Institutional and Organizational Analysis

Abstract

Economic models often assume away the laws of government, the norms of society, and the structure of organizations, but no economic activity would occur without a legal, social, and organizational framework. Laws, norms, and organizations are elements that contribute to social order and structure individuals' efforts to coordinate, cooperate, and compete at levels ranging from the family to international trade. This chapter provides an introduction to institutions, which include laws, policies, and any other rules devised and enforced by a recognized authority. Institutions are defined by Douglass North (1990: 3) as "the humanly devised constraints that shape human interaction" and by Elinor Ostrom (2005: 3) as "the prescriptions that humans use to organize all forms of repetitive and structured interactions." Institutions, together with the other elements of a social order, define property rights, the set of decisions that individuals can make about resources.An example from Mexican economic history illustrates the interaction between institutions, norms, and organizations. During the henequen boom in Yucatán, the relationship between hacendados and the Maya workforce took a distinct form, described by American "muckraking" journalists as a system of debt peonage. While it is not surprising to learn that indigenous Maya worked in a coercive environment, the specific mechanics of the debt peonage contract are hard to explain without understanding the details of the institutions, norms, and culture of Yucatán. Henequen, a fiber extracted from the long leaves of the henequen agave and used to make twine for the McCormick binder, was Mexico's most important agricultural export at the time. 1 The number of acres under henequen cultivation grew from 6,500 to 790,000 1 The information on labor contracting in Yucatán is drawn from Alston, Mattiace, and Nonnenmacher (2009) and Mattiace and Nonnenmacher (2014).

Business, Entrepreneurship and Innovation Toward Poverty Reduction

“…A second perspective to entrepreneurship and poverty reduction centres less on resources and capital investment and more on a reform perspective (Sutter, Bruton, and Chen 2019). This perspective address reform in institutions, both formal and informal (Scott, 2013;Alston, 2018). If formal institutions can be fixed, according to this perspective; entrepreneurship is more likely to be encouraged and nurtured (Acemoglu & Robinson, 2012;Tomizawa, Zhao, Bassellier, & Ahlstrom, 2019).…”

Economic freedom reform: does culture matter?

“… 2 Here we highlight Alston et al's (2018) view that culture (the shared norms, values and beliefs) and institutions (rules and enforcement mechanisms) are separate. Specifically, beliefs encompass views on how the world works and should work, and form expectations on how institutions will affect socio-economic outcomes and ultimately drive choices on institutions.…”

“…Specifically, beliefs encompass views on how the world works and should work, and form expectations on how institutions will affect socio-economic outcomes and ultimately drive choices on institutions. As per Alston et al (2018), when outcomes and expectations match, only marginal changes to institutions are possible.…”

The chronic uncertainty of American Indian property rights

“…Throughout we rely on the more general term ‘property institutions’ to broadly describe institutional arrangements governing property. More specifically, we take institutions to mean the rules articulated by known organizations with enforcement capacity (Alston et al ., 2018), although we predominantly limit our analysis to the property institutions available to settlers and Indians through public enforcement mechanisms. A system dealing with the allocation of resources in a community for use, exclusion, or transfer is what we deem ‘property institutions’.…”