A Dynamic Typology of Informal Institutions: Learning from the Case ofGuanxi

Abstract

Currently, the mechanism in which informal institutions, recently discovered as an influential, new paradigm in business and management studies interact with and shape formal institutions remains unclear. Helmke and Levitsky (2004) proposed an outcome-based typology for the interaction of informal institutions with formal ones. By using a structured approach for literature aggregation, we test the proposed typology of Helmke and Levitsky by applying this method to 74 empirical studies to investigate the influence of guanxi on formal institutions. We conclude that guanxi fits into none of the proposed categories perfectly. As a result, we propose the relationship between guanxi and formal institutions as auxiliary as well as competing concurrently, leading to convergent and divergent outcomes, respectively. Moreover, we propose a third category to add to the existing typology, namely 'formal institutions in transition'. We furthermore incorporate a dynamic aspect to the model by adding two further categories, concerned with the direction of the development. We believe the resulting extension to the original typology of Helmke and Levitsky accurately accounts for the dynamic nature of informal institutions as well as their important role in shaping effective formal institutions.

Sub-National Institutional Contingencies and Corporate Social Responsibility Performance: Evidence from China

“…The results of economic variables such as Size and TobinQ remain significant and positive, supporting the notion that larger and more profitable firms invest more in CSR than others do [52,110,111]. The coefficients of F_Age and BTMA remain significantly negative, which indicates that younger and high growth opportunity corporates tend to do more CSR as compared to firms which are older and have fewer growth opportunities [24,102].…”

“…The average scores assigned to these three dimensions have different weights, i.e., 30%, 20%, and, 50%, representing the composite CSR rating score for a particular firm. A validity test of the measure was done with satisfactory results by the previous researchers [24,101]. The CSR rating score ranges from 0 to 100; higher rating reflects better CSR performance [102].…”

“…Regarding CSR, former President Hu Jintao declared the goal of building a harmonious society [28]. This was a signal that China would endeavor to realize balanced economic development, and would be committed to confronting environmental and social concerns [24]. In the year 2006, an SOE, namely, the State Grid Corporation, became the first Chinese company to publish their CSR report.…”

“…CSRP is used both as a dependent and independent variable in this study. Following the previous studies [24,38,99,100], the study considers social rating score issued by Ranking (RKS) based on the Global Reporting Initiative (GRI 3.0). For the CSR rating score, the RKS review and CSR reports based on three main dimensions (overall evaluation, technical evaluation, and content evaluation) further cover 70 sub-dimensions of CSR activities.…”

“…The studies suggest that institutional factors and pressure such as government regulations, the legal system, national culture, and corporate governance significantly influence the firm's CSR policies. However, the institutional pressure put on firms is not homogenous due to many factors such as political resources [24], public policies [25], Guanxi (relationship) [26,27], a high level of government involvement [26,27], geographical remoteness [28], and formal and informal institutional environments [28,29].…”