Who Bribes in Public Contracting and Why: Worldwide Evidence from Firms

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Who Bribes in Public Contracting and Why: Worldwide Evidence from Firms

Utilizing data from an enterprise survey of over 11,000 firms operating in 125 countries, and building on a profit maximizing cost-benefit framework driving a firm’s bribery decision, we study the determinants of bribery in public procurement contracting. The data suggest that about one-third of firms bribe in order to secure public contracts, and that these firms pay an average of 7.9% of the contract value in bribes. The likelihood of bribing is higher in low income countries (50%), yet in industrialized OECD countries bribery does take place among a substantial minority (14%) of firms.

Econometric estimations suggest that the demand side of good governance (voice and democratic accountability, press freedom, transparency) and the supply-side (rule of law, government effectiveness), along with competition, reduce both the incidence and magnitude (fee) of procurement bribery by the firm. Multinational firms appear to partially adapt to their host country governance environment, bribing more often in medium- and low-income countries (at 20%) than in OECD countries (at 11%). Yet multinationals do not fully ‘adapt’ and thus do not behave exactly like the domestic firms in the host country (at 36%); transnational firms appear more sensitive to reputational costs in their home country and internationally as well.

Firms that are larger and foreign-owned are less likely to bribe than smaller domestic firms, yet among bribers, foreign and domestic firms pay similar bribe fees. This suggests that reputational risks - which weigh on the decision to bribe, not on the amount - play an important role. The results are consistent with the firm’s profit-maximizing framework and have implications for policy, namely in efforts to raise the cost and lower the benefits of bribing (e.g. detection and public disclosure of firms that bribe). The results also cast doubt on conventional initiatives that do not affect the profit function (such as voluntary codes of conduct).

Laws Locations: The Textures of Legality in Developing and Transitional Societies

Laws Locations: The Textures of Legality in Developing and Transitional Societies
April 23-25, 2010, UW Law School

The Conference titled "Laws Locations: The Textures of Legality in Developing and Transitional Societies" will be held at the University of Wisconsin Law School on April 23-25, 2010. The conference is held in conjunction with the annual symposium of the Wisconsin International Law Journal. It is part of the Research Circle on Role of Law in Developing and Transition Countries.

The conference is held in honor of Professor David Trubek, Voss Bascom Emeritus Professor of Law and Senior Fellow, Center for World Affairs and the Global Economy (WAGE).


Guest speaker:


Professor Richard Abel, Michael J Connell Professor of Law, University of California Los Angeles Law School will deliver "Personal Reminiscences of David Trubek."


Conference theme

Agenda


Speaker bios

Abstracts

Papers

Flavia Agnes


Cathi Albertyn


Helena Alviar

Joe Conti


Allison Christians

Javier Couso


Diogo Coutinho


Jackie Dugard

David Engel

Mary Gallagher


Manuel Gomez


Mario Gomez

Diana Kapiszewski

Jonathan Klaaren

Lisa Laplante

Lauren McCarthy


Sally Merry

Shunko Rojas


Alvaro Santos


Greg Shaffer

Mario Schapiro

Druscilla Scribner

Mauricio Villegas

LLSV Revisited Symposium in the BYU Law Review

Volume 2009, no. 6

Articles
“Law and Finance”: Inaccurate, Incomplete, and Important
Ruth V. Aguilera and Cynthia A. Williams

Law and Financial Development: What We Are Learning from Time-Series Evidence
John Armour, Simon Deakin, Viviana Mollica, and Mathias Siems

Legal Regimes and Political Particularism: An Assessment of the “Legal Families” Theory from the Perspectives of Comparative Law and Political Economy
John W. Cioffi

Unpacking Adaptability
Andreas Engert and D. Gordon Smith

The Legal Origins Theory in Crisis
Lisa M. Fairfax

Legal Origins and the Tasks of Corporate Law in Economic Development: A Preliminary Exploration
John Ohnesorge

A "Law & Personal Finance" View of Legal Origins Theory
Karl S. Okamoto

Rethinking the "Law and Finance" Paradigm
Katharina Pistor

Legal Origins, Investor Protection, and Canada
Poonam Puri

Mixing-and-Matching Across (Legal) Family Lines
J. Mark Ramseyer

Competition Policy and Comparative Corporate Governance of State-Owned Enterprises
D. Daniel Sokol

Contemporary Legal Transplants: Legal Families and the Diffusion of (Corporate) Law
Holger Spamann

Legal Origins, Functionalism, and the Future of Comparative Law
Christopher A. Whytock