To what extent do some fundamental concepts of New Institutional Economics help explain the governance phenomenon? (original) (raw)
Related papers
2018
This article explicitly deals with and scrutinises what can be perceived to be the core analytical issues and methodological concepts of new institutional economics. New institutionalism seeks to explain not just the origins and evolution of institutions of capitalism, but more generally the scope of the theory is supposed to be universally applicable. Granted this, new institutionalists often interpret the historical emergence and evolution of institutions in abstract logical terms. This is because of the static, timeless, ahistorical and asocial nature of marginalism and neoclassical equilibrium analysis used by new institutionalists. Hence, an attempt is made to propose certain methodological and theoretical premises that can pave the way for the construction of an alternative, qualified theory of institutional arrangements. In this vein, the issues of social structure, social relations, power and conflict come to central stage.
This article explicitly deals with and scrutinises what can be perceived to be the core analytical issues and methodological concepts of new institutional economics. New institutionalism seeks to explain not just the origins and evolution of institutions of capitalism, but more generally the scope of the theory is supposed to be universally applicable. Granted this, new institutionalists often interpret the historical emergence and evolution of institutions in abstract logical terms. This is because of the static, timeless, ahistorical and asocial nature of marginalism and neoclassical equilibrium analysis used by new institutionalists. Hence, an attempt is made to propose certain methodological and theoretical premises that can pave the way for the construction of an alternative, qualified theory of institutional arrangements. In this vein, the issues of social structure, social relations, power and conflict come to central stage.
The Economics of Governance: Transaction Cost Economics and New Institutional Economics1
2000
Governance of economic exchange or transactions is at the core of the growth and development of the economy. Sharing similar intellectual heritages, transaction cost economics (TCE) and new institutional economics (NIE) both seek to understand how exchange is conducted. An economy can be conceptualised as a range of organisations, within each and between each there are a nexus of transactions. Such transactions or exchanges involve the transfer of some or all of the property rights in goods, services, knowledge and assets. Without the ability to engage in economic exchange, a society's growth is limited. While all societies undertake individual (or private) economic exchange, even if the exchange is in the form of barter, individual exchange limits the scale and scope of a society's economic development. Economic development requires multilateral exchange to facilitate the complex division of labour and specialisation of economic activities, where gains from economic exchange in assets (comprising assets, goods, services and knowledge) deliver sustained economic growth. Economic exchange is organised through governance structures, which comprise markets, firms and intermediate economic organisations, such as franchises, licenses, alliances and long-run contracts (see Figure 1.1). TCE matches transactions to their optimal governance structures. NIE places governance structures in their wider institutional context, constraining (or facilitating) the choice of governance structure. Both governance structures and institutions safeguard exchange. To understand the growth of societies, transactions, governance structure and institutions are matched in a discriminating way. When NIE (and increasingly TCE) economists study 3 governance, they analyse how transactions are organised within their institutional context. TCE takes the transaction as the unit of analysis. A transaction is an exchange of property rights in assets, where the property rights gives the owner the right to exclude others from use of the asset, to appropriate rents from the assets and to sell the asset. An economy can be depicted as a nexus of transactions, where transactions are governed by governance structures. There are three categories of governance structures: markets, firms and intermediate contractual arrangements (including franchises, licenses, alliances, long terms contracts etc), as shown in Figure 1.1. TCE uses several words interchangeably, including governance structure, economic organisation, contract and contractual arrangement. The theoretical basis of TCE lies in the work by Coase and the economic literature on externalities, which explains the early focus of TCE on firms and markets. Transaction costs are the cost of operating the market system, including costs related to the search for a party with whom to transact, costs of negotiating the terms of transacting, and costs of ensuring (i.e. monitoring and enforcing) the parties fulfils their exchange obligations. Coase's work sprang from the problem of externalities and social costs, which analysed how competitive firms and individual maximising actions resulted in suboptimal social outcomes. In the absence of transaction costs, Coase 4
Critical Policy Studies
Network governance, which involves an informal and self-regulated set of public and private actors who together address various political and social problems, has substantially altered the institutional landscape concerning the formation and implementation of public policy. A common view is that this has made it possible to enhance pluralism and disperse political power by transferring power from the sovereign state to a wider set of private actors and stakeholders. I argue in this article that we need to analyze network governance in reference to the concept of domination and the theoretical tradition of neo-republicanism. For this purpose, I develop a theoretical framework that specifies five dimensions in which domination may arise and, conversely, be mitigated. An alternative image of network governance emerges which reveals that this type of governance may in fact generate a form of institutional domination that encompasses both citizens and civil society actors due to the arbitrary influence that certain network participants come to exercise upon the life choices of non-participants.
The Institutions of Governance. A Framework for Analysis
SSRN Electronic Journal
Production governance is not detached from the effects it produces. This paper suggests a framework to assess coordination structures and mechanisms in terms of their ability to include the publics and their interests, and to generate socioeconomic value consistently with those interests. To this end, the framework considers a combination of resource integration mechanisms (contract, authority, cooperation) and structures (markets, exclusive organisational structures, and inclusive organisational structures). These combinations are analysed along key features: information, knowledge sharing ad cocreation, involvement and empowerment, as well as alongside some specific functions of governance (legitimacy, cognition, interdependence). The value added is in identifying criteria for appreciating diverse ways of integrating and coordinating resources, and the associated effects, thus providing both scholars and practitioners with a tool to discriminate amongst alternatives.
Research frontiers of new institutional economics
RAUSP Management Journal, 2018
This contribution is about the 'progressive research program', as Imre Lakatos would have called it, initiated by New Institutional Economics. After a short reminder of the 'golden triangle' of concepts and tools introduced by the founders (Coase, North, Ostrom, Williamson) and their followers, the paper turns to a quick overview of the attainments of this paradigm along its dominant branches: organization theory and institutional analysis. The emphasis is on the new paths opening up, with a focus on two key issues: hybrid arrangements, which may well be the prevailing organization of transactions in developed market economies; and intermediate, 'meso-institutions', which likely provide the missing link between the general rules framing socioeconomic activities and the actors operating within these rules. The underlying argument is that whatever happens to the label 'NIE', this research program will remain with us for a long time ahead.
2021
In this paper, through the formulation of an alternate conceptual model, the author links the concepts of functional entrepreneurship and institutions, understood as a set of categories —formal and informal rules— showing a complex, dynamic and interactive character. Furthermore, the aim of this paper is to introduce an exploration of the concept of institutional coordination or positive institutional interaction as an essential element for neo institutional economics analysis. This aim proposes the hypothesis that institutional coordination or positive interaction among formal and informal institutions is the real key element for a theoretically consistent and com prehensive analysis, evaluation and testing of institutions. Moreover, the paper is attached to the «meta» concept of society, represented as a process of dy namic collaboration among individuals. This assumption seeks to suggest an improved theoretical standard through the insertion of concepts taken from classical legal...
Revisiting Institutional Economics: Basic Concepts and Research Directions
2014
In the last four decades there is a renewed interest within the economic theory for the institutional structures. Numerous, multiple and often unpredictable effects of institutions on economic process are differently reflected among the leading schools of economic analysis. Certainly, in this sense, the greatest attention should be given to the stream of economic thought known as institutional economics. This heterogeneous research orientation today is already clearly differentiated on Veblenian and the new institutional economics. The paper will make, in the light of its recorded achievements and the subjects of interest of its main protagonists, a general insight into the new institutional economics.