Business-Government Relationship in European Post-Transition Countries: Do Innovators Get the Worse End of a Stick?

Abstract

Post-transition countries struggle in their attempt to catch-up the more advanced market economies with more or less success. Simultaneously, the business performance of the countries whose innovation indicators lag behind the desired levels seems relatively poor. Often emphasized problems in post-transition countries regard the relations of fi rms with government institutions. We analyze perceptions of innovative and non-innovative fi rms in dealing with government offi cials, aiming to explore if these two groups of fi rms share similar experiences with tax administration, business licensing and courts offi cials. The analysis is focused on 17 European post-transition countries that are either EU members or accession countries. The results reveal that corrected for selection mechanism, innovative fi rms do not perceive courts as an obstacle to their business activities more than non-innovative fi rms, although they seem to participate more in court-related procedures. Furthermore, innovative fi rms in these countries are more likely to perceive licensing and tax administration as obstacles to their business. Thus, specifi c policy measures aimed at creating positive business environment should be designed in order to enhance innovation activities and support long-term growth prospects.