How quickly do firms respond to new institutions? Romanian survey data permits investigation of this question, using variables summarizing firms' strategies on transactional governance. These variables are regressed on the factors that should determine efficient behavior according to standard agency and transaction-cost theories. The results suggest that transactional strategies do not currently reflect efficiency considerations. Instead, behavior reflects peculiarities of transition: history, ownership, and state-relations are more important in determining responses to new institutions. Firms use institutions but do not evidence efficient responses to them. Appropriate institutional reform deploys information on how firms adjust to institutions before the long-run.
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Paper provided by University of Maryland, Department of Economics in its series Electronic Working Papers with number
03-001.
Length: 42 pages Date of creation: Mar 2003 Date of revision: Handle: RePEc:umd:umdeco:03-001
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Find related papers by JEL classification: P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Simeon Djankov & Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2003.
"The New Comparative Economics,"
NBER Working Papers
9608, National Bureau of Economic Research, Inc.
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