THE EFFECT OF INSTITUTIONAL CONSTRAINTS AND BUSINESS NETWORK ON TRUST IN GOVERNMENT: AN INSTITUTIONAL PERSPECTIVE

Gentjan Cera, Maksim Meço (), Edmond Çera () and Sadik Maloku ()
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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

REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, 2019, vol. 2019, issue 33, 6-19

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.

Keywords: public sector; trust in government; business enabling policies; institutional constraints; business network; ordinal regression; transition country. (search for similar items in EconPapers)
JEL-codes: E4 E5 F2 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:rom:rampas:v:2019:y:2019:i:33:p:6-19

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