AIB 2012 Conference Proceedings - Academy of International ...

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negative effects on parent-subsidiary relations as well as on MNC work outcomes. Results are discussed in
terms of theoretical and practical implications as well as suggestions for further research. (For more
information, please contact: Jakob Lauring, Aarhus University, Denmark: jala@asb.dk)
Session: 1.4.15 - Interactive
Track: 7 - Emerging Economies
The Implications of Institutional Differences in Emerging Economies
Presented On: July 1, 2012 - 14:30-15:45
Chair: Mahmood Zaidi, University of Minnesota
A Conceptual Investigation of the Effects of Culture on Economic Freedom in Emerging Markets
Chuck Bryant, Cleveland State University
The purpose of this research is to propose an investigation of the impact of culture on the relationship between
economic freedom and economic growth in emerging markets. To eliminate any bias introduced by the
relatively higher freedom index scores and/or relatively higher GDP per capita growth rates, our study focuses
exclusively on emerging nations. The preponderance of literature on economic health indicates that economic
freedom is a critical factor to a growing economy – especially in emerging markets where economic shocks can
be particularly impactful. (Mauro, 1995). Additionally, much empirical research on macro level cultural studies,
uses Hofstedes' cultural index as an indicator of the role of culture. This present work will rely on Hofstede's
cultural index and data from the Heritage Foundations' Index of Economic Freedom, to investigate the impact of
a culture on the relationship between economic freedom and per capita GDP growth rates. We posit that culture
has a moderating effect on this relationship. (For more information, please contact: Chuck Bryant, Cleveland
State University, USA: c.e.bryant@csuohio.edu)
Equity Culture and Transition Economies: Empirical Evaluation
Zita Stone, University of Kent
Fragkiskos Filippaios, University of Kent
Carmen Raluca Stoian, University of Kent
Equity culture is underdeveloped in Central and Eastern Europe. The question of the viability of equity financing
development as an alternative to the traditional debt financing in the CEEs is the main focus of this study. We
develop a theory-bridging conceptual framework through which we attempt to demonstrate what factors
contribute to its formation. We maintain that firms seeking equity finance are the main drivers for equity culture
development in a country. This demand is affected by the size of transaction costs these firms incur in the
process of searching for, establishing and co-ordinating contractual relationships with equity providers. We
establish that the size of transaction costs is determined by a set of conditions stemming from internal
(managerial) and external (macro-economic and institutional) environments impacting the firm. Our findings
suggest that CEECs can be clustered in three groups in terms of their potential for equity culture development.
Firstly, CEECs belonging to the group of Leaders (Czech republic, Estonia, Slovakia) have the macro-economic
and institutional conditions necessary for the development of an equity culture in place and that it is the equityoriented
financial institutions and the managerial capabilities which require further attention so that equity
culture can be fully developed. By contrast, countries from the Potentials group (Hungary, Latvia, Poland,
Slovenia) have the macroeconomic performance required for the development of an advanced equity-based
financial system, however the conditions stemming from the institutional (including both quality as well as
adequacy of equity-oriented financial intermediaries) and the managerial environment need improving. The
results for the group of Laggards (Bulgaria, Lithuania, Romania) indicate that in order for an equity culture to be
AIB 2012 Conference Proceedings
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