Original scientific paper
Institutional Interaction in the Business Environment: Eastern European Versus Western European Countries
Ružica Šimić Banović
orcid.org/0000-0001-6527-2726
; Faculty of Law, University of Zagreb, Zagreb, Croatia
Abstract
The interplay of formal (laws, regulations) and informal institutions (culture, tradition, norms of behaviour) has shown to be initially underestimated in the recent economic, political, and social transformation of Central and Eastern European countries. This predominantly led to a uniform approach that undervalued intangible legacy and consequently could neither predict nor address the divergence of the countries’ development and evolution of their business systems. Dominant national culture has been recognized as a very influential factor of institutional change. Considering that a favourable business environment is vital for economic progress, “institutional stickiness” of business-related laws and regulations and culture is thoroughly researched. It is further linked with the overall quality of the business environment and the level of economic development. This article suggests that a favourable business environment is expected to be found in societies characterised by a weak power distance, high individualism, low uncertainty avoidance and indulgence instead of restraint. Yet, opposite characteristics are found in numerous transition countries. Hence, the findings suggest a lesser likelihood of successful institutional import from Western to Eastern European societies.
Keywords
Culture; Institutions; Business environment; Transition; Post Socialism
Hrčak ID:
149395
URI
Publication date:
31.8.2015.
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