The Impact of Interplay between Formal and Informal Institutions on Innovation Performance: Evidence from CEECs

Abstract

Formal and informal institutions matter in the context of the innovation performance of Central and Eastern European countries (CEECs). The purpose of the research was to investigate whether the interplay between formal and informal institutions has a positive, negative or neutral impact on the innovation performance of CEECs, and if formal or informal institutions alone also have a positive, negative or neutral influence on the innovation performance of CEECs. The research is based on informal institutions of CEECs such as trust, traditions, customs, creativity or cooperation, and formal institutions of CEECs such as law, formal rules, or science, technology and innovation policy (STIP). The research methodology focuses on secondary statistical data from 18,808 surveys from the European Social Survey Round 9 (2018) edition 2.0 for informal institutions and from 1090 innovation policies of European Commission and OECD STIP Compass and 414,073 notices of awarded tenders of the European Union Tenders Electronic Daily for formal institutions. Innovation performance was measured by the Summary Innovation Index (SII) of the European Innovation Scoreboard 2019. The findings show that informal institutions such as trust in others, trust in the legal system, the importance of following traditions and customs or cooperation among citizens of CEECs, as well as interplay between informal institutions such as trust in the legal system and formal institutions such as obedience to rules among citizens of CEECs have a negative impact on the innovation performance of the national economies of CEECs. Meanwhile, the variety of policy theme areas and creativity among citizens of CEECs have a positive impact on the innovation performance of the national economies of CEECs.

Systematic review of institutional innovation literature: towards a multi-level management model

“…Institutional ownership (Cooke and Saini 2010 ; Yi et al 2017 ; Rong et al 2017 ; Asiedu et al 2020 ; Bennett and Nikolaev 2020 ; Kang and Jiang 2020 ; Li et al 2020 ; Afshari-Mofrad et al 2021 ; Sharma and Sharma 2021 ; Bentzen et al 2021 ; Godlewska 2021 ; Hussen and Çokgezen 2021 )…”

The Impact of Interplay Between Formal and Informal Institutions on the Development of Innovation Networks: A Comparative Study of CEECs

“…On the other hand, formal institutions such as national or regional innovations systems regulations or innovation law also matter when it comes to encouraging or discouraging the process of innovations and increasing or reducing the incentives to innovate or establish innovation networks (Pelkmans, Renda, 2014;Godlewska, 2021).…”

“…In the literature of the subject (Brinkerink, Rondi, 2021;Godlewska, 2021or Fuentelsaz et al, 2020, there is a heated debate whether only informal institutions are important for the development of entrepreneurship or innovation ecosystem (and innovation networks), or if formal institutions also have a significant impact. Moreover, Williams and Vorley (2015) argue that in some of CEECs like Bulgaria, there is an 'institutional asymmetry' between formal and informal institutions and that informal institutions hampered entrepreneurship and innovation ecosystem.…”

“…Nowadays, innovations are considered in the literature on the subject to be a crucial growth factor for every national economy (Zasuwa, 2006;Cieślik et al, 2016;Kraftova, Kraft, 2018;Dworak, 2020;Godlewska, 2021). Moreover, Zhang et al (2012) argue that there is a long-term two-way equilibrium relationship between scientific innovations and economic growth.…”

“…Furthermore, Wysokińska (2012) underlines that institutional system of the European Union member states like Poland or Hungary, have a key importance for development of entrepreneurship and innovation. In addition, social diversity, cultural creativity or socio-institutional infrastructure and networks are necessary for innovations (Lee et al, 2004;Rodríguez-Pose, Crescenzi, 2008;Godlewska, 2021). Institutions provide stability which is needed for innovative efforts to be successful (Lundvall, 1992).…”