Institutional Quality and Economic Development in Sub-Saharan Africa: Can Management Effort and Bribes Compensate for Low-Quality Institutions?

Gori Olusina Daniel, Kun Fu, Wilfred Dolfsma

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)

Abstract

Abstract: The industrial development in sub-Saharan Africa is perhaps more affected by the quality of institutions than that of other regions. We investigate what alternatives managers may have and what their firms would need to function in case the institutional furniture they encounter is of low quality. We find that, in high quality institutional environments, management spending effort to deal with the authorities and to navigate regulations negates the effect of the institutional environment. Managers do not need to spend such efforts. Perhaps surprisingly, we find that the positive effect of high-quality institutional environments on firm performance is enhanced by making informal payments.

Original languageEnglish
Pages (from-to)473-482
Number of pages10
JournalJournal of Economic Issues
Volume52
Issue number2
DOIs
Publication statusPublished - 3 Apr 2018

Keywords

  • firm performance
  • informal payment
  • institutional quality
  • institutions
  • sub-Saharan Africa

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