Institutional Change in Old Industrial Areas – Lessons for ... - UMAR

) A step further went the "sclerosis approaches", an expression going back to
Kindleberger (1978), sometimes also – more technically – called as "blockage of
endogenous renewability" (Geldner 1983). The basic assumption here is that
adaptive mechanisms do not work any more and that behavioural potentials have
been reduced: this leads to an overemphasis of distributional aspects instead of
efficiency, the existence of strong ties leading to collusion and reducing the necessity
to strong performance. The external conditions for "entrepreneurial alertness" (a
notion introduced by Kirzner (1980) in the tradition of Schumpeter) have deteriorated,
the subjective element of entrepreneurial behaviour has been negatively influenced
by objective preconditions ( the "entrepreneurial climate").
This raises the question why this happens especially in OIAs. One part of the answer
is given by theories of "bounded rationality" (Simon 1959, 1983, Cyert/March 1963)
assuming rigidities in the mechanisms of finding and processing information –
externalities are an important factor for these mechanisms leading to a diversion of
the logics of individual and collective action. These mechanisms have a clear
regional and sectorspecific dimension (Tichy 1979, Prisching 1985): Industries and
regions having a long success story are not any more able to take up the relevant
market signals, the petrification of structures and the routines of decision making
leads to misjudgements and misconceptions. The spatial dimension here includes
not only geographical distance, but informational aspects of lacking economies of
urbanization and agglomeration because of the similarity in behaviuor resulting in
locally bounded rationality.
This bounded rationality is also reinforced by strong distributional coalitions. Olson
(1982) emphasises the negative effects of collusions of social groups which are able
to influence political decisions in their own favour. They are the stronger the longer
societies and economies grow in a stable way – it takes a long time to build up such
coalitions but once they are installed they are able to exercise rent seeking
behaviour. OIAs with a long past of industrialization and wealth are strongly
influenced by such coalitions comprising managers, unions and politicians leading to
higher wages and prices and preventing mobility and flexibility.
6