Corporate social responsibility (CSR) was long associated with the ethics of company heads but now falls within an institutional process whereby practices give rise to rules which in turn modify company actions. CSR has spread as a result of social demand for a more ecological society, but it also constitutes a response to the crisis of shareholder governance. Drawing on the notion of ‘conception of control’ set out by Neil Fligstein (1990), we argue that CSR has given rise to a new ‘conception of control’, which we term ‘shareholder–CSR compatible’. Such a conception reflects how governance changes when environmental and societal responsibilities are combined with responsibility to shareholders. Shareholder value is still central within the enterprise, but top managers must now assume the position of mediators between these two imperatives.

We use the Economic Freedom Index to characterize the institutions of the Athenian city-state in the fourth century BCE. It has been shown that ancient Greece witnessed improved living conditions for an extended period of time. Athens in the fourth century appears to have fared particularly well. We find that economic freedom in ancient Athens is on level with the highest ranked modern economies such as Hong Kong and Singapore. With the exception of the position of women and slaves, Athens scores high in almost every dimension of economic freedom. Trade is probably highly important even by current standards. As studies of contemporary societies suggest that institutional quality is probably an important determinant of economic growth, it may also have been one factor in the relative material success of the Athenians.

This paper uses an augmented Feldstein–Horioka savings–investment methodology to examine the impact of institutional quality on the degree of capital mobility in developing countries. A high correlation between domestic investment and domestic savings can arise from the presence of institutional rigidities restricting the movement of capital across borders. We find that including different aspects of institutional quality raises the coefficient of the savings rate, implying lower capital mobility. However, the improvement in institutional quality that strengthens the legal system, reduces investment risks, and ensures democratic accountability, increases capital mobility in developing countries. Inclusion of foreign aid also has a positive impact on the coefficient of the savings rate.

The article proposes a reading of Marcel Mauss's insights into gift exchange in primitive societies through the lens of the institutional economics approach. It thus tries to demonstrate that the gift as seen by Mauss can be interpreted as an institution arising from the self-transcendence of social relationships that gifts themselves are expressly designed to create and according to which individuals orient their behavior. On this basis, we provide elements to discuss the benefits that might derive from the adoption of the institutionalist approach in economics.

For various reasons, governments sometimes fail to provide public goods. Private provision of such goods might then be used if it succeeds in overcoming three main problems: high organization costs, the assurance problem, and the free-rider problem. We argue that technologies that enable crowdfunding – the method of funding projects by raising small amounts of money from a large number of people via the internet – have enabled these problems to be overcome more readily. Such technology has lowered organization costs and enabled the employment of more efficient mechanisms to reduce the assurance and free-rider problems. To illustrate these effects, we present two case studies of private provision of public goods via crowdfunding: police services in Rockridge in Oakland, California, and the Ukraine Army.

Ronald Coase's work and its reception illustrate the significance – and the difficulty – of identifying problems and proposing solutions, which provides the theme of this paper. His theoretical innovation was not derived from economics, and seemed irrelevant to contemporary issues of economic theory and policy; only his much later perception of an apparently unrelated problem – the incoherent treatment of social cost as market failure – showed how the concept of transaction costs could illuminate two major areas of economics. The inadequate treatment by economists of the transaction costs of markets is linked to the neglect of processes, and especially the processes of organising the growth and use of knowledge – key concerns of Smith and Marshall. The curious relationship between Coase's explanation of firms and Austin Robinson's analysis of competitive industry leads to a reflection on the scarce resource of human cognition and the role (and fallibility) of institutions.

One of the many favourable aspects of the collapse of the USSR was the vastly increased access to the archives of Soviet institutions by historians, economists and other specialists that resulted. This led to an intense study, by specialists from the successor states of the USSR, mainly Russia (which inherited the archives of all the central Soviet institutions), and by foreign academics, of the huge mass of documents on the Soviet period accumulated in what became the archives of the successor states. One major result of this study was the publication of a large mass of archival documents. By now, not only individual volumes, but a number of series of volumes, containing original documents in a wide variety of fields, have been published. In addition, numerous articles and books utilizing archival sources have been published. Furthermore, some archival documents containing previously unknown information are now available on the web. For example, Ukrainian archivists have placed on the web numerous documents relating to the 1933 famine in their country. This new approach to the study of the USSR, and the additional knowledge resulting from it, is known as the archival revolution in the analysis of the Soviet system. Overviews of the new insights thus obtained about Stalinism have recently been published both by historians (Khlevnyuk, 2001; Litvin and Keep, 2005) and economists (Gregory, 2004; Gregory and Harrison, 2005), two journals/annuals have published special issues on the archival revolution, and there is a website devoted to political economy research in Soviet archives (http://www.warwick.ac.uk/go/persa). The purpose of this paper is to provide a survey of the new knowledge which is shorter than Gregory and Harrison's survey article, links the new knowledge to what was previously known, discusses some issues excluded from previous surveys, and considers questions likely to be of particular interest to JOIE readers.

In this paper, two models of long-run development are constructed, one for a unimodal agricultural structure and the other for a bimodal agricultural structure. The process of the evolution of state institutional capacity under these two structures is analyzed. Capacity is measured by the ability of the state to extract revenue in return for which services are provided. The development of such capacity is seen as the key factor in providing the human capital and infrastructure necessary for the shift from inward- to outward-oriented development. Latin America and East Asia are used as examples of these two modes of long-run development.

The economic literature is clear that transparent and impartial rule of law is crucial for successful economic outcomes. However, how does one guarantee rule of law? This paper uses the idea of ‘self-reinforcing’ institutions to show how political institutions may derail rule of law if associated judicial institutions are not self-reinforcing. We illustrate this using the contrasting examples of Estonia and Poland to frame the importance of institutional context in determining both rule of law and the path of legal institutions. Although starting tabula rasa for a legal system is difficult, it worked well for rule of law in Estonia in the post-communist transition. Alternately, Poland pursued a much more gradualist strategy of reform of formal legal institutions; this approach meant that justice institutions, slow to shed their legacy and connection with the past, were relatively weak and susceptible to attack from more powerful (political) ones. We conclude that legal institutions can protect the rule of law but only if they are in line with political institutions, using their self-reinforcing nature as a shield from political whims of the day.

Institutional inertia as one of the underlying reasons for hysteresis is often ascribed to external factors such as the distribution of wealth and income. Complementing these findings, the paper focuses on important internal factors, which render institutions stable and which prevent fast institutional changes, namely the role of mental models. Their importance is derived from the analysis of an important set of institutions, which can be described as enabling rules. Such rules enable actors to do certain things, such as speaking a language or playing chess. In doing so, enabling rules arguably require complementary mental models, which contain not only knowledge about the rules and the context in which they are applied, but also about how to apply the rules successfully. An important implication of this conceptualisation is that institutions and their representation are interdependent and mutually stabilising.

This paper analyses the influence of political institutions on the development of financial cooperatives. It proposes a political economy theory where autocratic regimes deliberately oppose the development of a well-functioning financial cooperative sector to maintain their political influence, and prevent the formation of strong pressure groups that can threaten the current political status quo and reduce the governing elites’ economic benefits from underdeveloped and exclusive financial sector. Using panel data from 65 developing countries from 1995–2014, the results show that democracy, political rights and civil liberties promote financial cooperative development. These results are robust in controlling for endogeneity as well as other economic and institutional factors.

This paper provides an empirical analysis linking two theories of firms' strategic behavior. We analyze corporate strategies in the emerging global market for liquefied natural gas. First, following Porter, we identify three strategic target market positions: chain optimization, flexibility strategy, and national oil companies (NOCs). Each target market position is supported by an underlying resource profile. Second, following transaction cost economics, we hypothesize that specific investments under uncertainty provide incentives to integrate vertically. We test these economic relationships empirically applying a two-stage procedure. Estimation results show that the three strategic choices of target market position, resource profile, and organizational structure are interrelated. We show that NOCs rely on less idiosyncratic assets than companies following a flexibility strategy and companies following a flexibility strategy rely on less idiosyncratic assets than chain optimizers. An increase in hold-up potential results in a higher probability of a firm organizing transactions within its own hierarchy.

The notion that business corporations should be managed for the exclusive benefit of shareholders has been widely challenged. In particular, critics have argued that directors are authorised to serve the interests of the corporation: a legal entity that is completely separate from its shareholders. However, the premise that shareholders have sole legitimate claim to ‘membership’ has rarely been questioned. This article explores medieval thought on ownership, authority and participation in guilds, churches, towns and universities, and shows that membership can be understood as participation in, and shared responsibility for, a group's distinct collaborative activity over time. Our theory suggests that ‘membership’ in the modern corporation extends to non-shareholding stakeholders, but with the implication that ownership and authority are vested in the members as a body and not in a separate entity.

Economic freedom is robustly associated with income growth, but does this association extend to the poorest in a society? In this paper, we employ Canada's longitudinal cohorts of income mobility between 1982 and 2018 to answer this question. We find that economic freedom, as measured by the Fraser Institute's Economic Freedom of North America (EFNA) index, is positively associated with multiple measures of income mobility for people in the lowest income deciles, including (a) absolute income gain; (b) the percentage of people with rising income; and (c) average decile mobility. For the overall population, economic freedom has weaker effects.

This paper examines two potential mechanisms – access to credit and reduction in relational risks – through which social trust can affect R&D investments. Social trust can increase R&D investments by expanding firms' access to external finance with which they can use to fund promising R&D projects. It can also increase R&D investments by reducing relational risks that expose firms to ex-ante and ex-post holdups or expropriation risks. Using industry-level data on R&D investment intensities in 20 OECD countries, I test these mechanisms by evaluating whether more external finance dependent and relational risk vulnerable industries exhibit disproportional higher R&D investment intensities in trust intensive countries. The results indicate that external finance dependent industries and relational risks vulnerable industries experience relatively higher R&D investment intensities in trust-intensive countries. Therefore, the results underline access to external finance and reduction in relational risks as causal pathways linking social trust and R&D investments.

Since the end of the shakeout following the bursting of the dot com bubble, we have seen substantial innovation in the institutions and organizational arrangements used to finance early-stage high growth technology companies. This paper will document the emergence of business accelerators, angel groups, micro venture capital funds and online equity crowdfunding platforms, and show the rapid growth in angel investing over this period. It will also document the corresponding movement away from traditional venture capital activity at the early stage of company development. The paper will explain how technological advance, specifically the decline in the cost of bringing a new software product to market, has driven this shift in the institutions of early-stage finance.

This note comments on Hindriks and Guala's ‘unified theory of institutions’. One of the components that Hindriks and Guala seek to unify, and which they claim is unsatisfactory on its own, is the analysis of conventions that derives from the work of Lewis. I argue that the Lewisian approach provides simple and powerful explanations of many regularities in the social behaviour of humans and other animals. Those explanations can be seen as good social science even if, as Hindriks and Guala argue, they do not fit with common-sense ontology.

Can foreign aid help free the press? Aid may boost press freedom by incentivizing government to reduce media regulations and provide financial support for infrastructure. Alternatively, foreign aid may prevent press freedom by expanding the role of the state and promoting government over private enterprises. We contend that the magnitude of foreign aid's influence is conditional on the existence of democratic checks. Using panel data from 1994 to 2010, we find evidence suggesting that aid significantly increases press freedom in democracies but insignificantly relates to press freedom in autocracies. Collectively, the results suggest that a standard deviation increase in aid to a country at the mean level of democracy increases press freedom by approximately a 1/20th standard deviation. Overall, the findings suggest that donors should be cautious as most aid recipients are not democratic and aid leads to only relatively small marginal improvements in press freedom.

This paper shows that the revolving door generates inequality of influence between financial firms and creates economic distortions. We first develop a theoretical model, introducing the notion of “bureaucratic capital” and stressing how the revolving door generates inequality in bureaucratic capital leading to inequality in profits. Then this prediction is tested, using a new database that tracks the revolving door process involving the 20 biggest US “diversified banks.” We show that regulators who supply a large stock of bureaucratic capital are more likely to be hired by the top five banks. We also develop indices of the inequality of influence between banks. We show that banks in the top revenue quintile concentrate around 80% of revolving door movements. Goldman Sachs appears as the prime beneficiary of this process, capturing approximately 30% of the total stock of bureaucratic capital.