Abstract:

Corruption poses significant challenges for transitional societies. In addition to a range of negative societal effects, corruption also leads to losses of investor confidence and economic efficiency. This paper evaluates the relationship between business environment, strategic networking, and corruption and their compound effect on firm performance in the former transitional societies of Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, and North Macedonia. To do so, the authors analysed firm-level data collected in the period 2019-2020 in conjunction with the 2021 Corruption Perception Index. The results of the hierarchical linear regression reveal that corruption and dynamics of the business environment affect strategic networking, especially its components: (a) cooperation and communication and (b) commitment. Corruption mediates the relationship between strategic networking and firm performance, while hostile and dynamic environments dampen the effect of the interplay between corruption and commitment on firm performance. In terms of strategic networking components, trust and reputation did not exert statistically significant influence, while commitment was a dominant component of strategic networking effects. The paper concludes with managerial and policy implications of the research findings.