Does Corruption Sand or Lubricate the Wheels of Firm Innovation?

This study addresses three questions pertinent to emergent work at the corruption and innovation nexus: whether, why and how involvement in bribery influences firm innovation in emerging economies. We address these queries by building upon and extending the institutional theory with the economics of corruption literature. We use multi-level data on 15,404 firms from 36 emerging economies to test our hypotheses. Our findings indicate that the relationship between innovation and corruption is curvilinear, i.e., firm innovation increases up to a tipping point and decreases with an increasing involvement in corruption after that. Bureaucratic red tape moderates the link between corruption and firm innovation. [ABSTRACT FROM AUTHOR]