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Varieties of Institutionalism and their Problems: Some comments on John
Campbell's Institutional Change and Globalization, Princeton University
Press, 2004.
by
Richard Whitley
(Manchester Business School, University of Manchester)
The Problem of Institutional Change
According to John Campbell, a central problem in much institutionalist analysis
concerns how we are to understand institutional change. This becomes a critical
issue when dominant institutions are considered to determine the nature and
behaviour of socio-economic groups and organisations in market economies such
that they are largely limited to fulfilling pre-ordained roles. To the extent that
institutionalist analyses presume that institutions are cohesive and mutually
reinforcing in their implications for economic and other actors, they find it difficult
to account for major socio-economic change. Given that many social scientists
believe that substantial change has occurred in the leading OECD states since
the collapse of the Bretton Woods system, this poses a serious problem for
institutionalist analysis in the view presented here.
This problem is considered to have three major aspects: how to identify the nature
of institutional change, how to explain it, and how "ideas" help to account for it.
While it is clearly important to be able to describe a phenomenon adequately if we
are to understand it, and identifying the key mechanisms involved in producing it
seems crucial to providing satisfactory explanations of institutional change, I am
less convinced of the centrality of the role of ideas, or beliefs, as a key issue in
accounting for such change. In what sense are explanations based on moral and
other beliefs a problem of the same order as arriving at adequate descriptions and
providing causal accounts of institutional change? As potential explanatory
factors, they are one set amongst many candidates, and do not seem to pose a
problem in the same way as the previous two might. Furthermore, it seems odd to
separate "ideas" from "interests", given that, as the author claims on page 91,
"Interests are a particular type of idea among many……..like other types of ideas.
(they) are socially constructed". It would seem more productive to explore the
ways in which different kinds of interests and other motivating beliefs are
constructed by differently constituted groups of actors to affect patterns of
institutional change.
However, that would call into question the tripartite division of institutionalist
analyses that underpins this book. Like others, Campbell distinguishes between
rational choice, organisational and historical varieties of institutionalism as three
distinct "paradigms", or frameworks of analysis, that deal with his three sub-
problems in different ways. Aside from the misleading use of Thomas Kuhn's term
in this context - perhaps not surprising in the light of Kuhn's own ambiguities
about its meaning and use (Martins, 1972; Masterman, 1970) - this summary of
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three recent strands of thought about institutional change and their central role in
structuring this book highlights an apparent conflict between two purposes.
First, in presenting an overview of some approaches and how they have dealt with
certain issues - or failed to do so adequately - the book attempts to offer an
introductory survey of the field for new researchers, in a comparable manner to
Richard Scott's Institutions and Organizations (1995). This objective might
account for the frequent labelling of some authors as being a particular type of
institutionalist, or, in Burawoy's case, of not being one at all, which appears rather
odd and unnecessary to many European social scientists. Second, the book also
purports to make a substantive contribution to the analysis of institutional change,
to the extent of suggesting 12 propositions about it that could form part of a new
theory. While it may be possible to combine these two goals in a single volume
successfully, it is not a straightforward matter to do so, and in this case the desire
to incorporate a discussion of currently influential approaches, particularly those
fashionable in North America, seems to me to have seriously inhibited the
substantive contribution that could have been made.
This wish to incorporate many of the present frameworks governing social
scientific research about socio-economic phenomena is especially unfortunate in
the construction of rational choice institutionalism. At least in its more reductionist
variants, it would be odd to regard this approach as reflecting institutionalist
presumptions at all, except in the very general and usually implicit sense that it
takes for granted the key institutions that underpin modern market economies and
strategic decision making in them. By assuming hyper-rational actors with perfect
knowledge of their interests and of how to make trade-offs between alternative
actions and preferences, many rational choice theorists exclude institutional
arrangements from any explanatory role in their accounts, especially in
constituting socio-economic groups as particular kinds of actors with properties
that vary between institutional contexts.
However, once it is agreed that actors' interests are institutionally constructed,
and that rational action reflects socially constituted preferences and cognitions,
then the processes through which different groups come to have particular beliefs
and conceptions of the world, their roles in it, and their interests, become central
to any adequate account of socio-economic and institutional change. In this
sense, ideas and beliefs are necessarily crucial to the understanding of all social
phenomena and should not be separated as a distinct "problem".
Furthermore, to suggest that the institutional constitution of actors is simply a
matter of institutions guiding and enabling them, as is done on page 62, is to
ignore, or downplay, the significant role of societal institutions in constructing
different types of collective socio-economic groups and organisations as particular
kinds of actors that are able to carry out different kinds of activities in varied
societal environments. Similarly to much institutionalist economics, this view
focuses on the regulative aspect of institutional rules at the expense of their
constitutive role, which many Anglophone philosophers of the social sciences
have been emphasising at least since the publication of Peter Winch's The Idea of
a Social Science in 1958. This feature of institutions specifies the ontological
status of socio-economic actors and their capabilities while their regulative aspect
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specifies the nature of appropriate behaviours. It is the unwillingness of most
rational choice approaches to socio-economic phenomena to take account of the
institutionally variable nature of actors, and their presumption of the protean,
universal and non-socially differentiated nature of firms as economic actors, which
distinguishes them from institutionalist accounts.
Returning to the two major issues in the analysis of institutional change, John
Campbell suggests that the key concern is to identify both the degree of change
involved, especially whether it is revolutionary or revolutionary in a comparable
manner to much of the literature on technological change, and the nature of the
social mechanisms producing it. It is not especially clear why the extent of change
is seen as the central problem, or how we should decide what constitutes as
adequate description of it. In any event, we are urged to specify the number of
dimensions on which change has occurred and the period of time within which it is
deemed to have happened. Radical change is seen as involving more of these
dimensions within a certain period, while incremental shifts in dominant
institutions are those that occur on only a few of them.
In addition to the difficulty of deciding which are the central dimensions for
assessing the degree of institutional change, how many we should take into
account, and for which intellectual purposes, this focus on the number of separate
aspects of institutions tends to ignore the interdependence of institutions and the
extent to which they are complementary in their impact on actors. Radical
qualitative change in societal institutions is usually understood to involve the
transformation of the whole configuration governing the nature of dominant actors,
their resources, abilities and strategies, rather than changes in a number of
discrete variable (see, e.g., Amable, 2003: 66-73). It is precisely the interrelated
modification of institutional arrangements in different fields that indicates a major
change in the environment of socio-economic actors, including, as Amable
emphasises, the composition of the dominant social bloc. Parenthetically, it may
be worth noting here the curious omission of the work of the French regulationist
school in this book.
The importance of complementary changes in dominant institutions and coalitions
for achieving transformative shifts in socio-economic systems is a major reason
why many observers consider the recent modifications in the governance of
actors in the capital markets and banking systems of Germany and Japan not to
herald radical institutional change of the kind that took place in the former state
socialist societies of Eastern Europe (Deeg, 2005; Jacoby, 2005; Vogel, 2005).
Not only did many other institutions governing important parts of the economic
system in these countries not undergo qualitative change in the 1980s and 1990s,
but the impact of the shifts that have occurred has been restricted to particular
sectors, firms and social groups. In considering the degree of institutional and
socio-economic change, then, the connections between dominant institutions are
at least as important as the number of their characteristics that have altered -
even if we can agree on what these are and how we should assess changes in
them.
Turning now to consider the mechanisms that might account for institutional
change, the key ones considered here are path dependence, bricolage and
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translation. Path dependent explanations are regarded as being better suited to
explaining continuity rather than change, while bricolage reshuffles existing
institutional elements to create novelty and translation involves the importation,
transformation and application of elements from external sources. Bricolage is
seen as primarily a mechanism for evolutionary change since it necessarily limits
the range of institutional principles and practices available for innovation. With this
process, institutional entrepreneurs achieve incremental change by reshaping
existing ways of thinking and legitimating practices within the available repertoire
of justificatory norms and values.
More radical changes depend on the translation and adoption of new elements
from outside the social system. As John Campbell rightly emphasises, traditional
diffusion studies tended to assume that what was being transferred between
people, organisations and cultures was largely unmodified by the diffusion
process. This is both theoretically and empirically improbable, as extensive
studies of material and social technology transfers within and between
organisations have confirmed (see, e. g., Abo, 1994; Boyer et al., 1998; Hancke
and Casper, 2000; Hibino, 1997). It therefore becomes important to consider how
institutional elements are transformed when translated, as well as how such
processes affect institutional arrangements in different kinds of "receiving "
society. As with many processes of change, such translation is by no means a
simple, linear and "rational" adoption of new, more efficient, practices but often
takes the form of a struggle between various groups pursuing distinct objectives
with opposing principles in which the outcome is often uncertain.
While this account of bricolage and translation mechanisms may be helpful in
explaining institutional change, albeit perhaps not as novel as seems to be implied
(see, e.g., Lanzara, 1998), it is unclear why these particular processes have been
singled out for special attention, or how we should identify and compare different
institutional principles and practices. If they are indeed central to the study of
institutional change, then presumably any substantive theory should suggest how
different kinds of actors are able to recombine and/or translate varied sorts of
institutional elements for particular purposes and achieve specific changes in
different circumstances. Although some examples of these processes are
provided in this book, it remains unclear how such a theory will develop and it is
difficult to avoid entirely the suspicion that using this sort of terminology will result
more in relabelling commonsense descriptions than providing substantive
explanations of institutional change.
Similar points can be made about the discussion of how cognitive and normative
ideas can help to generate institutional change. Distinguishing between
paradigms, programmes, frames and public sentiments in terms of their relative
focus on outcomes - or cause-effect relations - and the extent to which these
ideas are explicitly used in public debates, John Campbell suggests how different
kinds of actors develop and mobilise support for them to create change. Again,
though, it is not obvious why these dimensions were selected, or how we are to
identify different kinds of paradigms, frames etc., their likely development by
particular groups in various situations, or probable outcomes. If these types of
beliefs, frameworks and ideas are so critical to explaining institutional change,
then we should be able to suggest how different kinds will be more or less likely to
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be used by certain groups to accomplish specific objectives, and be relatively
effective in doing so in different circumstances.
The intellectual utility of these distinctions and guidelines is then demonstrated by
considering how "globalisation" is affecting political and economic institutions.
Reducing this multifaceted and often vaguely defined phenomenon to the
increasing international mobility of investment capital since the breakdown of the
Bretton Woods system, it is seen here as creating a major problem for the sorts of
institutional analysis discussed in this book. This is because some scholars think
that the growing freedom of investors to move capital across national borders
enables them to put increased pressure on national policy elites and the strategic
managers of large firms to follow investor-friendly strategies. These are usually
held to involve neo-liberal state policies and the maximisation of shareholder
returns. As a result, globalisation is supposed to encourage the standardisation of
both national state economic policies and corporate priorities regardless of
nationally distinct institutional frameworks. According to the more enthusiastic
proponents of what Bill Emmott termed "globaloney" (1992: 29-40; compare,
Doremus et al., 1998), then, nationally specific institutions are increasingly
irrelevant to the explanation of socio-economic phenomena.
Even if the degree of capital mobility has grown as much as some have claimed,
and this remains very much in dispute, particularly relative to that prevailing during
the Gold Standard period, it remains unclear exactly why this should be such a
"problem" for institutional explanations of socio-economic phenomena. First of all,
increasing external financial pressures need not necessarily imply the
homogenisation of state and corporate policies if, as most of the authors
considered in this book would agree, national and other institutional arrangements
help to generate particular kinds of competences in leading strategic actors. Firms
are more likely to respond to growing "outsider" influence - and it is worth noting
that most large companies in the major OECD economies rely relatively little on
external finance for investment purposes - by focusing on their different
capabilities rather than all competing in the same way across international
markets. Slavishly imitating what is considered to be current "best practice" by, for
instance, imitating lean production techniques is impossible to do without some
translation, as this book emphasises, and also implies an inability to innovate
successfully. By always trying following the industry leader, companies will never
reap first mover advantages and be permanently condemned to competing on
other firms' terms.
Similarly, states in institutional regimes that provide certain competitive
advantages for their leading firms in some technologies and markets would be ill-
advised to abolish these in the hope of catching up with the apparently more
successful ones. Insofar as globalisation is creating common financial pressures
for leading companies and state élites in the major OECD economies, then, these
forces are just as likely to increase the heterogeneity of policy responses and firm
strategies as decrease it, as indeed happened in the early part of the 20th
century.
Second, as many critics of the hyper-globalisation argument have emphasised
(see, e. g., Weiss, 2003), it is peculiar to treat globalisation as an external force
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compelling states to adapt to its apparent imperatives when it is largely the
actions and policies of states that helped to create the international capital market
in the first place. Especially within the European Union, but also more widely,
many states have agreed to share some sovereignty and reduce national barriers
to economic interdependence in order to reap collective advantages and improve
their joint capabilities to manage market economies. How they deal with the
consequences can equally be expected to reflect national elites' perceptions of
their strategic interests and their ability to mobilise their own and other states'
resources, as well of course as the nature of dominant institutional regimes in
different societies and allied coalitions. As Laurence's (2001) study of the "Big
Bang" deregulations - or perhaps more accurately re-regulations - of the British
and Japanese capital markets reveals, both the nature and effects of these
superficially similar state policies were quite different as a result of the very
different institutional contexts and dominant coalitions.
Third, insofar as some states have succeeded in creating relatively stable and
effective transnational institutions governing economic activities, such as the WTO
and various free trade agreements, as well as more political arrangements such
as the European Union, in the latter half of the 20th century, and these have
intensified cross border competitive pressures, this highlights the continued
importance of institutions in structuring economic phenomena. However much
significance one attributes to the increase of global business regulation
(Braithwaite and Drahos, 2000), and the extension of multi-levelled governance
(Bache and Flinders, 2004), for the perceived internationalisation of competition
and shareholder pressures, it remains clear that the relevance of the institutional
framework within which economic actors are constituted and governed, at
subnational, national and transnational levels of collective organisation, is still
considerable. Overall, then, there does not really seem to be a "problem" of
globalisation for institutional analyses of economic phenomena, whether these are
organisational, historical or any other variant one cares to construct.
In the final chapter of this book, John Campbell summarises his ideas in the form
of 12 propositions that he suggests could constitute a rudimentary theory of
institutional change. This kind of change is understood as a process of
constrained innovation, a term that is curiously reminiscent of Kuhn's account of
the "essential tension" between novelty and tradition in the history of science
(1977:chapter 9; see also, Whitley, 2000: 9-29). However, many of these are so
general and remote from empirical phenomena, not to say tautologous, as to be of
limited use in characterising and explaining patterns of such change.
Proposition 1, for example, asserts that institutional change can be triggered by
problems that are either exogenous or endogenous to the institution in question,
while proposition 7 claims that change is more likely when the entrepreneurs in
favour of it command more resources than their opponents. One does not have to
agree with Popper's strictures about the assessment of scientific knowledge
claims to wish for rather more empirical content than is contained in these and
other suggestions. In particular, some idea of which kinds of actors are likely to
become effective institutional entrepreneurs and bring about specific forms of
change in particular circumstances would be welcome.
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It also remains obscure how we should decide which types of programmes for
institutional reform could translate well to particular contexts, and in what sense
they could be said to fit specific circumstances. Overall, many of these
propositions seem unlikely to provide much additional explanatory value by, for
instance, identifying the causal processes through which particular types of
institutional change are likely to occur in specific kinds of ways in given contexts.
To do this, we would need to develop a systematic framework that: a) specifies
what is changing that requires explanation, i.e. what kinds of changes in which
institutional arrangement need to be accounted for, and suggests how we should
decide that a new account is better than previous ones, b) identifies the key
groups and the nature of their interests and beliefs that were involved in
supporting and opposing such changes, together with their material,
organisational and ideational resources, and c) shows how and why they were, or
not, effective in different societal contexts. Such a framework would have to show
both how particular kinds of changes; institutions, actors, beliefs, resources,
mechanisms and logics of action differed, and how these different types were
interconnected in certain situations to result in varied outcomes.
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