Institutions and Transnationalization

Introduction

At a first level, the notions of ‘institutions’ and ‘globalization’ could appear to exclude or oppose each other. The notion of institution suggests stability or at least an attempt at stabilization. An institutionalist perspective starts from the basic recognition that human activities, including activities of an economic nature, are embedded and framed within larger institutional schemes that are, on the whole, quite stable (Weber 1978; Polanyi 1944). A core dimension of the institutionalist project has been to understand how embeddedness matters, how institutions constrain and structure action, create regularities and stability, limiting at the same time the range of options and opportunities. In contrast, the process of globalization is often associated with the breakdown of traditional rules of the game and institutions, in particular through the weakening of national states and their order-creating capacities. The champions of that process welcome this evolution. They see globalization as a process where ‘markets’ displace and replace ‘institutions’ through time, bringing along wealth and development, economic, social, if not moral progress. The critics of globalization, on the other hand, equate this evolution with anomie, instability and disorder. The withering of traditional polities and institutions is often described, from such a critical stance, as one of the negative externalities of globalization.

The objective of this chapter is to overcome the apparent opposition between the two notions of ‘institutions’ and ‘globalization’. We suggest instead another perspective, where the two notions emerge as being tightly intertwined. First, we want to argue that our reading of the phenomenon of globalization will be significantly enhanced if we bring to bear upon that phenomenon an institutionalist perspective. The globalization of our world is, we propose, deeply about institutions. It is about the rules of the game in which economic and social activity are embedded and about the profound transformation of those rules in a world where order-creating capacities are not coinciding anymore with nation-state power. We argue that much of this institution building is of a transnational rather than a global nature; it unfolds across blurring boundaries between a variety of actors from different nation-states without necessarily [Page 300]implying convergence and homogenization at the global level. Second, we also want to argue that institutions and processes of institutionalization cannot be understood today without taking transnationalization into account. Most spheres of economic and social life, in most corners of the world, are not only constrained and framed by local and national sets of institutions but they become enmeshed as well in transnational dynamics.

We define institutions as those collective frames and systems that provide stability and meaning to social behaviour and social interaction and take on a rule-like status in social thought and action (Meyer and Rowan 1977; Douglas 1986: 46—48). Institutions stabilize and survive through self-activating social processes of reproduction (Jepperson 1991). At the same time, we see institutions not only as sets of constraints but also as tools and resources enabling action (Clemens and Cook 1999). In our view, institutions have both a structural dimension, including formal and informal rules and systems and an ideational dimension, including normative and cognitive schemes. The mix of those two dimensions can vary. The reach of institutions will also vary and it will be likely, in fact, to co-vary with the scope of social action and interaction. In other words, if action and interaction only play out at the level of a local tribe, locally defined and enforced sets of rules will be both necessary and sufficient. If action and interaction expand beyond the boundaries of the tribe, then there will probably be a need for translocal institutional frames that may displace, complement or transform local ones. While institutional resilience can be quite strong, institutions can change and what this chapter does is explore some of the dynamics of institutional change - those more particularly associated with the process of transnationalization.

...