Exploring the role of voluntary business associations on borrowed institutionalism in regional development: insights from the case of Kayseri in Türkiye

Abstract

ABSTRACT Institutional and cultural traditions, usually shaped by non-economic factors, help to reduce the transaction costs of firms, particularly the costs of knowledge transfer. This study attempts to explain the effects of non-economic factors over voluntary business associations (BAs) and highlight the concept of “borrowed institutionalism” to illustrate the constructive and destructive power of BAs in their use of their relationships with the political establishment for their members. In Türkiye, BAs are not only economic actors but are also embedded in social forms that contain secular or conservative characteristics. While, the structures of these associations that operate within various ideologies can contribute to the institutional setting, they can also hinder the economic potential of a region by developing love or hate relations with the respective political structures. This forms the basis of the concept of “borrowed institutionalism” introduced in this study. Kayseri, which is one of Türkiye’s successful production centers with its unique socio-political characteristics, and predominantly home to small- and medium-sized enterprises (SMEs) appears to be a critical case to analyze the role of BAs. The findings from Kayseri case study support the idea that both secular and conservative forms of BAs can cyclically be constructive or destructive for their members and create borrowed institutionalism based on non-inclusive institutionalism.