Elgar original reference
Edited by Geoffrey Wood and Mehmet Demirbag
Geoffrey Wood and Mehmet Demirbag There is a growing interest on the effects of institutions on how firms manage, and how differences in embedded institutional configurations force firms to adapt how they do business according to context in different parts of the world. Institutions may be conceived of in rational-hierarchical or relationship terms (Goergen et al. 2009). The former, grounded in rational choice economics assumes that the choices rational actors make is framed by specific institutional incentives and disincentives (North 1990; Peters 2005); it is held that, above all, of central importance is private property rights. Such approaches are dominant in the economics and finance literature (North 1990; La Porta et al. 1999). In contrast, relationship or socio-economic approaches to institutions reject the view that a single relationship (e.g. private property rights) will overcode all others. Rather, what firms do reflects complex webs of ties, involving not just owners, but also employees, associations, wider society, and directly or indirectly, the state (Peters 2005). The literature on comparative capitalism suggests that the manner in which firms manage – and indeed, conduct other social and economic relations within and beyond the firm – will depend on specific institutional configurations, and the particular complementarities made possible in a particular space and place (Hall and Soskice 2001; Whitley 2005; Hall and Thelen 2009). What in practical terms this means is that a range of different combinations of relationships may prove equally functional: the relative strength of property rights are not necessarily the most important institutional feature...