The role of MNCs and information flow on institutional change

Abstract

Purpose – The purpose of this paper is to investigate the impact of large business corporations, particularly media corporations, such as television (e.g. satellite networks), newspapers and social media (e.g. Facebook), on institutional change in the Arab world, which directly impact political and civil liberties in the region. Design/methodology/approach – Although there are several methods to measure institutional change, this paper relied on Kaufmann et al. (2010)’s governance indicators that capture, historically, how authority is exercised in a nation state. As the focus of this paper is on how information flows have empowered citizens in the Arab world, we built a panel database around one relevant governance indicator: “Voice and Accountability”. As a measure of governance, “Voice and Accountability” summarizes the condition of political, civil and human rights such as freedom of expression and freedom of association in a given country. This indicator takes scores ranging from 2.5, corresponding to strong governance, to −2.5, corresponding to weak governance. Findings – As predicted, the information flows variable has a positive and significant effect on institutional change. Table II also suggests that political globalization has a positive and significant effect on institutional change in the Arab world. In contrast, the variables for cultural proximity and human capital are associated with negative effects on institutional change. Originality/value – This paper is unique in the sense that it tackles a growing trend in the Arab world, namely, the impact of media on institutions.