Using data from nationwide surveys ofprovincial institutions and private manufacturing small medium enterprises, this study provided the first evidence of the impact ofprovincial institution quality andfirms’participation in and intensity of corrupt activities on firm productivity in Vietnam. We found that the bribe intensity instead of whether firms bribed state officials or not (measured by a dummy variable) has a negative effect on firm productivity when the endogeneity of corruption and unobservable characteristics are controlled for. This finding contrasts to a popular belief about a paradox for East Asian countries where corruption is positively associated with firm growth.