Institutional Framework for Analyzing Sustainability in European Agriculture and Rural Areas

The Institutional Framework

Figure 1 shows the institutional framework. This Figure is partly based on Williamson (2000: 297), but there are some important differences specific for this Chapter. The main difference between our framework and Williamson’s is that we add a level the ‘incentives structure’ distinguishing between them and the resource allocation decisions. These incentives can be based on rewards or punishment and on intrinsic or extrinsic motivation. Intrinsic or internal motivation is internal to the individual concerned and involves for instance the pleasure one gets from a task itself or from the sense of satisfaction in completing or even working on a task. Extrinsic or external motivation are monetary incentives, a grade for students, career concern, rules (of law), or direct order (as in a hierarchical governance structure). The incentives can continuously be changed, and when taken together with other levels, they are very important for the economic outcomes, but also for sustainability. For that reason we add this level. The third column gives an overview of the theories that are relevant at each institutional level.

Figure 1.

The theoretical framework for structuring human decision-making on sustainable resource uses