University of Birmingham Testing the self-selection theory in high corruption environments

Purpose: Whilst substantial evidence from low corruption, developed market environments supports the view that more productive firms are more likely to export, there has been little research into analysing the link between productivity and exports in high corruption, developing market environments. The purpose of this paper is twofold. First, to test the premise of self-selection theory whether the association between productivity and export is maintained in high corruption environments, and second to identify other variables explaining export activity in high corruption contexts, including cluster networks and firms’ competences. Design/methodology/approach: The authors draw on the World Bank Enterprise survey to undertake a cross-section analysis including 1,233 SMEs located in nine African countries. The advantage of this database is that it contains information about the level of perceived corruption at firm-level. Logistic regressions are performed for the full sample and for subsamples of firmsin high and low corruption environments. Findings: The findings demonstrate that the self-selection theory only applies to low corruption environments, whereas in high corruption environments, alternative factors such as cluster networks and outward looking competences, exert a stronger influence on the exporting activity of African SMEs. Research implications/limitations: This research contributes to theory as it provides evidence that contradicts the validity of self-selection theory in high corruption environments. Our findings would benefit from further longitudinal investigation. Practical implications: African SMEs need to consider cluster networks and outward looking competences as important strategic factors that might enhance their international competitiveness. This is the last author version of the Accepted Manuscript of the article (to be) published by Emerlad in International Marketing Review on 25th December 2017, DOI: 10.1108/IMR-03-2017-0054. 2 Originality/value: Our criticism of the self-selection theory is distinctive in the literature and has important implications for future research. We show that the contextualisation of existing theories matters and this opens a research avenue for further more sensitive contextualisation of existing theories in developing economies.