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Foundations of Contemporary Economics: New Institutional Economics vs. New Economic Sociology – The Granovetter-Williamson Debate

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  • Henrik Egbert
  • Teodor Sedlarski
  • Aleksandar B. Todorov

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.

Suggested Citation

  • Henrik Egbert & Teodor Sedlarski & Aleksandar B. Todorov, 2024. "Foundations of Contemporary Economics: New Institutional Economics vs. New Economic Sociology – The Granovetter-Williamson Debate," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 37-53.
    • Handle: RePEc:bas:econth:y:2024:i:1:p:37-53
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    References listed on IDEAS

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    1. Williamson, Oliver E, 1991. "Economic Institutions: Spontaneous and Intentional Governance," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 159-187, Special I.
    2. Oliver E. Williamson, 1986. "The Incentive Limits of Firms: A Comparative Institutional Assessment of Bureaucracy," International Economic Association Series, in: Bela Balassa & Herbert Giersch (ed.), Economic Incentives, chapter 7, pages 204-237, Palgrave Macmillan.
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    More about this item

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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