Informal Institutions Research Articles

Confucian culture and technological innovation: the long-term impact of informal institutions on regional progress in China

Confucian culture and technological innovation: the long-term impact of informal institutions on regional progress in China

Beacons not burdens: Business groups and corporate social performance around the world

AbstractResearch SummaryPrior studies on business groups (BGs) have predominantly focused on the impact of group affiliation on financial performance. In contrast, we argue that BG affiliates will outperform standalone firms in terms of corporate social performance (CSP) and that this effect will be positively moderated by the strength of formal and informal institutions. Moreover, we examine also differences among BGs and hypothesize that diversification and hierarchy of the group will negatively affect the CSP of affiliates. Employing a panel of 4368 firms from 43 countries between 2003 and 2016 and a propensity score matching approach in our regressions, we find robust support for these predictions. Our findings advance two distinct strands of literature on BGs and, respectively, corporate social responsibility.Managerial SummaryBG are a common organizational structure in many countries. Despite this, we still do not know much about them beyond their financial performance. In this study, we focus on examining the impact of BG affiliation on non‐financial performance (i.e., CSP) in the light of growing societal grand challenges. Using an international dataset of several thousands of firms, we find out that BG affiliates exhibit superior CSP results compared to non‐affiliated firms. These positive effects of affiliation are increased in environments with strong formal and informal institutions but reduced within groups that are more diversified and hierarchical. Our findings showcase the importance of BGs in tackling some of today's grand challenges and provide support for more nuanced approaches to study BGs across countries.

What does religion have to do with it: Exploring noninstitutional arguments for effective enforcement of IPR

AbstractThrough this paper the authors intend to establish a connect between religion and Intellectual Property Rights (IPR) particularly how various religions have justified IPRs and analyze whether religion can prove to be the much‐needed enforcement tool to fight infringement of IPRs. Intellectual Property is a domain which is governed purely by creativity and technology and has traditionally been justified by utilitarianism. However, the evidence we are in possession of does not entirely justify the rationale of exclusive rights granted under the current IPR regime. While questioning the contradictory evidence seems as a logical move, instead scholars are turning to nonindustrial faith‐based arguments which justify intellectual property as a moral end in itself. A growing number of academics are choosing to devote at least a portion of their research to examining how religious thought can influence approaches to difficult intellectual property questions because they find the religious texts to be a rich source of inspiration on both temporal and eternal issues. A major obstacle in the enforcement of IPR is that people are not entirely convinced that infringing IPR is unethical. This enforcement challenge, surprisingly in the presence of legislations, may be tackled by informal institutions such as religious commitments.

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

Our social order is shaped by institutions, which makes them important. Governmental players adhere to the formal or informal regulations that institutions set out. Any political system has informal institutions, albeit it can be challenging to understand how they relate to formal ones. An extensive examination of the many definitions of institutions is presented in this paper. Many instances from many subfields are given, which in turn emphasize how universal the key issues facing political actors in various substantive situations are. Afterwards, it is clarified what the ramifications of considering institutions in this way are and how they contribute to these strategic problems by resolving or generating them (consciously or not). Understanding how institutions function necessitates looking at their historical background. Three specific obstacles that arise when attempting to understand and justify the beginnings of institutions are identified; these issues indicate some of the domains in which our understanding of institutions is limited. This paper aims to highlight the common challenges encountered when attempting to comprehend the formation and operation of institutions, offering valid reasons for researchers in related fields to collaborate more to improve our understanding of institutions. Generally speaking, it is untrue to say that there is a boundary between absolutely "formal" and fully "informal" institutions. This paper reveals that this unexpected claim is an invitation for academics to consider several issues. Firstly, to distinguish formal and informal institutions from one another, definitions of each are required. Second, discussing the connection between formal and informal institutions is crucial. By doing this, disparities between various forms of informal institutions and their ranges of complexity are distinguished. Third, it is critical to comprehend how formal and informal institutions affect the sort of regime (autocracy vs. democracy) and vice versa. The subject of how informal institutions are generated, created, and maintained is also discussed in this context. This paper concludes with a discussion of methodological perspectives on formal and informal institutions. It considers the use of typologies that encompass formal institutions and are frequently employed in the study of governance systems for this reason. The discovery by certain researchers that informal structures have a significant and frequently surprising impact on the functioning of formal institutions serves as the foundation for subsequent discussions.

Collective PES Contracts Can Motivate Institutional Creation to Conserve Forests: Experimental Evidence

ABSTRACTIncentives are a widely used tool for addressing deforestation and are often implemented as collective contracts. Local institutions are crucial to the solution of collective action problems associated with forest conservation, but we still have little knowledge of how to encourage institutional creation through policy. Since collective contracts do not eliminate freeriding incentives, we argue that their success hinges on their ability to stimulate the creation of institutions for collective action. To test these ideas, we analyze data from an incentivized lab‐in‐the‐field experimental collective action game played with natural resource users in four developing countries. The experiment simulates management of a common forest, and groups were randomly assigned to a conservation incentive payment condition. We observe how much group members attempt to coordinate on the creation of institutional rules and find experimental evidence that an external incentive program can stimulate the endogenous creation of informal institutions.

Unlocking Opportunities: How Women Navigate Informal Networks in Saudi Arabia's Evolving Workplace

ABSTRACTIn the context of the Arab countries of the Middle East, Wasta informal networks predominate in the business environment. While historically women in the Kingdom of Saudi Arabia had limited access to informal networks, recent socio‐economic changes have had a positive impact on women's participation in the workplace. This research explores the use of Wasta informal networks by women in the context of the new Saudi workplace based on 26 interviews conducted with Saudi professional women. The findings highlight that, due to the changes in the formal institutions, which in turn impact informal institutions, women are generally afforded more direct access to networks, enabling them to attain jobs and progress their careers. The research also contributes to informal network literature by distinguishing between Wasta (negative practice) and other forms of informal networks (positive/beneficial practice). Suggestions are offered to policymakers, managers, and women practitioners to navigate the use of informal networks and Wasta.

Directors from related industries and corporate diversification

ABSTRACT This paper aims to examine the impact of directors from related industries on corporate diversification. Director social networks, as a form of informal institution, have significant effects on firms’ production, operation, and strategic decision-making. However, few studies have focused on the economic effects of directors from related industries. We select Chinese A-share listed companies from 2012 to 2021 as our research sample and empirically examine the impact of directors from related industries on corporate diversification. The study finds that directors from related industries can promote corporate diversification. Mechanism tests that they can influence corporate diversification through the information channel. Heterogeneity analysis shows that the impact of directors from related industries on corporate diversification is more pronounced in firms with strong absorptive capacity, non-state-owned enterprises, and in regions with poor institutional environments. Additionally, directors from related industries can strengthen the positive correlation between diversification and corporate investment efficiency.

Why are some nations more entrepreneurial than others? Investigating the link between cultural tightness–looseness and rates of new firm formation

AbstractResearch SummaryWe evaluate the role of cultural tightness–looseness as an explanation for cross‐cultural variation in new firm formation rates. Modeling cultural tightness–looseness as an antecedent for individual entrepreneurial dispositions and informal institutions, we examine its impact on the number of new limited‐liability companies registered per 1000 people and the rate of new entrepreneurs in the working‐age population. Our findings show that cultural tightness–looseness explains 56% of the variation in new firm formation rates in a sample of 156 nations, and 71% of the variation in the rate of new entrepreneurs in the 50 US states, with greater cultural looseness corresponding to higher rates of entrepreneurship, on average. This effect is robust to various model specifications, measures, and controls for other cultural dimensions.Managerial SummaryOur study examines how cultural tightness–looseness impacts new firm formation rates across nations and US states. We find that cultural looseness, characterized by flexible social norms, significantly influences entrepreneurial activity. Specifically, it explains 56% of the variation in new firm formation rates across 156 nations and 71% of the variation in new entrepreneur rates in the 50 US states. Nations and states with looser cultures tend to have higher rates of entrepreneurship. These findings are robust across different model specifications, measures, and control variables. Managers and policymakers should consider the strength and enforcement of social norms as factors in fostering new firm formation.

Students' Perception Of Non-Native Japanese Speaker Teacher's Competencies (Nnjsts) : Gender-Based Review

Japanese is one of the foreign languages taught in formal and informal educational institutions in Indonesia. The development of Japanese language learners is increasing quantitatively. In foreign language courses, native and non-native teachers collaborate on pedagogical tasks. This trend is also happening in Japanese foreign language courses. In addition, there are around 6,617 non-native Japanese language teachers (Japan Foundation, 2021). There is an argument that Native Japanese Speaker Teacher's (NJST) has many advantages over Native Japanese Speaker Teacher's (NNJSTs) and that students prefer NNJSTs over NJST, but the argument must be assessed. Many researchers have explored students' perceptions of NJSTs and NNJSTs worldwide in formal education institutions but not in the non-formal education institution sector. This study aims to explore the perception of Indonesian students towards NNJSTs in non-formal educational institutions, namely LPK Fuji Academy Singaraja with all samples coming from active students registered from January to August 2024. This study is a quantitative research with a descriptive approach conducted using an instrument in the form of a closed questionnaire based on the Likert scale. This study revealed that the perception of male and female students did not have a significant difference in their teaching competence based on the theory of Nuibe et al (2006). Male participants rated NNJSTs higher in terms of teaching effectiveness and communication skills, with an average score of 9.8. In contrast, female respondents gave slightly lower ratings in these areas with an average of 7.1. Furthermore, through this research, students need NNJSTs more because they allow for a successful learning process because of effective learning strategies. In addition, NNJSTs also help students in facing difficulties and challenges in their learning process.

Bride kidnapping and informal governance institutions

AbstractBride kidnapping, a forced marriage practice, has surged in post‐Soviet Kyrgyzstan alongside a revival of traditional values. The central government has empowered councils of elders, or aksakals, to handle local disputes based on cultural norms, including bride kidnapping. This study uses data from a national survey and a latent class nested logit model to examine how aksakal governance influences men's decisions to kidnap brides. Findings indicate that living under aksakal governance makes men 9% more likely to obtain a wife through bride capture, with men substituting kidnapping for choice marriage modalities such as elopement and standard love marriages.

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.

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.