Comments on: Measuring the Institutional Environment http://organizationsandmarkets.com/2007/03/23/measuring-the-institutional-environment/ Economics of organizations, strategy, entrepreneurship, innovation, and more Sun, 12 Feb 2012 08:11:55 +0000 hourly 1 http://wordpress.com/ By: Bo http://organizationsandmarkets.com/2007/03/23/measuring-the-institutional-environment/#comment-13535 Sun, 25 Mar 2007 02:14:45 +0000 http://organizationsandmarkets.com/2007/03/23/measuring-the-institutional-environment/#comment-13535 This is a very interesting discussion. In a paper to appear later this year in JIM, we have used one of the aforementioned secondary sources (in this case the Kaufmann indices) to measure institutional risk – or macro governance as we call it – in a study of Danish firms IJV and FDI behavior. During this research it became clear that there is a significant difference between “perceived” insitutional risk and “country-level” risk. Unfortunately, our primary data could not adequately account for the perceived risk of the institutional investment climate, however, we did find some very interesting relationships to other perceptual measures, such as trust, cultural distance etc. in terms of Danish firm’s inclination to chose equity over non-equity types of investments. In fact, by splitting our sample into “high and low governance countries” based on the secondary insitutional values, we found some interesting differences pointing to the same sort of concluion as above – the potential for overstating the effects of secondary institutional variables.

It should also be noted that most of these secondary insitutional variables are extremely highly correlated – in fact in our study we collapsed 6 measures into one – macro environmental governance – as using them independently did not make much sense…

]]>