Quality Of Institutional Environment Research Articles

Does managerial ability contribute to export product quality upgrading? Evidence from China

ABSTRACT This study investigated the impact of managerial ability on the quality of exported products. Consistent with our theoretical findings, our empirical results indicate that managerial ability positively affects export product quality. This finding is robust to alternative model specifications. Productivity is the main channel through which managerial ability drives export product quality upgrades. Additionally, the quality-driven effect of managerial ability is significant only for the largest and non-state-owned enterprises. Improvement in the institutional environment quality strengthens the quality-driven effect of managerial ability.

National culture and tax evasion: The role of the institutional environment quality

This study examines the role of institutional environment quality (IEQ) in the relationship between national culture (NC) and tax evasion (TE). Prior research examined the direct impact of culture on tax evasion but did not examine potential mechanisms that may influence this relationship. Using structural equation modeling and examining data for the European Union (EU) countries over the 2004–2018 period, we find that countries that exhibit high levels of power distance, uncertainty avoidance, collectivism, and restraint are associated with higher levels of tax evasion. The results indicate that IEQ has a mediating effect on the NC–TE nexus, suggesting that policymakers should aim at improving the quality of national institutions to diminish the undesirable influence of culture on tax evasion levels. More specifically, we find that the rule of law, regulatory quality, and government effectiveness are the IEQ indicators that fully mediate the NC-TE relationship. Moreover, splitting the sample into older and newer EU countries shows a partial mediation effect in older EU countries and a full mediation effect in newer EU countries. Enhancing IEQ can play a more prominent role in newer EU countries to reduce the detrimental impact of cultural values on tax evasion.

Институциональные аспекты влияния инновационного потенциала региона на результаты инновационной деятельности

Introduction: the innovation activity institutional environment is represented by set of institutions that produce conditions for creation and commercialization of innovations. The institutional environment outline within a territory is shaped by regional specificity formed by political, legal, economic, social institutions and their interactions. A high innovative potential of a region can only result from a high-quality institutional environment. Objectives: identification of institutional opportunities that affect the region’s innovation potential and the results of innovation activities. Methods: statistical analysis, content analysis. Results: the study covered regions with different socio-economic and innovative levels of development. The most innovative regions were found to have high indicators characterizing the innovative potential of the territory (in particular, human capital, fixed assets, costs of innovative activities, etc.). These regions have created a better institutional environment which provides for higher results of innovation activities. On the contrary, the regions lacking innovation activity institutions show low values of indicators characterizing the innovation potential and the results of commercialization of innovations. Conclusions: the innovation potential and the results of innovation activity in the region are influenced by many institutions, notably strategic planning system, the legislative framework, financial support, instruments of state regulation, science and education. The quality of institutional environment depends not only on the availability of the necessary institutions, but also on the degree of their implementation.

Institutional environment quality and the longevity of billionaire entrepreneurs

Using self-made billionaire entrepreneurs in China as a proxy for large entrepreneurs, we examine the impact of institutional environment quality on the longevity of such entrepreneurs. While property rights institutions and contracting institutions are important in explaining macroeconomic growth and small firm growth, we find no evidence that they matter to the longevity of billionaire entrepreneurs. However, we find access to finance to be important to the longevity of billionaire entrepreneurs. Our results help better understand the relative importance of various institutional environment forces to the continuous success of billionaire entrepreneurs.

Global modern slavery and sustainable development goals: Does institutional environment quality matter?

AbstractModern slavery is a persistent human tragedy and a growing organisational risk. The United Nations' sustainable development goals highlight the significance of governments in shaping firms' sustainability agenda and combating modern slavery. However, little is known about the effects of the institutional environment on modern slavery risk. This study, therefore, investigates the crucial policy question of whether the quality of the institutional environment has any effect on modern slavery and whether sustainable human development reinforces this relationship. Using data from 167 countries, we find that institutional environment quality is negatively associated with the prevalence of and vulnerability to modern slavery and positively associated with its modern slavery risk mitigation. Our results suggest that democratically elected governments operating in politically stable societies with higher quality of voice and accountability, higher levels of control of corruption, and stricter rule of law are more accountable and responsive to modern slavery risks. We also find that sustainable human development (HDI) has a moderating effect on the relationship between institutional environment quality and modern slavery, and this effect is mainly noticeable in low HDI countries. These results imply that governance reforms alone might not yield the desired effects for all countries and, hence, have significant implications for policymakers, companies, and societal stakeholders.

Relationship between the level of human development and institutional quality

Implementation of the sustainable socio-economic development goals is an important task for any country, which is why researchers pay attention to the analysis of factors that influence development. Human development is one of the components of development in a wide context. The level of human development largely depends on the quality of the institutional environment in a society. The article examines the relationship between the human development level and the institutional environment quality. Human Development Index (HDI) and Worldwide Governance Indicators (WGI) are used. The analysis includes data for 188 countries for the period from 2017 to 2019. Three clusters are obtained as a result of cluster analysis. The Spearman Rank Order and Kendall Tau Correlations are calculated for each cluster. The link between HDI and WDI is found to be directly positive. Moreover, the strength of the relationship depends on the quality of indicators in groups of countries - the higher the quality of indicators, the stronger the link between them. The results are obtained using the Statistica application package.

National Culture and Tax Evasion: The Role of the Institutional Environment Quality

National Culture and Tax Evasion: The Role of the Institutional Environment Quality

Banking stability, institutional quality, market concentration, competition and political conflict in MENA

This paper uses panel data analysis via GMM estimation to investigate a number of contemporary issues regarding whether MENA banks’ stability and profitability are affected by market power and market concentration. Additionally, it investigates political issues that took place in late 2010 and 2011, as well as whether the quality of institutional environment contributed to shaping the financial performance of MENA banks and their stability.A large sample of banks was selected for a period (1999-2016) that includes the recent Global Financial Crisis period and Arab conflict. Findings confirm that the quality of institutional variables plays a major role in explaining bank performance and stability. Furthermore, banks operating in more concentred markets are able to exercise their market power to obtain higher returns, confirming that less competition and higher concentration would lead to deterioration in banking stability. However, results show that banking stability and profitability would be safeguarded if those banks with higher market power operate in better environment with high regulatory quality, emphasising that regulatory quality should be carefully considered to ensure the stability of financial systems and the national economy as whole.

Institutional development and firm risk from a dynamic perspective: Does ownership structure matter?

In this paper, the relationship between institutional development and the risks of small and medium-sized enterprises (SMEs) in emerging Southeast Asian countries and the United States is investigated within a dynamic framework. The paper observes how two different types of national governance systems (well-developed vs. underdeveloped) influence firm risk. We also evaluate how ownership structure affects the impact of institutional environment quality on the risks of firms. We find that an improvement in institutional quality can reduce risks for SMEs in emerging Southeast Asian countries. However, there is no evidence of a relation between institutional development and firm risk in the United States. Our further analysis indicates that the adverse association between institutional development and risk is more pronounced for foreign-owned firms in both contexts studied. In contrast, state-owned firms in emerging Southeast Asian countries weaken the performance of increased institutional development in reducing firm risk, while this effect of state ownership does not exist in the United States.

Рыночные механизмы стратегии инновационного развития авиапрома России: проблемы и показатели экономики интеллектуальной собственности

Relevance. The article is based on the report of the author at the specialized session “Intellectual Property and competitiveness of enterprises in attracting investment and production diversification: key performance indicators (industry and corporate level)” within the framework of the XII International Forum “Innovative Development through the Intellectual Property Market”, which was held in Moscow on 30.10.2020. Despite approved strategy documents in place for development of Russian aviation industry and governmental programs being implemented, the Russian intellectual property market formation has not been considered among top tier priorities. Methodology: the study analyzes the global aviation industry trends and the outcomes of governmental programs on development of Russian aviation industry. Results. Based on the analysis of the global trends in innovation activity of aerospace industry leaders and the status of development initiatives in the Russian aviation industry and specifically the United Aircraft Corporation, conclusions are made with regard to the quality of institutional environment for support of innovations, with a rationale for facilitation of efforts by industry enterprises in their identifying, protecting and commercializing the intellectual property. Discussion. The study addresses a major issue of how, in the situation of a dominant share of public investments in the aviation industry, to facilitate and promote a proper level of activity in commercialization of intellectual property results by state-owned/sponsored enterprises, and ensure a sustainable level of support for private sector enterprises in the creation of advanced technology products.

The relationship between FDI inflows and private investment in Vietnam: Does institutional environment matter?

AbstractThe recent literature confirms that foreign direct investment (FDI) can crowd out/in private investment. However, questions concerning the FDI–private investment relationship under different kinds of institutional environment is of great interest. This study examines the role of institutional environment in the FDI–private investment relationship in Vietnam using the two‐step GMM Arellano–Bond estimators for a balanced panel data of 52 provinces during the period 2005–2014. More interestingly are the empirical findings. First, both FDI and institutional environment significantly boost private investment. Second, the FDI–private investment relationship completely varies based on the quality of institutional environment. Third, the positive effects of government revenue and government investment remain under different institutional environments. These findings suggest some important implications for governments in developing countries, especially the Vietnam government.

Increasing small- and medium-enterprise contribution to local and regional economic growth by assessing the institutional environment

PurposeA neo-institutional methodology defines the entrepreneurial environment for SMEs as a multidimensional set of interacting formal/informal institutions influencing regional economic growth. Acknowledging the multidimensional nature of SME growth, this study tests an approach to measure SME institutional environment quality through the identification of regional-level determinants.Design/methodology/approachThe method used in this paper is based on Brunset al.’s (2017) model and is tested on 81 Russian Federation regions. The approach seeks to determine variation in entrepreneurial ecosystems based on quality and estimated marginal effects of difference across geographical regions.FindingsThe most severe obstacle to SME development in Russia is its shadow economy and corruption. Access to finance, high transportation fees, and instability in the political and economic field ranks second and third, respectively. Results suggest governments should eliminate main obstacles at country-level, which hampers the SME sector's development. While this is noted for this case looking at Russia, this is a common argument found in SME research.Practical implicationsFindings from this study are useful in managerial practice, aimed at increasing innovative development and increasing the competitiveness of Russian SMEs. A neo-institutional approach is one of the theoretical strands with the emphasis on enhanced understanding of organizational behavior and social capital, including cultural norms and beliefs.Originality/valueUtilizing an extended empirical approach to assess the institutional environment for SMEs addresses a research gap – offering novel insight on SME growth useful for policy makers. The results can inform managerial practices to increase SME contribution to economic growth.

The Effects of Institutional Environment Quality and Abundance of Natural Resources on Economic Growth

The Effects of Institutional Environment Quality and Abundance of Natural Resources on Economic Growth

Institutions-technologies interaction and economic growth

The paper explores the interactions between technologies and institutions in terms of their influence on economic growth. The author demonstrates that long-term economic growth is determined by as a complex of causes including quality of institutional environment, and national innovative capacity. The economist introduces a working definition of technology as a set of material artefacts (things and / or living organisms) utilized by individuals followed by technological norms (rules) to transform resources into desired results (products). As opposed to other norms, the enforcement mechanism of technological norms includes not only managers’ actions on maintaining technological discipline, but also laws of nature. Workers’ compliance with technological norms (level of technological discipline) rests on their subjective norms that in turn are connected with tightness / looseness of national culture and institutional environment. Diffusion of new technologies within and across economy depends on firms’ incentives as potential recipients of them, and the incentives are determined by the level of competition in the economy and level of economic freedom, i.e. quality of institutional environment. Finally, the paper discusses the factors behind the development of Russia’s innovative capacity that influence economic growth

Drivers and brakes on the development of corporate bond markets of developed and developing countries

This paper analyzes the trends in the corporate bond market of the Russian Federation and considers its weaknesses. The authors first empirically investigate determinants of the development of corporate bond markets with account of different sensitivity to the influence of institutional factors for different groups of countries. Research methods include multifactor regressions and generalized method of moments. The sample includes 28 developed and developing countries. The authors obtain new results on the influence of institutional factors on corporate bond markets: in particular, a positive influence of quality of institutional environment on the fast-growing Next11 countries is revealed, as well as the significance of human capital for a number of developing countries.

Institutional System of Human Development and Institutional Environment: Relationship Features

The article considers the features of human development in the context of the concept of sustainable development. The need to study the institutional system of human development as regulated multilevel system of interconnected formal and informal institutions is justified. The relationship between the level of human development and the quality of the institutional environment is determined using the methods of correlation analysis. Analyse covers 214 countries and territories for 2017. The results of the correlation analysis show that there is a strong direct interconnection between HDI and WGI. The correlation ranges from significant to very strong one. This gives grounds for conclusion that there is influence of the quality of institutional environment on the level of human development.

Development of social sector through institutional change

The article analyses the preconditions of institutional changes in the social sector of Ukraine with the focus on the analysis of institutional regime quality and the analysis of the current model of social services management and financing. A comparative analysis of countries by the Knowledge Economy Index showed that it is due to institutional component that this index value decreases. High-income countries do not show significant growth dynamics as well. It is a quite representative fact that countries on path to creating competitive institutions (Baltic countries, Poland) are demonstrating the increasing dynamics of the Knowledge Economy Index, by the development of institutions as well. The analysis of individual components of the Knowledge Economy Index is also informative. Thus, Ukraine demonstrates a decline in the institutional environment quality over the period from 2000 to 2012 according to quantitative indicator of the economic and institutional regimes. The article also compares models of social services management in Ukraine and in developed countries. A multi-level model of social services management in Ukraine is formed. Its feature isthat most services are attributed to all three levels of management and financing. The results of the analysis show that the management of social service delivery is distributed to a wide range of stakeholders. The main difference between the models of social services management in Ukraine and in the countries of the analysed group is in the degree of private capital attraction. Current trends in the social sector development indicate the need for development of market economy institutions there: the social services market, social entrepreneurship in combination with the development of social impact investments. These processes should be regulated based on the following principles: priority of social goals in stakeholder cooperation, continuous improvement of quality, priority of one level of management of budgetary funds, stage-by-stage and comprehensive assessment of consequences of implementing new models of social services management.

Monetary Transmission Mechanisms in MENA: The Case of Bank Lending Channel

Most of the works related to monetary policy transmission mechanisms did not take into account the special case of developing countries. In these countries, given their features (exchange rate rigidity, financial fragility, banking prominence, etc.), it seems that the most reliable monetary transmission mechanism is the lending channel. The purpose of this paper is to focus specifically on this channel in 16 MENA Countries by using a GMM system on dynamic panel aggregated data from 1990 to 2015. We regress credit volume on the instrument of monetary policy. Meanwhile, we add many control variables to resolve the supply-demand puzzle. Thereafter, we include variables describing the sensitiveness of the lending behavior to the institutional environment quality as well as to key banking sector characteristics. Our results suggest that the lending channel is operational in MENA countries and is often related to past lending behavior. Moreover, the supply of loans is sensitive to institutional framework once there is a change in monetary policy.

Impact of institutional environment quality on tax evasion: A comparative investigation of old versus new EU members

This paper aims at comparatively investigating the impact of institutional environment quality (IEQ) on tax evasion in old (pre-2004) and new (post-2004) European Union (EU) member states. IEQ is measured by the World Bank’s Worldwide Governance Indicators, which include voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. The size of their shadow economy is used as a proxy for tax evasion. Using a linear mixed model to analyze the data, the results indicate a higher level of tax evasion in new member states compared to the old member states. Further, our analysis indicates that tax evasion is decreasing in the old member states, but at a lower rate compared to the new EU members. Overall, our results indicate that the relationship between IEQ and tax evasion is different between old and new member states. Specifically, our results indicate that while regulatory quality, voice and accountability, control of corruption, political stability, and government effectiveness are significant determinants of tax evasion levels in older EU members, government effectiveness is the only significant factor in the new EU member states.

Governance quality, foreign direct investment, and entrepreneurship in emerging markets

Purpose The purpose of this paper is to thoroughly investigate the interplay between institutions, foreign direct investment (FDI) and entrepreneurship in the context of emerging markets (EMs). Design/methodology/approach The authors argue that the impact of FDI on entrepreneurial activity depends on different natures of capital flow and entrepreneurial motivation and relates to the quality of institutional environment. First, the roles of inward and outward FDI are examined in connection with the new firm creation by opportunity- and necessity-motivated entrepreneurs. Second, the integrated influences of (inward/outward) FDI and governance quality (GQ) on (opportunity/necessity) entrepreneurship are tested. This nexus of relationships is analyzed through segmented regressions using the GEM data of 39 EMs over the 2004–2015 period. Findings It is evidenced that the quality of governance infrastructure affects the relationship between FDI and entrepreneurship: in emerging countries with low GQ, opportunity entrepreneurship is stimulated by inward FDI and diminished by outward FDI; and in emerging countries with high GQ, necessity entrepreneurship is discouraged by inward FDI and promoted by outward FDI. Practical implications This research has implications for the institutional context-based execution of public policy in emerging economies. As the entrepreneurial effects of inward and outward FDI are pronounced differently under the two types of entrepreneurship and the two extremes of GQ, public policy makers who recognize the catalytic role of FDI in domestic business development should take the distinct institutional context of their country into consideration. Originality/value The paper contributes to the extant literature on international entrepreneurship in emerging economies by making a breakdown on the roles played by different types of FDI in the entrepreneurial activity, analyzing the mediating effects of GQ on the relationship between inward/outward FDI and entrepreneurship, and interpreting the capital and institutional determinants of entrepreneurship in terms of entrepreneurial motivations by opportunity and necessity.