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The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity.

The authors employ an annual panel covering 30 OECD countries from 1993 to 2011.

An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run.

The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

The separation of powers constitutes a vital feature of western democracies, enshrined in myriad federal and state constitutions. Yet, as a broad principle, theorists struggle to pin down its precise nature, and many contend that the tripartite separation of state powers into legislative, executive and judicial branches proves simplistic and infeasible. I argue we should understand the separation of powers as a strategy used to structure relations between the separated institutions. This process of structuring empowers the creation of novel inter-relations among institutions (relations of balancing, checking, dividing, coordinating and so on), with the goal of improving their institutional integrity. In short, we separate only to reconnect.

This paper develops an organizing framework for research on corporate political strategy. It reviews the literature and then identifies a number of open research questions and streams for potential investigation. The paper closes by developing a theory to explain why, when, and how a firm will pursue multi-forum political action as part of its nonmarket and integrated strategy.

The purpose of this paper is to examine a curvilinear effect of legislative constraints on foreign debt.

A cross-sectional, time-series data analysis of 68 developing countries during the period from 1981 to 1999 was performed.

Foreign borrowing is most likely to increase at both low and high levels of legislative constraints, while it is most likely to decrease at moderate levels.

The paper is a first-cut empirical analysis of a curvilinear relationship between legislative constraints and foreign debt.

This study investigated the moderating role of democracy in the relationship between corruption and foreign direct investment. The purpose of this study is to understand whether corruption has different effects on the location decisions of multinational enterprises (MNEs) depending on the regime type.

This study explored how institutional context influenced the impacts of corruption on the location decisions of MNEs, specifically using a sample of Chinese cross-border mergers and acquisitions between 2000 and 2020.

This study assessed the role of democracy in the relationship between corruption and the location decisions of Chinese MNEs. In general, this study found that Chinese MNEs were hindered by host country corruption, but that these detrimental effects were weaker in the presence of more effective democratic institutions.

This study contributes to the literature on institutional factors in international business through its simultaneous investigation of the effects of both democracy and corruption on the location decisions of MNEs. Moreover, there is a prevailing view that Chinese MNEs are willing to enter countries with high corruption, but the results of this study indicate that they are risk-averse in ways similar to their Western counterparts.

This study aims to analyse the institutional changes in the Spanish labour market in the light of the measures introduced to support workers during the COVID-19 crisis. Applying the theoretical framework the authors’ hypothesis is that the labour policy response to the crisis provoked by COVID-19 in Spain has ranged from strategy of preservation of the social democratic coalition to the anti-bourgeois bloc coalition with a greater presence of social pacts and the support of the social partners.

Combining the institutional theory of liberalisation trajectories, the four ideal-typical reform strategies and the social pacts literature, the authors analyse the change in the labour market policy orientation during the COVID-19 economic crisis in Spain.

In comparison to the Great Recession labour policy response, short-time work schemes and new benefits have characterised the 2020 labour policy strategy. Then, the labour policy response has oscillated between, on the one hand, a strategy of preservation of the social democratic coalition, which is characterised by measures to protect workers on the margins of the labour market without affecting the discretionary power of employers. On the other hand, a strategy of the anti-bourgeois bloc coalition, reflected in the employment safeguard clause that attempts to limit both external numerical flexibility and the increase in unemployment. Finally, the authors have analysed whether the labour policies after the COVID-19 crisis constitute a new round of social pacts in Spain and how this took place. They conclude that the main measures approved in the area of employment protection have been supported by social pacts and the social partners (trade unions and employers), as reflected in the signing of the Social Agreement in Defence of Employment (ASDE).

To the best of the authors’ knowledge, this is a significant contribution as it is the first article to point out that the labour policy represents a change in the trajectory of liberalisation, limiting the discretionary power of employers and re-regulating the labour market. The main measure of (re)regulation has been to safeguard employment and to avoid objective or unfair dismissals, which is the traditional form of adjustment. In other words, internal numerical flexibility has been promoted over external flexibility, thus significantly modifying the orientation of labour policy. Finally, the authors have found that social pacts have allowed for greater institutional coherence between legal changes and the behaviour of employers and workers.

While many studies have investigated the impact of institutional factors (i.e. financial risk factors) in the host country on inward foreign direct investment (FDI), fewer studies have researched on the locational aspects of FDI in relation to the political economy. This paper aims to fill this gap by examining the effects of the political economy on inward FDI in Poland’s regions and in other CEE (Central and Eastern Europe) countries.

The paper develops a theoretical argument postulating that political economy affects locational determinants of FDI inflow. To test this hypothesis empirically, several analyses were performed at the national level (Poland, Bulgaria, Romania, Slovakia and the Czech Republic) and at the subnational level (Poland’s provinces). First, the “footloose” nature of FDI inflows using the time series analysis was examined. Then a fixed-effect panel data regression model and a dynamic adjustment model to quantify the impact of political ideology and agglomeration effects were performed.

After controlling for economic and institutional determinants of FDI, the findings indicate that, in transitional economies, ideology affects the locational choice of multinational corporations (MNCs). At the national level, the results show that political risk, liberalization and economic reforms are important drivers of FDI inflows. At the subnational level, the vote for a liberal party positively affects the distribution of FDI in the provinces. Another finding is that electoral cycles also affect FDI inflows at regional levels in Poland. Finally, this study provides some supporting evidence for the “footloose” nature of FDI in case of external shocks.

This study contributes to the literature on the locational determinants of FDI by showing that ideology constitutes an important factor for locational choices by MNCs. The findings have important implications for public policy decision-makers who are seeking to improve the attractiveness of their country or region as an FDI destination.

This article posits that the effect of political hazards on the choice of market entry mode varies across multinational firms based on the extent to which they face expropriation hazards from their potential joint-venture partners in the host country (the level of contractual hazards). As political hazards increase, the multinational faces an increasing threat of opportunistic expropriation by the government. Partnering with host-country firms that possess a comparative advantage in interactions with the host-country government can safeguard against this hazard. However, as contractual hazards increase, the potential benefit to the joint-venture partner of manipulating the political system for its own benefit at the expense of the multinational increases as well, thereby diminishing the hazard-mitigating benefit of forming a joint venture. A two-stage bivariate probit estimation technique is used to test these hypotheses on a sample of 3,389 overseas manufacturing operations by 461 firms in 112 countries.