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

Author

Listed:
  • 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

    as
    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. Joseph Henrich, 2001. "In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies," American Economic Review, American Economic Association, vol. 91(2), pages 73-78, May.
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    4. Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-1484, December.
    5. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    6. Williamson, Oliver E., 1987. "Transaction cost economics : The comparative contracting perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 8(4), pages 617-625, December.
    7. McMackin, John F. & Chiles, Todd H. & Lam, Long W., 2022. "Integrating variable risk preferences, trust, and transaction cost economics – 25 years on: reflections in memory of Oliver Williamson," Journal of Institutional Economics, Cambridge University Press, vol. 18(2), pages 253-268, April.
    8. Jean Ensminger, 1998. "Anthropology and the New Institutionalism," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(4), pages 774-774, December.
    9. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
    10. Victor Nee & Richard Swedberg, 2005. "Economic Sociology and New Institutional Economics," Springer Books, in: Claude Menard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 29, pages 789-818, Springer.
    11. Todorova, Tamara, 2022. "Оливър Уилямсън: Новатор На 20 Век И Основател На Новата Институционална Икономика [Oliver Williamson: an innovator of the 20th century and founder of the new institutional economics]," MPRA Paper 121077, University Library of Munich, Germany.
    12. Henrik Egbert, 2006. "Cross‐border Small‐scale Trading in South‐Eastern Europe: Do Embeddedness and Social Capital Explain Enough?," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 30(2), pages 346-361, June.
    13. 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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    16. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    17. Samuel Bowles & Robert Boyd & Colin Camerer & Ernst Fehr & Herbert Gintis & Joseph Henrich & Richard McElreath, 2001. "In search of homo economicus: Experiments in 15 small-scale societies," Artefactual Field Experiments 00068, The Field Experiments Website.
    18. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
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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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