Entrepreneurial Success Under Corruption Depends on Generation and Experience, New Study Finds
A new study published in the Strategic Entrepreneurship Journal takes a deep and carefully researched look at a question that has long puzzled economists and policymakers alike: how does corruption actually affect entrepreneurial success? Instead of offering a simple answer, the research shows that the impact of corruption on business performance depends heavily on who the entrepreneur is, when they grew up, and what kind of life experiences they bring into business.
The article, titled Generational Imprints: A Contingency Approach to Corruption and Entrepreneurship, moves beyond the usual debate of whether corruption is always harmful or sometimes helpful for entrepreneurs. Rather than treating entrepreneurs as a uniform group, the study highlights important generational and experiential differences that shape how business owners respond to corrupt environments.
Moving Beyond One-Size-Fits-All Views of Corruption
Much of the existing research on corruption and entrepreneurship tends to fall into two camps. One side argues that corruption acts as “sand in the wheels,” slowing down economic activity and hurting businesses. The other suggests that corruption can sometimes “grease the wheels,” helping entrepreneurs bypass inefficient regulations and get things done faster.
This new research challenges both of these simplified views. The authors argue that corruption does not affect all entrepreneurs in the same way, and any attempt to generalize its effects misses crucial nuances. Instead, the study adopts a contingency-based perspective, meaning that outcomes depend on the interaction between institutional conditions and individual characteristics.
At the center of this approach is imprinting theory, which suggests that experiences during a person’s formative years—especially adolescence and early adulthood—leave long-lasting marks on how they think, behave, and make decisions later in life.
Why Generational Background Matters
The study focuses on entrepreneurs in China, a country that has experienced a dramatic shift from a centrally planned economy to a market-oriented one. This transition created distinct entrepreneurial generations, shaped by very different social, economic, and institutional environments.
The researchers divide entrepreneurs into two broad groups:
- Premarket-generation entrepreneurs, who came of age before China’s market reforms and were socialized in a more state-controlled economic system.
- Market-generation entrepreneurs, who grew up after the transition and developed their worldviews in a more competitive, market-driven environment.
According to the study, these two generations developed different types of imprints. Premarket-generation entrepreneurs tend to carry more principled imprints, placing higher value on ethical norms, moral obligations, and rule-following. Market-generation entrepreneurs, on the other hand, are more likely to develop transactional imprints, emphasizing material outcomes, flexibility, and pragmatic exchanges.
Performance Differences in Corrupt Environments
Using a proprietary dataset of Chinese private firms, the study examines how these generational imprints play out in environments characterized by collusive corruption—situations where businesses and officials engage in ongoing, mutually beneficial corrupt relationships.
The findings show a clear pattern. In such corrupt settings, market-generation entrepreneurs consistently outperform their older counterparts. Their firms tend to achieve better performance outcomes, suggesting that their transactional mindset makes them more adaptable to navigating corrupt systems.
Premarket-generation entrepreneurs, by contrast, often struggle in these environments. Their principled imprints can clash with the informal norms and expectations of collusive corruption, limiting their ability to leverage relationships or engage in exchanges that may be necessary for survival or growth in such contexts.
The Role of Life Experience and Education
One of the most interesting aspects of the study is that it does not treat generational background as destiny. The researchers find that personal life experiences can significantly moderate generational effects.
Two factors stand out in particular:
- Rural living experience
- Higher levels of education
Entrepreneurs from either generation who have spent time living in rural areas tend to show a reduced performance gap. Rural experience often exposes individuals to resource constraints, informal problem-solving, and adaptive behaviors, which can soften rigid principled or transactional tendencies.
Similarly, higher education appears to narrow generational differences. Education can broaden perspectives, enhance analytical skills, and provide exposure to diverse norms and practices. As a result, highly educated entrepreneurs—regardless of generation—are better equipped to adjust their strategies when operating under corrupt conditions.
In short, experience matters, and individual backgrounds can reshape or even override early-life imprints.
Why This Research Matters for Entrepreneurship Studies
This study makes a significant contribution to entrepreneurship research by integrating individual-level characteristics with institutional conditions. Rather than asking whether corruption is good or bad for entrepreneurship in general, it asks for whom, under what circumstances, and why.
The findings help explain why previous studies on corruption and entrepreneurship often reached conflicting conclusions. When researchers ignore generational and experiential differences, they risk averaging out effects that are actually quite different across groups.
By showing that entrepreneurs respond differently to the same corrupt environment, the study highlights the dangers of overgeneralization in policy and theory.
Implications for Policymakers and Practitioners
For policymakers, the research suggests that supporting entrepreneurship in institutionally challenging environments requires more targeted approaches. Policies designed to help entrepreneurs navigate or resist corruption may need to account for generational differences, education levels, and life experiences.
For practitioners, especially those operating in emerging or transition economies, the findings underscore the importance of self-awareness. Understanding one’s own background and behavioral tendencies can help entrepreneurs make more informed strategic choices when dealing with complex institutional realities.
Understanding Corruption and Entrepreneurship More Broadly
Beyond this specific study, research increasingly shows that the relationship between corruption and entrepreneurship is deeply contextual. Cultural norms, institutional strength, personal values, and historical experiences all shape how entrepreneurs perceive and respond to corruption.
In many emerging economies, corruption remains a persistent reality rather than an exception. Studies like this one help move the conversation away from moral absolutes and toward a clearer understanding of how real-world entrepreneurs actually operate.
Final Thoughts
This research offers a nuanced and evidence-based perspective on a topic that is often discussed in overly simplistic terms. By combining imprinting theory with detailed firm-level data, the study shows that entrepreneurial success under corruption is not just about the environment—it is also about who the entrepreneur is and what they have experienced.
Rather than asking whether corruption helps or hurts entrepreneurship, the more meaningful question may be: which entrepreneurs succeed under which conditions, and why?
Research paper:
https://doi.org/10.1002/sej.1548
