Printer Friendly

Institutional analysis of strategic choice of micro, small, and medium enterprises: development of a conceptual framework.

Abstract

This paper presents a conceptual framework showing formal and informal institutions and their relationship with the strategic choice of micro, small, and medium enterprises (MSMEs) in a developing country setting. It emphasises how institutions at sub-national level (such as a region or city) influence the strategic orientations of MSMEs as many developing countries in Asia are undergoing decentralisation whereby sub-national government authorities are given more political, economic, fiscal, and administrative powers. Furthermore, it sheds more insights on the environmental (institutional) determinism-organisational (strategic) choice nexus. It offers propositions, questions as well as issues worth pursuing in empirical investigations in the future.

Introduction

If the micro, small, and medium enterprise (MSME) sector is an engine of economic growth, then the local institutional framework is the steering wheel. This is the underlying theme of this study. Its main thesis is that formal and informal institutions emanating from the economic, political, and socio-cultural environments at a sub-national level such as a region or city significantly influence the strategic directions of MSMEs operating in that locality. In many developing countries characterised by government deregulation and decentralisation, national institutions do matter but sub-national institutions matter even more.

However, the liability of smallness is known to be inherent among these MSMEs (Lall, 2000). This liability explains that despite their potential to contribute to economic growth, MSMEs are unable to compete well due to exogenous and endogenous constraints (Harvie and Lee, 2002; Kirby and Watson, 2003; Brown, Earle and Lup, 2005; Fogel, Hawk, Morck and Yeung, 2006). Institutional analysis has been used in a variety of ways to diagnose and offer remedies to the functional, performance, and competitiveness issues associated with MSMEs (Basu 1998; Busenitz, Gomez and Spencer, 2000; Carlsson, 2002; Carney and Gedajlovic, 2002). One stream of institutional theory that is replete with controversy is the new institutional theory of Douglas North whose original work on the subject focuses on institutional explanations of economic development (North 1990, 2005).

The current debate on North's work centres on how to operationalise formal and informal institutions (Glaeser, La Porta, Silanes and Shleifer, 2004; Helmke and Levitsky, 2004; Gambarotto and Solari, 2005; Vatn, 2005; Demirbas, 2006; Fergusson, 2006). Furthermore, as typical institutional analysis has been repeatedly applied in country-wide settings, a growing interest is on understanding the institutional framework at the sub-national levels such as a state, region or city (Busenitz et al, 2000; Brouthers, 2002; Meyer and Nguyen, 2005). The argument is that while national institutions do matter, it is important to recognise that there are may be institutional disparities between and amongst sub-national geoeconomic and political areas within the same national boundary especially in countries with diverse multicultural identifications situated in dispersed geographic locations (Meyer and Nguyen, 2005).

Another issue concerns the use of institutional analysis to describe national entrepreneurial (that is, SME) development. Typical studies tend to examine the institutional factors to explain national or regional aggregate measures of economic and/or entrepreneurial productivity (North, 1990; Ahmadi, 2003; Glaeser et al, 2004; Tabellini, 2005; Welter and Smallbone, 2005). While this could be helpful in macro economic analysis, most helpful for the MSME sector is to understand how specific institutional forms directly influence firm-level variables such as the functional activities and performance of firms.

This study hopes to contribute more insights if not remedies to the issues and research gaps identified above. Specifically, it attempts to present the development of a conceptual framework illustrating the institutional environment that is argued to shape the strategic choice of MSMEs. It discusses the following issues: (a) formal and informal institutions under the new institutional theory; (b) decentralisation; (c) the role of MSME in economic development; (d) strategic choice; and (e) link between institutions and strategic posture of MSMEs.

Review of Literature

New Institutional Theory

The seminal work of Douglas North in the field of new institutional economics (North, 1992) has inspired numerous studies on the institutional theory. North (1992) broadly defines institutions as the "rules of the game" or humanly devised structures that provide incentives and constraints to economic players. It suggests that these economic players are embedded in an external environment characterised by high degree of uncertainty and transaction costs (Baum and Oliver 1992; Hollingsworth, 2002). The presence of economic uncertainty makes it costly for MSMEs to transact. Institutions are formed to reduce this uncertainty by setting the "rules of the game" in the form of formal rules, informal norms, and their enforcement characteristics (North, 1992, 2005).

Likewise, the same rules of the game provide the constraints and incentives that encourage the economic players, say MSMEs, to switch from unproductive to productive activity, and ultimately improve the general economic well-being of a society (North, 1990). The extant literature has shown that institutions take the form of rules (Ostrom, 2005), collective action (Parto, 2005), and structures (North, 1992).

North's new institutional theory explains that there are two types of institutions: formal and informal. Formal institutions refer to written laws, policies, regulations, political and economic rules, and contracts (North, 1990).

On the other hand, informal institutions are referred to by North (1990) as codes of conduct, norms of behaviour, and social conventions that generally emanate from a society's culture. Informal rules are considered unwritten rules that are created, communicated, and enforced outside officially sanctioned channels (Helrnke and Levitsky, 2004). Their enforcement takes place by way of sanctions such as expulsion from the community, ostracism by friends and neighbours, or loss of reputation (Pejovich, 1999).

While there is a plethora of studies that have examined the role of formal institutions (Clingermayer and Feiock, 2001; Carlsson, 2002; Carney and Gedajlovic, 2002; Veciana, Aponte and Urbano, 2002; Co, 2004), studies that attempt to operationalise North's informal institutions are very scarce and divergent in their approaches. The very scarce empirical studies on informal institutions looked at socio-cultural factors such as kinship, community networks, religion, norms, and values as manifestations of informal institutions having varying degrees of influence on human or organisational behaviour (Hill, 1995; Pejovich, 1999; Veciana et al, 2002; Nkya, 2003; Tabellini, 2005; Fogel et al, 2006). Indeed there is an abundance of conceptual discussions on informal institutions coupled with a drought of empirical studies to operationalise the same (Helmke and Levitsky, 2004). One explanation for this could be that North's seminal work did not specifically come up with operational definitions of formal and informal institutions to guide empirical investigations.

Decentralisation of Governance

A focus on institutional environment at the city level is justified by the wave ofdecentralisation taking place in a number of developing countries, including Cambodia, Indonesia, the Philippines, Pakistan, India, Bhutan, and Thailand. Decentralisation in these countries is characterised by national governments assigning state powers, responsibilities and resources to sub-national authorities (Wescott and Porter, 2002). This is a process of restructuring or reorganisation of political, fiscal, and administrative authority whereby the authority and capabilities of government units at sub-national levels are substantially increased (Work, 2001). However, studies on the implementation of decentralisation reveal that results were lacklustre due to the underdeveloped institutional capacity at sub-national levels (Work, 2001; Wescott and Porter, 2002).

Micro, Small, and Medium Enterprises (MSMEs)

The role of MSMEs in economic development cannot be overemphasised. Comprising over 98 per cent of total enterprises in the Asia-Pacific region (APEC, 2002), MSMEs have assumed a leading role in economic development of many countries (Benney, 2000; Lee and Peterson, 2000; OECD, 2005). For instance, in the Philippines, 99.6 per cent of the total 810,362 business establishments as of 2003 are micro (91.75 per cent), small (7.5 per cent), and medium (0.35 per cent) firms generating 67.9 per cent of the country's total employment (DTI, 2005).

However, the liability of smallness that is inherent amongst these MSMEs explains that despite their potential to contribute to economic growth, they are unable to compete well due to exogenous and endogenous constraints (Lall, 2000; Kirby and Watson, 2003). Previous studies have shown that the institutional (that is, political, social and economic) framework significantly affects the chances of success of MSMEs (Amin and Thrift, 1995; Nkya, 2003; Aidis, 2005).

Strategic Choice of MSMEs

No business organisation would survive in the long run in the absence of a strategy (Thomson, 2001). Hence, the exercise of strategic choice is a fundamental managerial and organisational function in every MSME. Strategic choice refers to the determination of courses of strategic action an organisation should take (Child, 1997). Strategic choice, in this context is considered as an organisational variable although it is normally exercised by the top management of organisations. The choice is strategic as it involves matters of critical importance to an organisation as a whole. Child (1997) argues that strategic choice enables an organisation to relate to its external environment, set standards of operating performance, and determine the design of the organisation. In this context, environmental conditions shape the strategic choice (such as situational analysis and choice of goals and strategy) of organisations. Strategic choices consequently influence the organisation's scale of operation, technology, structure, human resources, and ultimately the organisation's operating effectiveness.

Conceptual Framework Development

The foregoing discussion on the theoretical domains of institutional theory, MSME sector development, and strategic choice serves as a mental map guiding the development of the framework linking institutions and strategic choice of MSMEs. Figure 1 presents the conceptual framework. The formal and informal institutions constitute the institutional matrix (North, 1990) which shapes MSMEs' strategic choice that is operationalised as strategic posture or the top management's risk taking behaviour with regard to investment decisions and strategic actions in the face of uncertainty, the extensiveness and frequency of product innovations and the related tendency toward technological leadership, and the pioneering nature of the firm as evident in the firm's propensity to compete with industry rivals aggressively and proactively (Covin and Slevin, 1990; Covin, Slevin and Schultz, 1994; Gibbons and O'Connor, 2005).

Formal institutions constitute the "concrete" (Boland, 1992) or "hard" institutional environment of the firm (Hodgson, 1993) while the informal institutions constitute the "consensus" or "soft" institutional environment. Together, they determine the level of institutional thickness which shape the productive and strategic directions of MSMEs (Amin and Thrift, 1995; Raco, 1999).

[FIGURE 1 OMITTED]

Link between Institutions and Strategic Posture

The relationships between institutions and strategic choice as manifested by strategic posture, remains a point which needs further clarification (Pfeffer and Salancik, 1978; Clark, Varadarajan and Pride, 1994; Child, 1997; Beckert, 1999). The strategic choice perspective of the growth of the firm builds on the assumption that the firm operates in a market economy in which it is relatively free to pursue its own strategic choices (Peng and Heath, 1996).

The work of Oliver (1991) provides the argument that firms are not passive entities floating in an ocean of institutions. Institutional theory can accommodate interest-seeking, active organisational behaviour when organisations' responses to institutional pressures and expectations are not assumed to be invariably passive and conforming across all institutional conditions (Oliver, 1991). By combining institutional and resource dependency theories, Oliver (1991) was able to identify a typology of strategic responses to deal with institutional pressures under the convergent assumptions that: (a) organisational choice is constrained by external pressures coming from a collective and interconnected environment; (b) organisations seek legitimacy, stability and predictability to survive; and (c) organisations are able to protect their interests through responsiveness to external demands and expectations. The ability of an organisation to adapt to changing environmental circumstances is the key to organisational survival and the effectiveness of the adaptive response is dependent on aligning the response to the environmental circumstances faced by the organisation (Strandholm, Kumar and Subramanian, 2004).

Likewise, the theory of opportunity exploitation (Shane, 2003), theory of organisational adaptation (Hrebiniak and Joyce, 1985), and the concept of environmental management (Zeithaml and Zeithaml, 1984) all point to the same argument that environmental structures (that is, institutions) are not necessarily antagonistic to strategic choice, rather they both form its precondition and inform its content (Whittington, 1988). Moreover, the subjective perceptions (mental models) of organisational key players about their external environment--correct or incorrect--determine the choices they make which are the ultimate sources of action (North, 2005).

Formal Institutions

Formal institutions refer to the legal and political factors manifested by the rule of law, regulations, government policies and assistance programs designed to support the business activities of MSMEs (Busenitz et al, 2000). These formal institutions are articulated in written forms, administered by a central authority, and violations of these "rules" entail legal sanctions (Redmond, 2005). Identification of these formal institutions is mainly based on the seminal work of Kaufmann et al (1999) on governance and institutional quality which inspired more studies on the role of formal institutions in economic development (Fogel et al, 2006).

Rule of Law

Rule of law refers to the supremacy of law whereby decisions are made by the application of known principles or laws without the intervention of discretion in their application (Kahn, 2006). A society with a strong rule of law is defined as one having sound political institutions, a strong court system, and provisions for orderly succession of power as well as citizens who are willing to accept the established institutions and to make and implement laws and adjudicates disputes (Oxley and Yeung, 2001). Rule of law enhances transactional trust among contracting parties knowing that their rights and interests are well protected by law supported by an efficient legal and judicial system (Vandenberg, 1999; Fogel et al, 2006). It promotes transparency and stability regarding boundaries of acceptable behaviour (Scully, 1988; Oxley and Yeung, 2001). Increased transactional trust therefore allows MSMEs to be more aggressive in seeking for opportunities, building alliances, bearing risks, raising capital and entering markets (Fogel et al, 2006). Hence, proposition number one states that rule of law is positively associated with entrepreneurial strategic posture.

Property Rights Protection

Possession of significant assets cannot be efficiently used to increase output and promote economic growth if such assets lack the legal status of property. Protection of property rights include the protection and enforcement of right to use, exclude others from using, modify, obtain income from, and sell assets (Reed, 2001; Landau, 2003). Property rights identify and protect the set of tangible and intangible resources that can be transferred in the market place and provides necessary incentives to owners to risk improvement to resources by ensuring that they will benefit from the improvement and that others will not deprive them of the benefit (Reed, 2001).

Consequently, protection of property rights allows the creation of security for capital borrowing and investment as well as provides incentives to put private property into productive use (Reed, 2001; Heitger, 2004; Rodrik, Subramanian and Trebbi, 2004). These incentives increase the confidence of MSMEs to innovate and become economically active without the fear of being cheated out of the fruits of their efforts (Heitger, 2004). Other advantages include the promotion of investment in knowledge creation and business innovation by establishing exclusive rights to use and sell newly developed technologies, goods and services (Maskus, 2000). Consequently it promotes widespread dissemination of new knowledge by encouraging rights holders to put their inventions and ideas in the market (Maskus, 2000). As information is viewed as a resource, it will open up opportunities for further research and development by the rights holder and other firms. Based on the foregoing arguments, proposition number two states that protection of property rights is positively associated with entrepreneurial strategic posture.

Government Policies

The development and maintenance of a policy framework conducive for private enterprise in general and for MSME development in particular cannot be over emphasised. In this context, government policies refer to the enacted and implemented laws, ordinances, regulations any other forms of legislations and/or government decisions especially those that affect the business sector (Fogel, 2001). The relevance of government policies is well supported by the argument of Rodrik (2006) that strategic government intervention may often be required to get out of the low-level traps and elicit private investment brought about by coordination failures and capital market imperfections. Government policies may be viewed as conduits through which MSMES can engage in business activities consistent with external rules and regulations, hence, reducing the level of uncertainty (for example, fear from government intervention).

Likewise, government policies open up opportunities for MSMES such as resource acquisition, mobilisation, alliance/network formation (for example, subcontracting), establishment of industry clusters, and market development or expansion (for example, export) (Lester, 1992; Skuras, Dimara and Vakrou, 2000; Jackson, 2002; Audretsch, 2004; Tan, 2004; Tambunan, 2005). Therefore, proposition number three states that government policies perceived as conducive for MSME are positively associated with entrepreneurial strategic posture.

Regulatory Quality

Regulatory quality refers to the degree to which compliance of the existing laws, rules, and other government regulatory procedures does not impose unreasonable burden on MSMEs (Gnyawali and Fogel, 1994; Geiger and Hoffman, 1998; Fogel and Zapalska, 2001). Burdensome government regulations may affect SMEs through: the increased prices to absorb the cost of regulatory compliance; pressure of cost inequities as small companies feel the brunt of regulatory burdens more than large firms; competitive restrictions that may significantly discourage small firms; managerial restrictions resulting from SMEs sacrificing managerial time to comply with government regulations; and mental burden arising from postponed projects, wasted time, managerial failure due to lack of time and energy (Gnyawali and Fogel, 1994; Kuratko, Hornsby and Naffziger, 1999; Hellman, Jones, Kaufmann and Schankerman, 2000; Kuratko and Hodgetts, 2004). Therefore, proposition number four states that better regulatory quality is positively associated with entrepreneurial strategic posture.

Government Assistance

Government assistance has been noted as a key component in small business or MSME development (Hill, 1995; Jackson, 1999; Helmsing, 2000; Henriquez, Verheul, van der Knaap and Bischoff, 2001). In this study, government assistance is expressed as the extent to which the government extends various forms of assistance or incentives supportive of the MSME sector (Busenitz et al, 2000). Jackson (1999) argues that governments have a significant role to play in nurturing the small business sector by being involved in the provision of non-traditional functions such as coordinating and monitoring economic agents, market development, financing, supporting producers, enabling community self-provision, supporting customers through provision of information, and direct provision of services not undertaken by the market (Jackson, 1999). Skuras et al (2004) concluded that the range of business assistance programs significantly shape the tendency of SMEs to pursue either survival-oriented or more aggressive-type of strategies. Proposition number five states government assistance is positively associated with entrepreneurial strategic posture.

Informal Institutions

Informal institutions refer to the cultural factors shared by members of a society in a that serve as constraints and/or standards and the violation of which entails social rather than legal penalties (North, 1990; Olsson, 1999; Redmond, 2005). This operational definition stems from the characterisation of informal institutions by North (1990) as codes of conduct, norms of behaviour, unwritten rules, conventions, and generally accepted way of thinking that come from socially transmitted information and are part of the heritage that we call culture (North, 1990; 1991; 2005). These norms, ethics, customs, taboos, and ideologies form the unofficial rules of a society, learned through socialisation and are largely the inherited view of the world from older generations (Olsson, 1999; Redmond, 2005).

Whilst there are a number of studies discussing the theoretical and conceptual bases of informal institutions (Pejovich, 1999; Aidis, 2005; Davis, 2006), only a handful of empirical studies attempted to measure specific constructs categorically classified as informal institutions (Peng and Heath, 1996; Nkya, 2003; Peng, 2004; Robson, 2004; Tabellini, 2005). The very scarce empirical studies on informal institutions look at sociocultural factors such as kinship, community networks, religion, norms, and values and their varying degrees of influence on human or organisational behaviour (Hill, 1995; Pejovich, 1999; Nkya, 2003; Tabellini, 2005). Obviously, there is a plethora of studies examining culture using the popular framework of Hofstede (1980) whereby cultural dimensions such as collectivism and uncertainty avoidance were shown to be related to entrepreneurship in various respects (Robson, 2004). Even so, informal institutions are oftentimes treated ex post facto or as residuals after exhaustively discussing formal institutional mechanisms. This is anathema to North's (1990) original concept of informal institutions for which he argues that informal constraints should not be treated as mere appendages of formal rules.

This study adopts the Global Leadership and Organisational Behaviour Effectiveness (GLOBE) cultural framework developed by House et al (2004) for a number of reasons. The study of Parboteeah et al (2005) claims that the GLOBE cultural study is the most up-to-date national culture study providing helpful updates to the cultural dimensions identified by Hofstede (1980) whose work has been criticised for many of its conceptual and methodological issues. As such, using the GLOBE framework tends to avoid Hofstede's problematic issues and incorporates other cultural dimensions not included in Hofstede's work and that of other cultural schemes (Parboteeah, Bronson and Cullen, 2005).

The GLOBE cultural framework measures culture using the Direct Values Inference method whereby cultural characteristics are inferred from the aggregated values of respondents in a survey (Lenartowicz and Roth, 1999). One of the strengths of the framework is its predictive validity whereby cultural dimensions are studied not just in the context of the general society but also in the context of leadership and organisational behaviour (House et al, 2004). The following are the major components of the GLOBE cultural framework which are considered in this study as manifestation of a society's informal institutions.

Performance Orientation

Performance orientation reflects the extent to which a community values results, assertiveness, competition, and materialism, and encourages and rewards innovation, high standards, and performance improvement (Javidan, 2004). Performance orientation shows strong resemblance to McClelland's Need for Achievement as well as the Protestant ethics of individual responsibility, hard work, knowledge and challenge (Javidan, 2004). It is considered as an important dimension of a community's culture as the underlying practices and values have an impact on the way the community defines success in adaptation to external challenges (Javidan, 2004). It promotes the values of seeking betterment, setting high standards of performance, ambitious expectations and a thirst for learning (Javidan, 2004).

According to Javidan (2004), societies with high level of performance orientation tend to display strong level of competitiveness, self-confidence, and ambition. Likewise, he further argues that in these societies, time is considered non-renewable and subject to high depletion thereby promoting a strong sense of urgency in meeting challenges and making decisions. Hence, proposition number six explains that higher level of performance orientation is positively associated with entrepreneurial strategic posture.

Future Orientation

Future orientation is used in this study to mean the tendency to conscientiously think and plan for the future and consider the long-term consequences of one's actions in the present (Ashkanasy et al, 2004; Corral-Verdugo and Pinheiro, 2006). Cultures with high future orientation display strong capability and willingness to imagine future contingencies, formulate future goals states, and seek to achieve goals and develop strategies for meeting their future aspirations (Ashkanasy et al, 2004). People in a future oriented culture are likely to be good in establishing and achieving goals and in planning strategies for meeting long-term obligations (Corral-Verdugo and Pinheiro, 2006). Proposition number seven is expressed as higher levels of future orientation are positively associated with entrepreneurial strategic posture.

Assertiveness

Assertiveness reflects the beliefs as to whether people are encouraged to be assertive, aggressive, and tough or non-assertive, non-aggressive, and tender in social relationships (Den Hartog, 2004; Parboteeah et al, 2005). Assertiveness behaviour includes making it clear to others what one wants, refusing what one doesn't want and generally expressing one's intentions in clear and unambiguous terms (Parboteeah et al, 2005). Assertiveness also entails willingness to confront opposing views and to express one's ideas and feelings in social encounters (Niikura, 1999). It is reported that assertive societies tend to be competitive, value success and to think of others as necessarily opportunistic (Den Hartog, 2004). Assertive societies tend to look at nature as something to be controlled and manipulated, take a pragmatic stance towards reality, and have a belief in human perfectibility (Den Hartog, 2004).

A highly aggressive culture places high value on achievement, independence, heroism, monetary rewards, and decisiveness (McGrath et al, 1992; Gleason et al, 2000; Su, 2006). The relationship between assertiveness and MSME strategic posture may be explained in terms of the dimensions of strategy-making. It is argued that assertiveness is an inherent dimension of strategy-making which concerns the levels of risk-taking and reactiveness or proactiveness of decisions (Miller, 1987; Koberg et al, 1993). Since entrepreneurial firms are viewed as risk-takers and act on rather than react to their environment, then an assertive culture is likely to support entrepreneurial strategic posture as strategy-making and implementation are considered as an exercise of assertiveness (Miller, 1987; Koberg et al, 1993). Hence, proposition number eight states that high level of assertiveness is positively associated with entrepreneurial strategic posture.

Collectivism

Collectivism involves the subordination of personal interests to the goals of the larger work, an emphasis on sharing, cooperation, interpersonal connectedness, group harmony and solidarity, and joint responsibility, concern for group welfare, and hostility toward out-group members (Hosfstede, 1980; 1983; Morris et al, 1993; Gelfand et al, 2004; Parboteeah et al, 2005; Yilmaz et al, 2005; Su, 2006). The opposite construct is individualism which refers to self-orientation, an emphasis on self-sufficiency and control, the pursuit of individual goals that may or may not be consistent with in-group goals, a willingness to confront members of the in-group to which they belong, and a culture where people derive pride from their own accomplishments (Morris et al, 1993; Yan and Hunt, 2005). Personal freedom is valued and individual decision-making is encouraged in societies with high individualism culture (Gong, Li and Stump, 2007).

Studies have shown that cultures that are low in collectivism (that is, high in individualism) tend to support entrepreneurial strategic posture. McGrath et al (1992) argue that entrepreneurs must have high individualism score since under individualist culture, individual initiative, achievement, right to privacy as well as formation of one's own opinion are highly valued. This is consistent with the findings of Parboteeah et al (2005) and Yan and Hunt (2005). Therefore, proposition number nine states that high level of collectivism is negatively associated with entrepreneurial strategic posture.

Power Distance

Power distance reflects the extent to which a community accepts and endorses authority, power differences, and status privileges (Carl et al, 2004). High degree of power distance leads to a less participative stance in decision-making, greater reliance on rules and procedures, and higher levels of subordinate submissiveness (Yilmaz et al, 2005). Likewise, preservation of current status tend to be highly noticeable in societies with high power distance (Hosfstede, 1980).

Shane (1992) explains that high power distance is anathema to innovation because it promotes hierarchical social structure and inequality, inhibits informal communication between people in different hierarchical levels, encourages centralisation of power, endorses elaborate control systems especially in organisations, and upholds unwillingness to accept change in the distribution of power. All these, according to Shane (1992), inhibit innovation such that: dispersed power structures create coalitions that support innovation; frequent informal communication as well as decentralisation permit free flowing of ideas which facilitates knowledge acquisition and diffusion; control systems based on trust rather than rigid rules and procedures encourage active participation and creative thinking amongst employees; and social mobility increases occupational mobility, technical change and innovation.

Innovation tend to be significantly lower in countries with high power distance (Yaveroglu and Donthu, 2002). Cultures that exhibit large power distance will be less innovative because people in such cultures are encouraged to respect authority, follow directions and avoid standing out through original thinking (Gong et al, 2007). People may take less initiative to consider and discuss the introduction of new products and technologies and will generally wait for signals from authority figures or opinion leaders (Gong et al, 2007). Therefore, proposition number 10 advances that high level of power distance is negatively associated with entrepreneurial strategic posture.

Humane Orientation

Humane orientation characterises those societies where people's behaviours are guided by values of altruism, benevolence, kindness, love, and generosity (Kabasakal and Bodur, 2004). The need for belongingness and affiliation rather than self-fulfilment, pleasure, material possession and power are likely to be the dominant bases (Kabasakal and Bodur, 2004). Societies that have high humane orientation tend to place greater importance of others (that is, family, friends, or community), have high need for belonging and affiliation, values obedience and promotes close monitoring of children by children rather than promoting independence (Kabasakal and Bodur, 2004).

The GLOBE study reveals that a humane oriented culture tends to contradict the elements of an entrepreneurial strategic posture: risk-taking, proactiveness, and innovation. Greater emphasis on affiliation rather than achievement, less emphasis on self-fulfilment, material possession and power, less emphasis on independence, strong tendency towards collectivism, and lesser value placed on assertiveness: all these do not fit nor support the conceptual scope of entrepreneurial strategic posture. To achieve something is an underlying purpose of entrepreneurial risk-taking. Likewise, independence is an essential element of innovation and proactiveness based on the assumption that one can only be innovative and proactive if they are willing to take a firm stand on what they think and feel (independent) and pursue ideas contrary to popular beliefs. Hence proposition number 11 states that high level of humane orientation is negatively associated with entrepreneurial strategic posture.

Uncertainty Avoidance

Uncertainty avoidance refers to the extent to which ambiguous situations are threatening to individuals, to which rules and order are preferred and to which uncertainty is tolerated in society (Gleason et al, 2000; De Luque and Javidan, 2004). In short, uncertainty avoidance reflects the level of tolerance for ambiguity within a given culture (Parboteeah et al, 2005).

Low uncertainty avoidance implies greater willingness to take risks (Hosfstede, 1980). Likewise low uncertainty avoidance comes with it values for risk-taking, strong motivations for individual achievement and more optimism--a very good climate for entrepreneurs to thrive (McGrath et al, 1992; Gong et al, 2007).

The intention to become an entrepreneur and start up a business is characterised as a risky behaviour compared to establishing an employment career with predictable and steady flow of income.

The fear of failure (usually operationalised by one's risk aversion) is a critical issue for entrepreneurs due to the little separation between business and personal risk in an entrepreneurial venture (Watson and Robinson, 2003). In this case, entrepreneurship can be characterised as requiring fair tolerance of ambiguity, locus of control that is more internal than external as well as willingness to take risks that are relatively well calculated (Pitt and Kannemeyer, 2000). Uncertainty avoidance turns out to be anathema to innovation as the latter tends to introduce unanticipated changes and cause uncertainty which in turn leads to resistance to innovation (De Luque and Javidan, 2004; Erumban and de Jong, 2006).

Hofstede (1980) noted that in hi uncertainty avoidance societies, there is greater fear of failure, lower willingness to take risks, lower levels of ambition, and lower tolerance for ambiguity. These values tend to contradict the entrepreneurial values of proactiveness, innovation, and risk-taking. Hence proposition number 12 states that high level of uncertainty avoidance is negatively associated with entrepreneurial strategic posture.

Strategic Posture

As previously discussed, the exercise of strategic choice by MSMEs is operationalised by the concept called strategic posture. Strategic posture implies that a firm can be categorised along a continuum ranging from less entrepreneurial to more entrepreneurial (Covin, 1991). Strategic posture, whilst exercised by the owner of an MSME, or top management of a firm, is considered an organisational variable as organisations are reflections of the values and cognitive bases of powerful actors (Carpenter and Fredrickson, 2001).

Strategic posture, hinges on three fundamental constructs: innovativeness, proactiveness, and risk-taking. Innovativeness reflects a tendency to support new ideas, novelty, experimentation, and creative processes, thereby departing from established practices and technologies (Lumpkin and Dess, 1996). Proactiveness refers to a posture of anticipating and acting on future wants and needs in the marketplace, thereby creating a first-mover advantage vis-a-vis competitors (Lumpkin and Dess, 1996). Risk-taking is associated with a willingness to commit large amounts of resources to projects where the cost of failure may be high (Miller and Friesen, 1982). It also implies committing resources to projects where the outcomes are unknown. It largely reflects the organisation's willingness to break away from the tried-and-tested and venture into the unknown (Wiklund and Shepherd, 2003).

Covin et al (1994) argue that firms with conservative or less entrepreneurial strategic posture are risk averse, non-innovative and reactive firms whilst those with more entrepreneurial strategic posture are risk taking, innovative, and proactive. These three components comprise a basic, uni-dimensional strategic orientation (Covin et al, 1994; Gibbons and O'Connor, 2005; Naldi et al, 2007). Essentially, strategic posture reflects the firm's strategic orientation, that is, the firm's overall competitive orientation (Covin and Slevin, 1989).

The importance of studying strategic posture rests on previous research that generated the following results among others: (a) strategic posture is the organisation's response or adaptation to the vagaries of the external environment (that is, hostility, turbulence, complexity, etc) (Lukas 1999; Strandholm et al, 2004); (b) strategic posture is the exploitation of the firms' resources to generate competitive advantage (Ordaz et al, 2003); (c) strategic posture shapes the level of innovation within the firm (Salavou et al, 2004; O'Regan and Ghobadian, 2005); and (d) strategic posture shapes the performance outcome of firms (Ramaswamy et al, 1994; Rajagopalan, 1996; Pelham, 1999; Durand and Coeurderoy, 2001; Noble et al, 2002; Morgan and Strong, 2003; Aragon-Sanchez et al, 2005).

Conclusion and Implications for Further Research

Institutions matter to MSMEs because they provide the structure, set constraints and offer incentives that could support or inhibit the proactive, risk-taking and innovative activities of these firms. The minimisation of transaction costs as well as level of uncertainty through formal institutions play a major role in supporting the entrepreneurial growth of MSMEs. The socio-cultural support provided by the equally important informal institutions complete the institutional landscape through which productive entrepreneurial activities could take place. The conceptual framework developed in this study offers a new way of looking at the relationship between the institutional environment and the strategic choices of MSMEs. However, this study offers numerous questions and issues worth pursuing in future studies.

Of major concern is the measurement of formal and informal institutions. It must be noted that there are many ways to measure a firm's external environment (Lenz and Engledow, 1986). If informal institutions are intangible, will the cognitive model of environment (Weick, 1988) provide an adequate framework for measurement? Should objective measures be used to determine the quality of formal institutions? Furthermore, many developing countries are undergoing deregulation and decentralisation of governance systems making sub-national (for example, regional or city) governments politically and economically more responsible and accountable. It would be interesting to know how the propositions would work in such institutionally-heterogeneous localities.

Finally, the ultimate objective of business operation is to realise a pre-determined goal or set of goals which may range from intrinsic to financial values. The challenge therefore is to establish if an institutional environment conducive for entrepreneurial strategic posture would result to better and sustainable MSME performance.

References

Ahmadi A, 2003. The Entrepreneurial Process: An Institutional Perspective. Foretagsekonomiska Institutionen.

Aidis R, 2005. "Institutional Barriers to Small-and Medium-Sized Enterprise Operations in Transition Countries", Small Business Economics, Vol 25, pp 305-318.

Amin A and N Thrift, 1995. "Institutional Issues for the European Regions: From Markets and Plans to Socioeconomics and Powers of Association", Economy and Society, Vol 24 No 1, pp 41-66.

Aragon-Sanchez A and N Sanchez-Marin, 2005. "Strategic Orientation, Management Characteristics, and Performance: A Study of Spanish SMEs", Journal of Small Business Management, Vol 43 No 3, pp 287-308.

Ashkanasy N, V Gupta, M Mayfield and E Trevor-Roberts, 2004. Future Orientation in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership and Organisations: The Globe Study of 62 Societies, pp 282-342. Thousand Oaks: Sage Publications.

Audretsch DB, 2004. "Sustaining Innovation and Growth: Public Policy Support for Entrepreneurship", Industry and Innovation, Vol 11 No 2, pp 167-191.

Basu A, 1998. "The Role of Institutional Support in Asian Entrepreneurial Expansion", Journal of Small Business and Enterprise Development, Vol 5 No 4, pp 319-326.

Baum JAC and C Oliver, 1992. "Institutional Embeddedness and the Dynamics of Organisational Populations", American Sociological Review, Vol 57 No 540.

Beckert J, 1999. "Agency, Entrepreneurs, and Institutional Change. The Role of Strategic Choice and Institutionalised Practices in Organisations", Organisation Studies, Vol 20 No 5, pp 777-799.

Benney A, 2000. "Banking on Small Business", The OECD Observer, Vol 223, November.

Boland L, 1992. The Principles of Economics: Some Lies My Teachers Told Me. New York: Routledge.

Brouthers K, 2002. "Institutional, Cultural and Transaction Cost Influence on Entry Mode Choice and Performance", Journal of International Business Studies, Vol 33 No 2, pp 203-221.

Brown DJ Earle and D Lup, 2005. "What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania". Economic Development and Cultural Change. Chicago, University of Chicago.

Busenitz L, C Gomez, and J Spencer, 2000. "Country Institutional Profiles: Unlocking Entrepreneurial Phenomena", Academy of Management Journal, Vol 43 No 5, pp 994-1003.

Carl D, V Gupta and M Javidan, 2004. Power Distance. in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 513-563. Thousand Oaks: Sage Publications.

Carlsson B, 2002. "Institutions, Entrepreneurship, and Growth: Biomedicine and Polymers in Sweden and Ohio", Small Business Economics, Vol 19 No 2, pp 105-129.

Carney M and E Gedajlovic, 2002. "The Co-evolution of Institutional Environments and Organisational Strategies: The Rise of Family Business Groups in the ASEAN Region", Organisation Studies, Vol 23 No 1, pp 1-29.

Carpenter M and J Fredrickson, 2001. "Top Management Teams, Global Strategic Posture, and the Moderating Role of Uncertainty", Academy of Management Journal, Vol 44 No 3, pp 533-546.

Child J, 1997. "Strategic Choice in the Analysis of Action, Structure, Organisations and Environment: Retrospect and Prospect", Organisation Studies, Vol 18 No 1, pp 43-76.

Clark, T, PR Varadarajan, and W Pride, 1994. "Environmental Management: The Construct and Research Propositions", Journal of Business Research, Vol 29, pp 23-38.

Clingermayer J and R Feiock, 2001. Institutional Constraints and Policy Choice: An Exploration of Local Governance. Albany: State University of New York Press.

Co MJ, 2004. "The Formal Institutional Framework of Entrepreneurship in the Philippines: Lessons for Developing Countries", The Journal of Entrepreneurship, Vol 13 No 2, pp 185-203.

Corral-Verdugo V and JQ Pinheiro, 2006. "Sustainability, Future Orientation and Water Conservation", European Review of Applied Psychology, Vol 56 No 3, pp 191-198.

Covin JG, 1991. "Entrepreneurial Versus Conservative Firms: A Comparison of Strategies and Performance", Journal of Management Studies, Vol 28 No 5, pp 439-462.

Covin JG and DP Slevin, 1989. "Strategic Management of Small Firms in Hostile and Benign Environments", Strategic Management Journal, Vol 10, January, pp 75-87.

--, 1990. "New Venture Strategic Posture, Structure, and Performance: An Industry Life Cycle Analysis", Journal of Business Venturing, Vol 5, pp 123-135.

Covin JG, DP Slevin and R Schultz, 1994. "Implementing Strategic Missions: Effective Strategic, Structural, and Tactical Choices", Journal of Management Studies, Vol 31 No 4, pp 481-505.

Davis L, 2006. "Growing Apart: The Division of Labor and the Breakdown of Informal Institutions", Journal of Comparative Economics, Vol 34, pp 75-91.

De Luque MS and M Javidan, 2004. Uncertainty Avoidance in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 602-653. Thousand Oaks: Sage Publications.

Demirbas D, 2006. "New Institutional Economy and Innovation Barriers: A Microeconometric Evidence", The Business Review, Vol 5 No 2, pp 82-88.

Den Hartog, D 2004. Assertiveness. in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 395-436. Thousand Oaks: Sage Publications.

CDTI, 2005. Small and Medium Enterprises Statistical Report. Department of Trade and Industry, Bureau of Small and Medium Enterprise Development, Philippines.

Durand R and R Coeurderoy, 2001. "Age, Order of Entry, Strategic Orientation and Organisational Performance", Journal of Business Venturing, Vol 16 No 5, pp 471-494.

Erumban AA and S de Jong, 2006. "Cross-Country Differences in Ict Adoption: A Consequence of Culture?" Journal of Worm Business, Vol 14, pp 302-314.

Fergusson L, 2006. "Institutions for Financial Development: What are They and Where Do They Come from?" Journal of Economic Surveys, Vol 20 No 1, pp 27-43.

Fogel G, 2001. "An Analysis of Entrepreneurial Environment and Enterprise Development in Hungary", Journal of Small Business Management, Vol 39 No 1, pp 103-109.

Fogel G and A Zapalska, 2001. "A Comparison of Small and Medium-Size Enterprise Development in Central and Eastern Europe", Comparative Economic Studies, Vol 43 No 3, pp 35-68.

Fogel K, A Hawk, R Morck and B Yeung, 2006. Institutional Obstacles to Entrepreneurship. in M Casson, B Yeung, A Basu and N Wadeson (eds), Oxford Handbook of Entrepreneurship, pp 540-579. Oxford: Oxford University Press.

Gambarotto F and S Solari, 2005. How Do Local Institutions Contribute to Fostering Competitiveness of Industrial Clusters? The Upgrading Process in the Italian Eyewear System in E Guiliani, R Rabelloti and MP van Dijk (eds), Clusters Facing Competition: The Importance of External Linkages, pp 177-194. Aldershot: Ashgate.

Geiger S and J Hoffrnan, 1998. "The Impact of the Regulatory and Corporate Level Diversification on Firm Performance", Journal of Managerial Issues, Vol 10 No 4, p. 439.

Gelfand MJ, DPS Bhawuk, LH Nishii and D Bechtold, 2004. Individualism and Collectivism. in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 437-513. Thousand Oaks: Sage Publications.

Gibbons PT and T O'Connor, 2005. "Influences on Strategic Planning Process among Irish SMEs", Journal of Small Business Management, Vol 43 No 2, pp 170-186.

Glaeser E, R La Porta, FLD Silanes and A Shleifer, 2004. "Do Institutions Cause Growth?", Journal of Economic Growth, Vol 9, pp 271-303.

Gleason K, LK Mathur and 1 Mathur, 2000. "The Interrelationship between Culture, Capital Structure and Performance: Evidence from European Retailers", Journal of Business Research, Vol 50, pp 185-191.

Gnyawali D and D Fogel, 1994. "Environments for Entrepreneurship Development: Key Dimensions and Research Implications", Entrepreneurship Theory and Practice, Vol 18 No 4, pp 43-62.

Gong W, Z Li and R Stump, 2007. "Global Internet Use and Access: Cultural Considerations." Asia Pacific", Journal of Marketing and Logistics, Vol 19 No 1, pp 57-74.

Harvie C and BC Lee, 2002. The Study of Small and Medium Size Enterprises in East Asia. in C Harvie and BC Lee (eds), Globalisation and SMEs in East Asia: Studies of Small and Medium Sized Enterprises in East Asia, Vol 1, pp 1-9. Cheltenham, Edward Elgar.

Heitger B, 2004. "Property Rights and the Wealth of Nations: A Cross-Country Study", Cato Journal, Vol 23 No 3, pp 381-402.

Hellman J, G Jones, D Kaufmann, and M Schankerman, 2000. Measuring Governance and State Capture: The Role of Bureaucrats and Firms in Shaping the Business Environment, World Bank Policy Research Working Paper No. 2312, The World Bank.

Helmke G and S Levitsky, 2004. "Informal Institutions and Comparative Politics: A Research Agenda", Perspectives on Politics, Vol 2 No 4, pp 725-740.

Helmsing B, 2000. "Decentralisation, Enablement and Local Governance in Low Income Countries", Inaugural Address as Professor of Local and Regional Planning, Faculty of Geographical Sciences, University of Utrecht. The Netherlands.

Henriquez C, I Verheul, I Van Der Knaap and C Bischoff, 2001. Determinants of Entrepreneurship in France: Policies, Institutions, and Culture, Institute for Development Strategies, Indiana University.

Hill C, 1995. "National Institutional Structures, Transaction Cost Economising and Competitive Advantages: The Case of Japan", Organisation Science, Vol 6 No 1, pp 119-131.

Hodgson GM, 1993. Economic and Evolution: Bringing Life Back into Economics. Cambridge: Polity Press.

Hollingsworth JR, 2002. On Institutional Embeddedness. in JR Hollingsworth, K Muller and E Hollingsworth (eds), Advancing Socio-Economics : An Institutionalist Perspective, pp 87-108. Oxford: Rowman & Littlefield Publishers Inc.

Hosfstede G, 1980. Culture's Consequences." International Differences in Work-Related Values. Beverly Hills CA: Sage Publications.

Hostede G, 1983. "The Cultural Relativity of Organisational Practices and Theories", Journal of International Business Studies, Vol 14 No 2, pp 75-89.

House R, P Hanges, M Javidan, P Dorfman and V Gupta, 2004. Culture, Leadership, and Organisations: The Globe Study of 62 Societies. Thousand Oaks: Sage Publications.

Hrebiniak L and W Joyce, 1985. "Organisational Adaptation: Strategic Choice and Environmental Determinism", Administrative Science Quarterly, Vol 30 No 3, pp 336-349.

Jackson P, 1999. "New Roles of Government in Supporting Manufacturing: The Capabilities of Support Agencies in Ghana and Zimbabwe", Public Administration and Development, Vol 19 No 3, pp 281-298.

Jackson P, 2002. Business Development in Asia and Africa: The Role of Government Agencies. Hampshire: Palgrave.

Javidan M, 2004. Performance Orientation in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 239-282. Thousand Oaks: Sage Publications.

Kabasakal H and M Bodur, 2004. Humane Orientation in Societies, Organisations, and Leader Attributes in R House, P Hanges, M Javidan, P Dorfman and V Gupta (eds), Culture, Leadership, and Organisations: The Globe Study of 62 Societies, pp 564-601. Thousand Oaks: Sage Publications.

Kahn J, 2006. "The Search for the Rule of Law in Russia", Georgetown Journal of International Law, Vol 37 No 2, pp 353-409.

Kirby D and A Watson, 2003. Small Firms and Economic Development in Developed and Transition Economies: A Reader. Aldershot: Ashgate.

Koberg C, L Tegarden and W Wilsted, 1993. "Environmental and Structural Influences on the Strategy-Making Process of Banks", Journal of Applied Business Research, Vol 9 No 3, pp 58-62.

Kuratko DF and RM Hodgetts, 2004. Entrepreneurship Theory, Process, & Practice. 6th edition. Ohio: Thomson-Western.

Kuratko DF, J Hornsby and D Naffziger, 1999. "The Adverse Impact of Public Policy on Microenterprises: An Exploratory Study of Owners' Perceptions", Journal of Developmental Entrepreneurship. Vol 4 No 1, pp 81-95.

Lall S, 2000. Strengthening Smes for International Competitiveness. Workshop on What Makes Your Firm Internationally Competitive? Cairo Egyptian Center for Economic Studies.

Landau D, 2003. "A Simple Theory of Economic Growth", Journal of Economic Development and Cultural Change, Vol 52 No 1, pp 217-235.

Lee SM and SJ Peterson, 2000. "Culture, Entrepreneurial Orientation and Global Competitiveness", Journal of World Business, Vol 35 No 4, pp 401-416.

Lenartowicz T and K Roth, 1999. "A Framework for Culture Assessment", Journal of International Business Studies, Vol 30 No 4, pp 781-798.

Lenz RT and J Engledow, 1986. "Environmental Analysis: The Applicability of Current Theory", Strategic Management Journal, Vol 7 No 4, pp 329-346.

Lester, T, 1992. "Does the Government Really Help Small Business Exporters?--An Analysis of Pre-Export Financing Programs under the Small Business Expansion Act of 1980 and the Export Trading Company Act of 1982", Northwestern Journal of International Law and Business, Vol 13 No 2.

Lukas B, 1999. "Strategic Type, Market Orientation, and the Balance between Adaptability and Adaptation", Journal of Business Research, Vol 45 No 2, pp 147-156.

Lumpkin GT and G Dess, 1996. "Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance." Academy of Management Review, Vol 21 No 1, pp 135-173.

Maskus K, 2000. "Intellectual Property Rights and Economic Development", Journal of International Law." Case Western Reserve, Vol 32, pp 471 506.

McGrath R, I MacMillan and S Scheinberg, 1992. "Elitist, Risk-Takers, and Rugged Individualists? An Exploratory Analysis of Cultural Differences between Entrepreneurs and Non-Entrepreneurs", Journal of Business Venturing, Vol 7, pp 115-135.

McGrath RG, I MacMillan, E Yang and W Tsai, 1992. "Does Culture Endure, or Is It Malleable? Issues for Entrepreneurial Economic Development", Journal of Business Venturing, Vol 7, pp 441-458.

Meyer K and HV Nguyen, 2005. "Foreign Investment Strategies and Sub-National Institutions in Emerging Markets: Evidence from Vietnam", Journal of Management Studies, Vol 42 No 1, pp 63-93.

Miller D, 1987. "Strategy Making and Structure: Analysis and Implications for Performance", Academy of Management Journal, Vol 30 No 1, pp 7-32.

Miller D and P Friesen, 1982. "Innovation in Conservative and Entrepreneurial Firms: Two Models of Strategic Momentum", Strategic Management Journal, Vol 3 No 1, pp 1-25.

Morgan R and C Strong, 2003. "Business Performance and Dimensions of Strategic Orientation", Journal of Business Research, Vol 56 No 3, pp 163-176.

Morris MH, R Avila and JW Allen, 1993. "Individualism and the Modern Corporation: Implications for Innovation and Entrepreneurship", Journal of Management, Vol 19 No 3, pp 595-612.

Naldi L, M Nordqvist, K Sjoberg and J Wiklund, 2007. "Entrepreneurial Orientation, Risk Taking and Performance in Family Firms", Family Business Review, Vol 20 No 1, pp 33-48.

Niikura R, 1999. "Assertiveness among Japanese, Malaysian, Filipino, and US White Collar Workers", Journal of Social Psychology, Vol 139 No 6, pp 690-699.

Nkya E, 2003. "Institutional Barriers to Small-Scale Business Development: A Need for Flexibility in Tanzanian Tax and Regulatory Systems", Journal of Entrepreneurship, Vol 12 No 1, pp 43-3.

Noble C, R Sinha and A Kumar, 2002. "Market Orientation and Alternative Strategic Orientations: A Longitudinal Assessment of Performance Indicators", Journal of Marketing, Vol 66 No 4, pp 25-40.

North DC, 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.

--, 1991. "Institutions", Journal of Economic Perspectives, Vol 5 No 1, pp 97-112.

--, 1992. "Institutions and Economic Theory", American Economist, Vol 36 No 1.

--, 2005. Understanding the Process of Economic Change. New Jersey, Princeton University Press.

O'Regan, N and A Ghobadian, 2005. "Innovation in SMEs: The Impact of Strategic Orientation and Environmental Perceptions", International Journal of Productivity and Performance Management, Vol 54 No 1/2, pp 81-98.

OECD, 2005. "Entrepreneurship Centre Takes Off", The OECD Observer, Vol 245, November.

Oliver C, 1991. "Strategic Response to Institutional Processes", Academy of Management Review, Vol 16 No 1, pp 145-179.

Olsson O, 1999. A Microeconomic Analysis of Institutions. Working Papers in Economics No 25. Department of Economics, Goteborg University.

Ordaz C, F Alcazar and R Cabrera, 2003. "Intangible Resources and Strategic Orientation of Companies", Journal of Business Research, Vol 56 No 2, pp 95-103.

Ostrom E, 2005. Understanding Institutional Diversity. New Jersey: Princeton University Press.

Oxley J and B Yeung, 2001. "E-Commerce Readiness: Institutional Environment and International Competitiveness", Journal of International Business Studies, Vol 32 No 4, pp 705-723.

Parboteeah KP, JW Bronson and JB Cullen, 2005. "Does National Culture Affect Willingness to Justify Ethically Suspect Behaviors", International Journal of Cross Cultural Management, Vol 5 No 2, pp 123-138.

Parto S, 2005. "Economic Activity and Institutions: Taking Stock", Journal of Economic Issues, Vol 39 No 1, pp 21-52.

Pejovich S, 1999. "The Effects of the Interaction of Formal and Informal Institutions on Social Stability and Economic Development", Journal of Markets & Morality, Vol 2 No 2, pp 164-181.

Pelham A, 1999. "Influence of Environment, Strategy, and Market Orientation on Performance in Small Manufacturing Firms", Journal of Business Research, Vol 45 No 1, pp 33-46.

Peng M and PS Heath, 1996. "The Growth of the Firm in Planned Economies in Transition: Institutions, Organisations, and Strategic Choice", Academy of Management Review, Vol 21 No 2, pp 492-528.

Peng Y, 2004. "Kinship Networks and Entrepreneurs in China's Traditional Economy", American Journal of Sociology, Vol 109 No 5, pp 1045-1074.

Pfeffer J and G Salancik, 1978. The External Control of Organisations: A Resource Dependence Perspective. New York: Harper & Row.

Pitt L and R Kannemeyer, 2000. "The Role of Adaptation in Microenterprise Development: A Marketing Perspective", Journal of Developmental Entrepreneurship Vol 5 No 2, pp 137-155.

Raco M, 1999. "Competition, Collaboration, and the New Industrial Districts: Examining the Institutional Turn in Local Economic Development", Urban Studies, Vol 36 No 5/6, pp 951-968.

Rajagopalan N, 1996. "Strategic Orientations, Incentive Plan Adoption, and Firm Performance: Evidence from Electric Utility Firms", Strategic Management Journal, Vol 18 No 10, pp 761-785.

Ramaswamy K, A Thomas and R Litschert, 1994. "Organisational Performance in a Regulated Environment: The Role of Strategic Orientation", Strategic Management Journal, Vol 15 No 1, pp 63-85.

Redmond W, 2005. "A Framework for the Analysis of Stability and Change in Formal Institutions", Journal of Economic Issues, Vol 39 No 3.

Reed OL, 2001. "Law, Rule of Law, and Property: A Foundation for the Private Market and Business Study", American Business Law Journal, Vol 38 No 3, pp 441-458.

Robson M, 2004. Complementarity Between Formal State Policy and Informal Norms: An Institutional Determinant of Success in Environmental Policy Interventions? The Case of Defostation in Developing Countries. Conference on Unlocking Human Potential: Linking the Informal and Formal Sector, Expert Group on Development Issues (EGDI) and Wold Institute for Development Economics Research (WIDER), United Nations University, 17-18 Sept 2004.

Rodrik D, A Subramanian, and F Trebbi, 2004. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development", Journal of Economic Growth, Vol 9 No 1, pp 131-165.

Salavou H, G Baltas and S Lioukas, 2004. "Organisational Innovation in SMEs: The Importance of Strategic Orientation and Competitive Structure", European Journal of Marketing, Vol 38 No 9/10, p. 1091.

Scully G, 1988. "The Institutional Framework and Economic Development", The Journal of Political Economy, Vol 96 No 3, pp 652-662.

Shane S, 2003. A General Theory of Entrepreneurship: The Individual-Opportunity Nexus. Massachusetts: Edwar Elgar.

Skuras D, E Dimara and A Vakrou, 2000. "The Day after Grant-Aid: Business Development Schemes for Small Firms in Lagging Areas of Greece", Small Business Economics, Vol 14 No 2, pp 125-136.

Strandholm K, K Kumar and R Subramanian, 2004. "Examining the Interrelationships among Perceived Environmental Change, Strategic Response, Managerial Characteristics and Organisational Performance", Journal of Business Research, Vol 57 No 1, pp 58-68.

Su SH, 2006. "Cultural Differences in Determining the Ethical Perception and Decision-Making of Future Accounting Professionals: A Comparison between Accounting Students from Taiwan and the United States", Journal of American Academy of Business, Cambridge, Vol 9 No 1, p. 147.

Tabellini G, 2005. Culture and Institutions: Economic Development in the Regions of Europe. CESifo Working Paper No. 1492, available at Social Science Research Network Online; http://ssrn.com/abstract=754086.

Tambunan T, 2005. "Promoting Small and Medium Enterprises with a Clustering Approach: A Policy Experience from Indonesia", Journal of Small Business Management, Vol 43 No 2, pp 138-154.

Tan H, 2004. "Business Development Services for SMEs--An Overview". Investment Climate and Small and Medium Enterprise Development in Western China Workshop. Xinjiang, China, World Bank Institute.

Thomson JL, 2001. Strategic Management. 4th ed. London: Thomson-Learning.

Vandenberg P, 1999. North's Institutionalism and the Problem of Combining Theoretical Approaches, Department of Economics Working Paper Series No. 87, School of Oriental and African Studies, University of London.

Vatn A, 2005. Institutions and the Environment. Cheltenham: Edward Elgar.

Veciana J, M Aponte and D Urbano, 2002. Institutions and Support Programmes for Entrepreneurship: A Two-Country Comparison. 47th World Conference of the International Council for Small Business. San Juan, Puerto Rico, International Council for Small Business.

Weick K, 1988. "Enacted Sensemaking in Crisis Situations", Journal of Management Studies, Vol 25 No 4, pp 305-317.

Welter F and D Smallbone, 2005. "Entrepreneurship and Enterprise Strategies in Transition Economies: An Institutional Perspective", in F Sjoholm and F Tongzon (eds), Intitutional Change in Southeast Asia. London: Routledge.

Wescott C and D Porter, 2002. Fiscal Decentralisation and Citizen Participation in East Asia. INDES Workshop on Fiscal Decentralisation and Citizen Participation in East Asia. Manila: Asian Development Bank.

Whittington R, 1988. "Environmental Structure and Theories of Strategic Choice", Journal of Management Studies, Vol 25 No 6, pp 521-536.

Wiklund J and D Shepherd, 2003. "Knowledge-Based Resources, Entrepreneurial Orientation, and the Performance of Small and Medium-Sized Businesses", Strategic Management Journal, Vol 24 No 13, p 1307.

Work R, 2001. "Decentralisation, Governance, and Sustainable Regional Development". in W Stohr, J Edralin and D Mani (eds), New Regional Development Paradigms: Decentralisation, Governance, and the New Planning for Local-Level Development. Westport: Greenword Press.

Yan J and J Hunt, 2005. "A Cross-Cultural Perspective on Perceived Leadership Effectiveness", International Journal of Cross-Cultural Management, Vol 5 No 1, p 49.

Yaveroglu IS and N Donthu, 2002. "Cultural Influences on the Diffusion of New Products", Journal of International Consumer Marketing, Vol 14 No 4, pp 49-63.

Yilmaz C, L Alpkan and E Ergun, 2005. "Cultural Determinants of Customer- and Learning-Oriented Value Systems and Their Joint Effects on Firm Performance", Journal of Business Research, Vol 58, pp 1340-1352.

Zeithaml C and V Zeithaml, 1984. "Environmental Management: Revising the Marketing Perspective", Journal of Marketing, Vol 48 No 2, pp 46-53.

Hernan "Banjo" G Roxas

Vai Lindsay

Nicholas Ashill

School of Marketing and International Business

Victoria University of Wellington, New Zealand

Antong Victorio

School of Government

Victoria University of Wellington
COPYRIGHT 2008 Singapore Institute of Management
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2008 Gale, Cengage Learning. All rights reserved.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Author:Roxas, Hernan G.; Lindsay, Vai; Ashill, Nicholas; Victorio, Antong
Publication:Singapore Management Review
Geographic Code:1USA
Date:Jul 1, 2008
Words:9375
Previous Article:Determinants of performance in retail banking: perspectives of customer satisfaction and relationship marketing.
Next Article:Influence of political relationship building on the business activity of firms in China.
Topics:


Related Articles
Local Economic Development: Incentives and International Trends.
Framework for Metacognitive Mapping to Design Metadata for Intelligent Hypermedia Presentations.
Uganda: poverty alleviation project.
TREND MICRO UNVEILS INTERSCAN GATEWAY SECURITY APPLIANCE.
Tools for institutional, political, and social analysis of policy reform; a sourcebook for development practitioners. (CD-ROM included).
Expanding access to finance; good practices and policies for micro, small, and medium enterprises.
Accounting theory; conceptual issues in a political and economic environment, 7th ed.

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters