Title: The role of trust in government and institutional environment in future business climate

Authors: Gentjan Çera; Edmond Çera; Humberto Nuno Rito Ribeiro; Sadik Maloku

Addresses: Faculty of Management and Economics, Tomas Bata University in Zlín, Mostní 5139, 760 01 Zlín, Czech Republic; University of Aveiro, GOVCOPP, ESTGA, Apartado 473, 3754 – 909 Águeda, Aveiro, Portugal ' Faculty of Management and Economics, Tomas Bata University in Zlín, Mostní 5139, 760 01 Zlín, Czech Republic; University of Aveiro, GOVCOPP, ESTGA, Apartado 473, 3754 – 909 Águeda, Aveiro, Portugal ' University of Aveiro, GOVCOPP, ESTGA, Apartado 473, 3754 – 909 Águeda, Aveiro, Portugal ' Faculty of Life and Environmental Sciences, University "Ukshin Hoti" Prizren, Rruga e Shkronjave Nr. 1, 20000, Prizren, Kosovo

Abstract: Though numerous studies have focused on the relationship between institutional environment shape entrepreneurship, yet it is not clear enough the effects of institutional constraints and institutional trust on future business climate. This study aims to investigate these relationships in the context of a transition country. The research combines two perspectives: institution theory and institutional trust. The data are collected using a face-to-face survey. Three ordinal regressions were performed in a dataset of 393 small and medium-sized enterprises from Albania. The results contribute into understanding the nature of entrepreneurship in a transition setting. After controlling for firm characteristics, analyses revealed that future business climate is negatively influenced by legal environment-related constraints, and positively by trust in government. Thus, favourable business climate can be achieved by applying not heavily business legislation and regulation framework, and by building trust in institution. This paper offers insights for scholars studying entrepreneurship and institutional environments.

Keywords: entrepreneurship; institutional constraints; institutional trust; future business climate; ordinal regression; Albania.

DOI: 10.1504/IJEV.2021.119143

International Journal of Entrepreneurial Venturing, 2021 Vol.13 No.5, pp.425 - 442

Received: 14 Jan 2020
Accepted: 08 Oct 2020
Published online: 24 Nov 2021 *

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