Innogen · Publications · Working papers
A Two-Tier Approach to Examining Institutional Change: Interventions to Improve Systems of Venture Finance and Innovation Illustrate Non-Crisis, Agent-Driven Change
This paper presents an argument for a two-tier approach to analyzing institutional change, especially as applied to non-crisis, agent-driven change. The argument is based on the empirical analysis of Ireland and Sweden’s creation of venture capital markets for innovation financing. From this empirical analysis, three specific arguments are made regarding institutional change. The first is that political agents can be the source of important institutional change in the course of meeting economic and political goals, therefore institutional change can be incremental. The second argument is that institutions should be divided at the theoretical level between ‘instrumental’ and ‘defining’ institutions; no division means that important nuances may be missed when examining change in national systems. The third argument is a precautionary statement regarding approaches to institutional analysis which use static descriptions of capitalist systems. Relying on static categories, especially in regards to new industries based on innovation and rapid change in technology, may lead to a narrow or inaccurate perception of institutional change.