Socio-Economic Review - recent issues

Austrian economics and economic sociology: past relations and future possibilities for a socio-economic perspective

Mikl-Horke, G. — 2008-04-01

The diversity of approaches within modern economics is often overlooked by economic sociology focusing on the neoclassical orthodoxy. At the time of the dispute over methods there had been mutual influences between Max Weber and the Austrian version of neoclassical theory, but in the later approaches of economic sociology the special features of Austrian economics, which has developed from being one of the neoclassical schools into a strand of thought with unique characteristics, have not been recognized. Modern Austrian economics emphasizes time, uncertainty, knowledge and dynamic market processes, which are themes of importance for economic sociology. Moreover, the conceptions of individual action and social order in Austrian economics can be of relevance for a socio-economic perspective with regard to overcoming the division between social and economic factors.

National capitalisms and global production networks: an analysis of their interaction in two global industries

Lane, C. — 2008-04-01

This paper studies the interaction between global systems of production/innovation and national capitalisms, from the theoretical perspectives of varieties of capitalism and global value chains or global production networks (GPNs). The paper's theoretical contribution lies in two areas: it links firms' construction of GPNs to national institutional configurations of lead firms but it also argues that under the impact of global markets the notions of national institutional reproduction and comparative economic advantage need to be re-conceptualized to reflect the complexity of global effects. The empirical part presents a comparative study of two industries in three countries—the UK, the United States and Germany. The paper utilizes original data on GPNs, based on a large number of interviews in firms and associations.

From hierarchical districts to collaborative networks: the transformation of the French apparel industry

Courault, B., Doeringer, P. B. — 2008-04-01

The French apparel industry has always had a distinctive industrial organization based on agglomeration economies of common skills and the need for direct coordination among fashion designers, manufacturers, suppliers and buyers. Often referred to as ‘garment districts’, these local clusters of apparel-related firms were dominated by small and medium-sized (SMEs) firms until the 1960s when mass markets encouraged the development of large firms using mass production methods and hierarchical contracting with smaller suppliers. Since the 1980s, delocalization of production along with dramatic changes in apparel retailing have almost completely destroyed large manufacturers and their hierarchical contracting arrangements. What remains is an industry in which SMEs are largely the survivors. While many of these firms remain marginal, there is a significant core that is developing new business strategies, more diversified competencies and new types of horizontal production networks. This paper examines the recent evolution of the French apparel industry from district to network forms of organization in two of France's main apparel and knitwear regions, based upon nearly 20 years of field research. This research identifies a set of countervailing factors to global outsourcing in which SMEs can have a competitive advantage.

Contradiction, convergence and the knowledge economy: the confluence of academic and commercial biotechnology

Vallas, S. P., Kleinman, D. L. — 2008-04-01

Efforts to understand the structure of the emerging knowledge economy have paid particular attention to the shifting boundary between academic and commercial (for-profit) research, especially in life sciences. Yet, empirical studies have tended to adopt a segmented approach, focusing on either industry or the academy, thus obscuring the increasingly interwoven nature of these two domains. In this paper, we explore the changing organizational logics that govern both academic and corporate science, using interview data gathered from two important clusters of the biotechnology industry: Route 128 in Massachusetts and the San Francisco Bay area. These data, while provisional, lead us to suggest that cultural traffic between university and commercial science has increased, blurring the boundary between them and generating a new and often contradictory knowledge regime, the product of a growing confluence of organizational logics that had previously been distinct. The emergence of this regime, which conforms to Stark's (2001) notion of ‘heterarchy’, holds important implications for prevailing theories of university–industry relations and of organizational change as well.

Transformational organizations and institutional change: the case of the Institut Pasteur and French science

Hage, J., Mote, J. — 2008-04-01

This article seeks to articulate the concept of the transformational organization, an organization with the capacity to transform its institutional environment with discontinuous changes in normative patterns or institutional rules. The possibility of an organization successfully departing from the contours of the institutional environment seems doubtful given our understanding of institutional processes, such as institutional isomorphism and path dependency. Drawing on the historical case of the Institut Pasteur, we identify the primary institutional mechanisms that allowed the Institut Pasteur to successfully alter the French scientific environment with the creation of the discipline of biomedicine.

Convergent perspectives in economic sociology: an Italian view of contemporary developments in Western Europe and North America

Ballarino, G., Regini, M. — 2008-04-01

During the last 30 years or so, different theoretical and empirical perspectives have come to see economies as embedded in institutional, social and cultural structures. Such perspectives developed in contrast to the neoclassical economic paradigm of a rational actor isolated from his/her social and cultural context, as well as to sociological functionalism, which sees economic action as heavily determined by values and social–structural factors. The general idea behind these perspectives is that economic action is always shaped by institutions rooted in history, and by the structures of social relationships in which economic actors are embedded; with the consequence that the former cannot be explained without including the latter in the explanation. This article shows how this perspective is shared by the ‘comparative political economy’ approach, which developed starting in the 1970s especially in Western Europe, and the ‘new economic sociology’ approach, which developed a decade later in the United States.

After reviewing the main features of both approaches, the article shows how Italian economic sociology has built a relevant research tradition. More specifically, it reviews the main contributions that this ‘school’ has given to our understanding of how modern capitalist societies work, especially regarding labour markets, welfare systems, local economies and industrial relations. The lack of a strong dominant and unifying paradigm has often been seen as a weakness of Italian economic sociology, as well as of economic sociology tout court. Yet this weakness has to some extent been turned into an advantage, since Italian economic sociologists have been more willing to cooperate with scholars in other disciplines and sub-disciplines and have also been more interested in entering new territories, from both a theoretical and a substantive point of view.

Beyond the frontier of the skin: blood, organs, altruism and the market

Steiner, P. — 2008-04-01

Peer Hull Kristensen and Jonathan Zeitlin Local Players in Global Games: The Strategic Constitution of a Multinational Corporation. Oxford, Oxford University Press, 2005

Ferner, A., Belanger, J., Westney, D. E. — 2008-04-01

Editorial

Streeck, W., Beckert, J., Zeitlin, J., Feick, J. — 2007-12-20

SASE's Annual Meeting 2008: 'Economic Flexibility and Social Stability in the Age of Globalization', July 21 23 at the University of Costa Rica, San Jose

2007-12-20

Karl Polanyi and the antinomies of embeddedness

Gemici, K. — 2007-12-20

While Polanyi argues that all economies are embedded and enmeshed in social relations and institutions, he tends to see market economy as disembedded, which reveals a tension in his thought. The main motivation for this paper is to understand the origins of this tension. On the basis of a systematic formulation of Polanyi's work, it is argued that Polanyi employs embeddedness in a dual manner: (a) as a methodological principle akin to methodological holism, and (b) as a theoretical proposition on the changing place of economy in society. These two formulations of embeddedness contradict each other. After tracing out the origins of this contradiction, this paper concludes by considering the implications of this analysis for economic sociology. It is argued that embeddedness as a methodological principle is the only acceptable usage of the term. Yet, in this capacity, embeddedness falls short of economic sociology's goal of providing a theoretical alternative to neoclassical economics.

Inequality, public opinion and redistribution

Kenworthy, L., McCall, L. — 2007-12-20

According to the ‘median-voter’ hypothesis, greater inequality in the market distribution of earnings or income tends to produce greater generosity in redistributive policy. We outline the steps in the causal chain specified by the hypothesis and attempt to assess these steps empirically. Prior studies focusing on cross-country variation have found little support for the median-voter model. We examine over-time trends in eight nations during the 1980s and 1990s. Here too the median-voter hypothesis appears to have little utility.

Corporate governance as political insurance: firm-level institutional creation in emerging markets and beyond

Markus, S. — 2007-12-20

What do we know about the politics of corporate governance in emerging markets? Although the state-level institutions have been amply explored, firm-level dynamics remain under-theorized. Complementing the orthodox emphasis on external finance as causal force behind the adoption of ‘minority shareholder protections’, the article outlines an alternative mechanism for firms operating in political settings with heightened risk of state intrusion. The Anglo-Saxon governance institutions can serve domestic managers as a strategy to build alliances with foreign stakeholders so as to counteract a dirigiste government. Empirically, the author seeks to explain the implementation of internationally accepted standards of corporate governance by Russia's big business between 1999 and 2004. The project disaggregates ‘corporate governance’ into specific institutions and examines their quality at the firm level. The causal inference links the shift in state policy vis-à-vis corporate property to the improved treatment of minority owners by the company insiders.

Institutional complementarities and institutional dynamics: exploring varieties in European football capitalism

Meier, H. E. — 2007-12-20

The article takes on the recent criticism about excessive determinism in institutionalist research in comparative political economy. It is argued that institutionalist reasoning holds too strong assumptions about the existence of self-reinforcing features of institutional configurations. In particular, such features are unlikely to be found in institutional configurations in domains shaped by competing logics. For such sectors, a ‘more political’ theory of institutional dynamics referring to the coalitional base of institutional configurations and stabilising efforts by political elites seems more appropriate. The paper provides empirical support for these claims by a comparison of the dynamics of the British and German football industries.

Amitai Etzioni Twenty years of 'The Moral Dimension: Toward a New Economics'

Beckert, J., Hollstein, B., Lehman, E. W., Marsden, D., Etzioni, A. — 2007-12-20

This year, 2008, is the twentieth anniversary of the first appearance of Amitai Etzioni's The Moral Dimension: Towards a New Economics (New York: The Free Press, 1988). The book was a major foundational text behind the inauguration of SASE, the Society for the Advancement of Socio-Economics, from which Socio-Economic Review originated. The editors have asked four scholars working on the relationship between economy and society to assess the book's continuing importance. The Review Symposium concludes with a response from Amitai Etzioni.

Maurizio Ferrera The Boundaries of Welfare: European Integration and the New Spatial Politics of Social Protection. Oxford, Oxford University Press, 2005

Leibfried, S., Starke, P., Palier, B., Orloff, A. S., Zeitlin, J. — 2007-12-20

Thanks to our reviewers in 2007

2007-12-20

Socio-economic impacts of international accounting standards: an introduction

Biondi, Y., Suzuki, T. — 2007-10-26

‘Why discuss accounting in Socio-Economic Review?’

‘Because accounting constructs socio-economic reality.’

‘How?!’

‘Theoretically speaking, there should be many ways of doing "account-ing" — an act of explaining business realities to multiple stakeholders of socio-economies. Practically speaking, however, the current trend is to use "Fair Value Accounting" which is considered to be useful particularly for investors, and this is now being globally standardized.’

‘What are the impacts of such new accounting on wider stakeholders and on the socio-economy at large?’

‘Many aspects of our life may have been undemocratically administrated without being noticed, because the Fair Value Accounting is presumed to be fair, while it is not.’

In order to promote discussions over how our socio-economies should be accounted for, this paper introduces, in a reader-friendly manner, problems of the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS)¹, and calls for diverse perspectives of future research.

Evolution of research on international accounting harmonization: a historical and institutional perspective

Baker, C. R., Barbu, E. M. — 2007-10-26

Accounting is acknowledged to be a complex form of socio-economic activity whose historical evolution is co-extensive with that of human civilization. Indeed, it is argued that the rise of capitalism and the current hegemony of global capital would not have been possible without the existence of an institutionalized set of organized accounting practices. As processes of globalization have become increasingly evident, there have also been calls for international accounting harmonization (IAH) of accounting practices. At the same time, there have been impediments in the path towards achieving IAH, not the least of which have been cultural and economic differences among countries. As of 1 January 2005, the path towards IAH entered a new and perhaps decisive phase. From that date, all companies domiciled in the European Union with publicly traded securities must prepare their consolidated accounts in accordance with International Financial Reporting Standards. This event presents an opportunity for socio-economic researchers to assess the status of IAH research. In this review article, we summarize research published in major English language accounting research journals during the period from 1965 to 2004 in order to trace trends in IAH research and to assess where the research may evolve from here. We conclude that the evolution of IAH research reflects the overall trend towards institutional isomorphism that is present in the IAH process itself. Implications for future IAH research are discussed.

Exploring social, political and economic dimensions of accounting in the global context: the International Accounting Standards Board and accounting disaggregation

Gallhofer, S., Haslam, J. — 2007-10-26

We elaborate an immanent critique of the International Accounting Standards Board (IASB), critically exploring its claim to serve the public interest by reference to its character and position, its official principles and its work vis-à-vis campaigns to disaggregate accounting focused on extractive industries and operating segments. We raise issues about the institution and its rhetoric and indicate that it does not straightforwardly apply its principles. Unable to abstract from its socio-political context, its accounting prescriptions intertwine with concerns to inform democracy and a related politics of accounting disaggregation. We attempt a rescuing critique, indicating IASB's potential to better serve the public interest.

Accounting for the growth and transformation of Chinese businesses and the Chinese economy: implications for transitional and development economics

Suzuki, T., Yan, Y., Chen, B. — 2007-10-26

Within the last decade, international accounting, as a common language of business and a mode of governance, has come to be widely disseminated in China, and has become an indispensable infrastructure of its socio-economy. This diffusion of accounting was propagated as a national strategy for growth, led by a few senior officials as key actors, and implemented through the National Accounting Institutes (NAIs) as a distinct institutional mechanism. Despite its importance, accounting is rarely examined in the literatures of knowledge transfer, institutional sociology, transitional economics and development studies. Drawing on the multidisciplinary methods of contemporary history, this paper casts light on the NAIs as a focal point which effectively transfers and disseminates new knowledge, order and the spirit of a market economy, and which could be further developed, with cautions, as a replicable model for transitional and developing economies.

Accounting for the Chinese context: a comparative analysis of international and Chinese accounting standards focusing on business combinations

Biondi, Y., Zhang, Q. — 2007-10-26

This paper aims at understanding the recent evolution of Chinese accounting standards while focusing on accounting for business combinations as a case of reference. A comprehensive comparative analysis between the standards of the International Accounting Standards Board and Chinese accounting standards is provided, based upon a dualistic approach towards two opposing perspectives of accounting, static (fair value) and dynamic (matching based). The comparison casts doubt on the ultimate convergence of Chinese and international accounting standards. Main differences remain and are explained by taking into account: (i) the special Chinese context, (ii) the massive industrial development experienced by business enterprises in China and (iii) the dynamic accounting perspective that leading accounting theorists and Chinese regulatory authorities agree with and wish to encourage.

Globalization: governmental accounting and International Financial Reporting Standards

Robb, A., Newberry, S. — 2007-10-26

From the early 1990s, Australia and New Zealand pioneered the application of business-style accounting practices to all government activities. Today these business-style practices are advocated for governments around the world, either via International Financial Reporting Standards or via the similar International Public Sector Accounting Standards (IPSAS). Although accounting might seem purely technical, accounting practices can carry with them significant constitutional and political (social) implications. Business-style accounting was not devised for governments and is not suited to provide the essential constitutional safeguards or to fulfil governments' public accountability obligations. These points are illustrated using evidence from New Zealand before explaining that today's IPSAS developments were led initially from New Zealand. This article urges those in other countries to consider constitutional and political implications before proceeding with this development.

Fair value accounting and fair trade: an analysis of the role of International Accounting Standard No. 41 in social conflict

Elad, C. — 2007-10-26

The past decade has witnessed a proliferation of accounting pronouncements that indicate that accounting rule-makers around the world are progressively abandoning the traditional historic cost model and actively embracing the fair value paradigm. In this regard, Barlev and Haddad (2003) argued that fair value accounting has the capacity to enhance the stewardship function by providing relevant information to stakeholders, thus alleviating social conflict. It is contended here that far from reducing conflict and alienation in the agricultural sector, the fair value approach is underpinned by neoclassical economic ideals that are not conducive to emancipatory accounting. Drawing upon Marx's notion of commodity fetishism, this paper analyses the ideological role of International Accounting Standard (IAS) 41 in legitimating social conflict in the context of fair trade coffee and forestry companies that were compelled by domestic legislation to adopt a full-fledged fair value accounting model in conformity with structural adjustment reforms instituted by the World Bank.

Assessing the impact of fair value upon financial crises

Boyer, R. — 2007-10-26

This article challenges the notion that the reform of accounting principles in accordance with fair value would provide better information, and that more transparency would reinforce the resilience of the economy. Actually, fair value gives at each instant a seemingly relevant liquidation value, but obscures the value creation process by mixing present profit with unrealized capital gains and losses. This discrepancy increases with an increased degree of uncertainty, which is at odds with widely held beliefs about the efficiency of existing financial markets. Fair value introduces an accounting accelerator on top of the already present and typical financial accelerator. It extends to the entire economic system, the source of financial fragility typical of the 1990s. If fair value accounting is applied to banks, an extra volatility may be created unless a new wave of innovations introduces countervailing forces.