| Most studies on firm-government interaction have utilized industry or country level data and used an industry or a country as the unit of analysis. As a result, only the influence of country-level or industry-level factors was examined in these studies. The impact of the characteristics of an individual firm on firm-government interaction remains unknown. Using firm-level data from the World Business Environment Survey (WBES), a survey of more than 10,000 firms conducted by the World Bank, this dissertation studies the influence of firm characteristics on firm-government interaction from two perspectives. The first perspective focuses on how firm characteristics, especially exporting, affect a firm's incentive to lobby and the government's incentive to provide favorable policies to the firm. A two-stage game is designed to model the interaction between firms and the government in the setting of international trade. The model shows that exporting firms, comparing to non-exporting firms, are keener to lobby. On the other hand, the government is more likely to work with exporting firms in policy making. Empirical study supports this conclusion. The second perspective focuses on how firm characteristics affect a firm's decision on bribery. Estimation from a two-part model shows that both country characteristics and firm characteristics play important roles in the decision. Dependence on infrastructure and facing inconsistent regulation increase a firm's likelihood to bribe, while exporting and increasing sales reduce the firm's likelihood to bribe. |
