Institutions and
Transnationalization
Jae Hwan Lee
April 6, 2010
Key Points
• Overcome opposition between institutions
(stability) and globalization (breakdown)
• Argue that institutions and globalization are
intertwined
Key Points
• Institutions are
– Those collective frames and systems that provide stability
and meaning to social behavior and social interaction and
take on a rule-like status in social thought and action
(Meyer and Rowan, 1977; Douglas, 1986: 46-48)
– Institutions have both structural and ideational
dimensions
• Transnationalization is
– To describe a world where economic and social
organization and coordination increasingly each across
national borders
– A better term than globalization and internationalization
Organizational Institutionalism
• Agnostic stance on transnationalization
• Organizational institutionalism
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Habitualization/Objectification/Institutionalization
De-institutionalization (political/functional/social)
Both used in analysis of institutional dynamics
Both allow for contestation between various interested
actors in the first two phases of the institutional process
and acknowledge the co-existence of different degrees of
institutionalization
Organizational Institutionalism
• Expected Contributions
– Analysis of institutional phenomena in the transnational
sphere where struggles between different parties and a
fair degree of institutions in the making are to be expected
– Offers the tools to study cross-border diffusion of
practices, templates and rules as sources of
institutionalization and de-institutionalization
– Allow the integration of a transnational dimension into
institutional analysis
Societal Institutionalism
• Refers to what is now a dense set of
conceptual and empirical studies focusing on
the historical emergence and contemporary
structuring of national economies
• Focus on the systematic nature of national
configurations of national institutions
Societal Institutionalism
• Adaptation of societal institutionalism in
transnationalization context
– Call into question the conception of institutions as
fully determining economic organization and action
– Explore what happens when actors or organizations
become involved in multiple institutional
environments with different and conflicting rule
systems
– Look at transnational arena as institutionalized or
institutionalizing space
World System Institutionalism
• Refers to a now well-established tradition of
cultural institutionalism
• World society is a society of empowered
actors; a society permeated by and
permeating actors with powerful cultural
values or institutional frames
World System Institutionalism
– Cultural and institutional web characteristics can function
as if centralized, state-like global power (Meyer et al.,
1997)
– Add the speed of diffusion and global pervasiveness of
standardized model and blueprints
– Bring cultural perspectives into analysis of states,
organizations and their transformation
– Actorhood is the soft kind and empowered by cultural
frames
– Real power and authority sources are cultural and diffuse,
rather than structured and centralized
– States are embedded in, shaped, and fashioned by a
powerful world society an its associated institutional and
cultural templates
World System Institutionalism
• More focus is needed on;
– Construction and negotiation of global cultural
models or institutions
– Understanding of actual processes and mechanisms of
diffusion and local reception, where transnational
institutional blueprints meet with local institutional
traditions
– Empirical and conceptual work on carriers
• Located at the interface of multiple sources of
embeddedness
• Cross and overcome the national/transnational border
• Contribute to back and forth translation and negotiation
International Relations
• Progressive Retreat of the State (Strange, 1996)
– In the process of regulatory reforms and privatization and
public service dismantling, states have not withered away
– Regulatory states (Majone, 1996) are as much powerful as
more interventionist states and are embedded in complex
constellations of actors and structures
– States’ input and identity are difficult to disentangle and
separate from those of other actors
International Relations
• Non-monolithic States
– State institutions are complex patchworks
– Porosity of state institutions has increased significantly
– Boundaries are tighter between sectors of state than
between state agencies and other actors in the same
sector
International Relations
• Various Forms of Private Authority
– Multiplicity of rule-making and institution-building
activities that emerge and are structured outside states
• Transnational Social Networks
– Transnational class formation (Van der Pijl, 1984, 1988)
– Mechanism of governance over state boundaries (Haas,
1989, 2002)
• Epistemic community makes reference to communities of
expertise and practice that are increasingly transnational while
individuals in those communities retain some form of local or
national influence and authority
International Relations
• Regulatory Networks
– A wide variety of public and private actors involved in rule
making, institution building and monitoring
– Complex interconnections between a multiplicity of
individual and organizational actors
– Organizational, cognitive, and normative frames
– Questions arise as to regulatory networks’ legitimacy and
legitimacy of private authority
Trans-nationalization as Institutional
Recombination
• Origins of transnational institutions
– Bricolage [construction (as of a sculpture or structure of
ideas) achieved by using whatever comes to hand], rather
than ex-nihilo generation
• Actors build upon, recombined, reinvent, reinterpret logics and
institutional arrangements
– Befits the processes of institutional emergence and
institutional building at the transnational level
– Institutional building in the transnational level involves
• Multiple actors or groups of actors with mental and action maps
originating from quite different institutional contexts
Trans-nationalization as Institutional
Recombination
• Historical Scenarios: Transnational Organizations or
Regional Federations
– Transnational Organization
• Roman Catholic Church, League of Nations, United Nations, OECD
• ILO, IMF, GATT (WTO)
• Central core, in charge of setting the rules and building institutions
at the transnational level
• Central core, directly reflecting the interests of member states
• Tools of particular nation states and governments
• Mirroring the existing geopolitical balance of power
• However, technocratic elite may have its own identity
Trans-nationalization as Institutional
Recombination
• Historical Scenarios: Transnational Organizations or
Regional Federations
– Regional Federation
• Followed temptation to create a supranational market or nation
• Empires, ECSC, EEC, or EU, and possibly NAFTA
• The process of rule setting and institution building stems from a
political initiative
• Public or semi-public actors, governments or representatives are
instrumental in that process
• The scope and reach of those centrally engineered constructions
go beyond those of transnational organizations
• New rules and institutions are enforceable due to enforceable
mechanisms that put member states under compliance
Trans-nationalization as Institutional
Recombination
• Historical Scenarios: Transnational Organizations or
Regional Federations
– Enforcements in Regional Federations
• Direct controls: associated with rewards (+) and sanctions (-)
• Voluntary compliance: member states aware of benefits from
supranational construction and consequences of not respecting
the terms of contract
Trans-nationalization as Institutional
Recombination
• Self-regulating communities: Scenario of the future?
– All actors come together, in non-structured and unformalized
settings, agree on collective rules (Cutler et al., 1999; Morgan
and Engwall, 1999)
– Public, semi-public, and private actors involved in rule setting,
institution building, and monitoring compliance
– Self-discipline or self-regulation
– NGOs and private actors, instead of waiting for public actors to
impose institutional frames, set their own rules
– Voluntary process, informal negotiation
– Emerging structural arrangements are amorphous, fluid and
multifocal
Trans-nationalization as Institutional
Recombination
• Self-regulating communities: Scenario of the future?
– Enforcement mechanisms
• Voluntary compliance: because all actors define the rules and
inflict upon themselves the institutional constraints that will
bound their actions and interactions
• Socialization: may emerge at a later stage
– Antecedents of self-regulating communities
• Structuring of commercial arbitration at the transnational level:
international cartels
• NGOs engage in standard settings, accreditation and soft
regulation
• MNCs become rule-setters and rule-developers: ICN (International
Competition Network)
Trans-nationalization as Institutional
Recombination
• Transnational recombination: Mode and Nature of
Process
– Mode
• Dominant : reflect one dominant local or national model (US)
• Negotiated: confrontation or rubbing against each other of
multiple locals or nationals, leading to negotiation
• Emergent: multiple actors with no clear identities and functioning
themselves at the interface of multiple rule systems, come in
collision with each other
Trans-nationalization and
Impact on Institutions
• Trickle-down Trajectories
– Transnational organizations or supranational constructions
as rule-making bodies and influencers on national polities
• EU, IMF, EBRD, WTO
– Challenger rules emerge from transnational space lacking
formal structure
• Self-disciplining transnational communities : rule making and rule
setting make take place at transnational fields or arenas lacking
structuration
• All kinds of actors negotiate and agree upon rules of the game
Trans-nationalization and
Impact on Institutions
• Trickle-down Trajectories
– Three groups
• One unit sample: US
• A few core and rather rich countries: compliance-driver
• Larger group and weak countries: susceptible to trickle-down
– Direct political dependence of national countries on a
supranational construction : EU
• Rules created at supranational level are likely to have
rapid and direct impact on national level
Trans-nationalization and
Impact on Institutions
• Trickle-up Trajectories
– National actors crossing national borders find rules of
game contradictory or in collision
• Individuals, groups, firms, associations, networks
• Widespread due to Internationalization of economic activities
– Foreign actors moving into national space with rules
different from local rules
• Locals or nationals pushing for new rules of the game
• New or emerging actors redefine
Trans-nationalization and
Impact on Institutions
• Trickle-up Trajectories
– Subsocietal level rules may change before national-level
institutionalization
– Transformation at subsocietal level reverberate at the national
institutional level: ex) Germany’s Kodex-Kommission
– Strategic firms or industries in smaller countries
• Nokia in Finland
• Forest industry in Norway and Finland
– Strength and legitimacy of those outsiders championing and
pushing for challenger rules
• Anglo-Saxon players : trademark advantage in finance and consulting
– Collision and national-level reverberation
• Subsocietal actors lack protective buffers or in crisis, collision intensify
– Collision and national-level reverberation
Conclusion
• Institutionalization, deinstitutionalization,
reinstitutionalization
• Institutional systems as open systems
• Social actors are embedded in locally and temporally
specific institutional rules of the game as well as
beyond local institutional settings
• Institutional logics competing at organizational,
societal, transnational
Conclusion
• Research Methodologies and Empirical Work
– Nested hierarchy of institutional context
– Reorient to analyze interaction between national and
transnational institutions
– Employ tools to analyze global and transnational forms or
organization, including MNCs, financial and knowledge
immediaries, loosely connected communities, networks
and their involvement in institution building and
institutional change
Conclusion
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Why do organizations exist?
Why are firms the same/different?
What causes changes in organizations?
Why do some firms survive and others don’t?
What are the emerging issues?