Bribery and Firm Growth: Sensemaking in CEE and Post-Soviet Countries

How does bribery affect firm performance in transition economies? What would be the consequences of a discrepancy between a firm’s perception of the environment and its strategic choices? Using the Business Environment and Enterprise Performance Survey (BEEPS) data, we examine 1) the effect of bribery on firm performance and 2) the moderating role of the perceived degree of court fairness by a firm. We first find that bribery itself increased firms' sales growth in 27 transition economies in CEE and post-Soviet countries from 2002 to 2008. Second, our results reveal that the perceived degree of court fairness negatively moderates the positive relation between bribery and firm growth. We explain the findings with organizational failure in sensemaking.