Why Institutions Matter

Why Institutions Matter

DOI: 10.4018/978-1-5225-6270-2.ch002
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Institutions play a crucial role both on an individual and on a societal level. Many of the personal life choices as well as the decision making on an organizational level and the development of the society as a whole are functions of various institutional arrangements. In the second chapter, the author defines institutions and their characteristics, elements, and functions. By analyzing the complex framework of institutional settings and rules, the author further points out what makes institutions a unique human achievement and why understanding of their functions will be crucial for the defining path ahead. Further, an overview of the rules and regulations sum up their functions as main ingredients of the social interactions. The last part proposes an in-depth study and analysis of the mechanisms by which new technologies influence institutional settings.
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Institutions matter. Individuals are social creatures. Every person is born in a specific social context, predefining a large part of his personal choices and social standings. Family, nationality, religion, language and culture take important role for building stereotypes and mind models, affecting later individual choices and life-arrangements. Even more, individual’ life often reproduce specific patterns, cultural traditions and norms, embedded deeper in his personal cognitive schemata. Recent authors as Thibaut (2017), Triandis (2018) come again to study social psychology in the groups, highlighting how social groups and its norms determine specific social reality, influencing individuals’ actions, decisions and social standings. Social psychology and group dynamic processes determine not only personal, but also organizational success (Katz & Kahn, 1978). That is how institutional settings define many of the social rules and enable individuals to live together in a complex social network of relationships. All formal and informal rules and norms actually aim to facilitate human and organizational behavior, providing a degree of stability and predictability of social interactions. By determining the framework of social interactions, institutions enable individuals to reduce uncertainty and to work together in order to resolve many complex natural and social problems. Cooperation strategies allow social agents to combine their efforts, resources and competences in order to achieve specific goals and to transform the physical reality. By applying innovative solutions, instruments, technologies and knowledge individuals push constantly the limits of the physical constraints. However, how these achievements will influence social realms in the next years to come?

During the last century, institutions became subject of research from different perspectives, bringing contributions of hundreds of scholars. For example, from political perspective, Peters (2011) resumes the following institutional schools of thought, ranging from Old and New Institutionalism to Normative Institutionalism, Historical Institutionalism, Empirical Institutionalism, Discursive and Constructivist Institutionalism, Sociological Institutionalism and International Institutionalism. The economic perspective reveal the concepts of Old and New Institutional Economics (Mirowsky, 1988; Hodgson, 1988). The social perspective enrich understanding of institutional theories’ implication in organizations (Meyer, 2008). All these insights show the various interdisciplinary aspects of institutional research, focusing on micro and macro dynamics of institutional frameworks and proposing complex models and methodologies for its improvement. However, the current level of institutional rules, norms and social agreements are far from optimal in its function to protect the social interest and to serve for communities’ sustainable development (Olstrom, 2015). The world today suffers from multiple crisis and many social systems operate in discordance. There still lack a common understanding how to act together and to cooperate for achieving common global goals, like for example the UN Global Sustainable Goals (Sacks, 2012). Grave environmental crisis and climate change issues, raising social disintegration, populism, inequality and war prospects are again among the key topics of discussion. Uncertainty for the future accumulate and many scenarios in the popular culture nurture fears for machine invasion and utopia. However, at the end of the day, it is upon us to figure out and design the next social realms. In this particular moment of fast changing technology possibilities, we need to reconsider what kind of institutions we need for the future.

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