Formal institutions, informal institutions, and red tape: A comparative study

Wesley Kaufmann,Reggy Hooghiemstra,Mary K Feeney

doi:10.1111/padm.12397

Wesley Kaufmann, Reggy Hooghiemstra + Show 1 more

Open Access

https://doi.org/10.1111/padm.12397

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Abstract

Firms across the globe are affected by red tape, but there is little academic research on how country‐level institutions shape red tape perceptions. Drawing on institutional theory, we argue that a variety of formal and informal country‐level institutions affect perceptions of red tape in the private sector. We test our hypotheses using six data sources, including the World Economic Forum and the World Bank. Our results indicate that red tape is weakly associated with a country's level of formalization and rule enforcement effectiveness and more prevalent in federal as opposed to unitary states. As for informal institutions, we find that red tape perceptions are more pronounced in countries with an increased conservative political ideology, higher levels of corruption, and cultures that emphasize individualism and uncertainty avoidance. We conclude with a discussion of the implications for theory and practice.

Highlights

The red tape literature can be characterized as ‘one of the most popular and even defining topics for empirical researchers in public management’ but it has ‘some troubling knowledge gaps’ (Brewer et al 2012, p. 289)
As for informal institutions, we find that red tape perceptions are more pronounced in countries with an increased conservative political ideology, higher levels of corruption, and cultures that emphasize individualism and uncertainty avoidance
We focus on three formal and three informal institutions that theory and previous research indicate are relevant for the study of red tape in the private sector (e.g., Bozeman 2000; Pandey and Scott 2002; Bozeman and Feeney 2011)

Summary

| INTRODUCTION

The red tape literature can be characterized as ‘one of the most popular and even defining topics for empirical researchers in public management’ but it has ‘some troubling knowledge gaps’ (Brewer et al 2012, p. 289). We include three formal institutions (formalization, rule enforcement effectiveness, and federalism) and three informal institutions (corruption, political ideology, and culture) that are reflected in both the existing red tape literature (e.g., Bozeman 2000; Bozeman and Feeney 2011) and comparative research on institutions at the country level. We focus on three formal (formalization, rule enforcement effectiveness, and federalism) and three informal institutions (corruption, political ideology, and culture) that theory and previous research indicate are relevant for the study of red tape in the private sector (e.g., Bozeman 2000; Pandey and Scott 2002; Bozeman and Feeney 2011). We hypothesize: H6b: There will be a negative association between the level of uncertainty avoidance in a country and perceptions of red tape in the private sector

| METHODS

| RESULTS

11 Economic growth

Findings

| CONCLUSION