How institutions moderate the effectiveness of regional policy: A framework and research agenda

Article · December 2016with345 Reads
Abstract
This paper develops a research agenda toward the systematic inclusion of institutions into the analysis of regional policy effectiveness. Departing from the commonly shared observation that formal rules of regulation and policies not always lead to the intended outcomes, we argue that institutions are crucial mediators of the workings of regulation and regional policies in specific geographical contexts. By defining institutions as stable patterns of interactions based on legitimate mutual expectations (Bathelt and Glückler, 2014), we open analytical scope for analyzing the multiple relations between regulated rules and regular social practice. Hence, we build on Helmke and Levitsky's (2004) conception of the interdependencies between regulation and institutions, and extend their heuristic into a dynamic framework at the regional scale on how to pursue what we call institutional policy-making. RESUMEN: El artículo desarrolla una agenda de investigación orientada a la inclusión sistemática de las instituciones en el análisis de la efectividad de la política regional. A partir de una observación comúnmente compartida de que las reglas formales de regulación y las políticas no siempre conducen a lograr los resultados perseguidos, se argumenta que las instituciones constituyen media-dores cruciales de los trabajos de regulación y de política regional en contextos geográficos específicos. A partir de definir las instituciones como estructuras es-tables de interacciones basadas en las mutuas expectativas legitimizadas (Bathelt y Gluckler, 2014), se abre un campo analítico para analizar las múltiples relacio-nes entre reglas reguladas y prácticas sociales regulares. A partir de ello y sobre la concepción de Helmke y Levitsky (2004) sobre las interdependencias entre regulación e instituciones se extiende su contenido en un marco dinámico a es-cala regional sobre cómo llevar a cabo lo que nosotros llamamos policy-making institucional.
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© Investigaciones Regionales – Journal of Regional Research, 36
(2016) – Pages 255 to 277
Section Articles
How institutions moderate the effectiveness
of regional policy: A framework and research
agenda
Johannes Glückler*, Regina Lenz*
ABSTRACT: This paper develops a research agenda toward the systematic in-
clusion of institutions into the analysis of regional policy effectiveness. Departing
from the commonly shared observation that formal rules of regulation and policies
not always lead to the intended outcomes, we argue that institutions are crucial
mediators of the workings of regulation and regional policies in specific geograph-
ical contexts. By defining institutions as stable patterns of interactions based on
legitimate mutual expectations (Bathelt and Glückler, 2014), we open analytical
scope for analyzing the multiple relations between regulated rules and regular so-
cial practice. Hence, we build on Helmke and Levitsky’s (2004) conception of the
interdependencies between regulation and institutions, and extend their heuristic
into a dynamic framework at the regional scale on how to pursue what we call
institutional policy-making.
JEL Classification: O17; P48; R58; Z18.
Keywords: Institutions; regional development; institutional policy-making; rela-
tional economic geography; policy-effectiveness.
RESUMEN: El artículo desarrolla una agenda de investigación orientada a la
inclusión sistemática de las instituciones en el análisis de la efectividad de la
política regional. A partir de una observación comúnmente compartida de que
las reglas formales de regulación y las políticas no siempre conducen a lograr los
resultados perseguidos, se argumenta que las instituciones constituyen media-
dores cruciales de los trabajos de regulación y de política regional en contextos
geográficos específicos. A partir de definir las instituciones como estructuras es-
tables de interacciones basadas en las mutuas expectativas legitimizadas (Bathelt
y Gluckler, 2014), se abre un campo analítico para analizar las múltiples relacio-
nes entre reglas reguladas y prácticas sociales regulares. A partir de ello y sobre
la concepción de Helmke y Levitsky (2004) sobre las interdependencias entre
255
* Economic Geography Group, Institute of Geography, Heidelberg University, Germany.
Acknowledgements. We are grateful to the guest editor of this special issue, Juan-Ramón Cuadrado-
Roura, as well as to Henry Farrell, Michael Handke, Kevin Morgan, José-Luis Sánchez-Hernández and
two anonymous referees for helpful suggestions on earlier versions of the manuscript.
256 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
regulación e instituciones se extiende su contenido en un marco dinámico a es-
cala regional sobre cómo llevar a cabo lo que nosotros llamamos policy-making
institucional.
Clasificación JEL: O17; P48; R58; Z18.
Palabras clave: instituciones; desarrollo regional; policy-making institucional;
geografía económica relacional; eficiencia de las políticas.
1. Introduction
The persistence of regional disparities in the structure and dynamics of economic
development, as well as the limited transferability of allegedly successful growth
models have been central challenges for theories of regional economic development.
One major finding has been the realization that regional disparities in growth can nei-
ther be fully explained by external incentives nor by endogenous, knowledge-based
approaches, exclusively (Rodríguez-Pose, 2013). Instead, more and more significance
is being attributed to the impact of social institutions on economic development. This
insight has been encouraging extensive research over the last 20 years, analyzing
the conditions for institutions, as well as their effects. A veritable institutional turn
(Martin, 2000) has become preeminent in many disciplines of the social sciences,
such as in economic geography (Storper, 1997; Gertler, 2010; Storper, 2011; Rodrí-
guez-Pose, 2013), economics (Williamson, 1985; Hall and Jones, 1999; Rodrik et
al., 2004; Acemoglu et al., 2014), organization science (Barley, 1990; Whitley, 1992;
Zilber, 2011) and political science (March and Olsen, 1984; Helmke and Levitsky,
2004; Farrell, forth.).
The proliferation of research on institutions across these and other disciplines
has led to a considerable polysemy of the meaning of the term «institution». This
diversity implies several challenges for institutional research more generally, and
for regional research, in particular (Colyvas and Powell, 2006; Bathelt and Glückler,
2014). On the one hand, advances in our understanding of the empirical antecedents
and consequences of institutions are closely tight to the very concept of institution
and thus tend to be conflated when associated with only either implicit or all-en-
compassing concepts of institutions. The heterogeneous use of the concept, in turn,
has made it arduously difficult to integrate the findings into a coherent institutional
framework. On the other hand, the precise roles of institutions in regional develop-
ment are still little understood. Though often celebrated as the sine-qua-non factors
making a difference for regional trajectories, institutions have hardly been unpacked
from the black box of regional analysis. Instead, their importance is often inferred
from an increasing inappropriateness of traditional explanations for regional devel-
opment. As long as institutions are hidden in the residual factor of regional growth
equations (Rodríguez-Pose, 2013), we have not yet understood how institutions are
actually related to both the effects on regional development and to the effectiveness
of regulation and regional policy.
How institutions moderate the effectiveness of regional policy: A framework and research agenda 257
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
This paper both proposes a framework and a research agenda that include institu-
tions and institutional dynamics into the analysis of regional policy effectiveness. We
argue that institutions are crucial mediators of the workings of regulation and regional
policies in specific regional contexts. Thus, institutions can be the answer to the ques-
tion, why the formal rules of regulation and policies not always lead to the intended out-
comes. Building on a relational perspective (Bathelt and Glückler, 2011), we first give
a short review of institutional research in various disciplines. We then briefly review
the predominant concepts of institutions and define institutions as stable patterns of
interaction based on legitimate mutual expectations (Bathelt and Glückler, 2014). This
conception opens analytical scope for studying the interdependencies between regula-
tion and institutions for which we draw on the framework by Helmke and Levistky
(2004). In extension of their approach, we adopt a dynamic and territorial perspective to
develop a framework of how to elaborate on what we call institutional policy-making.
2. Taking stock of institutional research
There is neither place nor is it the purpose of this paper to offer a comprehensive
appraisal of the vast body of research on the relation between institutions and econom-
ic development. Instead, we would like to offer a perspective of major commonalities
within and differences between two broad approaches, which we distinguish according
to whether research focuses on the antecedents or outcomes of institutions. Research
that focuses on the social and economic effects of institutions contributes to what
we call institutional theories, whereas research focusing on how institutions emerge,
change and are sustained adds to what we define as theories of institutions (Table 1):
Table 1. Analytic approaches in institutional research
Antecedent Outcome
Non-institutional Institutional
Non-institutional Non-institutional theory Theory of institutions
(2.2)
Institutional Institutional theory (2.1) Institutional theory
of institutions (2.2)
2.1. Institutional Theories
Institutional theories focus on the social and economic effects of institutions
which are seen as conditioning frames for social actions, thereby potentially contrib-
uting to regional path dependencies (Martin and Sunley, 2006). Economics, political
science and economic geography are prominent disciplines within this approach, see-
ing institutions mostly as either the rules or players of the game (North, 1990). A key
interest is to determine «good institutions» that facilitate socio-economic develop-
ment in order to generalize them into action models. While facing the difficulty of op-
258 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
erationalizing and measuring institutions adequately (Robinson, 2013; Shirley, 2013;
Voigt, 2013), such studies are often based on quantitative and comparative research
designs (Farole et al., 2011) that analyze the enabling or constraining effects of dif-
ferences in rules and regulations. They suggest, for instance, that a country’s growth
and development depend on the existence of property rights (Galiani and Schargrod-
sky, 2010; Acemoglu et al., 2014), rule of law (Duquet et al., 2014), or specific mech-
anisms of allocation and distribution (Di Tella et al., 2007), labor market conditions
and political systems (Glaeser et al., 2004). Research on varieties of capitalism (Hall
and Soskice, 2001; Streeck and Thelen, 2005; Hall and Thelen, 2009), on national
innovation systems (Cooke et al., 1997; Morgan, 2004; Asheim and Gertler, 2006),
and on social systems of production (Hollingsworth and Boyer, 1997; Hollingsworth
and Müller, 2002) is equally concerned with the effects of institutional conditions on
economic outcomes. Assuming a systemic character, these approaches try to include
“all parts and aspects of the economic structure and the institutional set-up affecting
learning, searching, exploring” (Lundvall, 1992: 12).
Not only on the national, but also on the regional and urban levels, this stream
of research investigates into what kinds of institutional arrangements facilitate eco-
nomic development (Amin, 1999; Huggins, 2016), i.e. the «institutional quality»
needed (Revilla Diez et al., 2016). Apparently objective measures such as the Euro-
pean Quality of Government Index are used, for instance, to quantify and compare
the perceived quality of government at the regional level within the European Union,
to map its interregional variation (Nifo and Vecchione, 2013; Charron et al., 2014,
2015), and its effects on economic prosperity.
Given its particular research motivation, institutional theory is inherently teleological:
it focuses predominantly on the effects of institutional variables on social and economic
outcomes and seeks to identify «good» institutions that are conducive for economic pros-
perity. This is not a problem per se, but it involves at least two challenges. First, due to the
instrumental logic underlying the analysis of institutional effects on economic growth,
the meaningful conceptualization of institutions is sometimes sacrificed in favor of «styl-
ized facts» (Clark, 1998) and tangible quantitative assessments. Examples are abundant:
surveys on trust in strangers and the strength of norms of civic cooperation (Knack and
Keefer, 1997), ratings of perceived quality of government (Nifo and Vecchione, 2013),
reported fear of failure in entrepreneurship (Vaillant and Lafuente, 2007), or the number
of voluntary organizations per inhabitant (Laursen et al., 2012). Second, even once seem-
ingly «good institutions» are identified, institutional theories have not much to say about
how institutions are actually built or reproduced in other contexts. This theoretical limita-
tion, requires an additional body of research which explores the processes of emergence,
creation, maintenance and change of institutions.
2.2. Theories of Institutions
Instead of focusing on their effects, theories of institutions treat institutions as the
dependent variable themselves. They seek to understand the conditions and processes
How institutions moderate the effectiveness of regional policy: A framework and research agenda 259
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
of their emergence, change or maintenance. In contrast to earlier studies on the dif-
fusion of institutions (Meyer and Rowan, 1977; Tolbert and Zucker, 1983) and on
external shocks as triggers of institutional change —such as environmental changes,
the introduction of new laws, incentives or technologies (Barley, 1990; D’Aunno et
al., 2000; Ahmadjian and Robinson, 2001)— more recent studies focus on the endog-
enous quality of institutional change by attributing greater influence to actors, like the
ability to either reproduce or modify the institutional bases that at the same time condi-
tion their actions (Seo and Creed, 2002; Lounsbury and Crumley, 2007). This mutual
influence of structure and individual or collective, as well as intended or unintended
agency is expressed and analyzed, for example, by the institutional work and institu-
tional logics approaches (Thornton et al., 2012; Lawrence et al., 2013; Zilber, 2013).
Research in the fields of organization studies (Munir and Phillips, 2005; Sudda-
by and Greenwood, 2009), economic history (Greif, 1993), and some approaches
to game theory (Greif and Laitin, 2004; Aoki, 2007) have shown that institutional
change can happen unintentionally (Smets et al., 2012) or be the result of the pur-
poseful action of «institutional entrepreneurs» (DiMaggio, 1988; Maguire, et al.,
2004; Crouch, 2005; Munir and Phillips, 2005). Depending on the context, the key
actors of institutional change can be located in the center (Phillips and Zuckerman,
2001; Greenwood and Suddaby, 2006) or in the periphery of an organizational field
(Leblebici et al., 1991; Haveman and Rao, 1997; Kraatz and Moore, 2002; Maguire
et al., 2004; Glückler, 2014) which can itself be either emerging or already estab-
lished (Greenwood and Suddaby, 2006).
Theories of institutions are often non-teleological, and instead put much emphasis
on theorizing the quality of institutions and the manifold processes of institutionaliza-
tion in carefully observed contexts of micro-social practice. Sometimes, however, the
often qualitative and case study-based research leads to rather fuzzy and all-inclusive
definitions of institutions. At least two challenges emerge from this stream of research:
First, although the advances in understanding processes of institutional change have
been substantial, there is still much to be learned about the mechanisms conducing this
change, the role that stakeholders take in it and the contingent conditions that enable
or constrain the operation of these mechanisms. Secondly, since the majority of re-
search on theories of institutions has been conducted outside geography, the geograph-
ical dimension of institutionalization has been overly neglected: To what extent are
institutions spatially bound and, if so, what are the mechanisms that lead to regionally
specific institutions as well as to interregional differences in institutional practices?
A preliminary conclusion of these two lines of research points to some research
gaps and the need for research in at least three directions: First, as has been shown
in the brief review above, institutional theories as well as theories of institutions are
incomplete with regard to an endogenous understanding of how institutions emerge,
sustain and change as well as how they affect related institutional and economic out-
comes. An inclusive and endogenous theory of institutional change will thus have to
integrate knowledge about the antecedents and consequences of institutions into what
we define as «institutional theories of institutions» (Table 1). This task, however, is
not at the focus of this article and must be left to future research.
260 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
Secondly, and as a prerequisite for such a theoretical endeavor, any institutional
approach needs to be explicit and sufficiently precise about its very concept of insti-
tution to make meaningful contributions to empirical analysis and normative prac-
tice. Only when clearly defined and conceptually operated for empirical observation
can diverse institutional approaches compare and connect their findings with a larger
institutional framework (Bathelt and Glückler, 2014). In the next section, we first ap-
praise two well-established uses of the term institution before we turn to an alterna-
tive, relational understanding of institutions. We endorse a relational perspective to
adopt an understanding of institutions as legitimate mutual expectations enacted in
stable patterns of social interactions.
Thirdly, and at the heart of the research agenda outlined in this article, a relational
perspective distinguishes between institutions on the one hand and the realm of pre-
scriptive rules and regulation on the other. This invites for a more explicit theoriza-
tion of the moderating role of institutions on the effectiveness of regulation and also
regional policy-making. The framework that we develop hereafter is dedicated to the
systematic analysis of the manifold interdependencies between regulation and insti-
tutions in search of unpacking the contextual nature of policy fit and failure (Bathelt,
2006; Bathelt and Glückler, 2011; Glückler and Bathelt, 2017). Our research agen-
da, then, aims to offer a framework for analyzing the interaction of regulation (and
policy-effectiveness) and institutions that invites and inspires future research toward
concepts of institutional policy-making.
3. Institutions characterize how the game is actually played
3.1. Organizations: Players of the game
Many studies have employed institutions to denote the particular role of orga-
nizations in economic development, for example trade associations, public bod-
ies, research facilities, or political organizations (Evans, 1985; Keating, 2001;
Greco, 2004; Jones and Gordon, 2004; Goodwin et al., 2005). This perspective
has been helpful to recognize the important role that organizations play in pro-
curing services which would otherwise be absent and which may be useful in
facilitating cooperation, compliant behavior, rule of law, charity, solidarity, etc.
The perspective of institutions as organizations can be found in studies of devel-
opment and international relations, as well as at the regional level. Approaches
such as «institutional thickness» (Amin and Thrift, 1995) and the «associational
economy» (Cooke and Morgan, 1998) have elaborated on the beneficial effects of
connectedness, close collaboration and on the support facilitated by intermedi-
ary organizations such as business associations, public research organizations,
vocational schools, chambers of commerce, and public authorities. However, an
excessive creation of intermediary organizational entities may raise the necessary
effort to coordinate them appropriately, and to try to avoid parallel structures, and
unhealthy competition among them (Magro et al., 2014; Morgan, 2016). We argue
How institutions moderate the effectiveness of regional policy: A framework and research agenda 261
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
that organizations should not be conflated with institutions (Bathelt and Glückler,
2014) because the very decisions and actions of organizations are grounded on
institutions themselves. In line with North (1990), we argue that organizations
are collective actors or players of the game whose action is itself structured by
institutions.
3.2. Regulation: Rules of the game
Much of the empirical work done in institutional theory refers to institutions as
the rules of the game (North, 1990), i.e. in the sense of consciously built formal or
prescriptive rules, e.g. property rights, contracts, or patent laws (Acemoglu et al.,
2006; Huggins, 2016). However, as decades of development cooperation and well-
intended reforms can tell, bringing different regions to the same level of develop-
ment cannot simply be done by introducing «good» institutions, i.e. supposedly
beneficial laws and regulations. Research in regional governance, for instance,
laments the lack of enterprise cooperation despite of years of incentivizing this
kind of networking (Cooke and Morgan, 1998; Parrilli et al., 2010). Regulatory
incentives to cooperate need not lead to the institutionalization of cooperation in
real innovation behavior. In fact, a rule that is introduced on the national level can
lead to very different outcomes at sub-national levels, depending on what kinds of
regional institutions it interacts with. Hence, regulation and institutionalized in-
teraction are two different analytical concepts. Therefore, we distinguish between
prescriptive rules and institutions. Often, the perspective of institutions as regula-
tion includes both formal and informal components (North, 1990; Rodríguez-Pose
and Storper, 2006; Gertler, 2010). In doing so, this literature explicitly refers to
habits, norms and conventions as informal institutions because they are unwrit-
ten, socially shared regularities in social realms, and deviance implies sanctions
outside the «official» channels, for example through social ostracism and disap-
proval (Salais and Storper 1992; Farrell and Knight, 2003; Helmke and Levitsky,
2004). While we agree that the latter are institutions, we find it inconsistent to treat
prescriptive rules (regulation) as enacted institutions. The actions of individual or
collective actors may or may not follow prescriptive rules, despite the risk of sanc-
tions. Instead, practices are said to be institutionalized if they are widely accepted
and enacted by actors in specific situations. Formal rules and regulation may influ-
ence the institutionalization of such practices, but they leave scope of action, and
may even be meaningless with regard to daily practice. Hence, studying the codi-
fied, formal regulation to us means studying «not-yet institutions» (Bathelt and
Glückler, 2014).
3.3. Stable interaction orders: How the game is actually played
In contrast to the players (organizations) and the rules (regulation) of the game,
we view institutions as how the game is actually played differently in different con-
262 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
texts, but consistently across recurring situations. Rather than being the prescrip-
tive rules which may or may not be put into practice, institutions are the relatively
stable patterns of interaction which are based on legitimate and mutual expectations
across similar social contexts (Bathelt and Glückler, 2014). Hence, rather than being
regulated prescriptions codified on paper, institutions are regular patterns of real in-
teraction. The defining prerequisites of an institution —namely the mutually shared
expectations about legitimate alternatives for interaction which are guaranteed by
sanctions in case of deviance— resonate, among others, with the French approach
of the économie des conventions, where conventions are defined as practices that are
bound together through mutual expectations (Storper and Salais, 1997; Sánchez et
al., 2010).
With regard to economic development, institutions can be understood as untraded
interdependencies (Storper, 1997). Due to their contextual emergence they are not
tradable, they can neither be bought nor licensed —as opposed to tangible assets,
financial capital or codified knowledge. Despite their crucial role in hindering or
facilitating innovation and regional growth, institutions are not imitable (Asheim and
Gertler, 2006) and therefore difficult to transfer into other contexts (Dunford et al.,
2016). Institutions, thus, are of priceless value or a great burden for social and re-
gional contexts.
This also shows that institutions are context-specific, and one general institu-
tional blueprint, for example cooperation, can become manifest in rather different
legitimate interaction orders in different contexts (Barley, 1990), or in different
regions within the same national context. Actors have an implicit knowledge about
these behavioral expectations, even when not currently exerting them (Hodgson,
2006). However, institutions can only be observed either in their transformation
into action in specific situations (Jones and Murphy, 2010) or in the explicit omis-
sion of observable practice. For example, the agreement not to attract qualified staff
from competitors or other firms in spatial vicinity is characterized by the deliberate
absence of action.
Now that institutions are defined as stable patterns of interaction in real social
contexts, the concept serves as a moderator between the micro level of social in-
teraction and the macro level of normative orders (Jessop, 2001). Both levels af-
fect the formation and change of institutions while at the same time being affected
by them. Institutions are continuously transformed in simultaneous processes of
downward and upward causation (Bathelt and Glückler, 2014): At the micro lev-
el, continuous social interaction reproduces existing institutional patterns. At the
same time, this everyday practice is itself a source of deviant behavior that may
transform into legitimate new institutions when repeated in similar situations and
becoming increasingly accepted (Hall and Thelen, 2009). This recursive loop of
practices reproducing existing institutions while at the same time challenging them
through deviant practices is a source of upward causation. At the macro level, in
turn, the imposition of prescriptive rules in the form of codified laws, directives,
norms, codes of conduct etc. affects institutions in a contingent process of down-
ward causation (Figure 1).
How institutions moderate the effectiveness of regional policy: A framework and research agenda 263
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
Figure 1. The intermediate role of institutions in policy-making
Although policies are developed on purpose either to protect or change existing
behavior, their effect on actual social practices is moderated by existing institutional
patterns in each social context. Rules and regulations, thus, come to be used in ways
other than intended or designed originally (Thelen, 2004; Streeck and Thelen, 2005).
This line of argument is supported by comparative empirical research that illustrates
how the convergence of formal policies, such as the regulation of money laundry in
the U.S. and the Netherlands, leads to very different and even opposite effects in ob-
served social practice (Unger and van Waarden, 2009). While both regulation and the
practice of organizations or individual actors can be empirically observed (Figure 1,
dotted boxes), institutions remain an abstract phenomenon. Institutions can only be
known through the observation of repeated patterns of interaction in similar situa-
tions and are thus read out of practice. Just as a grammar explicates the regularities
of speech do institutions describe the legitimate patterns of social interaction (Gid-
dens, 1984).
As long as the inimitability of institutions and the contingency of their effects
in other contexts holds true, researchers in regional development will need to under-
stand the processes of evolving, creating, maintaining, and transforming institutions
in regional context. Moreover, it will be necessary to theorize the relation between
institutions and new, exogenous rules introduced into institutional contexts by means
of regulation and regional policies. It is here where we identify a major research gap:
Since policies do not always have the intended social outcomes (e.g. Morgan, 2016),
we argue that institutions moderate the effects of regulation on social practice and
economic outcomes, and that any policy-making will be contingent on its institution-
al fitness in a specific regional context (Bathelt, 2006; Glückler and Bathelt, 2017). In
what follows, we will outline an analytical framework on how to unpack the mutual
effects and interrelatedness of institutions and regulation. This framework is meant to
open a research agenda that includes institutions into the analysis of regional policy-
264 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
making and policy-effectiveness in order to be able to develop an «institutional»
policy making that aims at either building on or changing not only behavioral prac-
tices, but their underlying institutional foundation (see Figure 1).
4. The relation between institutions and regulation
Now that regulation and institutions have been conceptually distinguished, there
is analytical scope for the analysis of the ways in which they mutually affect each
other. The theoretical variety of interactive effects between regulation and institu-
tions ranges between convergent and divergent effects on social practice, and offers
an important starting point for the conception of institutional policy-making. In what
follows, we build on the basic idea of Helmke and Levitsky (2004) to systematically
consider the ways in which regulation and institutions affect each other. In their
article, Helmke and Levitsky (2004) explore the relationship between formal institu-
tions (i.e. formal rules) on the one hand, and informal institutions on the other, which
they define as “socially shared rules, usually unwritten, that are created, communi-
cated, and enforced outside of officially sanctioned channels” (Helmke and Levitsky,
2004: 727). Their typology defines four kinds of informal institutions depending
on whether formal institutions are enforced effectively or ineffectively and whether
their interactions with informal institutions produce convergent or divergent social
outcomes. Hence, they distinguish complementary, accommodating, substitutive
and, finally, competing informal institutions (Table 2) and illustrate corresponding
empirical cases at the level of national politics such as electoral regulations and
practices.
Table 2. Typology of informal institutions (Helmke and Levitsky, 2004: 728)
Outcomes Effective formal institutions Ineffective formal institutions
Convergent Complementary Substitutive
Divergent Accommodating Competing
Though being helpful for the original distinction between informal and formal in-
stitutions and the outcomes of their various interactions, this typology needs to be re-
vised and extended to serve as an appropriate framework for the regional analysis of
institutional policy-making (Figure 2). According to the relational approach and the
concept of institution as a stable pattern of interactions adopted here, we first revise
the terminology and replace informal institutions with the term institution and formal
institution with the term regulation. The effectiveness of rule-making (regulation) is
linked to its degree of enforcement, i.e. the resources and efforts involved in monitor-
ing and sanctioning rule infringement. As one aspect of incentivizing and support-
ing economic development by public bodies, we include policies in the concept of
regulation. Second, we extend Helmke and Levitsky’s (2004) typology by adding an
explicitly dynamic perspective. As we have argued already above (Figure 1), not only
How institutions moderate the effectiveness of regional policy: A framework and research agenda 265
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
prescriptive rules have an effect on people’s behavior, but, vice versa, institutions
also shape the performance of regulation and may thus limit, strengthen or mediate
its effects to various degrees (Simmie et al., 2014). For designing and evaluating
policies and regulations, it is crucially important to distinguish whether policy inter-
ventions (new rules) are made in response to given institutions or whether and how
institutions change or emerge in response to incumbent regulations. Consequently,
our framework distinguishes two dynamic sequences for each of the four interactions
between institutions and regulation, depending on whether (effective or ineffective)
regulation responds to an existing set of (convergent or divergent) institutions or, vice
versa, whether an institution emerges in response to a given regulation. In sum, we
define four types of interactions between institutions and regulation, where for each
interaction we further distinguish the temporal sequence of interaction (Figure 2). In
what follows we empirically seek to scale the framework down to the level of regions
as a subnational territorial scale, and present illustrative case examples for each of the
subtypes of our extended framework.
Figure 2. A dynamic perspective on the interactions of regulation and institution
Rule-
substituting
institution
Rule-
competing
institution
Rule-
reinforcing
institution Institution-
reinforcing
rule
Institution-
circumventing
rule
Enforced rule
REINFORCEMENT SUBSTITUTION
CIRCUMVENTION COMPETITION
Non-enforced rule
ConvergentDivergent
Institution
Regulation
(Institution-
substituting
rule)
Institution-
competing
rule
Rule-
circumventing
institution
4.1. Reinforcement
The first relation is one of mutual reinforcement. In this case, effectively enforced
regulation is supported by institutions which help reproduce formal rules in real so-
cial practice. Working toward the same goals, institutions do not only exist in parallel
to regulation, but can fill in gaps or loopholes left by regulation or not covered by
266 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
policies without violating their overall goal (Helmke and Levitsky, 2004). Depending
on the direction of the influence, we distinguish between two cases: Rule-reinforcing
institutions and institution-reinforcing rules.
An institution-reinforcing rule means that an effective rule is introduced to an
already existing set of institutions aiming for the same results, thus «formalizing» the
institutions. This can be seen, for example, in the comparison between the willing-
ness of Dutch and US American firms to take the risk of innovating (van Waarden
2001). Despite the fact that the legal system in the Netherlands is more effective in
reducing uncertainty for entrepreneurs, US firms are more likely to take risks. Van
Waarden (2001) concludes that this can only be explained if one acknowledges that
risk-averse cultures also produce more risk-averse entrepreneurs and give themselves
more uncertainty-reducing policies.
Another example of how existing institutions on the regional level can facilitate
regulation can be seen with regard to the introduction of the cluster policy in the
Spanish Basque Country. Having a legacy of collective organization in cooperatives
(OECD, 2007), and being highly specialized in a few main industrial sectors, as well
as strongly relying on its endogenous efforts for lack of investment from abroad
(Morgan, 2016), the Basque Country was more receptive than other regions to the
successful introduction of cluster policies, and more recently, to smart specialization
strategies (OECD, 2007; Aranguren et al., 2016).
The reverse, rule-reinforcing institutions, can be seen in the case of the changed
attitudes toward sexual harassment at the work place since the corresponding anti-
discrimination law was passed in Iowa in 1964. Here, introducing and enforcing a
rule has changed attitudes and has created new supporting institutions. As Bilz and
Nadler (2014) point out, «citizens’ expectations» about how they are entitled to be
treated at work have clearly changed over the last three decades, ever since courts be-
gan recognizing sexual harassment as discrimination” (Bilz and Nadler, 2014: 243).
Specifically, their case shows public outcry after a court had approved the dismissal
of a female employee because of the jealousy of her boss’ wife. While this kind of
behavior would have been tolerated or accepted some decades ago, people today are
much more sensitive toward this topic and expect to be treated equally and profes-
sionally.
By being aware of, and taking into account positive local conditions, policies can
strengthen already existing regional competences and cumulatively reinforce path-
dependencies. By acting in accordance with already existing legitimate behavioral
expectations, a policy becomes an institutional policy (Figure 1).
4.2. Circumvention
A second theoretical interdependence is to be identified if enforced regulation co-
exists with divergent institutions. This happens either when an effective rule is made
against an existing institution, or when a divergent institution emerges in response to
an enforced rule. The latter is a case of rule-circumventing institutions, i.e. behavior
How institutions moderate the effectiveness of regional policy: A framework and research agenda 267
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
that is incentivized by rules but that alters their effects. These institutions are favored
and enacted by actors who dislike the outcomes of regulation or policies, but feel
unable to change them. They are fostered by lax enforcement of rules and policies,
which helps to reconcile different interests. Exceptions are tolerated in order to keep
up the intended outcome as a whole. By finding a way to modify their effects, actors
might even help to perpetuate given policies (Helmke and Levitsky, 2004).
An example of this can be seen at the level of a single organization in the study
of Bensman and Gerver (1963) about the use of a forbidden tool for wing assembly
—the tap— at an air plane factory in New York. The tap is a hard steel screw that
when inserted into a nut can cut new threads over the original threads of the nut. In
the case of the air plane factory, “[t]he use of the tap is the most serious crime of
workmanship conceivable in the plant. A worker can be summarily fired for merely
possessing a tap” (Bensman and Gerver, 1963: 590). Despite these explicit rules,
however, the majority of workers did possess and use the tap in their daily work. If
these rule violations were detected, they were not sanctioned; rather, different levels
of authorities such as the foremen, the plant quality and Air Force inspectors, knew
about the practice of using the tap and unofficially tolerated it for the sake of getting
the work done in time and according to the business targets. In addition, the differ-
ent ranks and positions had institutionalized interaction orders that both purposively
helped oversee the use of the tap (what you don’t know won’t hurt you) and that
educated workers on how and when to use the tap appropriately. Such an interaction
order included all status groups in the firm and thus enabled mutually legitimate
expectations about how to jointly get the job done, irrespective of corporate law.
It remains a normative question whether rule-circumventing institutions are evalu-
ated as sources of policy failure or sometimes as acceptable deviance in pursuit of
a consistent higher goal, in the case of Bensman and Gerver (1963): to get the job
done adequately.
The reverse case, an enforced rule made against a divergent institution, can be
seen in the case of sanctioning anti-poaching agreements between competitors of
certain industry branches. These institution-circumventing rules are characterized
by regulation that goes against certain institutions by effectively enforcing the rules
when detecting deviant behavior. In 2010, for example, the US Department of Justice
opened a case against high-tech companies because of their illegal agreement to not
recruit each others’ employees (Kirchgaessner and Menn, 2010). Despite violating
antitrust laws and going against both free competition and employees’ job and salary
opportunities (Lindsay and Santon, 2012), these firms had created divergent institu-
tions (illegal, but legitimate between them) trying to circumvent these rules. Contrary
to institution-competing rules (see below, 4.4), however, the rules were effectively
enforced once the institutions were discovered, and anti-poaching agreements were
stopped: Settlement agreements were put in place for five years prohibiting compa-
nies “from engaging in anticompetitive no solicitation agreements” and fees had to
be paid (U.S. Department of Justice, 2010).
Since regulation often leaves loopholes and is never fully complete, the above
cases demonstrate that this does not necessarily have to be a bad thing as long as the
268 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
circumventing institutions work toward the same goals and lead to their better ac-
complishment. Such an understanding resonates with what Unger and van Waarden
(2009) advocate as «risk-based regulation»: Deviation from the strict sense of the
rule may be seen as breaking codified rules, yet the actual intentions and social out-
comes of deviant practice may well comply with the higher common goal. An institu-
tional policy-understanding, thus, would grant some scope for interpretation on how
regulated norms are actually achieved in specific contexts.
4.3. Substitution
If regulation is missing or not properly enforced, we can observe institutions
developing in response to an ineffective or absent rule, in our terminology rule-sub-
stituting institutions. Aiming for the same goal, institutions can sometimes achieve
what regulation or policies fail to do (Helmke and Levitsky, 2004). In China, for
instance, the institution of guanxi substitutes for an unstable legal and regulatory
support (Xin and Pearce, 1996). Making personal connections and trusting on part-
ners is more important for doing business than open competition; it is not regarded
negatively, but rather as a sign of being loyal, especially since governmental support
is lacking.
Individual actors or whole industries might even have incentives to regu-
late themselves in order to preempt governmental regulation, for example in the
form of codes of conduct, «voluntary environmental agreements» of industries,
or environmental performance standards (Heritier and Eckert, 2008). This kind
of legitimate institution-building in a local economy can be seen, for example, in
the case of the whale watching industry in Victoria, a city on Vancouver Island
off the Canadian west coast (Lawrence and Phillips, 2004). After commercial
whale watching had gained momentum and the number of operators had steadily
been increasing in the 1980s, concerns about the harassment of the whales came
up and «the basic concern was to avoid regulation by instituting a set of volun-
tary guidelines» (p. 701) covering different aspects from accessing the harbor
to limiting the number of boats allowed around whales at the same time. Since
there was no regulation (yet), whale watching operators themselves established
a pattern of legitimate expectations on how to coordinate and mutually behave in
their activities.
The reverse case, institution-substituting rules, is not empirically valid because
it is unlikely that a rule that is in accordance with existing ways of behaving would
be non-enforced. In both cases it is likely that there is no need to create regulation, if
only to formalize existing and well-working social institutions in order to maintain
the status quo. Self-regulation in various degrees plays an important role here, either
voluntarily, because of the threat of governmental regulation, or because of pressures
of multinational supplier-client relationships (Christmann and Taylor, 2001). Thus,
this field offers a fruitful ground for focusing on institutional dynamics and for the
co-working of policy makers and institutional theorists.
How institutions moderate the effectiveness of regional policy: A framework and research agenda 269
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
4.4. Competition
In this final case, institutions and ineffective regulation are at odds with each oth-
er, i.e. they differ with regard to their incentives and outcomes (Helmke and Levitsky,
2004). Two cases can be distinguished: institution-competing rules (a rule is made
against an existing institution and remains ineffective) and rule-competing institu-
tions (institutions emerge in divergence to an ineffective rule).
The first case, the introduction of institution-competing rules, can be found in
the context of development cooperation, where well-meant policies are designed by
donor countries and implemented in developing countries. However, when such poli-
cies do not recognize regional specificities and prevailing institutions, policies are
doomed to fail. One regional example for this can be seen in the application of the
so-called «Nucleus Approach» in a development project in the leather sector of Dha-
ka, Bangladesh. The Nucleus Approach is based on the idea of cooperation between
entrepreneurs, and their willingness to discuss their problems and to jointly look
for solutions in working groups. Having had worked successfully in other countries
and sectors, this approach could not meet the expected goals in its implementation
in Dhaka’s leather sector because of the prevailing institutions of non-cooperation.
There was mutual distrust between the tanners who were expecting others to make
use of their experiences without telling their own. Despite incentives to change their
attitude toward this, the tanners sanctioned the project’s wrong expectations by not
attending the group meetings and by continuing their business as usual after the pro-
ject had ended (Lenz, 2013).
In comparison, rule-competing institutions, i.e. divergent institutions emerging
as a response to the introduction of an ineffective rule, can be seen with regard to the
introduction of a new anti-corruption regulation in the construction sector of Eastern
Indonesia (Tidey, 2013). In 2008, a new regulation was passed that was supposed to
fight corruption in bidding competitions and to make the competitive tendering pro-
cedure better verifiable by adhering to formalities on paper because «if what is visible
and tangible appears to be in line with the rules, then there is no “proof” to support
anticorruption investigations» (Tidey, 2013: 186). Until then, there was less adminis-
trative documentation and bidders were bribing officials to be awarded the contract.
After the new regulation was implemented, public officials made sure to adhere to
formalities in every detail. But the adherence to official rules did in fact not erase
corruption —it just changed the way it was done: Instead of accepting bribes for giv-
ing the project to a particular bidder, public officials were now accepting bribes for
making sure the application forms were in order. As a consequence of that, the most
competitive offers could be disqualified in case of minor failures to form adherence.
These cases not only show that there is no universal «right» policy, and that a
policy working well in one context might be a misfit in another context, but they
also serve as a good example for policies that solely aim for changes in isolate prac-
tices rather than the institutional patterns of interactions. While succeeding in erasing
«direct» bribes, the behavioral practices were changed in the way that bidders and
officials were now documenting the process. That is, people complied with the new
270 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
rule, yet the rule missed its overall goal. This is because it did not change the under-
lying mutual behavioral expectations of all actors involved, nor the ultimate goal of
winning the bid. One practice got exchanged for another, without touching their un-
derlying institutional base. Thus, policies are incomplete if they only aim at practice
change and leave the more substantial institutions untouched.
5. Conclusion and implications for research
We close by inviting scholars of regional research to acknowledge the critical
role of institutions for context-specific policy-making, as well as for the analysis of
the effectiveness of regional policies with regard to their intended effects (Bathelt,
2006; Lehmann and Benner, 2015; Dunford et al., 2016; Morgan, 2016; Glückler and
Bathelt, 2017). Our major argument has been to move from an atomistic perspective
of regulating single practices to a relational perspective of institutional policy-mak-
ing. Institutional policy-making identifies and responds to the underlying patterns of
stable interactions in which single practices are embedded. Such a perspective of in-
stitutional policy-making is conducive to cumulatively reinforcing existing strengths
in a regional economy, such as cluster policies, but also to successfully taking a turn
for the better in regions suffering allegedly bad institutions such as nepotism, corrup-
tion, non-cooperation etc.
Taking an institutional perspective on policies can also help to overcome the so-
called «innovation gap» (Parrilli et al., 2010; Glückler and Bathelt, 2017), as well as
the limited compatibility or missing impact of regional development plans and poli-
cies (Kitching et al., 2015). As we have argued in this paper, formal rules and regula-
tion may influence the institutionalization of actors’ behavior in given situations, but
they leave much scope of action, and may even be meaningless with regard to daily
practice (Greenwood et al., 2008; Bathelt and Glückler, 2014). In turn, the concept
of institutions may answer the question of how regulation and policies that aim to
change practices sometimes fail to have their intended effects. To move a step further
in our understanding of the intricate relation between regulation and institution, we
have built on Helmke and Levitsky (2004) to suggest a more detailed and dynamic
framework that systematically characterizes the mutually convergent and divergent
effects among regulation and institutions. Moreover, we have detailed a number of
examples of how policies may get either reinforced, substituted or circumvented, and
even competed by institutions.
Our typology of theoretical linkages is suggested as an analytical framework to
detect policy challenges and to promote an understanding of policy-making that is
sensitive to institutions and their spatio-temporal contextuality. We should distin-
guish two types of policies according to what they are aiming for: one, where policies
are introduced to change atomistic practice while ignoring their institutional embed-
dedness, the other where policies are directly implemented to change the underlying
institutions (Figure 1). A good example for the latter is the Tostan program operating
in Senegal, which is trying to abolish the practice of female genital cutting. In 1999,
How institutions moderate the effectiveness of regional policy: A framework and research agenda 271
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
Senegal introduced a law making it illegal to practice female genital cutting, but
rather to please Western values than out of the belief of doing the right thing. While
this kind of top-down approach can be seen as too coercive, the Tostan program tried
to address the issue on a more deep-rooted level (Shell-Duncan et al., 2013). Instead
of aiming for a superficial and temporal change in behavioral practice —by impos-
ing the «better» practice of non-cutting— they inform people more generally about
health topics and human rights to let them make up their mind on their own. In addi-
tion to these «nudges», they acknowledge that rules or policies cannot easily change
single practices that are embedded into institutionalized traditions, and therefore aim
at the long-term change of these underlying institutions. To achieve this, they need to
change each other’s behavioral expectations and fear of sanctions: people try to com-
ply with others’ expectations and will only change their behavior if they can credibly
expect others to do the same, which is why they publicly vow to refrain from genital
cutting in the future (Bicchieri and Mercier, 2014). Since 1997, the program has
achieved that more than 5,000 communities in Senegal have made such public decla-
rations (Shell-Duncan et al., 2013). This example also illustrates again the potential
for regional specificities in the interaction between institutions and regulation. While
the introduction of a law on national level did not change people’s behavior, the more
profound work of Tostan was able to achieve some changes in certain regions.
In pursuing a perspective of institutional policy-making, important questions lie
ahead of us: To what extent are institutions spatially bound and reproduced? To what
extent are institutions interwoven into other institutions, thus raising their hysteresis
against change? How can «good» institutions be leveraged for successful support
policies of innovation, entrepreneurship, and qualification but also for regional wel-
fare, enduring employment, environmental sustainability and social solidarity? Are
some of the relationship types outlined above more prevalent in some territories than
others based on the effectiveness of rule enforcement? For example, are substituting
and competing relationships more likely to be found in developing economies while
reinforcing and circumventing ones are easier to achieve in more advanced econo-
mies? How can adverse practices which are based on «bad» institutions be actively
transformed into «good» and socially desired institutions? What role do power and
hierarchy play in this process, and how can policy-making be adjusted to change
institutions rather than isolate practices?
Answers to all these questions presuppose a micro-social and process under-
standing of social interaction and institutionalization. Recent research criticizes the
fact that institutions are left vague when it comes to their specific modes of action
(Dellepiane-Avellaneda, 2010). As long as the statement that «institutions matter»
is not substantiated by explanations, institutions continue to be treated as «deus ex
machina» (Tomaney, 2013) and will remain a truism that explains regional differenc-
es solely by the very existence of institutions (Rafiqui, 2009). This is why a greater
focus needs to be put on the mechanisms of the process of institutional change. Only
by making these mechanisms visible can the effects of institutions be understood,
as well as the possibility of their political malleability. An explicitly micro-social
process perspective is needed in order to clarify the ambivalence of the relationship
272 Glückler, J., Lenz, R.
Investigaciones Regionales – Journal of Regional Research, 36 (2016) – Pages 255 to 277
between action and action-restraining or action-enabling structures (Hodgson, 2006;
Boxenbaum, 2014).
Concretely, this means to identify local conditions and all stakeholders involved
in a given practice and situation. It needs to be clear on which incentives individual
behavior is based: is it guided by official rules, or are people following behavioral
expectations that deviate from official rules? Only by identifying the underlying
guidelines that really influence behavior can we see the starting point for institu-
tional change, and can ultimately contribute to an endogenous «institutional theory
of institutions» which explains institutional effects by institutional mechanisms
themselves.
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    • Such a collective upgrading process based on public-private coordination will require institutional sensitivity. Without considering the fit between policies and their socioinstitutional context, the chances of upgrading policies to succeed can be expected to be significantly lower (Glückler and Lenz 2016;Benner 2017b). Aligning tourism development policies with institutions found in a tourist destination or, in suitable cases, designing appropriate and specific policies to change institutions such as tourism improvement districts (Assli 2009) requires policymakers to have a clear picture of the socio-institutional context of their tourist destination.
    [Show description] [Hide description] DESCRIPTION: Tourism clusters have attracted a good deal of attention in literature, probably due to the fact that (mass) tourism exhibits a strong tendency to agglomerate. A major challenge for many tourism clusters is how to upgrade their competitiveness in the wake of market change. While the 1950s and 1960s saw the rise of standardized mass tourism particularly in Mediterranean countries, driven by the Keynesian welfare state and Fordist paradigm as well as rising wealth in European markets, since the late 1970s a more differentiated and individualized pattern of tourism demand has emerged. Since then, tourists’ preferences have become much more diverse and led to a roll-back of the previously dominant form of standardized, deterritorialized mass (package) tourism. This diversity is somewhat reminiscent of the notion of flexible specialization known from the literature on industrial change. In the wake of these changes, tourism clusters that came into being during the age of Fordist mass tourism have to devise strategies to differentiate their offer and to adapt their product to new market demands. Eilat in Israel is one of those tourism clusters that exhibit salient features of Fordist mass tourism struggling to find their place in a more differentiated international tourism market. This study takes a look at the structure of the Eilat tourism cluster and suggests a trajectory towards differentiation and upgrading to enhance Eilat’s long-term competitiveness as an international tourist destination.
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    • Yet another possibility to develop higher value-added tourism niches in Tunisian regions is linking tourism with signature products such as dates and olive oil—two sectors that are currently promoted through cluster policy and can serve as vehicles to promote tourism in peripheral regions in the South and North-West, respectively (Benner 2017b; Benner). In such a context, the institution-sensitive kind of policy interventions to pursue according to the methodology of Glückler and Lenz (Glückler and Lenz 2016) prima facie consists in establishing institution-circumventing rules through instruments such as cluster policy or tourism improvement districts (Benner 2013;). Such instruments could combine public and private efforts and establish patterns of common upgrading efforts, possibly shaping institutional patterns of cooperation and competition.
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    • Concerning clusters, some formal institutions have an obvious influence on clusters, namely cluster policies. Furthermore, Glückler and Lenz[42]call for a 'systematic inclusion of institutions into the analysis of regional policy effectiveness' and highlight that the consideration of the institutional context in policy development can have a positive influence on innovation rates, among other benefits. Cluster policies and their potential influence on clusters themselves have been widely researched[19,[43][44][45][46].
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  • [Show abstract] [Hide abstract] ABSTRACT: Regional development occurs in the larger context of national economies. Thus, the elaboration of regional economic development strategies cannot be separated from higher-level economic policy which frames and conditions opportunities and risks for regional development. As a Southern European country undergoing a process of profound structural economic reform, Cyprus provides a case for a policy context aiming towards the emergence of a new model of economic growth. Within this context, the Limassol region as one of the country's major economic centers with a number of comparatively strong industries can serve as an example of how to promote regional development in the framework of national reform priorities such as moving the national economy closer towards a knowledge-and innovation-driven model. The present study analyses current reform priorities on the national and supra-national level, takes stock of the regional economic structure of Limassol district, and presents some preliminary ideas that could be further explored if and when a comprehensive regional economic development strategy for Limassol were to be elaborated.
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  • [Show abstract] [Hide abstract] ABSTRACT: The economic crisis which began in 2008 has had a far-reaching impact, including effects on the innovation behaviour of firms. Many companies have reduced their innovation-related activities, although some firms have been more resilient than others. Using a representative microdata panel of Spanish firms, we study the probability of companies abandoning in-house R&D during the crisis and its relationship to regional and policy factors. We find significant regional heterogeneity related to regional economic size and the type of the regional innovation system; regional government R&D support only reduces R&D abandonment rates in regions where a strong system of knowledge exploitation is in place.
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  • [Show abstract] [Hide abstract] ABSTRACT: Identifying opportunities to facilitate economic growth is a major challenge in local and regional development. Particularly for local or regional economies confronted with deep structural economic problems, unlocking growth differentials by targeting untapped potentials for employment and entrepreneurship can provide an opportunity to renew themselves. Therefore, it is logical that the "missing entrepreneurs" from among economically underrepresented or disadvantaged groups such as women, senior citizens, people with special needs, or youth as well as immigrants have recently gained attention by scholars and policymakers in local and regional development. Still, there is not yet a clear and comprehensive understanding on how to consider the needs of economically underrepresented or disadvantaged groups, both as entrepreneurs or as employees, in local and regional development strategy design. While women and youth entrepreneurship have been subject to an academic and policy debate for some time, the discourse on how to include other economically underrepresented or disadvantaged groups in local or regional economies is far less advanced. The present study reviews the state of literature on inclusive local development and, based on a preliminary analysis of the local economy, proposes a strategy for inclusive local development in Heraklion, Greece. As a locality suffering under the structural economic crisis that has afflicted Greece for almost a decade, a strategy for how to include economically underrepresented or disadvantaged groups in the local economy is both a social necessity and a way to unlock untapped potentials for economic growth.
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Project
El proyecto de investigación pretende identificar y analizar las nuevas formas de coordinación económica que se han difundido en las ciudades españolas durante el actual período de crisis socioecon…" [more]
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Social institutions have increasingly become recognized as important factors of economic development. However, institutions vary across regions, and allegedly ‘good institutions’ are hard to imitat…" [more]
Project
This project is based on the annual Klaus Tschira Symposia being held at the Villa Bosch in Heidelberg since 2006 and aims to bring together international scholars from a broad range of disciplines…" [more]
Article
February 2017
    Regional development occurs in the larger context of national economies. Thus, the elaboration of regional economic development strategies cannot be separated from higher-level economic policy which frames and conditions opportunities and risks for regional development. As a Southern European country undergoing a process of profound structural economic reform, Cyprus provides a case for a... [Show full abstract]
    Article
    September 2017
      Identifying opportunities to facilitate economic growth is a major challenge in local and regional development. Particularly for local or regional economies confronted with deep structural economic problems, unlocking growth differentials by targeting untapped potentials for employment and entrepreneurship can provide an opportunity to renew themselves. Therefore, it is logical that the... [Show full abstract]
      Article
      July 2017
        In the European Union and its neighborhood, regional development has increasingly come to focus on agglomerations during the last three decades. Notably, during the 1990s and early 2000s, clustering was the major policy focus in regional development. Currently, the concept of smart specialization is applied all over the European Union and is attracting interest in the EU’s neighborhood. The... [Show full abstract]
        Article
        May 2017
          Abstract: In recent decades, numerous cluster associations with public and/or private support have been established to facilitate clusters. These cluster associations have launched a number of activities and services aiming to increase the competitiveness, innovation, and productivity of their members and beyond. At the same time, it appears that many of these associations apply similar... [Show full abstract]
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