Neo institutionalism (also referred to as neo-institutionalist theory or institutionalism) is an approach to the study of institutions that focuses on the constraining and enabling effects of formal and informal rules on the behavior of individuals and groups. [1] New institutionalism traditionally encompasses three major strands: sociological institutionalism, rational choice institutionalism, and historical institutionalism. [2] [3] New institutionalism originated in work by sociologist John Meyer published in 1977. [4]
The study of institutions and their interactions has been a focus of academic research for many years. In the late 19th and early 20th century, social theorists began to systematize this body of literature. One of the most prominent examples of this was the work of German economist and social theorist Max Weber; Weber focused on the organizational structure (i.e. bureaucracy) within society, and the institutionalization created by means of the iron cage which organizational bureaucracies create. In Britain and the United States, the study of political institutions dominated political science until the 1950s. This approach, sometimes called 'old' institutionalism, focused on analyzing the formal institutions of government and the state in comparative perspective. It was followed by a behavioral revolution which brought new perspectives to analyzing politics, such as positivism, rational choice theory, and behavioralism, and the narrow focus on institutions was discarded as the focus moved to analyzing individuals rather than the institutions which surrounded them. [5] New Institutionalism was a reaction to the behavioral revolution. [5] [6]
Institutionalism experienced a significant revival in 1977 with two influential papers by John W. Meyer and Brian Rowan on one hand and Lynn Zucker on the other. [7] [8] The revised formulation of institutionalism proposed in this paper prompted a significant shift in the way institutional analysis was conducted. Research that followed became known as "new" institutionalism, a concept that is generally referred to as "neo-institutionalism" in academic literature. Another significant reformulation occurred with Paul DiMaggio and Walter W. Powell's paper on isomorphism. [9] [8] The three papers had in common that they explained the practices of organizations not in terms of efficacy and efficiency, but in terms of legitimacy. The functions of an organization did not necessarily reflect rational or optimal ends, but were instead myths, ceremonies and scripts that had a veneer of rationality. [8]
The following decade saw an explosion of literature on the topic across many disciplines, including those outside of the social sciences. Examples of the body of work in the decade which followed can be found in DiMaggio and Powell's 1991 anthology in the field of sociology; [8] in economics, the Nobel Prize-winning work of Douglass North is a noted example.
More-recent work has begun to emphasize multiple competing logics, [10] [11] focusing on the more-heterogeneous sources of diversity within fields [11] and the institutional embeddedness of technical considerations. [12] [13] The concept of logic generally refers to broader cultural beliefs and rules that structure cognition and guide decision-making in a field. At the organization level, logic can focus the attention of key decision-makers on a delimited set of issues and solutions, [14] leading to logic-consistent decisions that reinforce extant organizational identities and strategies. [15] In line with the new institutionalism, social rule system theory stresses that particular institutions and their organizational instantiations are deeply embedded in cultural, social, and political environments and that particular structures and practices are often reflections of as well as responses to rules, laws, conventions, paradigms built into the wider environment. [16]
Kathleen Thelen and Sven Steinmo contrast New Institutionalism with "Old Institutionalism", which was overwhelmingly focused on detailed narratives of institutions, with little focus on comparative analyses. Thus, the Old Institutionalism was unhelpful for comparative research and explanatory theory. This "Old Institutionalism" began to be undermined when scholars increasingly highlighted how the formal rules and administrative structures of institutions were not accurately describing the behavior of actors and policy outcomes. [17]
There is no agreed upon definition of institution in new institutionalist scholarship. [8] Mats Alvesson and Andre Spicer wrote in 2018 that it had become "difficult to agree what an institution is not – because institutions have become everything... When the term institution is defined, it is done so in broad and vague ways." [8]
Numerous scholarly approaches have been described as being part of New institutionalism. [2] [5] [18]
Sociological institutionalism is a form of new institutionalism that concerns "the way in which institutions create meaning for individuals, providing important theoretical building blocks for normative institutionalism within political science". [19] Some sociological institutionalists argue that institutions have developed to become similar (showing an isomorphism) across organizations even though they evolved in different ways. [20] [7] Institutions are therefore seen as important in cementing and propagating cultural norms. [21] Sociological institutionalists also emphasize how the functions and structures of organizations do not necessarily reflect functional purposes, but rather ceremonies and rituals. [3] [7] Actors comply with institutional rules and norms because other types of behavior are inconceivable; actors follow routines because they take a for-granted quality. [22] [23]
Normative institutionalism is a sociological interpretation of institutions and holds that a "logic of appropriateness" guides the behavior of actors within an institution. It predicts that the norms and formal rules of institutions will shape the actions of those acting within them. According to James March, [24] the logic of appropriateness means that actions are "matched to situations by means of rules organized into identities." Thus normative institutionalism views that much of the behavior of institutional actors is based on the recognized situation that the actors encounter, the identity of the actors in the situation, and the analysis by the actor of the rules that generally govern behavior for that actor in that particular situation.
New institutional economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the social and legal norms and rules) that underlie economic activity and with analysis beyond earlier institutional economics and neoclassical economics. It can be seen as a broadening step to include aspects excluded in neoclassical economics. It rediscovers aspects of classical political economy. Major scholars associated with the subject include Masahiko Aoki, Armen Alchian, Harold Demsetz, [25] [26] Steven N. S. Cheung, [27] [28] Avner Greif, Yoram Barzel, Claude Ménard (economist), Daron Acemoglu, and four Nobel laureates—Ronald Coase, [29] [30] Douglass North, [31] [32] Elinor Ostrom, [33] and Oliver Williamson. [34] [35] [36] A convergence of such researchers resulted in founding the Society for Institutional & Organizational Economics (formerly the International Society for New Institutional Economics) in 1997.
Rational choice institutionalism is a theoretical approach to the study of institutions arguing that actors use institutions to maximize their utility. [37] [38] Institutions are understood to be exogenously given constraints ("rules of the game") on rational individual behavior. It employs analytical tools borrowed from neo-classical economics to explain how institutions are created, the behaviour of political actors within it, and the outcome of strategic interaction. Rational choice institutionalism draws heavily from rational choice theory but is not identical to it. Proponents argue that political actors' rational choices are constrained (called "bounded rationality"). These bounds are accepted as individuals realize their goals can be best achieved through institutions. In other words, institutions are systems of rules and inducements to behavior in which individuals attempt to maximize their own benefit.
According to Erik Voeten, rational choice scholarship on institutions can be divided between (1) rational functionalism and (2) Distributive rationalism. [38] The former sees organizations as functional optimal solutions to collective problems, whereas the latter sees organizations as an outcome of actors' individual and collective goals. [38] Since individual and collective goals may conflict, the latter version of RCI accepts that suboptimal institutions are likely. [39]
Emphasizes how timing, sequences and path dependence affect institutions, and shape social, political, economic behavior and change. [40] [41] Unlike functionalist theories and some rational choice approaches, historical institutionalism tends to emphasize that many outcomes are possible, small events and flukes can have large consequences, actions are hard to reverse once they take place, and that outcomes may be inefficient. A critical juncture may set in motion events that are hard to reverse, because of issues related to path dependency. [42] [43] [44] [45] Historical institutionalists tend to focus on history (longer temporal horizons) to understand why specific events happen. [40] [46]
Proponents of discursive institutionalism, such as Vivien Schmidt, emphasize how ideas and discourses affect institutional stability and change. [47] [48]
Constructivist institutionalists [49] assert that political, social, or policy discourses can perform communicative functions: actors publicly expressing ideas can lead to social change, or coordinating functions. Thus ideas and meaning provide a mechanism for multiple actors to achieve consensus on norms and values and thus create social change. [50] This is increasingly moving beyond political science and into international relations theory and foreign policy analysis. [51] [52]
Feminist institutionalism is a new institutionalist approach which looks at "how gender norms operate within institutions and how institutional processes construct and maintain gender power dynamics". [19]
Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory originated in the eighteenth century and can be traced back to the political economist and philosopher Adam Smith. The theory postulates that an individual will perform a cost–benefit analysis to determine whether an option is right for them. It also suggests that an individual's self-driven rational actions will help better the overall economy. Rational choice theory looks at three concepts: rational actors, self interest and the invisible hand.
An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Institutions vary in their level of formality and informality.
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the other. Its name and core elements trace back to a 1919 American Economic Review article by Walton H. Hamilton. Institutional economics emphasizes a broader study of institutions and views markets as a result of the complex interaction of these various institutions. The earlier tradition continues today as a leading heterodox approach to economics.
In sociology, an isomorphism is a similarity of the processes or structure of one organization to those of another, be it the result of imitation or independent development under similar constraints. The concept of institutional isomorphism was primarily developed by Paul DiMaggio and Walter Powell. The concept appears in their 1983 paper The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. The term is borrowed from the mathematical concept of isomorphism.
In sociology and organizational studies, institutional theory is a theory on the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for social behavior. Different components of institutional theory explain how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse.
New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions that underlie economic activity and with analysis beyond earlier institutional economics and neoclassical economics.
Historical institutionalism (HI) is a new institutionalist social science approach that emphasizes how timing, sequences and path dependence affect institutions, and shape social, political, economic behavior and change. Unlike functionalist theories and some rational choice approaches, historical institutionalism tends to emphasize that many outcomes are possible, small events and flukes can have large consequences, actions are hard to reverse once they take place, and that outcomes may be inefficient. A critical juncture may set in motion events that are hard to reverse, because of issues related to path dependency. Historical institutionalists tend to focus on history to understand why specific events happen.
In international relations (IR), constructivism is a social theory that asserts that significant aspects of international relations are shaped by ideational factors. The most important ideational factors are those that are collectively held; these collectively held beliefs construct the interests and identities of actors.
Paul Joseph DiMaggio is an American educator, and professor of sociology at New York University since 2015. Previously, he was a professor of sociology at Princeton University.
Institutionalist political economy, also known as institutional political economy or IPE, refers to a body of political economy, thought to stem from the works of institutionalists such as Thorstein Veblen, John Commons, Wesley Mitchell and John Dewey. It emphasizes the impact of historical and socio-political factors on the evolution of economic practices, often opposing more rational approaches. In the political sense, this implies the influences actors like the state have on socio-economic practices and the shaping of institutions via political decision-making.
Social rule system theory is an attempt to formally approach different kinds of social rule systems in a unified manner. Social rules systems include institutions such as norms, laws, regulations, taboos, customs, and a variety of related concepts and are important in the social sciences and humanities. Social rule system theory is fundamentally an institutionalist approach to the social sciences, both in its placing primacy on institutions and in its use of sets of rules to define concepts in social theory.
Institutional analysis is the part of the social sciences that studies how institutions—i.e., structures and mechanisms of social order and cooperation governing the behavior of two or more individuals—behave and function according to both empirical rules and also theoretical rules. This field deals with how individuals and groups construct institutions, how institutions function in practice, and the effects of institutions on each other, on individuals, societies and the community at large.
Institutional logic is a core concept in sociological theory and organizational studies, with growing interest in marketing theory. It focuses on how broader belief systems shape the cognition and behavior of actors.
Vivien A. Schmidt is an American academic of political science and international relations. At Boston University, she is the Jean Monnet Chair of European Integration Professor of International Relations in the Pardee School of Global Studies, and Professor of Political Science. She is known for her work on political economy, policy analysis, democratic theory, and new institutionalism. She is a 2018 recipient of a Guggenheim Fellowship and has been named a Chevalier in the French Legion of Honor.
Walter W. Powell, born August 15, 1951, is a contemporary American sociologist. Powell is Professor of Education, Sociology, Organizational Behavior, Management Science and Engineering, and Communication at Stanford University and the Stanford Graduate School of Education since 1999 and is known for his contributions to organizational theory, in particular to the new institutionalism and network theory. Since 2000, he has been an external faculty member of the Santa Fe Institute.
Liberal institutionalism is a theory of international relations that holds that international cooperation between states is feasible and sustainable, and that such cooperation can reduce conflict and competition. Neoliberalism is a revised version of liberalism. Alongside neorealism, liberal institutionalism is one of the two most influential contemporary approaches to international relations.
Rational choice institutionalism (RCI) is a theoretical approach to the study of institutions arguing that actors use institutions to maximize their utility, and that institutions affect rational individual behavior. Rational choice institutionalism arose initially from the study of congressional behaviour in the U.S. in the late 1970s. Influential early RCI scholarship was done by political economists at California Institute of Technology, University of Rochester, and Washington University. It employs analytical tools borrowed from neo-classical economics to explain how institutions are created, the behaviour of political actors within it, and the outcome of strategic interaction.
Sociological institutionalism is a form of new institutionalism that concerns "the way in which institutions create meaning for individuals." Its explanations are constructivist in nature. According to Ronald L. Jepperson and John W. Meyer, Sociological institutionalism
treats the “actorhood” of modern individuals and organizations as itself constructed out of cultural materials – and treats contemporary institutional systems as working principally by creating and legitimating agentic actors with appropriate perspectives, motives, and agendas. The scholars who have developed this perspective have been less inclined to emphasize actors’ use of institutions and more inclined to envision institutional forces as producing and using actors. By focusing on the evolving construction and reconstruction of the actors of modern society, institutionalists can better explain the dramatic social changes of the contemporary period – why these changes cut across social contexts and functional settings, and why they often become worldwide in character.
The logic of appropriateness is a theoretical perspective to explain human decision-making. It proposes that decisions and behavior follow from rules of appropriate behavior for a given role or identity. These rules are institutionalized in social practices and sustained over time through learning. People adhere to them because they see them as natural, rightful, expected, and legitimate. In other words, the logic of appropriateness assumes that actors decide on the basis of what social norms deem right rather than what cost-benefit calculations suggest best. The term was coined by organization theorists James G. March and Johan Olsen. They presented the argument in two prominent articles published by the journals Governance in 1996 and International Organization in 1998.
Rational choice is a prominent framework in international relations scholarship. Rational choice is not a substantive theory of international politics, but rather a methodological approach that focuses on certain types of social explanation for phenomena. In that sense, it is similar to constructivism, and differs from liberalism and realism, which are substantive theories of world politics. Rationalist analyses have been used to substantiate realist theories, as well as liberal theories of international relations.
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