Changing Institutional Environment and International Connections

Abstract

In this thesis, I study subnational and supranational institutional dynamics and their effects on international connectivity. In the second and third chapters, I focus on regulative harmonization within regional integration as a proxy to the changing institutions at the supranational level. I use process of Turkey’s candidacy to full membership in the European Union (EU) as a context of regional integration. In the second chapter, I adopt a network perspective to the international connectivity and track the progress in regulative harmonization by constructing a basic composite index using EU Commission annual progress reports. I utilized social network analysis on USPTO patent data to understand the effect of regulative harmonization on the centrality, complexity and resilience of Turkey’s innovation network. In the third chapter, I adopt a team perspective to the international connectivity. Using the same context, I construct a more sophisticated composite index by utilizing a combination of content analysis, principal component analysis (PCA) and linear aggregation methods to track the regulative harmonization in a robust way. In this chapter, I investigate the relationship between regulative harmonization and international connectivity in innovation using the same patent data supplemented by additional manually parsed company and country level data. I use a classic entropy-based measure, Shannon, to analyze the international connectivity of co-inventor teams in patents. Additionally, I explore asymmetrical impact of different regulation groups as well as a possible mediatory role of MNEs conditional on their origin using a signaling theory perspective. This chapter presents insights regarding the relationship between institutional fundamentals and international connectivity of a country. Finally, in the fourth chapter, I analyze the mechanisms through which national formal institutions interact with subnational informal institutions. More specifically, I use exploratory qualitative analysis supported by the fuzzy set qualitative comparative analysis to study how and under what conditions subnational informal institutional factors, that are represented by local business communities and local government-business relationships, exacerbate or ameliorate voids in national formal institutions. Export promotion programs represent the context for formal national institutions in this final chapter. My study contributes, first, to institutional theory by offering a deep analysis of how national formal and subnational informal institutions interact and result in different subnational responses to common institutional voids. Second, it contributes to the literature on economic geography and innovation by demonstrating the institutional fundamentals as antecedents of international connectivity in innovation from both network and team perspectives. My thesis also contributes to the IB literature by showing the asymmetrical effect of different groups of formal institutions on international connectivity and mediatory role of MNEs conditional on their origins in the relationship between regulative harmonization and international connectivity in innovation. I also contribute methodologically to analyses of complex social phenomenon by putting together a novel bundle that produces the Weighted Average Regulative Progress Index, WARP Index, and then combines it with Shannon’s Entropy Index and a recently published estimation method, ivmediate for Stata, that accounts both on endogeneity and mediation.