The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

The Economic Institutions of Capitalism

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

https://mpra.ub.uni-muenchen.de/21442/2/mpra_paper_21442.pdf

The resource-based view: A review and assessment of its critiques

http://www.bmcommunity.sitew.com/fs/Root/8oezg-Demil_et_Lecocq.pdf

Business Model Evolution: In Search of Dynamic Consistency

To enable a better understanding of the underlying logic of path dependence, we set forth a theoretical framework explaining how organizations become path dependent. At its core are the dynamics of self-reinforcing mechanisms, which are likely to lead an organization into a lock-in. By drawing on studies of technological paths, we conceptualize the emergent process of path dependence along three distinct stages. We also use the model to explore breakouts from organizational path dependence and discuss implications for managing and researching organizational paths.

/pdf/organizational-path-dependence-opening-the-black-box-4ehmaa5btz.pdf

Organizational Path Dependence: Opening the Black Box

In the resource-based view of strategy and in evolutionary economics, complementary assets play a crucial role in explaining sustainable competitive advantages and innovations. Despite the apparent importance of complementary assets for the understanding of corporate strategy, their creation and the associated managerial problems have been much less discussed. We believe this to be a major weakness in the strategic theory of the firm. Interestingly, problems of coordination and cooperation are center stage in the contract-based theories of the firm, and we try to integrate some of their insights into a resource-based perspective. Specifically, we show how complementary assets raise the need for strategic direction by a firm's top management. Moreover, complementary assets magnify internal incentive problems, and their management has an impact on the innovativeness of a firm. Lastly, complementary assets play a crucial role in the internal appropriation of innovative rents. We demonstrate the fruitfulness of our integrated framework by relating some of our findings to the literature on corporate strategy, industry evolution, and organizational structures. Copyright © 2007 John Wiley & Sons, Ltd.

https://www.jstor.org/stable/pdfplus/20142418.pdf

Innovations and the role of complementarities in a strategic theory of the firm

Beyond the well-known discussion in regard to the Cassis de Dijon of the European Court of Justice, implying the mutual recognition of national product regulations, the topic of mutual recognition and regulatory competition has emerged again in the realm of European corporate laws (“Centros” of the ECJ in 1999). Can effective competition among European corporate laws be expected? In the US a broad discussion has developed whether the existing competition process among US corporate laws leads to permanent legal improvements by legal innovations or to a race to the bottom. Beyond this discussion a new point has been raised recently: the possibility and importance of path dependence as a potential problem for the efficacy of competition among corporate laws (lock-ins). For the analysis of this problem we apply the concept of technological paradigms and trajectories to legal rules in corporate law and introduce “legal paradigms,” which direct the search for better legal solutions in certain directions and might be stabilized by certain factors (esp. complementarities to other legal rules) leading to considerable path dependence effects. Our results show that path dependence might play a crucial role for competition among European corporate laws, even if the principle of mutual recognition would be introduced to corporate laws in the EU, implying that competition among European corporate laws might be difficult and sluggish. Consequently the question arises whether additional meta-rules should be established that might mitigate the problem of path dependence and lock-ins in regulatory competition in corporate law.

/pdf/european-corporate-laws-regulatory-competition-and-path-2xyepvai19.pdf

European Corporate Laws, Regulatory Competition and Path Dependence

In this paper, we examine the link between innovative activity on the part of firms, the competitive pressure to introduce innovations and punitive damage awards. While innovative activity brings forth valuable new products for consumers, competitive pressure in the ensuing innovation race induces firms to launch innovations too early, thereby raising the likelihood of severe product risks above the optimal failure rate. Introducing innovations too early may call for the application of punitive damages instead of mere compensation of harm caused, in order to decelerate such welfare-reducing innovation races.

/pdf/innovation-tort-law-and-competition-3fg81ykswb.pdf

Innovation, Tort Law, and Competition

Purpose



– The aim of this paper is to propose an integrative framework of organizational decline on the firm‐level.




Design/methodology/approach



– In recent years, there has been a growing number of contributions to the research field of organizational decline from diverse theoretical perspectives and different levels of analysis. In this paper, an integrative framework of organizational decline on the firm‐level is proposed that relies on a process perspective, combining insights from organizational ecology, path dependence and the resource‐based view.




Findings



– Different theoretical perspectives are used to explore various aspects of the problem of organizational decline. A theoretical framework as a theoretical perspective is developed to guide research and to interconnect diverse theoretical findings. Based on the suggested framework, two archetypes are distinguished which lead an organization to insolvency: malabsorptive incompetence and maladapted competencies.




Originality/value



– The proposed framework allows the capture of the dynamic process of organizational decline and the identification of the triggers driving organizational decline.

Klaus Heine

Papers

Innovations and the role of complementarities in a strategic theory of the firm

European Corporate Laws, Regulatory Competition and Path Dependence

Innovation, Tort Law, and Competition

Organizational decline: A synthesis of insights from organizational ecology, path dependence and the resource‐based view

Regulierungswettbewerb im Gesellschaftsrecht : zur Funktionsfähigkeit eines Wettbewerbs der Rechtsordnungen im europäischen Gesellschaftsrecht