The Impact of Corruption on Small Entrepreneurial Companies: Take Guangdong Province as Evidence

摘要

We find that corruption has negative impact on the performance of small entrepreneurial companies when they compete with their peers in highly corrupted industries. We took the enterprises of China, the world's largest emerging economy, as the research object, and after China put forward the "Eight-Point Regulation" by President Xi Jinping in 2012, China launched a large-scale and far-reaching anti-corruption campaign that we can regard it as an effective external shock to research and identify channels for corruption's negative external impact. We find that smaller companies have lower profitability and productivity than their established counterparts, with small entrepreneurial company having lower sales growth in the most corrupt industry, probably because demand has shifted to the largest in their industry, which spend more on corrupt officials to gain political support.