L 6 Institutions at different levels Flashcards
Which institutional layers are there?
Individual behavior group institutions organizational institutions industry institutions national institutions supranational institutions
Institutional spheres
fields of power influence the creation, maintenance and adaptation of institutions
institutional spheres shape and influence national institutions
Institutional drivers
three powers (state, market, civil society) --> influence how institutions are created
Coordination of the three powers
state = corrective
market = competitive
civil society = cooperative
Weaknesses of the three powers
state = bureaucratic
market = imperfect markets
civil society = fragmented
Financing of the three powers
State = Taxis, tariffs
Market = stocks, loans, profits
Civil society = donations, services
The institutional logics of the institutional spheres
State = Iron hand
Market = Invisible hand
Civil Society = Intangible hand
Iron hand
are the rules that result from rationalization and regulation of human activities
Invisible hand
rules that result from free market of supply and demand
intangible hand
are the rules that result from respect and esteem for, connectedness with, and loyalty to the group
esteem
Wertschätzung
commons
goods that are accessible to everyone
tragedy of the commons
theory that states people use commons for their own interests with negligible negative effect per person. Every additional unit used directly harms others who can no longer enjoy the benefit
Solution to the tragedy of the commons
Iron hand: government sets a limit to commons available
Invisible hand: privatization by converting common goods into private property, which gives the new owner an incentive to enforce its sustainability
Intangible hand: people cooperate to conserve the resource in the name of mutual benefit (Elinor Ostrom’s principles: commons often do not end up in tragedy because the intangible hand works well)
Liberal model on (power distribution among institutional spheres)
US & Anglo-Saxon countries Large market sphere and small state little overlap btw. spheres few state-owned enterprises more individualistic culture
Business-statist model
China, East Asia
small civil society
close cooperation btw. market and state
collectivist cultures (communism)
long-term orientation
Corporatist model/ stakeholder/ polder model
Continental Europe
relationship btw. all three spheres
medium-term orientation
The polder model
consensus model where deliberation takes place before making decisions; recognition of plurality (sub-groups have different views)
in the Social Economic Council there are members of the government, employees and and employers.
wages and working conditions were negotiated
deliberation
(öffentliche Beratschlagung)
regulative institution of the polder
Collective Labor Agreements
formalized institutional bodies
Social Economic Council
What made Netherlands the sick man of Europe?
exploitation of natural resources led to a collapse of the guided wage policies
also paradox of plenty, dutch disease
Supranational instituions
formal and informal rules btw. countries
mercantilism
theory suggesting that a nation’s prosperity depends on a positive trade balance and thus control though the iron hand. (nationalism, protectionalism)
can be referred to the beggar-thy-neighbor policy
argued that:
- global volume of trade is set and unchangeable
- prosperity of a nation depends on the supply of capital
beggar-thy-neighbor policy
benefits of one country are at the expense of others. The only way to get wealthier is by stealing from your neighbors
Hegemony Stability Theory
theory that for international trade and financial systems to run smoothly, there must be hegemony
bottom-up on levels of institutions
institutional work = create or lobby for new institution…
top-down on levels of insitutions
higher level institutions shape the institutions at lower level and constrain the institutional bandwidth of them.
What does the civil society include?
The family and private sphere
religious/autocratic model
small market sphere and strong overlap btw. state and civil society
e.g. islamic countries
institutional faultlines
divisions btw. different groups of people within a nation
e.g. caste system or the Zuilen in Netherlands
Regulatory supranational insitutions
formal trade agreements = treaties
normative supranational insitutions
informal peer pressure among G20 leaders
zuilen = pillars
Ideologically isolated groups; a kind of mini-societies within the Netherlands with their own unions, media,
football clubs etc.
institutional fault lines were between the zuilen
1944 Bretton Woods
International framework for international economic cooperation after war
- IMF
- World Bank
- GATTs
GATTs
General Agreement of Tariffs and Trade
What is Cultural convergence?
is related to cognitive supranational institutions. Cultural convergence is about the increasingly similar cognitive institutions in various aspects of work-related attitudes and values, consumption patterns, strategic decisions etc.
Where does cultural convergence occur?
It happens to less than 10% of the world’s population, mostly in western nations and elite non-western countries.
What does the article “The Clash of Civilizations” say about cultural convergence?
convergence may occur within civilizations, among kin-countries.
Regionalization is when kin countries become more alike when fault lines become sharper across civilizations.
Cultural divergence between civilizations occur through convergence.
Level of integration
- Level
Free trade
Level of integration
- Level
Customs Union
Level of integration
- Level
Common Market
Level of integration
- Level
Economic Union
Level of integration
- Level
Political Union
Customs Union
common external tariffs
common market
free trade area with also relative free movement of capital and services
Economic Union
Common currency, harmonized tax rates, common monetary and fiscal policy
e.g. EU
European Commission
Executive arm of the EU;
independent of national interests
European Council
heads of states
defines the European Union’s overall political direction and priorities.
European parliament
elected by the European citizens directly
exercise legislative and budgetary functions
Court of justice
responsible for interpreting EU law and treaties
Council of the EU
EU decision maker
It negotiates and adopts legislative acts in most cases together with the European Parliament through the ordinary legislative procedure, also known as ‘codecision’.
kin-country syndrome
culturally similar countries rally together against countries with dissimilar cultures
torn countries
countries with many people from different civilizations
Challenges of the EU
- prevent more potential departures
- deal with populism, nationalism and racism
- face the causes of sluggish growth
What creates core competencies (CC’s) at company level?
formal guidelines and informal routines
What are core competencies?
points of strength of a firm that give it a competitive advantage
What can core competencies also be?
they can also be core rigidities
What are core rigidities?
ways of working in a firm that become ingrained and hard to change. This is bad when you can’t react to your environment anymore
What is institutional bandwidth?
How much institutions can vary at a certain institutional level. At lower levels there is a low institutional bandwidth.
(supranational institutions like the EU regulate many laws on food standards and thus institutions vary a lot. –> high institutional bandwidth.)
nepotism
family members are favored even if they aren’t capable
How do fault lines btw. civilizations occur?
Due to different social , economic and ideological policies.
Will fault lines sharpen when civilizations converge?
Yes. This is called civilization consciousness.
What reasons contribute to civilization consciousness?
- Cross-civilization interactions lead to crystallizing cultural divergence
- reviving religious consciousness that underpins difference btw. civilizations
- polarizing feelings btw. west and rest. Due to the kin-country syndrome.
- Torn countries where there are many cultures within the country that find it hard to find kin country allies.
- increasing economic regionalization (agreements are only for certain regions)
kin-country syndrome
culturally similar countries rally together vs. dissimilar countries.
institutional convergence
where institutions become similar due to EU regulation
What happens to kin countries when fault lines become sharper across civilizations?
regionalization. Kin countries become more alike.
Overlap in the liberal model?
Btw. Market and Civil Society
overlap in business-statist model?
btw. market and state.
small civil society.
East Asia
Corporatist model overlap?
Overlap btw. State, Market and Civil Society
