Firm-Level and Public-Sector Corruption Perceptions: The Nexus

Understanding how firm-level corruption shapes national corruption perceptions is crucial for both policymakers and businesses, as it provides evidence to strengthen governance frameworks and foster integrity-driven corporate environments. This study investigates the relationship between firm-level corruption experiences and the Corruption Perceptions Index (CPI), a widely used measure of perceived public-sector corruption. Three indicators from the World Bank Enterprise Surveys are used to capture firm-level corruption: firms’ bribery incidence, gifts to tax officials, and informal payments to public officials. The analysis covers data from 36 countries and employs a rigorous methodological approach, including mean-based estimation techniques such as Gaussian Generalized Linear Models (Gaussian GLM) and Robust Least Squares (RLS), as well as Bootstrap Quantile Regression (BQR). The Gaussian GLM and RLS results indicate that all three indicators have a significant negative impact on the CPI, meaning that more frequent occurrences of these firm-level corrupt practices are associated with lower CPI scores, which reflect higher perceived levels of corruption. The BQR analysis further reveals that the negative impact of two firm-level corruption indicators, bribery incidence and gifts to tax officials, is concentrated in the lower quantiles, indicating a stronger effect in countries with low CPI scores or higher apparent corruption. These findings underscore the importance of strengthening institutional oversight and promoting business integrity at the firm level, as reducing routine corruption in business interactions can meaningfully enhance a country’s overall corruption perception and institutional credibility.