On Integrating New and Old Institutionalism: Douglass North Building Bridges

Abstract

In institutional economics, the explanandum is the institution. Definitions of institution refer to a framework of behavior: institutions direct, channel, or guide behavior. We prefer to distinguish values as the underlying systems of belief about right and wrong from the more concrete institutional structure of norms, rules, and structures. In economics, it is important to study the influence of the institutional structure on behavior in order to understand better the performance of firms, markets, and economies in different settings. For instance: with respect to take-overs, norms in Japan differ from the American ones; legal rules of competition differ in the United States from those in France, and the structure of market and firms differ between sectors, which influences behavior of management with respect to diversification, networking, and the like. Central questions in institutional economics are why institutions come into existence, why they develop in specific ways, and what can be said about their efficiency? In economics, these questions are approached from different perspectives within the schools of new and old institutionalism. These schools differ in respect to their problem definition (explanandum), to their explanatory variables (explanantia), and to their methodology of

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