1 CASE STUDY RESEARCH IN THE NEW INSTITUTIONAL ECONOMICS ESNIE 2004 Roland Speklé Erasmus University Rotterdam

2 Workshop outline general views on case study research cases in the NIE some recent examples wrap up: a typology of case study potential

3 Case study research: a working definition A case study involves the detailed examination within its natural setting of a single example of a class of phenomena Typical data gathering instruments: interviews informant reports internal documents/archival records (e.g. minutes board meetings, internal memoranda, correspondence) direct (or participant) observation other sources (e.g. court testimony and rulings, contract databases)

4 Case study research: the dismal view (I) case study research: a pseudo-profound description of a research object selected on the basis of easy access the case report means nothing but “flagging” that the study includes an empirical linkage the case method has been selected because the researcher didn’t know any research methods and the case method seemed to require the least knowledge

5 Case studies: the dismal view (II) lack of rigour (“anecdotal evidence”) validity problems, especially when it comes to: statistical conclusion (do independent and dependent variables covary?) internal validity (are changes in the dependent variables caused by changes in the independent variables?) problems of generalizability (external validity)

6 Some “celebrated cases” in the NIE Kodak (Joskow, 2002; Klein, 1996, 1999; Shapiro, 1995)  analysis of “aftermarkets”, evaluation of antitrust ruling Schwinn (Williamson, 1985)  franchising, evaluation of antitrust ruling Fisher Body (Klein, Crawford & Alchian, 1978; Coase, 1988; 2000; Klein, 1988, 2000; Freeland, 2000; and many, many others)  hold-up problems and vertical integration

7 Claude Ménard (2001) Case studies can be of great help in the further development of the NIE: construction of stylized facts to feed into our analysis and that help us explore the contribution of our explanatory concepts and that help to define/refine them comparative case studies aimed at isolating variables so as to capture their effects empirically

8 Masten and Saussier (2002) “case studies are an important, indeed necessary, complement to econometric analysis” “data and measurement problems that would cripple econometric analyses often yield to intensive scrutiny of a single or small number of cases” “case studies can and often have been the stimulus to refinements in the theory” “case studies provide an important check that econometric analyses, in abstracting away from contract complexity to accommodate data limitations, do not misconstrue the purpose and function of particular terms”

9 Some recent examples of case studies Nicolas Argyres (1999) Michel van den Bogaard and Roland Speklé (2003) Paul Joskow (2002)

10 A typology of case study research (Keating 1995) theory discovery case to map/frame phenomena ignored/grossed over by extant theories theory illustration case to establish the usefulness of a theoretical perspective by demonstrating its ability to make sense of what is going on in a specific setting theory specification case to refine an underspecified theory in order to make it amenable to testing theory refutation case to falsify a well-specified theory (crucial test) or to show that claimed relations do not always hold (counterpoint case)

11 Theory discovery cases describing novel phenomena searching for new perspectives to resolve anomalies Discovery cases typically produce theoretical building blocks (rudimentary concepts and constructs, working hypotheses etc.)

12 Theory illustration cases Two interacting objectives: demonstrating the plausibility of a theoretical perspective applying that perspective to develop a unique explanation of the case Ideally, this type of study employs a comparative perspectives approach to establish the relative power of the perspective over other theories

13 Theory specification cases takes theory into the field to assess whether the theory captures the heterogeneity and complexity of the phenomenon it purports to explain improve construct validity refine concepts/constructs operationalize concepts/constructs Ideal output: testable propositions

14 Theory refutation cases least likely to fit  to assess the boundaries of a theory most likely to fit  strong disconfirmation if the findings do not match the theory Typically used to identify problematic parts of the theory, i.e. those parts that require respecification