Influence Of Formal Institutions Research Articles

The Effect of National Cultural Values on the Financial Inclusion: An International Perspective

Financial inclusion is essential for attaining the United Nations Sustainable Development Goals. Research on financial inclusion is becoming increasingly vital for both researchers and policymakers alike. Previous studies have investigated the influence of formal institutions on financial inclusion. Nevertheless, the influence of informal cultural disparities on financial inclusion remains largely unexplored. This study investigated the influence of national cultural values on the levels of financial inclusion and illustrated how national culture might decrease the degrees of financial inclusion in countries. A comparative analysis methodology was used in the study, utilising secondary data from a time series from 2012 to 2021. The data encompassed 40 nations that were divided into four income groups. The findings indicated that the differences in degrees of national cultural values among various countries substantially impacted the country's levels of financial inclusion. The results suggested that Hofstede's cultural dimensions significantly impacted financial inclusion in the countries examined in the study. Moreover, these aspects were associated with financial inclusion, demonstrating diverse levels and orientations of influence. The results indicated that countries with a strong aversion to uncertainty and significant power disparities likely exhibit lower financial inclusion levels. Conversely, nations characterised by high levels of individualism and masculinity tended to demonstrate greater financial inclusion. The robust and extensive results of a series of rigorous evaluations may be a valuable foundation for policymakers, regulators, and other stakeholders in their efforts to promote sustainable development worldwide by improving global financial inclusion.

Protect, respect, remedy, and report? Development of human rights reporting in the context of formal institutional settings

AbstractThis paper investigates the influence of formal institutions, in particular legislation, on corporate human rights (HR) reporting. We use a mixed‐method approach, combining qualitative institutional analysis of two European countries — the Netherlands and Switzerland — with quantitative content analysis of annual reports of 94 listed companies for the years 2007 to 2019 (1222 firm‐years). We find that, for each observed book year, companies in the Netherlands are more willing to disclose HR information than companies in Switzerland, which we explain by their differences in formal institutional development. Our results indicate that formal institutions are essential determinants in HR reporting, both in the willingness of companies to disclose and the extensiveness of disclosure. Moreover, we observe a significant positive impact of legislation on HR reporting but find that the overall compliance levels of affected companies are low. We contribute to prior research, by providing evidence on the development and institutional drivers of HR reporting, a largely overlooked branch of sustainability reporting.

Confucianism and IPO underpricing

Previous studies show culture has an impact on IPO underpricing. Can Confucianism being a traditional culture system in China affect underpricing of Chinese IPOs? If yes, through what channels? This paper affirms the impact of Confucianism on IPO underpricing using a large sample in China. Results show that Confucianism can reduce IPO underpricing. This effect is more pronounced for non-state-owned firms and firms located in regions with weak investor protection. To investigate which channels of Confucianism affecting underpricing, we find that Confucianism can improve financial reporting quality and stock price informativeness, which is consistent with information asymmetry channel. We also find that Confucianism at underwriter's headquarter can decrease issuing firms' underpricing, consistent with rent seeking channel. We also find that Confucianism can reduce managers' agency costs, which is consistent with agency cost channel. Our results hold after considering alternative proxies for underpricing and proxies for Confucianism, controlling for the influence of formal institutions or other informal institutions, and employing instrumental variables in two-stage least squares regression.

Formal Institutions and Informal Entrepreneurial Activity: Panel Data Evidence from Latin American Countries

Abstract The objective of this work is to examine the influence of formal institutions on the level of informal entrepreneurial activity in Latin American countries. We use a panel dataset for 18 countries during the 2004–2017 periods. This dataset has not been widely used for longitudinal research by academics in the field of entrepreneurship in developing countries. Using the percentage of the adult population identified as self-employed as a proxy for informal entrepreneurial activity, our results suggest that informal entrepreneurial activity is lower in Latin American countries that have stronger property rights and lighter business regulation. However, countries with more flexible labor regulation show higher informal entrepreneurial activity. Therefore, we believe there is margin for policy intervention to reduce informal entrepreneurial activities in Latin America.

Institutional conditions and social innovations in emerging economies: insights from Mexican enterprises\u2019 initiatives for protecting/preventing the effect of violent events

Latin-American countries are characterised by societal problems like violence, crime, corruption, the informality that influence any entrepreneurial activity developed by individuals/organisations. Social innovations literature confront “wicked problems” with strong interdependencies among different systems/actors. Yet, little is known about how firms use innovation to hedge against economic, political or societal uncertainties (i.e., violence, social movements, democratisation, pandemic). By translating social innovation and institutional theory approaches, this study analyses the influence of formal institutions (government programs and actions) and informal institutions (corruption, extortion and informal trade) on the development/implementation of enterprises’ technological initiatives for protecting/preventing of victimisation. By using data from 5525 establishments interviewed in the 2012/2014 National Victimisation Survey of the Mexican National Institute of Statistics and Geography (INEGI), our findings shows that formal conditions (government programs) and informal conditions (corruption, extortion and informal trade) are associated with an increment in the number of enterprises’ social innovations. Our findings also contribute to the debate about institutional conditions, social innovations, and the role of ecosystems’ actors in developing economies. A provoking discussion and implications for researchers, managers and policymakers emerge from this study.

REDD+ as a Vehicle for Community-Based Forest Management? Critical Insights from Vietnam

Both the reducing emissions from deforestation and forest degradation program (REDD+) and community-based forest management (CBFM) aim to combat forest degradation and deforestation on various levels. Both approaches include multiple objectives such as carbon sequestration, livelihood improvement and forest tenure reform. New institutions, such as community-forest management boards or REDD+ implementation agencies, are being introduced to achieve sustainable development in the forestry sector. However, the way REDD+ affects local CBFM systems and community livelihoods remains understudied. This study analyzes the effects of REDD+ on CBFM systems in Vietnam. We selected four research communes (sub-district level units) and we conducted household surveys (n = 187), focus group discussions (n = 4), expert interviews (n = 8) and secondary data analysis (n = 23). Our findings show that in one commune REDD+ introduced CBFM and forestland allocation to communities in accordance with their customary boundaries. In another commune, REDD+ was implemented in a pre-existing CBFM and institutional landscape, and the program had little effect on households’ livelihoods. The implementation of CBFM in all four communes led to further consolidation of influence of formal institutions and a higher level of formalization among involved communities. Based on the results of this study, we propose a novel typology on CBFM systems in a post-REDD+ era. This typology takes the level of formalization, marketization, globalization and forest dependence of respective households, which make up a community, into account. We present CBFM systems on a spectrum from customary to formal, and we highlight the need to adapt REDD+ and CBFM to individual households’ livelihood trajectories.

The influence of home-country institutions on servitization

PurposeThe purpose of this paper is to explore how home-country institutions influence firms’ servitization decisions. Existing studies have mostly neglected differences across countries and implicitly assumed the servitization process and drivers are homogenous across national institutional environments. The authors challenge this assumption.Design/methodology/approachUsing case-based research, the authors explored the influence of formal institutions of the product, financial and labor markets on the servitization of two firms operating in a developed country and two in an emerging country.FindingsThe absence of robust home-country institutions did not necessarily hinder the servitization process. On the contrary, firms servitizate to overcome the difficulties posed by these institutional voids. The flexibility associated with service offerings enables firms to create viable alternatives to cope with taxes, lack of infrastructure and qualified labor force.Originality/valueThese outcomes contribute to the servitization literature, which has mainly focused on single-country studies and takes for granted the institutional differences between countries. The findings suggest future studies need to consider how and, to what extent, the country where the company is located influences servitization strategies and processes. Such reflections will improve the inferences made concerning firms’ servitization. For practitioners, the results suggest that the move into the provision of services can be a fruitful strategy to overcome the difficulties faced in emerging markets.

The influence of formal institutions on the relationship between entrepreneurial readiness and entrepreneurial behaviour

PurposeThe purpose of this paper is to use a unique set of measures from Holmeset al.(2013) to clarify the relationship between entrepreneurial readiness and entrepreneurial behaviours across countries and determine whether formal institutions moderate this relationship.Design/methodology/approachThis paper uses data collected by the Global Entrepreneurship Monitor, the Index of Economic Freedom, Political Risk Services, and the Freedom House and Political Constraint Index to test a theoretical model. A multilevel analysis is performed based on set of 377,356 observations from 51 countries spanning eight years (2001-2008).FindingsThe results suggest that entrepreneurial readiness has a strong relationship with entrepreneurial behaviour (as measured by entrepreneurial entry and opportunity-based entrepreneurship) and that this relationship strengthens with increases in political democracy (PD), government regulations (GR), financial capital availability (FCA) and market liquidity (ML).Research limitations/implicationsThe study is based on Holmeset al.’s (2013) institutions that are most important for society, uses satisfactory sample size and multi-level modelling. However, many more institutional conditions that remain to be considered might affect entrepreneurial activities.Practical implicationsFor policy-makers, the results show that PD, GR, FCA and ML correlate favourably with entrepreneurial behaviour when individuals have a high level of entrepreneurial readiness. Policy-makers should introduce policies that provide a secure environment to individuals to start their own ventures.Originality/valueThe current study is among the first to examine the three dimensions of formal institutions—political, regulatory, and economic institutions—in a single study. Using the three dimensions, the study explains theoretically and examines empirically the effect of individual-level entrepreneurial readiness on entrepreneurial behaviour.

Disaster Response After Extreme Events in Taiwan: The Influence of Formal Institutions on Inter‐Organizational Interaction

The performance of a disaster response system is related to its capacity to facilitate interaction and situational awareness among the organizations that respond to a disaster event. In line with the assumption that formal institutions have an impact on the organization and performance of a country's disaster management system, governments around the world have sought to improve their disaster management capacities through the promulgation of laws and regulations. The literature, however, is limited in its ability to explain the effect that formal institutions have on the emergence of inter‐organizational interactions in disaster response contexts. This article explores how formal institutions, shaped by legal institutions and information technology, influenced inter‐organizational interactions after two disaster events in Taiwan: The ChiChi Earthquake in 1999 and Typhoon Morakot in 2009. Through a content analysis of newspaper articles and qualitative interviews with decision makers involved in these events, this study identifies how formal institutions facilitated and inhibited inter‐organizational interaction under uncertain and emergent situations. This study not only contributes to the development of institutional and disaster management theory, it also provides policymakers with insights into how to strengthen the capacity of their disaster management systems.

Inclusive Institutions, Innovation and Economic Growth: Estimates for European Countries

This paper investigates the theoretical and empirical foundations of the links between inclusive institutions, innovation and economic growth. Its first contribution to the literature is to provide a non-scale R&D-based growth model incorporating negative externalities linked to low institutional quality that not only affect the productivity of private and human capital, but also constrain the diffusion of existing technological knowledge. In turn, these negative externalities reduce economic growth. The second contribution of this paper is to run estimates for a sample of European Union countries. Empirical analysis based on pooled long- and short-run estimates confirms the importance of private capital and technology as instruments to increase economic growth in European countries and suggests the existence of a positive relationship between inclusive institutions, innovation and economic growth. The estimates also show that market failures linked to the degree of market competition and to the level of network interaction in the economic system significantly condition the influence of formal institutions on private capital, technology and GDP growth.

Economic Behavior of Wood Sector Enterprises of Karelia Republic under Conditions of Market Transformations

The article presents the analysis of economic behavior of wood sector enterprises of Karelia Republic during transition to market. Findings show that the absence of adequate institutional conditions has set many enterprises on the brink of survival. The influence of formal institutions is essentially leveled by inefficient informal actions. Examples of positive changes testify not so much that the formation of effective institutions is taking place, as about the degree of adaptation of successful enterprises while using all favorable external factors. The analysis is based on data of long-term economic and sociological surveys of Karelia forest territories.

Big sister is watching you! Gender interaction and the unwritten rules of the Amsterdam red‐light district

It is generally accepted that in sexual interaction men are the hunters and women the gatherers. An expressly sexual environment such as a red‐light district would be expected to only reinforce this image. Strikingly enough, however, it is precisely prostitutes who seem able to break with these established gender roles. This ethnographic study uses participant observation to demonstrate how assumptions about sexual interaction may be specious: Female prostitutes are frequently not the passive victims and male clients not the active sex‐hunters they are taken for. Both the communicative function and protection of privacy play an important role in these processes in a red‐light district. In the red‐light district, gender interaction is bound by social regulation and unwritten rules that greatly exceed the influence of formal institutions. In this paper, the case of the red‐light district “De Wallen” in Amsterdam, The Netherlands, is discussed in the context of several disciplines including urban anthropology, social psychology, geography, gender studies, and urban sociology.