The dual face of corruption: Facilitator and deterrent to exports in Vietnamese firms

This study explores the complicated relationship between corruption and firms' export decisions in Vietnam, applying data from the World Bank's 2023 Enterprise Survey. Using logistic regression analysis on a sample of 1,028 firms, we identify an inverted U-shaped relationship between corruption levels and export propensity. The primary objective is to determine how varying levels of corruption influence firms' internationalization strategies, specifically their likelihood to engage in export activities. The key findings reveal an inverted U-shaped relationship between corruption levels and export propensity. While minimal corruption fosters export activities by reducing bureaucratic barriers, excessive corruption creates financial and operational constraints, ultimately deterring firms from internationalizing. However, as corruption increases, it creates serious financial and operational challenges that can discourage companies from expanding internationally. This study also underscores the significant influence of firm-specific characteristics on export behavior. Larger firms, those with foreign ownership, and those demonstrating higher levels of innovation are more likely to engage in export activities, independent of corruption levels. These findings contribute to the understanding of how institutional factors shape firm internationalization in emerging markets. The study provides important insights for managers dealing with regulatory uncertainties and for policymakers creating specific anti-corruption strategies. Understanding the threshold at which corruption transitions from a facilitator to a deterrent is essential for strategic decision-making. Furthermore, this study emphasizes the need for policymakers to create specific anti-corruption measures. These measures should balance the need for efficient regulations with the importance of promoting a fair and transparent business environment.