Title: Towards a theory of corruption, nepotism, and new venture creation in developing countries

Authors: Mawuli P. Gavor; Bryan T. Stinchfield

Addresses: Franklin & Marshall College, P.O. Box 3003, Lancaster, PA 17604, USA. ' Department of Business, Organizations, and Society, Franklin & Marshall College, P.O. Box 3003, Lancaster, PA 17604, USA

Abstract: The dominant view among social scientists and policy makers has been that corruption has a mostly negative effect on economic growth - especially in developing countries. However, some scholars have shown support for the efficient grease hypothesis (EGH), which is that corruption can increase the efficiency of some economic transactions. Based on the EGH and Hofstede's (1983) work on national culture, we theorise that nepotism and corruption in developing countries facilitates the new venture creation process, and thereby reinforces the persistent nature of corruption. Implications for policy makers are also discussed.

Keywords: corruption; new ventures; developing countries; culture; nepotism; new venture creation; economic growth; efficient grease hypothesis; efficiency; economic transactions; Geert Hofstede; national cultures; small and medium-sized enterprises; SMEs; entrepreneurs; entrepreneurship; family issues; families; gender issues.

DOI: 10.1504/IJESB.2013.050749

International Journal of Entrepreneurship and Small Business, 2013 Vol.18 No.1, pp.1 - 14

Published online: 30 Sep 2013 *

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