SASE 2003: Abstracts Network H

SASE 2003:

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Abstracts Network H

Olivier Butzbach (European University Institute, Italy)
E-Mail address: olivier.butzbach@iue.it
Varieties of Capitalism: Going Beyond the Institutionalist Narrative. A comparative study of French and Italian savings banks, 1970-2000

This paper assesses the neo-institutionalist account of the persistent varieties of capitalism through a comparative study of the French and Italian savings banks sectors. According to neo-institutionalism, national capitalisms resist convergence pressures because of the interplay of economic and political institutions. Neo-institutionalists identify path-dependence as the main dynamic behind this resilience of national capitalisms. Although this theory has allowed moving beyond the simplistic, dichotomist views of globalization by introducing, institutions and embededness into the equation, it presents many flaws as well. First, it fails to understand the mechanisms by which agents conform, resist or undermine the existing institutional frameworks; secondly, it overlooks the autonomy of political agents in setting objectives and leading change; as a result, it does not permit a full understanding of the complex linkages between governments and firm's decisions in the long run. This paper tries to address such flaws through the analysis of the French and Italian savings banks over the past three decades, relying on quantitative (with longitudinal data on banks performance and balance sheet structure) as well as qualitative data (with 50 interviews with savings bank staff and regulators in both countries).

Sun-Ki Chai (University of Hawaii, USA)
E-Mail address: sunki@hawaii.edu
Culture, Rationality and Economic Institutions in East Asia: The Case of the Chinese Family Firm

Explanation of economic interactions within East Asia has long been split between those who view action as an outcome of rational decision-making by an autonomous state and those who view it as a result of cultural patterns ingrained in Confucianism and other elements of traditional culture. This paper shows how these two approaches can be used in a complementary rather than conflicting manner to explain the origins of the Chinese family firm. It does so by examining ways in which cultural norms can provide points of convergence for rational actors in situations of strategic uncertainty that would otherwise induce multiple equilibria. Cultural norms will be particularly important at those points in history when new institutions are being formed, and can lead to distinct institutional forms. Once created, however, the institutions themselves can structure incentives in a way that leads to self-perpetuation.

Stephen W K Chiu (The Chinese University of Hong Kong, Hong Kong)
E-Mail address: stephenchiu@cuhk.edu.hk
Network Deficit? Inter-firm Linkages and the Software Industry in Hong Kong

This paper examines the nature of inter-firm network in the software industry in Hong Kong. The current literature on industrial districts and social capital the Silicon Valley now commonly highlight the role of inter-firm network as a source of innovation and productive edge. Recent studies on the rise of the Indian software cluster also concur with this insight. Our exploratory study extends this line of work by focusing on the burgeoning software industry of Hong Kong. We found that there was few pre-existing inter-firm network, where firms searched and initiated their contracts from the open market rather than by referrals or derived from other forms of personal and inter-organizational relationships. The innovative and production network evident in Silicon Valley is plainly absent in Hong Kong. The lack of institutional drivers of network building in the form of public policies and other public-sector agencies also accentuated this "network deficit." Moreover, we have also observed that firms with different core strategies developed different coping strategies to the limited scope of inter-firm linkages. Finally, we will briefly discuss the long-term prospect of the software industry in Hong Kong and possible means to forge a more vibrant innovative network.

Colin Crouch (European University Institute, Italy)
E-Mail address: colin.crouch@iue.it
Towards a micro-analysis of forms of capitalism

In a number of recent works I have been developing a criticism of the holistic character of many approaches to the study of comparative capitalism. In particular, I have argued that insistence on the idea of coherent national systems (i.e., the assertion that actual cases always correspond to ideal types) weakens the capacity of analysis to account for institutional innovation by social actors. I have argued that a more disaggregative approach is needed. It is therefore necessary to propose in detail how such a disaggregative approach should be carried out in practice. I shall try to do this in the proposed paper, the starting point of which will be existing analyses of forms of governance by Boyer, Hollingsworth, Schmitter, Streeck, etc. The paper is therefore primarily theoretical and methodological, though it will be illustrated with practical examples.

Ewald Engelen (University of Amsterdam, The Netherlands)
E-Mail address: eengelen@fmg.uva.nl
Pension Fund Engagement. Chances and Limitations

In this paper the growing popularity of what is called 'pension fund engagement' is critically assessed by means of a reconstruction of the failure of the Swedish Wage Earner Funds. The outcome of this assessment is sobering. Even under optimal political conditions pension savings proved to be too unwieldy to have any impact on the ownership structure of large publicly quoted corporations. Apparently the logic of funded pension arrangements is such that the chances for active engagement are minimal, largely explaining the marginal amount of pension savings currently invested in socially responsible ways. The second part of the paper is an exercise in institutional redesign. In it a proposal for a Fund for Economic Development is presented, financed from the surpluses of regular pension funds, and largely organized like a 'classic' venture capital provider. In this manner the fiduciary duties of regular pension funds are taken seriously, while there will at the same time be sufficient mass behind the construction of an alternative investment infrastructure, including reconstructed concepts of 'risk' and 'return', that in the long run the monopoly of the mainstream financial industry on the definition of economic rationality stands a chance to be broken.

Juergen R. Grote (University of Konstanz, Denmark)
E-Mail address: juergen.grot@uni-konstanz.de
Internationalization, Europeanization and Organized Interest Domains in Germany, Britain and the United States

A recent debate both in international relations and in comparative politics centres around the question whether and to what extent internationalization and Europeanization are also discernible at the level of domestic institutions. The focus is on processes of adaptation of strategies and structures of these institutions to different kinds of external challenges. The present paper selects a particularly important type of institution – organized business interests – and presents comparative evidence for the case of chemical interest associations and associations representing the ICT sector in three countries (Germany, UK, US). After a discussion of how external threats and challenges are subjectively perceived among leading figures of these associations, the paper embarks on empirical network analysis and outlines the dominant structures of the two sectors' interest populations in three countries. The graphic representation used for that purpose has been elaborated by the politics and the informatics departments of Konstanz University. The data is drawn from an international research project that the author is coordinating at Konstanz. It includes complete results of the structural part of the analysis. The main finding is that internationalization and Europeanization notwithstanding even powerful actors such as the three countries' chemical and ICT associations remain firmly embedded within their domestic institutional contexts and that, secondly, external challenges of different kinds (economic, political, technological, societal) do not necessarily impact in any dramatic way on established structures which, most of the time, reach far back into the 18th century.

Carmen Dolores Wehbe Herrera (Universidad de La Laguna, España)
E-Mail address: cwebhe@ull.es
Situacion Actual Del Proceso de Integracion Europeo: Tareas Pendientes, Colapsos y Rupturas de un Proces en Marcha

El proceso de integración europeo se ha implementado sobre dos ejes articuladores: el de la profundización y la expansión. La década de los noventa es la antesala de transformaciones importantes en el mismo; al tiempo que se manifiestan claramente las fisuras de un proceso en exceso escorado hacia el mercado.

Efectivamente, la aceleración del proceso de integración europeo en la última década es una huida hacia adelante, por parte de la hoy Unión Europea, para apuntalar y acomodarse a la dinámica global. Por el camino la Unión Europea está dejando aparcados cada vez más temas, algunos de ellos de crucial importancia para la propia viabilidad del proceso de integración.

En el momento actual y con la próxima ampliación las rupturas e insuficiencias de este proceso en marcha irán adquiriendo cada vez mayor protagonismo. Es precisamente en este punto en el que nos centraremos analizando las insuficiencias del proceso tanto desde el punto de vista interno com externo.

Christel Lane (University of Cambridge, UK)
E-Mail address: col21@cam.ac.uk
Changes in Corporate Governance of German Corporations: Convergence to the Anglo-American Model?

This paper examines the many changes that have transformed the German system of corporate governance during the last seven years. It concludes that it is in the process of converging towards the Anglo-American system and that this has fundamentally affected the way strategic decisions are being made within firms. Large global firms in internationally oriented industries are particularly affected, but the notion of shareholder value and its many behavioural correlates are diffusing through the whole economy. Consequently, the distinctive logic, which had underpinned the German model of capitalism during most of the post-war period, is eroding, and this transformation is affecting also labour and industrial relations. The negative consequences of convergence for labour are highlighted. The argument is empirically substantiated with data about recent trends in financial markets, banks and within firms.

The paper theoretically examines institutional change, focusing on the notions of a system logic and of institutional coherence/complementarily. It analyses external sources of change, as well as highlighting the role of powerful internal actors in promoting this transformation process. The paper examines arguments which conceptualise changes in the German system variety of capitalism as a process of hybridisation but concludes that convergence is a more apt characterisation. Convergence is not seen as a functional necessity, nor is it regarded as inevitable.

Assaf Likhovski (New York University, USA)
E-Mail address: al841@nyu.edu
The Politics of Tax Avoidance Adjudication: A Comparative Report

Tax avoidance is one of the major problems that every tax system faces. Even tax systems which are seemingly progressive may in fact favor the wealthy because they allow determined individuals or corporations to exploit loopholes inadvertently embedded in the system to minimize their taxes. Courts play a major role in the fight against tax avoidance. However, the scope of judicial intervention in the tax avoidance schemes of taxpayers varies. Certain courts adopt a pro-taxpayer attitude to tax avoidance and other courts pursue a pro-government approach. What factors influence judicial attitudes to tax avoidance? One rare study of the history of British anti-avoidance doctrines in the first part of the 20th century has suggested that British judges have adopted a pro-taxpayer approach to tax avoidance because such approach was motivated by a class-based desire to assist wealthy taxpayers to reduce their taxes. This paper examines the validity of such a class-based interpretation based on two in-depth studies of the history of tax avoidance adjudication in the United States and in Israel. In the American case class interests may have played some role in determining early 20th century judicial attitudes to tax avoidance but cultural and psychological considerations also played a role. In the Israeli case too class interests may have had some effect but institutional factors especially the relative inefficiency of the tax collection machinery in the first decades after the establishment of the state were no less important. Class-interests, the paper concludes, may sometimes influence the way courts view tax avoidance but cultural, psychological and institutional factors also play an important role.

Eric Pineault (Carleton University, Canada)
E-Mail address: pineault.eric@sympatico.ca
The socioeconomic foundations of capitalist finance, towards an institutionalist perspective

This paper* presents a sociohistorical analysis of the development of the institutional foundations of capitalist finance using Canada as a case study. It combines Hyman Minsky's analysis of the social structure of capitalist finance and his historical typology of capitalist finance regimes with key insights on the institutional development of modern financial relations from Veblen, Commons and french regulationists (Boyer, Orlean) into a coherent theoretical framework. Using this framework we will examine the development of three basic dimensions of modern financial relations: obligation, negociability and liquidity. Differentiate the institutional forms of capitalist finance which rest on these different dimensions and identify the specific mechanisms by which they regulate accumulation. We will apply this analysis to the historical development of the Canadian capitalism, questioning in particular the current transition from a managerial to a financialized variety of capitalism.

*The paper presents part of PhD dissertation supervised by Robert Boyer and Jules Duchastel, successfully defended in the fall of 2002.

Dara Szyliowicz (Texas Tech University, USA)
E-Mail address: daras@ba.ttu.edu
Change and Patterns of Activity: Regime Approaches to Institutional Change

The question of how change occurs within institutions and fields has been a topic of recent debate (Dacin, Goodstein, and Scott, 2002). This paper argues that giving more attention to individual and institutional agency issues would prove fruitful for advancing theories on institutional change. By using work in political science on regime theory it is possible to better incorporate both collective understandings (such as institutional logics) and agency considerations into conceptions of institutional change processes. Regime theory, acknowledges the importance of "norms" and "principles"; however, with its emphasis on political action, it also recognizes the degree to which actors' maneuvering shapes and influences the institutional environment (Krasner, 1983; Young, 1989). Actors jockey for position, and work to influence the "rules of the game", through regulations and decision-making procedures; eventually they reach an agreement which then ultimately leads to change within the field -- a new regime(Wendt and Duvall, 1989; Jonsson, 1995). We empirically test the effects of competitive regimes using 35 years of data on the brokerage house industry. This study looks at how the relationships between the actors came together to create specific regimes of competition at certain times and how those regimes changed over time. Event history techniques are used to test whether changes in a regime have an effect on firm founding.

Ronan Le Velly (Université de Nantes, France)
E-Mail address: rlevelly@voila.fr
Markets transactions sociology vs Market sociology

This paper aims at considering the theoretic tools sociology offers to study market issues.

I shall begin by presenting the work of some researchers who have been sharing the project of a New Economic Sociology. I name this approach Market transactions sociology. By this title, I stress the rich sociological theory of action that the notion of embeddedness allows. What's more in using the plural in "market transactions", I indicate the absence of market uniform model. Social context enables, constrains and shapes market transactions in different ways.

It remains to be proven if the specificity of the market phenomenon is not disregarded in this approach. I label Market sociology the works of past authors, especially Max WEBER, who all stress the distinctive characteristics of the market exchange compared with other forms of goods transactions. This term is not due to the lack of sociological theory of action but to the fact that this action is perceived through a typical picture, combining formal rationality and impersonality. Besides, Market sociology aims at seriously considering the consequences on social issues of the development of market logic and deals with macro- historical features like capitalism.

Then, in confronting these two research traditions, I shall highlight some oversights or inadequacies in New Economic Sociology.

My theoretical presentation is illustrated with some empirical examples of practices of "fair trade" (world charity shops and label), which are thought as "alternative to the market" while being, in actual fact, part of the market cosmos.

Christina L. Ahmadjian (Hitotsubashi University, Japan)/Gregory E. Robbins (Georgia Institute of Technology, Georgia)
E-mail:mailto:%20cahmadjian@ics.hit-u.ac.jp/greg.robbins@mgt.gatech.edu
A Clash of Capitalisms: Foreign Shareholders and Corporate Restructuring in 1990s Japan

This paper examines the conflict between stakeholder- and market-based business systems that resulted from an increase in foreign portfolio investment in the Japanese economy in the 1990's. As foreign institutions, which were more interested in investment returns than in long-term relationships, replaced domestic shareholders, one of the fundamental pillars of Japan's stakeholder capitalism began to crack, and Japanese firms began to adopt practices more characteristic of Anglo-American market economies. In an analysis of 1626 listed Japanese firms between 1990 and 1997, we found that foreign shareholders increased a firm's propensity to downsize and divest assets. The effect of foreign shareholders was strongest among firms less integrated into the existing Japanese system-those with lower levels of shareholding by domestic corporations and financial institutions. There is little evidence that foreigners exerted pressure directly through shareholder activism. Rather, as firms' resource dependencies shifted from domestic to foreign capital, their behavior shifted accordingly.

Nina Bandelj (Princeton University, USA)
E-mail: nbandelj@princeton.edu
Determinants of Foreign Direct Investment Trajectories in Central and Eastern Europe (1990-2000)

Foreign direct investment (FDI) has been considered a crucial force for the restructuring of post-socialist economies. This paper examines the determinants of overtime FDI flows in eleven Central and East European countries since 1989. Previous research suggests that economic conditions, which promise highest returns and minimum costs, will attract FDI flows. In contrast to this investor-centered perspective on efficiency calculations, I argue that FDI is a social process, constrained and enabled by both the investors' and hosts' actions and their institutional underpinnings. Using pooled cross-sectional time series analysis, I find that economic characteristics and risk ratings contribute little to explaining FDI flows in Central and Eastern Europe. Rather, investors seem to be assured by the legitimacy granted to the East European countries after they sign European Union Agreements. In addition, the decisions of post-socialist states to sell large state monopolies to foreigners significantly shape the FDI trajectories across countries over time, creating turning points in the series. In light of this finding, I conduct a discrete time event history analysis estimating the hazard of states to start selling strategic sectors to foreign investors. I find that state actions, converging over time, are not pressured by economic necessity, but depend upon the historically institutionalized organization of domestic economies and the efforts to protect domestic ownership in the newly established states. These analyses highlight the role of institutions in facilitating market processes.

Helen Callaghan (Northwestern University, USA)
E-mail: h-callaghan@northwestern.edu
Battle of the systems or multi-level game? Domestic sources of intergovernmental disagreement over company law harmonization in the European Union

What makes sovereign states agree to international integration has long been a subject of debate among scholars of the European Communities. Much less attention has been devoted to the obstacles on the path towards ever closer union. Yet the sources of divergent national interests regarding the design of shared rules are often far from obvious. Why do decades of negotiation among capitalist countries of comparable size fail to resolve fundamental disagreement regarding the regulation of common markets? Researchers in the Varieties of Capitalism tradition have grappled with related issues, but their functionalist "battle of the systems" explanation for harmonization failure is unsatisfactory because it neglects the political dimension of institutional design.
The present paper discusses the domestic sources of conflicting German, French and British preferences regarding EU legislation on two aspects of corporate governance: shareholder rights and worker codetermination. Analyzing lobbying activities in negotiations over the hostile takeover directive and the European Works Councils directive from the 1980s to the present, I show that struggles over the design of rules governing business are no less intense within countries than between countries. This implies that, contrary to an influential strand of the Varieties of Capitalism literature, divergent governmental positions reflect more than a mere clash of fundamentally incompatible economic systems that are universally cherished at home. Instead, they seem to result from differences in the -institutionally mediated- balance of political power at the domestic level.
My main theoretical aim is to improve upon existing explanations for continued institutional divergence among advanced industrialized economies. Data gathered for that purpose may also be of interest to rational choice theorists working on two-level bargaining models, to micro-economists developing the New Economics of Organization and to international relations scholars debating the conceptualization of the European Union as a system of multilevel governance. Among other things, progress on these issues will contribute to a more realistic assessment of the possibilities and limits of corporate law reform and European economic integration.

Thomas David (University of Neuchatel, Switzerland)/André Mach (University of Lausanne, Switzerland)
E-mail: andre.mach@iepi.unil.ch
Corporate Governance in Sweden and Switzerland: Contemporary Institutions in Historical Perspective

Until the beginning of the 1980s, Switzerland and Sweden shared some common features regarding the functioning of their systems of corporate governance. Despite the high degree of internationalisation of their economies (in particular the strong extroversion of the major companies), both countries were characterised by the existence of various ownership restrictions organised by private actors and favoured by legal rules. The distortion of voting rights and the predominance of a "pyramidal structure" constituted the main instruments of this "selective protectionism" which allowed national ownership and management to protect domestic companies from foreign control or takeovers. Our paper will focus on the historical construction of corporate governance's mechanisms in these two countries, and specifically the construction of these defensive instruments. In both countries, it is possible to observe a "periodisation" in the reforms of corporate governance regulations (company law and financial regulations mainly). Three major periods can be distinguished: 1) 1880-1930: The liberal phase, characterised by the initial adoption of company law in 1881 Switzerland and 1893 in Sweden. 2) 1930-1980: The institutionalisation and consolidation of ownership restrictions. The depression of the 1930s led to profound reforms of company laws in both countries (1936 in Switzerland and 1938 in Sweden). The differences in the institutionalisation of these restrictions' mechanisms can be explained by economic and political factors: In Sweden, this revision has been an important element of the historical compromise between capital and labour since the end of the 1930s. In Switzerland, the reinforcement of these defensive mechanisms process can be explained by the high degree of autonomy and self-regulation in the corporate sector, due in part, to the weakness of the central state. 3) 1980-2000: The questioning of ownership restrictions. Due to the interaction of external pressures (liberalisation of financial markets, increasing multinationalisation of production) and domestic ones (the rising importance of institutional investors and the changing preferences of decisive actors, in particular of the banks), the traditional functioning of corpporate governance, in particular traditional ownership restrictions, has been called into question.

Marie-Laure Djelic (ESSEC, France)/Sigrid Quack (WZB, Germany)
From National Configurations to Transnational Recombination: Towards an Institutional Analysis of Globalisation

Faced with ongoing debates on globalisation, societal institutionalism in its traditional form is showing its limits. In this paper, we suggest that a serious sociologically grounded and institutional contribution to the ongoing debate on global governance calls for a shift in focus - away from the preoccupation with national configurations and towards an attempt at understanding transnational recombinations. The investigation of transnational recombination calls for new analytical tools. Here we argue that the solution may come from an hybridisation of what we call 'societal institutionalism' (national business systems framework or varieties of capitalism approach for example) with other variants of the institutionalist argument in particular those we label 'cultural' or 'phenomenological'. We elaborate on three aspects of institutional analysis that we identify as key to getting a better understanding of the relationship between globalisation and institutions. Firstly, we propose an interpretation of institutionalisation as a process and not a state of things. Secondly, we reinterpret institutional genesis and institutional change as revealing recombination. Thirdly, we argue for a more systematic analysis of the interplay of such processes of recombination across different levels of analysis, particularly the national and the transnational.
With a conceptual framework so reformulated, it is possible to take in the transnational reality in its full complexity. We show, on the one hand, how the societal institutionalism is an interesting starting base to look at the structuration and stabilisation of the transnational reality. On the other hand, we gain new insights in the ways in which institution building and recombination at the transnational level becomes reflected - often progressively and somewhat incrementally - at the national business system level. We point to what we call a 'stalactite change' model. Our proposition is that the succession and combination, over a long period of time, of a series of incremental and sometimes minor transformations could lead in the end to consequential and significant change.

Shawn Donnelly (University of Bremen, Germany)
E-mail: donnelly@uni-bremen.de
In Whose Interest? Creating the European Company Statute

In February 2002, the European Union introduced the European Company Statute (ECS) after a delay of more than 30 years. The legal framework for a European company confronted different national perceptions of the rights and responsibilities companies have. In part, success was made possible by converging ideas amongst European law makers about the ability of differing forms of capitalism to co-exist under a single regulatory framework. Even more so, success depended on an institutional strategy that circumvented national differences. The result is a hybrid European company law that preserves at least two competing varieties of capitalism in the EU.
This paper provides an overview of the ideational and institutional obstacles to European cooperation in this field since the early 1970s and the changes that took place to make this new European institution possible.

Rodolphe Durand/Hayagreeva Rao/Philippe Monin, (Northwestern University, USA)
Purity With Danger: The Effects of Identity on Reputation in French Gastronomy?

Do pure identities create focus and enhance reputation? Or do hybrid identities enable cultural hedging and safeguard reputation? We identify the boundary conditions under which pure identities produce reputational upgrades and reputational downgrade. We test our predications in a in a study of elite French restaurants during the period 1970 until 1997 and derive implications for institutional theory and economic sociology.

Roberto Herranz (University of Santiago de Compostela, Spain).
Power -not only trust- in the Clasical Economic Sociology of Market

The pourpouse of this essays is to study the power and the trust in the dinamic social relations of Market, as two key components in the contribution of Weber, Durkheim, Simmel, Cooley and others clasics. Critizincing the "formal and lean conception" of neoclasical market and his rational system, we propouse a natural, indeterminated and open system to integrates their differences and contributions of the clasics.
In the first stay, we articulated the differents ways to "embeddedness" the social relations of Markets in the environment, by incorporating the social structures, the system of power and the culture. Between our clasical sociologists, the context is no only a social limit that constrain the social behaviour but also a matrix that contributes to the constitution and development of the social actor and his capabilities, introducing certainty in the market.
In second place, we consider the market as a social interacción arena under conditions of competence and bargainig, that is characterized: 1)By the ambivalence between power and cooperation, 2) By a social learning process affecting the practical and social rationality of different actors: the social definition of the others, his own identities, that could contribute to stabilice the social environmet.

Martin Hess (University of Munich, Germany and University of Manchester, UK)
Spatial relationships? Towards a re-conceptualisation of embeddedness

The concept of embeddedness has gained much prominence in economic geography over the last decade, as much work has been done on the social and organisational foundations of economic activities and regional development. Unlike the original conceptualisations, however, embeddedness is mostly conceived of as a 'spatial' concept related to the local and regional levels of analysis. By re-visiting the early literature on embeddedness - in particular the seminal work of Karl Polanyi and Mark Granovetter and critically engaging with what I will call an 'over-territorialised' concept, a different view on the fundamental categories of embeddedness is proposed. This re-conceptualisation then is illustrated using the post-structuralist metaphor of a rhizome to interpret the notion of embeddedness and its applicability on different geographical scales.

Martin Hoepner (Max Planck Institute for the Study of Societies, Germany)
Corporate Governance Reform and the German Party Paradox

Do parties matter in corporate governance reform? Why do German Social Democrats opt for more corporate governance liberalization than the CDU although, in terms of the distributional outcomes of such reforms, one would expect the situation to be reversed? The European Parliament's crucial vote on the European takeover directive in July 2001 shows that the left-right dimension does indeed matter in corporate governance reform, beside cross-class and cross-party nation-based interests. In Germny, SPD and the CDU behave "paradoxically." The SPD favors more corporate governance liberalization than the CDU, which tends protected the institutions of "Rhenish", "organized" capitalism. I offer two explanations for the paradoxical party behavior: The historical conversion of ideas, and the importance of conflicts over managerial control.

Gregory Jackson (REITI, Japan)/Mari Sako (University of Oxford, USA)
Employee Representation and Corporate Restructuring: Deutsche Telecom and NTT Compared

How does the nature of employee representation systems affect corporate decisions concerning the boundary of the firm? This paper addresses this question in general theoretical terms, and presents interim empirical findings from the telecom sector in Germany and Japan. Both countries are renowned for their non-liberal coordinated business systems whose competitive advantage lies in long-term commitments made to key stakeholders including employees. Employment security, however, can no longer be taken for granted as an informal rule of the game, particularly in a sector such as the telecoms industry. It is experiencing drastic corporate restructuring as a result of privatization, market liberalization, and technological change. The paper argues that a greater degree of centralization in the Japanese employee representation and participation system than in the German system (despite a pyramid of betriebstrat up to Konzernbetriebstrat) has resulted in more internalization of employment adjustment within the NTT Group than in the DT Group. This trend is likely to lead to greater intra-sectoral and intra-corporate variability in human resource practices (e.g. use of performance related pay) in Germany (despite its industrial unionism) than in Japan (with enterprise unionism).

Daniel Lee Kleinman (University of Wisconsin, USA)/Steven Vallas (Georgia Institute of Technology, Georgia)
Commercialization, Contradiction, and Conflicting Organizational Logics: The Case of Biotechnology in the United States

This paper seeks to contribute to neo-institutionalist theory by exploring a theme that has frequently been observed but seldom made the object of empirical analysis: the phenomenon of organizational contradiction, involving the coexistence of conflicting organizational logics within a single organizational field. We address this theme by developing a case study focused on the commercialization of science, a process that has greatly weakened the boundary between university and corporate research, inviting a commingling of normative codes and practices that have traditionally been cordoned off from one another. Drawing on interviews with scientists, administrators, and technicians (N=85) in two centers of research in bio-technology -the Silicon Valley region in California, and the Route 128 region adjoining Boston- we examine the organizational logics evident in the work situations of both university and industrial scientists. Specifically, our data focus on the organizational pressures that research personnel experience, the social relations established among researchers themselves, and the tacit rules governing the flow of information among scientists. Owing both to the mobility patterns of professional scientists and to the increasing collaboration of academic units and for-profit firms, organizational contradiction is increasingly the common within US biotechnology, as conflicting organizational logics have emerged within previously distinct and homogeneous institutional domains. The result, we contend, is an organizational field that is increasingly fraught with ironies, anomalies and contradictions: a condition that is well captured by David Stark's (2001) concept of "heterarchy." Our paper concludes by drawing out the implications of our findings, both for neo-institutionalist theories of change and contradiction and for current understandings of the emerging knowledge economy.

Sonia Labatt Ph.D (University of Toronto, Canada)
E-mail: s.labatt@rogers.com
Environmental Finance, Corporate Governance, and the New Fiduciary

Increasingly, financial analysts and investors are recognizing that a link exists between a company's environmental and financial performance. Factors that are anticipated to contribute a further premium to a firm's value with respect to progressive environmental management include: tightened regulatory pressures, greater corporate environmental reporting disclosure requirements and increased shareholder activism. As institutional investors scrutinize their investment opportunities, the convergence of these factors is predicted to contribute to an expanded interpretation of fiduciary responsibility for those organizations. By virtue of the size and global reach, managers of institutional portfolios, such as pension funds, have the power to influence corporate environmental governance through their investment strategies, as well as through active engagement and proxy voting initiatives. This paper reviews the structure and importance of pension funds in the global economy, and then discusses the importance of the role of environmental management in the creation of shareholder value. Factors driving environmental governance are identified with respect to their implications for pension fund trustees and managers. The final section draws these discussions together to assess their impact on environmental finance and a new interpretation of fiduciary responsibility.

Michael Lounsbury (Cornell University, USA)
Institutional Variation in the Evolution of Social Movements: Competing Logics and the Spread of Reycling Advocacy Groups?

Drawing on ideas from the literatures on organizations and social movements, I study how the emergence of a new recycling logic facilitated changes in the causal drivers of state-level recycling advocacy group creation in the U.S. Specifically, I show that the formation of early state recycling advocacy groups was enabled by state-level conditions that were favorable to ecological activism. These early organizations were loosely connected and promoted a holistic logic of recycling that emphasized a vision of recycling as a mechanism to restructure Capitalistic production and consumption processes and enable community-building and development. As the recycling movement unfolded, it took on a more hierarchical, national character, structured by a new national social movement organization, the National Recycling Coalition. This national organization promoted a more technocratic logic of recycling that valorized the creation of a mass-market in recycling commodities as a way to promote the development of a profitable recycling industry. I argue that this facilitated the widespread diffusion of recycling advocacy groups and reoriented the nature of recycling activism. The holistic logic was not eliminated by the rise of the technocratic logic, but continued to exist as a competing logic. I show that after the endorsement or recycling by mainstream actors, the holistic logic became manifest in the formation of recycling advocacy groups that engaged in jurisdictional battles with waste-to-energy incineration proponents over the solid waste stream. Implications for organization theory and the study of social movements and institutional change are discussed.

Gábor Péli (University of Groningen, The Netherlands)
E-mail: g.peli@eco.rug.nl
Differ from thy Neighbour: Product Positioning in Multidimensional Markets

The paper analyses ways of market partitioning between different products. It extends the spatial competition model of Hotelling (1929) to multidimensional commodity spaces: now, products on a market have n descriptors. Firms intend to minimise their catchment area overlap, and to maximise the number of products in the market. The generalization of the Hotelling-model is well-discussed until two (geographical) dimensions (cf. Lösch, Christaller). Moving to higher dimensional markets allows for different ways of market partitioning. Two of them are investigated: (i) Product locations form a system of n-dimensional cubes (Figure 1). The entailing cubic cell arrangements build up easily in any dimensions (firms have to follow a strategy that combines product imitation and product differentiation). But, cubic configurations become increasingly loose: the cube's center - vertix distance (the maximal misfit between product and buyer) increases towards infinity with n. This setting invites competitor entry in higher dimensions. (ii) Dense market packings with spherical cells (Figure 2). Markets densely filled up with spherically symmetric product areas are exempt of the problem of increasing misfit. This setting brings to the sphere packing problem of geometry (Conway and Sloane 1998): How can one fill up the space with congruent n-spheres in the densest way? The kernel points of a dense sphere packing represent a good arrangement for product points. However, it is difficult to find and to build up a dense arrangement. In stable markets, selection processes may press the system towards such settings. The paper demonstrates how certain market crowding outcomes are facilitated by space properties. It highlights the correspondence between geometric model characteristics and socio-economic outcomes, suggesting some empirical applications. This research line substantially draws on the findings of the niche- and resource partitioning models of organizational ecology (Carroll and Hannan 2000), making its links explicite to the discussed economic models.

Marc Schneiberg/Sarah Soule (Reed College, USA)
Institutionalization as a Contested, Multi-Level Process: The Case of Rate Regulation in American Fire Insurance

Organizational analysts have come to view institutionalization in three different ways-as an expression of modern rationalized culture, as a process of mimesis, diffusion and emergent order, or as a process of negotiation and social reconstruction occasioned by disruptive state interventions. We combine historical analysis and heterogeneous diffusion models of the regulation of insurance rates by the American fire insurance industry to reconceptualize institutionalization as a contested, multi-level process. We present four key findings that revise conventional accounts. First, the institutionalization of rate regulation represented a settlement of political conflicts over competing models of organization and the character of economic order rather than an expression or enactment of taken- for- granted principles. Second, this settlement and its underlying conflicts were products not of local problem solving activity, but of efforts by social movements to contest existing arrangements and promote alternative models of market organization. Third, the process of sorting through competing models and arriving at a settlement were driven, shaped, and made possible by conflicts, institutional dynamics, and developments occurring a multiple levels in the American polity, that is, by developments at the intra-, inter-, and supra-state levels. Finally, these settlements resulted not in a unitary or isomorphic insurance system, but rather in a fractured field characterized by variations on core themes - a dual community of regulated states-and the persistence of competing logics. In developing these findings, we extend recent efforts to link politics, challengers and movements with organizations theory and neo-institutional analysis.

Marc Ventresca/Peter Levin (Northwestern University, USA)
Institutional Contests and Settlements in Market-Making: Evidence from the Commodities Exchanges, 1867-1922"

Institutional analysis is resurgent across the social sciences, often in the idiom of instrumental social theory and with under-specification of the often disorderly conflicts and struggles that occur prior to the construction of ontologically-stable actors and activity. We focus on these conflicts and struggles, using a multi-source dataset tracking the modern origins and development of organized trading in commodities from the mid-19th century, with focus on the dominant Chicago market exchanges. We treat the market-making that occurs as an organizational and legal process marked by successive settlements among key institutional actors. We analyze shifting institutional logics and governance arrangements with times series data from 1848-1922 on court cases, legislation and legislative hearings, popular press accounts, and academic and government experts including economists. The institutional settlements that mark different eras in the rise of organized commodities markets involve a cultural model of "organized speculation" that supplants legal and popular conceptions of gambling, that in turn contributes to a modern conception of tractable, manageable risk in organized markets. Then, a series of governance settlements establish a specific organizational form as appropriate, which pushes to the edges of the field alternative existing organizational forms and also establishes a standard model of governance and accountability the underscores the power of key challenger actors in the exchanges field. Finally, the work of expert theorizers in both academic and over time government agencies naturalizes this form of the market and establish the terms of debate and competition after 1922.

Sigurt Vitols (WZB, Germany) Is a European System of Corporate Governance Emerging?

It has become commonplace to distinguish between two types of corporate governance systems: "insider/stakeholder" systems, and "outsider/shareholder." This dichotomy is at the root of a growing literature on trying to conceptualize change in "insider/stakeholder" systems, with the three positions in this debate being: 1) changes are cosmetic and divergence persists, 2) these systems are dying out and being replaced by "outsider/shareholder" systems, and 3) there is some kind of "partial convergence" or "hybridization." This paper argues that this dichotomy offers too few alternatives for classifying corporate governance systems, and a more differentiated schema should include separate dimensions employee participation and for share ownership. It is argued that a system of corporate governance is emerging in Europe which is distinguished by 1) moderate levels of employee rights (information and consultation) and 2) a "mixed" system of ownership, where influence is shared between large shareholders and portfolio-oriented institutional investors. This type of corporate governance system is distinguished from both the US-style outsider system and the postwar German stakeholder system.