P33 - Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and AidReturn

Studies on institutional support for the internationalisation of firms from transitional economies are inconclusive. This research contributes to the studies of institutional support in cases of firms with complementary innovation – internationalisation strategies. Mixed method research is used to support quantitative structural modelling. It uses qualitative interview data in combination with quantitative data gathered by a survey questionnaire on a sample of 88 telecommunications firms from the Croatia economy the year after it joined the European Union (2014). SmartPLS model is used to analyse data obtained through a questionnaire survey. The results show that institutions can assist firms in recombining their processes when they offer concrete product development support and, to a lesser extent, marketing support. The recombination of firms’ processes, i.e. its ability to openly innovate, leads to significantly better globalised-localised (glocal) financial and marketing performance, which results are robust. The results are inconclusive in the case of glocal growth performance. The structural model assessed the effect of readiness for open innovation on glocal growth as positive and insignificant, while the robustness check found it to be positive and significant.
Implications for Central European audience: The value of this study is twofold. Firstly, it provides support and direction according to which institutional support could be directed to strengthen the internationalisation effort of the incumbent industry from transitional Central European economy that has transformed from the socialist to a market economy and undergone a process of joining the European Union. Secondly, it shows managers weak spots in institutional support and enables them to mitigate them quicker by finding similar support either outside of the firm on international markets or by employing highly qualified individuals.

The paper provides an introduction to the special issue. It shows a sense in which Visegrád and Balkan EU countries are correlated in macroeconomic performance and integrated with the global business cycles. Using inflation rate levels as a starting point to characterize when these countries began their transitions, it shows that after 1996 both real GDP growth and real interest rates move together to a significant degree both with each other and with the US. This provides a background from which to view the paths since the collapse of the Soviet Union that these transition economies have taken. In addition, comparison is made to US money and banking policy, to provide an outline of how this may impact progress in the transition region. A subsequent summary of the other articles in the issue shows an inter-relation in their themes about how Central, Eastern, and Southeast Europe have progressed since 1991, and how these paths may be affected by Western economic policy.
Implications for Central European audience: The paper shows that transition regions can be impacted by international financial integration, including to possible detriment when capital markets are regulated by policy that pushes real interest rates below their natural levels. Negative real interest rate policy since the 2008-2009 financial crisis and again during the Covid crisis may hasten the rise of autocratic democracy and limit social, political, and economic freedom.