Differentiated effects of formal and informal institutional distance between countries on the environmental performance of multinational enterprises

This research examines the influence of environmental institutional distance between home and host countries on the standardization of environmental performance among multinational enterprises using ordinary least-squares (OLS) regression techniques and a sample of 128 multinationals from high-polluting industries. The paper examines the environmental institutional distance of countries using the concepts of formal and informal institutional distances. The results show that whereas a high formal environmental distance between home and host countries leads multinational enterprises to achieve a different level of environmental performance according to each country's legal requirements, a high informal environmental distance encourages these firms to unify their environmental performance independently of the countries in which their units are based. The study also discusses the implications for academia, managers, and policy makers.     

The three faces of China: Strategic alliance partner selection in three ethnic Chinese economies

It is generally understood that firm strategy is linked to both internal firm resources and external, competitive industry forces. More recently, studies have suggested that firm strategy is also influenced by the formal and informal institutions of the institutional environment. Culture and commercial conventions represent important informal institutions – the norms and values shared by a group of individuals – whereas more formal institutions include the regulatory, economic, and political forces in the environment. We explore the effects of formal and informal institutions on strategic alliance partner preferences in Mainland China, Taiwan, and Hong Kong. Although the three share a broad lineage, their institutional development differs in some respects. Utilizing a policy capturing study, we explore alliance preferences of senior managers from each of the three economies to demonstrate how similarities and differences in the institutional environment can produce variation in alliance partner preferences. This paper contributes empirically by comparing alliance partner preferences in three different ethnic Chinese communities in East Asia. We add to the nascent but growing literature on institutions and strategy, with practical implications for understanding alliance partner preferences of managers in China, Taiwan, and Hong Kong, which represent major centers of strategic alliance activity.     

India's Informal Trade with Bangladesh: A Qualitative Assessment

The large and vibrant informal trade between India, and Bangladesh continues to thrive despite unilateral/regional/multilateral trade liberalisation in these two countries. This calls for an in-depth analysis of India's informal trade with Bangladesh. Using insights from the New Institutional Economics informal and formal institutions engaged in cross-border trade are contrasted to examine whether informal trading arrangements provide better institutional solutions. The analysis, carried out on the basis of an extensive survey conducted in India and Bangladesh reveals that informal traders in India and Bangladesh have developed efficient mechanisms for contract enforcement, information flows, risk sharing and risk mitigation. Further, informal traders prefer to trade through the informal channel because the transaction costs of trading in the informal channel are significantly lower than the formal channel implying that informal trade takes place due to the inefficient institutional set up in the formal channel. The principal policy implication from the study is that unless the transacting environment of formal traders improves, informal trade will continue to coexist with formal trade, even if free trade is established in the SAARC region.     

The effects of competition policy,regulatory quality and trust on inward FDI in host countries

This article develops a comparative institutionalist framework to investigate how pro-enforcement reforms leading to a change in competition policy regimes attracts FDI in host countries, and how this relationship is moderated by the interplay between key formal and informal institutions. We revisit the FDI theory by integrating insights from economics of competition policy and the most recent debate on how institutions matter to international business. We contend that the effectiveness of competition policy enforcement is a crucial factor in attracting FDI, but only in host countries characterized by institutional configurations where the lack of trust is concomitant with a high-quality regulatory institutional environment. Our analysis on a sample of 63 countries followed in the 1980–2017 period supports our hypotheses. This paper contributes to a deeper understanding on the competition policy–FDI relationship at national level and has implications for policy makers.     

Strategic social marketing to foster gender equality in Indonesia

ABSTRACT

Gender equality is still facing many challenges in Indonesia; this also includes a prominent problem of gender-based violence. Social marketing approach has been used to promote gender-equality programmes tackling gender-based violence. MenCare+ is one of the examples of programmes in Indonesia that engage men with multicomponent, strategic, involves campaigns, education, training and policy advocacy with a number of objectives including improving access to services, increasing sexual and reproductive rights, and fostering gender equality. Some achievement has been made such as MoU with local government to promote male involvement in the use of contraception. However, gender-equality movement is still needed in order to change the mind set and paradigm towards gender equality, and social marketing can become a powerful tool to do it.

Abbreviations: MoU: memorandum of understanding; NGO: non-government organization     

Equal Dreams: The One Child Policy and the Consumption of Education in Urban China

This study explores the effect that China's one child birth policy is having on gender equality in urban areas of China, as viewed through patterns of consumption. Specifically, differential access to education by gender is examined through an analysis of the investments of urban parents in their children's education. The results of the study show that there are few important differences in the aspirations of parents for daughters versus sons. In addition, educational expenditures, including tuition, private lessons, books, and other educational products, show no significant differences by gender. These results seem to indicate that, in an important departure from a long history of unequal access to education by females in China, urban children are receiving full and equitable investments in their futures by their families, regardless of their gender. The results have important implications for the effects that public policies can have on gender equality.     

The role of seeding in multi-market entry

Firms introducing new products into multi-markets often face the dilemma of how to dynamically allocate their marketing resources during penetration. The aim of this study is to examine which responsive allocation strategy is more effective for these firms. We explore three major resource allocation strategies: uniform strategy, in which the firm distributes the marketing efforts evenly among its regions regardless of market development; support-the-strong strategy, under which the firm invests its efforts proportional to the number of adopters in that region (at least up to a certain market coverage); and support-the-weak strategy, in which the firm invests its efforts proportional to the remaining market potential.Using both formal analysis and complex systems simulations, we find that strategies that disperse marketing efforts, such as support-the-weak and uniform strategies, are generally superior to support-the-strong strategy. Not only is this finding surprisingly robust to market conditions and variations on these strategies, but it also runs counter to conventional wisdom prevailing in international marketing. The conditions under which support-the-strong policy might become more effective include: (a) fixed entry or operation costs above a certain level; and (b) substantial variance between regions in responsiveness to marketing efforts. However, variance in intrinsic innovativeness between regions does not imply the superiority of support-the-strong strategy.     

Unravelling agency relations inside the MNC: The roles of socialization,goal conflicts and second principals in headquarters-subsidiary relationships

Prior research has advanced classical agency theory to account for various characteristics of headquarters (HQ)-subsidiary relations in the multinational corporation (MNC). In an attempt to contribute to this line of research, in this paper, we propose and test an agency model for HQ-subsidiary relations inside the MNC. Drawing on classical agency assumptions, we develop a baseline hypothesis that links informal controls (i.e., socialization), HQ-subsidiary goal conflicts, and the HQ’s use of formal controls (i.e., behavioral controls). We subsequently introduce an important boundary condition, which reflects subsidiaries’ internal agency relations with subsidiary CEOs as second principals. More specifically, we argue that the baseline relationship only holds under low levels of second principal power. To test our model, we employed a unique study design with three parallel surveys addressing the agents and the two principals involved in 131 agency relations within one MNC.     

Good apples in spoiled barrels: A temporal model of firm formalization in a field characterized by widespread informality

Entrepreneurship scholars have devoted increasing attention to formalization (i.e., a firm's transition from informality to compliance with formal institutions). However, little is known about the actual process through which informal firms transition to pursue opportunities in a fully legally compliant way. This transition poses formidable challenges, especially in fields in which informality rather than formality is widespread. To understand how firms transition to full formality and manage the related institutional challenges in such contexts, we conduct a longitudinal, inductive case study of an informal firm, confiscated from the Mafia in Italy, and examine how it succeeded in operating formally in a field in which informality regulated transactions and was accepted across society. The findings suggest that formalizing in such contexts is a two-phase process that entails first extricating the enterprise from the influence of informal institutions and then cultivating formal institutions in the field to increase the firm's legitimacy. The study contributes to the literature on formalization, entrepreneurship, and institutional work by advancing the understanding of formalization as a dynamic and entrepreneurial endeavor that requires specific institutional work at different points in time to succeed.     

Impacts of advertisements that are unfriendly to women and men

Taking Belgium as a case in point, this study analyses, first, tolerance for advertisements unfriendly to women and men as expressed by advertising and marketing professionals, consumers and gender equal opportunity workers. Second, it compares which types of unequal gender portrayal raise concerns with which sector of respondents. Finally, it analyses the differences in adherence of the three sectors to the two main policy solution paradigms proposed in the 2008 European Parliament Resolution on ‘How marketing and advertising affect equality between women and men’. Results suggest a degree of tolerance that varies significantly according to sector, language, gender and age. Overall, respondents express more concerns regarding traditional sex roles in advertising than regarding nudity, unattainable beauty standards or gender stereotypes, and prefer gender-and-advertising literacy programmes and awards for advertisements that break through gender stereotypes over stricter ethical and/or legal regulations. These findings should prove useful to advertising and marketing professionals, national advertising regulatory bodies and policy makers.     

Informal payments by patients for health services: prevalence and determinants

ABSTRACT

The aim of this paper is to explain the prevalence of informal payments in the health services sector in Southern Europe using the lens of institutional theory. To evaluate whether informal payments prevail due to formal institutional failures which lead to an asymmetry between the laws and regulations (formal institutions) and the unwritten rules (informal institutions), an analysis is undertaken of 2013 Eurobarometer survey data on the propensity to make informal payments by patients in Southern Europe. A strong association is found between the extent to which formal and informal institutions are unaligned, and the prevalence of informal payments, and such payments are found to be more likely when there is a lack of modernisation of governance coupled with a low range and reach of health services provision, lower health outcomes and systems focus on curative rather than preventative health services. The theoretical and policy implications are then explored.     

The Razor's edge: Managing MNC affiliates in Iran

Much has been written on the nature of international assignees’ experiences of managing Multinational Corporation (MNC) affiliates in the context of Western economies. This study aims to broaden the debate and elucidate these issues in the largely overlooked region of Middle East with a particular focus on Iran. Data from six MNC affiliates across two high growth global industries reveals that the nature of international assignees’ experiences can be explained in terms of desirable, indifference, and undesirable effects of managing MNC affiliates. Specifically, it was found that the international assignees’ perceptions of managing MNC affiliates were formed prior to their appointments. Furthermore, while conformance to headquarter (HQ) managerial orientations was seen to serve as a proxy for earlier desirable experiences of these international assignees, their current performance was seen to deteriorate by the need to fully comply with the HQ's way of doing things. Together, these findings support the view that the degree of congruence or fit between, on the one hand, the HQ and international assignees’ orientations, and on the other hand, between the international assignees and the host country culture could have implications for the success or failure of the international assignees in the context of Iranian-based MNCs. Finally, the paper concludes with implications and lessons for policy makers, practitioners and academics.     

Digital entrepreneurship ecosystem as a new form of organizing: the case of Zhongguancun

Digital innovation is becoming increasingly important in today’s economy. Many digital innovations are developed not within organizations, but in innovation-driven entrepreneurial ecosystems, where various entrepreneurship related stakeholders collaborate and cooperate. Despite its significance, studies on digital entrepreneurship ecosystems (DEEs) are limited and the concept is largely undertheorized. This study intends to fill that gap by studying how a DEE organizes. This organizing issue is challenging, because stakeholders of a DEE are self-organizing and are not governed by any formal authority. To answer that question, we adopt forms of organizing as a theoretical lens, which provides structure to examine organizing issues. Through an in-depth case study of Zhongguancun, the Silicon Valley of China, we unveil eight processes around the themes of division of labor and integration of efforts. We further show that the forms of organizing feature a balance of centralized design and de-centralized emergence. This balanced view extends the forms of organizing literature, which takes an either/or perspective. Ecosystem architects and policy makers who intend to build entrepreneurship ecosystems to promote local economies can derive practical implications from our findings.     

How institutions and gender differences in education shape entrepreneurial activity: a cross-national perspective

Previous studies offer evidence that human capital obtained through education is a crucial explanation for cross-national differences in entrepreneurial activity. Recently, scholar attention has focused on the importance of education in subjects such as science, technology, engineering, and math (STEM) for the promotion of entrepreneurial activity. To our knowledge, empirical evidence for this link is scarce, despite the emphasis made in the literature and by policy makers on the choice of study at the tertiary level. Given that differences in STEM education are particularly large between men and women, we utilize data from the Global Entrepreneurship Monitor for 19 European countries and the USA. We study the role of these differences in STEM education at the national level for three stages of the entrepreneurial process: entrepreneurial awareness, the choice of sector for entrepreneurial activity, and entrepreneurial growth aspirations. We also test whether the effects of gender differences in education is moderated by the nature of the institutional environment in which entrepreneurs operate. Our findings show that individual-level explanations including education account for the gender differences during all three stages of early-stage entrepreneurial activity. Moreover, countries with greater gender equality in science education are characterized by higher entrepreneurial activity in knowledge-intensive sectors and high-growth aspirations. Thus, next to individual-level education, closing the gender gap in science at the national level can benefit a country as a whole by stimulating innovative entrepreneurial activity.     

Venture capital in Europe: social capital,formal institutions and mediation effects

Venture capital (VC) as an industry has existed for more than 50 years, yet it has only moderately developed beyond the USA despite numerous trials of governments to foster it. Vast research endeavors have been carried out to understand the antecedents, barriers, and facilitators of the industry. However, the focus has been rather limited and accounted almost exclusively for formal features of institutional environments, leaving the informal dimensions unexplored. This paper tries to close that gap. Based on longitudinal country-level data on 18 European countries, we first explore if the “usual suspects,” mostly embodied in reformable formal institutions, do play a role in the European context. We also investigate if informal institutions, and in particular social capital, may exert a prominent effect. In this respect, we found that the impact of social capital on VC activity is indeed indirect, through determining those structural formal institutions which in turn significantly affect VC activity. These findings contribute to the literature on VC and inform European policy makers on the most promising channels for creating a prosperous institutional environment for the financing of innovative start-ups.     

非正式投资影响因素研究：基于浙江创业观察的实证分析

虽然非正式资本是创业企业早期阶段重要的融资来源,但是并不清楚像中国这样的转型经济国家中个体非正式投资倾向的影响因素。文章利用浙江创业观察（2016）调查数据,从个体创业特质和创业活动参与两个方面,分析个体是否进行非正式投资以及他们的非正式投资去向的影响因素。研究结果表明,认识企业家和商业机会感知是影响个体非正式投资倾向两个最重要的因素,创业活动参与的不同类型对于个体的非正式投资倾向存在替代或者互补效应。文章最后对于发展非正式资本提出相应的对策建议。     

The nature of informal food bazaars: Empirical results for Urban Hanoi,Vietnam

This paper aims to study the interesting phenomenon of informal food markets in urban areas, which have been neglected in the past research. Based on an empirical study of consumer choice between informal and formal markets (markets built-up by street hawkers vs. government-planned markets), this paper provides a basis for understanding the nature of informal markets in the Vietnamese context. The results show that cheap price and convenience (proximity) are important in shaping the choice by consumers for informal markets for food, while close relationship with sellers or services provided by sellers are not. Shoppers with higher concern for freshness and safety of fresh food are more likely to shop at formal markets. Additionally, low-income shoppers are found significantly inclined toward informal markets, while higher-income shoppers tend to shop at formal markets. Therefore, these two types of market should be viewed as two marketplaces to serve two segments of consumer groups, rather than two markets competing for a share of the business.     

Coercion,Guidance and Mercifulness: The Different Influences of Ethics Programs on Decision-Making

The development of an ethics program is a method frequently used for organising responsible behaviour within organisations. For such a program, certain preconditions have to be created in the structure, culture and strategy. In this organisational context, managers have to take their decisions in a responsible way. This process of decision-making, embedded in an ethics program, is the main focus of this article. Ethics programs often influence decision-making in a formal way; certain norms and types of behaviour are formalised and controlled within the organisation. Subsequently, individual managers have to infer the meaning of responsible behaviour from the demands laid down in the ethics program. Such a formal ethics program has some important advantages but the dangers of such an approach are often ignored. This article discusses both the advantages and disadvantages of a formal ethics program and adds two alternative ways of stimulating responsible behaviour in the organisation. In a monological approach the reflections of the decision makers on their own values are central in differentiating between right and wrong. In a dialogical approach, the communications between decision makers and other stakeholders involved are the foundations for determining a responsible solution. Because each approach is appropriate for certain issues, a well-chosen combination is justified. Such an ethics program should be strict on certain issues but leave room for reflection and interaction on other issues.     

Overcoming the double hurdles to investing in technology

Technological activities of small and medium-sized enterprises (SMEs) have received considerable attention from researchers and policy makers since the mid-1980s. Small firms could nurture entrepreneurship and facilitate the creation and application of new ideas. In spite of their potential in generating innovations, it is also observed that SMEs shy away from formal R&D activities, and the firm size itself seems to be a barrier for R&D activities. SMEs operating in developing countries face extra hurdles to investing in R&D. Given the massive share of SMEs, it becomes crucial to realize their developmental potential in developing countries. In this paper, we study the drivers of R&D activities in SMEs in Turkish manufacturing industries by using panel data at the establishment level for the 1993–2001 period. Our findings suggest that SMEs are less likely to conduct R&D, but if they overcome the first obstacle of conducting R&D, they spend proportionally more on R&D than the LSEs do. R&D intensity is higher in small than in large firms. Moreover, public R&D encourages firms to intensify their R&D efforts. The impact of R&D support is stronger for small firms.