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Change from Within: German and Italian Finance in the 1990s
Abstract
Debates surrounding institutional change have become increasingly central to Political Science, Management Studies, and Sociology, opposing the role of globalization in bringing about a convergence of national economies and institutions on one model to theories about ‘Varieties of Capitalism’. This book brings together a distinguished set of contributors from a variety to examine current theories of institutional change. The chapters highlight the limitations of these theories, finding them lacking in the analytic tools necessary to identify the changes occurring at a national level, and therefore tend to explain many changes and innovations as simply another version of previous situations. Instead a model emerges of contemporary political economies developing in incremental but cumulatively transformative processes. The contributors shoe that a wide, but not infinite, variety of models of institutional change exist which can meaningfully distinguished and analytically compared. They offer an empirically grounded typology of modes of institutional change that offer important insights on mechanisms of social and political stability, and evolution generally. Beyond Continuity provides a more complex and fundamental understanding of institutional change, and will be important reading for academics, researchers, and advanced students of Political Science, Management Studies, Sociology and Economics.
... From this perspective, the expectation is that banks are more likely to cooperate amongst themselves and with the public authorities in order to deal with ailing counterparts if domestic banks are homogenous in terms of business models and overall financial health. For instance, in the heterogeneous German banking system, three pillars of different types of banks fiercely compete with each other and have distinctive protection schemes (Deeg 2005). These structural differences could help explain why German banks did not cooperate with each other, nor with the German public authorities in order to deal with ailing banks during the international financial crisis. ...
... On the eve of the sovereign debt crisis, the structure of the Italian banking sector presented a number of distinctive features that reflected both the successes and failures of the regulatory changes initiated in the early 1990s (Ciocca 2005;Deeg 2005). One of the major achievements of these reforms was the privatisation of the sector: Italian banks entered the crisis as private entities 3 in contrast to Germany, for example, which had a considerable number of public banks (Epstein & Rhodes 2014). ...
This article examines the management of the recent banking crisis in Italy. In particular, we investigate the changing coalitional dynamics among Italian banks with a view to identifying the conditions under which banks are more likely to share the costs of crisis management. We argue that banks’ preferences are significantly shaped by the institutional context within which they operate. In particular, the establishment of Banking Union in the European Union (EU) significantly weakened the traditional coalitional dynamics among Italian banks by injecting uncertainty about the distributional effects of crisis management policy solutions.
... They may adapt to prevailing institutions, a process that differs from reproducing those institutions (Thelen, 2003). Even prevailing institutions are not necessarily reproduced automatically; political actors must cultivate them (Deeg, 2005 ). Thus, institutional changes may not lead to the " replacement " of old institutions (Streeck & Thelen, 2005). ...
... Actors associated with old institutions may create " bounded change " within old paths (Weir, 1992). As a result, institutional changes can occur endogenously within institutions (Deeg, 2005) and can be evolutionary in the absence of external shocks (Schwartz, 2001). Thelen (2003) holds that, as a result of political contestation, some old actors may transform themselves in search of new purposes (conversion); and Schickler (2001) notes that new elements may be grafted onto old institutions (layering). ...
The nonprofit sector has become an arena of increased political contestation. Rather than being shaped passively by global trends and broader power relationships among social classes and organizations, the nonprofit sector and the larger civil society have increasingly become forces shaping social and political developments. To account for how these forces unfold in different countries, one needs to go beyond social origins theory, the power-distributional account, and sociological institutionalism and draw on concepts from historical institutionalism that explicitly consider how dynamic interactions between institutional forces and long-term historical changes shape patterns of political contestation. By examining the developmental trajectories of environmental NGOs in South Korea, this article explains how political contestation-embedded within institutional and historical processes of critical junctures and path dependence-may shape developmental trajectories of the nonprofit sector.
... IOs are constituted by patterns of institutions (legitimised rules, norms and expectations: Hall, 1986; Thelen and Steinmo, 1992; Carter, 2008a) and actors which have emerged through the stabilised over-lapping of functional (for example, production) and regulatory activity (Jullien and Smith, 2008). They are co-produced by public and non-public actors over time and structure actor strategy within their own 'logics' of action (Pierson, 1996; Deeg, 2005). Consequently, we part company from scholars of devolution who either employ the term 'sector' in an undefined way and study 'sectors' for purely functionalist reasons (because of Keating, 2005), or as 'context' and illustrations for general arguments about devolution (for example, Cairney's treatment of the tobacco industry, 2007a, b). ...
Generating systematic knowledge on devolution's impact upon polity-building in Scotland remains a considerable challenge. Convinced that a theory-driven method is essential, this article advocates analysis of change in the Scottish polity through a new approach rooted in institutionalist theory to studying the regulation of sectors of public and collective action. Labelled `territorial-institutionalism', this approach studies actor usages of representations of territory as key political resources for legitimising the institutionalisation of sectors and, thence, of polity-building. In applying territorial institutionalism to two sectors - whisky and fisheries - we identify a plurality of actor evocations of territory which fall into three categories: polity-building, sector-building and identity-building. Moreover, we distinguish three political usages of these evocations in the (re-)institutionalisation of each sector post-devolution: (re-)setting the boundaries of their regulatory instruments; modifying the access of stakeholders to decisional arenas; and legitimising/de-legitimising policy instruments and actor influence during conflict. We conclude first that devolution has facilitated change in both sectors. However, inter-sectoral differences highlight the importance of how actors link different representations of territory. Second, we argue that analysis cannot be limited to Scottish arenas, but must include the engagement of Scottish actors in extra-national arenas in general, and those of the European Union in particular.British Politics (2009) 4, 315-340. doi:10.1057/bp.2009.9
Firmaların ve rekabetin dinamiğini belirlemede, yapıları ve stratejileri etkilemede içerisinde bulunulan toplumsal bağlam önem kazanmaktadır. Bu çalışmada da Whitley’in ulusal iş sistemi yaklaşımı çerçevesinde birbirinden farklı iş sistemine sahip olan ülkelerin, iş sistemlerini biçimlendiren temel kurumlar üzerinden, ekonomik çıktılarını karşılaştırılması amaçlanmıştır. OECD’nin 2017-2018 Küresel Rekabetçilik Raporu’nun esas alındığı çalışmada, her bir iş sistemine örnek teşkil edecek 6 ülke (Hong-Kong, İtalya, Birleşik Krallık, Güney Kore, Almanya ve Japonya) seçilmiştir. Bu ülkelerin seçilmesinin sebebi çalışmanın kuramsal çerçevesini oluşturan Whitley’in belirlediği ülke tanımlamaları olmalarıdır. Devletin piyasaları düzenleme yoğunluğu, sermaye piyasaları yoluyla finansallaşma, ücretlerin belirlenme esnekliği ve yetki devri isteği göstergelerine bakılarak, ülkelerin ekonomi-politik bağlamları da göz önünde bulundurularak, incelenmiştir. Araştırma sonucunda tarihsel bağlamın ve ekonomi-politik yapıların etkisiyle ülkelerin farklı iş sistemlerine sahip olması ülkelerin rekabetçilik düzeyleri açısından da farklılaşmalarına yol açmıştır. Ayrıca, bu raporu daha da önemli kılan nokta, ülke sıralamasında en rekabetçi olarak gösterilen ülkelerin bile alt göstergeler açısından diğer ülkelerin gerisine düşebilme ihtimalidir.
This paper explores the extension of collective governance to sectors without collective governance tradition. We introduce the concept of state‐led bricolage to analyze the expansion of the Swiss apprenticeship training system – in which employer associations fulfill core collective governance tasks – to economic sectors in which training had previously followed a school‐based and state‐oriented logic. In deindustrializing societies, these sectors are key for the survival of collectively governed training systems. Through a mixed‐methods analysis, we examine the reform process that led to the creation of new intermediary organizations that enable collective governance in these sectors. In addition, we compare the organizational features of these organizations with the respective organizations in the traditional crafts and industry sectors. We find that the new organizations result from state‐led bricolage. They are hybrid organizations that reflect some of the bricoleur's core policy goals and critically build on the combination of associational and state‐oriented institutional logics.
Agency has received much attention in recent historical institutionalist theorizing of change processes, but remains largely disconnected from questions about mechanisms that stabilize institutions. To help fill this lacuna, the paper presents bricolage as one key mechanism through which actors stabilize an institutional setup. It suggests that institutions may be defended by keeping intact the institutional logic on which the incumbent coalition is based, but rearrange the salience of the ideational and institutional elements that make up the existing institutional setup. The empirical relevance of the argument is supported through a case analysis of a 1980-reform that could have changed the face of German corporatism, but never was, namely the policy of collective equity funds (Tariffonds). Through process tracing, we explain the fate of the reform with the effectiveness of a last-minute intervention based on a bricolage of the extant institutional logic.
This paper explains the extent to which the export-led growth strategies deployed in Germany and Italy turn out to be self-defeating. The problem lies in the impact of those strategies on the banking systems of the two countries. The German banks become more international; the Italian banks become more locally oriented. In turn, these changes create tensions that cannot be reconciled easily within the institutional framework that made the export-led growth model successful in the first place. The paper also seeks to explain why tensions in export-led growth models today do not always resemble those it experienced in the past – and it examines what are the implications both for how the two countries responded to the economic and financial crisis and how they are responding to the economic consequences of the novel coronavirus pandemic.
The Porto Maravilha project comprises the revitalization of the port area of the Rio City and has large dimensions: it’s the largest Public-Private Partnership (PPP) and the largest Consortium Urban Operation (OUC) in the country. Such proportions have attracted great interest and visibility, with the project being extensively debated in the media, in the political and governmental sphere, and in the academic environment. Despite all this attention, however, few analyzes focus on the role of the federal body responsible for much of the land ownership present in the project, the Secretariat of Federal Property (SPU). The purpose of this work is to analyze the institutional trajectory (s) of the SPU, and how it was cultivated, based on the performance of its superintendence in Rio de Janeiro (SPU-RJ) linked to the Porto Maravilha project. It is assumed here that change depends on investment by the endogenous actors and bifurcation illustrates the fact that these investments, explained in terms of cultivation or neglect, are not exclusive, because the same actors cultivate or neglect certain trajectories depending on the interests at stake. This is the main hypothesis of this research: the coexistence of institutional trajectories in SPU-RJ.
It has long been overlooked that factions of finance such as banks and insurers can have opposing policy interests. This paper is concerned with the preferences and strategies of private financial actors in the context of private prefunded pensions. To capture the “tug of war” among these actors, this paper identifies their different financial business models (insurance- and investment-orientation), political roles (financial incumbents and challengers), and levels at which infighting may occur (political and product-market level). For the German case, it shows that product-market competition among financial incumbents and challengers over retirement savings products only turned into competition politics during the 1990s, when shifting political winds provided an opening to insert path-shaping instruments in line with the program of finance capitalism. Financial actors’ preferences are not a derivative of economic or functional incentives, but socially embedded in that they are crucially shaped by interactions with their competitors and the political environment. The analysis disentangles the complex web of competition, cooperation, and ownership among factions of finance and discerns their genuine preferences from those strategically adjusted to context. This sheds doubt on functionalist explanations of (pension) financialization and enhances our understanding of how financial actors form and pursue their preferences.
The economic decline of Italy between the mid-1990s and the outset of the financial crisis is a critical case in European political economy because its model of capitalism was deeply reformed at the time when its decline commenced. This paper argues that the Italian economic stagnation cannot be attributed to the lack of market-friendly reforms in a globalized economic context, as argued by previous literature. Instead, Italian economic decline is a consequence of institutional change which on the one hand has destroyed previous institutional complementarities, and on the other hand has led to an incoherent, or ‘hybrid,’ capitalist setting. Under the lenses of the Varieties of Capitalism approach, this paper reviews the main reforms in the fields of corporate governance and finance as well as in the labor market. It shows that such reforms established new institutions alternatively apt to support both strategic coordination and market coordination, resulting in institutional incoherence, and mixed incentives. In the short-run, incoherent reforms have reduced the availability of capital to SMEs; in the longer-run, they failed to give actors incentives to pursue innovation. This paper contributes theories of economic growth/decline focused on the supply-side of the economy and it is compatible with other – non-rival – explanations focused on the demand-side.
The financial foundation of Germany’s manufacturing success, according to the comparative capitalism literature, is an ample supply of long-term capital, provided to firms by a three-pillar banking system and ‘patient’ domestic shareholders. This premise also informs the recent literature on growth models, which documents a shift towards a purely export-led growth model in Germany since the 1990s. We challenge this common assumption of continuity in the German financial system. Export-led growth, characterised by aggregate wage suppression and high corporate profits, has allowed non-financial corporations to increasingly finance investment out of retained earnings, thus lowering their dependence on external finance. This paper documents this trend and shows that business lending by banks has increasingly been constrained on the demand side, reducing the power – and relevance – of banks vis-à-vis German industry. The case study suggests a need for students of growth models to pay greater attention to the dynamic interaction between institutional sectors in general, and between the financial and the non-financial sectors in particular.
While previous research on the impact of the economic crisis on
EU policy has primarily focused on the internal market and
financial market regulations, the effect on public procurement
has so far been neglected. This lack of attention is surprising.
Public procurement accounts for approximately 14% of the EU
GDP and involves over 250.000 contracting public authorities.
Therefore, procurement is considered essential for lifting the EU
out of the crisis by promoting competitiveness and growth.
Nevertheless, public procurement reflects contradictory developments.
Whereas the European Commission strives for greater
harmonisation, member states often focus on national priorities.
By comparing the old and new procurement regimes through
the lenses of historic institutionalism, this article demonstrates
that the EU managed to enhance harmonisation despite tendencies
of increased national protectionism. The article finds
that procurement became a much more prominent policy
instrument for greater market integration subsequent to the
economic crisis.
In the following, we examine the encounter between business management models and professional values when organizational innovations are introduced in a Norwegian hospital. The management model is based upon ‘value-based health care’ (VBHC). We argue that the value perspectives have worked as symbolic signals for work practices. However, institutional values and medical considerations have also guided the organization of clinical work. Being a pragmatic blend of the business management model for cost- effective health work on the one hand, and professional values on the other, the value concept appeared as a hybrid organization where different institutional logics are combined.
The article deals with the issue of the French financial system design based on a historical analysis of the development of the fund management industry. It recounts how the main banks have become leaders in the global asset management industry. This success relies on a long-term institutional evolution towards a hybrid model and the ongoing close relationships between banks and the State since the end of World War II. The establishment of a friendly institutional framework for the bank intermediation expansion was rooted in the seizure of power by reformist civil servants in the late 1950s and the early 1960s, who would later become heads at the Treasury and the main banks. We also argue that the State’s ability to develop new forms of interventions, especially during financial liberalization and European construction, has been crucial in the development of a competitive fund industry. Finally, we show that the State’s and banks’ interests have driven the hybridization process of the fund sector and that the fund sector serves primarily the State’s interests and the funding needs of the financial sector at the expense of the real economy.
The contemporary dynamics of inequality are connected rather to the imbalances in the distribution of income “at its source” than to the eneffectiveness of the redistribution devices. This paper shows that the processes of financialization of firms – i.e. the tendency of firms to pursue financial accumulation strategies, or anyway to pursue the maximization of return on capital for investors in the short term – enrich financial and managerial elites, whilst they trigger a decline of wages. The empirical analysis, specifically referred to the Italian case, considers both the accumulation strategies of large non-financial firms, and the effects of the “short-termist turn” of economic players in the foundational economy.
How do institutional logics travel within an economy? Employing insights from historical-and ideational institutionalist theory, this paper offers a novel understanding of change dynamics as driven by actors' creation of institutional interlinkages within a political economy. It develops the causal mechanism of 'invasion from within', consisting of a three-stage process: The progressive weakening of a policy paradigm within one institutional site coinciding with a strengthening of the policy paradigm in another; the building of a coalition within the exporting field; and the use of framing strategies to 'localize' adjacent logics of action and delegitimize adversarial coalitions. The analytical purchase of the argument is corroborated through process tracing of the German pension paradigm shift during the 1990s, showing that ideas about private capital formation developed in finance were redirected toward old-age provision and strategically transferred to the pension arena by a coalition of actors from the German finance domain.
The aim of this paper is to evaluate the impact of the foreign Institutional Investors arrival in the German quoted firms’ capital structure, and the broadcast of the “Shareholder Value” discourse, on the social reproduction process of the German managerial Elites. In this sense, we have assembled a panel of 25 quoted firms. Our study is from 1990 to 2010. Our paper is organized in three parts. First, we will clarify two elements of pressure that the German capitalism has to bear, namely (a) the sudden arrival of the foreign Institutional Investors in the ownership capital structure, and (b) the reform of corporate governance principles. Then, we will estimate their effects on the sociology and the nomination process of the presidents by analyzing their school trail, the “in-house career” pattern, and the gap between the presidency of the management board and the presidency of the supervisory board. We will try to localize the continuities, inertias and changes. In fine, we will focus our attention upon the remuneration problematic. We are in the presence of a complex combination of inertia and change. However, the recent adoption of some market mechanisms doesn’t reveal an abrupt change.
This article is concerned with the genesis of German financial liberalisation. A refined inventory of financial system change – including new meso-level data on finance pattern and the marketisation of banking – reveals a varied pattern of change across German finance. It is argued that this financial diversification can only be understood with careful reference to the underlying ideational factors. An analytical narrative traces how technocratic ideas of financial modernisation during the 1980s began to open up space for the political program of finance capitalism to absorb liberal and leftist discontents with insider control and bank dominance. Upon reaching a tipping point of discursive dominance, the program was distinctly adopted across the political economy as the result of compartmentally different political, ideational and structural factors; creating a non-hegemonic financial paradigm that became identifiable in the face of recent crises. By developing analytical steps that link incremental and dynamic theories of institutional change in a conceptual framework of belief shifts, the paper contributes to efforts of adapting existing models of change to complex domains and accounting for the dynamic nature of the paradigm-generating process. The findings inform the larger debate about internal capitalist diversity and the coherence of national economic models.
Purpose
Much has been said about institutional change and the forms it can take, whether it is abrupt or incremental, path breaking or path dependent. This strand of research is highly relevant in times of welfare institutional reforms and changes. A puzzle, however, remains, and it concerns the empirical phenomena that there might be institutional inertia despite seeming change. One reason for this remaining puzzle is, as argued here, that the ongoing theoretical reflections have a certain blind spot: “institutional constellations” and their characteristics. The purpose of this paper, therefore, is to analyse the “layering” of a welfare institution which results in an institutional constellation.
Design/methodology/approach
Such newly established institutional constellations, though they look roughly similar and are formed of comparable ingredients, can differ profoundly between themselves. This could be due to the fact that the characteristics of institutions depend on the regulating principles (the “spirit”) implemented in them. To validate this hypothesis, the author analyses in depth the institutional layering in two traditionally different social protection systems: the Dutch and the German pension systems.
Findings
In both cases, as the author shows, the traditional regulating principles are also implemented in the newly established institutional constellation, so that in the end pension systems do not change but differ as they did before.
Originality/value
The empirical phenomenon of institutional inertia despite seeming change has not yet been explicitly addressed. This is the case since the ongoing theoretical reflections have a certain blind spot: “institutional constellations” and their characteristics which are the focus of this paper.
For nearly two decades, scholars in international business and management have explored the implications of institutional voids for firm strategy and structure. Although institutional voids offer both opportunities and challenges, they have largely been associated with firms’ efforts to avoid or mitigate institutional deficiencies and reduce the transaction costs associated with operating in settings subject to those institutional shortcomings. The goal of this special issue is to advance scholarship on this topic by (a) exploring institutional voids that are new to the literature, (b) providing a deeper assessment of the different ways in which firms respond to these voids, and (c) utilizing diverse disciplines and theoretical approaches to do so. In this introduction, we first review and synthesize extant research on institutional voids, tracking the evolution of institutional void scholarship since the inception of the concept (Khanna & Palepu, Journal of Economic Literature, 45(2):331–372, 1997) and providing our perspective on its contributions and limitations. We then summarize the contributions of the articles included in this special issue. In addition to identifying an array of institutional voids – economic and social – the articles highlight four different strategies for responding to them: internalization, substitution, borrowing and signaling. Drawing on these, we develop new insights on the implications of institutional voids for firm behavior. We conclude with suggestions for future research.
Recent institutionalist scholarship has established links between the liberalization or “disorganization” of capitalism and shifts in economic actors’ “logic of action” towards opportunism. Yet, a more general theoretical treatment of “logics of actions” and their links to specific institutional contexts is lacking. This paper proposes to link a theory distinguishing three “logics of action” – opportunism, enlightened self-interest and strong solidarity – to Hopner’s typology of capitalist institutions – organized, coordinated, and liberal. It theorizes the interactions between these logics and the social mechanism – goal signaling – that can explain a shift from one logic of action to another, potentially leading to change from one type of institution to another. An empirical example shows that such a theory furthers our understanding of the micro-foundations not just of liberalization, but also of the contrary evolution, i.e. the (re-)embedding of capitalism.
In comparative political economy, the patience of capital investment has often been explained with the political activity of stakeholders. Such scholarship attributes investment preferences to either set assumptions about what various actors are likely to want from their pension systems or to macro-level institutional factors. Comparing the preferences of business and labor actors in the occupational pension systems in Finland, the Netherlands, and the USA, we argue that preferences are better explained more dynamically and emerge from meso-level institutional forces. We find that financing needs and capacities, governance capacities and financial regulations explain changes in labor and business preferences with regard to fund investment. In each of the cases, a combination of these three institutional factors explains a preference shift toward more varied and more impatient investing.
Organizational learning is a conceptually rich construct that can inform understandings of a wide range of organizational phenomena. The field of higher education, however, lacks a sufficient body of empirical research on organizational learning in colleges and universities. Moreover, the limited set of organizational learning publications in higher education is weighted heavily toward the functionalist paradigm. This lack of paradigm diversity can be problematic in terms of how the organizational learning construct is applied to practice. In the context of the corporatization of higher education, where the authority of central management has been strengthened, functionalist approaches to organizational learning can reinforce top-down power dynamics and exacerbate tensions between faculty and administrators. This chapter calls for higher education researchers not only to conduct more studies of organizational learning, but to do so from the vantage point of multiple research paradigms.
First, the chapter discusses how organizational learning is relevant to the unique contexts of higher education institutions. Second, the chapter examines the wide variety of definitions used in the organizational learning literature, and highlights some of the paradigm debates that have emerged among scholars in this field. Next, the chapter explains and critiques some of the prominent functionalist theories that have guided the study of organizational learning. To complement these long-standing functionalist perspectives, the chapter introduces several organizational learning theories that have emerged in other paradigms. Finally, the chapter concludes with a proposed research agenda for studying organizational learning in colleges and universities.
Der „Governance“-Begriff hat in der Politikwissenschaft, der Soziologie und auch der Ökonomie in den letzten Jahren wachsende Popularität erfahren. Im Kern richtet sich das Interesse der Governance-Debatte auf die Art und Weise, wie kollektives Handeln in der Politik, der Gesellschaft oder auch der Ökonomie koordiniert wird und wie leistungsfähig unterschiedliche Formen institutioneller Arrangements diesbezüglich sind (vgl. Benz 2004, Lange/Schimank 2004, Miller 2005). Der auf die institutionelle Steuerung der Wirtschaft gerichtete Zweig der Governance-Forschung geht davon aus, dass wirtschaftliche Transaktionen nicht nur über den Markt, sondern durch eine Vielzahl von nicht-marktförmigen Koordinationsstrukturen organisiert werden können. Neben der Unternehmenshierarchie gerieten Netzwerke, Verbände und natürlich auch der Staat als Institutionen der Koordination ökonomischer Transaktionen in den Blickpunkt der Betrachtung.
What explains regulators’ preferences concerning the Single Supervisory Mechanism (SSM)? The paper answers this question by providing an alternative account of the creation of the SSM using an institutionalist perspective. It is argued that the creation of the SSM does not simply reflect the material interests of governments and domestic financial firms, but that regulators’ positions were also significantly affected by the institutional environment in which they operated. Two characteristics of domestic supervisory governance are identified: the institutional responsibilities of banking regulators (microprudential and/or macroprudential) and the fragmentation of supervisory and monetary policies. The empirical analysis demonstrates the relevance of these factors for shaping regulators’ preferences both within and across countries.
There is an implicit historical institutionalist agreement within academic literature on Scottish devolution: Institutions and history are relevant for explaining how the Scottish institutions evolved and how they shaped politics. However, there is disagreement on the question to what extent the devolution reforms, which started in 1997 and transferred powers from UK institutions to newly created Scottish institutions, form a real break with the previous institutional settlement. It is also criticised that studies on devolution highlighted the explanatory power of history, but without elaborating what they actually mean by history matters and without theorising on the issue.
My paper will address this criticism by discussing three different conceptual approaches and by suggesting an explicit historical institutional approach for the study of devolution. It provides a dynamic understanding of institution and combines the concept of path dependency and the theory of gradual change.
The co-existence of multiple, often contradictory, institutional demands pose challenges to organizations. Despite the intriguing context that multinational enterprises (MNEs) present for the study of organizational action to such demands, research has focused on organizational fields. To more deeply consider the MNE context, we argue that MNEs offer an opportunity to examine the role of society in the ‘management' of multiple institutional logics. Further, we highlight organizational attributes such as economic ties, foreignness, and location strategy that filter institutional complexity in the context of MNEs. The papers in this Special Issue explore how the dynamic interaction between MNEs and the varying institutional demands across their multiple environments creates avenues for active agency. This article is protected by copyright. All rights reserved.
How may we understand the occurrence of gradual but significant change following economic crisis? Theories of gradual institutional transformation offer important insights to analyses of long-term institutional change, but have so far shied away from dealing with institutional change during and following crisis, leaving the issue to more traditional critical juncture models. Instead of seeing gradual institutional change originating only in the efforts of rule takers to circumvent existing institutions – potentially leading to gradual change over longer periods of time – the paper suggests that in more abrupt processes of change characteristic of economic crisis, rule makers may also reinterpret the meaning of rules and redeploy them under significantly altered circumstances leading to gradual change. The paper suggests that the concept of bricolage is useful for understanding how policymakers create new institutional setups through the re-ordering of existing institutional elements. The empirical relevance of these arguments is demonstrated with a study of post-crisis special bank insolvency policies in Denmark and the United States, showing how in both polities new institutions were created from existing institutional elements.
Recent institutional approaches have granted actors more strategic space in coping with their structural environment, but they largely neglect to conceive actors as social entities, thereby reducing the relation between actors and institutions mostly to interaction effects. This article underscores the dialectical and mutually constitutive relation between actors and institutions by taking a more actor-centred perspective. Empirically, the article analyses the professional socialization of corporate leaders in Germany in the context of the changing face of German capitalism. Drawing on insights from the literature on social agency and the sociology of management, it is argued that the professional socialization of corporate leaders, which facilitated a more consensus orientation, persisted over a long period, but eroded after the 1980s. The more conflictual interpretation of institutions and economic relations by today's corporate leaders is not only linked to (internal and external) political and economic structural changes but also to the managers' new professional experience.
Since the early 2000s, scholars from a variety of disciplines have used the concept of financialization to describe a host of structural changes in the advanced political economies. Studies of financialization interrogate how an increasingly autonomous realm of global finance has altered the underlying logics of the industrial economy and the inner workings of democratic society. This paper evaluates the insights of more than a decade of scholarship on financialization. Three approaches will be discussed: the emergence of a new regime of accumulation, the ascendency of the shareholder value orientation and the financialization of everyday life. It is argued that a deeper understanding of financialization will lead to a better understanding of organized interests, the politics of the welfare state, and processes of institutional change.
This paper sets out to explain why Spain experienced a full-fledged sovereign debt crisis and had to resort to euroarea financial assistance for its banks, whereas Italy did not. It undertakes a structured comparison, dissecting the sovereign debt crisis into a banking crisis and a balance of payments crisis. It argues that the distinctive features of bank business models and of national banking systems in Italy and Spain have considerable analytical leverage in explaining the different scenarios of the crises in each country. This ‘bank-based’ analysis contributes to the flourishing literature that examines changes in banking with a view to account for the differentiated impact of the global banking crisis first and the sovereign debt crisis in the euroarea later.
Cet article propose une analyse des stratégies déployées par une association patronale pour s'adapter aux multiples transformations de son environnement. Il montre la capacité des acteurs, considérés comme des entrepreneurs institutionnels, à transformer les institutions du travail pour qu'elles soient plus représentatives de leurs besoins et intérêts. Le cas de l’Association des manufacturiers du vêtement pour hommes au Québec (AMVQ) permet de lever le voile sur le comportement associatif des employeurs et surtout, d'illustrer le potentiel dont l'acteur est investi pour enclencher (ou freiner) le processus de changement institutionnel, et dans ce cas précis, pour transformer son modèle associatif en réponse aux fortes pressions vers la décentralisation des relations industrielles.
This article proposes an analysis of the strategies of an employers’ association in response to the multiple transformations of its environment. It focuses on the capacity of actors, viewed here as institutional entrepreneurs, to transform their work-related institutions to better reflect their needs and interests. The study presents a case study of the Men's Clothing Manufacturers Association (MCMA), which provides insight into the associative behaviour of employers and, more particularly, illustrates the potential for actors to initiate (or to impede) the process of institutional change. In this particular case, MCMA members transform their associative model in order to deal with strong external pressures toward the decentralization of their industrial relations regime.
The article examines internal diversity within national models of capitalism in Europe, with a particular concern with firm financing and corporate governance patterns. It is suggested that a relatively small number of firms have shifted to a new institutional context consisting of common international institutions and practices, while the large majority of firms continue to operate in a more slowly evolving set of domestic institutions or rules. Examining changes since the early 1990s in firm financing and corporate governance, the article finds preliminary evidence to support the thesis of increasing diversity, but also that national patterns of firm finance are still distinct. Rising diversity challenges the long-term viability of coordinated market economies in Europe.
China's HIV/AIDS policy progress displays a long‐term stagnancy followed by a sudden revolution. This article utilizes multiple theoretical tools to interpret this policy progress. It identifies four phases of China's HIV/AIDS policy process: (1) institutional endurance interpreted by path dependence from historical institutionalism; (2) deinstitutionalization explained by Oliver's antecedents of deinstitutionalization; (3) the radical shift interpreted by Kingdon's agenda‐setting theory; and (4) reinstitutionalization and diffusion of institutional theory. This study demonstrates the utility of “creative borrowing”—employing multiple theoretical tools to harness the strengths of each. Doing so reveals that a country's past experience with similar policy issues, the perceived political and moral legitimacy of existing policies, and a country's existing political interests can exert resistance to change. In the presence of multiple pressures for change, policy entrepreneurs who can identify policy windows and couple multiple streams may achieve radical policy shifts.
El progreso legislativo relacionado al VIH/SIDA en China muestra un estancamiento a largo plazo seguido de una revolución repentina. El objetivo de este estudio es utilizar múltiples herramientas teoréticas para interpretar este progreso legislativo. Se identifican cuatro fases en el progreso de la legislación china sobre el VIH/SIDA: (1) Resistencia Institucional, interpretada por la dependencia al modelo del institucionalismo histórico; (2) Desinstitucionalización, explicada por los antecedentes de desinstitucionalización de Oliver; (3) el Cambio Radical, interpretado por la teoría del establecimiento de agendas políticas de Kingdon, y (4) Reinstitucionalización y Difusión de la teoría institucional. Este estudio muestra la utilidad del “préstamos creativo”—el empleo de múltiples herramientas teóricas para aprovechar las fortalezas de cada una. Este estudio revela que experiencias pasadas con temas legislativos similares, la percepción de legitimidad política y moral de las políticas existentes, y los intereses políticos existentes en el país pueden ejercer una resistencia al cambio Dada la presencia de múltiples presiones para el cambio, emprendedores políticos que identifiquen oportunidades en las políticas y combinen múltiples enfoques pueden lograr cambios políticos radicales.
Related Articles: “Civil Society and Immigrant Health Policy Convergence,” (2011): http://onlinelibrary.wiley.com/doi/10.1111/j.1747‐1346.2010.00283.x/abstract “The State, the Market, Economic Growth, and Poverty in China,” (2007): http://onlinelibrary.wiley.com/doi/10.1111/j.1747‐1346.2007.00088.x/abstract “The Search for Legitimacy in Asia,” (2010): http://onlinelibrary.wiley.com/doi/10.1111/j.1747‐1346.2010.00240.x/abstract
Before the 1980s Italy had the typical institutional configuration of Southern European capitalism: an important role for the state in controlling production activities and markets; limited social security; and high employment protection. In the last 30 years, Italian capitalism underwent a process of institutional change moving away from this configuration. The deepest reforms occurred in the 1990s and aimed to achieve a more market-oriented economy to cope with European market integration. Reforms, however, did not succeed in moving the economy towards a ‘liberal market economy’: they simply increased laissez-faire without achieving better co-ordination through markets, leaving Italy with an inefficient model.
This research asks to what extent, how and why two key domains of domestic political economy, namely, macroeconomic policies and financial services regulation, have been Europeanised in Italy over the last decade. The impacts of Economic and Monetary Union and European Union financial services regulation are assessed by tracing the change in interests, ideas and institutions in these policy areas and identifying the causal mechanisms through which change came about (or was resisted). It is concluded that the degree of Europeanisation and its effects have been uneven across different elements of the political economy and some distinctive national features have remained.
This article proposes a reinvestment in political sociology in general,
and the concept of territory in particular, as means of renewing analysis of the
policy–polity dialectic at the heart of the European Union (EU). Drawing on a
sociological theory of decision-making and sectoral regulation, the foundations for
a ‘territorial institutionalist’ approach are developed in order to study political
usages of territory. Specifically, the process of the ‘political assignment of authority’
is examined to analyse three such usages in EU fisheries and wine: justifying frontiers
of policy instruments, defining actor eligibility, politicizing/depoliticizing regulatory
controversies. Overall, we argue that EU studies must re-engage in epistemological
debates over policy–polity linkages in order to produce new and rigorous knowledge
about European integration and its legitimization. For, as our findings suggest, these
processes are not driven by the certainty of ‘rational’ multi-level governance, but are
mediated within sectoral ‘institutional orders’.
This article adds to recent theorizing on gradual institutional change by focusing on how institutional displacement occurs through sequential patterns of change. It argues that under certain conditions, reformist political actors may achieve systemic reform through sequences of incremental reforms. We illustrate our argument through a comparative analysis of systemic health care reforms in two Bismarckian health insurance systems, the Netherlands and Germany. These reforms involved further universalization of health care insurance combined with regulated competition to enhance efficiency. The analyses show that reformist actors anticipated institutional drift and that they employed layering and conversion over time to pave the way for institutional displacement. In the Netherlands, successive sequences complemented each other so that over time the former bifurcated insurance system could be replaced by a universal system. In Germany, successive sequences did not complement each other, and bifurcation is still in place.
This article considers the treatment of institutions and institutional change in relation to finance and macro-institutional comparison in economic geography. Where recent contributions are sympathetic to the ‘Varieties of Capitalism’ framework, this article argues instead for an analytical approach that is attentive to the functions of finance and institutions. While the former contends that institutional function follows from form, the latter reevaluates this relationship. This article illustrates these arguments empirically through a qualitative comparison of the changing form and function of the German financial system and banking sector with that of the USA over the last two decades.
After years of acrimonious debate among leading industrialized states, the G20 reached an agreement in 2009 on the regulation of hedge funds. Anchored in an institutional theory of government action that draws on historical institutionalism, this article finds that cleavages between liberal market economies (US, Britain) and organized market economies (Germany, France) determined the failure to regulate hedge funds in the 1990s, the origins of a self-governance regime in the mid-2000s, as well as the nature of the G20 agreement in 2009. Historical institutionalism offers an important complement to theoretical traditions in international political economy (IPE) that stress the role of states’ market power in shaping international regulatory regimes, especially in accounting for how the evolution of state preferences affect the nature of international regulation over time. The article concludes with suggestions for how historical institutionalism can be extended beyond its typical purview in comparative politics to give analytical and substantive nuance to the study of international market regulation.
The concept of institutional complementarity - that the co-existence of two or more institutions enhances the functioning of each - is frequently used to explain why institutions are resistant to change and why introducing new institutions into a system often fails to achieve the intended objective. This paper utilizes examples from comparative political economy to delineate the concept and address the issue of how to measure the strength of complementarities. It then assesses the utility of the concept for explaining institutional change, concluding that assessing the causal effect of complementarities on change is difficult and ambig- uous. A better understanding requires embedding complementarities within a more general theory of institutional change which takes a broader view of the ways in which institutions interconnect and change.
Die Governance-Diskussion befasst sich mit der Art und Weise, wie kollektives Handeln in der Politik, der Gesellschaft oder
auch der Ökonomie koordiniert wird und wie leistungsfähig unterschiedliche Formen institutioneller Arrangements diesbezüglich
sind (vgl. Benz u.a. 2007; Miller 2005). Der auf die institutionelle Steuerung der Wirtschaft gerichtete Zweig der Governance-Forschung geht davon aus, dass wirtschaftliche
Transaktionen nicht nur über den Markt, sondern durch eine Vielzahl von nicht-marktförmigen Koordinationsstrukturen organisiert
werden können. Neben der Unternehmenshierarchie gerieten Netzwerke, Verbände und natürlich auch der Staat als Institutionen
der Koordination ökonomischer Transaktionen in den Blickpunkt der Betrachtung (Lütz 2006).
Zusammenfassung??An die ?Spielarten des Kapitalismus?-Diskussion ankn?pfend, ?berpr?ft dieser Beitrag die Parteiendifferenzhypothese am Beispiel der gegenw?rtigen aktion?rsorientierten Transformationen der Unternehmenskontrolle. Aus dem Forschungsstand ?ber die Verteilungswirkungen aktion?rsorientierter Unternehmenskontrolle und ?ber die institutionelle Komplementarit?t zwischen Unternehmenskontrolle und Arbeitsbeziehungen ist die Erwartung abzuleiten, dass das Mitte-Links-Spektrum aktion?rsorientierten Reformen besonders reserviert gegen?ber stehen sollte. Tats?chlich zeigt ein Vergleich von Reformen der vergangenen anderthalb Dekaden das Gegenteil. In Deutschland, Frankreich, Italien und den USA waren die politischen Mitte-Links-Spektren die treibenden Kr?fte hinter den aktion?rsorientierten Reformen, w?hrend Parteien der rechten Mitte die traditionellen Institutionen von organisiertem Kapitalismus, Staatskapitalismus, Familienkapitalismus und Managerialism zu bewahren suchten. Die vergleichende Betrachtung erm?glicht die Benennung von Impulsen, die in systematisch unterschiedlicherWeise auf die jeweiligen politischen Spektren der betrachteten L?nder wirkten. Die beobachtete Konfliktkonstellation l?sst sich als ?Konflikt um Managerherrschaft? modellieren. Wir argumentieren, dass dieser neben den von Klassentheorie und Principal-Agent-Ansatz beschriebenen Grundkonflikten kapitalistischer Gesellschaften eine eigenst?ndige Konfliktdimension repr?sentiert, ohne die die Reformen der Unternehmenskontrolle seit den fr?hen 1990er Jahren nicht zu verstehen sind.
The new orthodoxy in studies of policy dynamics is that policy change occurs through a homeostatic process. “Perturbations” occurring outside of an institutionalized policy subsystem, often characterized as some type of societal or political upheaval or learning, are critical for explaining the development of profound and durable policy changes which are otherwise limited by “endogenous” institutional stability. These homeostatic assumptions, while useful for assessing many cases of policy change, do not adequately capture the historical patterns of policy development found in many sectors. The roots of this problem are traced back to the origins of the new orthodoxy in comparative policy research whereby different levels (orders) of policy making have been incorrectly juxtaposed, providing a parsimonious, but sometimes empirically incorrect, view of policy change. Revising existing taxonomies of policy levels provides a superior identification of the processes of change, and uncovers more than one mechanism through which significant policy change can occur. Three of these alternative mechanisms – a “neo-homeostatic” one in which paradigmatic changes occur through endogenous shifts in goals; a “quasi-homeostatic” in which exogenous factors influence changes in objectives and settings; and a “thermostatic” one in which durable policy objectives require that settings adapt to exogenous changes – are discussed.
Recent institutionalist scholarship has theorized the liberalization or “disorganization” of capitalism as the result of shifts in economic actors’ “logic of action” towards opportunism. Little attention has been given to the reverse possibility that shifts in economic actors’ “logic of action” away from opportunism might contribute to “embedding” or “organizing” capitalism. This paper builds on recent scholarship to theorize this scenario and then demonstrate its empirical validity with an historical institutionalist study of the emergence of such a “non-liberal” institution in Switzerland in 1961. The theoretical framework links three “logics of action” – opportunism, enlightened self-interest and strong solidarity – to Höpner’s typology of capitalist institutions – organized, coordinated, and liberal. It theorizes the interactions between these logics and the social mechanism – goal signaling – that can explain a shift from one logic of action to another, potentially leading to change from one type of institution to another.
This article examines the introduction of shareholder value in the German business system. Its main argument is that the idea of shareholder value has been introduced and adopted in different ways by German firms. Divergences are identified both at the discursive level and at the level of organisational structures and practices of corporate governance. They can be understood by applying translation theory to the adoption process. The main tenet of translation theory is that ideas are constantly being modified when they enter new contexts, mainly due to the diversity of actors involved in the process of translation. Translation theory therefore goes beyond traditional diffusion studies, which tend to assume a linear and homogeneous transmission of ideas. The analysis of two German firms, DaimlerChrysler and Volkswagen AG, lends support to the explanatory potency of translation theory.
Several institutionalist orientations such as historical institutionalism, especially its earlier versions, tend to treat institutional or policy change as a result of exogenous factors. Some others, on the other hand, emphasize endogenous sources of change. It has, however, already been shown theoretically and empirically that institutions may face both endogenous and/or exogenous triggers in their lifetime. This study suggests that we should get beyond this fruitless debate and focus on the more intriguing question of why some internal or external triggers create major changes while others do not. This study suggests that some external or internal developments are more likely to trigger change than others because they carry with them certain meanings or ideas for change entrepreneurs. This implies that paying more attention to agency would significantly improve the historical institutionalist account of institutional or policy change. These arguments are illustrated by an analysis of recent institutional changes in the area of cultural rights in Turkey, i.e. in the Kurdish issue.
This essay takes stock of the corporate governance reform efforts in which Italian policy makers have engaged since the beginning of the 1990s. After describing the reform process and its drivers (a concern for Italian equity markets' attractiveness in an increasingly competitive and global framework, scandals, and EC activism) the essay analyses the main reforms to single out what has worked (i.e., what has had a practical positive impact on Italian listed companies' corporate governance) and what has not. After concluding that the corporate governance legal framework has greatly improved as a result of reforms, the essay identifies a number of areas where further steps could be taken to protect investors against the risk of expropriation by corporate insiders. It is also argued, however, that the mother of all corporate governance reforms in Italy would be a change in legal and political culture; legal culture should change so as to put substance over form, function over doctrine. That would be a precondition to effective enforcement of corporate and securities laws. Political culture should change from one that deems it to be the norm for politicians to decide on the allocation of corporate control to one more respectful of property rights. Finally, two modest, bottom-up proposals to help change legal culture in the long run are put forth.
This article proposes a theoretical mechanism for explaining why various components of a welfare state may develop differently, given similar economic, political and ideological contexts. Evaluating welfare state plans as products of political processes, the article looks at the role of political actors and their mistakes, considering how these mistakes shape future social policy-making. The article identifies ‘unexpected consequences’ of institutional design: situations where the decisions of powerful actors lead to the empowerment of their rivals, which in turn may change policies to their advantage. Drawing on a case study from the Israeli welfare state, namely, the introduction and then abolishment of income testing in the Children's Insurance Plan, the article demonstrates how this mechanism may have allowed certain political actors to protect welfare state plans in the face of neo-liberal pressures. It discusses how other political actors can take advantage of similar situations and notes the conditions needed for success.
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