Analysis of adaptive institutional regulation of socioeconomic development of trade enterprises

Economy and management of the enterprise

In the light of growing economic development and constantly changing market conditions the effectiveness of trade enterprises becomes a key point of organization’s strategy and dictates the need for faster adaptation to the external environment. The article under review evaluates the relevance of this topic and explores the problem of adaptive institutional regulation of trade enterprises. The authors define the object and its structure, goals, tools, the algorithm of institutional regulation and describe evolutionary and revolutionary scenarios of adaptive regulation. The study includes a new interpretation of the definition of ‘adaptive mechanism’, covers L.A. Rastrigin’s and Y.Z. Tsipkin’s viewpoints of the ‘adaptation’ definition, describes the types of adaptation goals, analyzes the tools of institutional adaptation in terms of the entrepreneurial goals and develops the algorithm of institutional status assessment for a trade enterprise. Institutional status assessment involves describing the set of norms and standards followed by the enterprise, specifically economic and social ones, and comparing them to the reference values. The deviation from the reference value, in its turn, becomes the incentive for the normalization of institutional status in the sphere of corporate finance, tax liabilities, planning, controlling etc. The results of this study can be used to correct the strategy of organization’s development in order to minimize risks and increase stability. The optimal number of institutional tools of trade business regulation is related to the number of the development goals, unique for every business entity. This relation is described with Tinbergen’s inequality, that shows the balance between the number of goals and the number of tools used to achieve them. If economic practice reveals inefficiency of adaptation tools, it compels the organization’s management to make some changes in the norms and processes used by specific institutions: either to introduce new norms/processes or to improve the existing ones. The need for theoretical and methodological evaluation of institutional adaptation of trade enterprises is constantly increasing, especially because of their growing importance for making operational and strategic decisions regarding the development of trade business.