Globalisation and the Diversity of National Institutions: A Comparative Analysis of Contract Enforcement

This paper examines various aspects of comparative economic organization, particularly different types of contractual governance. Despite the widespread claims of global convergence and market-led institutional reform, there is still conspicuous resilience of national specificity and societal variance of institutions that are pertinent to considerations of regulation, policy and business strategy. We provide an evaluation of various debates on the effects of globalisation, concentrating on the literature on state capacity and national business systems, national competitiveness and country-specific firm strategy, and societal variance of institutions. Our main analysis of contract enforcement is concerned with a fundamental question; how transaction costs may influence the emergent forms of institutional arrangements across different societies. We argue that the relative configuration of institutional arrangements facilitating economic exchange is shaped by different modalities of enforcement. Based on the institutionalist insights (Williamson, 1985; North, 1990), we propose a typology of business exchange and enforcement: contract, trust and hostage.