Endogenizing Institutions and Their Changes

This paper proposes an analytical-cum-conceptual framework for understanding the nature of institutions as well as their changes. First, it proposes a new definition of institution based on the notion of common knowledge regarding self-sustaining features of social interactions with hope to integrate various disciplinary approaches to institutions and their changes. Second, it specifies some generic mechanisms of institutional coherence and change - overlapping social embeddedness, Schumpeterian innovation in bundling games and dynamic institutional complementarities - useful for understanding the dynamic interactions of economic, political, social, organizational and cognitive factors