Does social capital reduce entrepreneurs’ petty corruption? Evidence across Indonesian regions

Julien Hanoteau (1, 2) , Gandhi Pawitan (3) , Virginie Vial (4)

1 Kedge BS - Kedge Business School
2 AMSE - Aix-Marseille Sciences Economiques
3 Parahyangan Catholic University
4 KEDGE Business School [Marseille]

Corruption is a barrier to entrepreneurship in emerging countries, justifying to investigate its determinants. Using data on 1,250 entrepreneurs across Indonesian regions, We analyze the effects of social capital on individual corruption. 2-levels ordered probit regressions evidence that weak-ties discourage entrepreneurs’ bribing, strong-ties encourage it, whereas this latter effect is moderated by the quality of access to formal credit. Bribing banks or turning to relatives for external funding are alternative solutions for entrepreneurs facing a poor access to formal credit, a common feature in emerging countries, and the second solution is preferred given the risk and psychological costs of corruption.

Mots clés: corruption; credit access; entrepreneurship; Indonesia; social capital; corruption

Mots clés: entrepreneurship; corruption; social capital; credit access; Indonesia; entrepreneurship

Domaines: Sciences de l'Homme et Société

Julien Hanoteau, Gandhi Pawitan, Virginie Vial. Does social capital reduce entrepreneurs’ petty corruption? Evidence across Indonesian regions. Papers in Regional Science, 2021, 100 (3), pp.651-670. ⟨10.1111/pirs.12588⟩. ⟨hal-03670023⟩