High-quality Institutions Research Articles

Whether, how and why home country environments influence emerging market firm acquisition behavior

PurposeAccording to the 2019 World Investment Report, recent events in deglobalization have made many countries, especially developed markets, resist inward foreign direct investment (FDI) as ceding control to foreign countries. At the same time, many emerging market firms (EMFs) have been increasing their acquisitions in developed markets. The authors elaborate three unconventional motives that justify such acquisitions, and test whether conditions in home countries related to these motives predict the pursuit of greater or lesser equity control. Understanding how home country conditions may spur seeking greater equity control can help policymakers and business firm decision-makers improve these dynamics.Design/methodology/approachExamining data covering the period 2006–2018, the authors test hypotheses using a sample of 4,130 acquisitions by EMFs into developed markets, and test hypotheses to investigate “How does the institutional and resource environment of an EMF's home country relate to the respective EMF acquisition behavior of seeking equity control?”FindingsThe authors found that higher institutional quality, poorer factor market development, and higher capital market quality in the home country are related to higher equity positions sought.Practical implicationsAcquiring and target firm managers, along with other stakeholders, can gain insights on how to respond to acquisition opportunities by recognizing how home country conditions influence emerging market internationalizing behaviors into developed markets.Originality/valueThe compilation of this data uniquely covers 48 different emerging markets and further concentrates on the relatively less understood pre-deal phase for EMNEs entering developed markets.

Institutional environment for the development of regional high-technology industries

Introduction. The effective development of high-technology industries is ensured by a high-quality institutional environment formed at both federal and regional levels. Most works in this field lack a systematic approach and leave room for the further study of the institutional environment for the development of regional high-technology industries. Purpose. The identification of the minimum required framework of the institutional environment that ensures the development of regional high-technology industries. Methodology. In this work we used the following general and special methods: analysis, synthesis, induction, deduction, generalisation, comparison, economic analysis, content analysis, and tabular interpretation of empiric and factual information. Results. We identified key political, legal, economic, and social institutions that influence the development of regional high-technology industries. Conclusions. The institutional environment is a complex and multidimensional system of institutions and their interactions that influence the activities of all economic agents, including innovative and high-technology companies. Therefore, it is necessary to ensure the formation of high-quality institutions at both federal and regional levels that will make the interactions in the field of high technologies predictable, decrease transaction costs, and so on.

RELATIONSHIP BETWEEN GLOBALIZATION AND POVERTY IN PAKISTAN: ROLE OF INSTITUTIONS

This paper aims to investigate the role of institutions in the long-term relationship between globalization and poverty. The autoregressive distributed lag (ARDL) model of co-integration is employed to estimate the long-run equilibrium relationship in the context of Pakistan over annual time series data spanning from 1984 to 2015. The KOF index is used to measure globalization, and the weighted average of five variables— democratic accountability, government stability, law and order, corruption control, and bureaucratic quality—is used to assess institutional quality. Our results demonstrate that the impact of globalization on reducing poverty would increase in the presence of high-quality institutions. However, the size effect of institutional quality is not large enough to reap the full benefits of globalization in mitigating poverty in the country. Other control variables in the model reveal that unemployment and government spending increase poverty, whereas GDP growth is found to reduce it. Keywords: Globalization; KOF Index; Poverty; Institutional quality; ARDL; Pakistan. JEL: F6; I3; D73; C5

World practice of applying strategic management in cooperation with market subjects of educational services

This article is devoted to the issues of foreign practice of applying methods and tools of strategic management in the interaction of subjects of educational services on the market.Today, given the development of higher and postgraduate education, the main focus is on the integration of education and business. This process was developed along with the development in the higher education system of such terms as “integration”, “internationalization”, “globalization”, which are becoming synonyms and not contradictory terms adopted in the field of higher education.With the development of globalization and internationalization of higher education, the importance of the implementation process, methods and measures for the implementation of transformations that contribute to the development of the detail of a higher education institution as a high-quality and effective institution of education and science increases. The object of close and thorough research is the organizational and economic mechanism that contributes to improving the quality of education.Integration processes are prerequisites for the development of a competitive environment among higher educational institutions, thereby allowing us to consider the organizational and economic mechanism of managing educational institutions as a business process, while it is necessary to take into account the specific features that are characteristic only of a higher educational institution as a subject of educational services.

The Effects of Institutions on Emerging Market Firms’ International Assignment Location Decisions

We investigate international assignment (IA) location decisions of emerging market firms as determined by the institutional contexts of their home and host countries. Using an institutional perspective, assignment patterns of the entire firm population in Slovenia to either other emerging or developed host countries in Europe are analysed. The findings show that both institutional quality and distance influence expatriation flows in firms from a low quality institutional context. These firms expatriate more to markets with high quality institutions and choose host countries with higher rather than smaller institutional distance for their IAs. We refine institutional theory with respect to host and home country institutional determinants of expatriation decisions by taking into consideration the particular features of emerging markets and their firms – separately and compared to developed markets and their firms.

Institutions matter: The impact of the covid-19 pandemic on the political trust of young Europeans.

In this paper, we study the short‐run evolution of political trust during the recent covid‐19 pandemic using survey data for a sample of young individuals living in Germany, France, Italy, and Spain. In particular, we analyze whether pre‐pandemic perceptions and experiences of citizens about various dimensions of local governments and institutional quality had any mediating effect on the evolution of political trust after the outbreak of the covid‐19 pandemic. The results show a relative increase in political trust of about 9% in regions with high institutional quality (75th percentile) compared with regions with low institutional quality (25th percentile) over the period 2019−2020. This divergence can be associated with either a better performance of policymakers in high‐quality institutions regions, or to more positive attitudes toward politicians by citizens that, before the pandemic, believed to live in regions with efficient institutions. Overall results are not affected by the inclusion of regional fixed effects or by possible differential evolution of political trust according to a large set of observable regional characteristics.

Digital Paradox: Platform Economy and High-Quality Economic Development—New Evidence from Provincial Panel Data in China

Based on provincial panel data of China from 2011 to 2019, this paper discusses the influence and mechanism of the platform economy on the high-quality development of regional economies. It is found that the platform economy has an inverted U-shaped impact on the high-quality development of regional economies. On the left side of the inverted U-shaped inflection point, the platform economy plays a significant role in promoting high-quality economic development; on the right side of the inflection point, the platform economy has an obvious inhibitory effect on high-quality economic development. Statistical analysis showed that 85% of the observations fell on the left side of the inflection point, indicating that China’s platform economy as a whole is in the early stages of development. From the strong and weak grouping test of the degree of government intervention, it was found that the platform economy only has an inverted U-shaped effect on the high-quality development of the areas with weak intervention. From the point of view of the coefficient, the platform economy has a greater promoting effect on the high-quality development of the areas with strong intervention. From the grouping test of the quality of the market system, it was found that the inverted U-shaped curve is steeper in the areas with higher institutional quality, indicating that, in the early stage of development, the platform economy has a greater promoting effect on the high-quality development of areas with perfect institutions. In addition, the analysis of regional heterogeneity showed that, in the early stage of development, the promoting effect of the platform economy on the high-quality development of the northeastern and western regions is more significant. After exceeding the threshold, the platform economy has an inhibitory effect on the high-quality development of all regions. The mechanism test shows that technology, talent, and capital in the initial stage of development can all play a positive regulatory role; after exceeding the threshold, platform economic monopoly may restrain high-quality economic development by hindering technological progress and causing a mismatch of labor–capital elements and resources.

Immigrant Diversity, Institutional Quality, and GVC Position

This paper investigates the effect of immigrant diversity on a country’s position in global value chains (GVCs) and how this effect depends on the institutional quality of destination countries. We investigate this issue using data on 19 manufacturing sectors of 18 OECD countries over the 2000–2014 period. Fixed effects estimation results show that the impact of immigrant diversity on the GVC position is significantly influenced by the institutional quality of destination countries. Specifically, in countries with high (low) institutional quality, immigrant diversity is positively (negatively) associated with the GVC position. Moreover, the interaction effect of immigrant diversity and institutional quality on the GVC position is heterogeneous across immigrant groups and institutional dimensions. This study not only enriches the literature on the relationship between immigrant diversity and GVC position but also discusses new ideas that can promote GVC positions of real economics, which is essential for sustainable economic development.

An investigation of relationship between global economic sanction and life expectancy: do financial and institutional system matter?

ABSTRACT This article examines the impact of cross-border economic sanctions (CES) on the quality of national health – proxied by life expectancy. Structural gravity models are employed for a sample of 148 sanctioned countries (108 developing countries and 40 developed countries) during the 1995–2018 period. We consider various forms of sanction, including arms, military, trade, finance and travel. The results reveal that the imposition of sanctions, especially arm, financial, travel and other sanctions, has a significant negative effect on the national health of the targeted countries. The effects are largely heterogeneous across sanctioned countries in terms of their economic development. Furthermore, financial market development and institutional quality of the sanctioned countries critically affect the relationship between CES and national health. Particularly, more developed financial markets, the higher degree of financial openness and central bank independence, as well as higher institutional quality, help targeted countries alleviate the consequences of CES on national health. These empirical findings are expected to provide insightful lessons for economists and policymakers in the targeted countries facing the risk of economic degradation.

Does the country’s institutional quality enhance the role of risk governance in preventing bank risk?

ABSTRACT This study investigates the relationship between risk governance effectiveness and bank risk at different levels of institutional quality. We find that risk governance effectiveness negatively affects bank risk and this relationship is stronger in countries with higher institutional quality. This indicates that risk governance can prevent bank risk more effectively in countries with greater institutional quality.

Towards a green world: the impact of the Belt and Road Initiative on the carbon intensity reduction of countries along the route.

The Belt and Road Initiative (BRI) has attracted widespread attention since its implementation, especially the ecological effect. However, the net environmental impact of the BRI on countries along the route has rarely been directly assessed, though nearly 8years after the BRI was proposed. This study quantitatively estimates the net effect, impact mechanism, and impact heterogeneity of the BRI on the carbon intensity reduction of countries along the route by adopting the difference-in-differences estimator based on propensity score matching, which enables a more convincing causal relationship between the BRI and the countries' ecological improvement. Research indicates that the BRI has significantly promoted the carbon intensity reduction of countries along the route, which is mainly achieved by boosting the growth of green economy (scale effect), the progress of green technology (technique effect), and the upgrading of industrial structure (composition effect). Moreover, the impact reveals obvious heterogeneity, manifested as the BRI has significantly promoted the carbon intensity reduction of countries with high institutional quality, high-income countries, and countries along the Silk Road Economic Belt, while its impacts on countries with low institutional quality, low-income countries, and countries along the 21st Century Maritime Silk Road are not significant. A series of validity tests further demonstrate the robustness of the estimation.

The effect of foreign institutional ownership on corporate tax avoidance: International evidence

We find that foreign institutional investors (FIIs) reduce their investee firms’ tax avoidance. We provide evidence that the effect is driven by the institutional distance between FIIs’ home countries/regions and host countries/regions. Specifically, we find that the effect is driven by the influence of FIIs from countries/regions with high-quality institutions (i.e., common law, high government effectiveness, and high regulatory quality) on investee firms located in countries/regions with low-quality institutions. Furthermore, we show that the effect is concentrated on FIIs with little experience in the investee countries/regions or FIIs with stronger monitoring incentives. Finally, we find that FIIs are more likely to vote against management if the firm has a higher level of tax avoidance.

What drives local currency bond market development in Saudi Arabia: do macroeconomic and institutional factors matter?

The main objective of this study is to empirically determine which factors are related to the development of local-currency bond market (LCBM) in Saudi Arabia over the period 1990–2019. Using ARDL modeling, the results reveal long-run cointegrating relationships between LCBM capitalization and macroeconomic, financial, and institutional factors. Unlike institutional ones, macroeconomic and financial factors seem to matter more in developing LCBM in the short run. However, in the long run, larger economic size more government spending, low inflation levels, broader and deeper banking system, higher bureaucratic quality, and better investment profile, all play a crucial role in the determination of Saudi LCBM. Policy implications include measures toward sound macroeconomic fundamentals, broad and deep banking system, efficient stock market, and high-quality governance institutions.

Export entrepreneurship promotion: The role of regulation-induced time delays and 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.

Professionalization of The Principal’s Role

The aim of this work is to point out the importance of the professionalization of the principal’s role in education institutions, with an accent on preschool institutions. The sample included principals (N=57) of preschool institutions in Central Croatia. The goal was to test the mediation relationship through SEM and examine the direct influence of interpersonal relationships within the preschool institution on the development of its work quality; furthermore, to test the indirect influence of these relationships by introducing the mediation variable of professional competence. The structured modelling in the AMOS was applied for testing the direct and indirect influence. The contribution of interpersonal relationships on the work quality is high and statistically significant (β=0,920), which confirms the direct influence. For testing the mediation effects, a bootstrapping method was designed that confirmed the indirect influence of interpersonal relationships on the work quality with the statistically significant serial mediator of professional competence (p= 0,016), thereby confirming partial mediation. This research determined that positive interpersonal relations, mediated by the principal’s professional competence, have a positive effect on the work quality of a preschool institution. In order for preschool institutions to reach the desired quality, it is necessary for them to be managed by professionally empowered and expert principals who promote prime cooperative relationships as the starting point in developing a high-quality institution. The results of this research contribute to a clearer perception and understanding of the professionalization of the principal’s role through key areas of his/her work and activity, and the possibility of their practical implementation into education institutions.

Information Interventions and Postsecondary Enrollment: Evidence from Appalachian Ohio

This paper examines a series of high school-level interventions designed to encourage college attendance in a historically underperforming region, Appalachian Ohio. High schools received competitive grants to combat information frictions regarding postsecondary enrollment—through campus visits, college fairs, financial aid seminars, etc. I estimate the effect of these competitive grants on postsecondary enrollment. Only Appalachian high schools were eligible for the program, and I exploit this policy-induced variation in treatment allocation to compare college attendance rates for high schools that received funding and similar, non-Appalachian high schools that were ineligible for the program using a difference-in-differences framework. Leveraging multiple datasets and treatment specifications, I document two findings: i) while college attendance generally rose during treatment, no evidence indicates that the grants increased attendance relative to similar yet untreated schools and ii) there is no evidence that attendance patterns shifted to higher-quality institutions.

Provincial governance and financial inclusion: micro evidence from rural Vietnam

Do government institutions improve financial inclusion for households and wage earners in a transitional country? We answer this question in Vietnam, a socialist-oriented market economy that has seen rapid economic growth, while balancing economic prosperity with equity, social inclusion, and bolstering the state’s governance and public administration performance. Our micro-econometric analysis provides fresh evidence that households in provinces with better institutions are more likely to receive larger formal loans, and have bank accounts, savings books, and ATM cards. Also, wage earners living in provinces with higher quality institutions are more likely to be covered by compulsory social insurance. The finding is robust to the choice of econometric specifications and control variables. Our research result implies that improving the quality of provincial institutions (or governance) is an effective way of enhancing financial inclusion for households and wage earners in rural Vietnam.

Favouritism to SOEs: institution quality or career concern?

ABSTRACT SOE is often viewed as favoured by the government compared to other firms. This is in conflict with GDP tournament theory on China’s economic success. Using the Annual Census of Enterprises dataset from 1999 to 2008, this article reveals the surprising finding that SOEs did not obtain significantly more government subsidy. We find that regions with high-quality institutions significantly reduced SOE subsidy grants rather than the city party secretary’s career concern to promote GDP.

The dynamic links between nuclear energy and sustainable economic growth. Do institutions matter?

This study investigates the relationship between nuclear energy consumption and economic growth and the role of institutional quality in explaining this relationship using panel data of 18 top nuclear power-consuming countries for the period 1995–2017. It is the first research effort that incorporates the impact of institutional arrangements into the nexus between nuclear energy and economic growth. For this reason, we employ an institutional quality index which constitutes a composite measure of core institutional dimensions such as the rule of law and regulatory efficiency. The results of first and second-generation panel unit root and cointegration tests reveal a long-run relationship between economic growth, nuclear energy consumption, institutional quality, real gross fixed capital formation, and labor force. The pooled mean group estimation shows that nuclear energy consumption and institutional quality exercise significant positive effects on economic growth in the long run. In contrast, higher institutional quality has a negative long-run impact on the use of nuclear power. Furthermore, it is only observed a unidirectional causal effect from economic growth to nuclear energy consumption in the short run. Given the global controversies over the role of nuclear power in promoting sustainable economic growth, our findings imply that the institutional framework of the countries that consider nuclear energy as a long-term clean energy option has to be reassessed.

Business and Human Rights: A Configurational View of the Antecedents of Human Rights Infringements by Emerging Market Firms

This study investigates the antecedents of human rights infringements (HRIs) by emerging market firms (EFs). We used fuzzy set qualitative comparative analysis (fsQCA) to examine HRIs in 245 firms based in eight emerging markets, between 2003 and 2012. Our findings disclose three equifinal configurations of high levels of HRIs, all involving EFs that have expanded to a high number of foreign markets: (i) large, old, low performing state-owned enterprises (SOEs) operating in high quality institutions’ home and host markets, (ii) small, young, over-performing EFs operating in low quality institutions’ home and host markets, and finally (iii) large, old, high performing SOEs, operating in low quality institutions’ home and host markets. We contribute to the literature by examining a novel dataset on HRIs by EFs, and by building a configurational explanation of HRIs that bridges the arguments of the institutional theory and strain theory literatures on corporate wrongdoing.