indexes by different international bodies. In this
research, firm managers were directly asked to
evaluate the corruption they face.
The dependent variable ‘‘corruption’’ was specified
in line with our hypotheses as ‘‘a manipulation
of powers of government or sale of government
property, or both by government officials for personal
use’’ (Jain, 1998). In studying corruption, it is
important to avoid asking whether corruption is
inherently good or bad. Johnson pointed out that
such questions are futile as the answers depend on
the standards of good and bad and also on the elements
of comparison (We might also ask good or
bad to what?) (Johnson, in Ward, 1989: 17). The
level of corruption was evaluated as the frequency of
unofficial payments by financial institutions to public
officials for getting various services or other advantages.
In order to characterize and measure this
variable, a set of seven questions was given to
respondents. For each question, the respondent had
to indicate the frequency using a 1–6 never/always
scale. An example of a question is: ‘‘How often do
firms like yours nowadays need to make extra,
unofficial payments to public officials to gain government
contracts?’’ For each of our conceptual
hypothesis, respondents were asked a set of relevant
questions.
For example, in order to measure the intensity of
competition, a set of six statements was given to
respondents, using a scale of 1-to-6 (1 for low and 6
for very high) to evaluate the pressure of competitors
(this includes new entrants and current contestants,
both local and foreign) and the pressure from customers
in key strategic decisions. An example of a
question is ‘‘Please rate the influence of the pressure
from domestic competitors on key decisions about
your business’’. Exploratory factor analysis (EFA)
across the six items indicated sufficient convergence
to suggest that it was valid to incorporate all six items
into one measure (Cronbach’s a = 0.8467). The
EFA identified only one dimension for this variable.
Also to access the politicization of the economic
activity, seven questions were asked such as ‘‘How
often does the government intervene in the investment
decision of your firm?’’ or ‘‘How often does
the government intervene in the pricing decision of
your firm?’’ The respondents had to evaluate the
government intervention using a scale of 1-to-6.
The EFA, across the seven questions, showed a
strong convergence with a Cronbach’s a of 0.8630.