Original scientific paper
How corruption affects business results: The case of Croatia
Jelena Budak
orcid.org/0000-0003-3739-4704
; Ekonomski institut, Zagreb, Hrvatska
Edo Rajh
orcid.org/0000-0003-1916-5756
; Ekonomski institut, Zagreb, Hrvatska
Abstract
The background of this paper is found in recent theories why corruption prevalence menaces the safety of business environment. In order to examine if exposure to corruption derogates business results of firms in Croatia we have tested the hypothesis that higher corruption perceptions of business leaders in small, medium and large firms in Croatia are associated with firms’ worse financial results. As a seminal research we measure corruption perceptions of business by employing
unique data from three annual surveys conducted in more than one hundred firms in Croatia. The constructed index of corruption perceptions of business is used in the empirical analysis how higher corruption perceptions of firms in Croatia are affecting financial results in terms of total revenue per employee, net profit per employee and total sales per employee. The years of observation are 2002, 2003
and 2004. The extension of our research to three groups of small, medium and large firms in Croatia aims to separately examine the correlation between corruption perceptions indices and financial results
for each group of firms. The preliminary results indicate that corruption is more affecting small firms in Croatia. Policy recommendations
and lines of further research are discussed.
Keywords
corruption perceptions of business; financial results; Croatia
Hrčak ID:
199717
URI
Publication date:
15.12.2006.
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