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Journal of Competitiveness

The Impact of Institutional Environment on Slovak Enterprises and the Institutional Hysteresis Effect

Ladislav Bazo, Miroslava Cukanova, Laura Markovicova, Dusan Steinhauser

Keywords:
hysteresis effect, institutional environment, Slovak republic, business environment index, perception of institutional quality

Abstract:
In recent years, a decline in competitiveness and in the quality of the business environment measurements has been reflected in the Slovak Republic, as noted, for example, in the assessments of the World Bank and the World Economic Forum, as well as in the business environment index (BEI from Business Alliance of Slovakia PAS), data from which we have used in our research. A multiple regression analysis along with the correlation analysis confirmed our assumption that in the Slovak Republic a state of institutional hysteresis exists. The hysteresis effect indicates rigidity despite the economic recovery, not restoring the original balance after a certain failure in the economic process. In our case, many external environment subindeces tend to decline while macroeconomic variables (employment, value added, R&D expenditures, revenues from corporate taxes) grow. On the other hand, the internal factors of a company, through which it itself affects the environment, such as the level of liquidity or innovation, is growing. We conclude that the companies we examined have adapted. The process of improving the assessment of the country (corruption, law enforcement, equality before the law, functioning of the judiciary) will become much more expensive over time. The result of this change should be an entrepreneurial environment in which the entrepreneur does not have to deal with the ongoing optimization of taxes and levies, a condition which in the long run would lead to the economic recovery in the Slovak Republic and to improvements in competitiveness.

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10.7441/joc.2019.03.03


Bazo, L, Cukanova, M., Markovicova, L., & Steinhauser, D. (2019). The Impact of Institutional Environment on Slovak Enterprises and the Institutional Hysteresis Effect. Journal of Competitiveness, 11(3), 35–52. https://doi.org/10.7441/joc.2019.03.03

Journal of Competitiveness

  

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ISSN 1804-171X (Print); eISSN 1804-1728 (On-line)


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