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Business and Politics

Editor-in-Chief: Aggarwal, Vinod K.

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Volume 14, Issue 4 (Jan 2013)


Engaging the evolution of varieties of capitalism: a two-tier approach to examining institutional change

Michele Mastroeni
  • Corresponding author
  • Innogen Institute, University of Edinburgh, Old Surgeon’s Hall High School Yards Edinburgh Midlothian EH1 1LZ, UK
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  • Other articles by this author:
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Published Online: 2013-01-18 | DOI: https://doi.org/10.1515/bap-2012-0032


There is a continuing need for an analytical approach to institutional change, especially as applied to incremental, agent-driven change. Important institutional change can be incremental and not necessarily linked to immediate crisis. Institutional adjustments initiated by actors in the course of meeting specific economic and political goals can unblock systemic bottlenecks leading to improved economic performance. Aggregate incremental change could also lead to system evolution that deviates significantly from the original system model. This paper presents an approach that engages agent impact on the institutional system, and the political or social motives for action; the two-tiered approach moves away from the categories described in Varieties of Capitalism, one of the more influential approaches to analyzing institutional impact in an economy. Instead of static national categories, the approach presented in this paper differentiates between defining institutions and instrumental institutions, the differences in ease and speed of change which characterize each institutional tier, and how the system’s evolution is impacted by the combined effect of changes in each tier. Differentiating between institutions in this manner, the paper provides an approach that is more flexible in explaining the interactions between agents and institutions, and the changes which may result.


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About the article

Corresponding author: Michele Mastroeni, Innogen Institute, University of Edinburgh, Old Surgeon’s Hall High School Yards Edinburgh Midlothian EH1 1LZ, UK, Tel.: +441316506391

Published Online: 2013-01-18

Zysman 1986; Hall and Soskice 2001.

Hall and Soskice 2001.

Blyth 2003.

Amable and Palombarini 2009; Rafiqui 2010.

Rafiqui 2010.

Gertler 2010.

North 1990.

Van Deth 2003.


Nilsson et al. 2004.

Jasso and Opp 1997.

Lehrer and Asakawa 2004: p. 921.

Niosi 2002.

Niosi and Bellon 2002.

See also Tylecote 1994; Zysman 1994.

For other critiques on Varieties of Capitalism applied to innovation, see Varheim 2003; Taylor 2004; Akkermans et al. 2005. Hall and Thelen (2009) defend Varieties of Capitalism from criticisms by acknowledging the role that government actors can have in leading change and institutional reform, particularly in formal institutions. They note that power struggles amongst actors may lead to institutional change, and that this struggle can spill over into the manipulation of a “multiplicity of institutions” that may be nested within one another. However, their description makes it difficult to determine how some institutions may nest within others (geographically, historically, functionally?), whether there is a hierarchy between institutions, and what qualities define what they label “meta-institutions” which help actors pursue change.

Schneider and Paunescu 2012: p. 17.

Ahlquist and Breunig 2012.

Hall 2007: p. 41.

See Hall 2007: pp. 61–63.

Hall 2007: p. 63.

Ibid: p. 55.

Foregoing use of national types does not mean, however, that institutional stability is shed completely – rather, as in Immergut’s (1998) description of historical institutional approaches, the impact of path dependence and history is respected, along with actors’ capacity to learn from history.

North 1990; Van Deth 2003; Nilsson et al. 2004.

Also noted by Niosi 2002; and Lehrer and Asakawa 2004 in the area of innovation.

Cortell and Peterson 1999.

Fast-moving institutions are so-called by Roland because of the rate of change, which he argues only occurs rarely; such changes are spurred by exogenous factors such as technology that create slight, imperceptible changes in slower institutions such as values and norms, which aggregate into crisis. This view poses severe limitations in studying the kind of change that occurs without crisis, instigated by politico-economic agents to achieve socio-economic goals. However, combining Roland’s fast and slow-moving institutions with Cortell and Peterson’s issue-specific change, these limitations can be overcome.

OECD 1996: p. 230.

Evans 1995: p. 11.

Hall and Soskice 2001; Hall and Gingerich 2009; Schneider and Paunescu 2012.

Hall and Soskice 2001.

Black and Gilson 2003.

Reiter 2003.

Henrekson and Rosenberg 2001.

Cetindamar and Jacobsson 2003.


Henrekson and Rosenberg 2001; Henrekson and Jakobsson 2003.

The incubators now maintained under Innovationsbron have produced 138 companies in 2004, 440 in 2005, and 589 in 2006 while maintaining a 10–20% acceptance rate of ideas (Mastroeni and Rosiello 2010).

Jacob et al. 2003.

Interview with KTH Holding representative, 2003.

Interview with SEB representative, 2003.

McGowan 1990; Barry and Bradley 1997; Hall and Soskice 2001.

Mac Sharry 2000.

O’Riain 2004.

Cogan and McDevitt 2000.


Fitzpatrick 2001; O’Connor 2001.

O’Connor 2001.

O’Connor 2001.

Giarratana et al. 2005.

Hilliard and Green 2005.

Interview with two IDA representatives, 2003.

Ibid. 2003.

Fitzpatrick 2001.

O’Riain 2004.

Enterprise Ireland 1999.

Interview with Irish Venture Capitalist, 2003.

DETE 2006.

Steinmo 2003; p. 32.

Reiter 2003: pp. 108, 116.

Steinmo 2003.

Henrekson and Jakobsson 2003.

Steinmo 2003: p. 42.

Mac Sharry 2000.

Girvin 1989.

Cetindamar and Jacobsson 2003.

Hall 2007: p. 44.

Citation Information: Business and Politics, ISSN (Online) 1469-3569, ISSN (Print) 1369-5258, DOI: https://doi.org/10.1515/bap-2012-0032.

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