Formal and Informal Institutions: The Independent and Joint Impacts on Firm Innovation

2021 ◽  
pp. 1-50
Author(s):  
Cuifen Weng ◽  
Xuanye Li ◽  
Hongyan Yang ◽  
Ting Ren
Keyword(s):  
Informal Institutions ◽  
Firm Innovation ◽  
Innovation Research ◽  
Multiple Dimensions ◽  
Formal And Informal Institutions ◽  
World Bank Enterprise Survey ◽  
Perceived Constraints ◽  
Formal Finance ◽  
Enterprise Survey ◽  
The Impact

ABSTRACT We study the impact of formal and informal institutions perceived and experienced by firms on their innovation using the 2012 World Bank Enterprise Survey data in China. We propose a framework to identify different innovator types of firms. Our analysis shows that (1) perceived constraints from the governmental system make firms more likely to be innovators than non-innovators; (2) perceived constraints from the legal system make firms more likely to be imitators than innovators; (3) lack of formal finance makes firms more likely to be non-innovators than innovators; (4) prevalence of bribery makes firms more likely to be non-innovators than innovators but less likely to be innovation pretenders than innovators. Our study enriches institutional theory and innovation research by establishing a framework that encompasses multiple dimensions of formal and informal institutions perceived and experienced by firms and the impacts of such perception and experience on firms’ propensity to become certain type of innovator.

scholarly journals Evaluating the Impact of the Informal Economy on Businesses in South East Europe: Some Lessons from the 2009 World Bank Enterprise Survey

2012 ◽  
Vol 7 (1) ◽  
pp. 99-110 ◽  
Author(s):  
John Hudson ◽  
Colin Williams ◽  
Marta Orviska ◽  
Sara Nadin
Keyword(s):  
World Bank ◽  
Informal Economy ◽  
Employment Relations ◽  
East Europe ◽  
South East Europe ◽  
Adverse Impacts ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
The Impact ◽  
Targeted Approach

Evaluating the Impact of the Informal Economy on Businesses in South East Europe: Some Lessons from the 2009 World Bank Enterprise SurveyThe aim of this paper is to evaluate the variable impacts of the informal economy on businesses and employment relations in South East Europe. Evidence is reported from the 2009 World Bank Enterprise Survey which interviewed 4,720 businesses located in South East Europe. The finding is not only that a large informal sector reduces wage levels but also that there are significant spatial variations in the adverse impacts of the informal economy across this European region. Small, rural and domestic businesses producing for the home market and the transport, construction, garment and wholesale sectors are most likely to be adversely affected by the informal economy. The paper concludes by calling for similar research in other global regions and for a more targeted approach towards tackling the informal economy.

scholarly journals The Impact of Interplay Between Formal and Informal Institutions on Corporate Governance Systems: a Comparative Study of CEECs

2018 ◽  
Vol 21 (4) ◽  
pp. 85-104
Author(s):  
Małgorzata Godlewska ◽  
Tomasz Pilewicz
Keyword(s):  
Corporate Governance ◽  
Deductive Reasoning ◽  
Case Study Research ◽  
Individual Case ◽  
Informal Institutions ◽  
Comparative Case Study ◽  
Governance Systems ◽  
Formal And Informal Institutions ◽  
The Impact

The central point of this paper is to present the results of comparative case study research concerning the impact of the interplay between formal and informal institutions in the corporate governance systems (CGS) of Central and Eastern European Countries (CEEC). Particular focus was put on the values of the corporate governance codes (CGC) of CEECs, as well as on transparent ownership structures, transactions with related parties, the protection of minority shareholders, independent members of supervisory boards, and separation between the CEO position and the chairman of the board of directors. The main subject of interest concerns two research areas: the character of the relationship between formal and informal institutions, as well as whether the interplay between them is relevant to the CGSs of CEECs. Moreover, the author investigates whether the CGCs of CEECs consist of regulations that are compatible with the values set up in preambles using research methods such as individual case study or deductive reasoning. The conclusion presented in the paper was drawn on the basis of a review of the literature and research on national and European corporate governance regulations, as well as the CGC of CEECs. The primary contribution this article makes is to advance the stream of research beyond any single country setting, and to link the literature on the interplay between formal and informal institutions related to CGSs in a broad range of economies in transition (‘catch up’ countries) like CEECs. This paper provides an understanding of how the interplay between formal and informal institutions may influence the CGCs of CEECs.

Network centrality and innovation performance: the role of formal and informal institutions in emerging economies

2019 ◽  
Vol 34 (6) ◽  
pp. 1388-1400 ◽  
Author(s):  
Haifeng Wang ◽  
Yapu Zhao ◽  
Beilei Dang ◽  
Pengfei Han ◽  
Xin Shi
Keyword(s):  
Social Cohesion ◽  
Emerging Economies ◽  
Informal Institutions ◽  
Innovation Performance ◽  
Network Centrality ◽  
Entrepreneurial Firms ◽  
Content Type ◽  
Growth Enterprise Market ◽  
Formal And Informal Institutions ◽  
The Impact

Purpose The impact of network centrality on innovation performance is inconclusive. The purpose of this paper is to examine how formal and informal institutions affect the influence of network centrality on firms’ innovation performance in emerging economies by integrating social network theory and institutional theory. Design/methodology/approach Multisource and lagged data from 234 technology-based entrepreneurial firms listed on the Chinese Growth Enterprise Market were leveraged to test a proposed research model. Findings Results suggest that formal institutions (marketization) positively moderate the relationship between network centrality and innovation performance, whereas informal institutions (social cohesion) negatively moderate this relationship. Moreover, formal and informal institutions have a strong joint impact on such relationship, that is, the effect of network centrality on innovation performance is most positive when marketization is high and social cohesion is low. Originality/value This empirical research provides new insights into whether and how firms can grasp the innovation benefits of network centrality by exploring institutional contingencies. It further sheds on light the scope of the network centrality–innovation issue by extending its research context to Chinese entrepreneurial firms.

scholarly journals The Impact of Interplay Between Formal and Informal Institutions on the Development of Innovation Networks: A Comparative Study of CEECs

2021 ◽  
Vol 13(49) (3) ◽  
pp. 105-120
Author(s):  
Małgorzata Godlewska
Keyword(s):  
Case Study Research ◽  
Innovation Process ◽  
Informal Institutions ◽  
Comparative Case Study ◽  
Innovation Networks ◽  
Eastern European ◽  
Economies In Transition ◽  
Formal And Informal Institutions ◽  
Eastern European Countries ◽  
The Impact

The aim of this paper is to present the results of comparative case study research concerning the impact of the interplay between formal and informal institutions on the development of innovation networks of the Central and Eastern European Countries (CEECs). The primary contribution this article makes is to link the literature on the interplay between institutions related to innovation networks in a broad range of economies in transition like CEECs. This paper provides an understanding of how interplay between these institutions may influence the development of innovation networks of CEECs. Practical policy recommendations are to introduce a risk guarantee mechanism, which may promote the innovation process at different levels and influence the development of innovation networks later.

scholarly journals The Impact of Institutions on the Evolution of Tourism Accommodation Format: Evidence from Wulingyuan, China

2019 ◽  
Vol 11 (10) ◽  
pp. 2882
Author(s):  
Ting Jiang ◽  
Shaobing Zhuo ◽  
Chaozhi Zhang ◽  
Jun Gao
Keyword(s):  
Sustainable Development ◽  
Informal Institutions ◽  
Evolution Process ◽  
Formal Institutions ◽  
Tourist Destination ◽  
The Sustainable Development ◽  
Formal And Informal Institutions ◽  
Industry Needs ◽  
The Impact ◽  
Current Stage

This paper examines the impact of institutions on evolution of tourism accommodation format in Wulingyuan, a well-known tourist destination in China, from the perspective of institutional cluster embeddedness. Data were primarily collected through interviews and participant observations. The findings show a five-stage evolution process starting from introduction (1982–1988), through growth (1989–2000), adjustment (2001–2004), and upgrade (2005–2010) to the current stage of individualization (2011–present). During the process, the informal institutions work to suppress, conflict with the formal institutions, yet transform into formal institutions in the end. In such a process, institutional loopholes and frictions are the norm, and tourism accommodation format evolves from extensive development to sustainable development. It suggests that the sustainable development of the tourism accommodation industry needs the synergy of formal and informal institutions.

Determinants of Islamic banking growth: an empirical analysis

2018 ◽  
Vol 11 (1) ◽  
pp. 18-39 ◽  
Author(s):  
Tamsir Cham
Keyword(s):  
World Bank ◽  
Time Series Data ◽  
Empirical Work ◽  
Series Data ◽  
Islamic Banking ◽  
Content Type ◽  
Positive Effects ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
The Impact

Purpose This paper aims to examine the determinants of growth rate in Islamic banking using annual time series data. Design/methodology/approach The author applied several econometrics methods including generalized linear model and survey-based indicators. The author uses the World Bank Enterprise Survey data to supplement the answers. Findings The results support the view that high oil prices, stable domestic prices, higher educated populace and greater presence of capital resources have positive effects on growth in Islamic banking. The findings, however, revealed that instability adversely affects Islamic banking growth. The author found no clear conclusion on the impact of economic growth, greater presence of Muslim population and presence of sharia in the legal system of the country on growth in Islamic banking. The major constraints impeding Islamic banking growth include regulations, tax rates and skilled labor force. Originality/value There is no empirical work that has been done on the determinants of Islamic banking growth by taking into account the following factors: oil price dynamics, sharia compliant, macroeconomic variables, instability and World Bank Enterprise survey. This paper attempts to search for the push and pull factors of Islamic banking growth to fill the gap in determining the Islamic banking growth.

scholarly journals EVALUATING THE IMPACT OF INFORMAL SECTOR COMPETITORS ON THE PERFORMANCE OF FORMAL ENTERPRISES: EVIDENCE FROM BOSNIA AND HERZEGOVINA

2020 ◽  
Vol 25 (02) ◽  
pp. 2050014
Author(s):  
COLIN C. WILLIAMS ◽  
BRUNILDA KOSTA
Keyword(s):  
World Bank ◽  
Bosnia And Herzegovina ◽  
Informal Sector ◽  
Employment Growth ◽  
Policy Implications ◽  
Sales Growth ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
The Impact ◽  
Do So

It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.

scholarly journals IMPACT OF THE INTERPLAY BETWEEN FORMAL AND INFORMAL INSTITUTIONS IN THE CORPORATE GOVERNANCE AND INDEPENDENCE OF AUDIT FIRMS: A COMPARATIVE STUDY OF CEECS

2020 ◽  
Vol 19 (1) ◽  
pp. 23-32
Author(s):  
Małgorzata Godlewska
Keyword(s):  
Corporate Governance ◽  
Code Of Ethics ◽  
Meta Analysis ◽  
Audit Fees ◽  
Informal Institutions ◽  
Research Areas ◽  
Audit Firms ◽  
Formal And Informal Institutions ◽  
Financial Audit ◽  
The Impact

The central point of this paper is to present the results of comparative meta-analysis concerning the impact of the interplay between formal and informal institutions in the corporate governance and independence of audit firms of Central and Eastern European Countries (CEECs). The paper focuses on the values of the national Financial Audit Law and national auditors’ code of ethics of CEECs, as well as on independence, professional scepticism, non-audit services, audit fees, mandatory audit firm rotation and joint carrying out of statutory financial audit. The main subject of interest concerns two research areas: the character of the relationship between formal and informal institutions, as well as whether the interplay between them is relevant to corporate governance and independence of audit firms of CEECs.

scholarly journals Infrastructure Support for the Development of Small Businesses

2019 ◽  
Vol 8 (3) ◽  
pp. 6430-6433
Keyword(s):  
Sustainable Development ◽  
Small Businesses ◽  
Institutional Environment ◽  
Informal Institutions ◽  
Economic Mechanism ◽  
Institutional Approach ◽  
Institutional Infrastructure ◽  
Formal And Informal Institutions ◽  
Institutional Actors ◽  
The Impact

For the purpose of sustainable development of small businesses, it is necessary to pay special attention to the formation of infrastructure for small businesses. This study uses an institutional approach which involves assessing the impact of formal and informal institutions on the development of small businesses. The author introduces the concept of the “frontier” institution as an institution, the operation of which is governed by the prescriptions of laws and established regulations, but the performance of certain functions is based on informal rules. This allows such an institution to more effectively perform the functions of a formal institution and makes it more capable and competitive in the market in a specific period of time. Furthermore, the study identifies the concepts of the institutional environment and institutional infrastructure. The author defines the institutional environment as a set of rules of conduct and institutional infrastructure as a set of institutions that form the rules of conduct and have an impact on small businesses. The impact is understood as the formation by institutional actors of rules of conduct that have incentive and disincentive effects on small businesses. This makes it possible to identify the causes of positive or negative deviations in the development of small businesses and to develop solutions aimed at solving the problems encountered. The article studies the organizational and economic mechanism that reflects the functioning of formal and informal institutions through which institutional infrastructure influences small businesses in order to achieve their goals.

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