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institutionsandinstitutionaltheory.pptx
- 2. Institutions and Institutional Theory- Outlines 2 Significance of Institutions Definition of Institutions Characteristics of Institutions Typology of Institutions Major institutionalTheories-Historical, Rational-choice and Normative
- 3. InstitutionsandInstitutionalTheory Significance 3 Inrecentyearsscholarsandpolicymakersalike havepaidincreasingattentiontothecomplex relationshipbetweeninstitutionsandeconomic development. Thereiswidespreadconsensusthatinstitutions mattercruciallyfordevelopment. Theinstitutionalsettingswithinwhicheconomic policiesareformulatedareof crucialsignificance ForAcemoglu(2005), differencesin economic institutionsarethefundamentalcausesof differencesineconomic development. Institutionsaretherulesof thegameina society . Moreformallytheyarethelimitationstofree behavioursimposedontheindividualsbythe
- 4. InstitutionsandInstitutionalTheory Significance 4 Rodrik(2000)presentedoneof themostthroughanalysesof the roleof institutionsintheprocessof economic growth. Theanalysestaketakesintoaccounttherolesof propertyrights, regulatoryinstitutions,institutionsformacroeconomic stabilization,institutionsforsocialinsuranceandinstitutionsof conflict management. LaneandTornell(1996),observedthatmanycountriesthatare richinnaturalresourcessuchasNigeria,TrinidadandVenezuela havedonepoorlyintermsof economicgrowth Intheabsenceof well-definedandprotectedproperty rights, naturalresourcescanbeexploitedbyanumberof powerful political groups. Poorcountriestendtohaveunreliableof legalsystems,corrupt governmentandinsecurepropertyrights. Whereinstitutionsarepoor,entrepreneurssucceedonthe basis of politicalratherthaneconomiccriteria:inefficient entrepreneurs survivewhohappentohavethepersonaltieswithstateofficials thatarenecessarytoprotectagainstexpropriation(Keeferand
- 6. InstitutionsandInstitutionalTheory- significance 6 Mostpoliticalactionsof realconsequenceoccurin institutions.Therefore,itiscrucialtounderstand howthesebodiesactandhowtheyinfluencethe behaviorof individualsworkingwithinthem(Peter 1999). Agenerationof workhasshownthatinstitutions affectvariouspoliticaloutcomes.Forinstance, numerousscholarshaveshownthatelectoral systemsshapethebehaviorsof parties, candidatesand voters Otherscholarshavedemonstratedthatdifferent constitutionalstructuressuchaspresidentialor parliamentarysystemsaffectregimestability ,
- 7. Whatis Institution? 7 Institutionisaslipperyterm,whichmeans differentthingstodifferent authors. For Olsen(1992:7), aninstitutionisthebearerof asetof practices,astructuralarrangementanda configurationof rules,whichdetermineswhatis exemplary behavior. Institutionsaredevisedbyindividuals(micro- level) butin turn constrain their actions. Theyarepartof thebroadsocialfabric(macro- level)butalsotheconduitthroughwhichday-to- daydecisionsareactionsaretaken.Hence, institutionisameso-levelconcept.
- 8. Whatis Institution? 8 Institutionscanbeformalor informal. Formalinstitutionsarenormallyestablishedand constitutedbybindinglaws,regulationsandlegal orderswhichprescribewhatmayormaynot be. Informalinstitutionsontheotherhandare constitutedbyconventions,norms,valuesand acceptedwaysof doingthings,whether, economic,politicalor social. Theseareembeddedintraditionalsocial practicesandculturewhichcanbeequally binding(Leftwich 2006).
- 9. Institutions-Characteristics 9 Structure Themostsignificantelementof aninstitution. Structuremaybeeitherformal(legislature,bureaucracy , politicalparties,mass-media)orinformal(a networkof interactingorganizationsorasetof shared norms). Institutionalismprovidesnoplaceforindividualsandtheir interests. Rather itinvolves groups of individuals in some sortof patternedinteractionsthatispredictablebasedupon specifiedrelationshipsamongtheactors. Stability Theexistenceof somesortof stabilityovertime. Somelegislatormaydecidetomeetinacommittee meeting once in a room in theparliament house. That could beverypleasantbutitwouldnotbeaninstitution. If theyagreetomeetroutinelyafteraspecificperiodoftime atthesameplace,thatwouldbegintotakeontheshape of aninstitution.
- 10. Institutions-Characteristics(contd.) 10 Regulatorof individual behavior Institutions must insomeway (formal/informal)constrain the behaviorof its members.If we resumewith thetrivial instanceof thecommitteemeetingabove,itmaynotbe consideredasaninstitutionif themembersdonotattach importanceandobligationtoattendthemeeting. SharedValues Thereshouldbesomesenseof sharedvaluesand meaning amongthemembersof theinstitution.Thisviewis centralto thenormativeinstitutionalismof MarchandOlsen Legitimacy Institutionsinvolvelegitimacybeyondthepreferenceof individualactors.Theyarevaluedinthemselvesandnot simplyfortheirimmediatepurposesandoutputs. Institution’sstabilityof overtimemaycontributetogainthis legitimacy(Lowndes:1996:182).
- 11. Typology of institutionalism 11 Thereareatleastsevenversionsof ´new institutionalism`currentlyinuse(Peters1999). These are Historical institutionalism, Rationalchoice institutionalism, Normativeinstitutionalism, Empiricalinstitutionalism, International institutionalism, Sociologicalinstitutionalism and Institutionofmediation.
- 12. 12 HistoricalInstitutionalism Historicalgrowthof aparticularOrganization is crucialinidentifyingthedegree of institutionalization. Institutional history enables us understand boththe originof aninstitutionandthepathsbywhichithas developed(Berman 1983). Eachinstitutionhasitsownhistory;itsowntime- dependentlineof developmentandhowasocial systemdevelops,operatesandaffectsitsstructure andcapacitiesforaction(Scott 1995). Institutionalizationissomethingthathappenstoan Organisationovertime,reflectingthe Organisation’sowndistinctivehistory ,thepeople whohavebeeninit,thegroupsitincorporatesand thevestedintereststheyhavecreatedandtheway ithascopedwiththeenvironment(Selznick1957).
- 13. 13 HistoricalInstitutionalism Historicalinstitutionalistsseeinstitutionsas continuities. Astheypointout,institutionsaremeanttobe preservative. Indeed,theemphasisonpathdependenceisanother wayof sayingthatthetransactioncostsof doingthings differentlyisalmostalwaysprohibitivelyhigh,although direconditionsmayreducethemarginalcostsof change. Butif institutionsareaboutpreservation,politicsis aboutmanipulationandleadershipisaboutoverturning constraints.
- 15. 15 HistoricalInstitutionalism Clearly,inanyconceptionof institutions,thecost of changewhetherformalornon-formaland whetherfinancialororganizationalmustbepart of whataninstitution confers. Equally,thepoliticalcostsof tryingtodisturbthe statusquoarefargreaterwherethestruggle involvesmanyactorswithdiversepreferences ratherthanonlyafewwithhomogeneous preferences. So, anysystemthatmakesdecision-making difficulttendstowardthepreservationof existing institutions.
- 16. 16 HistoricalInstitutionalism TheUS Congressbecamewhatitistodaythroughan evolutionof sometwohundredyears.TheBritish parliamenttookitscurrentshapeafteramuchlonger evolutionaryperiodthantheUS Congress. Institutionsrelyuponthelogicof persistenceor path dependencyandoncelaunchedonthatpaththey continuealonguntilsomesufficiently strong social/politicalforcedeflectsthemfromit(Krasner 1984). Trendsrequiresnotonlychangingstructuresbutalso theprevailingmind-setaboutwhattheinstitution should do. Further,publicinstitutionsoncecreatedtendtohave structuralrelationshipswithsocietyandwithpowerful socialactors.
- 17. 17 HistoricalInstitutionalism Institutional Formation- ForHI, whatismainlyof interestisthe construction,maintenanceandadaptationof institutions. Theemphasisof historicalInstitutionalismismuch moreonthepersistenceof organizationsafterthey areformedthanitisonthefactsof theirinitial creation. T osomeextenttheemphasisonembodyingideas inthestructuresthatsupportinstitutionsmaybe takenasadefinitionof theformationof institution. Itcanbearguedthatwhenanideabecomes acceptedanditisembodiedintothestructural
- 18. 18 HistoricalInstitutionalism Institutional Formation- What"may'"'be'''more'‘importantforthequestionof formationinthehistoricalinstitutionalismisthe definitionof whenthatcreationoccurs. Thechoiceof therelevantdatefromwhichto count futuredevelopmentswillbecrucialfor makingthe casethatthoseinitialpatternswill persistand shapesubsequentpoliciesinthepolicy area. Forexample,whenKing(1995)wasconsidering thedevelopmentof welfarepoliticsintheUnited StatesandtheUnitedKingdomhebeganthe analysisfromthepassageof majorpiecesof
- 19. 19 HistoricalInstitutionalism Institutional Formation- Thequestionof whatisadefiningevent,orwhat changesareincrementalandwhatchangesare fundamental,isafamiliarone.Dempsterand Wildavsky(1980),forexample,askthesimple question of whatconstitutesanincrement,asopposed toa more fundamentalshift in policyor a budget. Thefamiliarityof thisquestion,however,doesnot makeitanyeasiertoresolve.Forpurposesof understandinghistoricalinstitutionalism,thequestion becomeswhetherthemovementawayfroma presumedequilibriumpositionoccursbyevolutionor revolution. Bothtypesof changeoccur ,butacceptingthe
- 20. 20 HistoricalInstitutionalism Institutional Change- Historicalinstitutionalismhastreatedchangethrough theconceptof 'punctuatedequilibria'(Krasner,1984). Formostof itsexistence,aninstitutionwillexistinan equilibriumstate,functioninginaccordancewiththe decisionsmadeatitsinitiation,orperhapsthosemade atthepreviouspointof 'punctuation.‘Thesepolicy equilibriaarenot,however ,necessarilypermanentand institutionsareconsideredcapableof changewithinthe contextof theapproach. whenamajorinstitutional(evolutionary)changedoes occurthen,afterthefact,itcanbearguedthatthere wasasufficientforceavailabletoproduceamovement awayfromtheequilibriumandinertiaaffecting an
- 21. 21 HistoricalInstitutionalism Institutional Change- Themodelstatesthatpolicygenerallychanges only incrementallyduetoseveralrestraints,namely the "stickiness"of institutionalcultures,vestedinterests,and theboundedrationalityof individual decision-makers. Policychangewillthusbepunctuatedbychangesinthese conditions,especiallyinpartycontrolof government, or changes in public opinion. Thus policy is characterizedby longperiodsof stability ,punctuatedbylarge—thoughless frequent—changesduetolargeshiftsinsocietyor government. GuncontrolandU.S. federaltobaccopolicyhavealso been found tofollow punctuated changes.Arecent studyby MichaelGivelfoundthatdespiteasignificantmobilizationto changestatetobaccopolicy ,U.S. statetobacco policymakingfrom1990to2003wasnotcharacterizedby punctuatedpolicychange,whichalsofavoredthepro-
- 22. 22 Rational Choice Institutionalism Rationalchoiceinstitutionalismassumethat individualsareinstrumentallypersuadedto maximizetheir utility . Rational-choiceinstitutionaliststhinkof institutionsasasystemof rulesand incentives. Thistheorypermit,prescribeandproscriberules thatisdesignedtoconstrainbehaviour. For rationalchoicetheorists,institutionsare easilychangeable:if correctsetorrulesorthe correctpayoff matrixisselectedthenthedesired outcomecanbe engineered.
- 23. 23 Rational Choice Institutionalism Still,amoreprevalentviewof institutionsasrules— derivedfromeconomicmodelsof cooperation— suggeststhatinstitutionsmaybetheproductof agreementsthatareParetooptimal—thatis,oneparty ismadebetteroff,butnooneismadeworseoff. Logrolls,reciprocities,mutualadvantagesalso producenewinstitutionalarrangements.Andthereisa reciprocalrelationshiphere;thatis,institutionsof certainforms,particularlyonesthatfragmentpower andprovidemultiplevetopoints,arelikelytoinduce log rolling,reciprocities,andmutual backscratching. Suchconditionsmakecoherentchangeordirection andcentralleadershiplesslikely ,allthingsequal, thoughhardly impossible.
- 24. 24 Rational Choice Institutionalism Inevitably ,institutionsadvantagesomeintheshort termanddisadvantageothers,butthelongrun maybeadifferentstory . Thesamerulesandstructuresmay ,overlonger stretchesof time,provideadvantagesor disadvantagestodifferentinterests,indeedeven reversingwhichinterestsareadvantagedor disadvantaged. Theso-calledfilibusterruleof theUS Senate, ironicallytheproductof anefforttocreategreater institutionalefficienciesbydeterringtinyminorities fromtyinguptheSenateindefinitely ,clearlyhelps concertedandsubstantialminoritiesand frustrates
- 26. 26 Rational Choice Institutionalism Individualsandinstitutionsinteracttocreate preferences. Theargumentisevenif individualsmaybecome involvedwithaninstitution,includingonesuchas themarketthatisassumedtobefavorableto individualutilitymaximization,theymustquickly learnmoreaccommodativenormsandaccept institutionalvaluesif theyaretobesuccessfulin thoseinstitutions(North,1990). Asetof rulescanarisewithinorganizationsthat structuresbehaviorandestablishestheboundsof acceptability .Further,theexistenceof thoserules ultimatelybenefitsallparticipants,and perhaps
- 28. 28 Rational Choice Institutionalism Thetheorypositsthatthereisaproblemof ensuringthatorganizations,aswellasindividual bureaucrats,willcomplywiththewishesof political leaders. Thebasictaskof institutionaldesigntherefore becomestodevelopconfigurationsof institutions thatwillensurecompliancebytheirmemberswith thewishesof their'principals‘. ATabulaRasa. Unlikeothermodelsof institutions beingdiscussedhere,therationalchoice perspectiveassumesthatinstitutionsarebeing formedonatabularasa. Theoutcomesof thedesignprocessare
- 29. 29 Normative Institutionalism Normativeinstitutionalismasdevelopedby March andOlsen(1989)underlinestheroleof valuesand logicof appropriatenessindefininginstitution (Peters1999)meaningthatinstitutionscanbe consideredasembeddingrulesandroutinesthat definewhatconstitutesappropriateaction. Thenormsandformalrulesof institutionswill shapetheactionsof thoseactingwithinthem. Institutionsareviewedasindependententitiesthat overtimeshapeapolitybyinfluencingactors’ preferences,perceptions,and identities. Inthissense,institutionsareendogenous.
- 30. 30 Normative Institutionalism Thisapproachcanbereadilycontrastedwith rationalchoiceinstitutionalism:ratherthanaseries of calculatedactionsdesignedtomaximize perceivedbenefit,anygivenactorwithinan institutionwillfeeltosomeextentconstrainedand obligatedbythenormsandrulesof the institution. Logicof appropriatenessspecifieswhat is appropriatefor a particular person or role in a particular situation. Thelogicof ruledrivenmandatoryactionis: “What sort of situation is this? What kind of person(s) am I (are we)? What does a person like myself do in situationlike this?” The“logicof appropriateness”asdefinedby the valuesof theinstitutionprescribesparameters of
- 31. 31 Normative Institutionalism The logics of appropriateness develop over time and through interactions among institutional members. In thissenseitisevolutionarybynature(Peters 1999). NIasitstitlereflectsthecentralroleassignedtonorms andvalueswithinorganizationsinexplainingbehavior inthis approach. Individualsarenotatomisticbutratherareembedded inacomplexseriesof relationshipswithother individualsandwithcollectivities. Theyare,assumedtobealwaysinfluencedbytheirfull rangeof organizationalattachmentsandhencecannot beautonomous,utilitymaximizingandfullyrational individualsassumedby RCI.
- 32. 32 Normative Institutionalism Anotherwaytounderstandthedifferencesthat MarchandOlsenpositbetweentheirapproachto politics andtheRCI is in the diffe rence between exogenous andendogenouspreferenceformation (MarchandOlsen, 1996). ForRCI, thepreferencesof politicalactorsare exogenoustothepoliticalprocess,andareshaped byforcesbeyondtheconcernof theimmediate choicesituation. Fornormativeinstitutionaltheories,ontheother hand,individualpreferencesareshapedtoalarge extentbytheirinvolvementwithinstitutions(see also Wildavsky ,
- 33. 33 Normative Institutionalism Thesetwomodelsaremirroredinthedistinction madebyMarchandOlsen(1989)between aggregativeandintegrativepoliticalprocesses. Theformerformatisinessenceacontractualform fororganizations,inwhichindividualsparticipate largelyforpersonal gain. Thelatterformof organizationcomesclosertothe ideaof aninstitutionasexpressinga'logicof appropriateness,' . Participationinintegrativeinstitutionsis undertakenonthebasisof commitmenttothe goalsof theorganization,oratleastan "acceptance of thelegitimate claimsof the
- 34. 34 Normative Institutionalism ForMarchandOlsen, aninstitutionisnot necessarilyaformalstructurebutratherisbetter understoodasacollectionof norms,rules, understandings,andperhapsmostimportantly routines (1989). Politicalinstitutionsarecollectionsof interrelated rulesandroutinesthatdefineappropriateactionin termsof relationsbetweenrolesandsituations. Theygoontosaythat'institutionshavea repertoireof proceduresandtheyuserulesto selectamongthem.
- 35. 35 Normative Institutionalism Andalsoinstitutionsaredefinedbytheirdurability andtheircapacitytoinfluencebehaviorof individualsforgenerations(1995, p.9). Likewise,institutionsarearguedtopossessan almostinherentlegitimacythatcommitstheir memberstobehaveinwaysthatmayevenviolate theirown self-interest. "Perhaps'themostimportantfeatureof theMarch andOlsenconceptualizationisthatinstitutions tendtohavea'logicof appropriateness'that influencesbehaviormorethana'logicof consequentiality'thatalsomightshapeindividual action.
- 36. 36 Normative Institutionalism Thatis,if aninstitutioniseffectiveininfluencing thebehaviorof itsmembers,thosememberswill thinkmoreaboutwhetheranactionconformsto thenormsof theorganizationthanaboutwhatthe consequenceswillbeforhim-or herself. Perhapstheextremeexamplewouldbethe behaviorof soldierswhofacealmostcertaindeath butstillbehave'appropriately'(Macdonald,1983), orfiremenwhowillinglyenterblazingbuildings becausethatistheroletheyhaveacceptedasa functionof theiroccupationalchoiceandtheir traininginthefireservice.
- 37. 37 Normative Institutionalism This'appropriate'behaviorcanbecontrastedto thatassumedbyeconomicmodels,inwhich individualsareexpectedtothinkfirstwhatthe objectivepay-off willbefor them. Thatis,individualswillmakeconsciouschoices, but thosechoiceswillremainwithintheparameters establishedbythedominantinstitutionalvalues. Thosechoicesalsowillrequirethateachindividual makeaninterpretationof justwhatthedominant institutionalvaluesare;eventhemostthoroughly developedinstitutionswillleavemanyareasof behavioropentointerpretationby individual
- 38. 38 Normative Institutionalism Thiswill,inturn,requiresomemeansof monitoringbehaviorsandreinforcingdominant viewsaboutappropriateness. Thelogicof appropriatenessalsooperatesinless extremesituationsthantheonesoutlinedabove. Inmostcasesthelogicof appropriatenessin public institutionsmaybemanifestedthrough rather ordinaryactivitiessuchasservingtheclient as muchaspossible,ornotengagingincorruption on thejob. Theseareveryroutinestandardsof proper behavior,butinthisnormativeconceptionof institutionsitistheroutineandthemundanethat
- 39. 39 Normative Institutionalism Therefore,therewillhavetobeenforcement mechanismstodealwithinevitablecasesof deviance,butformostdecisionsatmosttimes routineswillbesufficienttogenerateappropria te' pe rformance . Pe rhaps as important is the simple fact thatthe presenceof routinesmayhelptoidentifywhatthe exceptional,andthereforetheimportant,casesfor anyorganization are. Theseexceptionalcasesmaycreatethecommon lawwithinorganizationsthatdefinewhatisreally appropriateandwhatis not.
- 40. 40 Normative Institutionalism Theoperationof thelogicof appropriatenesscan beseenasaversionof roletheory .Theinstitution definesasetof behavioralexpectationsfor individualsinpositionswithintheinstitutionand thenreinforcesbehaviorthatisappropriateforthe roleandsanctionsbehaviorthatis inappropriate. Someaspectsof therolemayapplytoall membersof theinstitution,whileother expectationswillbespecifictothepositionheldby an individual. Further, like organizational culture there may be several versions of the role among which a role occupantcanpickandchoose- thinkof the
- 41. 41 Normative Institutionalism Thus,whenindividualsareinductedintoan institution,theywillinmostinstanceshavebeen pre-socializedbytheirmembershipin thesociety . Somecommonnorms- reciprocity ,honesty , cooperation- thatareimportantforpublicactors arelearnedasapartof thegeneralsocialization process. Routinesaremeansthroughwhichindividual membersof aninstitutioncanminimizetheir transactionanddecision-makingcostsduring participation. Further,theyaremeansthroughwhichthe institutioncanenhanceitsownefficiencyand
- 42. 42 Normative Institutionalism AsMarch and Olsen pointout,allorganizations developroutinesandthenemploythoseroutines asthemeansof monitoringandreactingto changeswithintheirtask environments. Insomewaytheroutinesdefinethenatureof the organization- policedepartmentswillhave differentroutinesthandofiredepartments, althoughbothareinthe'publicsafety'business. Asroutinesbecomemoreestablishedandhave somegreatermeaningattachedtothemthe degreeof institutionalizationwithinthestructureis increased.
- 43. 43 Normative Institutionalism Theabovearepartialanswerstothequestionof the originsof institutions,butonlypartial ones. Forexample,whileindividualsmaybringwiththema varietyof valueswhentheyjoinmostinstitutions,the answerdoesnotappearverysatisfyingforinstitutions thathaverulesandvaluesthatarequitedifferentfrom thosefoundinthesurroundingsociety ,butwhichyet performimportantservicesforthat society . Again,themilitaryorquasi-militaryorganizations appeartobethebestexampleshere.Evenwithin more'normal'politicalinstitutionsthepersonal ambitionof politiciansmaynotcorrespondverywellto societalnormsabouttheroleof thepublicofficialasa servantof the people.
- 44. 44 Normative Institutionalism Inparticular,BrunssonandOlsenarguethatthe greater thedegreeof disjuncturebetweenthevalues professedbyaninstitutionanditsactualbehavior, andthevaluesheldbysurroundingsocietyandthe behaviorof theinstitution,themorelikelywill changebe. Further,in this view ,changeisrarelytherational,planned exercisefoundin strategic plans,butrathertendstobeemergentandmore organic.
- 45. 45 Normative Institutionalism IndividualandInstitutional interaction Itisclearhowinstitutionsaffectindividualbehaviorin normativeinstitutionalism.Institutionshavetheir 'logicsof appropriateness'thatdefinewhatbehavior isappropriateformembersof theinstitutionand whichbehaviorisnot. Membersof thatinstitutionviolatethosenormsonly attheirperil. Atraderwhoviolatestherulesof themarketrisks beingexcludedfromsubsequentdeals,justasa memberof Parliamentwhoviolatesnormsabout partyloyaltymay'havethewhipwithdrawn,'and
- 46. 46 Normative Institutionalism Inorderforthislogicof appropriatenesstobe effectivetheremustbesomeformof enforcement.Asnotedabove,mostinstitutions dohavethosemeansof enforcement,evenif theyhavenoformalizedmeansforadjudication or sanction. Therearealwaysinformalmeansthroughwhich memberscanbepressuredto conform. Partof theargumentforpositinganormative basisforinstitutionsisthatineffectiveinstitutions thesanctioningandenforcementprocessesare builtintothestructuresthemselvesthrough
- 47. 47 Normative Institutionalism TheMarchandOlsenperspectiveproposedseveral importanttheoreticalcomponentsforpolitical scienceasadiscipline. Onesuchelementwasthereturntoitsinstitutional rootsandtoasenseof thecollective,asopposedto individual,rootsof politicalbehavior. Individualsareimportantintheirmodelandstill ultimatelymustmakethechoices,butthosechoices arelargelyconditionedbytheirmembershipina numberof political institutions. Inthisviewthestructure-agencyproblemisresolved throughtheindividualacceptedandinterpretingthe valuesof institutions.
- 48. 48 Normative Institutionalism A second crucialelementof theMarchand Olsen view is that the basis of behavior in institutions is normativeratherthan coercive. Ratherthanbeingguidedbyformalstatedrules themembersof institutionsaremoreaffectedby thevaluescontainedwithintheorganizations. There is no independent means of ascertaining whether it was values that produced behaviors, and no wayof arguing thatitwasnottheroot of thebehavior.