Informal Institutions in a Transition Economy: Does Business Ethics Matter?

The paper is based on the New Institutional Economic Theory, which emphasizes institutions as a vital component in the creation of wealth and economic growth. It is widely accepted that formal institutions change rapidly through political and legislative decisions. Informal institutions are deeply embedded in customs, tradition and inherited behavioral norms. Thus, change comes at a very slow pace. This research is focused on the business ethics segment of informal institutions. The paper is based on the effects of institutional changes on the position and the slope of demand curve for ethical business behavior. Business people faced with opportunity costs that influenced their behavior. Additional statistical analyses provide evidence of business ethics perception, which is more expressed in the group of managers than in the administration group. Behavior of the middle-aged population differs significantly in comparison to other groups when deciding on ethical dilemmas in real business situations.