How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclasical accounts provide an "undersocialized" or atomized-actor explanation of such action, reformist economists who attempt to bring social structure back in do so in the "oversocialized" way criticized by Dennis Wrong. Under-and oversocialized accounts are paradoxically similar in their neglect of ongoing structures of social relations, and a sophisticated account of economic action must consider its embeddedness in such structures. The argument in illustrated by a critique of Oliver Williamson's "markets and hierarchies" research program.

Economic Action and Social Structure: The Problem of Embeddedness

Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as “the organizational advantage,” rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital; (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and proces...

https://www.jstor.org/stable/pdfplus/259373.pdf

Social Capital, Intellectual Capital, and the Organizational Advantage

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

https://www.jstor.org/stable/pdfplus/259056.pdf

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

Output per worker varies enormously across countries. Why? On an accounting basis, our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker--we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language.

/pdf/why-do-some-countries-produce-so-much-more-output-per-worker-r25pge75qn.pdf

Why Do Some Countries Produce so Much More Output Per Worker than Others

This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.

/pdf/corruption-and-growth-2z9d0x0u16.pdf

Corruption and Growth

Why do developing countries fail to adopt the institutions and policies that promote development? Our answer is the violence trap. Key political reforms — opening access and reducing rents — are typically feasible only when the domestic economy reaches a given level of complexity (for reasons we specify); yet complex economies typically can emerge only when key political reforms are already in place (for standard reasons). The interdependence of political reform and economic complexity entails violence because, as we show, unreformed polities lack adaptive efficiency. The literature sparked by Lipset’s modernization thesis has operationalized “economic development” as a higher GDP per capita. Building on Steuart, we view development as creating a more complex economy whose workings will be more seriously disrupted by political violence. Empirically, we show that economic complexity (as measured by the Hidalgo-Hausmann index) strongly deters coups, even controlling for GDP per capita and level of democracy.

The Violence Trap: A Political-Economic Approach to the Problems of Development

The Economic Growth of the United States, 1790-1860

This chapter describes the confront a number of fundamental puzzles in economic history/development—puzzles that go to the heart of the nature of economic change. They can be broadly classified under two general headings: how to account for the uneven and erratic pattern of both historical change and contemporary development, and how to model this process of change and development. Economic organizations are firms, trade unions, cooperatives, etc.; political organizations are political parties, legislatures, regulatory bodies; educational organizations are universities, schools, vocational training centers. It was the lack of large-scale political and economic order that created the essential environment hospitable to political/economic development. The Netherlands and England pursued different paths to political/economic success, but in each case, the experiences were conducive to the evolution of a belief structure that induced political and economic institutions that lowered transaction costs.

/pdf/some-fundamental-puzzles-in-economic-history-development-4p5xgs73sn.pdf

Some Fundamental Puzzles in Economic History/Development

There is now a growing understanding that economic, political, legal, and social institutions are essential to the economic success and failure of nations. Governance can be defined in various different ways, and its meaning certainly differs when authors talk of corporate governance versus governance in general. In the context of economic growth and development, governance refers to essential parts of the broad cluster of institutions. Particularly important elements of governance, defined as such, will include the political institutions of a society (the process of collective decision making and the checks on politicians, and on politically and economically powerful interest groups), state capacity (the capability of the state to provide public goods in diverse parts of the country), and regulation of economic institutions (how the state intervenes in encouraging or discouraging economic activity by various different actors). Thus the interactions between governance and growth are intimately linked to the interactions between institutions (broadly construed) and economic growth. The discussion offers a broad view of the diverse strategic choices available to development decision makers, and helps clarify how the preferred choice might be conditioned by a country's unique historical circumstances. It highlights a variety of distinctive dynamic sequences, which differ from one another both in their points of entry and, more broadly, in what comes before what as development unfolds. The relevance of each of these distinct sequences depends on country-specific realities. To be sure, the discussion has painted with a very broad brush. But the risk of taking an excessively broad view seems less worrying than the alternative that seems all too common in the current discourses on both governance and growth: partial approaches; cookie-cutter recommendations that fail to account for countries' radically disparate circumstances; and inattention to dynamic processes that link the different dimensions of development.

Governance, growth, and development decision-making

https://ecsocman.hse.ru/data/781/763/1216/9411007.pdf

Douglass C. North

Papers

The Violence Trap: A Political-Economic Approach to the Problems of Development

The Economic Growth of the United States, 1790-1860

Some Fundamental Puzzles in Economic History/Development

Governance, growth, and development decision-making

The Historical Evolution of Polities