2019, a shared project of the European Bank for Reconstruction and
Development,the European Investment Bank and the World Bank Group. The selected countriesare Albania,
Bosnia and Herzegovina, North Macedonia, Kosovo, Montenegro and Serbia.The questions included in the
data set contribute to understandingwhat firms experience in the private sector. Collected data are based on
firms’experiencesand enterprises’perceptions of the environmentin which they operate.
Design/methodology/approach –This paper measures enterprise performance in terms of sales,
employees and fixed assets growth. The vector of independent variables comprises enterprise characteristics
such as enterprise age, size, ownership structure, legal status, access to formal banking services, gender
ownership and other composedva riables.Moreover, to capture the level of perceived corruption by firms, we will
focus on the following ES questions: “Is it common to have to pay some irregular additional payment or gifts to
get things done with regard to customs, taxes, licenses, regulations, services,”and the “corruption payment”is
defined in the form of a dummyequal to one if the enterprise replies “frequently,”“usually”or“always.”
Findings –Preliminary empirical research results shed light on the level and effects of corruption on
enterprises’performance. However, the magnitude and statistical significance are different among the
countriesincluded in the sample.
Originality/value –Instead of firm-level characteristics, research on corruption frequently focuses on
effects dependent on nationaland institutional characteristics. To better identifythe kinds of businesses that
are most at risk of corruption, we have selected to focus on differences among firm characteristics in this
research. Understandingfactors at the firm level is preferred from a policy perspectivebecause these findings
assist policymakersto make recommendations.
Keywords Firm performance, Entrepreneurship, Corruption
Paper type Research paper
1. Introduction
It is believed that corruption is widespread throughout the Western Balkan countries
(Qerimi and Sergi, 2012;Budak and Rajh,2014;Feruni et al.,2020). Several economies in the
region are classified by international organizations as having significant levels of
corruption. The CorruptionPerception Index of Transparency International spans from 0 to
100, with low values indicating very corruptnations. As an illustration, the UK scored 73 in
2022, whereas Albania and Bosniaand Hercegovina scored 36 and 34, respectively.
Corruption and
firm
performance
583
Journalof Financial Crime
Vol.31 No. 3, 2024
pp. 583-593
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-04-2023-0082
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
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