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

First published in 1973, this is a radical interpretation, offering a unified explanation for the growth of Western Europe between 900 A. D. and 1700, providing a general theoretical framework for institutional change geared to the general reader.

The Rise of the Western World

D IURING the past several decades there has been a growing interest in location theory in America. Building on the pioneering works of Thtinen, Weber, Lbsch, Palander, and others,2 a number of economists and geographers have extended the analysis to apply to a wide range of problems and have attempted to synthesize location theory with other fields of economics.3 However, very little work has been done in using the principles of location to analyze the historical growth of regions in America.4 While economists concerned with location theory sometimes point out the implications of their analysis for the growth of regions, they have not followed up these discrete observations with any systematic analysis. A fundamental difficulty has been that the theory of regional economic growth' has little relevance for the development of regions in America. Not only does the sequence of stages outlined by the theory bear little resemblance to American development but its policy implications are also fundamentally misleading. This paper will attempt to demonstrate the inadequacies of the existing theory of regional economic growth and will advance a number of propositions that may lead to a more useful theory, both for analyzing the historical development of the American economy and for understanding the contemporary problems associated with regional economic growth. The analytical propositions advanced in this paper, though explicitly oriented to America's development, would apply equally well to other areas that meet the following conditions: (1) regions that have grown up within a framework of capitalist institutions and have therefore responded to profit maximizing opportunities, in which factors of production have been relatively mobile,6 and (2) re1 I am indebted for criticisms and suggestions to several of my colleagues at the University of Washington, particularly Philip Cartwright, J. R. Huber, Franklyn Holzman, and Robert Lampman. Dean H. W. Stoke and the Research Committee of the Graduate School at the University of Washington generously provided financial assistance for research, part of which is used in this article.

Location Theory and Regional Economic Growth

The rise of the western world was the ascendency of a relatively backward part of the world to world hegemony between the tenth and the eighteenth centuries. Its realization involved fundamental economic, political and military changes. The focus of this short essay must of necessity concentrate on the economic issues although the political developments cannot, and should not, be overlooked.1

The rise of the western world

This book presents a model for examining problems of institutional change and applies it to American economic development in the nineteenth and twentieth centuries. The authors develop their model of institutional change. They argue that if external economic factors make an increase in income possible but not attainable within the existing institutional structure, new organizations must be developed to achieve the potential in income. Their model is designed to explain the type and timing of these necessary changes in institutional organization. Individual, voluntary cooperative, and governmental arrangements are included in the discussion, although the latter differs considerably from the first two.

http://ndl.ethernet.edu.et/bitstream/123456789/3387/1/111.pdf.pdf

Institutional Change and American Economic Growth

This chapter is intended briefly to summarise the essential characteristics
of the new institutional economics, to describe how it differs from neoclassical theory, and then to apply its analytical framework to problems of
development.

Douglass C. North

Papers

The Rise of the Western World

Location Theory and Regional Economic Growth

The rise of the western world

Institutional Change and American Economic Growth

The new institutional economics and third world development