Bribery from a micro, demand-side perspective

Corruption is prevalent in the developing world, negatively impacting small businesses. While research on corruption has focused on bribery from an economics-system perspective, there has been less research on the role of bribery from a more micro perspective. In this study, we explore bribery from the demand side by anchoring our qualitative, theory-building efforts in 12 new firms, 10 government officials, and 13 agents (for brokering bribery payments) in India. We found that in corrupt systems, the bureaucracy of government departments is deliberately made more bureaucratic by corrupt informal autonomous ventures within government departments that use informal human resource management systems to develop and perpetuate corruption and that recognize new legal constraints as an opportunity to use brokers to facilitate bribery. We highlight how these corrupt informal autonomous ventures engage in and perpetuate corruption, a practice that is destructive to the government, to small businesses, and to the people’s confidence in the nation.