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Complementarity and institutional change: How useful a concept?

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  • Deeg, Richard

Abstract

The concept of institutional complementarity – i.e. the idea that the co-existence of two or more institutions enhances the functioning of each – is increasingly used to explain why institutions are resistant to change and why introducing new institutions into a system often leads to unintended consequences or failure to achieve the intended objective. While the concept is appealing and intuitive, in reality its utility for explaining change is less than straightforward. This paper utilizes examples from comparative political economy to, first, unpack and delineate the concept and address the issue of how to measure the strength or ‘binding force’ of complementarities. Second, it assesses the utility of the concept for explaining institutional change. It is suggested that one’s view of the methods and utility of measuring complementarity will hinge importantly on one’s general theory of institutions and institutional change. In the end, while institutional complementarities are significant, assessing their causal effect on institutional change is difficult and ambiguous in most instances. A better understanding requires that we embed complementarities within a more general theory of institutional change which takes a broader view of the ways in which institutions interconnect and change.

Suggested Citation

  • Deeg, Richard, 2005. "Complementarity and institutional change: How useful a concept?," Discussion Papers, Research Unit: Institutions, States, Markets SP II 2005-21, Social Science Research Center Berlin (WZB).
  • Handle: RePEc:zbw:wzbism:spii200521
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    References listed on IDEAS

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    1. Morgan, Glenn & Whitley, Richard & Moen, Eli (ed.), 2005. "Changing Capitalisms?: Internationalization, Institutional Change, and Systems of Economic Organization," OUP Catalogue, Oxford University Press, number 9780199275632.
    2. Hall, Peter A. & Gingerich, Daniel W., 2004. "Varieties of Capitalism and Institutional Complementarities in the Macroeconomy," MPIfG Discussion Paper 04/5, Max Planck Institute for the Study of Societies.
    3. Field, Alexander J., 1991. "Institutions, Institutional Change and Economic Performance. By Douglass C. North. Cambridge: Cambridge University Press, 1990. Pp. viii, 152. $32.50, cloth; $10.95, paper," The Journal of Economic History, Cambridge University Press, vol. 51(04), pages 999-1001, December.
    4. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    5. Ragin, Charles C., 2000. "Fuzzy-Set Social Science," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226702773.
    6. Deeg, Richard, 2001. "Institutional change and the uses and limits of path dependency: The case of German finance," MPIfG Discussion Paper 01/6, Max Planck Institute for the Study of Societies.
    7. Streeck, Wolfgang & Thelen, Kathleen (ed.), 2005. "Beyond Continuity: Institutional Change in Advanced Political Economies," OUP Catalogue, Oxford University Press, number 9780199280469.
    8. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
    9. repec:ucp:bkecon:9780226702766 is not listed on IDEAS
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    More about this item

    Keywords

    Institutions; Complementarities; Political Economy; Varieties of Capitalism;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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