Institutional Theories

A second group of theories focuses on the institutional limitations of political actors, i.e. governments, parties or interest groups, and their impact on the state’s capacity to implement radical policy changes. Institutionalist approaches emphasize that each actor possesses a certain degree of discretion to realize his or her policy preferences; this discretion in turn depends on the institutional environment of the actor.⁷⁵ For example, if a government is granted sufficient room to manoeuvre due to minor institutional limitations, the implementation of radical reform policies, i.e. full liberalization and privatization, is more easily realizable than in the presence of strong environmental constraints. Thus, in contrast to actor-centered approaches it is not the individual’s or group’s preference that is in the focus here, but the institutions that enable or constrain those actors’ actions.⁷⁶

One important variant of institutionalist theories is the veto player theory which combines concepts of partisan politics with institutional restrictions. Tsebelis (1995: 301) defines a veto player as an “individual or collective actor whose agreement […] is required for a change in policy.” The theory postulates that the probability of a significant policy change depends on the number of veto players in a given political system and the similarity of their preferences. The greater the number of veto players and the more distant the preferences are from each other, the less likely it is that the status quo of a system will be changed (Tsebelis 2002). This idea may also be applied to the reform of infrastructures: the change from public ownership regimes to new regime types is comparable to a profound restructuring of the institutional status quo.

A similar combination of actor-centered and institutional analysis can be found in the application of the party difference model with political regime types such as majoritarian or consensus democracies. The basic assumption of juxtaposing different types of

75 According to new institutionalism, exogenous forces have to be interpreted in different institutional settings (Thelen and Steinmo 1992). Policy ideas, for instance, are selected and adapted according to the various institutionalist environments. This view has, however, been subject to strong criticism. Several authors posit that exogenous factors are often added to theory on an ad hoc basis when institutionalist variables loose their explanatory power (cf. Gorges 2001). New institutionalist features, it is argued, can include policy ideas but their source is often external to institutions.

76 On ‘actor-centered institutionalism’, see for instance Scharpf (1997).

democracy is that institutional structures of political systems limit the legislative and executive branches’ room for action in the exercise of their majoritarian power (Lijphart 1999). Within this context the party difference theory only applies conditionally: the more a political system is penetrated by consensus democratic rules and the more numerous institutional barriers against the parliamentary majorities are, the less it will explain (Schmidt 2002a).

A third variant of institutionalist approaches sheds light on the impact of corporatist arrangements in a political system. The basic assumption is that strongly organized and powerful societal groups strengthen or weaken the ability of state actors to implement policies that intend to change the status quo. Some authors advocate the view that corporatism enhances the state’s governance capacity through the mediation of conflicting social interests (Ingebritsen 1998; Schmitter 1981). In contrast, others argue that political systems with pronounced corporatist elements lead instead to “institutional sclerosis” and

“social rigidities” (Olson 1982) by which the capacity of the state to alter policies and to reform institutions is severely restrained (Kunkel and Pontusson 1998).

The varieties of capitalism literature integrates these different institutionalist variables and postulates that globalization does not lead to cross-national convergence.

Instead, states maintain their individual room to maneuver for the most part (Berger and Dore 1996; Swank 2002). In particular, national institutions such as the structure and rules of the political system as well as ideas and belief systems continue to influence the reaction of the nation state to the developments of globalization (Garrett and Lange 1995). As an example, scholars like to refer to deregulation policies which are implemented to a much greater extent in pluralist and liberal market economies, i.e. Australia, Canada, the United Kingdom or the United States, than in coordinated economies, i.e. Germany or the Scandinavian states (Hall and Soskice 2001).

The combined analysis of differences in actor characteristics and domestic institutions as well as the role of vertical policy transference and policy diffusion should be able to explain cross-country diversity in the reform processes and in the configurations of regulatory regimes. The task is to assess whether countries that reveal an obvious diversity

of regulatory regimes in the quantitative analysis also show significant differences along domestic categories. If we find that same actor beliefs, similar institutional configurations and a comparable impact of policy diffusion have brought about strikingly different regulatory regimes, some other rationale must have been at work. To accomplish this, the analysis does not have to be in-depth, meaning that it integrates all details and characteristics of the specific national situation. Rather, it should suffice to single out those aspects of the domestic categories that have impacted on the processes of regulatory reform in the respective country.