Institutional competition and import of institutions: Theoretical aspects

Abstract

Modern economy updates the problems of institutional competitions manifested in permanent non-compliance with the rules by the economic agents, the introduction of new institutions, standards, agreements, destruction of the current institution system. The import of the instutitions is the most relevant type of the institional competition. The borrowing of the institutions exert the impact of the established rules on the internal institutions and organizational forms, thus becoming dependent, just like their executors. This provides the initiator of the introduced rules with some benefits and the leading role in the institutional competition. The purpose of the research is to use theory of the institutional competition to propose a unified quality assessment method for the acting and re-introduced institutions to approve of the managerial decisions aimed to adjust the institutional system. The research methodology consists of institutional theory and assessment approaches to classical and functional efficiency, as well as in the field of quality assessment for the institution performance, which are defined as abstract norms and organizational structures, including the development institutions as regional development agencies. The result of the study was a designed general model of institutional competition, presentation of the blocking effect and dysfunction of the imported institution, as well as the proposed unified comparative assessment method for the quality of acting and imported institutions. It is also substantiated that the plot of the Coase theorem is opposite to the "lock-in" effect, while the Coase theorem lacks institutional competition. In practice, transactional costs are shown not to be equal to zero for the institutional competition. When institutions are imported, costs can increase with lock-in effects and dysfunction. In this regard, the introduction of new institutions should be justified with the parameters of the performance efficiency in some countries and with the conditions of the social economic system where they are supposed to be used, taking into account the institutional competition. The institutional competition is showcased as the import of development institutions as regional development agencies. Further research is seen to be connected with testing the proposed approach under the quality assessment criteria from the institutions and designed models for determining the permissible volume of imports of institutions.

Keywords

institutions, agents, institutional competition, import of institutions,lock-in effect, dysfunction of institutions, development institutions, regional development agencies, Coase theorem, external effects

For citation

Sukharev O.S. Institutional competition and import of institutions: Theoretical aspects. Perm University Herald. Economy, 2021, vol. 16, no. 2, pp. 127–149. DOI 10.17072/1994-9960-2021-2-127-149

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