Political-Cultural Approach to Market Institutions

934 words 4 pages
Markets as Politics: A Political-Cultural Approach to Market Institutions
Author: Neil Fligstein in: American Sociological Review, 1996, Vol. 61 (August:656-673) personal summary Markets are social constructions that reflect the unique political-cultural construction of their firms and nations. The creation of markets implies societal solutions to the problems of property rights, governance structures, conceptions of control, and rules of exchange. These solutions are then linked to current perspectives in economic sociology: networks, population ecology, institutional theory, and the problem of constructing action. The term "markets as politics" is used in two dimensions: a) the formation of markets is a part of state-building and b)
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6. Power struggles within firms are over who can solve the problem of how to best organize the firm to deal with competition. The winners of the struggle will impose their organizational culture and design on the firm. 7. Through intended and unintended actions, states can thwart the actions of firms to create stable conceptions of control. 8. The "liability of newness" in a new market reflects, in part, the market's lack of social structure or conception of control (i.e., it reflects participants' inability to control competition). With no established conception of control to structure non-predatory forms of competition, price has its strongest effect. 9. New markets borrow conceptions of control from nearby markets, particularly when firms from other markets choose to enter the new market. 10. In markets with stable conceptions of control, there is a great deal of agreement by market participants on the conception of control and the status hierarchies and strategies it implies. 11. Incumbent firms pay attention to the actions of other incumbent firms, not challenger firms, while challenger firms focus on incumbent behaviour. A stable world depends on social relations between the largest firms. 12. Firms in stable markets continue to use the governing conception of control, even when confronted with outside invasion or general economic crisis. The major force that holds a market together over a period of time

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