Local governance quality and law compliance: The case of Mozambican firms
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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Local governance quality and law compliance : The case of Mozambican firms. / Berkel, Hanna Mareen; Rand, John; Hansen, Christian Estmann.
I: World Development, Bind 157, 105942, 09.2022.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Local governance quality and law compliance
T2 - The case of Mozambican firms
AU - Berkel, Hanna Mareen
AU - Rand, John
AU - Hansen, Christian Estmann
PY - 2022/9
Y1 - 2022/9
N2 - Using panel data of manufacturing enterprises in Mozambique between 2012 and 2017, we investigate how changes in perceived quality of governance are related to firms’ law compliance.Controlling for firm-level unobserved heterogeneity, we look at three aspects of governance and their components: transparency, security, and infrastructure. We examine which of these have thepotential to alter firm compliance behaviour. We find that enterprises’ perceptions of transparency are key to law abidance. In particular, higher predictability of changes in the law, better access tolegal documents, and regular meetings with state officials improve firm compliance rates. Thus, we confirm results showing that more political participation and government openness increasecompliance with regulations, even in a non-democratic context. Additionally, we test whether political legitimacy acts as a mediator or a moderator in this governance–compliance relationship,but find no clear evidence of this being the case. However, we do confirm that legitimacy has an independent effect on firms’ compliance with regulations in the context of Mozambique.
AB - Using panel data of manufacturing enterprises in Mozambique between 2012 and 2017, we investigate how changes in perceived quality of governance are related to firms’ law compliance.Controlling for firm-level unobserved heterogeneity, we look at three aspects of governance and their components: transparency, security, and infrastructure. We examine which of these have thepotential to alter firm compliance behaviour. We find that enterprises’ perceptions of transparency are key to law abidance. In particular, higher predictability of changes in the law, better access tolegal documents, and regular meetings with state officials improve firm compliance rates. Thus, we confirm results showing that more political participation and government openness increasecompliance with regulations, even in a non-democratic context. Additionally, we test whether political legitimacy acts as a mediator or a moderator in this governance–compliance relationship,but find no clear evidence of this being the case. However, we do confirm that legitimacy has an independent effect on firms’ compliance with regulations in the context of Mozambique.
KW - Faculty of Social Sciences
KW - grovernance
KW - transparency
KW - law compliance
KW - firms
U2 - 10.1016/j.worlddev.2022.105942
DO - 10.1016/j.worlddev.2022.105942
M3 - Journal article
VL - 157
JO - World Development
JF - World Development
SN - 1873-5991
M1 - 105942
ER -
ID: 322128550