Subnational Institutions Research Articles

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.

Escapism and Chinese SMEs’ OFDI: The Role of Subnational Institutions and Firms’ Institutional Ties

Escapism and Chinese SMEs’ OFDI: The Role of Subnational Institutions and Firms’ Institutional Ties

Chinese SOEs’ technological upgrading through OFDI: The impact of political ties and subnational institutions. A survey of literature

This paper presents a systematic literature review on the relationship between outward foreign direct investment (OFDI) and technological upgrading in Chinese state-owned enterprises (SOEs), emphasizing the moderating role of political ties and subnational institutions. Analyzing 51 core papers from 2011 to 2022, the study synthesizes key theories on how political ties influence Chinese SOEs’ technological upgrading through OFDI. It also finds that political ties affect motivations and resources of SOEs with various types of state ownership and thus affect their OFDI strategies and innovation capabilities. This research further explores the impact of subnational institutions and their interactions with political ties. The findings underscore the perspective that subnational institutions shape a firm’s learning capability, and their impact is moderated by SOEs’ political ties. Finally, the study identifies key issues in SOEs’ technological upgrading through OFDI and offers valuable insights for policymakers and SOE managers. Future research directions are outlined to understand the impact of OFDI on the technological upgrading of Chinese SOEs.

Multinational enterprises' R&D commitments in Chinese provinces: A configurational approach

Multinational enterprises (MNEs) are increasingly off-shoring some of their R&D to emerging markets, including China. Much of the extant literature on MNEs' investments in R&D facilities abroad analyses technological and institutional factors at the national level, typically using regressions to examine how host-country institutions influence foreign MNEs' outlays. It, therefore, tends to downplay the importance of sub-national and non-technology-related institutions, and how configurations of home- and host-country institutions interact to influence R&D commitments abroad. Drawing on the global factory model and the Varieties of Capitalism approach, we identify five causal conditions that may influence MNEs' R&D commitments abroad. Conducting an abductive fuzzy-set qualitative comparative analysis, we find four combinations of causal conditions are sufficient to explain substantial R&D commitments in different Chinese provinces. The combination of local corruption and provincial R&D intensity is important, as are the MNE's home-country stock-market capitalization to GDP ratio and minority investor protection. We contribute to the literature on MNEs' investments abroad by extending the importance of sub-national institutions to include those not directly related to technology. We also reveal how combinations of institutions (rather than individual ones acting independently) from the MNE's home and host contexts explain MNEs' R&D commitments in Chinese provinces.

Subnational institutions, firm capabilities and eco-innovation

Abstract We examine the role institutional pressures, at the subnational level, play in the generation of eco-innovations and explicitly consider how they interact with firms’ heterogeneous capabilities and ownership characteristics. Theoretically, we combine elements from institutional theory with the resource-based view of the firm to develop our hypotheses. Empirically, we use a novel dataset over the period 2003–2013 compiled from several sources: (I) environmental regulations (city-level) from the China Environmental Statistical Yearbooks and City Statistical Yearbooks; (II) green patents (firm-level) from the China National Intellectual Property Administration; and (III) ownership (firm-level) from the National Bureau of Statistics. Our econometric analysis employs an instrumental variable (IV) approach that controls for endogeneity and a negative binomial multilevel methodology for robustness. The results show that institutional pressures associated with environmental regulations, implemented at city level, lead to more green patents produced by firms in these jurisdictions. Crucially, the effectiveness of environmental regulation is enhanced when firms invest more in their internal technological capabilities. Finally, we find that a firm’s affiliation with a business group enhances the positive effects of regulations in terms of the production of eco-innovations.

COVID-19 and Political Trust in Local Governments: Evidence From Nepal

The COVID-19 pandemic has reinvigorated debates about the drivers of political trust. Research so far has mainly focused on national-level institutions, during the early stages of the pandemic and using data from established democracies. However, how does this relationship look like if we pay attention to subnational institutions in non-consolidated democracies, and further away from the initial COVID-19 outbreak? To contribute to this line of research, this article focuses on the local level and explores the association between individuals’ satisfaction with COVID-19 performance and political trust in Nepal. For that, it uses novel data collected via telephone interviews (N = 1400) conducted between 25 April and 24 May 2021, during the second wave of COVID-19. Our main results reveal that satisfaction with local institutions’ COVID-related performance is significantly and robustly associated with levels of political trust at the local level. The association holds even when geographical and time specifications are added, trust towards national institutions or expectations about local governments are included in the analysis and the dependent variable is disaggregated to discard measurement biases. The study thereby provides important insights into the role performance plays for institutional trust beyond the national level and in an unconsolidated democracy.

Exploring the linkage between health technology assessment and decision making during COVID-19 public health emergency in a developing country: analysis of processes and results.

The decision-making (DM) process in public administration is the subject of research from different perspectives and disciplines. Evidence-based policies, such as health technology assessment (HTA), are not the only support on which public policies are designed. During the COVID-19 pandemic WHO, national and subnational institutions developed HTA reports to guide DM. Despite this, inadequate variability was observed in the health technologies recommended and reimbursed by different provincial Health Ministries in a federally organized developing country like Argentina. The processes and results of DM on health technologies for COVID-19 in Health Ministries of Argentina were inquired. A retrospective research design was developed, with triangulation of quantitative and qualitative methods. We retrieved information for the years 2020-2021 through document review of official webpages, surveys, and interviews with decision-makers of the 25 Argentinian Ministries of Health. We analyzed the recommendations and reimbursement policies of seven health technologies. In contradiction with WHO's policies, ivermectine, inhaled ibuprofen, convalescent plasma and equine serum were widely recommended by most of Argentina's health ministries outside a clinical trial context, with risks for patients and a huge opportunity cost. Despite an important HTA institutional capacity, the impact of HTA organizations and their technical reports was limited. Health Ministries with institutionalized HTA units had more adherence to WHO recommendations, but the influence of different technical and political criteria was identified. Power relations within and outside the administration, the pharmaceutical industry and academics, the media, social pressure, the judicial and legislative powers, and the political context strongly influenced DM.

Do institutional contingencies matter for green investment?—An institution based view of Chinese listed companies

Current research in the field of environmental management has placed significant emphasis on understanding the reasons behind varying organizational responses to environmental responsibilities. Governance scholars emphasize the central role of institutional factors in shaping environmental responsibilities, primarily due to the substantial influence exerted by regulatory institutions. Drawing on institutional theory, we investigate how sub-national institutional factors impact a firm's green investment intensity and explore their moderating influence on the relationship between green investment and a firm's financial performance. Using a database of Chinese listed companies from 2012 to 2019, this study employs fixed effect model as a baseline regression. Our analysis demonstrates that sub-national institutions, such as state-owned enterprises (SOEs), regional development, and cross-listing, have significant and positive impact on corporate green investment. Our study further provide an evidence that green investment significantly improve firms' financial performance. Moreover, the positive effect of green investment on financial performance is stronger in SOEs and in firms of developed regions as compared to their counterparts, and weaker in cross listed firms than those of non-cross listed peers. Our study suggest that subnational institutions play an imperative role in improving environmental quality and financial performance by promoting corporate green investment. To make sure that our findings remain robust to endogeneity, we applied generalized method of moments (GMM) and propensity score matching (PSM) method. Our findings further provide implications for emerging economies with similar shareholding patterns and unbalanced regional development.

State Courts and Covid-19 Policies in Brazil: How Did the Constitutional Review Take Place in the Lower-Level Judiciary?

How do state courts in Brazil participate in the debate about Covid-19 policies? I argue that state courts had a role in making decisions on key policies when political actors couldn’t agree on how to handle the crisis. This paper compares its findings to what previous research has found on the role of the STF at the federal level. The results show that subnational institutions tried to use state courts to halt such policies in a similar way to what happened in the STF.

Exploring Cross-Border Labor Commuting as a Practice of Tactical Mobility

Within the last few years there has been an increased interest in the interplay of structure and agency in border studies. Following the strategic-relational approach, these studies generally focus on territorial actors, particularly subnational institutions and how they use their capacities, to establish transnational cooperation and networks, to overcome the obstacles resulting from national and / or multi-governmental policies. Like subnational organizations and institutions on border regions, cross-border commuters develop and use tactics to overcome the socio-economic and legal risks and crises. Based on the thematic analysis of the semi-structured interviews with commuters from Germany, Luxembourg, the Netherlands, and Poland, it is demonstrated that by being mobile across the borders, commuters aim at gaining flexibility and a relatively advantageous position in housing and labor markets of different countries. This paper, by referring to the strategic-relational approach, argues that cross-border mobility is practiced as a form of tactical mobility in which commuters constantly revise their mobility practices, depending on new, emerging socio-economic conditions. Moreover, by referring to the concept of de Certeau’s (1984) tactic, three main typologies of cross-border mobility are conceptualized.

Human Rights During Transition: Accountability Mechanisms in Mexican States 1997–2008

This paper assesses the impact of political and fiscal accountability mechanisms on the severity and scope of human rights violations in Mexico's states during its democratic transition. First, we argue that elites in states with lower levels of electoral accountability are free of constraints that would normally result in their removal from office should they engage in human rights violations. Similarly, we argue that local elites maintain power while evading accountability when supported by transfers from the central government, and are thereby freer to use force. We find statistical support for our claims that lower levels of procedural democracy and higher levels of central transfers are associated with higher levels of human rights and physical integrity rights violations. These results are robust to subsample and numerous economic and other factors. Our findings suggest that particularly during democratic transitions, subnational institutions are salient in explaining the frequency of human rights violations.

The Link between Democratic Institutions and Population Health in the American States.

This project investigates the role of state-level institutions in explaining variation in population health in the American states. Although cross-national research has established the positive effects of democracy on population health, little attention has been given to subnational units. The authors leverage a new data set to understand how political accountability and a system of checks and balances are associated with state population health. The authors estimate error correction models and two-way fixed effects models to estimate how the strength of state-level democratic institutions is associated with infant mortality rates, life expectancy, and midlife mortality. The authors find institutions that promote political accountability are associated with lower infant mortality across the states, while those that promote checks and balances are associated with longer life expectancy. They also find that policy liberalism is associated with better health outcomes. Subnational institutions play an important role in population health outcomes, and more research is needed to understand the link between democracy and health. The authors are the first to explore the link between democratic institutions and population health within the United States, contributing to both the social science literature on the positive effects of democracy and the epidemiological literature on subnational health outcomes.

Spatial effects of institutional quality on firm performance: evidence from Vietnam

The impact of national institutions on the economy has attracted research attention for decades. However, research on the influence of subnational institutions at the firm level is modest. This paper examines the spatial effects of institutional quality on firm performance using evidence from Vietnam. The model employed in the research is the Spatial Durbin Model (SDM), which is used to test hypotheses on data collected from enterprise surveys in the provinces of Vietnam over the period 2011–18. The research results show that the institutional quality of a locality has a direct impact on firm performance in that locality and indirectly affects firms in adjacent localities. At the same time, enterprises in different localities not only interact spatially with each but also tend to cooperate and compete. The results also show that the control of corruption positively affects the profits of enterprises; and informal charges negatively influence firms' total factor productivity in Vietnam. These findings imply that improving the quality of subnational institutions in emerging countries such as Vietnam promotes the growth of enterprises.

Distances Matter: Parent’s CSR Reputation and CSP of Multinational Enterprises’ Subsidiaries

Prior studies found that foreign subsidiaries of multinational enterprises (MNEs) suffer from liability of foreignness (LOF). According to stakeholder theory, foreign subsidiaries may be able to improve their legitimacy of business practices and overcome LOF by demonstrating social commitments to host-country constituents through corporate social responsibility (CSR). This study doesn’t only investigate whether the distances between the MNE home countries and China (host country) affect multinational enterprises (MNEs) foreign subsidiaries’ corporate social performance (CSP), but also examines how sub-national institutions affect the subsidiaries engaging in CSR in China. The study further tests the moderating role of parent’s CSR reputation. Using the data from 2009 to 2015 in the blue books of corporate social responsibility issued by Research Center for Corporate Social Responsibility Chinese Academy of Social Sciences (CASSCSR), the study adopts the top 100 foreign-invested enterprises in China as our sample. The CASSCSR collected the CSR information via their CSR reports, financial reports and official websites; they did an all-around research and valuation on their current CSR information disclosure. The results show the effect of distances on subsidiaries’ CSP in China, and highlight the importance of parent’s CSR reputation as a mechanism that may induce foreign subsidiaries to engage in CSR in China.

When foreign direct investment is threatened: Rio Tinto and Richards Bay Minerals

Theoretical basis The theoretical basis of the teaching note is grounded in theory associated with macroeconomics and foreign direct investment (FDI); in particular why FDI is important to a developing country. Research methodology A secondary research methodology was used for the research and writing of this case study. Data (news articles and relevant readings) was obtained via the internet. Case overview/synopsis The case highlights the interrelated factors (civil society infrastructure, local and political unrest and community instability) that led to global mining company Rio Tinto announcing the halt of its operations and force majeure at its only South African business, Richards Bay Minerals (RBM). RBM was the largest business and employer in the province. Following the destruction of some of its equipment, civil unrest such as blocking of roads and intimidation of staff and the murder of one of their executives, Nico Swart, RBM management consequently announced all supplier contracts and operations would be halted until it was safe for work to be resumed.The case allows students to consider the interrelated factors that multinationals operating in developing countries are subject to in terms of different sub-national institutions and the potential impact of a large multinational ceasing operations in a local economy, both directly and indirectly. It concludes with considerations of what needs to be in place for RBM to continue operations. Complexity academic level This case can be used in undergraduate- and graduate-level courses, in management development programs or in short executive education courses focusing on the environment of business, macroeconomics and FDI.

Subnational institutions and power of landholders drive illegal deforestation in a major commodity production frontier

Deforestation is a main threat to the biosphere due to its contribution to biodiversity loss, carbon emissions, and land degradation. Most deforestation is illegal and continues unabated, representing around half of the total deforestation in the tropics and subtropics. Quantifying illegal deforestation is challenging, let alone assessing the social and institutional processes underlying its occurrence. We tackle this challenge by quantifying the relative influence of individual (i.e., landholders’ power, landholding size) and contextual (i.e., subnational institutions, agricultural suitability) factors on the type and size of illegal deforestation in the Argentine Dry Chaco, a major commodity production frontier and global deforestation hotspot. We build a Bayesian network fed with data of 244 illegal deforestation events, obtained from journalistic articles, grey literature, key informant interviews, and geospatial analyses. The results reveal that more powerful landholders were associated with larger illegal deforestation events. Policy simulations suggest that higher concentration of land in the hands of powerful landholders and more flexible subnational forest regulations would escalate illegal deforestation. This points to the need for a smart policy mix that integrates across economic, agricultural, and environmental sectors to halt illegal deforestation at commodity production frontiers. A land tenure reform can facilitate forest protection, while incentives to land-use diversification and the criminal prosecution of illegal deforestation are critical to shift landholder behavior towards more balanced production and conservation outcomes.

Conflicted transitions: Exploring the actors, tactics, and outcomes of social opposition against energy infrastructure

Given the growing frequency, severity, and salience of social mobilization and community action on energy and climate issues, in this study we systematically explore the configurations of types of infrastructure, actors, tactics, and outcomes of recent opposition to energy transitions across seven carbon-intensive regions in Asia, Europe, and North America. Based on both a literature review and an original dataset of 130 case studies spanning the past decade, we track opposition to a wide range of energy infrastructure in these regions, including low-carbon options such as renewable energy and nuclear power; provide network analyses of the actors and coalitions involved in such events; and develop a typology and frequency analysis of tactics (such as litigation or protest), and outcomes (such as remuneration, policy change, concessions, or labor protections). We show that the politics of energy transitions in carbon-intensive regions varies significantly from country to country and across types of energy, and we discuss how the configurations of infrastructure, actors, tactics, and outcomes can be explained by differences in national institutions and their responses to global or supranational pressures. By bringing both a sociotechnical and comparative perspective to the global analysis of social movements and energy transitions, we suggest how goals of energy transition are refracted through national and subnational institutions and through local mobilizations both in support of and opposed to those transitions.

Development of Russian Resource-Type Regions: Geography vs. Institutions?

The paper examines the dynamics of the level of resource dependence in the resource-type regions of Russia from 2005 to 2017. The classification of regions is based on the authors’ two-factor classification model using the share of the extractive sector in the GRP and the ratio of the extractive sector to the manufacturing industry. Exploiting the method of fuzzy classification and calculating a comprehensive assessment of resource dependence, the classification regions are classified on a scale of continuous values, which makes it possible to assess the level of resource dependence of the regions of the Russian Federation and their grouping. The dynamics of the level of resource dependence is monitored and the regions that have made transitions from one selected group to another are distinguished. The results obtained indicate that in the period under consideration there was an increase in the level of resource dependence. For most of the resource-type regions, the level of resource dependence has increased, the number of resource-type regions has grown from 22 to 27. An analysis of the case studies of individual regions shows that the policy of the federal center and the largest Russian companies, often state-owned, was in most cases more significant than the policy of regional authorities. The case of Russia, therefore, corresponds to the patterns described in the literature investigating the influence of geography and institutions on development at the subnational level: geographic factors play a decisive role in the development of regions, the role of subnational institutions is small. Differences at the subnational level in such institutional factors as the protection of property rights or regulatory efficiency are not decisive in attracting investment; priorities formed at the national level play a decisive role. The ability of regional authorities to influence the development of the region comes down mainly to the effective integration of the federal center into the projects

From Global to Local: Subnational Development Banks in the Era of Sustainable Development Goals

ABSTRACT Financing the implementation of the seventeen Sustainable Development Goals (SDGs) has been a development challenge since the establishment of the 2030 Agenda — especially under the unequal circumstances imposed by COVID-19. This paper aims to better inform this debate by highlighting the nature of Subnational Development Banks (SDBs) in the context of sustainable finance and how they operate within development networks. To this end, the research method addresses a comparative study among countries that stand out for the number of subnational institutions in their development systems, Brazil and Vietnam. After comparing the Brazilian and Vietnamese particularities, we present concrete examples of SDBs working to connect local needs to the 2030 Agenda investments. As final conclusions, the study allows to demonstrate that, by being the last mile specialist on the ground, in different localities with particular backgrounds and contexts, SDBs could be available channels to international resources to address the financial needs of local firms and governments, improving both efficiency and effectiveness of development programs and funds. Highlighting the potential of SDBs, this analysis leaves possibilities for a future research agenda on more integrated national development finance systems focused on local impact.

With a Little Help from Their Friends: The Consequences of Populists in National Government for Policymaking in Local Government

AbstractDespite increasing research into populist parties in power, their impact on subnational institutions has been neglected. Taking a novel multilevel perspective, this article inquires into the policy consequences of populist radical right parties (specifically, the FPÖ and Lega) in local government, and the effect of their simultaneous participation in national government. The article shows the expansion of exclusionary policy that follows their concurrent presence in national and local government. The process that leads from national government entry to local policy influence is traced using interview and newspaper data. The article argues that the influence of central parties over these ‘showcase’ localities is rooted in different multilevel governance configurations. These vary cross-nationally according to two factors: the strength of mayors’ linkages with higher government levels in the different institutional settings and, due to the different extent of party nationalization, the strategic value of the municipality to the central party.