Summary of the introduction to the JOIE Vol 18 (1) special issue by Luca Andriani, Department of Management, Birkbeck University of London and Randolph Bruno, School of Slavonic and East European Studies, University College London. The full article is available on the JOIE website.
This special issue aims to explore the role of institutions and cultural traits broadly defined insofar and their respective interconnections on a variety of economic, social and institutional outcomes.
The need of further research on the interlink between culture and institutions have been strongly advocated by economists and institutionalists alike. However, bringing together culture and institutions within an organic framework, is a non-trivial operation. This is due to the complexity of the synergies between cultural aspects and institutional devices.
The role of cultural aspects and their impact on organisational, market and business performance have been widely investigated in the context of managerial and business studies since the very seminal work of Hofstede in 1980 (Hofstede 1980). Subsequently, culture, as a field of enquiry of relevance to economic and institutional outcomes, progressively gained attention in the broader economic literature and culminated with the emergence of New Cultural Economics as embodied in Guiso et al. (2006) and Tabellini (2010) within a more neoclassical bent.
Within the Institutional Economics, the interconnection between culture and institutions has been a recurrent, even though sometime latent, underlying theme. North (1990), for instance, argues that cultural traits such as sanctions, taboos, customs and traditions are informal constrains affecting individuals’ behaviour and actions. Hodgson (2006) relates the concept of culture to the interplay between formal and informal institutions within an expanding critical debate on the role of institutions in economics. With the aim of enriching this important debate, in recent years, the Journal of Institutional Economics has provided a voice to pioneer empirical and conceptual works on the relationship between culture and different institutional and socio-economic aspects both in high income and developing economies (e.g., Andriani and Sabatini 2015; Berggren et al. 2019; Gerxhani and Van Breemen 2019; Kyriacou and Lopez Velasquez 2015; Spranz et al. 2012; Tarabar 2019). However, in many circumstances, at present, culture and institutions are keywords belonging to two only partially converging research streams.
This special issue attempts to start filling this gap and to build an ad-hoc organic platform for disseminating such a debate. To this purpose, we aim to bring together papers to improve the theoretical, empirical and methodological understanding of the role of institutions and culture in different geopolitical and socio-economic realms.
Contribution of the Special Issue and future research
Undoubtedly, in the last decade, in their analyses economists have been paying more attention to the role of cultural aspects. However, the main criticism they have received is that the predominant perspective embraced by this literature so far relies upon incentive-based utility maximisation models (McKloskey 2021).
This approach has consistently overlooked the moral dimension of cultural values and norms that influence individuals’ preferences, attitudes and behaviours shaping, in turn, the relationship of an individual with her co-citizens as well as with the public institutions. These values and norms unlikely fits within a classical utility function since, by using McCloskey’s words, “people have identity” (McKloskey and Silvestri 2021, p.8). This identity drives individuals to act and behave according to beliefs, morals and ideals rather than to incentives (McKloskey 2021).
This special issue provides, an introductory and explorative investigation on this research stream. By doing so, this special issue provides interesting evidence and intellectually engages with the proposition that the synergies between cultural values and institutional aspects cannot be neglected from the broader economic debate, and neither can be reduced to an incentive-based utility maximising model. Particular attention is devoted to the role of cultural aspects relative to economic and institutional outcomes (Mickiewitz and Kaasa 2021; Moellman and Tarabar 2021), individuals and social attitudes towards rent-seeking behaviours, corruption, tax evasion, and institutional trust, among others (Amini et al 2021; Andriani et al. 2021; Kaasa and Andriani 2021), and to the interplay between specific cultural traits and the evolution of institutional frameworks such as family systems and state formation (Gutmann and Voigt 2021; Benati and Guerriero 2021). Part of the special issue has also been devoted to commemorating Geert Hofstede, pioneer in the study of culture and institutional aspects (Sent and Kroese 2021) as well as the review of Joel Mokyr’s book “A Culture of Growth” (Hodgson 2021).
By using Mokyr’s words, culture is “something entirely of the mind” (Mokyr 2017, p.9) and is based on shared values and beliefs transmitted through social learning and accepted via a process of normative and moral contemplation. This requires a cognitive reflection that goes beyond the classical zero-sum game. Looking at this perspective, this special issue might be seen as a prelude to further research on the co-evolution of culture and institutions and on the possible implications that this co-evolution may have for the society under different aspects including, but not limited to, economic performance, technological progress, entrepreneurship, governance of the state-citizens relationship and, more importantly, human development and well-being.
Amini, C Douarin, E and Hinks, T (2022) Individualism and attitudes towards reporting corruption: evidence from post-communist economies. Journal of Institutional Economics. 18(1): 85-100
Andriani, L and Sabatini, F (2015) Trust and prosocial behaviour in a process of state capacity building: the case of the Palestinian Territories, Journal of Institutional Economics 11(4): 823-846
Andriani, L, Bruno, R, Douarin, E and Stepien-Baig, P (2022) Is tax morale culturally driven? Journal of Institutional Economics. 18(1): 67-84
Benati, G and Guerriero, C (2022) The origins of the state: technology, cooperation and institutions. Journal of Institutional Economics. 18(1): 29-43
Berggren, N., Ljunge, M., & Nilsson, T. (2019). Roots of tolerance among second-generation immigrants. Journal of Institutional Economics, 15(6): 999-1016.
Gerxhani, K. and Van Breemen, J. (2019). Social values and institutional change: An experimental study. Journal of Institutional Economics 15(2): 259-280.
Guiso, L., P. Sapienza and L. Zingales (2006), “Does Culture affect Economic Outcomes? Journal of Economic Perspectives, 20(2): 23–48
Gutman, J and Voigt, S (2022) Testing Todd: family types and development. Journal of Institutional Economics. 18(1): 101-118
Hodgson, G M (2021) Culture and institutions: a review of Joel Mokyr’s A Culture of Growth. Journal of Institutional Economics. 18(1): 159-168
Hodgson, G. M. (2006), ‘What are Institutions?’, Journal of Economic Issues, 40(1): 1–25 North, D. C. (1990), Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press
Hofstede, G. (1980), Culture’s Consequences: International Differences in Work-Related Values, Beverly Hills, CA: Sage Publications.
Kaasa, A and Andriani, L (2022) determinants of institutional trust: the role of cultural context. Journal of Institutional Economics. 18(1): 45-65
Kyriacou, A. P. and F. J. López Velásquez (2015), “Inequality and Culture in a Cross-Section of Countries,” Journal of Institutional Economics, 11(1): 141–166
McCloskey, D. N. (2021), Bettering Humanomics: A New, and Old, Way of Doing Economic Science, Chicago: University of Chicago Press.
McCloskey, D. N. and Silvestri, P. (2021), Beyond behaviourism positivism and neo-institutionalism in economics: a conversation with Deirdre Nansen McCloskey. Journal of Institutional Economics (published online 18 April 2021): 1-12
Mickiewicz, T and Kaasa, A (2022) Creativity and security as a cultural recipe for entrepreneurship. Journal of Institutional Economics. 18(1): 119-137
Moellman, N and Tarabar, D (2022) Economic freedom reform: does culture matter? Journal of Institutional Economics. 18(1): 139-157
Mokyr, J. (2017), A Culture of Growth: The Origins of the Modern Economy, Princeton: Princeton University Press
Sent, E M and Kroese, A (2022) Commemorating Geert Hofstede, a pioneer in the study of culture and institutions. Journal of Institutional Economics. 18(1): 15-27
Spranz, R Lenger, A and Goldschmidt, N (2012) The relation between institutions and cultural factors in economic development: the case of Indonesia, Journal of Institutional Economic 8(4): 459-488
Tabellini, G. (2010), ‘Culture and Institutions: Economic Development in the Regions of Europe’, Journal of the European Economic Association, 8: 677–716
Tarabar, D. (2017), “Culture, Democracy and Market reforms: Evidence from Transition Countries,” Journal of Comparative Economics, 45(3): 456–480.