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Trust and Entrepreneurship

A West–East Perspective

Edited by Hans-Hermann Höhmann and Friederike Welter

In this innovative book, international scholars investigate trust and its role in relation to the entrepreneurial behaviour of small firms across a variety of institutional and cultural settings. The contributors draw on original empirical material from a number of West European and East European countries, highlighting the role of culture and the significance of a multi-disciplinary approach in researching trust and its importance in entrepreneurship.
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Chapter 3: The Dark Side of Trust: Corruption and Entrepreneurship – A Cross-National Comparison between Emerging and Mature Market Economies

Vartuhi Tonoyan


1 Vartuhi Tonoyan INTRODUCTION Most economic research on corruption has been done from the viewpoint of a bribe-taker (a national officer). However, for an appropriate analysis of the roots of the phenomenon corruption, one also needs to scrutinise it from the perspective of a bribe-payer (an entrepreneur). Only an investigation of both sides involved in corrupt transactions, as well as their motives and codes of conduct, will contribute to a better understanding of corruption and, thus, enable us to combat it efficiently (Bardhan 2003). Against this background, this chapter attempts to give insights into the determinants of (the perception of) corruption from the viewpoint of entrepreneurs as potential bribe-payers. An analysis of (the perception of) corruption from the perspective of selfemployed business people is also crucial for understanding the causes and consequences of corruption in economic life. Previous research points out that the survival, success and growth of enterprises in the post-Soviet block depend on how well they adapt to the corrupt institutional environment (Djankov et al. 2002; Hellman et al. 2000; Kaufmann and Wei 1999). Investments in corrupt and illegal rent-seeking activities are therefore a crucial component of a successful business strategy in the Commonwealth of Independent States (CIS) countries. At the same time, it is argued that a high level of administrative corruption as well as excessive bureaucratic burdens hinder start-ups (De Soto 1987). Despite already being among the highest in the world, corruption rates in the post-Soviet republics continue to rise (Bjørnskov and Paldam 2002). Although...

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