Subnational Institutions Research Articles

The Flypaper Effect: Do Political Institutions Affect Danish Local Governments’ Response to Intergovernmental Grants?

Despite a large number of empirical studies on the flypaper effect, it remains disputed whether the effect exists and to what extent it is asymmetrical. The flypaper effect suggests that intergovernmental grants tend to result in higher increases in public expenditures than a similar increase in citizens’ private income would have led to. An asymmetrical effect exists when the fiscal response differs depending on whether grants are increased or decreased. By considering political institutions that moderate the effect of intergovernmental grants, this article offers a theoretical explanation that accounts for the mixed empirical evidence. The local response to intergovernmental grants is tested using a reform of the Danish intergovernmental grant scheme in 2007. In line with the expectation, the article finds a strong asymmetrical effect, but more surprisingly, this effect is found both when subnational budget institutions are centralised and when they are fragmented.

Through Another Lens: American Democracy Viewed through Race/Ethnicity and Subnational Institutions

Through Another Lens: American Democracy Viewed through Race/Ethnicity and Subnational Institutions

Engineering Multilevel Governance? Joint European Support for Sustainable Investment in City Areas (JESSICA) and the Involvement of Private and Financial Actors in Urban Development Policy

Dąbrowski M. Engineering multilevel governance? Joint European Support for Sustainable Investment in City Areas (JESSICA) and the involvement of private and financial actors in urban development policy, Regional Studies. Joint European Support for Sustainable Investment in City Areas (JESSICA), one of the financial engineering instruments (FEI) within European Union cohesion policy framework in the 2007–13 period, created scope for developing cooperation between sub-national authorities and financial institutions and private investors. Anchored in the literature on multilevel governance, this paper examines how the implementation of this instrument has affected the patterns of sub-national governance in Poland and Spain. Despite stimulating learning processes and the emergence of unprecedented cross-sectoral partnerships, the implementation was hampered by numerous obstacles, underlining the limitations of multilevel governance and of FEI as tools for promoting urban development.

"Subnational Institutions, Performance Feedback and Subsequent Expansion of A Foreign Subsidiary"

Using 150,542 cases of foreign subsidiaries operating in an emerging economy from 2000 to 2005, this study examines the effect of subnational institutional development on the subsequent expansion strategy of a foreign subsidiary in fixed-assets investment in a subnational region within a host country. We find that a foreign subsidiary would take a large extent of subsequent expansion in the subnational regions where the levels of subnational economic and social institutional development are low, because these regional markets embrace great uncertainties, which requires the subsidiary to extend its internalized operation. In addition, our study shows that performance feedback of a foreign subsidiary plays significant negative moderating effects on the relationships between the levels of subnational political and social institutional development and the subsequent expansion of a foreign subsidiary. Our study contributes to international expansion literature by emphasizing subnational institutions within a h...

"Institutional Voids, Avoidance Response and Foreign Listing"

As a surging phenomena, foreign listing has been explained by the financial motivation to reduce capital cost and strategic motivation to seek overseas opportunities. This paper has taken a new perspective to explain foreign listing from the pushing effect of home institutional voids. In the context of emerging economies, this article proposes that some firms can make advantage of institutional voids, while firms are hurt by institutional voids. Foreign listing is a partial avoidance response by firms to create a more favorable set of institutions. Using a sample of listed firms from China, the study shows that firms with relation-based capabilities are less likely to go foreign listed, and firms with market-based capabilities are more likely to foreign list. Furthermore, we consider the unbalanced development of subnational institutions in emerging economies, and explore the moderating role of subnational institutional development.

O sistema brasileiro de instituições financeiras subnacionais para o desenvolvimento: um panorama

O objetivo deste trabalho é oferecer um panorama sobre a experiência brasileira recente com o sistema composto das instituições financeiras públicas que chamaremos de "subnacionais", voltadas para o financiamento do desenvolvimento: um banco regional de desenvolvimento, três bancos estaduais de desenvolvimento e 13 agências estaduais de fomento. Em geral, esse sistema é débil, possui fontes de funding pouco diversificadas e depende do BNDES e dos governos estaduais. As operações de crédito oriundas das instituições financeiras subnacionais para o desenvolvimento (IFDs-SN) são qualitativamente distintas das dos bancos públicos federais brasileiros. Salvo o setor comercial, em todos os demais as operações de crédito cresceram a taxas inferiores à média do Sistema Financeiro Nacional (SFN) ou mesmo dos bancos públicos, à exceção do ano de 2009, revelando que as IFDs-SN contribuíram para a ação anticíclica implementada pelos bancos públicos brasileiros após a crise financeira internacional.

“Courting the multinational”: Subnational institutional capacity and foreign market insidership

Significant contemporary challenges face an internationalizing firm, including the non-ergodic nature of investment, and the liability of outsidership. Recent revisions to the Uppsala internationalization process model reflect these challenges, whereby “insidership” is represented as realized, successful foreign market entry. Drawing upon socio-spatial concepts from international business and economic geography, this paper demonstrates the endogeneity of subnational institutions in shaping foreign market insidership within an advanced economy. Employing a multi-method research design with almost 60 subnational actors, the role and interaction of subnational institutions within the internationalization process are explored. Our findings illustrate how customized coalitions of subnational institutions effectively initiate, negotiate and accelerate insidership of inward investment within the foreign market both prior to and during formal entry. Key aspects of this dynamic include communicating tangible and intangible locational resources, initiating functional and relevant business relationships, and facilitating access to codified and tacit knowledge. This paper embellishes the Uppsala internationalization process model by demonstrating the capacity of subnational institutions to participate actively with foreign market insidership, and in so doing advances understanding of how the risk and uncertainty associated with foreign market entry are currently navigated.

Environmental Reviews and Case Studies: Limitations and Challenges of Provincial Environmental Protection Bureaus in China's Environmental Data Monitoring, Reporting and Verification

Although administered from the top-down, China's environmental governance is characterized by decentralization, a feature that has been cited as the cause of poor implementation of policies at the local levels. To address this implementation gap, the central government in China has instituted environmental targets in its evaluation system of local leaders. However, the system of performance evaluation based on statistics and indicators has revealed problems of data and information abnormalities, falsification, and collusion between local officials to hide or misrepresent data. Little academic attention has been paid to sub-national institutions in place for data collection, reporting, and verification in China. This paper seeks to understand how institutions collect and transfer environmental data in China's vertical governance structure, as well as the challenges faced primarily by provincial Environmental Protection Bureaus (EPBs) to shed light on why discrepancies and gaps in environmental data might e...

Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms

This research examines the factors determining whether or not exporting firms expand to outward foreign direct investment (OFDI) as part of their internationalisation strategy, using a recent survey of Chinese private-owned enterprises. We carry out a multi-dimensional analysis to investigate the impact of firm productivity, internal resources and the external environment on OFDI decisions, including both the decision to undertake OFDI and the volume of OFDI flows. It is found that productivity, technology-based capability, export experience, industry entry barriers, subnational institutions and intermediary institutional support affect firms’ OFDI decisions. The findings have important policy and managerial implications.

Is Federalism a Political Safety Valve? Evidence from Congressional Decision Making, 1960–2005

American federalism is often described as a system that contains valves, or institutional mechanisms that ensure that major policy reforms can be created, even during periods of intense political conflict. By granting discretion to the states, for example, scholars claim that Congress can ensure that diverse constituencies receive their preferred policies. In this article, we examine Congress's pattern of delegating discretion to sub-national institutions in the postwar period, systematically assessing how the political conditions under which a broad sample of landmark legislation passed are related to the delegation of administrative authority to the states. Contrary to the safety valve image of federalism, we find very little evidence to suggest that Congress grants more discretion to sub-national governments under periods of intense political conflict.

EU cohesion policy, horizontal partnership and the patterns of sub-national governance: Insights from Central and Eastern Europe

This article draws on the concept of Europeanization to assess the EU cohesion policy’s capacity to promote inclusive regional governance and cooperation in regional development initiatives in Central and Eastern European countries. EU cohesion policy is often credited with improving cooperation and coordination in the delivery of the regional development policy through the application of multi-level governance enshrined in the partnership principle. By imposing a close partnership among a variety of actors, cohesion policy has the capacity to alter domestic relations between the centre and the periphery, and to create a broader scope for regional and bottom-up involvement in economic development policy. However, a lack of tradition of decentralization and collaborative policy-making, as well as a limited capacity of sub-national actors, can result in uneven outcomes of the application of the partnership principle across countries and regions. This raises questions about the transferability of the partnership approach to new Member States characterized by weak sub-national institutions, a legacy of centralized policy-making and limited civic involvement. This paper addresses this issue by comparing horizontal partnership arrangements put in place for the purpose of cohesion policy implementation and examining their impacts on the patterns of sub-national governance. The horizontal partnership arrangements are compared across three regions in countries with differentiated systems of territorial administration: Poland, the Czech Republic and Hungary.

The relationship between national and sub-national human rights institutions in federal states

The rapid spread of national human rights institutions represents one of the most important developments in the human rights movement in recent years. Many federal states have joined this global trend by creating national human rights institutions, state human rights institutions, or both. This article presents an empirical comparison of how such states have addressed the federal division of power and responsibility concerns that have arisen in such an enterprise. So far, no single strategy has emerged to address federalism concerns. Some countries have established unitary but deconcentrated national human rights institutions, while others have multiple sub-national human rights institutions but no internationally recognised national human rights institution. The most common response has been the establishment of both a national human rights institution and a network of sub-national human rights institutions. Strict forms of dual federalism are rarely embraced however, and the relationship between national and sub-national institutions, where both exist, has been characterised by both episodic cooperation and significant tensions.

The Wealth of Subnations: Geography, Institutions, and Within-Country Development

I study fundamental determinants of economic development in a new dataset covering 1,867 subnational regions from 101 countries, focusing on within-country effects of geography and institutions. I find that several geographic factors have significant explanatory power for within-country differences in per-capita GDP, including terrain ruggedness, tropical climate, ocean access, temperature range, storm risk, and, to a lesser extent, elevation, malaria risk, and natural resources. I find no evidence of a positive effect of subnational institutions on within-country differences in income, whether institutions are measured by property rights protection, corruption control, law and order, or regulatory efficiency.

"Subnational Institutions, Foreign Firms Ownership Strategies, and Local Partner Selection"

In this paper, we examine the following important issues in international business. How the subnational institutions in emerging economies affect foreign firms¡¯ ownership strategies, and further affect the local partner selections for the joint ventures? We are trying to introduce subnational institutions as an important factor influencing the ownership strategies of MNCs. Following the key tenets of institutional theory, we argue that foreign firms will form joint ventures with local firms in the host provinces where the institution is less developed. And foreign firms that come from the less developed countries are more likely to choose joint venture as their ownership strategy when they face less developed institutional environment. We further propose that foreign firms are more likely to choose non- state local firms as their partner when they entering less developed institutional environment. Based on the empirical analysis of MNCs in China, our hypotheses are supported.

The National Business System and Its Applications: Reflections from the Belgian Experience

MNCs exercise control across borders by transferring employment practices to their subsidiaries. By drawing from “national business system” some studies indicate home- and host-country effects as mediating the transfer. Accordingly, institutional variance is national specific. However, sub-national institutions as well as local actors’ strategies are equally important. In the paper we originally use the concept of “institutional entrepreneurship” to illustrate how coordination mechanisms to mediate the transfer can be created beyond the national borders. Based on the Belgian case, we individuate three levels at which these coordination mechanisms operate: the region, the firm and the inter-firm.

Does Federalism Impact Gender Architectures? The Case of Women's Policy Agencies in Germany and Austria

This article investigates how strong German and weak Austrian cooperative federalism affect women’s policy machineries. We find that it is the federal organization of both polities that has posited engrained advantages for the establishment and the sustainability of women’s policy agencies (WPA). We also find that center/left parties are crucial for sustaining and advancing the role of WPA. However, during economic crises, we see that the women’s policy infrastructure in the strong federal state (Germany) was downsized while Austria’s national social democratic WPA protects subnational institutions.

Institutionalising Dissent: HIV/AIDS, the Post-Apartheid State and the Limits of Transnational Governance in South Africa

Contemporary analyses of globalisation and transnational governance have depicted the state as an institution that is decreasing in significance due to the rising influence of external political and economic forces. However, a close examination of AIDS politics in South Africa reveals that the ANC-led government developed institutional arrangements and alliances with non-governmental organisations to limit the effect of transnational political influence during the administration of former President Thabo Mbeki. While the impact of increased international funding for non-governmental organisations on political processes has been underscored by critical research, I argue here that an inclusion of the shifting strategies that ‘developing’ states utilise to maintain political autonomy in the context of neoliberal globalisation may offer additional insight into the ways in which transnational political forces interact with the different institutional scales of the state. The degree of political autonomy enabled by transnational political influence also calls attention to the fact that sub-national state institutions must also be included in an analysis of transnational governance, particularly given South Africa's quasi-federal political system. Finally, I propose that abstract theories of neoliberal globalisation and transnationalism might benefit from the critical perspectives offered by South Africans involved in navigating the contentious field of AIDS politics during the era of AIDS dissidence.

Subnational Institutions and Internationalization of Emerging Market Firms:The Macro-Micro Link

Using survey data of 727 Chinese private enterprises in 31 provinces, we demonstrate that emerging market firms’ (EMFs) home-based subnational institutions, in terms of government’s market orientat...

Regional Institutional Development and Foreign Affiliate Performance

Drawing on the institutional-based view, this paper sheds light on the influence of the development of subnational institutions within a host country on foreign affiliate performance. Using 186,158 firm-year cases in 28 subnational regions of China, we find that the levels of the development of regional economic and social institutions have positive curvilinear impacts on the level of foreign affiliate performance and negative curvilinear influences on variation in that performance. However, the impacts of regional political institutions on foreign affiliate performance differ from those of regional economic and social institutions.

Sub-national institutions, firm strategies, and firm performance: A multilevel study of private manufacturing firms in Vietnam

Some private small and medium sized enterprises (SMEs) in transition economies have actively internationalized. This decision needs to accommodate institutional conditions that vary, not only between countries, but also within an individual country. Our paper examines the relationship between export strategy and firm performance, and the extent that sub-national institutional factors moderate this relationship. Using multilevel data analysis techniques with a sample of private manufacturing firms in Vietnam, we find institutional factors moderate export strategy and firm performance's relationship.