Does Innovation Foster or Mitigate the Corruption Obstacle? Firm-Level Evidence from Tunisia

In this paper, we analyze the extent to which process or product innovation accentuates or mitigates the corruption obstacle for Tunisian firms. Using firm-level data from the World Bank Enterprise Survey conducted in 2013, we empirically test how innovation accentuates or mitigates the corruption obstacle. We show that innovation has a negative and statistically significant effect on the corruption obstacle. Besides, we prove that competition and the obstacle to corruption are negatively related. This result teaches that the Tunisian firms face a rent-shifting corruption.