The dynamics of inertia : institutional persistence and change in telecommunications and health care

Abstract

Important strands of the new institutionalism assume that the efficiency of institutions declines over time. Institutions, according to this view, are more stable than their environment, which supposedly results in an ever increasing misfit. This misfit, it is hypothesized, can only be corrected by the creative destruction of the institutions. The article takes issue with this view. Using case studies from the international telecommunications regime and the German health care system, it argues that institutional persistence does not necessarily prevent institutional adaptation. While it is an obstacle to creative destruction, it is compatible with other forms of institutional transformation, which have not received much attention from institutionalist scholars. Inert structures can be patched up with new structures or transposed to new functions. The article analyzes patching up and transposition as distinct modes of institutional change, and assesses their adaptive potential.