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Do Market‐Supporting Institutional Characteristics Explain Firm Performance? Evidence from Emerging Markets
Author(s) -
Elango B.,
Lahiri Somnath
Publication year - 2014
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.21608
Subject(s) - emerging markets , rule of law , context (archaeology) , language change , quality (philosophy) , business , government (linguistics) , sample (material) , control (management) , investment (military) , industrial organization , accounting , public economics , economics , finance , politics , law , art , paleontology , philosophy , linguistics , chemistry , literature , management , epistemology , chromatography , political science , biology
The importance of market‐supporting institutions and their impact on business investment and economic growth has gained the attention of researchers and practitioners alike. In this study, we extend this research by capturing the impact of the quality of regulative institutional characteristics on firm performance in an emerging market context. We use a sample of 26,493 emerging market firms from 91 countries over the years 2003 to 2010 and test for the relationship between government effectiveness, regulatory quality, rule of law and control of corruption, and firm performance. Results indicate that governmental effectiveness and regulatory quality impact performance outcomes positively, while rule of law impacts performance negatively. These findings provide important insights and encourage managers and public policymakers to be cognizant of the impact of these factors and adapt accordingly. © 2014 Wiley Periodicals, Inc .