Does legal registration help or hurt? The effect of government corruption on resource acquisition by nascent ventures in an emerging economy

This study examines the effects of pervasive and arbitrary corruption on entrepreneurs’ resource acquisition during their new venture creation stages in an emerging economy. It also investigates how legal registration may alter the effects of the two dimensions of government corruption. Our analysis of 160 nascent entrepreneurs in China between 2009 and 2011 shows that pervasive and arbitrary corruption both hamper resource acquisition by nascent ventures. We highlight that the negative effects of corruption vary among nascent ventures, and the effects are dependent on the legal status of nascent ventures. Legal registration helps to reduce the negative effect of arbitrary corruption, but does not reduce the negative effect of pervasive corruption.