Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy
The transition from plan to market provides a rare opportunity for insight into the endogenous development of economic institutions. Economic activities under the Soviet regime were coordinated by a central authority. Soviet coordinating mechanisms...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/01/891733/disorganization-or-self-organization-emergence-business-associations-transition-economy http://hdl.handle.net/10986/19713 |
| id |
okr-10986-19713 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-197132021-04-23T14:03:44Z Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy Recanatini, Francesca Ryterman, Randi ACCESS TO INFORMATION BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS CENTRAL PLANNING CENTRALLY PLANNED ECONOMIES CONTRACT ENFORCEMENT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXCESS SUPPLY GDP GOVERNMENT INSTITUTIONS GOVERNMENT SUBSIDIES INCOME INNOVATION INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL DEVELOPMENT INTERNATIONAL TRADE MACROECONOMIC POLICY MANAGERS MARKET ECONOMY NETWORK EXTERNALITIES ORGANIZATIONAL STRUCTURE PRODUCT MARKETS PUBLIC SECTOR SOCIAL ACTIVITIES STRATEGIC COMPLEMENTARITIES TRANSACTION COSTS The transition from plan to market provides a rare opportunity for insight into the endogenous development of economic institutions. Economic activities under the Soviet regime were coordinated by a central authority. Soviet coordinating mechanisms were disrupted during the transition period, leading to an increase in firms' transactions costs. Blanchard and Kremer (1997), among others, emphasize the negative impact of this "disorganization" on output behavior at the beginning of the transition. Although their argument is correct, the authors believe that their work and similar analyses stop short of fully characterizing the transition by concentrating only on reform's disruptive effects. The authors start where the earlier work ends, examining the business associations that emerged spontaneously in response to the transition's challenges. They provide empirical evidence that institutions that help coordinate production and trade emerge spontaneously in a widely "disorganized" environment. Using a largely unexplored set of firm-level data, they document the emergence of business associations at the beginning of the transition and provide evidence that these new coordinating institutions mitigated the initial decline in output. Building on the growing literature on complexity and transaction costs, they interpret the emergence of these informal institutions as the firms' rational attempt to coordinate activities in a decentralized economy. In other words, the creation of complex organizations such as associations is the spontaneous result of a natural tendency in every system to create order at the edge of chaos. Business associations are more likely to emerge where there is disorder to provide their members with stability, coordination, and the information needed to improve performance. 2014-08-26T20:02:36Z 2014-08-26T20:02:36Z 2001-01 http://documents.worldbank.org/curated/en/2001/01/891733/disorganization-or-self-organization-emergence-business-associations-transition-economy http://hdl.handle.net/10986/19713 English en_US Policy Research Working Paper;No. 2539 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia Russian Federation |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO INFORMATION BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS CENTRAL PLANNING CENTRALLY PLANNED ECONOMIES CONTRACT ENFORCEMENT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXCESS SUPPLY GDP GOVERNMENT INSTITUTIONS GOVERNMENT SUBSIDIES INCOME INNOVATION INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL DEVELOPMENT INTERNATIONAL TRADE MACROECONOMIC POLICY MANAGERS MARKET ECONOMY NETWORK EXTERNALITIES ORGANIZATIONAL STRUCTURE PRODUCT MARKETS PUBLIC SECTOR SOCIAL ACTIVITIES STRATEGIC COMPLEMENTARITIES TRANSACTION COSTS |
| spellingShingle |
ACCESS TO INFORMATION BUSINESS ASSOCIATION BUSINESS ASSOCIATIONS CENTRAL PLANNING CENTRALLY PLANNED ECONOMIES CONTRACT ENFORCEMENT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXCESS SUPPLY GDP GOVERNMENT INSTITUTIONS GOVERNMENT SUBSIDIES INCOME INNOVATION INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL DEVELOPMENT INTERNATIONAL TRADE MACROECONOMIC POLICY MANAGERS MARKET ECONOMY NETWORK EXTERNALITIES ORGANIZATIONAL STRUCTURE PRODUCT MARKETS PUBLIC SECTOR SOCIAL ACTIVITIES STRATEGIC COMPLEMENTARITIES TRANSACTION COSTS Recanatini, Francesca Ryterman, Randi Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| geographic_facet |
Europe and Central Asia Russian Federation |
| relation |
Policy Research Working Paper;No. 2539 |
| description |
The transition from plan to market
provides a rare opportunity for insight into the endogenous
development of economic institutions. Economic activities
under the Soviet regime were coordinated by a central
authority. Soviet coordinating mechanisms were disrupted
during the transition period, leading to an increase in
firms' transactions costs. Blanchard and Kremer (1997),
among others, emphasize the negative impact of this
"disorganization" on output behavior at the
beginning of the transition. Although their argument is
correct, the authors believe that their work and similar
analyses stop short of fully characterizing the transition
by concentrating only on reform's disruptive effects.
The authors start where the earlier work ends, examining the
business associations that emerged spontaneously in response
to the transition's challenges. They provide empirical
evidence that institutions that help coordinate production
and trade emerge spontaneously in a widely
"disorganized" environment. Using a largely
unexplored set of firm-level data, they document the
emergence of business associations at the beginning of the
transition and provide evidence that these new coordinating
institutions mitigated the initial decline in output.
Building on the growing literature on complexity and
transaction costs, they interpret the emergence of these
informal institutions as the firms' rational attempt to
coordinate activities in a decentralized economy. In other
words, the creation of complex organizations such as
associations is the spontaneous result of a natural tendency
in every system to create order at the edge of chaos.
Business associations are more likely to emerge where there
is disorder to provide their members with stability,
coordination, and the information needed to improve performance. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Recanatini, Francesca Ryterman, Randi |
| author_facet |
Recanatini, Francesca Ryterman, Randi |
| author_sort |
Recanatini, Francesca |
| title |
Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| title_short |
Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| title_full |
Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| title_fullStr |
Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| title_full_unstemmed |
Disorganization or Self-Organization : The Emergence of Business Associations in a Transition Economy |
| title_sort |
disorganization or self-organization : the emergence of business associations in a transition economy |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/01/891733/disorganization-or-self-organization-emergence-business-associations-transition-economy http://hdl.handle.net/10986/19713 |
| _version_ |
1764440429902692352 |