Business relations under transformation influences

Abstract

The article aims to study and analyze the influence of transformation on business relations in East European countries. It includes revealing the essence of the transformation change, formal rules, informal constraints and enforcement characteristics. Literature review suggests that political and socioeconomic changes can affect transformation reforms in the framework of speeding them up. The process of convergence of the new institutional economy and the evolutionary economy theories demonstrate confirms the existence of common theoretical foundations. They include recognition of the existence of limits of rational behavior of economic entities, unpredictability, and irreversibility of business decision-making process. Institutional transformation assumes a complex process, where mechanical copying and transferring institutions do not provide quantitative changes, and need the development of formal rules and informal institutions, law enforcement mechanism, as well as consciousness and mental characteristics of the population. The content of the modern institutional system of transformation, including the institutional-legal, institutional-economic and institutional-technological systems, is presented. The systematization of classification features is carried out: content, the main tasks and results of the functioning of the institutional transformation subsystems. The effectiveness of the present system is considered, based on revealing the relationship and the influence of all its subsystems. Transformation changes affect business environment, and result in foundation of a stronger legal framework and a system of property rights, decreasing bureaucracy, and enhancing competition. The success of any efforts to weaken the influence of ineffective institutions will depend primarily on whether East European countries’ present-day facade institutions can be replaced with institutions that are robust and independent. Application of the interdisciplinary approach promotes an in-depth study the drivers of transformation reforms, and proposes scenarios for future development of East European countries.