Firm Competitiveness and Detection of Bribery

Using survey data collected from senior corporate executives around the world I analyze how detection of bribery impacts firm competitiveness. The data suggest that the most significant impact is on employee morale, followed by business relations and reputation, and then regulatory relations. I find that who initiated the bribery act, how it was detected, and how the firm responded after detection are all associated with the impact on a firm’s reputation, business relations, regulatory relations, and employee morale. Internally initiated bribery from senior management is more likely to be associated with a significant impact on firm competitiveness. Bribery detected by the control systems of the firm is less likely to be associated with a significant impact on both business and regulatory relations. Finally, bribery cases where the initiator of the bribery is dismissed are less likely to be associated with a significant impact of firm competitiveness. These results shed light on which organizations’ competitiveness is more likely to be affected by the detection of bribery.  George Serafeim is at Harvard Business School. I acknowledge financial support from the Division of Faculty and Research Development at Harvard Business School. I am grateful to PwC that made the data used in this study available to me. I am solely responsible for any errors. Contact email: [email protected]