The literature lacks consensus on the role of currency regimes in explaining external competitiveness. Countries not only differ in terms of currency regimes, but can also have different institutional arrangements, namely trade agreements and inflation targeting (IT) frameworks in addition to the overall quality of governance. Hence, using the real effective exchange rate and by covering 35 developing countries over the period 1975–2014, we investigate the role of currency regimes in explaining the degree of misalignment while considering institutional factors. First, we find that intermediate regimes limit the currency misalignment with greater financial openness (FO). Second, non-reciprocal preferential trade agreements improve price competitiveness, whereas free trade and reciprocal ones can only be beneficial with a higher degree of FO. Third, misalignments in fixed regimes decline in the presence of stronger institutions or in countries with an IT type of monetary policy framework. The above results remain robust to alternative specifications.

Frank Knight's theory of monopoly price has received relatively little attention in the literature on Risk, Uncertainty and Profit. We argue that Knight accepted and refined the monopoly price theory of Carl Menger and his followers. Knight highlights the difference between monopoly as an inevitable outcome of departures from perfect competition, and monopoly as a contingent or ‘culture-history fact’. In the latter case, coercive institutional barriers to potential competition shape the choice set of consumers and producers, and provide a crucial method for identifying monopoly gains. There are three benefits to this account of Knight's contributions: it rehabilitates the focus on the institutional determinants of monopoly price, as opposed to the mainstream emphasis on market frictions and imperfections; it opens the way for a Mengerian monopoly price theory that seriously engages the study of institutions; and it adds new evidence and nuance to ongoing debates about Knight's place in economics.

In his seminal 1921 book, Risk, Uncertainty, and Profit, Frank Knight distinguished uncertainty and risk. This paper applies Knight's concept of uncertainty to knowledge generated in incumbent organizations to explain the inherent difficulty in assessing potential innovations along with the key role played by knowledge spillover entrepreneurship as a conduit for transforming new knowledge created by an incumbent organization but ultimately commercialized through the creation of a new firm and innovation. Knowledge is inherently uncertain and constitutes what is characterized as the knowledge filter impeding innovative activity in the context of incumbent firms and organizations. The organizational and institutional context and market uncertainty can either facilitate or impede the spillover of knowledge from the firm where it was created to the entrepreneurial startup where it is transformed into innovation. The empirical evidence based on a large, unbalanced panel of 9,126 UK firms constructed from six consecutive waves of a community innovation survey and annual business registry survey during 2002–2014. Implications for managers, scholars, and policymakers are provided.

An established tenet of the literature is that the use of flexible labor leads to less innovation. Yet, less attention has been paid to the possibility that it is the decision to innovate that generates the incentive to hire on a permanent basis. The goal of this paper is to show the existence of interlocking complementarities between the firm's technological and hiring strategies. To do so, we develop a simple model where the workers’ decision to invest in human capital is affected by the type of employment contract (temporary versus permanent) and by the type of technological investments (routine versus innovative). When the firm is unable to coordinate its actions across these different domains, two equilibria simultaneously exist: in the ‘high-road’ equilibrium, firms invest more in innovative projects and hire on a permanent basis; in the ‘low-road’ equilibrium, they invest more in routine projects and hire on a temporary basis.

For two decades, economic agents have been investing in the personal data-driven industry on the assumption that courts, the keepers of the legal systems, would have backed their claims, turning their technological control of personal data into legally protected property rights. Courts' backing has proved only temporary as they are now revising early solutions by constraining collection, use, and trade of personal data to protect the hierarchically superior rights. The theory of ‘legal bubbles’ rationalizes the economics underlying the legal shockwaves affecting the personal data-driven economy. ‘Legal bubbles’ tend to arise when economic agents invest in the economic exploitation of a new resource in a context of uncertainty and ignorance about the legal implications of innovative activities. These legal foundations may eventually turn out to be unstable as a result of courts' ex-post attempt to re-adapt them to the previously ignored implications of unconstrained commodification, with disruptive economic consequences.

The paper examines doctrinal and political reasons to explain why the Ancient Greek religion did not feature a distinct class of professional priests as suppliers of religious goods. Doctrinal reasons relate to worshiping a multitude of powerful anthropomorphic gods with flawed characters; absence of a founder of religion and of a scripture; lack of religious doctrine and of a code of moral behaviour and piety manifested as mass participation in rituals. These factors denied religious suppliers the opportunity to form a monopoly acting as an autonomous intermediary between humans and gods. Political reasons relate to the supremacy of the demos which watchfully guarded its decision-making powers and prevented other actors like a priestly interest group to challenge its authority.

Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization policies. Many electricity sectors are now pursuing deep decarbonization goals which will entail replacing dispatchable fossil generation primarily with intermittent renewable generation (wind and solar) over the next 20–30 years. This transition creates new challenges for both short-term wholesale market design and investment incentives consistent with achieving both decarbonization commitments and security of supply criteria. Thinking broadly about the options for institutional change from a Williamsonian perspective – thinking like Williamson – provides a useful framework for examining institutional adaptation. Hybrid markets that combine ‘competition for the market’ that relies on competitive procurement for long-term purchased power agreements with wind, solar, and storage developers, ideally in a technology neutral fashion, and ‘competition in the market’ that relies on short-term markets designed to produce efficient and reliable operations of intermittent generation and storage, is identified as a promising direction for institutional adaptation. Many auction, contract, and market integration issues remain to be resolved.

The politics of financial governance under conditions of uncertainty has re-emerged as a significant issue for scholars of International Political Economy and related fields, not least because of the fallout from the 2007-2008 financial crisis. In this article I assess the legacy of Frank H. Knight's Risk, Uncertainty, and Profit for debates about reconceptualising financial governance and fostering financial stability. I argue Knight's book is productive in assisting understanding of the fallacies of the ‘risk-based’ economic theory tending to underpin financial governance, in particular drawing attention to the limitations of social scientific knowledge that reduce governance capacity and increase uncertainty in financial markets. I further argue, after Knight's deliberately paradoxical approach, that uncertainty in finance might be beyond regulation but at the same time there is still a societal need to attempt to achieve a politics of uncertainty that can cope with ignorance of the future through experimental governmental efforts.

Financial institutions in developing economies fail to provide entrepreneurs with access to finance to grow their businesses. This severely hampers economic development in these countries. We seek to explain why and develop an argument and model based on Knight's theory, which we augment in two ways. First, by describing problems embedded in financial institutions of developing economies, for which we use the Schumpeterian view that creative destruction requires new credit to fund entrepreneurial disruption and de Soto's finding that undocumented assets possessed by entrepreneurs in developing economies cannot be leveraged as collateral to access finance. Second, we use Williamson's hierarchical institutional model to distinguish vertical interactions. The model is illustrated using the case of Uganda, a developing country in Eastern Africa. Our analysis finds that Uganda suffers from intertwined and misaligned formal and informal institutions, limited extent of codified property, and sparse access to finance. The findings prompt policymakers in developing economies to consider problems with and within financial institutions.

In this study, we examine disparities in financial development at the regional level in India. The major research questions of the study are: how do we measure the level of financial development at the sub-national level? How unequal is financial development across the states? Does it vary by ownership of financial institutions? To explore these research questions, our study develops a composite banking development index at the sub-national level for three different bank groups – public, private and foreign for 25 Indian states covering 1996–2015. Our findings suggest that despite reforms, banking development is significantly higher in the leading high income and more developed regions compared to lagging ones. Furthermore, we find that all bank groups including public banks are concentrated more in the developed regions. Overall, over the years the position of top three and bottom three states in the aggregate banking index have remained unchanged reflecting lop-sidedness of regional development. We also note improvement in the ranking of some north-eastern states during the period 2009–15.

Silvestri interviews McCloskey about her forthcoming book, ‘Beyond Behaviorism, Positivism, and Neo-Institutionalism in Economics’, critical of recent economics, especially of neo-institutionalism. Neo-institutionalism uses the ugly character ‘Herr Max U’ as its central idea: the elevation of Prudence to the only virtue. Institutions are mainly intermediate, not ultimate, causes in society. Ethics, rhetoric, identity, ideology, and ideas matter. McCloskey's turn to defending liberalism is in the background of her critique of behaviorism, positivism, and neo-institutionalism as anti-liberal, reducing the analysis of people to a model of childish slaves. Liberalism is the theory of non-slave adults. Of the big ideas of the past few centuries, only liberalism treats people with suitable dignity, and permits them to have a go, and make others rich. Neo-institutionalism shares the two sins of modern Samuelsonian economics: a devotion of mere existence proofs; and a deviation to arbitrary tests of statistical ‘significance’. And in its tale of a rise of ‘capitalism’, it shares the errors of amateur economic history. The better word for the modern economic world of the Great Enrichment – fully 3,000% increases in real income per person – is ‘innovism’. Neo-institutionalism, as the method of historical economics, must be replaced by ‘Humanomics’.

This paper explores the interaction of informal constraints on human behaviour by examining the evolution of English football jerseys. The jersey provides an excellent setting to demonstrate how informal constraints emerge from formal rules and shape human behaviour. Customs, approved norms and habits are all observed in this setting. The commercialisation of football in recent decades has resulted in these informal constraints, in many cases dating back over a century, co-existing with branding, goodwill and identity effects. Combined, these motivate clubs to maintain the status quo. As a result, club colours have remained remarkably resilient within a frequently changing landscape.

This paper explains how informal institutions influence the reaction to the COVID-19 pandemic and the response to formal restrictions. I claim that it is not enough to introduce countermeasures, as individuals must follow them if they are to be effective. The acceptance of such measures is reflected in individuals' degrees of mobility decrease and contact reduction, the aims of governmental restrictions. I identify a group of attitudes connected with individuals' responses that differ across countries. They are associated with social relations and approaches to dealing with problems. The analysis confirms that formal restrictions can be seen as successful only if they are supported by strong informal institutions. In some cases, they even define individuals' reactions more than formal recommendations. The findings are useful not only for explaining the special case of reaction to pandemic restrictions but also for investigating what generally determines individuals' compliance with formal rules.

The last two chapters of Frank H. Knight's Risk, Uncertainty and Profit are seldom cited and frequently ignored. But in those chapters, Knight moves from entrepreneurial judgment and organizational strategies to meet the dilemmas uncertainty presents in a firm to the wider question of how uncertainty affects the social organization of economic activity. Ignoring the concluding chapters of Knight's book means we miss an important part of his early career thoughts on the tradeoffs between free enterprise and the social organization of economic activity. The purpose of the paper is to lay out the perspective on social economic organization that he took in the final two chapters of his first major work against the context of his other contemporary writings.

We owe Williamson for the formal introduction of hybrid organizations as essential building blocks in ‘the institutional structure of production’. The analysis of these institutional arrangements, which culminated in The Mechanisms of Governance, provided a unified approach to the variety of setting within which transactions are embedded, opening a new perspective on a cornerstone of modern economies. This essay explores the past, present, and future of this breakthrough. First, it reviews the progressive integration of hybrids as a category of their own in the classic ‘make-or-buy’ model, inserting hybrids as an ‘intermediate’ form different from markets in that adaptation cannot be done unilaterally and different from ‘unified organizations’ in that adaptation cannot be done by fiat. Second, it shows how this initial characterization of hybrids, besides providing a coherent approach to empirical research available at the time, gave a powerful impulse to new contributions, identifying more rigorously the fundamental features of hybrids, throwing light on why firms go hybrid, and explicating the governance structure chosen. Last, it offers insights on a research program that remains a work in progress, delineating new terrains to explore and new puzzles to solve.

Many years ago, Emmanuel Todd came up with a classification of family types and argued that the historically prevalent family types in a society have important consequences for its economic, political, and social development. Here, we evaluate Todd's most important predictions empirically. Relying on a parsimonious model with exogenous covariates, we find mixed results. On the one hand, authoritarian family types are, in stark contrast to Todd's predictions, associated with increased levels of the rule of law and innovation. On the other hand, and in line with Todd's expectations, communitarian family types are linked to racism, low levels of the rule of law, and late industrialization. Countries in which endogamy is frequently practiced also display an expectedly high level of state fragility and weak civil society organizations.

Much agreement exists among economic historians that an institutional structure which allows for broad participation in a country's economy is conducive to growth. With respect to England's institutional structure, changes that followed the Glorious Revolution of 1688 are given pride of place in recent literature. This article contributes to this literature by highlighting and explaining regulatory change that removed barriers to entry into the country's most vital industry, textiles, in the years between 1550 and 1640. However, although economic historians have tended to explain England's growth-facilitating institutions as arising abruptly through political revolution that placed constraints on the Crown, this article will elucidate change that was protracted, accretive, peaceful, and came through royal institutions. More specifically, this article argues that restrictive regulations, which were widely supported, were removed because Crown and Council, in consultation with local officials, recognized that enforcement would come at the cost of the greater priority of employment preservation.

We examine the cultural context for individual's trust in public institutions. To shed some light on possible cultural explanations from a more comparative perspective and cover a wider set of cultural aspects, we use indicators of cultural dimensions by Kaasa et al. (2014) based on Hofstede's (1980) approach. Multilevel regression analysis is conducted with individual-level data from two waves of the European Social Survey (2008, 2010) and regional-level data from multiple sources. Confirmatory factor analysis is used to construct the indicators of social and institutional trust and corruption. Our results suggest that individuals tend to trust institutions less in regions with large power distance. Hence, an important key for governments being more successful in achieving their aims seems to be related to improving the sense of participation and civic responsibility.

France relies on unionized judges to assess labor cases in court. The economic literature advocates that judges pertaining to the more belligerent unions alter judicial equilibrium, foster lower settlements, avoid trials, and intensify a professional judge's interventions. This paper intends to test whether such speculations are accurate. The empirical evidence provided here suggests that such fears are not grounded. Using a database on French employment courts, between 2012 and 2016, we show that judges from the most adversarial trade unions foster conciliation and reduce the number of dropped legal cases. The lack of statistically significant impact of unions on the judicial institution's dysfunctions is evident: the labor judiciary's alleged polarization does not drive the rate of appeals and the number of professional judges' intervention. Finally, the judicial malfunctions appear to be driven by institutional distortions and local socio-economic conditions.

This paper links banking system development to the colonial and legal history of African countries. Based on a sample of 40 African countries from 2000 to 2018, our empirical findings show a significant dependence of current financial institutions on the inherited legal origin and the colonization type. Findings also reveal that current financial legal institutions are not major determinants of banking system development, and that institutional development and governance quality are more important. A high share of government spending relative to GDP also positively affects banking system development in African countries.