A behavioral theory of governments’ ability to make credible commitments to firms: The case of the East Asian paradox

Abstract

Commitment, Political risk, Economic growth, Culture, Government, Institutions,

Toward a legitimacy-based view of political risk: The case of Google and Yahoo in China

“…This has led Henisz and Zelner () to criticize traditional political risk theory as deterministic, and Jones () to call it “undersocialized” for not considering the broader societal influences affecting business‐government interactions and the policy‐making process. Recognizing that both intervening and not intervening in the activities of firms carries risks, government intervention is no less important—but it is increasingly selective (Bremmer, ; Minor, ; Stevens and Cooper, ). Moreover, firms are increasingly under scrutiny from home country stakeholders for issues including the natural environment, human rights, national security, and tax inversion (Kostova and Zaheer, ; Scherer et al, ).…”

The Stabilizing Effects of International Politics on Bilateral Trade Flows

“…A second negative reinforcement mechanism arises from embassies and alliances' abilities to constrain government predation upon foreign investments. Many governments—especially those with weak institutional constraints—have the incentives and capabilities to break existing agreements with firms in efforts to extort more rents (Stevens and Cooper :588). Such behavior increases a country's trade volatility through two channels.…”

Institutions and entrepreneurship development: High-technology indigenous firms in China and Taiwan

“…These insights are widely accepted, yet critical issues remain in both streams of literature. The economic development theorists shed most of their analytical light on the roles played by the institutions yet largely ignore the evolutionary nature of the firm's growth and leave little scope for entrepreneurial initiatives (Stevens & Cooper, 2010), particularly strategic choices between exploitation and exploration. Whereas the entrepreneurship theorists, while adopting a firmcentered evolutionary approach, pay inadequate attention to the external environment in which firms are embedded and thus not enough is known about how firms could make a delicate transition between exploitation and exploration at different growth stages through interplay with the institutions that surround them.…”

“…The increasing interest in the growth of indigenous firms in China and Taiwan is due in part to the fact that the defining characteristics of the two countries differ significantly from the orthodox economic theory characterized by the laissez-faire approach in the West (Stevens & Cooper, 2010;Whitley, 1992Whitley, , 2000. While many prior studies have examined the influence of the state, the social sector, and the market on the growth of local firms (e.g., Evans, 1995;Lal, 2000;Makoba, 2002), the extant economic development literature largely maintains that one of the three institutions must play a more important role than the other two.…”