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Regular version of the site

Non-market management mechanisms and social capital

2007
Department: International Laboratory for Institutional Analysis of Economic Reforms (LIA)

The target of the research is government institutions, in particular, executive bodies of the Russian Federation and non-profit organizations. The main objective of the research is the institutional analysis of corporate culture formation processes in executive bodies: modeling the evolution of behavioral norms and processes of accumulating social capital in executive bodies as well as streamlining the governance system within the executive power.

The objective was developed within the methodological framework of new institutional theory using the tools of non-cooperative and evolutionary game theory and auction theory. The theoretical results have been verified by empirical studies. The instruments for empirical studies were developed by the research team.

The research resulted in:

  • Two models characterizing the specifics of informal relations within government institutions,
  • Two models related to various aspects of modeling regulation policy – the structure of the regulating body and the policy impact on economic agent incentives.

The models and methods are based on the theory of incomplete contracts and agency theory. We have defined parameters that determine the form of governance in executive bodies and parameters characterizing the specifics of service exchange among government officials.

As part of the project, we carried out structured interviews using a questionnaire developed by the research team in the Ministry of Economic Development and Trade of the Russian Federation, Ministry of Economic Development and Trade of Samara Region, Department of Economic Development of the Central Office of the Government of Perm Krai, Administration of Krasnoyarsk Krai. Among the participants of the survey in the Russian MEDT and Administration of Krasnoyarsk Krai were the Monitoring-Krasnoyarsk research company and Center of Social Forecasting.

Although the models include the use of accumulated experience on this topic in foreign and Russian literature they also touch upon issues that hadn’t previously been studied. These models and methods have no parallel. Based on these methods, we have carried out an evaluation of introducing regulation into activity of government officials.

In the context of researching non-profit organizations, the work provided a means of evaluating the importance of people’s confidence – in each other and in institutions – for developing civil society. Empirical testing of our hypotheses demonstrated the following results:

  • Average institutional confidence among people in a region, as expected, has no impact on the level of civil society development in the region.
  • Interpersonal confidence doesn’t affect the level of civil society development in the region. This proves our hypothesis incorrect. However if we consider individual data, the level of confidence in surrounding people starts influencing the expert evaluation of the civil society development level in the region of residence. It means that the data that were used for region-by-region evaluation could be invalid, and in reality there is a relationship between confidence and the development of civil society.
  • Our hypothesis suggesting that non-profit organizations compensate for the absence of trust and confidence in people’s interactions still hasn’t been confirmed. In Russia, people still don’t see non-profit organizations as alternative producers of social services. And they do not really act as government rivals in this sense even though they have already started providing some services, mainly in the niches where it is difficult for the government to accommodate demand specifics.
  • Our hypothesis stating that the higher the confidence level among the least educated and poorest citizens is, the higher the level of civil society development in the region is, seems to be disproved. We believe that this is related to the fact that if the poor trust each other and, for example, cooperate, they can’t really change the situation and solve their problems: they lack the necessary experience and knowledge. The fact that the holders of this experience and knowledge rarely strive for cooperation is one of the most important problems in Russian civil society.
  • The level of confidence affects people’s civil activity (participation in non-profit organizations, eagerness to initiate collective actions) along with other factors: income level, religious affiliation, having individuals from the risk group as family members (potential consumers of services rendered by non-profit organizations).
  • There are no consistent relations between interpersonal confidence and socio-demographic characteristics.

Overall, the research demonstrated that both at the regional and individual levels, confidence is a significant factor for civil activity and the level of civil society development. At the same time, we emphasise the impact of confidence in surrounding people, whereas the influence of institutional confidence wasn’t revealed during the testing of our hypotheses.

The important theoretical conclusion coming out of this research work is that the so-called supply-side theories explaining the emergence of non-profit organizations are inadequate for Russia: Russians start (or do not start) cooperating regardless of their confidence in government, social or business institutions.

Russian civil society desperately needs the participation of successful, wealthy citizens in its structures. Finally, confidence of Russians in surrounding people is not a function of their social status, education etc. The only indicator that affects the level of confidence is income group, but even the impact of this is marginal. It seems that confidence is a derivative of individual’s values rather than of his or her position on the social ladder.