IDEAS home Printed from https://ideas.repec.org/a/rom/rampas/v2019y2019i33p6-19.html
   My bibliography  Save this article

The Effect Of Institutional Constraints And Business Network On Trust In Government: An Institutional Perspective

Author

Listed:
  • Gentjan ÇERA

    (Tomas Bata University in Zlin, Faculty of Management and Economics, Zlín, Czech Republic)

  • Maksim MEÇO

    (Agricultural University of Tirana, Faculty of Economics and Agribusiness, Tirana, Albania)

  • Edmond ÇERA

    (Tomas Bata University in Zlin, Faculty of Management and Economics, Zlín, Czech Republic)

  • Sadik MALOKU

    (University Ukshin Hoti Prizren, Faculty of Life and Environmental Sciences, Kosovo)

Abstract

Determinants of trust in institutions have been investigated by scholars mostly at individual level by using different theoretical perspectives. However, the ways in which changes in institutional environment affect business trust in government have not received adequate attention from researchers. The current paper sets out to contribute to existing literature by examining closely the role of business enabling policies, institutional constraints, and business networks on institutional trust in the context of a transition country like Albania. The study adopts an institutional perspective and the analysis is administrated on a firm-level data collection. Stratified sample technique was applied in selecting the respondents. To test the proposed linkages an ordinal regression was performed on an original data-set comprising 210 small and mediumsized enterprises. The results revealed that business enabling policies positively influence trust in government, whereas institutional constraints such as courts and corruption, and tax and labor regulations–related constraints negatively affect it. Hence, the higher the institutional constraints, the lower the institutional trust. Moreover, being a member of a business association diminished trust in government. Nevertheless, an interesting finding was that old firms in business association were less skeptic toward government as compared to the other ones. This paper offers useful insights for scholars into the linkage between trust in governmental agencies and entrepreneurship in institutional transformation contexts, and it unquestionably adds to the knowledge on transition countries.

Suggested Citation

  • Gentjan ÇERA & Maksim MEÇO & Edmond ÇERA & Sadik MALOKU, 2019. "The Effect Of Institutional Constraints And Business Network On Trust In Government: An Institutional Perspective," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2019(33), pages 6-19, December.
    • Handle: RePEc:rom:rampas:v:2019:y:2019:i:33:p:6-19
    as

    Download full text from publisher

    File URL: https://ramp.ase.ro/_data/files/articole/2019/33-01.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brown, J David & Earle, John S & Lup, Dana, 2005. "What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 33-70, October.
    2. Watson, John, 2007. "Modeling the relationship between networking and firm performance," Journal of Business Venturing, Elsevier, vol. 22(6), pages 852-874, November.
    3. John Hudson, 2006. "Institutional Trust and Subjective Well‐Being across the EU," Kyklos, Wiley Blackwell, vol. 59(1), pages 43-62, February.
    4. Besnik A. Krasniqi & Sameeksha Desai, 2016. "Institutional drivers of high-growth firms: country-level evidence from 26 transition economies," Small Business Economics, Springer, vol. 47(4), pages 1075-1094, December.
    5. De Clercq, Dirk & Danis, Wade M. & Dakhli, Mourad, 2010. "The moderating effect of institutional context on the relationship between associational activity and new business activity in emerging economies," International Business Review, Elsevier, vol. 19(1), pages 85-101, February.
    6. Maryse J. Brand & Evelien P. M. Croonen & Roger T. A. J. Leenders, 2018. "Entrepreneurial networking: a blessing or a curse? Differential effects for low, medium and high performing franchisees," Small Business Economics, Springer, vol. 50(4), pages 783-805, April.
    7. Aparicio, Sebastian & Urbano, David & Audretsch, David, 2016. "Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 45-61.
    8. Martin Paldam & Erich Gundlach, 2008. "Two Views on Institutions and Development: The Grand Transition vs the Primacy of Institutions," Kyklos, Wiley Blackwell, vol. 61(1), pages 65-100, February.
    9. Thai, Mai Thi Thanh & Turkina, Ekaterina, 2014. "Macro-level determinants of formal entrepreneurship versus informal entrepreneurship," Journal of Business Venturing, Elsevier, vol. 29(4), pages 490-510.
    10. Jaroslav BELAS & Lubomir BELAS & Martin CEPEL & Zoltan ROZSA, 2019. "The Impact Of The Public Sector On The Quality Of The Business Environment In The Sme Segment," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2019(32), pages 18-31, June.
    11. Reinhard Bachmann, 2011. "At the crossroads: Future directions in trust research," Journal of Trust Research, Taylor & Francis Journals, vol. 1(2), pages 203-213, June.
    12. Boris Bauke & Thorsten Semrau & Zheng Han, 2016. "Relational trust and new ventures’ performance: the moderating impact of national-level institutional weakness," International Entrepreneurship and Management Journal, Springer, vol. 12(4), pages 1007-1024, December.
    13. Farzana Chowdhury & Siri Terjesen & David Audretsch, 2015. "Varieties of entrepreneurship: institutional drivers across entrepreneurial activity and country," European Journal of Law and Economics, Springer, vol. 40(1), pages 121-148, August.
    14. Jaroslav Belas & Martin Cepel & Anna Kotaskova, 2018. "Quality of business environment in the SME segment," Proceedings of International Academic Conferences 6509331, International Institute of Social and Economic Sciences.
    15. Susan L Young & Christopher Welter & Michael Conger, 2018. "Stability vs. flexibility: The effect of regulatory institutions on opportunity type," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(4), pages 407-441, May.
    16. Farzana Chowdhury & David B. Audretsch & Maksim Belitski, 2019. "Institutions and Entrepreneurship Quality," Entrepreneurship Theory and Practice, , vol. 43(1), pages 51-81, January.
    17. Abdixhiku, Lumir & Krasniqi, Besnik & Pugh, Geoff & Hashi, Iraj, 2017. "Firm-level determinants of tax evasion in transition economies," Economic Systems, Elsevier, vol. 41(3), pages 354-366.
    18. Simón-Moya, Virginia & Revuelto-Taboada, Lorenzo & Guerrero, Rafael Fernández, 2014. "Institutional and economic drivers of entrepreneurship: An international perspective," Journal of Business Research, Elsevier, vol. 67(5), pages 715-721.
    19. Iiris Aaltio, 2008. "Management education as an identity construction: the case of Estonia and its transition economy background," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 5(1), pages 83-99.
    20. Ben Letaifa, Soumaya & Goglio-Primard, Karine, 2016. "How does institutional context shape entrepreneurship conceptualizations?," Journal of Business Research, Elsevier, vol. 69(11), pages 5128-5134.
    21. Bai, Wensong & Holmström-Lind, Christine & Johanson, Martin, 2018. "Leveraging networks, capabilities and opportunities for international success: A study on returnee entrepreneurial ventures," Scandinavian Journal of Management, Elsevier, vol. 34(1), pages 51-62.
    22. Judy S. Yang, 2017. "The governance environment and innovative SMEs," Small Business Economics, Springer, vol. 48(3), pages 525-541, March.
    23. Martin Cepel, 2019. "Social And Cultural Factors And Their Impact On The Quality Of Business Environment In The Sme Segment," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 7(1), pages 65-73, June.
    24. Gregory N. Price, 2012. "Race, Trust in Government, and Self-Employment," The American Economist, Sage Publications, vol. 57(2), pages 171-187, November.
    25. Idris, Bochra & Saridakis, George, 2018. "Local formal interpersonal networks and SMEs internationalisation: Empirical evidence from the UK," International Business Review, Elsevier, vol. 27(3), pages 610-624.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lushi Isuf & Çera Gentjan & Murrja Arif & Ujkani Sead, 2023. "Linking Farmers’ Bargaining Power in Trade to their Plans for Future Economic Activities," South East European Journal of Economics and Business, Sciendo, vol. 18(2), pages 173-185, December.
    2. Ladislav Mura & Zuzana Hajduová, 2021. "Measuring efficiency by using selected determinants in regional SMEs," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 487-503, March.
    3. Tetyana Pimonenko & Yuriy Bilan & Jakub Horák & Liudmyla Starchenko & Waldemar Gajda, 2020. "Green Brand of Companies and Greenwashing under Sustainable Development Goals," Sustainability, MDPI, vol. 12(4), pages 1-15, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Urbano & Sebastian Aparicio & David Audretsch, 2019. "Twenty-five years of research on institutions, entrepreneurship, and economic growth: what has been learned?," Small Business Economics, Springer, vol. 53(1), pages 21-49, June.
    2. Marcus Box & Karl Gratzer & Xiang Lin, 2023. "Self-employment, corruption, and property rights: a comparative analysis of European and CEE economies," SN Business & Economics, Springer, vol. 3(1), pages 1-29, January.
    3. Junaid, Danish & He, Zheng & Afzal, Farman, 2022. "The impact of weak formal institutions on the different phases of the entrepreneurial process," Journal of Business Research, Elsevier, vol. 144(C), pages 236-249.
    4. Abd Rashid, Suliza & Masron, Tajul Ariffin & Malim, Nurhafiza Abdul Kader, 2023. "The effect of corruption on entrepreneurship in the presence of weak regulatory quality: Evidence from developing countries," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    5. Turan Yay & Gülsün G. Yay & Tolga Aksoy, 2018. "Impact of institutions on entrepreneurship: a panel data analysis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 131-160, April.
    6. Daniel L. Bennett & Christopher Boudreaux & Boris Nikolaev, 2023. "Populist discourse and entrepreneurship: The role of political ideology and institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(1), pages 151-181, February.
    7. Valentina Diana Rusu & Angela Roman, 2017. "Entrepreneurial Activity in the EU: An Empirical Evaluation of Its Determinants," Sustainability, MDPI, vol. 9(10), pages 1-16, September.
    8. Jianhong Zhang & Désirée Gorp & Henk Kievit, 2023. "Digital technology and national entrepreneurship: An ecosystem perspective," The Journal of Technology Transfer, Springer, vol. 48(3), pages 1077-1105, June.
    9. José Carlos Pinho, 2017. "Institutional theory and global entrepreneurship: exploring differences between factor- versus innovation-driven countries," Journal of International Entrepreneurship, Springer, vol. 15(1), pages 56-84, March.
    10. Diana Schüler, 2023. "Institutional change and entrepreneurship as occupational choice—The case of South Korea," Journal of International Entrepreneurship, Springer, vol. 21(3), pages 385-439, September.
    11. Elaine Laing & André Stel & David J. Storey, 2022. "Formal and informal entrepreneurship: a cross-country policy perspective," Small Business Economics, Springer, vol. 59(3), pages 807-826, October.
    12. Colin C. Williams & Besnik Krasniqi, 2018. "Explaining Informal Sector Entrepreneurship In Kosovo: An Institutionalist Perspective," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-20, June.
    13. Miao, Chao & Gast, Johanna & Laouiti, Rahma & Nakara, Walid, 2022. "Institutional factors, religiosity, and entrepreneurial activity: A quantitative examination across 85 countries," World Development, Elsevier, vol. 149(C).
    14. Francisco Díez-Martín & Alicia Blanco-González & Giorgia Miotto, 2022. "The impact of state legitimacy on entrepreneurial activity," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 935-955, June.
    15. Inmaculada Buendía-Martínez & Inmaculada Carrasco Monteagudo, 2020. "The Role of CSR on Social Entrepreneurship: An International Analysis," Sustainability, MDPI, vol. 12(17), pages 1-22, August.
    16. Colin C. Williams & Brunilda Kosta, 2019. "Evaluating Institutional Theories Of Informal Sector Entrepreneurship: Some Lessons From Albania," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 1-17, June.
    17. Yassine Bakkar & Susanne Durst & Wolfgang Gerstlberger, 2021. "The Impact of Institutional Dimensions on Entrepreneurial Intentions of Students—International Evidence," JRFM, MDPI, vol. 14(4), pages 1-23, April.
    18. Patrizia Pastore & Antonio Ricciardi & Silvia Tommaso, 2020. "Contractual networks: an organizational model to reduce the competitive disadvantage of small and medium enterprises (SMEs) in Europe’s less developed regions. A survey in southern Italy," International Entrepreneurship and Management Journal, Springer, vol. 16(4), pages 1503-1535, December.
    19. Rafik Abdesselam & Jean Bonnet & Patricia Renou-Maissant & Mathilde Aubry, 2018. "Entrepreneurship, economic development, and institutional environment: evidence from OECD countries," Journal of International Entrepreneurship, Springer, vol. 16(4), pages 504-546, December.
    20. Thomas Neumann, 2021. "The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review," Management Review Quarterly, Springer, vol. 71(3), pages 553-584, July.

    More about this item

    Keywords

    public sector; trust in government; business enabling policies; institutional constraints; business network; ordinal regression; transition country.;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F2 - International Economics - - International Factor Movements and International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rom:rampas:v:2019:y:2019:i:33:p:6-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Androniceanu Armenia (email available below). General contact details of provider: https://edirc.repec.org/data/ccasero.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.