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2024 | Buch

An Introduction to Institutional Inertia-Theory and Evidence Kapitel lesen Erstes Kapitel lesen

Institutional Inertia

Theory and Evidence

herausgegeben von: Nezameddin Faghih, Ali Hussein Samadi

Verlag: Springer Nature Switzerland

Buchreihe : Contributions to Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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This edited volume explores the concept of institutional inertia and its relationship to economic growth and development. Including insights from experts across disciplines, chapters identify the types, causes and effects—both positive and negative—of institutional inertia. By questioning the types of institutional inertia that improve economic performance and impact the effectiveness of the state, as well as studying their role in the dynamics of institutional change, the volume attempts to trace and understand the different evolutionary paths of societies. Bridging important research gaps, this volume will be of use to students, researchers, and practitioners of institutional and evolutionary economics, development economics, management, and organizational theory.

Inhaltsverzeichnis

Frontmatter
An Introduction to Institutional Inertia-Theory and Evidence
Abstract
Why are some countries poorer (or richer) than other countries? Many answers have been given to this question and it is still an active field of research. The main idea of this edited volume is that institutional inertia is an important and fundamental factor in explaining the cause of poverty and wealth of nations. However, this is a factor that has received less attention in the recent literature on institutional economics. Therefore, the objectives of this book are to explore the meaning of inertia and to identify the types, causes, significance, and effects of institutional inertia. Thus, this book presents the concept of inertia from two positive and negative aspects and explains the concept and types of institutional inertia. Then the effects and causes of institutional inertia are also explained. However, this book appears to be the first attempt in this field and differs from the existing literature in several ways: (i) unlike the existing literature, it has a comprehensive look at the definition of inertia, institutional inertia, types of institutional inertia, its roots and effects; (ii); it has a special look at the roots of cognitive inertia and introduces it as the main source of institutional inertia; (iii) it presents a comprehensive view of organizational inertia; (iv) it comprehensively discusses the impact of institutional inertia in the fields of trade, energy transition, climate change, innovation and entrepreneurship. Hence, this edited volume on Institutional Inertia embraces a wide spectrum of topics such as inertia (resistance and endurance); the concepts, types and causes of institutional inertia; the origin of development, critical juncture, and institutional inertia; inertia in informal institutions (concepts, and effects); the roots of cognitive inertia (an introduction to institutional changes); cognitive inertia as a fundamental cause of institutional inertia; overview of institutional-organization inertia nexus; internal empowerment dynamics of organizational inertia management; trade and institutional inertia; transition to sustainable energy and institutional inertia; legitimacy, institutional inertia, and climate change; early entrepreneurship entry and institutional rigidities in emerging market economies (evidence from the Global Entrepreneurship Monitor); inertia, innovation failures, and learning from innovation failures (some insights from MSEs in an emerging market economy). In each chapter of this book, the authors, with their expertise in their chosen topics, have attempted to reveal some emerging aspects in institutional inertia that can be useful not only for academics, but also for institutional, cultural, social, economic, and development policies and practices.
Nezameddin Faghih, Ali Hussein Samadi

Concepts, Types, Causes, and Effects

Frontmatter
Inertia: Resistance and Endurance
Abstract
Inertia is known as a fundamental and effective phenomenon in nature, humans and human (social) institutions. This phenomenon is woven into their warp and weft. In this chapter, inertia and its place in physical and non-physical structures is studied by examining the history of this concept and phenomenon as a mental model. There are two main viewpoints on inertia, i.e., Newton’s point of view about inertia (as a virtual force and a resistance factor to changes in motion), and Mach and Graneau’s point of view about inertia (as a real force and a preservative factor for the structure of bodies and universe). By reviewing the literature and taking this subject into contemplation, it is concluded that inertia consists of positive and negative aspects: the positive aspect works as a structure preservative and stabilizing force (Endurance Force), and the negative aspect works as a resistant force to structure change and dynamic state (Resistance Force). These two aspects of inertia have a fundamental and vital role in institutions’ structure, dynamics, and preservation. Furthermore, topics such as angular momentum and moment of inertia, wide applications of inertia, the origin of inertia, inertia as a mental model, cognitive inertia, inertia in society, phylogenetic inertia and ecological pressure in institutional evolution, and entropic inertia in institutional evolution are also studied. Finally, the institutional renewal time function is introduced and proposed, and the result of the balance between inertia and overcoming it, that is, the evolution of structural preservation, is also considered, emphasizing future research on the application of institutional renewal time function to different institutions and economies, and especially comparative studies on economies at different levels of development for a deeper understanding of institutional inertia.
Nezameddin Faghih, Mahdi Jamshidi Khosh, Ali Reza Seifi
An Introduction to Institutional Inertia: Concepts, Types and Causes
Abstract
The resistance of institutions to change (or institutional inertia), is one of the important issues in institutional economics. In this chapter, the concept of inertia, the types of inertia in human sciences, and the causes of institutional inertia have been explained. Also, types of inertia at the level of individuals, inertia at the level of social and political structures, and inertia at the level of knowledge development, concepts and ideas are explained. Due to the importance of institutional inertia and the fact that this type of inertia includes a large number of other types of inertia (such as organizational inertia, psychological inertia, and socio-political inertia), sixteen major and fundamental factors causing institutional inertia have also been introduced and explained. These factors are divided into four categories: economic, socio-political, historical, and psychological factors and are briefly explained. Another contribution of this chapter is providing evidence of the compatibility of institutional changes and institutional continuity.
Ali Hussein Samadi, Masoomeh Alipourian, Sajjad Afroozeh, Alireza Raanaei, Mojtaba Panahi
The Origin of Development, Critical Juncture, and Institutional Inertia
Abstract
Different from proposing many theories, it is difficult to identify the primary cause of nations’ backwardness. Scientists seek the main cause of nations’ backwardness. They seek a response to the questions of what causes nations’ rise and fall and why some countries are underdeveloped while others are developed. Historical-critical juncture is a point in a nation’s history where a development turnaround occurs. This chapter identifies three coordinates for the historical-critical juncture. First, the historical-critical juncture is not a multifactor but a single factor. In other words, the cause of development is not a set of correlated factors. This chapter cautions researchers not to consider development’s cause as a set of factors. Second, many historical-critical junctures created by humans in nations’ history are not historical determinism. For this reason, the historical quasi-experimental method rejects historical determinism hypotheses, such as geography and culture. Third, to find the cause of development, we must philosophize on the causation. Philosophizing the causes/effects brings us closer to the original cause. This chapter eliminates many causes, such as the difference between geography, culture, and institution, from the list of development causes and also argues that a critical juncture causes institutional inertia.
Saleh Ghavidel Doostkouei, Mahmood Mahmoodzadeh, Mir Hossein Mousavi
Inertia in Informal Institutions: Concepts and Effects
Abstract
This chapter investigates inertia in informal institutions, that is, the culture and values of a society. The limited cognitive capacity of the human mind and the complex relationships between different institutions are the reasons identified for the inertia of informal institutions. Humans’ limited cognitive capacity forms beliefs, on the one hand, and human habits, on the other. Concerning institutions and organizations, beliefs and habits cause institutional inertia. The limited human cognitive capacity, accompanied by issues such as human interest and the “free rider problem”, forms the inertia of informal institutions in another way. Furthermore, since we are not always faced with the inertia of informal institutions and sometimes sudden changes may occur in informal institutions, we address in this chapter the speed and direction of changes in informal institutions. Of course, culture should be dynamic and able to change along with technological and economic developments, protecting society’s cultural endowment, identity, and special values to avoid cultural revolution and decay. Furthermore, this chapter addresses viewpoints that ignore inertia in informal institutions.
Zahra Kheiridoust

Cognitive Inertia

Frontmatter
The Roots of Cognitive Inertia: An Introduction to Institutional Changes
Abstract
In this chapter, we analyze the concept of cognitive inertia, investigate the roots of its formation, and then examine the role of cognitive inertia in creating institutional changes. Cognitive inertia means the tendency to perpetuate beliefs after they are formed. The findings of this chapter show that cognitive biases play an effective role in the emergence of cognitive inertia. Among the most important identified biases that have a greater impact on the formation and escalation of cognitive inertia, this chapter identifies the following: status-quo bias, confirmation bias, commitment escalation bias, belief bias, conservatism bias, and self-attribution bias.
Also, the results of this chapter show that one of the most important reasons for not forming institutional changes in a society can be attributed to the problem of cognitive inertia. Institutional economist, Douglas North argues that there is a close relationship between mental models, belief systems, and institutions. He believes that institutions are derived from belief systems. He also believes that the difference between rich and poor countries comes from the difference in their beliefs. Therefore, the lack of change in the belief system can lead to the lack of institutional changes.
Ali Hussein Samadi, Mojtaba Panahi, Alireza Raanaei
Cognitive Inertia as a Fundamental Cause of Institutional Inertia
Abstract
Various reasons have been stated to explain the formation of institutional inertia. The best factor to explain this phenomenon is the factor that plays a unique role in the formation and development of institutions. Based on this, cognitive factors can be considered the basic factors of creating institutions at the fundamental level. However, in the institutional economics literature, less attention has been paid to these factors. According to the relationship between the institution and cognitive factors, it may be argued that cognitive inertia is the cause of the formation of institutional inertia. Therefore, cognitive factors can be seen as the most important formation of institutions. The main idea of this chapter is based on the synthesis of institutional economics and behavioral economics. Therefore, in this chapter, the question of how cognitive inertia leads to institutional inertia is studied.
Ali Hussein Samadi, Alireza Raanaei, Mojtaba Panahi

Organizational Inertia

Frontmatter
Overview of Institutional–Organizational Inertia Nexus
Abstract
This chapter provides insights on institutional – organizational inertia nexus using multiple dimensions of age dynamics, organizational age dynamics, the sphere of Inertia (myopia-hubris perception, level of motivation, rate of reaction, organizational politics, action-inaction dynamics, board of directors, corporate governance framework and communication-information nexus. Dimensions of inertia are topical and multifaceted and the attendant problems are contextual due to the multidisciplinary nature. Using extant literature of studies conducted in different contexts, it is evident that the dimensions of institutional-organizational inertia would continue due to increasing rates of disruptive changes, human cognition, and contextual push and pull factors.
Understanding the factors that cause resistance to change and acceptance of change requires a contextual insight into the perceptual benefits and threats it poses to organizations and society. Furthermore, the institutional-organizational nexus connotes the critical impact of institutions and environmental forces on organizational actors. Scholarly evidence suggests the need to appreciate the evolving nature of the constructs domain, and the role of organizational actors and decision-makers. The findings and recommendations are premised on the need to adopt a holistic approach to investigate inertia.
Adeleke Oladapo Banwo, Henry Omache, Josiah Chukwuma Ngonadi
Internal Empowerment Dynamics of Organizational Inertia Management
Abstract
Today, due to the rapid progress of science and technology and the complexity of the organizational environment, organizational survival and dynamism require continuous innovation and changes. The inability to foresee and predict the future or the failure to respond to internal and external demands for change and adaption is the primary characteristic of organizations of this century. Organizations must either be able to adapt to the rapid and sometimes sudden changes in their surroundings or disband. A proper understanding of organizational inertia can help managers to deal with the resistance to change in the organization appropriately and prevent the failure of the change process. Organizations facing environmental and internal changes need to create capabilities in organizational resources. Hence, resources empower an organization to react appropriately to issues and changes and take the organization out of inertia. Organizational inertia has been mainly investigated exclusively. However, despite the great importance and impact of identifying how the path of organizational resource empowerment is formed in line with organizational stress management, less attention has been paid to this category. Therefore, this chapter aims to explain and interpret how to manage organizational inertia through organizational resource empowerment. In this regard, the present study used a descriptive-analytical approach to review available literature using the library studies method. These research findings indicate that organizational inertia management and taking advantage of stopping or limiting inertia in organizational relationships requires a particular focus on the quadruple empowerment strategies, including manager, employee, organizational context, and employee organization relationship. Notably, desired realization of these strategies leads to determining the path of relationship formation in the positive, dynamic, cooperative, and humanistic integrated organizational space through a creative integrated organizational plan consistent with social identity.
Fatemeh Rezazadeh, Sima Rezazadeh, Mina Rezazadeh

Trade, Energy and Environments

Frontmatter
Trade and Institutional Inertia
Abstract
The importance of institutions and their relationship with macroeconomic variables has attracted the attention of many researchers. The existing literature indicates a significant relationship between institutions and the economic environment, which is strengthened by trade openness. Also, the economic literature shows that the phenomenon of inertia is ambiguous and like a double-edged sword. It also seems that the existence of inertia, especially for developing countries, leads to suboptimal macroeconomic and foreign trade performance. By understanding these conditions, this chapter examines the relationship between foreign trade and institutional inertia. To answer this question while reviewing the literature, a simple theoretical model based on Gartner (Macroeconomics under flexible exchange rates. Harvester Wheatsheaf, New York, 1993) has been used. The findings show that there is a significant relationship between foreign trade and institutional inertia. Accordingly, although institutional change and foreign trade can move independently of each other, if they move together and this issue is addressed by policymakers, it can lead to a stronger relationship between institutions and economic performance.
Saeed Rasekhi
The Transition to Sustainable Energy and Institutional Inertia
Abstract
The increase in energy consumption, especially fossil fuels, and its environmental effects, shown the necessity of transitioning to sustainable energy more than ever. However, in the transition to sustainable energy, laws, regulations, infrastructure, supply chains and interest groups with political power support the existing energy systems against any changes. As a result, the establishment of energy systems with clean and renewable technologies will be difficult. In this chapter, the approaches of new institutionalists about the transition to sustainable energy have been explained, especially, the literature of socio-technical transition (STT). In the STT approach, innovation is very important for sustainable change, so governance becomes important in empowering sustainable innovations and creating deep changes in energy systems. Also, in order to understand why different countries are transitioning to sustainable energy at different speeds and paths, the institutional inertia resulting from the resistance of existing energy systems and the role of path dependence in this regard have been analyzed. In the end, by providing evidence of the impact of path dependence on institutional inertia and the successful experience of some countries in the energy transition through the use of renewable energies, we have shown that although the transition is difficult, it is possible.
Ali Hussein Samadi, Masoumeh Alipourian
Legitimacy, Institutional Inertia, and Climate Change
Abstract
The increasing impact of climate change on the environment has led to more efforts, programs and global actions to control these changes. In the meantime, some obstacles hinder the effectiveness of environmental measures and policies. Part of these obstacles is related to institutional inertia. In this chapter, the effects of legitimacy, as one of the mechanisms that create institutional inertia, on environmental performance have been investigated. The legitimacy of the state is an issue that has received less attention in climate change discussions. In this chapter, using a regression model, the effect of government legitimacy on environmental performance has been investigated based on the data of 171 countries. The results show that there is a direct relationship between state legitimacy and environmental performance. The results also showed that, if the state legitimacy is low or it is facing a crisis of legitimacy, this issue creates institutional inertia in the field of environmental policy. In turn, this issue will worsen the environmental performance.
Ali Hussein Samadi, Sajjad Afroozeh

Innovation and Entrepreneurship

Frontmatter
Early Entrepreneurship Entry and Institutional Rigidities in Emerging Market Economies: Evidence from the Global Entrepreneurship Monitor
Abstract
Variation in the effectiveness of local economic institutions is one of the most important reasons behind different levels of economic development in countries around the world. This chapter investigates how different types of institutional rigidities affect early entrepreneurship entry in emerging market economies. Emerging economies are characterized with low to moderate GDP per capita, high GDP growth rates, dynamic consumer markets, increased competition levels, underdeveloped financial markets, predominance of state-owned enterprises, policies for active reduction of trade barriers, and an increased integration into the global economy. The empirical analysis is based on a multilevel logit model and nascent entrepreneurship entry data from the Global Entrepreneurship Monitor for 20 emerging economies from 2000 to 2017. The institutional rigidity indices used in the study are from the Economic Freedom of the World data set. We focus on state ownership of assets, property rights protection, tariffs, capital and people movement control, credit market regulations, administrative requirements, bureaucracy costs and bribes and favoritism. The results indicate that better functioning capital markets and relaxed trade barriers have a positive effect on nascent entrepreneurs. The effect of administrative requirements and bureaucracy on the propensity to become a nascent entrepreneur is insignificant. This could be explained with entrepreneurs easily moving to the informal sector to avoid dealing with regulations. Higher prevalence of state ownership positively affects the propensity to become a nascent entrepreneur. Lastly, we provide a brief discussion on policies that can improve nascent entrepreneurial activities within a nation.
Kameliia Petrova, Agnitra RoyChoudhury
Inertia, Innovation Failures, and Learning from Innovation Failures: Some Insights from MSEs in an Emerging Market Economy
Abstract
It is widely accepted that inertia may inhibit small businesses’ innovation and growth. However, little is known as to why some small businesses experience inertia and how this relates to innovation failures and learning from such failures. The objective of the present study is to examine inertia, innovation failures, and learning from innovation failures through the lens of micro and small enterprises. Micro and small business enterprises have been seen as informal ways of doing business without a formal institutionalization. As an emerging market economy, Indonesia sets an exemplary context that may enrich our understanding of institutional inertia. This study uses a qualitative approach by interviewing 25 small business owners in West Sumatra, Indonesia. The data were analyzed by using thematic analysis. It was found that most interviewees failed to learn from their failures because of their incapability to institutionalize business strategies. Nevertheless, some patterns emerged, and they present clues leading to innovation failures and lessons to be learned, which in turn, reduce inertia. The present study offers some propositions that capture the essence of the issue, which can be used for future research.
Donard Games, Ares Albirru Amsal, Dessy Kurnia Sari, Rayna Kartika, Dian Yuni Anggraini
Backmatter
Metadaten
Titel
Institutional Inertia
herausgegeben von
Nezameddin Faghih
Ali Hussein Samadi
Copyright-Jahr
2024
Electronic ISBN
978-3-031-51175-2
Print ISBN
978-3-031-51174-5
DOI
https://doi.org/10.1007/978-3-031-51175-2

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