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The New Institutional Economics
... The business environment which is relevant for business enterprises may constrain or enhance costs of transaction and it consequently, greatly affect economic growth in any economy (Hawawini, Subramanian & Verdin, 2004;Goldszmidt et al. 2011). Transaction costs are a central component of economic activities (Brock, 2002). Transaction costs are the cost of running the economic system which is different from production costs which the neoclassical analysts were preoccupied with (Marinescu, 2012). ...
This study examines the impact of quality of institutional factors on firm performance and economic growth in selected African countries over the period 1990 to 2012. Fixed effects with Driscoll and Kraay standard errors model was employed on time series data after diagnostic checks. The study finds that political stability, corruption, and democratic accountability have positive statistical impact with firm performance and economic growth while investment risk, law and order, and bureaucratic quality have negative impact with firm performance and economic growth. However, only political stability, democratic accountability and bureaucratic quality have significant impacts. In order to minimise transaction costs and improve firm performances and economic growth, the study suggest making efforts to curb bureaucratic impediments, improve democratic accountability that will create stable macroeconomic and investment policy, and make policies that will check unstable prices that lead to inflation.
... Como mecanismos de governança, os contratos têm a peculiaridade de conseguir coordenar a produção de forma mais eficiente do que outras estruturas de produtivas. Isso ocorre, pois por meio do contrato é possível descrever um relacionamento idiossincrático "sob medida" para os contratantes, capacitando-os a suprir as demandas das partes de forma satisfatória e atendendo de maneira eficiente os interesses dos agentes (WILLIAMSON, 2005). ...
A produção nacional de frango de corte tem se destacado entre os diversos setores produtivos nas últimas décadas. O desempenho do setor possibilitou ao Brasil assumir posição de destaque no ranking mundial como o maior exportador e o terceiro maior produtor de carne de frango. No Paraná, o sistema agroindustrial de frango de corte se consolidou, principalmente, no interior do estado. A produção dessa proteína contribui significativamente para a economia estadual. Dada a sua relevância, este artigo tem como objetivo examinar os contratos de produção de aves firmados entre os avicultores da Mesorregião Oeste do Paraná e as agroindústrias de abate e processamento. Os aspectos privilegiados incluem as principais salvaguardas, as estruturas de incentivo e controle, bem como eventuais assimetrias informacionais existentes nessa relação. O artigo se apoia em estudo de cunho qualitativo, com a aplicação de um questionário in loco junto a 133 avicultores com propriedades localizadas na Mesorregião Oeste do Paraná. Os principais resultados indicam que os contratos de integração constituem um eficiente instrumento de coordenação da produção e garantia da qualidade das aves produzidas.
... Also, the postulates of the institutional theory are applied, which can justify the behaviour of individual subjects at the macro and micro levels. In this case, the works of such specialists as (Furubotn, 1998), (Hamilton, 1986), (Williamson, 1985) are studied. ...
The article objective is identifying the main transformational processes affecting the economic security of investment activities of industrial enterprises, which are the guarantee to their long-term development and the formation of a program for the transformation of the economic security system of enterprises in order to protect investment activity from the negative impact of changes in the external and internal environment. Methodology. The research is based on analytical materials and results of the evaluation of the dynamics of world investments for 2017 and statistical information concerning direct investments from different countries of the world in Ukrainian economics. The main postulates of the institutional theory are also used to characterize institutional changes in Ukraine for detailing their impact on the economic security of the investment activity of Ukrainian industrial enterprises. Results. The research results indicate negative tendencies in the sphere of investment both for the country as a whole and for particular economic entities. This is caused by the military conflict in the East of the country and investors’ distrust to the institutional component of the functioning of the domestic economy. This situation indicates the need to introduce changes in the system of economic security of domestic enterprises. Practical implications. The authors developed the program for the transformation of the economic security system of enterprises, taking into account the actual needs for ensuring the economic security of their investment activity. Value/originality. After transformations implementation, the economic security system of enterprises receives new characteristics and allows mitigating relevant threats with different efficiency level.
... Having noted the relevance of institutional environment in the corporate governance system generally and with specific reference to Nigeria, this section lays out the core principles of the new institutional economics (NIE) theory relied upon herein. 55 Indeed, the claim by the NIE theory of the relevance of institutional factors in determining organisational outcome is well acknowledged by theorists and scholars. 56 In summary, the postulate of NIE theorists is that institution constitutes 57 : (1) written rules and agreements that regulate contractual dealings and corporate governance; (2) constitutions, laws and regulations that govern society, politics and finance; and (3) generally unwritten codes, beliefs and norms of behaviour that underpin any structurally hierarchical organisation. ...
It examines the debate within corporate governance studies about the value of separating the roles of company Chair and chief executive officer (CEO). It considers how the performance benefits of Chief-CEO duality may be affected by the company's institutional environment, with reference to the experience in Nigeria after reforms promoting the model
... Membership of a rural business association gives higher odds of having made an increase in profits over the past 5 years and of having a lower annual turnover. Controlling for variations between sectors, this suggests that membership may be having optimising effects, as highlighted by the resource based view (Barney 1991;Gulati et al. 2000;Parker 2008), transaction costs theory (North 1986;Park 1996, Williamson 1985 and the logic of exchange (Granovetter 1985). This supports the view that rural businesses with associative relations are more successful than their less networked equivalents (Besser and Miller 2010). ...
Rural spaces are often associated with strong community ties (Reimer, 1997; Atterton and Bosworth 2012) but the simultaneous spread of infor- mation technology and advances in personal mobility in the ‘Network Society’ (Castells, 2005) have stretched the geography of many rural networks and relations. In this context, this opening chapter considers the role of rural businesses as essential nodes in rural networks and the value that network relations can bring to smaller, rural enterprises.
... Societies prosper when people have incentives to enrich themselves by 22 See Furubotn & Richter (1998), Klein (2000), and Williamson (2000) for comprehensive surveys of the New Institutional Economics. Brock (2002) Miller (1992) for a discussion of institutions within the firm. North and Nye (2002) argued forcefully for a reorientation of research in economic history away from conventional cliometric methods and toward the analysis of institutions. ...
ABSTRACT Christians have a moral obligation to help the poor and destitute, and many Christians argue that we must exercise our moral obligation by, for example, redistributing income,or by,enacting,price controls and,minimum,wages. Christians must,proceed,with caution,when,prescribing such,policies: the resulting changes,in incentives embodied,in changed,formal institutions may,in fact work to the detriment of “the least of these” among,us. JEL Classification: A13, B25, D63, O1, Z12 Keywords: Christianity, development, institutions, growth, ethics, redistribution I. THEORIES OF ECONOMIC GROWTH The world has undergone,a revolution of stupendous magnitude,in the last
... (1931, p. 85) Such failure remained over time. Postwar institutionalists share with the classics a deep criticism of neoclassical economics, although we may note a slight but interesting difference: neoclassical theory is no longer criticized for being based on wrong assumptions as before (ayres, 1936;Veblen, 1900) but for being insufficient to face actual real challenges (Galbraith, 1973b;Gruchy, 1982;Myrdal, 1972). a minimal role of equilibrium is stressed by ayres: "equilibrium is just equilibrium-'Just' in the sense of 'only'-and provides no clue to economic justice" (ayres and Heflebower, 1958, p. 487). ...
Institutionalism did exert a great influence both in the academia and in politics in the interwar period. However, after World War II, it lost ground and was pushed behind the scenes, although some distinguished exponents reached a remarkable success. In the 1970s, a new and very different kind of institutionalism developed. The paper inquires, through the use of the concept of equilibrium, into the evolution of institutionalism, from the classic, through the modern, to the new institutionalism.
This article assesses the contributions of industry leaders, smaller corporations, and independent inventors to the international technological specialization of Great Britain in the interwar years. For the first time, we compare directly the contribution of these sources and combine the Chandlerian and “sources of invention” perspectives. The analysis is based on a novel dataset of more than 8,000 patents granted in the USA to British inventions. Our findings show the extent to which Britain integrated inventions generated by independent inventors with those of corporate inventors, i.e., industry leaders and smaller corporations, in both engineering- and science-based fields. This research highlights specificities of a former leader’s transition from the technological paradigm of the first phase of capitalism to that of the second phase.
Given the ongoing debate on the relationship between institutions and entrepreneurship, this study aims to better understand the joint effects of two country-level formal institutions, government effectiveness and political freedom, and whether the informal institution of religiosity moderates this relationship. To achieve this goal, the current study used multiple datasets, including the Global Entrepreneurship Monitor (GEM), World Governance Indicators (WGIs), and the WIN-Gallup International Global Index of Religiosity and Atheism. The data cover 85 countries from 2010 to 2017. The results suggest that the rate of entrepreneurial activity across nations is shaped by the interplay between formal and informal institutions.
This paper examines the relationship between regulation-induced time delays and export entrepreneurship in a panel of 59 countries for the period 2006 to 2014. The paper finds robust evidence that regulations which cause lengthy time delays in moving a standard container of goods from the factory to the seaport significantly reduce export entry rate. These findings support the hypothesis that decreasing regulation-induced time delays expands export entrepreneurship by reducing the cost of exporting. Additionally, the paper finds that superior quality institutions significantly enhance the positive impact of lower regulatory time barriers on export entrepreneurship. Stronger protection of private property rights is the most important measure of institutional quality that aides the favorable impact of lower regulation-induced time barriers on export entrepreneurship. Furthermore, a reduction in regulation-induced time barriers has a positive effect on net entry rate and survival rates of export entrants, and high-quality institutions significantly increase the magnitude of this positive outcome.
In the past two decades or so, over 50 resource-rich countries have set up investment funds to store a portion of their revenues from oil, gas, or other mineral production and exports. They include the world’s very rich and the very poor countries, and democratic and autocratic regimes. Some resource funds have been successful in expanding national wealth, helping smooth out national business cycles and supplanting national incomes; others are less so; and a few simply squandered national wealth. Setting up a resource fund is not panacea to the social, economic, and political problems a country faces, nor is there one model all resource funds can follow in their governance and in their operation. This chapter draws some comparative lessons on why and how government justified to the public assigning a portion of revenue from producing and exporting natural sources to a separate account as an investment fund, the optimal governance structures to ensure the wealth is managed for the interest of the people, and investment strategies for the funds’ sustainability and expansion. A clearly defined legal framework, transparent governance structure, and rules-based investments are all helpful, but they do not determine the success or failure of NRFs. Understanding how domestic politics plays out at each stage of the fund’s development is what this chapter seeks to achieve.
Focusing on switching the energy inputs to economies from fossil fuels to renewable energy and neglecting material outputs gives an overoptimistic picture of achieving carbon neutrality. We propose a set of equations that integrate analysis of energy and materials, provide a framework for a new carbon neutrality science, and lead to three carbon neutrality conditions. The equations are applied to low carbon materials, such as metals, and high carbon materials, such as wood. Refining carbon is the key carbon dioxide (CO2) emissions source to minimize for steel and aluminium, but slow technological change could create a ‘carbon neutrality gap’ by 2050. This will increase in size unless forest expansion is accelerated to offset remaining CO2 emissions. Principles of a new carbon economics are proposed and applied. Policy priorities include integrating energy and materials in carbon neutrality strategies, strengthening carbon reporting standards, establishing national wood products databases, increasing afforestation rates, and controlling deforestation.
In the age of nation states, the creation of any armed force is a political act. Prior to this age, private initiative spontaneously created armed forces to satisfy a short-term demand for military force and disbanded them once they had accomplished their mission. Today, those who have political power in the state create a (or maintain an existing) armed forces organization that exists as such. Without this institutional legitimization, armed forces could not emerge or continue to exist.
This paper examines the relationship between natural resource rents and new business formation (a critical measure of entrepreneurship) using a panel dataset of 28 African countries covering the period 2002-2014. The paper finds robust evidence that nations with high resource rents (i.e. resource rents exceeding 30% of GDP) significantly exhibit less entrepreneurial activity. This result is consistent with the hypothesis that high resource rents significantly promote rent-seeking behavior at the expense of entrepreneurship. Policies that reward productive entrepreneurship and reduce incentives for rent-seeking behavior are therefore important for reversing this negative relationship in African countries with high natural resource derived income.
This paper examines the impact of regulation-driven trade barriers on export entrepreneurship in a panel of 60 countries between 2006 and 2014. The paper finds robust evidence that unfavorable trade regulations significantly reduce export entry rate and export entry density (two critical measures of export entrepreneurship) by increasing the time and cost associated with documentary and customs compliance procedures. These findings support the hypothesis that less conducive business regulations are an important domestic supply constraint which impede export entrepreneurship by increasing trade costs. In addition, the paper finds that the magnitude of the negative relationship between export entrepreneurship and regulation-driven trade barriers is significantly more pronounced in countries with poor governance quality. Two measures of governance quality (i.e., political stability and rule of law) are shown to be relatively more significant in aiding favorable trade regulations that promote export entrepreneurship. Furthermore, a reduction in regulation-driven trade barriers has a positive impact on net entry rate and survival rates of first, second- and third-year exporters, and high-quality governance institutions significantly increase the magnitude of this positive relationship.
Conventionally, those engaging in tax non-compliance are explained as rational economic actors doing so when the benefits outweigh the costs. However, many individuals are still compliant to their tax regimes even when the pay-off from tax evasion is greater than the costs. The result is the emergence of a social actor perspective that gives primacy to tax morale when explaining tax non- compliance. Through the lens of neo-institutionalist theory, this approach argues that citizens behave in ways that reflect the normative, cultural-cognitive and regulatory rules of their institutional environments. To test this theory, we have analyzed a representative micro survey of 2,528 citizens in Turkey. The finding we have obtained in this paper using an econometric analysis is that high tax morale is significantly more likely when there is trust in government (the normative dimension), feeling of belonging to the nation (the cultural-cognitive dimension) and perceptions of the risk and severity of punishment (regulatory-instrumental dimension). It displays the importance of the tax morale approach when explaining and tackling tax non-compliance in Turkey.
SUMMARY
The hypotheses formulated in the dissertation sought answers to a complex question - the entrepreneurial phenomenon. Because of its interdisciplinarity, this was a great commitment of me. The breakthrough point where I have thought to find my responses were in the field of economics psychology / behaviour economics, so I needed broad new interdisciplinary knowledge making both the approach and the explanations complex.
Although the thesis was written this year (2017), yet for the past decade, I have been researching the questions and the answers of this topic via readings and researches. I tried to investigate the relevant findings of economics, system theory, entrepreneurship and economic psychology.
In the course of reviewing the topics of my scientific lectures (30+) and writings of the past decade, they all brought me a little closer to the main statements of the dissertation now completed. I recall several exciting and enjoyable moments of reading, learning and professional debates, the results of which I hope are welcomed by my colleagues and my fellow researchers.
In my dissertation, I have reviewed a considerable amount of literature, the reason for which is, as I have stated above, that I have summarised basic concepts of several fields of science, supplemented with the most recent literature. I have summarised literature review in four major chapters that can each be linked to the given hypothesis and can lead the reader to conclusions.
Four hypotheses were formulated in the dissertation:
H1: I have assumed, for the basic pillar of the entrepreneurial ecosystem that the so-called hard elements, such as infrastructure, legal and commercial regulatory conditions, government support, capital and money market conditions are nonetheless important, but the quality of the ecosystem will be more determined by the so-called soft factors. Behind these soft factors lie management capacity, resulting from school and out-of-school entrepreneurial training, social-societal values and thus culture, which provides the courage, the relaxed conditions for experimentation and a significant social support (guard-net) for the re-start after the failure.
H2: I have identified the reconsideration of the business-process approach as a second challenge. Based on literature and my observations, I intended to demark the stage of brainstorming more precise than the position of the currently accepted entrepreneurial approaches does. I think that the entrepreneurial process itself is essentially a short stage in the corporate life cycle that is preceded by brainstorming and then followed by the growth phase, which is again followed by the consolidated organisational cycle.
H3: Thirdly, I have stated that very few meet the accepted entrepreneurial definitions based on literature and my experience. All this led me to look at the entrepreneurial roles and their related competences and common personality characteristics. Here, a secondary goal has been identified which might create a new business category that prototypes the expectations of classical entrepreneurial definitions. It was named that is, Non-Conventional Organizations (NCO) (together with my fellow research partner, Zoltán Csigás).
H4: Last but not least, based on my experiences, my previous research and literature I have formulated an organisational competence profile description that describes the survival minimums of organisations (I have named them the KO criteria). Over the last sixty years, we have learned a lot about the organisations' excellent operational capabilities, but the phenomena that make a company excellent may not be helping it to survive. Now, the first level is to keep the organisation alive at the ever-increasing competition. I sought these minimum criteria, what they might be.
I have formulated my hypotheses on three levels and seeking for the way of evidencing. The highest level was the social-societal approach where I tried to find answers regarding the entrepreneurial ecosystem. The question was what criteria and conditions of the ecosystem are needed to make the members of the ecosystem successful. I retained my hypothesis here, since I was able to justify with strong data that there is indeed a relationship between the quality of the entrepreneurs and the ecosystem profile.
At the middle level (organisational level), I have applied a minimalist approach. I was looking for critical organisational features that make organisations survive. I reversed the message of excellence models. I believe that the recipe for success could lead to far, but if we did not solve the mandatory tasks before, then it is pointless to talk about this very high quality level. Here, too, I have found organisational phenomena that are essential to be displayed in the competence inventory of the organisation (dynamic capacity, organisational two-handedness). In addition, I have identified an organisational phenomenon profile that is novel not regarding its elements, but in its system-level approach. These elements were called KO criteria. In the study, I included as the starting point an organisational model created with my previous research associates (COVΛ model).
At the bottom, at the micro level, I was dealing with the individual, the entrepreneur. I have reviewed the validity of entrepreneurial definitions and have identified that life cycle phases of businesses should be shaped differently. Here, my basic conclusion is that the brainstorming phase should be separated from the enterprise shaping stage and it should be demarked from the growth phase as well as from the later consolidated corporate phase.
Entrepreneurial process
Invention➡What is this?➡Chaos and Growth ➡Consolidation
Most important actor and its most important role
Inventor / Idea Man➡Entrepreneur / Producer➡Crisis /
Change Manager ➡Manager
35. Figure 1: The main actor of a high-level entrepreneurial process. The author's own work
I have identified the tasks to be solved for the organisational stages, the competences needed for the solution, and competences regarding the roles (Figure 35). I have dealt with roles in point of enterprises, the display of which has a significant influence on the operation of businesses. I declare that the particular entrepreneurial role can be captured by a personality profile and a competence pattern rather than an average entrepreneur.
During the study, I worked with a new methodology that was named 'post mortem'. This is basically, as it is in its name, an ex post, post-event evaluation of a particular phenomenon. I have looked at the cease of non-operating companies (n = 388), and have concluded results of their aggregated data.
Based on research in the literature and my experiences, I attempted to supplement Lewin's basic formula (B=f(P,E), where the external environment (E) and the internal psychic (P) define behavioral (B) functions (f)) by entrepreneurship (Be=fe {(De,E)×exe}).
As a scientific novelty, I see the results of the accomplished work in a eight smaller steps, as reported in the chapter on scientific innovations (5.2).
This thesis is a milestone, an important stage in my research and the cognitive process in which I have been fortunate to be actively involved in more than a decade...
The role of trade in post-crisis periods is widely acclaimed. Exporting is determinant for the recovery of countries that have experienced an economic downturn, enhancing productivity and growth and increasing the level of employment. Against this backdrop, the purpose of this study is to advance our understanding on the impact of domestic institutional quality on firms’ decision to export. To test this relationship, we frame our study in Greece and deploy perceptual, multi-item measures of three governance constructs that may challenge institutional isomorphism (severity of corruption, bureaucratic efficiency and regulatory complexity). On the basis of a logistic regression analysis, we find that the joint interactions of institutional weaknesses make firms reluctant to initiate internationalization activity. Thus, home institutional susceptibility seems to hinder export activity.
Im Zeitalter der Nationalstaaten ist die Gründung eines Militärs ein politischer Akt. Anders als eine Unternehmung wird es nicht gegründet, um eine sich bietende Gelegenheit zur Gewinnerzielung auszunutzen, sondern weil die politischen Entscheidungsträger des Staates die Errichtung einer militärischen Organisation an sich wollen. Unabhängig von deren konkreten Aufträgen oder Fähigkeiten ist daher ein politischer Wille erforderlich, der das Militär in diesem grundsätzlichen Sinne legitimiert. Ohne ihn hört die militärische Organisation auf zu bestehen.
This article provides and tests a theoretical framework with a multilevel (country–city) nested model to analyze the relationship between national business regulations (NBRs) and city level entrepreneurship. While public interest theory predicts a positive relationship between NBR and city level entrepreneurship, public choice theory predicts the opposite, a negative relationship. Based on multilevel analysis for a matched country–city panel of 228 cities across 20 European countries for the years 2004 to 2009, the empirical evidence from panel data estimation explains how changes in NBRs influence changes in city level entrepreneurial activity over time.
The study of intragroup dynamics in management studies views conflict as a contingency process that can benefit or harm a group based of characteristics of the group and context. We review five models of intragroup conflict in management studies. These models include diversity-conflict and behavioral negotiation models that focus primarily on conflict within a group of people; social exchange and transaction cost economics models that focus primarily on conflict within a group of firms; and social dilemma models that focus on conflict in collectives of people, organizations, communities, and generations. The review is constituted by summarizing the insights of each model, foundational papers to each model; the most recent uses and developments of the models in the last decade; the complementarity of these models; and the future research directions.
Corruption is not a new problem. Even though it is considered a social ill and almost universally viewed as a problem, it remains present in many of the developing countries. Although the existence of corruption is common knowledge, people are reluctant to admit that they take and pay bribes, and therefore measuring and assessing corruption can be a challenge. In this chapter, we look at what types of corruption exist, how corruption is measured in different sources, and some of the causes that have been found to contribute to engaging in corruption. We have also examined how corruption is present in different sectors and it affects stakeholders in developing countries. With a growing concern regarding the size of government, we also examine how corruption and the size of government affect the recipients of the services, especially entrepreneurs.
In order to understand how the environment influences business owner/managers’ attitudes towards tax morale, we build a theoretical model based on a neo-institutionalist framework. Our model combines three complementary perspectives on institutions—normative, cultural–cognitive and regulatory–instrumental. This enables a broader understanding of factors that influence business owner–managers’ attitudes towards tax evasion. We test the resulting hypotheses using regression analysis on survey data on business owner/managers in Latvia—a transition country, which has undergone massive institutional changes since it was part of the Soviet Union over 25 years ago. We find that legitimacy of the tax authorities and the government (normative dimension), feeling of belonging to the nation (cultural–cognitive dimension) and perceptions of the risk and severity of punishment (regulatory–instrumental dimension) are all associated with higher tax morale for business owners and managers.
The fundamental question regarding the NIE literature and its application to transition economics is also the simplest: What exactly is an “institution?” As Geoffrey Hodgson astutely pointed out, “it is not possible to carry out any empirical or theoretical analysis of how institutions … work without having some adequate conception of what an institution … is” (Hodgson 2006: 1). While there is a well-developed philosophical literature attempting to tackle this issue (North 1990, Hodgson 2006, and Voigt 2009a bracket the debate), for the most part the empirical literature has avoided the question; thus, lack of a precise definition of this central term has led to difficulties econometrically, with the concept of “institutions” being defined by the model and the data, rather than a concrete conception of “institutions” defining the model. Indeed, the current muddled view of “institutions” has led to empirical investigations encompassing all manner of “institutions” across all spheres: as recent research by Stefan Voigt (2009) noted, “in the literature, newspapers, supermarkets, and even phone booths have been described as institutions” (Voigt 2009a: 2).
Professional economics would benefit from an infusion of religious formulations, particularly the notions that all humans are made in God's image and are fallen creatures. This infusion would lead economics to more openly recognize the role of moral reflection in economic thinking and enhance the way in which economics conceives of the use of knowledge in both the private and public sectors. In addition, particular benefits might be realized in rethinking conceptions of entrepreneurship, competition, and opportunistic behavior. I provide examples of the ways Christian values shape my research agenda as an economist.
The paper argues and shows that much of contemporary economics undergoes a certain trend toward economic sociology or socio-economics, in virtue of increasingly acknowledging and incorporating various sociological components and influences. The paper identifies and considers at least four major related indicators of such a trend. These are, first, the revival of economic sociology or social economics; second, the renewal of the economic sociology of the market; third, the return of socio-economic institutionalism; and the rediscovery of cultural factors in the economy and markets. The paper suggests that in virtue of such a tendency at least in part contemporary economics appears increasingly congruent with modern economic sociology rather than with sociological rational choice theory. It aims to contribute to a more adequate account and understanding of pertinent recent tendencies in economics in respect of their implications for contemporary economic and other sociology. The paper infers that the renewal of economic sociology both within contemporary economics and sociology provides the fertile ground for interdisciplinary collaboration between economists and sociologists today, just as its early version did in the past.
The management literature provides extensive coverage of the different motives and factors that encourage companies to cooperate and adhere to cooperative relationships. Nielsen (1988), who influenced a wide body of authors (Heide and Miner 1992; Parkhe 1993; Hagedoorn and Schakenraad 1994; Mohr and Spekman 1994; Gulati 1995; Browning et al. 1995; Holm et al. 1999; Afuah 2009), seeks to demonstrate that cooperative strategies may ethically boost organisational efficiency in various circumstances. Taking a multidisciplinary approach, he sets out the utility of cooperative strategies within the scope of concepts such as the environmental life cycle, generic strategies and aggregating value before concluding that strategies involving cooperation between major corporations may be more efficient than external market mechanisms. Hence, cooperative strategies are susceptible to enhancing organisational efficiency in various different market scenarios.
As global competition intensifies, the geographic fragmentation of supply chain activities is creating a concentration of trade at regional freight gateways or hubs. This has significant implications for the economic prosperity of the specific gateway regions. The study explores the deliberate governance efforts of regional economic development agencies and the communities they support in their attempts to exploit location-specific logistics assets to deliver economic productivity gains. Drawing on the new institutional economics’ body of literature, the research explores prevalent governance models which represent the proactive attempts by these agencies to transform regional logistics capability into cohesive hub strategies. By adopting exploratory cluster-mapping procedures, web content analysis, and Delphi panels, study findings suggest a typology of multijurisdiction, and multiagency governance models representing the collaborative efforts between public sector and government agencies, academic institutions, and private sector organizations within selected European and U.S. logistics hubs. Each governance type is defined in accordance to specific economic organization and proficiency characteristics.
Empirical
We combine agency and institutional theory to explain the division of equity shares between the foreign (majority) and local (minority) partners within foreign affiliates. We posit that once the decision to invest is made, the ownership structure is arranged so as to generate appropriate incentives to local partners, taking into account both the institutional environment and the firm-specific difficulty in monitoring.
Using a large firm-level dataset for the period 2003–2011 from 16 Central and Eastern European countries and applying selectivity corrected estimates, we find that both weaker host country institutions and higher share of intangible assets in total assets in the firm imply higher minority equity share of local partners. The findings hold when controlling for host country effects and when the attributes of the institutional environment are instrumented.
The classic view is that weak institutions lead to concentrated ownership, yet it leaves the level of minority equity shares unexplained. Our contribution uses a firm-level perspective combined with national-level variation in the institutional environment, and applies agency theory to explain the minority local partner share in foreign affiliates. In particular, we posit that the information asymmetry and monitoring problem in firms are exacerbated by weak host country institutions, but also by the higher share of intangible assets in total assets.
Assessing investment opportunities abroad, foreign firms need to pay attention not only to features directly related to corporate governance (e.g., bankruptcy codes) but also to the broad institutional environment. In weak institutional environments, foreign parent firms need to create strong incentives for local partners by offering them significant minority shares in equity. The same recommendation applies to firms with higher shares of intangible assets in total assets.
Tanto la economía argentina, con sus crisis crónicas, como en la actualidad la economía internacional, que sufre los efectos de una crisis financiera de carácter global, implican un llamado a la reflexión sobre los propios fundamentos del sistema económico. Como respuesta a estas inquietudes de fondo la presente obra propone una revisión acerca de la actualidad del pensamiento de W. Röpke, uno de los economistas más audaces, completos y, paradójicamente, menos conocidos del siglo XX. Este economista desarrolló un enfoque sistémico del pensamiento económico en el período más convulsionado de la historia moderna –los años que van de la primera a la segunda guerra mundial– que incluyó la “Gran Depresión” de los años 30. En ese contexto Röpke propone volver a orientar la economía de mercado al servicio del hombre y de la sociedad, objetivo del que se había desviado. Para lograr esto bosqueja un elaborado marco institucional y una serie de requisitos éticos, políticos y sociales. Finalmente plantea un sistema de organización y de política económica, que fue aplicado y probado en la práctica con buenos resultados en Europa de posguerra y otras experiencias más recientes. Este libro estructura lógicamente los elementos centrales de la visión “röpkeana” para elaborar un enfoque que pueda resultar útil en la situación de Argentina en las circunstancias de Latinoamérica y el mundo hoy.
What is the ‘raison d’être’ of auditing? Does auditing only exist by the grace of the legislator? Or does auditing fulfill other needs in contemporary society? For many companies, auditing has been made mandatory. This is possibly one of the reasons why researchers to date have given limited attention regarding the drivers for the demand for audit. Auditing (seen as a social control mechanism) is part of an organizational order in society. Therefore, it is essential to reflect on the (changing) demands of society. As a lack of insight why society demands an audit, accommodates the risk of not meeting the needs and expectations of society, the added value of auditing may be called into question. This dissertation deals with the question: what are drivers for the demand for audit for Dutch SME companies which are not mandatory required to have their financial statements audited.
We model and test the relationship between social and commercial entrepreneurship drawing on social capital theory. We propose that the country prevalence rate of social entrepreneurship is an indicator of constructible nation-level social capital and enhances the likelihood of individual commercial entry. We further posit that both social and commercial entrepreneurial entry is facilitated by certain formal institutions, namely strong property rights and (low) government activism, albeit the latter impacts each of these types of entrepreneurship differently. We apply bivariate discrete choice multilevel modeling to population-representative samples in 47 countries and find support for these hypotheses.
The article presents preliminary ?ndings of a research survey on large-and middle-scale farmers and the groundnut sector in Senegal. The sampling of this group of producers is justi?ed on the basis of the high degree of social strati?cation and farmers’ heterogeneity existing in Senegal, and the methodological problems associated with approaches focused on the ‘ average representative farmer’. This argument leads to a task of grouping farmers into distinct classes according to capitalist tendencies, dynamism and scale of production. The core part of the article tackles the political economy of the process of agricultural liberalization and structural adjustment in Senegal and their effects on the behaviour and production conditions of the classes of large-and middle-scale farmers analysed in the ?rst part.
Entrepreneurial innovation encourages economic progress, and an institutional climate that encourages risk taking, rewards success, and weeds out failure is essential to a well-functioning economic system. This essay explores a cluster of path-breaking entrepreneurial innovations with common roots in Memphis, Tennessee: Piggly Wiggly’s popularization of self-serve grocery shopping, Holiday Inn’s innovations in standards and quality, Autozone’s adaption of insights from other industries, and FedEx’s creation of a distribution network that has made overnight shipping a reality.
Does capitalism perform better when embedded in certain cultures? Given the wide range of economic outcomes, we address potential causes for the effectiveness or ineffectiveness of institutional constraints. This paper argues that culture matters for the success of capitalist institutions, specifically economic freedom. We claim that different cultures may raise or lower the productivity of economic institutions by either constraining or supporting these rules. We analyze this relationship empirically by examining how the interaction between economic freedom and culture affects economic growth. Our results suggest that culture does, indeed, enhance the effectiveness of capitalism and its subsequent impact on growth.
Do we really know whether or not we have “maximized” utility, or do we just know that we are “happy” or “sad”? We argue that we can never know objectively whether or not utility has been maximized; however, people acting on a free market are sufficiently close to the decision as to be able to hazard a better guess about their opportunity costs than policy makers.
This paper elaborates and provides empirical support for two different approaches to managing the nexus of headquarters subsidiary relations in a multinational corporation (MNC). The first approach is that of Differentiated Fit. We show that the extent to which an MNC differentiates the formal structure of its headquarters subsidiary relations to fit the contexts of its various subsidiaries, the better the performance of the MNC as a whole. The second approach is that of Shared Values. We show that a high degree of shared values among the headquarters and subsidiaries is another approach to governing headquarterssubsidiary relation that enhances the performance of the MNC. We further maintain that differentiated fit and shared values, while being alternatives, are not mutually exclusive ways of effectively managing headquarters subsidiary relations. Indeed, MNCs that can simultaneously implement these two approaches have the best relative performance.
For want of appropriate and effectual methodological approaches or analytical instruments, analysis of socio-economic phenomena can sometimes be problematic. As Frances et al. have aptly noted, any analysis of social nature begs the question: ‘with what theoretical tools do we approach the analysis of events and processes?’ (p. 1). In land matters, for example, Malpezzi (1999b,c) has keenly observed that most of the studies on land reforms have focused on the rural and agricultural sectors, at the expense of the urban sector. Arguably, the paucity of land policy/reform studies on the urban sector could be explained, to a large measure, by the fact that most of the studies carried out in this area apply theoretical frameworks or models that are highly abstract (e.g. neoclassical economic models) or too simplistic in approach.1 Such models or methodological frameworks may not be readily applicable or efficacious in explaining the convoluted urban land market realities. The narrow option for alternative tools of analysis for studying land market ‘events and processes’ (to use Frances et al.’s (1991) terminology) may well have hindered land policy/reform research in the urban sector. Against that background, this paper advances an eclectic, property-rights-based approach that is robust and versatile enough to have wide application. An empirical study conducted under the framework attests to the relevance of such an approach to land use policy and urban land market analysis.
Purpose
The purpose of this paper is to explore the relationship between beliefs and economic policy in the context of gasoline prices following Hurricane Katrina.
Design/methodology/approach
The paper applies three contributions – by North, Caplan and Higgs – to the question of gasoline pricing policy; and surveys public opinion regarding interference with prices.
Findings
The paper identifies evidence of “anti‐market bias” in polling data, press releases, and legislation, and argues that the uncertainty emanating from statutes restricting “price gouging” may reduce investment in the provision of “necessary goods and services” after natural disasters.
Originality/value
The paper is of value in offering evidence of anti‐market and anti‐foreign bias among what might be called political first responders to Hurricane Katrina, and posits the view that interference with prices compounded the shortages facing the Gulf coast or any other disaster‐stricken area.
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