Proceedings of the International Conference on Applied Research in Management, Business and Economics
Year: 2019
DOI:
Are Entrepreneurs Optimistic Concerning Institutional Constraints? Evidence from a Balkan Country
Gentjan ÇERA, Edmond ÇERA
ABSTRACT:
A vast empirical studies have shown that institutions have the capacity to shape business behaviour. Formal and informal institutions might enable or constrain business activity. The aim of this research is to explore whether an entrepreneur’s perception of institutional constraints differs in time (present versus future). By comparing these two positions, we can see how optimistic are entrepreneurs. The research is anchored at the institutional theory. The analysis is conducted on firm-level data collected through a face-to-face survey. The sample size consists of 393 firms operating in a Balkan country, Albania. The non-parametric chi-square test for independence was performed in two stages: firstly, between institutional constraints and both current and future business climate; secondly, only the favourable category of both business climates and institutional constraints. The selected institutional constraints analysed are informal institutions (corruption and informal competition) and formal ones (courts and road infrastructure). Findings of this paper are useful to get a better view of the nature of entrepreneurs’ behaviour in a Balkan country. The non-parametric test revealed insignificant differences between the favourable category of both current and future business climate across the institutional constraints’ levels. Consequently, the entrepreneurs’ perception on institutional constraints will not change in the future, so, they will be neither optimistic nor pessimistic. The generalisation of these results to another context is limited, even though concerning regional, economic and institutional environments Albania has similarities with other transition and in particular with Balkan countries. This study offers insights for scholars dealing with institutional transformation and business environment, and it adds value to the knowledge on transition countries, in particular on the Albanian case.
Keywords: Albania; entrepreneurship; institutional constraints; non-parametric test; transition country.