2.2. Research strategy description

of property rights and credibility, commerce can successfully develop even under the absence of these “fundamental institutions” thanks to the informal settlements. The evidence brought by Rodrik (2008) can be treated as the argument in favour of Hayek’s (1945) premise regarding the role of “spontaneous social arrangements”.

The literature review has demonstrated that there is no consensus regarding the links between culture and formal institutional design: while some researchers view culture as a stable and exogenous (yet endogenously developed) constraint (North, 1990), others conceptualize formal institutions (including legal institutions) as a potential trigger of the cultural change (Mautner, 2011; Becker et al., 2015). Analogously, it is hard to come up with a model of interaction between culture, formal institutions, and economic development. Nevertheless, all the pieces of evidence discussed in the previous section consistently emphasize the primary role of endogenous cultural change.

The present research attempts to explore the aforementioned links utilizing the data clustering method. Clustering analysis is frequently applied for the sake of structuring massive multi-dimensional datasets. Alternatively, it can be identified as a method of classifying objects into groups without making any prior assumptions regarding the precise selection criteria. In the context of the present study, clustering analysis is used for several purposes, namely: i) investigating whether a unique country-specific environment exists; ii) assessing the groups of countries sharing similar cultural values; iii) assessing the groups of countries sharing similar features of the formal institutional environment; iv) assessing the groups of countries with a similar level of well-being; v) contrasting results obtained during stage ii) and stage iii) in order to assess the links between culture (informal institutions) and the quality of formal institutional environment; vi) contrasting results obtained during stages ii), iii), and iv) in order to assess whether the links between culture and formal institutional environment as well as the links between culture, formal institutions, and well-being exist.

The data provided by Hofstede et al. (2010) are used as the benchmark for further analysis. The data for assessing various aspects of cultural and formal institutional environment was alongside subjective well-being provided by The World Values Survey (Haerpfer et al., 2020). As discussed earlier, the vast majority of studies