The Comparative Institutional Analysis of Innovation: From Industrial Policy to the Knowledge Economy
This article surveys comparative institutional research from sociology and political science that seeks to explain patterns of innovation across the advanced industrial economies. It has two broad aims. Firstly, the article reviews three scholarly literatures that link innovation to the orientation of national institutional models: political science research on industrial policy and competitiveness, sociological institutionalism, and the varieties of capitalism tradition. Secondly, it explores in more detail how national institutional differences across the advanced industrial economies impact innovation within the knowledge economy. Drawing on recent research linking sectoral systems of innovation and national institutional models, the article explores how financial, labour market, and corporate governance institutions across different types of economies impact the organization of ‘radically innovative’ companies in new technology often associated with Silicon Valley.
David L. Owen and Brendan O'Dwyer
The purpose of this article is to provide a brief overview of the development of corporate social and environmental reporting practice since it first began to achieve some degree of prominence on an international scale in the 1970s, before offering a critical evaluation of the state of current practice. This article focuses on the contribution of present day reporting, and associated assurance, initiatives made towards enhancing the transparency of corporate social and environmental impact, together with delivering enhanced levels of accountability to organizational stakeholders. A large part of this article draws on research in social and environmental accounting within the field of interdisciplinary accounting research. This research field has a thirty-five-year history and has developed in parallel with certain streams of corporate social responsibility research in the management literature. For example, social and environmental accounting research embraces both normative concerns with fulfilling obligations and duties to the wider society.
Jeremy Moon and David Vogel
This article examines the role of governments and civil society in shaping and encouraging corporate social responsibility (CSR). It begins by exploring the relationship between CSR and particular patterns of business–government–civil society relations. It then examines the patterns of business–government relations that are associated with CSR. It explores two basic models. One is the dichotomous view that posits that CSR and government are, by definition, mutually exclusive; accordingly, the scope of CSR is defined by the absence of regulation and public policy. The second posits that CSR is the relationship between market actors and governments. This article also investigates changes in business–government–civil society relations which explain the recent growth and development of CSR. Finally, it examines the ways in which governments have promoted CSR and the relationship between responsible public and private policies.
Sigrid Quack and Elke Schüßler
This chapter examines how the changing roles and relationships between Professional Service Firms, clients and state actors in the context of broader social and economic transformations have challenged previously institutionalized forms of professional regulation. Although global Professional Service Firms have become both actors and arenas of regulation, the authors suggest that an exclusive focus on their self-regulation fails to do justice to the complex regulatory dynamics emerging at and across (sub-)national, regional, and global levels. Reviewing the literature on regulation in the accounting and legal professions the chapter shows that while competition, free trade, and quasi-market governance have expanded into a number of previously protected realms of professional organization and work, various state actors are reasserting their regulatory capacity in new multi-scalar actor constellations. These two closely interwoven trends develop against historically diverse legacies in different fields and countries.
Effective enforcement is vital to the successful implementation of social legislation, and legislation that is not enforced rarely fulfils its social objectives. This article examines the question of how the enforcement task might best be conducted in order to achieve policy outcomes that are effective and efficient, while also maintaining community confidence. It begins by examining the two strategies that for many years dominated the debate about enforcement strategy, the question of ‘regulatory style’ and whether it is more appropriate for regulators to ‘punish or persuade’. Such an examination begins with John Braithwaite's seminal contribution and the arguments he makes in favour of ‘responsive regulation’. This approach conceives of regulation in terms of dialogic regulatory culture. It is taken further by Smart Regulation, which accepts Braithwaite's arguments as to the benefits of an escalating response up an enforcement pyramid.
David P. Baron and Thomas P. Lyon
This article evaluates the institutions society uses to mitigate environmental externalities. A unified theory of environmental governance is reviewed, which determines the key players influencing environmental outcomes and their objectives, the institutions within which they interact, and the expected results of their interactions. It incorporates a number of key ideas from political science, and takes initial steps toward integrating non-governmental organizations (NGOs) into the overall theory. Environmental governance includes markets for green products and investments, regulatory relationships, and NGO/corporate engagements. Inducing compliance becomes increasingly difficult as the number of firms covered grows. A full theory of environmental governance must comprise interest-group politics and industrial organization. Markets increasingly provide incentives for companies to green themselves. The penetration of information technology into every crevice of modern life continues to change the set of strategies available to both activists and firms.
Andrew King, Andrea M. Prado, and Jorge Rivera
This article explores some of the ways that corporations coordinate to set the rules of business competition. Such coordination is often called “industry self-regulation” (ISR). ISR is sometimes created by actors that are not “industrial”. Its enforcement may not be “self” regulated, but rely instead on the sanctions of outsiders. It first describes the difficulties and promises of self-regulation as a mechanism to address environmental problems. Research has demonstrated that the effectiveness of the initiatives is subject to the credible enforcement of their rules and their interactions with other institutions. Stakeholders must infer the credibility of the certification by gauging the interests of the certifier. Informed customers and intermediaries support the functioning of self-regulatory institutions. Self-regulatory programs created by business enterprises take forms that appear to be designed to solve exchange problems. Firms can create misleading programs that substitute good feeling for good action.
Marina Martynova and Luc Renneboog
This chapter presents a comparative analysis of corporate governance regulatory systems and their development since 1990 in the United States and in 30 European countries. It introduces a proposed methodology that would help create detailed corporate governance indices which describe the primary features of capital market laws in these countries. These indices also determine how the law in each country deals with different potential agency conflicts between corporate constituencies. The analysis of regulatory provisions in the suggested framework provides a better understanding of how corporate law functions in a certain country, as well as which strategies the regulators use to achieve their goals.
Glenn Morgan and Sigrid Quack
This article reveals the tension between evolutionary, functionalist driven notions of law and more historical and contingent accounts of the emergence of particular legal systems, practices, and forms. It builds on this by examining how forms of economic organization and economic outcomes are determined by law, and, in particular, by national legal systems. The article problematizes this argument by showing how law in the contemporary period that impacts on economic organization is moving and dynamic, national and international, public and private, soft and hard. This requires a focus on three phenomena: first, the internal structure of legal systems and the sorts of powers and capacities that particular actors accrue in those contexts; second, the development of law as a business and what this means for the dynamism of law from different national contexts; and third, how this dynamism has led to new forms of innovation and internationalization in law.
The first public–private partnership (PPP) motorway in Australia was open to traffic more than two decades ago, and yet no comprehensive evaluation of PPPs in the road transport sector has been sighted. It is the intention of this chapter to fill this gap. Although there have been noticeable advancements in contract design and use of incentive mechanisms to optimize risk allocation between the public and private sectors, Australian PPP motorways have yet to deliver an optimal outcome. It is questionable whether the current risk-shifting approach in the present PPP paradigm is suitable for providing infrastructure-based road services where long-term service provision is a requirement. In such cases, a proactive risk management approach may be preferred.
Hasan Bakhshi, Stuart Cunningham, and Juan Mateos-Garcia
The cultural and creative industries are closely intertwined with government. This chapter reviews key economic rationales for public policy interventions for the arts, cultural and creative industries. Market failure justifications depend on the status of arts and culture as non-rival public goods, as ‘merit goods’, or the need to moderate the effects of up-front investment costs or monopoly, and the inherent uncertainty of creative production. ‘Systems failure’ too is a regular rationale for policy intervention. Using the United Kingdom as an example, the chapter shows how emphasis on these rationales has shifted over the last three decades, first in the context of industrial policies for traditional aims such as exports and job growth, which have been joined in recent years by the need for investment in intangibles, knowledge exchange, and spillover effects in the wider economy.
Ruth V. Aguilera, Michel Goyer, and Luiz Ricardo Kabbach de Castro
This chapter explains how regulation affects corporate governance. The discussion uses a comparative perspective and includes a broad view of corporate governance. It first examines the classic tension in regulation theory between the interests of regulators and policymakers in influencing governance, and then discusses several key limitations of this kind of approach. The next section explores two primary perspectives for studying regulation in corporate governance—law and economics and politics—before the chapter concludes with a section on the various impacts regulation has had on corporate governance practices. Hard and soft law are also studied.
Peter Alexiadis and Martin Cave
This article examines how regulation and competition law have been deployed to control the firms operating in the telecommunications sector, and how, in particular, regulation has been designed, particularly in the European Union, in such a way that it can be withdrawn in favour of the more widespread application of competition law. Examples are electricity generation, sewage treatment, long distance telecommunications services, and retailing. The question arises as to when traditional price regulation can give way to reliance on competition law. The trend in many countries, and especially in telecommunications in Europe, has been to move to ‘deregulate’ in this way. This article examines how such decisions are made and how well competition law works in such contexts.
Catherine Mitchell and Ashley Woodman Lawrie
This article discusses the extent to which regulation has a role to play in the development and operation of sustainable energy systems, in other words, the extent to which regulators' decisions should be shaped by broader policy goals on sustainability, and how regulators might devise frameworks to encourage the deployment of sustainable technologies and practices. Its basic premise is that the development of sustainable energy systems is vital in the public interest and that economic regulators can play a key role in delivering such systems. This article highlights that inherent conflicts between policy and regulatory objectives, especially in an area that seeks to incentivise investment, achieve goals in terms of climate change commitments and enhance efficiency. It points to the tensions that arise between levels of government as well as in terms of allocation of decision-making authority between government departments and supposedly independent regulatory agencies.
Jürgen Feick and Raymund Werle
This article deals with the regulation of cyberspace and suggests that the challenges of regulation in this area are partly reminiscent of those in other regulatory domains and partly new ones. This newness is due to the opportunities that the new technologies provide to actors and which allow them to act in very different ways — as regulators or as regulatory targets. A significant point in this field is that the distinction between those who regulate and those who are regulated can become blurred because public regulators increasingly, and more so than in other regulatory domains, depend on the co-operation of regulatory intermediaries, if public intervention is to be effective. The continuing challenge in this field is liable to centre around the norms, rules, and regulations governing this complex and dynamic space and the ways in which these are influenced by a variety of factors, parties, interests, institutions, and forces.
Adrian Towse and Patricia M. Danzon
This article focuses on the pharmaceutical industry. The pharmaceutical industry (including biological therapies and vaccines) is heavily regulated and yet has no intrinsic natural monopoly characteristics. Indeed it is highly competitive from research through to selling. Market power is temporary and derived from public policy in the form of government-granted patents on individual products. The regulatory issues in pharmaceuticals therefore arise from a number of factors that characterise this field. This article looks at the special challenges of regulating in the face of such factors as poor observability of efficacy, high dangers of moral hazard, and the potential exclusion from desirable services of those who lack wealth. In response to the need for private sector investment in drugs and vaccines to treat Less Developed Country-only diseases, the advantages and disadvantages of ‘push’ and ‘pull’ subsidy proposals are also considered in this article.
Standards of one kind or another are central to all regulatory regimes. Conceived of in most general terms, standards are the norms, goals, objectives, or rules around which a regulatory regime is organised. The first part of this article elaborates further on the meaning of standards within regulatory regimes. The second part of this article is concerned with the variety of state and non-state actors who are involved in standard-setting and the processes through which standards are set and applied. The setting of standards is characterised by a diffusion of responsibility — national and supranational levels, state and non-state. The final substantive section of this article addresses the challenges of accountability associated with the emergence of a highly diffuse ‘industry’ for regulatory standard setting.
David J. Teece
The strategic management of technology is fundamentally about the commercialization of new knowledge. This article accordingly focuses very little on the creation of new knowledge, focusing instead mainly on commercialization aspects. Commercialization is primarily about the entrepreneurial role of bringing technology to the user and winning in the marketplace. It involves the quest for competitive advantage — using knowledge, technology, and intellectual property as the differentiator. Whether one is talking about creating new technological know-how or bringing new products and process embodying such know-how to the market, it is helpful to begin by discussing the nature of the knowledge assets implicated by the management of technology. To some, it is a little novel to be talking about ‘managing’ knowledge. Yet this is now a critical business function, requiring new concepts and some accepted definitions.