Strategic Responses to Institutional Voids (Rationalization, Aggression, and Defensiveness): Institutional Complementarity and Why the Home Country Matters

We seek to understand how the strategic responses of firms to institutional voids are affected by their home countries’ institutional contexts. It adopts an exploratory, multiple case studies approach examining the responses of advanced and emerging multinational enterprises, and local firms in two African countries which are characterized by such voids, namely the Democratic Republic of the Congo and Zimbabwe. Our research suggests that firms’ strategic responses to institutional voids in emerging or developing markets are affected by the home country’s institutional environment and firms’ experiences and advantages arising from that home context. Firms adopt strategic responses which reflect their respective advantages and this results in diverse approaches based on the interplay between capitalizing upon internal resources and institutional know-how. For some firms this may result in a defensive strategic response, whilst for others opportunistic and aggressive agility, or rationalization and reconciliation may manifest. We demonstrate differences between advanced and emerging multinational enterprises and domestic firms covering the spectrum between institutional outsiders and insiders. We emphasize the contextual nature of these strategic responses and argue that this requires integrating both a resource and institution-based analysis of firms’ underlying advantages and how they are able to leverage off these advantages in institutionally voided environments. Practical implications arise for doing business in emerging and developing markets.

Conflictual Complementarity: New Labour Actors in Corporatist Industrial Relations

Liberalisation of industrial relations entails the weakening of unions and a respective rise of alternative, ‘new labour actors’, altering traditional class representation by introducing new strategies. Research on this phenomenon has focused on decentralised contexts, where new actors are seen to pursue both independent strategies as well as cooperation with unions to contest rising employers’ discretion. Drawing on multiple qualitative methodologies, this article analyses the roles and contributions of new actors in the context of corporatist industrial relations, to find rising conflicts between them and unions. Combining social movement theories of strategic change with industrial relations theories of power and theories of institutional complementarity, reveals conflictual forms of complementarity between new actors and corporatist unions. Through interacting with new labour actors, corporatist union strategies are seen to change in a ‘spin-off’ form, reforming unions’ traditional power and dominance to (partially) counter previous liberalisation of industrial relations.

Innovative Development in the Context of Complementarity

The peculiarities of innovative development in the interaction of economic and social components of the external and internal environment are studied on the basis of a complementary approach, namely the relationship between economic efficiency and social justice, their negative and positive impact on the quality of life and socio-economic development opportunities. As for complementary development, the idea of justice, which currently is an important factor in achieving European living standards and guaranteeing social-economic rights of a person and citizen, plays an important role in reforming all the spheres of public life, democratization of Ukrainian society, and providing Ukraine's integration into the European political and legal space. Complementarity research is becoming relevant at the present stage of global economic development, when the market situation is characterized by a fairly high rate of transformation, and innovation becomes the main competitive factor. The author considers the emergence of the complementarity concept in research works made in various areas (e.g., the concept of institutional complementarity), and also highlights the features of compensatory and supplemental complementarity. Unconditional following global examples without taking into account the state of real socio-economic and institutional structures in a certain state will not give a favourable result from implementing reforms and introducing innovations due to the lack of complementary connections. Therefore, the conditions for the emergence of new institutional changes and the impact of "social elevators" on social development in the long run are analyzed. The presence of complex unresolved problems in the development of our state actualizes the study of the complementary context of innovative development, aimed at rethinking the role of social justice in solving major economic problems. Due to a complementary approach, the economic system will be able to increase such features as adaptability and continuity by developing mechanisms of self-preservation, and will acquire systematic innovative development with a ripple effect.

Is There a Link Between Complementary Economic Institutions and Ideologies?

Since the publication of Max Weber’s “Protestant Ethics and the Spirit of Capitalism” in 1904, the author’s idea about the positive relationship between Protestantism and capitalism has taken root in social sciences. Even though since then, multiple authors have questioned Weber’s idea, it still remains popular. Douglass C. North’s theory of institutions is interesting in this respect. He pointed to the intentionality behind the emergence of institutions. For North, institutions are an attempt to reduce the uncertainty by providing a structure to our everyday life, including interactions. The forms of these interactions depend not only on the climatic, demographic, technological and other factors, but also on people’s ethical attitudes. In our study, we proceed from the assumption that there is a relationship between institutions and ideologies in the broad sense of the term, on the one hand, and, on the other, from the concept of complementary institutions. The latter implies the presence in the institutional environ- ment of two or more complementary institutions. Complementary institutions determine the structure of contractual relations between agents pursuing simple tasks, which means that there are various systems of stimuli and principles of how these agents should deliver on their obligations. In this respect the question arises as to how such institutional complementarity fit into the ideologies prevailing in this or that society? Is it possible for complementary institutions to coexist? In this study we focus on two cases from Chinese history to show that institutional complementarity is possible only if the adherents to the dominant ideology are ready to accept the possibility of flexible interpretations of such ideology and of the existence of complementary ideologies. The first example is the popularity of Taoism as a complementary ideology of Confucianism among the merchants in Qing China. Since Confucianism could not create the necessary ethical incentives for those people who were engaged in trade, Taoism filled the ethical void with its magical practices. The second case relates to the era of the Han Dynasty and the dispute about the limits of the state’s influence on the economy between the representatives of different philosophical schools. In both examples, complementary ideology creates necessary incentives for building complementary institutions.

Institutional Capacity of the Higher Education System and Factors of Its Provision

The article is aimed at revealing the state of the institutional system of higher education in Ukraine in the context of the coronavirus pandemic by using the category of institutional capacity. To this end, the following methodological achievements of economic research are used: the unity of logical and historical, normative and positive analysis; institutional and evolutionary approach; logical modeling; behavioral economics; and political markets theory. Based on the authors' definition of the institutional capacity concept, the main features of the institutional capacity of the higher education system are specified, namely: internal complementarity of the institutional system; its external complementarity; interlinking internal and external complementarity. The analysis shows that the Ukrainian higher education system is experiencing a deep multilevel crisis, the origins of which lie in the fact that the government lacks the following: a systemic vision of modern higher education problems; understanding of the close relationship between the level of state support and the dynamics of national competitiveness; absolute dominance of fiscal motivation over the strategic one while solving the problems of financing the needs of higher education. The results obtained provide an opportunity to further study the ways of inhibiting destructive processes, then neutralizing them and, finally, creating the preconditions to restore institutional capacity. The practical significance of the study lies in the fact that it enriches scientific ideas about the structure of the institutional system of higher education and, on this basis, helps to develop managerial decisions aimed at improving the efficiency of the system. The originality of the article is stipulated by using the institutional capacity category and the institutional complementarity concept to study the current state of higher education in Ukraine.

REVIEW OF THE MONOGRAPH BY SHEVCHYKA B. M. TRADITION AND ECONOMY: ECONOMIC SYSTEMS IN SOCIO-CULTURAL DYNAMICS (LVIV, LTEU PUBLISHING HOUSE, 2017, 574 p.)

This material is a review of the book by Bohdan Shevchyk �Tradition and economy: economic systems in socio-cultural dynamics� (2017), which presents author�s concept of undestending socio-cultural changes as the basis of economic development. The monograph substantiates the concept of economic orientalism, which is considered in such dimensions: firstly, as a new paradigmatic project of socio-economic development; secondly, as forms of sociocultural space. The ideational type of cultural mentality of Ukrainians acts as the leading one and determines the structure and institutional complementarity of the national economic system of Ukraine. The main results of the author�s research, which characterize the scientific novelty, include the following: theoretical substantiation of the concept of economic orientalism as a characteristic of a number of modern circumstances, which is associated with: the change of types of dominant culture in the processes of sociocultural dynamics and the transition from sensory to ideational type of cultural mentality; proving the socio-cultural context of the formation of economic orientalism. Business entities are considered as a multi-intellectual socio-cultural economic system of the ideational type of culture; interpretation of systems of economic thinking as structures of mentality, which is the basis of theoretical modeling of evolutionary and transitive economic systems in the quadratic: structure-function-processenvironment

Authoritarian Aid and Regime Durability: Soviet Aid to the Developing World and Donor–Recipient Institutional Complementarity and Capacity

How does authoritarian aid influence the durability of dictatorships? Western aid is thought to facilitate authoritarian durability because it can provide patronage. Authoritarian aid, by contrast, has received far less attention. This article examines both Soviet economic and military assistance, developing a theory of donor–recipient institutional complementarity to explain the impact of Soviet aid during the Cold War. The argument is developed through case studies of Vietnam and Ghana and a cross-national statistical analysis of Soviet economic aid and military assistance to developing countries from 1955 to 1991. Soviet economic aid was tied to the purchase of Soviet industrial equipment. When recipient states shared the Soviet Union's centrally planned economy, economic aid strengthened state infrastructural power by (1) enhancing fiscal capacity and (2) cultivating the dependency of the population on the state. Aid flows helped consolidate and maintain authoritarian institutions, promoting authoritarian durability. By contrast, while Soviet economic aid to noncommunist regimes provided some opportunities for patronage through employment in SOEs, the lack of institutional complementarity in planning institutions and overall lack of capacity of these institutions caused Soviet aid to contribute to inflation and fiscal crises. Economic problems, in turn, increased the vulnerability of noncommunist regimes to military coups, particularly when ideological splits emerged between pro-Soviet rulers and pro-Western militaries that undermined elite cohesion. The institutional subordination of the military to communist parties insulated communist regimes from the risk of coups.

22. The Impact of Public Policies

This chapter examines the effects of public policy. It first considers economic paradigms and approaches to welfare and documents the overriding historical changes in approaches to the economy, from Keynesian ideas of macro-economic steering to more market-oriented economic perspectives. It then explores the idea of institutional complementarity, as expressed in the typologies of welfare regimes, varieties of capitalism, and flexicurity. It also looks at some of the empirical analyses of the effects of welfare policies and the tension between welfare and economic efficiency. Finally, it looks at policy feedback, path dependence, policy learning, social learning, policy transfer and policy diffusion, and policy convergence.