Hierarchies, markets and power structures: some foundational issues on the role of institutions Giovanni Dosi

Different notions of institutions 1) Formal organizations (from firms to technical societies, from universities to government agencies,…) 2) a- collectively shared and socially legitimized patterns of behavior (from social habits to routines, to ethical practices…) Conventions… b- shared “mental models” and “identities”… 3) Negative norms and constraints (from moral prescriptions to formal laws…) 4) Institutions as “social technologies”

Possible dimensions for classification of different theories Role attributed to individual rationality in the development of collective institutions Degrees of path-dependency / inertia of institutions themselves… Relative analytical importance of “choice” vs. “constraints” in individual and collective behaviors… Importance and modes of influence of history and institutions upon preferences and behaviors… Nature of organizations in which agents operate (…from epiphenomena to asylums…)

Units of analysis? transactions? information partitions? actions/strategies? utilities? cognitive frames? social roles?

“Weak” vs. “Strong” institutionalism (1) ‘Weak’ institutions ‘Strong’ institutions Role of institutionsParametrize system variables; contain menu of strategies Also ‘embed’ cognitive and behavioral patterns; shape identities of actors ‘Primitives' of the theory (Perfectly or boundedly) rational self- seeking agents; institutions as derived entities Institutions as ‘primitives’ forms of rationality and perception of self- interest as derived entities Mechanisms of institutions formation Mainly explicit, ‘constitutional’ processes Partly unintentional self- organization processes

“Weak” vs. “Strong” institutionalism (2) Efficiency properties Institutions perform useful coordinating and governance functions; … often considered equilibria in some rule-selection space Institutions as ‘carriers of history’, reproduce path-dependently, often irrespectively of their functional efficiency Mechanisms of institutions formation Mainly explicit, ‘constitutional’ processes Partly unintentional self- organization processes Efficiency properties Institutions perform useful coordinating and governance functions; … often considered equilibria in some rule-selection space Institutions as ‘carriers of history’, reproduce path-dependently, often irrespectively of their functional efficiency

Nature of hierarchies “Exchange” view“Political” view No analytical status to the notion of power… Essential features of organizations are patterns of power exercise authority relations Apparent “power relations” reducible to asymmetric transaction conditions Power/authority relations are essentially different form exchange relations [and ergo are also autonomous interpretative dimensions…] Basic units of analysis are transactions Units of analysis include also Elementary “bits” of knowledge (basic?) organizational forms Behavioral codes/ “mental frames”… “Organizations” are “veils” covering sets of contracts or at most bundles of incomplete contracting arrangements Organizations as different and indeed often constitutive of exchanges…

Generative processes of institutions/organizations Why does organization X exist…? Explicit dynamics vs. property of equilibria How did organization X come to existence? “Constitutional” vs. self-organizing processes… a) processes of organizational learning…which ones…? b) criteria and mechanisms of selection within and among organizations… Co-evolving institutions / organizations over rugged landscapes