Institutional and Regulatory Environments in ICT Sectors

According to institution literature, institutions can be defined as systems composed of regulative, normative and cultural-cognitive elements that shape social behaviour and social structure (Scott, 1995). These systems combined provide meaning, order and stability in an institutional environment. Institutions are also generally referred to in terms of formal rules (e.g. constitutions, laws and regulations) and informal constraints (e.g. norms, sanctions and conventions). While both organizations and market are embedded in a broader institutional environment, market is an institutional arrangement which provides organizations with access to resources owned by other organizations. Institutional theories underscore the ability of institutions to influence organizations to conform to practices, policies and structures that are consistent with institutional preferences (Meyer & Rowan, 1977). In the transition economies, market mechanism is also subject to institutional influences; in particular, how resources are developed and mobilized among different organizations can be affected by policies on intellectual property and foreign ownership (Zhou & Li, 2007). Under these circumstances, both institutional and market transitions may in fact interact and produce enhancing as well as conflicting forces, with various behavioral consequences (Barnett & Carroll, 1993).