The Dictionary of Human Geography

substance of the economy. Institutional
parameters, as Hodgson (1988) argues in his
celebrated book, explain economic variety,
economic impulse and organization, evolu-
tionary change, historical specificity and rules
of meaning, interpretation and action.
The term ‘institution’ covers a wide variety
of meaning to progressively thicken the idea of
the economy as an institution. Most obviously,
this includes the formal institutions of eco-
nomic and regulation such as firms, banks,
corporate rules, business standards and gov-
ernment regulations that are societally
specific, slow to change and significant chan-
nelling devices. It also includes informal insti-
tutions such as social conventions of power,
deference, respect, trust and legitimacy, which
are also highly localized, and which guide be-
haviour in different markets, organizations and
territories. In turn, taken-for-granted eco-
nomic canons such as profit maximization,
market individualism, price signalling and
actor rationality are read as value-laden in a
dual sense: first, as embedded fictions that
need to be worked at; and, second, as socially
generated norms that are neither incontrovert-
ible nor universal. Then, economic continuity
and change are explained in terms of recursive
routines and habits – personal, interpersonal,
organizational and social – treated as the hid-
den hand of daily economic practice and
consensus, as the social genes of economic
evolution and path-dependency, and as a
core determinant of learning and innovation
capability. Old institutional economics, thus,
rejects the premises of mainstream economics,
but it also injects a considerable degree of
texture, contingency and socio-institutional
specificity in heterodox economic theory
traditionally dominated by big-picture gener-
alizations.
In economic geography, this variant of insti-
tutional economics has had some impact in
development geography by soliciting critical
work on the role of international organizations
such as the World Bank or major NGOs;
research on the social and institutional param-
eters of particular markets, such as micro-
credit or open-air trade; and studies of local
economic potential based on an analysis of
formal and informal institutions, social con-
ventions and learning processes. The concep-
tual thrust, however, has come from studies of
urban and regional economic dynamism and
creativity in the global North. Many new con-
cepts, such as cluster dynamics, industrial
atmosphere, institutional thickness, untraded
interdependencies, associational ties, indus-

trial slack and redundancy, urban buzz and

creativity, trust and reciprocity, and intelligent

regionalism, have been inspired by institu-

tional economics to account for local eco-

nomic success. Researchers associated with

institutionalism in this field include Annelee

Saxenian, Amy Glasmeier, Michael Storper,

Allen Scott, Meric Gertler, Trevor Barnes,

Chris Olds, Phil Cooke, Kevin Morgan, Ron

Martin, Ash Amin, Nigel Thrift, Jamie

Peck, Ray Hudson, Peter Maskell, Anders

Malmberg, Bjorn Asheim, Gernot Grabher,

Peter Sunley and Harald Bartheld.

The work of these researchers has brought

new insight into the spatial dynamics of the

economy in three broad areas. The first relates

to the role of spatial proximity between firms

such that the full benefits of specialization,

agglomeration, and trust and reciprocity can

be exploited. The second relates to the differ-

ent ways in which social capital developed in

civic associations, institutional activism and

reflexivity, and public-sector leadership can

contribute to local economic vitality. The

third relates to the spatial foundations of the

knowledge economy and economic learning in

general, where the research has highlighted the

significance of localized R&D, technology

transfer, learning in inter-firm networks, tacit

knowledge formed in interpersonal networks

of common purpose and mutual obligation.

This body of work has considerably expanded

understanding of how space affects the

institutions of economic development and

change. aa

Suggested reading

Amin and Thrift (1994a); Hudson (2005);

Martin and Sunley (2006).

institutionalism A term with many mean-

ings in the social sciences, all intended to sig-

nal the varied ways in which institutions

structure social life in time and space. It is an

approach that rejects actor-centred ap-

proaches that stress individual human inten-

tion and will. It also seeks to interpret

structure in terms of historically and socially

embedded institutions, seen to evolve slowly,

often unpredictably and sometimes ineffi-

ciently. Structures are not seen as immutable,

universal, or machine-like. Inpolitical geog-

raphy institutionalism has influenced the

study of political institutions and their effects

on electoral geography, and studies of

geographies of belonging, citizenship and

conflict. Insocial geography, it has had

some impact on studies of social and cultural

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INSTITUTIONALISM