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Institutions and Transnationalization Jae Hwan Lee April 6, 2010.

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Presentation on theme: "Institutions and Transnationalization Jae Hwan Lee April 6, 2010."— Presentation transcript:

1 Institutions and Transnationalization Jae Hwan Lee April 6, 2010

2 Key Points Overcome opposition between institutions (stability) and globalization (breakdown) Argue that institutions and globalization are intertwined

3 Key Points Institutions are – Those collective frames and systems that provide stability and meaning to social behavior and social interaction and take on a rule-like status in social thought and action (Meyer and Rowan, 1977; Douglas, 1986: 46-48) – Institutions have both structural and ideational dimensions Transnationalization is – To describe a world where economic and social organization and coordination increasingly each across national borders – A better term than globalization and internationalization

4 Organizational Institutionalism Agnostic stance on transnationalization Organizational institutionalism – Habitualization/Objectification/Institutionalization – De-institutionalization (political/functional/social) – Both used in analysis of institutional dynamics – Both allow for contestation between various interested actors in the first two phases of the institutional process and acknowledge the co-existence of different degrees of institutionalization

5 Organizational Institutionalism Expected Contributions – Analysis of institutional phenomena in the transnational sphere where struggles between different parties and a fair degree of institutions in the making are to be expected – Offers the tools to study cross-border diffusion of practices, templates and rules as sources of institutionalization and de-institutionalization – Allow the integration of a transnational dimension into institutional analysis

6 Societal Institutionalism Refers to what is now a dense set of conceptual and empirical studies focusing on the historical emergence and contemporary structuring of national economies Focus on the systematic nature of national configurations of national institutions

7 Societal Institutionalism Adaptation of societal institutionalism in transnationalization context – Call into question the conception of institutions as fully determining economic organization and action – Explore what happens when actors or organizations become involved in multiple institutional environments with different and conflicting rule systems – Look at transnational arena as institutionalized or institutionalizing space

8 World System Institutionalism Refers to a now well-established tradition of cultural institutionalism World society is a society of empowered actors; a society permeated by and permeating actors with powerful cultural values or institutional frames

9 World System Institutionalism – Cultural and institutional web characteristics can function as if centralized, state-like global power (Meyer et al., 1997) – Add the speed of diffusion and global pervasiveness of standardized model and blueprints – Bring cultural perspectives into analysis of states, organizations and their transformation – Actorhood is the soft kind and empowered by cultural frames – Real power and authority sources are cultural and diffuse, rather than structured and centralized – States are embedded in, shaped, and fashioned by a powerful world society an its associated institutional and cultural templates

10 World System Institutionalism More focus is needed on; – Construction and negotiation of global cultural models or institutions – Understanding of actual processes and mechanisms of diffusion and local reception, where transnational institutional blueprints meet with local institutional traditions – Empirical and conceptual work on carriers Located at the interface of multiple sources of embeddedness Cross and overcome the national/transnational border Contribute to back and forth translation and negotiation

11 International Relations Progressive Retreat of the State (Strange, 1996) – In the process of regulatory reforms and privatization and public service dismantling, states have not withered away – Regulatory states (Majone, 1996) are as much powerful as more interventionist states and are embedded in complex constellations of actors and structures – States’ input and identity are difficult to disentangle and separate from those of other actors

12 International Relations Non-monolithic States – State institutions are complex patchworks – Porosity of state institutions has increased significantly – Boundaries are tighter between sectors of state than between state agencies and other actors in the same sector

13 International Relations Various Forms of Private Authority – Multiplicity of rule-making and institution-building activities that emerge and are structured outside states Transnational Social Networks – Transnational class formation (Van der Pijl, 1984, 1988) – Mechanism of governance over state boundaries (Haas, 1989, 2002) Epistemic community makes reference to communities of expertise and practice that are increasingly transnational while individuals in those communities retain some form of local or national influence and authority

14 International Relations Regulatory Networks – A wide variety of public and private actors involved in rule making, institution building and monitoring – Complex interconnections between a multiplicity of individual and organizational actors – Organizational, cognitive, and normative frames – Questions arise as to regulatory networks’ legitimacy and legitimacy of private authority

15 Trans-nationalization as Institutional Recombination Origins of transnational institutions – Bricolage [construction (as of a sculpture or structure of ideas) achieved by using whatever comes to hand], rather than ex-nihilo generation Actors build upon, recombined, reinvent, reinterpret logics and institutional arrangements – Befits the processes of institutional emergence and institutional building at the transnational level – Institutional building in the transnational level involves Multiple actors or groups of actors with mental and action maps originating from quite different institutional contexts

16 Trans-nationalization as Institutional Recombination Historical Scenarios: Transnational Organizations or Regional Federations – Transnational Organization Roman Catholic Church, League of Nations, United Nations, OECD ILO, IMF, GATT (WTO) Central core, in charge of setting the rules and building institutions at the transnational level Central core, directly reflecting the interests of member states Tools of particular nation states and governments Mirroring the existing geopolitical balance of power However, technocratic elite may have its own identity

17 Trans-nationalization as Institutional Recombination Historical Scenarios: Transnational Organizations or Regional Federations – Regional Federation Followed temptation to create a supranational market or nation Empires, ECSC, EEC, or EU, and possibly NAFTA The process of rule setting and institution building stems from a political initiative Public or semi-public actors, governments or representatives are instrumental in that process The scope and reach of those centrally engineered constructions go beyond those of transnational organizations New rules and institutions are enforceable due to enforceable mechanisms that put member states under compliance

18 Trans-nationalization as Institutional Recombination Historical Scenarios: Transnational Organizations or Regional Federations – Enforcements in Regional Federations Direct controls: associated with rewards (+) and sanctions (-) Voluntary compliance: member states aware of benefits from supranational construction and consequences of not respecting the terms of contract

19 Trans-nationalization as Institutional Recombination Self-regulating communities: Scenario of the future? – All actors come together, in non-structured and unformalized settings, agree on collective rules (Cutler et al., 1999; Morgan and Engwall, 1999) – Public, semi-public, and private actors involved in rule setting, institution building, and monitoring compliance – Self-discipline or self-regulation – NGOs and private actors, instead of waiting for public actors to impose institutional frames, set their own rules – Voluntary process, informal negotiation – Emerging structural arrangements are amorphous, fluid and multifocal

20 Trans-nationalization as Institutional Recombination Self-regulating communities: Scenario of the future? – Enforcement mechanisms Voluntary compliance: because all actors define the rules and inflict upon themselves the institutional constraints that will bound their actions and interactions Socialization: may emerge at a later stage – Antecedents of self-regulating communities Structuring of commercial arbitration at the transnational level: international cartels NGOs engage in standard settings, accreditation and soft regulation MNCs become rule-setters and rule-developers: ICN (International Competition Network)

21 Trans-nationalization as Institutional Recombination Transnational recombination: Mode and Nature of Process – Mode Dominant : reflect one dominant local or national model (US) Negotiated: confrontation or rubbing against each other of multiple locals or nationals, leading to negotiation Emergent: multiple actors with no clear identities and functioning themselves at the interface of multiple rule systems, come in collision with each other

22 Trans-nationalization and Impact on Institutions Trickle-down Trajectories – Transnational organizations or supranational constructions as rule-making bodies and influencers on national polities EU, IMF, EBRD, WTO – Challenger rules emerge from transnational space lacking formal structure Self-disciplining transnational communities : rule making and rule setting make take place at transnational fields or arenas lacking structuration All kinds of actors negotiate and agree upon rules of the game

23 Trans-nationalization and Impact on Institutions Trickle-down Trajectories – Three groups One unit sample: US A few core and rather rich countries: compliance-driver Larger group and weak countries: susceptible to trickle-down – Direct political dependence of national countries on a supranational construction : EU Rules created at supranational level are likely to have rapid and direct impact on national level

24 Trans-nationalization and Impact on Institutions Trickle-up Trajectories – National actors crossing national borders find rules of game contradictory or in collision Individuals, groups, firms, associations, networks Widespread due to Internationalization of economic activities – Foreign actors moving into national space with rules different from local rules Locals or nationals pushing for new rules of the game New or emerging actors redefine

25 Trans-nationalization and Impact on Institutions Trickle-up Trajectories – Subsocietal level rules may change before national-level institutionalization – Transformation at subsocietal level reverberate at the national institutional level: ex) Germany’s Kodex-Kommission – Strategic firms or industries in smaller countries Nokia in Finland Forest industry in Norway and Finland – Strength and legitimacy of those outsiders championing and pushing for challenger rules Anglo-Saxon players : trademark advantage in finance and consulting – Collision and national-level reverberation Subsocietal actors lack protective buffers or in crisis, collision intensify – Collision and national-level reverberation

26 Conclusion Institutionalization, deinstitutionalization, reinstitutionalization Institutional systems as open systems Social actors are embedded in locally and temporally specific institutional rules of the game as well as beyond local institutional settings Institutional logics competing at organizational, societal, transnational

27 Conclusion Research Methodologies and Empirical Work – Nested hierarchy of institutional context – Reorient to analyze interaction between national and transnational institutions – Employ tools to analyze global and transnational forms or organization, including MNCs, financial and knowledge immediaries, loosely connected communities, networks and their involvement in institution building and institutional change

28 Conclusion Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others don’t? What are the emerging issues?

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