Redefining the Rules of the Economic Game
New Horizons in Institutional and Evolutionary Economics series
Edited by Marie-Laure Djelic and Sigrid Quack
Chapter 5: Changing Transnational Institutions and the Management of International Business Transactions
Richard Whitley INTRODUCTION The comparative analysis of forms of capitalism has emphasized the institutionally structured nature of economic activities and outcomes (Hall and Soskice 2001; Hollingsworth and Boyer 1997; Whitley 1999). Variations in dominant institutions, such as those governing access to and use of capital and labour, explain the major contrasts in systems of economic coordination and control that have become established in twentieth century capitalism. They also help to account for continuing national differences in sectoral specialisation, technological development and performance (Soskice 1997; Quack et al. 2000; Whitley 2000). An important aspect of these contrasts concerns inter-firm relationships, especially how firms manage transactional uncertainty. Different institutional frameworks encourage owners and managers to deal with suppliers, customers and competitors in different ways across market economies, as the contrast of Japan and the UK exemplifies (see, for example, Sako 1992). Many of these accounts of different patterns of economic organisation focus on the postwar nation state as the dominant unit of analysis and location of key institutions governing economic activities. As Djelic and Quack point out in their introduction to this book, the international business environment is typically regarded as anomic and adversarial, with weakly developed institutions that are limited in their effects on economic behaviour. However the dominant role of national institutions, and of the nation-state itself, in governing economic activities, is historically contingent, and various conventions for managing international business relationships have been developed in different industries and countries since the rise of industrial capitalism. While the global business...
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