Original article History of Economic Thought, Methodology, and Heterodox Approaches

FOUNDATIONS OF CONTEMPORARY ECONOMICS: NEW INSTITUTIONAL ECONOMICS VS. NEW ECONOMIC SOCIOLOGY – THE GRANOVETTER-WILLIAMSON DEBATE

Henrik Egbert - Anhalt University of Applied Sciences, Germany
Teodor Sedlarski - Sofia University St. Kliment Ohridski
Aleksandar B. Todorov - University of Economics – Varna
Received: 13 May 2024
Revised:
Published:
Downloads: 0
Citations: 0
Book 1/2024
JEL B31 B21 B25 B15 Z13
DOI https://doi.org/10.56497/etj2469103

Abstract

 Nearly 50 years ago, Mark Granovetter initiated a fundamental critique of economic theory. His critique was the starting point for the New Economic Sociology (NES). Particularly, he criticized the emerging theories of New Institutional Economics (NIE), focusing on the ideas of Oliver Williamson (1932–2020) who was one of the most prominent representatives of this school. In this paper we address this critique and Williamson’s response to it. Williamson argued from the perspective of transaction cost economics, while Granovetter focused on the social embeddedness of individuals. The impact of this debate on economics has resulted in an increased research interest in the role of institutions and social networks. However, both lines of thought did not bring economic and sociological theories together. NES established as a subdiscipline in Sociology. Its central concept of embeddedness continued to attract interest but proved to be of little empirical applicability. NIE, on the other hand, has become part of mainstream economics.

How to cite this article

Egbert, H., Sedlarski, T., Todorov, A. B. (2024). Osnovi na savremennata ikonomika: Novata institutsionalna ikonomika sreshtu novata ikonomicheska sotsiologiya – teoretichniyat sblasak mezhdu Mark Granovetar i Olivar Uilyamsan (Foundations of Contemporary Economics: New Institutional Economics vs. New Economic Sociology – The Granovetter-Williamson Debate). Economic Thought Journal, 69(1), 37-53. (in Bulgarian). https://doi.org/10.56497/etj2469103

References

Acheson, J. (2006). Institutional failure in resource management. Annual Review of Anthropology, 35 (1), 117-134. https://doi.org/10.1146/annurev.anthro.35.081705.123238 (in Bulgarian)

Bargar, P., Lukman, T. (1996). Sotsialnoto konstruirane na realnostta. Sofiya: Kritika i humanizam. [Бъргър, П., Лукман, Т. (1996). Социалното конструиране на реалността. София: Критика и хуманизъм] (in Bulgarian).

Beckert, J. (2003). Economic sociology and embeddedness: How shall we conceptualize economic action? Journal of Economic Issues, 37 (3), 769-787. https://doi.org/10.1080/00213624.2003.11506613

Beckert, J. (2009). The great transformation of embeddedness: Karl Polanyi and the new economic sociology. In: Hann, C. and Hart, K. (eds.). Market and Society: The Great Transformation Today. Cambridge: Cambridge University Press, 38-55. https://dx.doi.org/10.2139/ssrn.2465810

Chavdarova, T. (2016). Nova ikonomicheska sotsiologiya. Sofiya: Iztok-Zapad. [Чавдарова, Т. (2016). Нова икономическа социология. София: Изток-Запад] (in Bulgarian).

Coase, R. (1937). The nature of the firm. Economica, 4 (16), 386-405. https://doi.org/10.1111/j.1468-0335.1937.tb00002.x

Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology, 94, 95-120.

Egbert, H. (2006). Cross-border small-scale trading in South-Eastern Europe: Do embeddedness and social capital explain enough? International Journal of Urban and Regional Research, 30 (2), 346-361. https://doi.org/10.1111/j.1468-2427.2006.00668.x

Egbert, H., Sedlarski, T. (2011), Exploring Impact: Negative Effects of Social Networks. International Journal of Latest Trends in Finance and Economic Sciences, Vol. 1, No. 2.

Egbert, H., Sedlarski, T. (2018). Osnovi na savremennata ikonomika: Dzheyms Byukyanan i konstitutsionnata ikonomika. Ikonomicheska misal, No. 1, 113-122. [Егберт, Х., Седларски, Т. (2018). Основи на съвременната икономика: Джеймс Бюкянън и конституционната икономика. Икономическа мисъл, No. 1, 113-122]. https://doi.org/10.56497/etj1863105 (in Bulgarian).

Egbert, H., Sedlarski, T. (2020). Osnovi na savremennata ikonomika: Gordan Talok i publichniyat izbor. Ikonomicheska misal, No. 1, 107-118. [Егберт, Х., Седларски, T. (2020). Основи на съвременната икономика: Гордън Тълок и публичният избор. Икономическа мисъл, No. 1, 107-118]. https://doi.org/10.56497/etj2065105 (in Bulgarian).

Egbert, H., Sedlarski, T., Todorov, A. B. (2023). Osnovi na savremennata ikonomika: Elinor Ostrom i obshtite resursi. Ikonomicheska misal, 68 (5), 554-571. [Егберт, Х., Седларски, Т., Тодоров, А. Б. (2023). Основи на съвременната икономика: Елинор Остром и общите ресурси. Икономическа мисъл, 68 (5), 554-571]. https://doi.org/10.56497/etj2368505 [(in Bulgarian)].

Ensminger, J. (1992). Making a Market: The Institutional Transformation of an African Society. Cambridge: Cambridge University Press.

Ensminger, J. (1998). Anthropology and the New Institutionalism. Journal of Institutional and Theoretical Economics, 154(4), 774-789. https://www.jstor.org/stable/40752112.

Fourcade, M., Beckert, J., Fligstein, N., Carruthers, B. (2023). Reflections on the field of socio-economics. Socio-Economic Review, 21 (2), 703-720. https://doi.org/10.1093/ser/mwad014.

Granovetter, M. (1983). The strength of weak ties: A network theory revisited. Sociological Theory, 1, 201-233. https://doi.org/10.2307/202051.

Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91 (3), 481-510. https://doi.org/10.1086/228311.

Granovetter, M. (1992). Economic institutional and social construction: A framework for analysis. Acta Sociologica, 35 (1), 3-11. https://doi.org/10.1177/000169939203500101.

Granovetter, M. (2005). The impact of social structure on economic outcomes. Journal of Economic Perspectives, 19 (1), 33-50. https://doi.org/10.1257/0895330053147958.

Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E., Gintis, H., McElreath, R. (2001). In search of homo economicus: Behavioral experiments in 15 small-scale societies. American Economic Review, 91 (2), 73-78. https://doi.org/ 10.1257/aer.91.2.73.

Hirschman, A. O. (1982). Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble? Journal of Economic Literature, 20 (4), 1463–1484.

Krippner, G. (2001). The elusive market: Embeddedness and the paradigm of economic sociology. Theory and Society, 30 (6), 775-810. https://www.jstor.org/stable/658117

McMackin, J., Chiles, T., Lam, L. (2022). Integrating variable risk preferences, trust, and transaction cost economics – 25 years on: reflections in memory of Oliver Williamson. Journal of Institutional Economics, 18 (2), 253-268. https://doi.org/10.1017/S1744137421000576.

Ménard, C. (2022). Hybrids: Where are we? Journal of Institutional Economics, 18 (2), 297-312. https://doi.org/10.1017/S1744137421000230.

Nee, V. (2005). The new institutionalisms in economics and sociology. In: Smelser, N. and Swedberg, R. (eds.). The Handbook of Economic Sociology. 2nd ed. Princeton: Princeton University Press, 49-74. Available at https://www.jstor.org/stable/j.ctt2tt8hg.

Nee, V., Ingram, P. (1998). Embeddedness and beyond: Institutions, exchange, and social structure. In: Brinton, M. and Nee, V. (eds.). The New Institutionalism in Sociology. New York: Russell Sage, 19-45. Available at https://www.sup.org/books/title/?id=1839.

Nee, V., Swedberg, R. (2005). Economic sociology and new institutional economics. In: Menard, C. and Shirley, M. (eds.). Handbook of New Institutional Economics. Dordrecht: Springer, 789-816. https://doi.org/10.1007/0-387-25092-1_30.

Platteau, J.-P. (1994). Behind the market stage where real societies exist – part II: The role of moral norms. The Journal of Development Studies, 30(3), 753-817.

Podolny, J., Page, K. (1998). Network forms of organization. Annual Review of Sociology, 24 (1), 57-76. https://doi.org/10.1146/annurev.soc.24.1.57.

Polanyi, K. (1957 [1944]). The Great Transformation. Boston: Beacon Press.

Popov, T., Sedlarski, T. (2012). Institutsionalna ikonomika. Vazmozhnosti i neizpolzvan potentsial. Sofiya: UI „Sv. Kliment Ohridski“. [Попов, Т., Седларски, Т. (2012). Институционална икономика. Възможности и неизползван потенциал. София: УИ „Св. Климент Охридски“] (in Bulgarian).

Richter, R. (2005). The new institutional economics: Its start, its meaning, its prospects. European Business Organization Law Review, 6 (2), 161-200. https://doi.org/10.1017/S1566752905001618.

Richter, R. (2015). Essays on New Institutional Economics. Cham: Springer. https://doi.org/10.1007/978-3-319-14154-1.

Sedlarski, T. (2009). Kontseptsiyata za tranzaktsionnite razhodi v neoklasicheskata i neoinstitutsionalnata teoriya. Ikonomicheski alternativi, br. 1/2009, 79-87. [Седларски, Т. (2009). Концепцията за транзакционните разходи в неокласическата и неоинсти­туционалната теория. Икономически алтернативи, бр. 1/2009, 79-87] (in Bulgarian).

Sedlarski, T. (2011). Nesvobodnoto vaznikvane na svobodniya pazar – „Velikata transformatsiya“ na Karl Polani. Ikonomicheska misal, No. 1, 51-72. [Седларски, Т. (2011). Несвободното възникване на свободния пазар – „Великата трансформация“ на Карл Полани. Икономическа мисъл, No. 1, 51-72] (in Bulgarian).

Sedlarski, T. (2013). Nova institutsionalna ikonomika. Sofiya: UI „Sv. Kliment Ohridski”. [Седларски, Т. (2013). Нова институционална икономика. София: УИ „Св. Климент Охридски”](in Bulgarian).

Sedlarski, T. (2013a). Institutsionalni aspekti na pazara. Sofiya: UI „Sv. Kliment Ohridski“. [Седларски, Т. (2013a). Институционални аспекти на пазара. София: УИ „Св. Климент Охридски“] (in Bulgarian).

Sedlarski, T. (2020). Povedencheski i sotsialnopsihologicheski izmereniya na pazarniya red: status, shtastie i blagosastoyanie. Vtoro izdanie. Sofiya: UI „Sv. Kliment Ohridski“. [Седларски, Т. (2020). Поведенчески и социалнопсихологически измерения на пазарния ред: статус, щастие и благосъстояние. Второ издание. София: УИ „Св. Климент Охридски“] (in Bulgarian).

Sedlarski, T. (2023). Ustoychivi kulturni osobenosti i obshtestveno-ikonomichesko razvitie: individualizam, kolektivizam, institutsii, meritokratsiya i rastezh. V: Godishnik na Sofiyskiya universitet „Sv. Kliment Ohridski“ – Stopanski fakultet, T. 22, 151-193. [Седларски, Т. (2023). Устойчиви културни особености и обществено-икономическо развитие: индивидуализъм, колективизъм, институции, меритокрация и растеж. В: Годишник на Софийския университет „Св. Климент Охридски“ – Стопански факултет, Т. 22, 151-193] (in Bulgarian).

Sensenbrenner, J., Portes, A. (1993). Embeddedness and immigration: Notes on the social determinants of economic action. American Journal of Sociology, 98 (6), 1320-1350. https://www.jstor.org/stable/2781823

Todorova, T. (2022). Olivar Uilyamsan – novator na XX vek i osnovatel na novata institutsionalna ikonomika. Sofiya: UI „Sv. Kliment Ohridski“. [Тодорова, Т. (2022). Оливър Уилямсън – новатор на XX век и основател на новата институционална икономика. София: УИ „Св. Климент Охридски“] (in Bulgarian).

Williamson, O. (1975). Market and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press.

Williamson, O. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics, 22 (2), 233-261. https://doi.org/10.1086/466942.

Williamson, O. (1981). The economics of organization: The transaction cost approach. American Journal of Sociology, 87 (3), 548-577. https://doi.org/10.1086/227496.

Williamson, O. (1984a). The economics of governance: Framework and implications. Journal of Institutional and Theoretical Economics, 140 (1), 195-223. Available at https://www.jstor.org/stable/40750687.

Williamson, O. (1984b). The incentive limits of firms: A comparative institutional assessment of bureaucracy. Weltwirtschaftliches Archiv, 120 (4), 736-763. https://doi.org/10.1007/BF02706513.

Williamson, O. (1985). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. New York: The Free Press.

Williamson, O. (1987). Transaction cost economics: The comparative contracting perspective. Journal of Economic Behavior and Organization, 8 (4), 617-625. https://doi.org/10.1016/0167-2681(87)90038-2.

Williamson, O. (1991). Economic institutions: Spontaneous and intentional governance. Journal of Law, Economics and Organization, 7 (special issue), 159-187. https://doi.org/10.1093/jleo/7.special_issue.159.

Williamson, O. (1993a). Transaction cost economics and organization theory. Industrial and Corporate Change, 2 (2), 107-156. https://doi.org/10.1093/icc/2.2.107.

Williamson, O. (1993b). The evolving science of organization. Journal of Institutional and Theoretical Economics, 149 (1), 36-63. https://www.jstor.org/stable/40751579.

Williamson, O. (1993c). Calculativeness, trust, and economic organization. Journal of Law and Economics, 36 (1, Part 2), 453-486. https://doi.org/10.1086/467284.

Williamson, O. (1993d). Opportunism and its critics. Managerial and Decision Economics, 14 (2), 97-107. Available at https://www.jstor.org/stable/2488006.

Williamson, O. (1995). Hierarchies, markets and power in the economy: An economic perspective. Industrial and Corporate Change, 4 (1), 21-49. https://doi.org/10.1093/icc/4.1.21.

Williamson, O. (1996). The Mechanisms of Governance. Oxford: Oxford University Press.

Williamson, O. (2000). The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature, 38 (3), 595-613. https://doi.org/ 10.1257/jel.38.3.595.

Williamson, O. (2005). The economics of governance. American Economic Review, 95 (2), 1-18. https://doi.org/10.1257/000282805774669880.

Wrong, D. (1961). The oversocialized conception of man in modern Sociology. American Sociological Review, 26 (2), 183-196. https://doi.org/10.2307/2089854.

How to publish

Are you an author? Please read our publishing terms first.

Learn