On the Demand for Favors: Bribes vs. Gifts and their Relation to Law Enforcement

Gift giving has historically been known as a way to express gratitude and inspire reciprocity, which over time has developed into a way to influence business relationships. While small gifts are rather innocuous, the feeling of reciprocity with grandiose gifts can suggest a request for favorable treatment or something in return. Bribery on the other hand, is widely perceived as an intolerable action but the desire for businesses to gain an advantage over adversaries by buying a favor is rather compelling. As countries in the EU vary in their ability to identify and enforce corruption, this thesis explores the relationship between perceptions of corruption enforcement and the prevalence of using bribes and gifts to mitigate business transactions. The findings convey a negative correlation between corruption enforcement and bribes, as well as a positive correlation between corruption enforcement and gifts. This suggests that gifts may serve as a substitute for bribes in countries where corruption is more efficiently identified and enforced. This thesis also explores the effectiveness of creating more stringent anti-corruption policies in mitigating enforcement perceptions and in reducing the dispersion of gifts and bribes in business but the results are not statistically significant.