Informal Institutions Research Articles

Political trust and economic development in European regions

AbstractThis paper examines the complex relationship between political and social trust, government quality, and economic development across 208 regions in the European Union (EU). We use a pooled data generalized structural equation model (GSEM) to show that political trust serves as a fundamental driver of regional economic development in the EU. Political trust is, in turn, influenced by both social trust and government quality. Social trust and government quality have quadratic effects on political trust, showing diminishing returns, while the effect of political trust on economic development is linear. Political trust mediates the relationship between social trust and economic development entirely, while government quality retains a direct relationship with economic development. These findings underscore the fundamental role that political trust plays as a mechanism through which both formal and informal institutions shape regional development.

Інституційне забезпечення екологічної резильєнтності

Current issues of the formation of a modern system of institutional support of resilience based on the ecological component in Ukraine are considered. Attention is focused on the development of conceptual methodological postulates aimed at creating an effective institutional environment for sustainable and resilient nature management. The purpose of the article is the formation of a modern institutional environment for nature management, which will be based on an effective combination of formal and informal institutions, which will directly or indirectly, with the help of appropriate tools, ensure the involvement of natural resources in economic circulation. The research was conducted using a complex of general scientific and special methods, which made it possible to ensure the conceptual integrity and reliability of the obtained results. With the help of abstract logical analysis method, conceptual methodological postulates on institutional support for the sustainability of resilient nature management were formed. Structural and functional analysis is used to study the functional features of institutions within the framework of resilient spatial development. Based on the modeling method, a scheme for the distribution of institutional tools by components of ensuring resilience in the natural resource sphere was developed, and the relationships between these tools were identified and visualized. The novelty of the work consists in the development of an algorithm for the implementation of institutional transformations regarding the management of territorial entities’ resilience (in terms of natural-resource / ecological component) taking into account the European experience of municipal management of spatial development. The principles of institutional transformations in resilience management, which are of a universal nature, have been improved with an interpretation in the field of natural-resource (ecological) relations. Attention is focused on the importance of forming multi-subject corporate structures of territorial development management using modern platform mechanisms. This approach makes it possible to balance the interests of various stakeholders — the state, local self-government bodies, businesses and the population, and, accordingly, to ensure a consensus regarding the directions of resilient development of territorial entities. The article also examines the issue of consolidation of financial resources in the natural and economic sphere and the mechanisms of their effective use to achieve the goals of resilient development. Innovative approaches to the management of natural resources are proposed, including their capitalization and involvement in economic circulation, taking into account environmental limitations. Conclusions have been made regarding promising directions for further research in this field, including the development of specific mechanisms for implementing relevant institutional transformations, evaluating their effectiveness in various regions of Ukraine, as well as studying the possibilities of adapting international resilience management experience to Ukrainian realities.

Ambiguity or specificity: The influence of merchant guild culture on managers' disclosure strategy

AbstractRecent studies indicate that culture attributes significantly influence corporate behaviour. Building on this, our study explores how merchant guild culture (MGC) influences firms' voluntary disclosure practices, specifically through managerial disclosure strategies. Analysing data from Chinese listed firms between 2010 and 2022, we found that MGC significantly reduces the specificity of managerial responses at earnings communication conferences (ECCs). This suggests that firms influenced by MGC favour ambiguous communication, aligning with the value to mitigate competitive risks. Our findings deepen the understanding of cultural influences on corporate disclosure practices and extend literature on the role of informal institutions in corporate behaviours.

Riding on information-based advantages: Business group affiliation and cross-border acquisition completion

This study examines the impact of business group affiliation on the likelihood of completing cross-border acquisitions. Drawing on information asymmetry theory, we hypothesize that business group–affiliated firms are more likely to complete cross-border acquisition deals than standalone firms. Recognizing the role of formal and informal institutions in shaping information asymmetry in cross-border acquisition transactions, we also investigate the contingent effects of regulatory quality distance (a formal institutional factor) and cultural distance (an informal institutional factor) on the above relationship. Our empirical analysis, based on a sample of 1293 cross-border acquisition deals announced by Indian firms between 2000 and 2017, offers interesting insights. Specifically, we find that business group affiliation positively influences the likelihood of cross-border acquisition completion and that regulatory quality distance between the home and host countries attenuates this effect. However, contrary to our expectations, cultural distance also attenuates the positive impact of business group affiliation on cross-border acquisition completion, challenging the expectation that business group affiliation advantages would mitigate information asymmetry across all contexts. Thus, our study underscores the context-dependent nature of business group affiliation advantages, which are shaped by formal and informal institutional factors in cross-border acquisitions.

Syrian War Economies

Abstract Accounts of the Syrian conflict tend to emphasize “top-down” geopolitics or “bottom-up” local-national conflict dynamics. As a contribution to this roundtable on rethinking war economies, I argue that political economy and comparative approaches can help explain the connections between global-regional processes and domestic institutional transformations brought by war. Institutional development under Asad left a contradictory legacy: the Syrian regime was incapable of compromise with domestic opposition in 2011, but it proved resilient in the ensuing devastating war that subjected the government to international sanctions, external interventions, and territorial fragmentation. The Syrian regime responded to these shocks by reconfiguring its elite networks of power, which further blurred the lines between formal and informal institutions. As its financial resources dropped, the regime initiated new economic policies, but these attempts were refracted through the distortions of the war, and either became predatory or were paradoxically blocked by the elite networks crafted earlier as a survival strategy.

Exploring the nexus between exports’ economic complexity and institutional quality: insights from Italian provinces

ABSTRACT The present research aims to investigate the determinants of economic development and productivity by proposing an empirical analysis of the economic effects of institutional quality on the economic complexity of export at the intra-national level, focusing on 103 Italian provinces from 2004 to 2016. Using the System Generalised Method of Moments (System-GMM) estimator, the study assesses the influence of various institutional dimensions on provincial economic complexity, as measured by the Economic Complexity Index (ECI). The findings indicate that institutional quality, particularly rule of law, regulatory quality, and voice and accountability, significantly enhances economic complexity. Better formal and informal institutions such as completeness of contracts, social cohesion, contract enforcement, by reducing transaction costs and uncertainty, and by favouring knowledge dissemination and security of investments, are source of comparative advantage in complex industries that lead to diversified and sophisticated production, fostering economic growth and innovation. Moreover, the study emphasises the importance of related activities, which interact with institutions to support complex and innovative export-related activities through knowledge spillovers and related diversification. The analysis also highlights the pivotal role of human capital, social capital, and innovation, which should remain focal points for policymakers.

Explaining and Understanding Formal and Informal Institutions in the Age of Globalization

Explaining and Understanding Formal and Informal Institutions in the Age of Globalization

How informal institutions matter: clan culture and fertility in China

How informal institutions matter: clan culture and fertility in China

Dvojí život historické antropologie.

Since 1989 modern western methodological approaches, including historical anthropology, have been adopted in Czech academic circles, both spontaneously (among historians) and in institutionalised form (the case of ethnology). Very often, however, historical anthropology has been taken up only as an external label that has not meant any real change in research methods. This has simply encouraged the replication of the formal and informal ties and institutions inside the academic community that originated in the period of "normalisation" and that undermine the possibility of the real transformation of our academic environment. The author therefore attempts to distinguish in terms of both theory and method between two types of "historical anthropology": chronologically the first type has been closer to historical sociology (and directed in its way to the history of mentalities), while the second drew inspiration from social anthropology and led towards micro-history. In the Czech environment the ethnologists are closer to the first and the historians to the second, but often without either group being aware of the fundamental difference between the two types.

An investigation of the factors underlying informal settlement growth: The case of Burayu City, Ethiopia

Informal settlements in developing countries’ cities are becoming more and more widespread. The city of Burayu is no exception to this trend. To address the challenges involved, it is important to understand the reasons for the prevalence and perseverance of informal settlement. However, there is a lack of institutional and actor perspectives to investigate the process and factors driving the growth of informal settlement in Burayu city. This study investigates the process and precipitating factors underlying the growth of informal settlements based on institutions, structure and agency and social non-compliance perspectives. Primary data for this study were gathered via key informant interviews, questionnaires, and observations. Secondary data were obtained from the empirical data. This study revealed that local informal institutions such as social networking play a crucial role in the growth process of informal settlement by fostering an informal written contract of sale. The study also identified rural-urban migration, speculation, locational choice, and lack of good governance as precipitating causes for the growth of informal settlement. In addition, actors use formal institutional loopholes to engage in informal buildings. Therefore, along with government structure ineffectiveness, the behavior of informal actors’ was also identified as an important, albeit often neglected, factor in the growth of informal settlements. Identifying the impact of various informal actors' behaviors on the proliferation of informal settlements is vital not only for improving relationships among actors but also for introducing relevant institutions to control informal actors to improve land governance.

Societal Trust and Modified Audit Opinions: International Evidence

ABSTRACT This study examines how societal trust influences auditors’ likelihood of issuing modified audit opinions. Analyzing cross-country data, we find that auditors in countries with high levels of societal trust are less prone to issue modified audit opinions. Specifically, our findings indicate that this effect is moderated by formal audit-related institutions, such as heightened auditor liabilities, the presence of Public Company Accounting Oversight Board (PCAOB) inspections, and a more advanced audit profession. These results are consistent even when applying a difference-in-differences (DiD) approach. Further analysis shows that the moderating impact of formal institutions is more pronounced for clients operating domestically, clients of non-Big N auditors, and auditors with long tenure. Overall, our findings highlight societal trust as a significant informal institution influencing auditor opinions, with a complex interplay between this trust and formal audit-related institutions. The study offers important implications for policy, practice, and future research. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40; M41.

Do regional trusts alleviate bond market risks? Evidence from the Chinese municipal corporate bond pricing

Municipal corporate bonds have attracted significant attention due to their pricing mechanisms and reflect China's distinct financial landscape. Existing research has highlighted the influence of informal institutional factors on bond pricing. This study introduces the social trust index to measure regional trust levels and assesses its correlation with municipal corporate bond issuance pricing. The empirical analysis indicates that higher regional trust levels are significantly associated with reduced issuance credit spreads for municipal corporate bonds. The relationship is moderated by local economic development and the strength of implicit government guarantees. Employing the “Yongmei” event as a case study, this research explores the dynamics of bond pricing mechanisms following a reduction in government implicit guarantees and finds that a weakening of these guarantees intensifies the influence of regional trust on credit spreads. Additionally, default events are observed to have spillover effects, impacting neighboring provinces and the overall market. This research extends the investigation of regional trust's pricing mechanisms to the municipal corporate bond market, thereby enriching the study of informal institutions' impact on financial market pricing. The findings underscore the importance of effectively harnessing market mechanisms by governments to mitigate risks in the municipal corporate bond sector.

Institutional Topography: A Review of Subnational Institutions

Research on subnational institutions is largely motivated by the observation that formal and informal institutions within countries are unevenly configured over geographical space. Although diverse, this relatively nascent body of work has yet to explicate firm activity across subnational locales that exhibit institutional dissimilarity and isomorphism with both proximate and distant centers of political-economic power. To characterize firm activity over such spatially continuous institutional landscapes within countries, we synthesize insights from the subnational institutions literature by introducing a topography framework with its characteristic dimensions comprised of (1) polycentricity, (2) elevation, and (3) slope. We discuss theoretical contributions from using this framework to review 92 articles in the period 1999 to 2024 from 24 journals before concluding with directions for future research. This work integrates knowledge on subnational institutions across management sub-fields, including, but not limited to, international business, strategic management, and entrepreneurship.

Penguatan Kelembagaan Lokal dan Konservasi Ekologi Mangrove Jangkaran Untuk Pariwisata Berkelanjutan

This community service focuses on strengthening local institutions, preserving mangrove ecology and increasing tourist visits. Activities are carried out through collective problem solving, training and mentoring. This community service has succeeded in encouraging and implementing pro-sustainable tourism policies. Strengthening informal institutions, especially developing joint agreements, resolving disputes/conflicts, cooperation, commitment and new ideas, namely low carbon tourism. This activity also ensures that all sustainable tourism ideas are prepared, included and regulated in the review and revision of the Jangkaran Village Tourism Master Plan (RIPPARKAL). Ripparkal is the foundation for mangrove ecology and ecosystem conservation through village regulations as formal institutional strengthening. In this way, the institution is legal and binding, so that the government provides the village budget and infrastructure to carry it out. Apart from that, focusing on ecological conservation can encourage carbon trading from communities to emitters as an alternative financing mechanism in line with Presidential Regulation No. 98/2021. However, this dedication is too early to evaluate the achievement of ecological and environmental improvements, as well as overcoming decline. visits for short periods of service. This still requires assistance and capacity strengthening to fulfill the necessary requirements and complementary requirements to enter the next carbon trading system.

Informal governance and transnational access in world politics

AbstractThe governance turn in political research has led to increased attention to informal institutions. For scholars of international relations this has contributed to recent scholarship that reveals a notable growth in the number of informal intergovernmental organizations (IIGOs). Many aspects of IIGOs remain unknown, including whether they involve transnational actors (TNAs). Yet, whether IIGOs are open to TNAs or not may affect their performance and legitimacy. Given the importance of TNA access to IIGOs, this article explores IIGOs openness to TNAs. We illustrate that IIGOs vary whether they are open or not and that arrangements for TNA access differ. Theoretically, we build on existing literature to posit that the political costs of involvement, TNA resources, and the institutional environment affect whether IIGO are open or closed to TNAs. Empirically, we present new data on TNA access to 94 IIGOs and examine the variation in IIGO openness to explore the validity of our theoretical expectations. We find that no single account can be offered to understand access across IIGOs, and our explanatory factors show variegated effects across different subgroups of the sample. Our findings have implications for debates on the rise of informal global governance and the openness of global governance.

Informal Institutions and Environmental Quality: Exploring the Mediating Roles of Different Civic Pro-Environmental Behaviors in China

Informal Institutions and Environmental Quality: Exploring the Mediating Roles of Different Civic Pro-Environmental Behaviors in China

Neo-institutionalism perspective on local governance in Lombok: Reinstitutionalisation of Tuan Guru in the Indonesian decentralization era

This article delves into an examination and analysis of leadership models within local government institutions in Indonesia, employing the conceptual framework of new institutionalism. We contend that informal local institutions within communities not only influence the behavior and identity of leaders as actors but, within the context of decentralization, have also undergone a process of reinstitutionalization regarding roles and functions, employing distinct patterns of appropriation. Employing an interpretive approach, this article focuses on phenomena within the management of local governance in the West Nusa Tenggara province. Data were collected through in-depth interviews, literature studies on local history, and online news searches. Through a case study of local governance in West Nusa Tenggara province, particularly Lombok, the article reveals that the Tuan Guru, an informal local institution in Lombok society, has experienced reinstitutionalization through vertical and horizontal appropriation. The conclusion drawn is that decentralization has created opportunities for informal institutions to re-establish their roles within formal governance through appropriation patterns.

A regional perspective on the privatisation of Chinese state-owned firms

ABSTRACT This study examines the impact of regional formal and informal institutions and the regional origins of private shareholders on the privatisation efficiency of Chinese state-owned enterprises (SOEs). Using a difference-in-differences method to examine 63,599 firm–year observations, we find that, on average, privatisation enhances the capacity utilisation efficiency of Chinese SOEs. That positive effect is stronger in regions with higher marketisation or more embedded in Confucianism. Interestingly, private shareholders from mainland China enhance capacity utilisation, but foreign shareholders exert no significant effect. Moreover, Hong Kong–Macau–Taiwan shareholders weaken the positive effect of privatisation on capacity utilisation in both low-marketised and high-Confucian regions.

Emissions trading, corporate social responsibility, and innovation quality -based on the perspective of formal and informal institutions

ABSTRACT High-quality green innovation plays a significant strategic support role in high-quality economic developments. Drawing upon institutional theory and property rights theory, this paper investigates the drivers of green innovation quality (GIQ) from the perspectives of formal and informal institutions. Emissions Trading Schemes (ETS) represent formal institutions designed and implemented by governments, while Corporate Social Responsibility (CSR) represents informal institutions. The study finds that ETS significantly enhances GIQ. Moreover, CSR significantly and positively moderated the relationship between ETS and GIQ, indicating that the synergistic interaction between formal and informal institutions stimulates superior innovation quality. This paper contributes to the understanding of the relationship among government regulations, corporate ethics and responsibility, and innovation quality. This paper offers recommendations for environmental policy and management strategies.

The Effectiveness of Restorative Justice in Resolving Juvenile Criminal Cases: An Examination of Legal and Social Perspectives

The objective of this research is to examine and address issues pertaining to the enforcement of the law in instances of violent criminal activity perpetrated by students of legal age who are enrolled in educational institutions. External factors, including association, education, and social environment, exert a significant influence on children's criminal behavior, which frequently originates from the tendency to emulate negative behaviors and the lack of adequate parental supervision. This research employs a normative legal approach to elucidate the nature of the penalties imposed upon minors who perpetrate criminal acts, as delineated in the Juvenile Criminal Justice System No. 11/2012. The findings indicate that to avert criminal conduct by minors, it is imperative to implement sustainable development initiatives that bolster the survival, physical, mental, and social advancement of children, while safeguarding them from threats that could jeopardize their future and the nation. The juvenile criminal justice system incorporates community involvement throughout the entirety of the case process. Crimes occurring within the community are shaped by the prevailing social conditions, along with individual factors pertaining to the perpetrators and victims. At the conclusion of each case, the community is tasked with facilitating the reintegration of offenders and victims back into the social milieu. This is achieved through either the establishment of new informal institutions or the reinforcement of existing formal ones.