The Relationship Between Logistics Performance, Corruption And Government Effectiveness In Asian Countries
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Date
2017-08
Authors
Koh, Bee Hui
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
The study aimed to provide a comprehensive understanding of impact of corruption on logistics performance with the moderating effect of government effectiveness was sought within Asian countries, by considering the severity of corruption in Asia and the effect on logistics performance as logistics performance is a major element to ensure effective import and export as a result of increased trade volume within and beyond Asia continent. In addition, effective government is vital to reduce the impact of corruption on logistics performance. In this study, we investigated if Corruption Perception Index (CPI) has a direct effect on Logistics Performance Index (LPI) and if Governance Effectiveness (GE) has moderator effect on relationship between CPI and LPI. Total data of 26 Asian countries from CPI, LPI and GE were collected for the period from 2007, 2010, 2012 and 2014 in order to carry out this research. Three static linear panel models were applied for the analysis. However, Fixed Effect Model (FEM) is the best model to examine the results after best fit model evaluation was done. The findings from the data analysis show corruption has a direct effect on logistics performance. The analysis result suggests a positive consequence of corruption which sees corruption as “grease the wheels” that facilitate growth and efficiency. The moderating variable of government effectiveness was added in the second regression. The results later showed government effectiveness has moderator effect on relationship between corruption and logistics performance. Interestingly, the coefficient of the interaction term is
positive and significant by including an interaction term of corruption and government effectiveness. This implies government effectiveness directly increases the likelihood of logistics performance, the coexistence of corruption and government effectiveness facilitates the logistics performance. The result suggests an indirect “sand in the wheel” effect where a corrupt practice is not required when government effectiveness is high. The findings of the study would benefit both academics and practitioners by providing an overview examination on the relationship of corruption, logistics performance and government effectiveness in Asian countries. From the theoretical perspective, this study enriches the literatures of the relationship of corruption, logistics performance, and government effectiveness in the Asia context by considers the dimensions of three indices (CPI, LPI and GE) examined in the same framework. In the long run, the collection of the researches enable a comprehensive source of logistics performance literatures so that the logistics industries and policy makers could gain a better understanding of the actual situation of the impact of corruption on logistic performance and the role of effective government in that said relationship. From practical perspective, the findings of this study will be beneficial to logistics providers and Asian countries’ government by providing a proven result of government effectiveness on the relationship of corruption and logistics performance in Asia context. This study is significant in providing insightful finding for the development of logistics performance. Even though corruption was found positively affect logistics performance, however, once the element of government effectiveness was added, corruption was found negatively affect logistics performance. Therefore, the result helps logistics stakeholders and Asian countries’ governments to gain a better understanding on influences of corruption on logistics performance and the essential role of effective government in said relationship. Governments should ensure the
effectiveness and quality of institutions in order to alleviate the negative impact of
corruption on logistics performance.
Description
Keywords
Corruption on logistics performance , with the moderating effect