Joseph Campbell describes a narrative pattern for a hero's journey. ‘A hero ventures forth from the world of common day into a region of supernatural wonder: fabulous forces are there encountered and a decisive victory is won: the hero comes back from the mysterious adventure with the power to bestow boons on his fellow man’ (2008: 30). This paper looks at Oliver E. Williamson's life through Campbell's lens and reveals his journey, challenges, and triumphs not only for himself but also for all students of the science of organization.

Formal economic models of entrepreneurship have two characteristics: they model entrepreneurship as an allocation of resources, and they identify common factors affecting this allocation. These common factors are represented as parameters of optimization models, and they are evaluated at the market level. We argue that although these models are useful, they are incomplete because certain aspects of entrepreneurial behavior, such as judgment, alertness, or innovativeness, cannot be easily transformed into allocative problems. Moreover, entrepreneurial acts involve idiosyncratic elements, which limit the applicability of the market-level analysis to individual cases. Thus, the traditional economic methods have to be complemented by approaches highlighting the role of individual and historical specificity. The study of entrepreneurship, therefore, requires a synthesis of both general theory and historicist approaches, as envisioned a century ago by Frank Knight.

Two shifts of informal rules occurred in the decades around the turn of the 20th century that continue to shape U.S. fiscal policy outcomes. Spending norms in the electorate shifted to expand the scope of the government budget to promote economic security and macroeconomic stability. Simultaneously, norms for elected office shifted to careerism. Both norms were later codified into formal rules as legislation creating entitlement programs, macroeconomic responsibility, and organizational changes to the fiscal policy process. This institutional evolution increased demand for federal expenditures while creating budgetary commons, thus imparting strong motivations to spend through deficit finance in normal times. Despite the last four decades of legislative attempts to constrain spending relative to taxes, the informal norms have trumped the formal constraints. While the empirical literature on deficits has examined the constraining effects of informal rules, this paper offers a novel treatment of shifting norms as having expansionary effects on deficits.

It has been an enduring concern of institutional economics and critical realism to understand how individuals are able to exercise agency in the context of social structures, and to maintain appropriate connections, separations and balances between these two levels of causal power. This paper explores the contribution of Alasdair MacIntyre's neo-Aristotelian philosophy to the topic. Empirical data are provided from the career narratives of senior Scottish bankers recalled in the aftermath of the global financial crisis of 2007/8. The method of the study is interpretive, using themes drawn from MacIntyre's writings. These bankers faced moral choices as tensions developed between their own professional standards and the new corporate goals of the banks. We discuss MacIntyre's understanding of individual moral agency as a narrative quest in the context of different types of institution with different and often conflicting ideas about what constitutes good or right action. Habituation and deliberation are important in enabling action, but fully developed moral agency also depends on individuals being able to make choices in the space opened up by tensions within and between institutions.

We explain archaeological evidence of Sogdian merchants in central Asia in early medieval, remote long-distance trade on the emerging Silk Road. In fact, it began as barter, but was based on the social organization that Sogdians developed in their communities when migrating east. Their particular way of generating trust and institutionalized cooperation was by social leverage, involving third parties as contract witnesses and/or guarantors. These usually had own commercial relations with the contractors, facilitating crediting and exchange – and credible threat to defectors. While Greif (1989) had been criticized for overlooking courts in the Maghribi case, we discuss a differentiated (latent) role for courts. We also discuss property rights versus possession, transactions costs and price implications. We analyze the mechanism in historical cases and game-theoretical reconstructions, and explain trade flourishing under strong uncertainty.

This article builds on a legal institutionalist approach to assess market-based regulatory change in British television production over the last three decades. It explores how formal rules governing television production constitute market relations, and whether these rules are likely to be evaded by television producers and commissioners in a context where contracting depends heavily on social norms of cooperation, reciprocity and flexibility. Using qualitative data, this article suggests that changes in law and terms of trade intended to promote a market in television production have not had a straightforward or linear effect: compulsory independent production quotas and licensing models of terms of trade have redrawn organizational boundaries in unexpected ways, disturbed the public service remit and engendered new financial flows. Formal rules were nonetheless central to the trajectory of the television production industry, as they were a constitutive element of changes in the power structure of the sector towards producers’ interests.

This comment criticizes Ha-Joon Chang's assessment of contemporary institutionalism, in his article entitled ‘Institutions and Economic Development: Theory, Policy and History’, for failing to show fundamental problems in the discourse. I argue that the current discourse's insights are structurally biased because it fails to satisfactorily address methodological problems of doing meaningful comparative research. The discourse is characterized by a limited focus on differences of degree, a neglect of interaction, and a tendency to represent societies from a partial perspective. The result is an unbalanced debate that tends towards equating developed country institutions with economic success.

This article provides comments on the article titled ‘Institutions and Economic Development: Theory, Policy and History’ by Ha-Joon Chang.

This is a review of Joel Mokyr's fascinating book entitled A Culture of Growth. The work is summarized, noting its focus on Darwin-style evolutionary explanations of cultural change. But Mokyr's emphasis on cultural entrepreneurs and positive feedbacks in the procreation of ideas is insufficient to explain the origins of modern economic growth. Too much explanatory weight is placed on too few extraordinary people. It is argued that Mokyr's analysis should be extended, to bring the evolution of institutions, as well as the evolution of culture, into the picture at an additional level. The role of inter-state rivalry and exogenous shocks has also to be underlined. This kind of analysis can be developed within the framework of generalized Darwinism, which Mokyr himself adopts. This is a major and highly stimulating book.

The purpose of this symposium is to shed light on the genealogy of the idea of a business corporation, an economic institution which has long been regarded with a mixture of awe and apprehension. Each of the four original contributions addresses the history of some of its key features. In the process, each contributor reveals some of the insights that history has to teach us regarding the central concepts that inform contemporary debates about the nature of the corporation, the contours of the corporation's purpose, the sources of corporate power, the functions of corporate law, the duties of directors, the status of shareholders, and the legitimacy of corporate rights.

We examine the effectiveness of bankruptcy institutions at promoting socially efficient allocation of resources. Under the Slovenian simplified reorganization procedure, firms with rejected reorganization proposals are not automatically liquidated. This unique institutional feature facilitates an estimation of the extent of different types of filtering failures. Based on an ex-post conceptualization of firm viability, Type I errors (the acceptance of plans by non-viable firms) are more likely than Type II errors (the rejection of plans by viable firms) and the overall incidence of filtering failure is 27%. Based on an ex-ante conceptualization of firm viability, any given reduction in Type II errors would give rise to three times as many Type I errors. We contextualize our findings in the light of prior results in the literature, alternative mechanisms for insolvency resolution, and related bankruptcy reorganization schemes internationally where courts are awarded a comparatively more prominent role.

Bankruptcy has long been the standard approach to reorganizing failing corporate entities. In recent years, bailout, whereby a governmental entity takes charge of the reorganization, has appeared as an alternative. At the enterprise level, there is a Coase-like invariance proposition at work in which a failing concern is replaced by a going concern under either process. Significant differences arise once we move beyond the point of reorganization. The choice between bankruptcy and bailout is fundamentally a choice between alternative arrangements for corporate governance, and not about transforming failing concerns into going concerns because this will happen under either arrangement. We argue that political entanglement in corporate restructuring will tend to preclude the entrepreneurial discovery process. We recount the recent American auto and financial industry bailouts, highlighting how each episode was guided by political considerations, which served to distract the restructuring process from discovering those opportunities that market-based restructuring would have discovered.

A growing literature in the fields of economics and political science has identified the importance of culture for both economic development and good governance. In this article, we argue that a fundamental factor driving cultural traits conducive towards development and governance is inter-personal income inequality. Our empirical evidence from a cross-section of countries and based on measures of culture extracted from the World Values Survey, provides strong support for our argument even after controlling for the effect of an extensive range of potentially confounding variables and the possibility that our estimates may suffer from both measurement error and reverse causality.

This Article considers one aspect of the ongoing debate about the moral limits of markets – namely, the purported harmful effects of market transactions on particular relations, goods, services, or society at large, due to an inappropriate valuation. In other words, the argument is that some markets are ‘repugnant’ because they degrade and corrupt a variety of nonmarket values and relations, not just to the willing parties to the exchange, but to larger segments of society. This objection contains both a (frequently unacknowledged) empirical component and a moral component. This Article critiques these empirical claims on two grounds. First, market skeptics fail to provide evidence of the negative effects they hypothesize, despite widespread variation over time and across legal regimes. Second, these objections fail to account for the well-documented human tendency to fashion repugnant exchanges in a manner that reinforces – rather than undermines – deeply held values and relationships.

In multilevel marketing companies (MLMs), member-distributors earn income from selling products and recruiting new members. Successful MLMs require a social capital structure where members can access and mobilize both strong and weak social ties. Utah has a disproportionate share of MLM companies located in the state and a disproportionate number of MLM participants. We argue that Utah's dominant religious institutions have led to the emergence of a social capital structure, making MLMs particularly viable. Utah is the most religiously homogeneous state; roughly half its population identifies as members of the Church of Jesus Christ of Latter-day Saints (LDS Church). The LDS Church's institutions foster a social capital structure where (almost all) members have access to and can leverage social capital in all its forms. LDS institutions encourage members to make meaningful social connections characterized by trust and reciprocity with other church members in local neighborhoods and across the world.

This article introduces the special issue on climate adaptation and institutions. Economic accounts of climate adaptation have stressed its collective action nature and the limitations of standard economic approaches to the matter. Governance accounts, on their part, have shown that adaptation does not always happen when it is expected. Against this background, institutional economics has the potential to shed light on those societal processes and collective mechanisms leading to and shaping adaptation (or the absence of it). The selection of articles contributing to this special issue shows that climate adaptation can indeed be explored successfully through institutional economics, and that doing so fits well within the institutional economics agenda. Some recommendations for future research are provided at the end.

Institutions are the driving features of economic and human development. Together with other social structures they influence the trajectories of societal change. Such factors are however tightly connected and should not be analysed in isolation but considered as interdependent with each other. This study contributes to the understanding of interconnections among institutions and other structural factors by focusing on two features: the manifold nature of linkages and the possibility of relations being asymmetric. An analogy to symbiotic relationships, common in ecology, serves as inspiration for an innovative methodological strategy to empirically study multiple interconnections. Focusing on the Brazilian municipality level, the study includes 54 structural factors in a correlation network. Empirical results include the identification of centroids, meaning most connected factors, which tend to gain or lose importance at higher levels of municipal development; and the identification of positive asymmetric relationships between structural factors, which may inform on system dynamics.

Deirdre McCloskey is right, economists interested in comparative development ought to pay more attention to the history of ideas. But, which ideas? And how do they emerge? In this short paper I argue that other ideas, besides the bourgeois ethics, are at least as important. And that a new emphasis on ideas does not make institutions less important, nor does it require that we abandon the traditional method of economics.

This essay explores the trade-off between strong and weak intellectual property rights inside firms with reference to the importance of job termination. The probability of job termination has an effect on the relative profitability of different intellectual property rights regimes. Weak intellectual property rights may make it more attractive for skilled workers to join the firm, which will increase its profits while employing workers. However, when a job match is terminated the firm is left with the ownership of intellectual property only under a strong intellectual property rights regime. Based on the institutional complementarities approach we develop a simple model that analyses this trade-off, in which multiple organisational equilibria exist. We show that when intellectual property rights are taken into account, expectations such as increase in the skill and knowledge content of work are not inevitable in the knowledge economy.

In this article, we reconceptualize, using an extended discrete and dynamic Ostrom's classification, the specific intellectual property (IP) regimes that support geographical indications (GIs) as ‘knowledge commons’, e.g. a set of shared collective knowledge resources constituting a complex ecosystem created and shared by a group of people that has remained subject to social dilemma. Geographical names are usually considered part of the public domain. However, under certain circumstances, geographical names have also been appropriated through trademark registration. Our analysis suggests that IP laws that support GIs first emerged in Europe and spread worldwide as a response to the threat of undue usurpation or private confiscation through trademark registration. We thus emphasize the nature of the tradeoffs faced when shifting GIs from the public domain to shared common property regimes, as defined by the EU legislation pertaining to GIs. In the context of trade globalization, we also compare the pros and cons of regulating GIs ex-ante rather than engaging in ex-post trademark litigation in the courts.