Informal Institutions and Historical Institutionalism1

Kellee S. Tsai
Johns Hopkins University
Hong Kong University of Science and Technology
Last revised: 14 August 2014

Although historical institutionalism encompasses a variety of institutional dynamics, it

has traditionally focused on the impact of formal institutions designed and enforced by
official entities. The tendency to prioritize formal institutions reflects in part the fact that
historical institutionalism grew out of the study of advanced industrial democracies. By
contrast, efforts to take informal institutions seriously have derived primarily from research
on developing countries and transitional economies where certain types of formal institutions
may be less institutionalized than informal ones. An implicit division of analytic labor has
thus emerged between scholars of established capitalist democracies who regard formal
institutions as the normative barometer for institutional analysis, and comparativists who
specialize in countries where key political economic processes occur beyond the scope of
formal institutions. The reflexive association of formality with advanced industrial
democracies and informality with incomplete development, however, is not only teleological,
but misleading. Concepts developed from analyses of endogenous institutional change in
varied political economic contexts reveal that the causal mechanisms of institutional
transformation are often informal in character. Meanwhile, even though informal institutions
have received more attention by comparativists studying developing and post-communist
countries, an emerging second generation of historical institutionalists recognizes that even in
advanced political economies, informal institutions are relevant in structuring political

1

Paper presented at the 2014 Annual Meeting of the American Political Science Association (APSA), August
28-31, 2014, Washington D.C. The theoretical and literature review portions of this paper will be published as
Kellee S. Tsai, Informal Institutions, in Tulia Falleti, Orfeo Fioretes, and Adam Sheingate, eds., Oxford
Handbook of Historical Institutionalism (New York: Oxford University Press, forthcoming), Ch. 12.

2

processes and economic performance. Going forward, direct theorization of informal
institutions represents a fertile frontier for comparative politics, particularly when combined
with insights from historical institutionalism about institutional stability and change.
This paper develops these arguments in four main parts. The first two sections review
key contributions in historical institutionalism, starting with now-classic contributions that
concerned how institutions structure politics, followed by more recent efforts to explain
institutional development over time. The latter studies continue to privilege formal
institutions, but upon closer examination, present explanations that include dynamics
generated by informal institutions. The second part discusses studies in comparative politics
that explicitly engage informal politics, practices, and institutionsbut are not necessarily
identified with historical institutionalism. The third section proposes that informal
institutions be analyzed in a manner that decouples institutional formality from functionality.
The case of economic reform in China illustrates how the relative dysfunctionality of formal
institutions may give rise to informal coping strategies that facilitate transformation of the
original formal institutions in an endogenous manner. Economic reform in developing
countries and transitional economies often encounters the challenge of overcoming a partial
reform equilibrium trap, whereby initial beneficiaries of early reform become political
obstacles to deeper liberalization.2 This phenomenon poses a dilemma for historical
institutionalism at two points in time, or critical junctures. The first juncture is the
initiation of economic reforms, and the second one is overcoming the partial reform
equilibrium trap. Attending to adaptive informal institutions provides insight into how
unorganized groups may nonetheless influence policy processes. The paper concludes by
identifying promising directions for incorporating informal institutions into historical
institutional analysis.

2

Joel S. Hellman, Winners Take All: The Politics of Partial Reform in Postcommunist Transitions, World
Politics 50, 2 (1998): 203-234.

3

Historical Institutionalism 1.0: Structuring Politics
The term historical institutionalism emerged in the 1990s to describe research in
comparative political economy that highlighted the importance of institutions in shaping
political behavior and outcomes. As indicated in other chapters of this volume, historical
institutionalism is self-described by its architects as an approach to understanding politics,
rather than a particular methodology or theory.3 The now-classic volume, Structuring
Politics: Historical Institutionalism in Comparative Analysis, presented studies of advanced
industrialized countries to demonstrate the value of taking historically contextualized
institutions seriously.4 Through narrative analysis, formal political institutionsrather than
political culture or decontextualized rational actorswere found to explain cross-national
variation in comparative political economy issues such as size of the welfare state, scope of
the health care system, and levels of unionization. This initial focus on formal institutions is
not surprising given that the contributions to Structuring Politics concerned comparative
public policy, which reflects decisions taken by official entities.5
Concurrently, the distinction of historical institutionalism from other variants of
institutionalism (namely, economic and sociological) encouraged students of political
economy to identify with one of the three institutionalisms.6 Most comparativists straddled
economic and/or historical institutionalism, including their accompanying emphasis on
formal institutions. Those interested in informal institutions quietly borrowed concepts from
sociological institutionalism such as taken-for-granted values, habits, and cultural scripts.7

3

Cf. Sven Steinmo, What is Historical Institutionalism? in Donatella Della Porta and Michael Keating, eds.,
Approaches and Methodologies in the Social Sciences (New York: Cambridge University Press, 2008).
4
Sven Steinmo, Kathleen Thelen, and Frank Longstreth, eds., Structuring Politics: Historical Institutionalism in
Comparative Analysis (New York: Cambridge University Press, 1992).
5
Jonas Pontussen, From Comparative Public Policy to Political Economy: Putting Political Institutions in their
Place and Taking Interests Seriously, Comparative Political Studies 28, 1 (April 1995): 117-147.
6
Peter Hall and Rosemary Taylor, Political Science and the Three Institutionalisms, Political Studies 44, 5
(December 1996): 936-957.
7
Walter W. Powell and Paul J. DiMaggio, The New Institutionalism in Organizational Analysis (Chicago:
University of Chicago Press, 1991); Ann Swidler, Culture in Action: Symbols and Strategies, American
Sociological Review 51, 2 (April 1986): 273-286.

4

But few studies in comparative political economy overtly embraced sociological
institutionalism as rationalist logic dominated the sub-field during the 1990s.
To the extent that first generation economic and historical institutionalists engaged
softer variables,8 such as ideas, norms, and culture, they were treated in either primordial or
epiphenomenal terms. At the primordial end, Douglass Norths influential reminder to neoclassical economists that formal institutions affect economic performance, ironically
attributed third world poverty to cultural constraints informal institutions, and mental
models that inhibit the development of (western-style) property rights.9 Other efforts to
incorporate the role of ideas in comparative political economy tended to subsume them
within a particular institutional setting in a residual manner.10 For example, in a rationalist
explanation of the European Communitys move towards the single market in 1992, ideas
about mutual recognition of goods and services instrumentally appeared as a focal point for
facilitating cooperation.11 Rather than exercising independent causality, however, ideas
merely served to coordinate actors expectations under conditions of multiple equilibria.12
Within historical institutionalism, economic ideas have received greater explanatory
attention. Most notably, Peter Halls account of the paradigmatic policy shift from
Keynesianism to monetarism in Britain emphasized the role of economic ideas in influencing
three sequential orders of policy change: overarching policy goals, the means to achieve the
goals, and the details of policy instruments.13 From a more interpretive perspective, Kathryn
Sikkink traced the divergence between Argentina and Brazils post-war developmental

8

Robert Bates, Contra Contractarianism: Some Reflections on the New Institutionalism, Politics and Society
16, 2-3 (June 1988): 387-401.
9
Douglass North, Institutions, Institutional Change, and Economic Performance (New York: Cambridge
University Press, 1990).
10
Mark M. Blyth, Any More Bright Ideas? The Ideational Turn of Comparative Political Economy (Review
Article), Comparative Politics 29, 2 (January 1997): 229-250.
11
Geoffrey Garrett and Barry R. Weingast, Ideas, Interests, and Institutions: Constructing the European
Communities Internal Market, in Judith Goldstein and Robert Keohane, eds., Ideas and Foreign Policy:
Beliefs, Institutions and Political Change (Ithaca: Cornell University Press, 1993).
12
Blyth, Any More Bright Ideas?, 242-44.
13
Peter A. Hall, Policy Paradigms, Social Learning, and the State, Comparative Politics 25 (April 1993): 27596.

5

strategies to differences in the extent to which ideas about import substitution were embedded
in pre-existing state institutions.14 Critical of the epiphenomenal handling of ideas in both
economic and historical institutionalism, Mark Blyth placed economic ideas at the center of
his work by conceptualizing them as institutional blueprints during periods of uncertainty, as
weapons in distributional struggles, and as cognitive locks.15 When Sweden experienced
economic downturn in the late 1970s, ideas provided substantive content for changing its
economic model.16
The ideational turn in comparative political economy and institutional analysis helped
to demonstrate that especially during critical junctures, ideas matter as much as formal
institutions. But in the end, ideas do not have direct causal impact. Although particular ideas
may guide reforms of economic policies and institutions, they are still filtered through preexisting institutions.17 Moreover, as unwritten norms, rules, and practices, informal
institutions encompass much more than ideas about the economy. The discussion of
mechanisms of institutional change in the next section highlights the importance of informal
institutional dynamics even in the absence of ideational signposts.
Historical Institutionalism 1.5: Explaining Institutional Change
While historical institutionalism provided convincing explanations for institutional
stability, typically drawing on the logic of path dependency, the quest to explain institutional
change within the same framework inspired new concepts to describe different modes of
institutional transformation. These include displacement, layering, drift, conversion, and

14

Kathryn Sikkink, Ideas and Institutions: Developmentalism in Argentina and Brazil (Ithaca: Cornell
University Press, 1991).
15
Mark M. Blyth, The Transformation of the Swedish Model: Economic Ideas, Distributional Conflict, and
Institutional Change, World Politics 54 (October 2001): 1-26.
16
Mark M. Blyth, Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century
(New York: Cambridge University Press, 2002).
17
Even when these ideas are fully-formed ideologiescomprising both causal beliefs and normative
prescriptionsthey regulate behavior through institutions.

6

exhaustion.18 What distinguishes these mechanisms of change from earlier historical
institutional explanations of change is that they occur gradually over time, in a manner that is
endogenous to the institutional environment. They identify the dynamics through which
change may occur in the absence of crisis, exogenous shocks, or the critical junctures that
characterize punctuated equilibrium models of institutional and policy change.19 Although
the geographic scope of James Mahoney and Kathleen Thelens Explaining Institutional
Change (2010) extends beyond advanced political economiesby including cases from
Brazil, Indonesia, and Kenyathe framework remains focused on formal institutions. In
particular, the latter volume conceives institutions above all else as distributional
instruments laden with power implications, emphasizing that many formal institutions are
specifically intended to distribute resources to particular kinds of actors and not to others.20
This does not preclude informal rules or expectations. Indeed, the five modalities of
institutional change detailed in this literature entail critical shifts in institutional enforcement
that are not articulated as informal institutions, but arguably, warrant such conceptual
marking.
First, displacement occurs when the introduction of new institutions effectively
replace pre-existing ones. Revolutions, external occupation/colonialism, regime change, and
transitions from socialist to market economies are examples of institutional displacement.
The trigger for institutional displacement may be exogenous or endogenous to a particular
institutional environment. As will be elaborated in the next section, even though the

18

Wolfgang Streeck and Kathleen Thelen, eds., Beyond Continuity: Institutional Change in Advanced Political
Economics (New York: Cambridge University Press, 2005); and James Mahoney and Kathleen Thelen,
Explaining Institutional Change: Ambiguity, Agency, and Power (New York: Cambridge University Press,
2010).
19
Frank Baumgartner and Bryan D. Jones, Agendas and Instability in American Politics (Chicago: University of
Chicago Press, 1993); Giovanni Capoccia and R. Daniel Kelemen, The Study of Critical Junctures: Theory,
Narrative, and Counterfactuals in Historical Institutionalism, World Politics 59 (April 2007): 341-369; Stephen
D. Krasner, Approaches to the State: Alternative Conceptions and Historical Dynamics, Comparative Politics
16, 2 (January 1984): 223-246.
20
Mahoney and Thelen, A Theory of Gradual Institutional Change, in Mahoney and Thelen, eds., Explaining
Institutional Change, 7-8.

7

movement goes from one set of formal institutions to another, adaptive informal institutions
generated from the initial institutional context may facilitate the transition. But this
intermediary channel has not been acknowledged within historical institutionalism.
Second, institutional layering entails incremental amendments to existing rules or the
enactment of new rules without voiding others. The piecemeal accumulation of such
amendments may inhibit the operation of existing institutions, and ultimately undermine their
original intent. In Eric Schicklers study of US congressional development, layering proved
to be more politically feasible than dismantling institutions with strong supporters.21 In this
respect, layering could be viewed as an informal strategy for reforming dominant institutions
without challenging them directly. If widely practiced and repeated, as appears to be the case
in the US Congress, then layering should be considered an informal institution in its own
right.
The third mode of change, institutional drift, has a cognate similarity with layering in
the sense that old rules remain untouched out of political (electoral) convenience. Instead of
diluting the relevance of old rules with layers of additional rules, however, policy drift
occurs when broader environmental conditions change in the absence of adjustments to
ensure continuing vitality of the institution. In coining the term, Jacob Hacker observed that
demographic shifts in the US population led, de facto, to retrenchment of social welfare
coverage.22 Policy inaction amidst growing need for protection of new groups eroded the
substantive impact of the original policy. As with layering, drift may be consequentialist
rather than reflecting benign neglect: drift may be the result of active attempts to block

21

Eric Schikler, Disjointed Pluralism: Institutional Innovation and the Development of the U.S. Congress
(Princeton: Princeton University Press, 2001).
22
Jacob Hacker, Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy
Retrenchment in the United States, American Political Science Review 98, 2 (2004): 243-260.

8

adaptation of institutions to changing circumstances.23 Drift may be facilitated by external
changes, but like layering, it can also be an informal political strategy.
Fourth, conversion refers to the redeployment of institutions for purposes that depart
from their founding intentions. In organizational sociology, Philip Selznicks study of the
Tennessee Valley Authority is a classic case of how local officials may redefine the goals of
a public organization to serve alternative objectives.24 In a non-democratic setting, XL Ding
noted that during the 1980s, the Institute for Marxism and Leninism in Beijing came to be
populated with liberal intellectuals who advocated deepening reform of Chinas socialist
system.25 Conversion enables reform-oriented entrepreneurs to introduce alternative
missions within the confines of officially sanctioned institutions. The possibility of
conversion suggests, however, that the original institution has already declined in relevance,
effectiveness, and/or legitimacy. Not all institutions are equally vulnerable to appropriation
by change agents. Changes in the broader social, political, or economic context facilitate
conversion. Furthermore, as others have observed, layering may lay the foundation for
conversion.26
Fifth and finally, exhaustion represents gradual institutional depletion. Certain
institutions may become anachronistic due to changes in structural (demographic, political,
economic) conditions. While the same changes could lead to institutional drift, in the case of
exhaustion, institutions eventually cease to function. With institutional drift, the original
institutions retain their authoritative essence, but may govern a more circumscribed
population. Exhaustion, on the other hand, denotes institutional breakdown. As an example,
Wolfgang Streeck and Kathleen Thelen point to Avner Greif and David Laitins notion of

23

Jacob Hacker, Policy Drift: The Hidden Politics of US Welfare State Retrenchment, in Streeck and Thelen,
eds., Beyond Continuity, 41.
24
Philip Selznick, TVA and the Grass Roots: A Study in the Sociology of Formal Organization (Berkeley:
University of California Press, 1949).
25
X.L. Ding, Institutional Amphibiousness and the Transition from Communism, British Journal of Political
Science 24, 3 (1994): 293-318.
26
Hacker, Privatizing Risk, 250.

9

self-undermining institutional dynamics over time.27 Although Greif and Laitin present
their argument in economistic termsreferring for example, to shifts in quasiparametersthe causal logic of institutional self-destruction versus reproduction resonates
with other strands of historical institutionalism.28
Even though all these modes of change concern formal institutions, a number of them
would be more accurately categorized as informal institutions. Opportunistic actors can
engage in layering, drift, and conversion when outright displacement is not a realistic option.
Indeed, displacement is probably the least common mode of change because it is typically
preceded by an extreme event (e.g., war, economic crisis, regime change). During normal
times, layering and conversion provide a non-confrontational, informal means to introduce
alternative rules. As discussed in the third section of this paper, they can be viewed as types
of adaptive informal institutions that emerge in contexts where marked gaps exist between
formal institutions and the aspirations of actors in the political economy.
Informal Institutions in Comparative Politics
In contrast to historical institutionalists focusing on advanced industrial democracies,
comparativists studying transitional economies and the developing world have contributed
more directly to the literature on informal institutions. In a key article in Perspectives in
Politics, Gretchen Helmke and Steven Levitsky outlined a typology of informal institutions
based on their functional relationship with formal institutions.29 Specifically, informal
institutions may be complementary, accommodating, competing, or substitutive vis--vis
formal ones. They define institutions in general as rules and procedures (both formal and
informal) that structure social interaction by constraining and enabling actors behavior,

27

Streeck and Thelen, Introduction, in Streeck and Thelen, eds., Beyond Continuity, 29. They cite a working
paper, but the more developed argument was published as Avner Greif and David D. Laitin, A Theory of
Endogenous Institutional Change, American Political Science Review 98, 4 (November 2004): 633-652.
28
In particular, James Mahoney distinguishes between self-reinforcing and reactive sequences. James
Mahoney, Path Dependence in Historical Sociology, Theory and Society 29, 4 (August 2000): 507-548.
29
Gretchen Helmke and Steven Levitsky, Informal Institutions and Comparative Politics: A Research
Agenda, Perspectives on Politics 2, 4 (December 2004): 725-740.

10

which is consistent with historical institutionalism.30 Helmke and Levitsky further highlight
that within the universe of institutions, informal institutions are socially shared rules, usually
unwritten, that are created, communicated, and enforced outside of officially sanctioned
channels.31 Both the typology and conscious definition of informal institutions have
enhanced attention to the role of informal institutions in comparative politics. For ease of
reference, Table 1 shows the resulting categories in their 2x2 matrix.
Table 1. Helmke and Levitskys Typology of Informal Institutions
Outcomes/Effectiveness

Effective Formal
Institutions

Ineffective Formal
Institutions

Convergent

Complementary

Substitutive

Divergent

Accommodating

Competing

Source: Helmke and Levitsky (2004), 728.

Building on Guillermo ODonnells earlier call for understanding the actual rules
that are being followed rather than only parchment institutions, the co-authors elaborate
on the case for attending to informal political institutions in a volume on Latin America.32
They start from the premise that Informal rules coexist with formal democratic institutions
throughout Latin America.33 Official parchment institutions include the constitution, which
may specify whether the political system is unitary or federal, presidential or parliamentary;
the electoral system; and institutional checks and balances. Much of the existing literature on
Latin American politics has pointed to the competing influence of informal institutions such
as clientelism, patrimonialism, and corruption. Indeed, the subversive impact of informal

30

Ibid, 727.
Ibid, 728.
32
Guillermo ODonnell, Another Institutionalization: Latin America and Elsewhere, Kellog Institute Working
Paper No. 222 (Indiana: University of Notre Dame, 1996), 10, cited in Gretchen Helmke and Steven Levitsky,
eds., Informal Institutions and Democracy: Lessons from Latin America (Baltimore: Johns Hopkins University
Press, 2006), 2.
33
Ibid, 1.
31

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institutions on formal ones dominates institutional analysis of emerging democracies in the
developing and-post communist world. In other words, informal institutions are typically
presented as competing with or undermining the intended functions of formal institutions. A
few illustrative examples from this literature follow.
Defining informal institutions as the patterns of patron-client relations by which
power is also exercised, Michael Bratton finds that the three informal institutions of
clientelism, corruption, and Big Man presidentialism play a greater role in shaping political
processes in Africa than official state institutions.34 Data from the Afrobarometer survey
reveals that overall, African citizens rely on informal patron-client ties because all formal
institutions systematically fall short of popular expectations.35 Due to the endurance of
personal authority in shaping state-society relations, throughout sub-Saharan Africa political
transitions from neopatrimonial rule have faced particular challenges in institutionalizing new
rules of democratic accountability and participation.36
Studies of post-communist transitions have observed the revival of similar
neopatrimonial institutions following the collapse of the Soviet Union. Kathleen Collins
noted the re-emergence of clansmeaning, informal identity networks based on kin or
fictive kin bondsas key political actors in Central Asia.37 The resulting rise of clan
politics, the politics of informal competition and deal making between clans in pursuit of
clan interests, has influenced post-Soviet political trajectories. Writing in 2004, Collins
found that inter-clan rivalries led to violent regime collapse in Tajikistan, while deals struck
between clans provided relative political stability during the initial political transitions of

34

Michael Bratton, Formal versus Informal Institutions in Africa, Journal of Democracy 18, 3 (July 2007),
97. Cf. Michael Bratton, Neopatrimonial Regimes and Political Transitions in Africa, World Politics 46, 4
(July 1994): 453-489.
35
Ibid, 107.
36
Michael Bratton, Neopatrimonial Regimes and Political Transitions in Africa, World Politics 46, 4 (July
1994): 453-489.
37
Kathleen Collins, The Logic of Clan Politics: Evidence from the Central Asian Trajectories, World Politics
56, 2 (January 2004): 224-261.

12

Uzbekistan, Kyrgystan, Kazakhstan, and Turkmenistan. But in hindsight, the mere continuity
of autocracy in the latter republics belies continuing outbreaks of ethnic conflict throughout
the 2000s.38 As an informal institution, clans continue to compete with and undermine the
efficacy of formal political institutions. The rise of violent democracy fueled by drug
cartels in Mexico follows a similarly corrosive combination of what Andreas Schedler calls,
electoral authoritarianism and the normalization of violence in Latin American politics.39
Following Helmke and Levitskys typology, in contexts with weak formal
institutions, informal institutions may be substitutive rather than competing. The two types
are distinguished by functionality: competing informal institutions subvert, while substitutive
informal institutions make up for failures in the operations of formal institutions. Due to the
ineffectiveness of Mexicos electoral courts, for example, gentlemans agreements (called
concertacessiones) have served to resolve electoral disputes between government and
opposition elites, albeit with decreasing effectiveness in recent years.40 In a different context,
Anna Grzymala-Busse observed that after the collapse of communism in Eastern Europe,
inherited informal institutions acted as substitutes for new formal rules.41 Given the
underdevelopment of formal institutions for monitoring and sanctioning incumbent
politicians in Poland and Hungary, the press and opposition political parties, rather than
formal investigations launched by attorneys general or independent state investigators
exposed the rent-seeking activities of office holders.42 Through unofficial channels, informal
institutions can sometimes deliver the political accountability that dysfunctional formal
institutions are supposed to provide. Similarly, informal networks such as community

38

Sarah Kendzior, The Curse of Stability in Central Asia, Foreign Policy, February 19, 2013, available at:
http://www.foreignpolicy.com/articles/2013/02/19/the_curse_of_stability_in_central_asia .
39
Andreas Schedler, The Criminal Subversion of Mexican Democracy, Journal of Democracy 25, 1 (January
2014): 5-18; and Andreas Schedler, ed., Electoral Authoritarianism: The Dynamics of Unfree Competition
(Boulder, CO: Lynne Reinner, 2006).
40
Helmke and Levitsky, Introduction, Informal Institutions and Democracy, 16. Cf. Schedler, The Criminal
Subversion of Mexican Democracy.
41
Anna Grzymala-Busse, The Best Laid Plans: The Impact of Informal Rules on Formal Institutions in
Transitional Regimes, Studies in Comparative International Development (2010): 311-333.
42
Ibid, 319.

13

solidary groups may be more effective in the provision of public goods and services than
local governments.43
In this regard, complementary informal institutions enhance the performance of
generally functional formal institutions by reducing transaction costs and providing greater
stability in the operations of the overall institutional environment. Complementary informal
institutions reinforce rather than violate the spirit of formal institutions by filling in the
gaps left by the latter. They are more likely to be found in contexts where there is
congruence between formal political institutions and social norms and values. The US
Supreme Court, for example, operates according to various judicial norms and customs for
assigning opinions and reviewing cases (e.g., the Rule of Four).44 Julia Azari and Jennifer
Smith similarly point out numerous unwritten rules that complete, coordinate, and operate in
parallel to formal rules in the US legislative and executive branches.45 Although
complementary informal institutions also exist outside of well-established democracies, the
literature has focused more on the shared expectations that support democratic governance.
Finally, accommodating informal institutions enable actors to work within the
confines of official rules to pursue goals that deviate from, but do not undermine formal
institutions. Informal power-sharing arrangements such as Dutch consociationalism
exemplify this type of informal institution. Helmke and Levitsky also cite the example of
personal networks (blat) in the Soviet Union as an accommodating informal institution that
helped citizens meet both state-mandated production targets and individual needs without
violating the letter of party-state regulations.46 The same could be said of reliance on

43

Lily L. Tsai, Accountability wihtout Democracy: Solidary Groups and Public Goods Provision in Rural
China (New York: Cambridge University Press, 2007).
44
Helmke and Levitsky, Informal Institutions and Comparative Politics, 728.
45
Julia R. Azari and Jennifer K. Smith, Unwritten Rules: Informal Institutions in Established Democracies,
Perspectives on Politics 10, 1 (March 2012): 37-55.
46
Alena Ledeneva, Russias Economy of Favors: Blat, Networking, and Informal Exchange (New York:
Cambridge University Press, 1998), cited in ibid, 729.

14

personal relations (guanxi) in urban China during the communist era.47 Clientelism emerged
in state work units as a means to access scarce resources (e.g., housing, cooking oil, soap)
rationed by factory directors. As with the other three forms of informal institutions in this
typology, accommodating institutions are labeled retrospectively based on their effects.48
Ultimately, whether a particular type of informal institution is complementary,
accommodating, competing, or substitutive is contingent on its impact on formal institutions.
As Hans-Joachim Lauth points out, common law is often perceived as complementing formal
laws, but in the case of kangaroo or mafia courts, common law can also have deleterious
effects on democracy.49 Similarly, personal connections, whether called blat or guanxi, can
facilitate transactions that are consistent with (accommodate) the broader mandates of official
rules, while straying considerably from their spirit. Yet personalistic ties can also reinforce
(complement), replace (substitute), or obstruct (compete with) parchment institutionswithin
the very same country. The boundaries between everyday shortcuts that support or erode a
particular institution are contextually fluid. Therein lies the analytic limitation of
categorizing informal institutions by functionality. We have no way of knowing a priori
whether clans, gentlemens agreements, patron-client ties, or undocumented judicial mores
reinforce, impede, or overshadow formal institutions.
In this regard, a more fundamental concern is that formal institutions implicitly
represent a normative baseline in both historical institutionalism and comparative politics.
There is an unarticulated bias in the literature towards assuming that institutions sanctioned
by official authority are more important than informal rules. This tendency is apparent
even among students of authoritarian regimes who may privately question the desirability of

47

Andrew G. Walder, ed., Communist Neo-Traditionalism: Work and Authority in Chinese Industry (Berkeley:
University of California Press, 1988).
48
Hence, clientelism in Maoist China could be viewed as accommodating in urban work units, but closer to
competing or substitutive in the context of local rural politics. Jean C. Oi, State and Peasant in Contemporary
China: The Political Economy of Village Government (Berkeley: University of California Press, 1989).
49
Hans-Joachim Lauth, Informal Institutions and Democracy, Democratization 7, 4 (Winter 2000): 21-50.

15

non-liberal institutions, but in explanatory practice, accept them as a metric for assessing the
degree of institutionalization or stability in the political economy. Because formal
institutions are designed and enforced by the state, they are reflexively accepted as the
reference point for empirical analysis. This is due in part to the sequential and overlapping
rise of state-centric theorizing during the 1980s,50 followed by the development of historical
institutionalism in the 1990s. Both strands of literature employ the Weberian definition of
the state, which equates legitimacy with state-sanctioned formal institutions.
As a result of this state-centric bias, informal institutions are defined as non-Weberian
deviations from formal institutions, and viewed as residual add ons to an institutional
context expected to embody legal rationality. Any widely practiced regularity in behavior
that is not codified in writing becomes epiphenomenal, and therefore, is less likely to be
studied in its own right. Helmke and Levitskys four-part typology is productive in
demonstrating that informal institutions have varying implications for the effectiveness of
formal institutions. But as long as the conceptualization of informal institutions is tied to
their functionality relative to formal ones, it is counterintuitive to trace their causal effects on
behavior independent of official regulations.
Historical Institutionalism 2.0: Decoupling Formality and Functionality
In order to understand informal institutions on their own terms, explaining how they
affect the political economy needs to be decoupled from their functionality relative to formal
institutions. Operationally, Helmke and Levitsky suggest the following:
[M]oving beyond functionalist accounts entails identifying the relevant actors and
interests behind informal institutions, specifying the process by which informal rules
are created, and showing how those rules are communicated to other actors in such a
manner that they evolve into sets of shared expectations.51

50

Peter B. Evans, Dietrich Reuschemeyer, and Theda Skocpol, eds., Bringing the State Back In (New York:
Cambridge University Press, 1985).
51
Helmke and Levitsky, Informal Institutions and Comparative Politics, 731.

16

In other words, we need to trace both the origins and the reproduction of informal
institutions. This, in turn, provides a basis for identifying the sources of change in informal
institutions. Implementing this recommendation is not intuitive for historical
institutionalism, given its traditional emphasis on official rules and public policy. As
suggested earlier, however, the modalities of endogenous institutional change delineated by
historical institutionalists describe processes that are actually informal. Analytically, the
logical next step is to theorize such processes as informal institutions when they recur in a
patterned manner.
A more inclusive ontology of institutions would facilitate such attention by
acknowledging that formal and informal institutions co-exist within any given environment,
even if one type may be more prevalent than the other. To borrow a mathematical visual
metaphor, it would be more theoretically progressive to regard institutions as a single twodimensional Mbius strip with both formal and informal componentsregardless of regime
type or level of economic development. Such a move would offer a less state-centric
barometer of functionality and legitimacy. Rather than treating informal institutions as a
departure from official regulations, it may well be that formal institutions obstruct informal
practices preferred by both state and non-state actors. Informal institutions may provide
greater efficiency and stability in the system than formal political institutions. When
institutionalization is equated with state-enforced mandates, as is usually the case, unofficial
sources of regulation are neglected. Yet the latter may be a more robust, if not predictable
basis for reading behavioral regularities, especially when official rules lack normative
support.
As such, it remains worthwhile to distinguish informal institutions that are deeply
rootedand therefore perceived as culturalfrom more recently developed ones. The
former are typically described as indigenous customs and beliefs that are taken-for-granted,

17

unconsciously reproduced, and self-regulating. Informal institutions defined in these terms
appear entrenched and resistant to change, though in reality, cultural endowments are rarely
as static as depicted in accounts that view them as obstacles to (western-style) formal
institutions.52 On the other hand, there is a universe of informal practices that emerge as a
direct result of possibilities or deficiencies in the formal institutional environment. I have
termed these reactive coping strategies, adaptive informal institutions, to differentiate them
from longer-standing practices that are apparently embedded in the cultural fabric of
society.53 More specifically, adaptive informal institutions are defined as regularized
patterns of interaction that emerge as adaptive responses to the constraints and opportunities
of formal institutions, that violate or transcend the scope of formal institutions, and that are
widely practiced.54 Focusing on adaptive informal institutions encourages analysis of
shifting norms and incentives that are endogenous to a particular institutional context.
The case of reform-era China illustrates how the emergence of adaptive informal
institutions enabled reformers to overcome the institutional and political capital invested in a
state-dominated economic system. Specifically, in the years following Maos death, private
entrepreneurs devised a creative repertoire of informal practices to circumvent socialist era
regulatory and ideological constraints on for-profit activities. For example, falsely
registering as a collective enterprise, wearing a red hat, enabled entrepreneurs and officials
to run private businesses (with more than eight employees) with less hassle. The prevalence
of this disguising strategy was well known to both party-state cadres and ordinary people,
which eroded the legitimacy of official restrictions on capitalist activity. Similarly, due to
limited access to credit from state banks, to date, private entrepreneurs have relied on various

52

For example, North, Institutions, Institutional Change, and Economic Performance.

This is more of an analytic distinction than an empirical one. In reality, there may well be adaptive informal
institutions that represent a revival of more traditional practices. An excellent example is Zeki Sarigil and
Burcu Ozdemir, Informal Institutions in Dispute Resolution: Cem Courts, Paper presented at the 72nd
Annual National Conference of the Midwest Political Science Association (MPSA), April 3-6, 2014, Chicago.
54
Kellee S. Tsai, Adaptive Informal Institutions and Endogenous Institutional Change in China, World
Politics 59 (October 2006): 125-126.
53

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forms of informal finance, cleverly cloaked as other types of legitimate operations.55 Such
obfuscating practices are so widespread and routinized that they may be regarded as adaptive
informal institutions.
There is both empirical and analytical value in recognizing when informal behavior
becomes institutionalized for two main reasonsfirst, they may represent a more relevant
reality for understanding the context of common coping strategies; and second, their
popularity has potential effects on subsequent reforms of formal institutions. In terms of the
latter, the emergence of widespread deviations from official mandates alerts the designers of
formal institutions to repeated deficiencies in institutional enforcement. For informal
practices to reach the point of being institutionalized indicates that the gatekeepers of formal
institutions are complicit, if not supportive, of reiterated infractions. Political leadership then
faces the question of whether to look the other way themselves, re-assert the authority of
formal institutions, or reform them. Passivity can be politically convenient, as seen in the
policy drift channel for institutional change. Reinvigorating enforcement mechanisms is
sensible when the informal practices entail criminal or other activities that adversely affect
public welfare. But when adaptive informal institutions yield desired outcomes such as
economic growth or political stability, they provide reform-oriented policy elites with
practical evidence that can be marshaled to promote formalization of such practices.
Adaptive informal institutions may serve as an indirect channel for newly emerging or
underrepresented groups to affect policy changeeven in the absence of such
consequentialist ambitions. Quotidian coping strategies can have unintended policy effects.
More concretely, in the above examples from China, the adaptive informal institution
of wearing a red hat facilitated the legalization of large private businesses, which
represented an initial critical juncture; and later on, the formal admission and active

55

Kellee S. Tsai, Back-Alley Banking: Private Entrepreneurs in China (Ithaca, NY: Cornell University Press,
2002).

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recruitment of private entrepreneurs into the Chinese Communist Party enabled deepening of
economic reforms, including de facto privatization of small and medium state-owned
enterprises. In the absence of practical evidence that violations of existing rules were
promoting economic growth and involving the staff of the party-state, it would have been
much more challenging and politically costly for Chinas reformers to legalize private
economic activities. By the same token, other dramatic departures from the Peoples
Republic of Chinas founding missionsuch as constitutional protection of private property
rights, commercialization of print media,56 and development of land markets57evolved
incrementally in response to local practices. Focusing solely on official policy changes and
formal institutions would miss out on the informal dynamics that enabled near-revolutionary
changes in formal institutions to occur in the absence of regime change.
A host of fence-breaking activities in Vietnam similarly paved the way for post-hoc
legalization of private businesses, sale of land use rights, and market-based prices and
wages.58 But to be sure, not all adaptive informal institutions become formalized. In
Vietnam, informal decentralization in the provision of public order continues to compete with
largely ineffective formal institutions.59 In China, many institutionalized forms of shadow
banking remain banned or unregulated even as they literally enrich both state and non-state
actors. Identifying the conditions under which adaptive informal institutions develop causal
impact on institutional change requires analysis of specific political economies. Depending

56

Doris Fischer, Censorship and Marketization: Institutional Change within Chinas Media, in Thomas
Heberer and Gunter Schubert, eds., Regime Legitimacy in Contemporary China (New York: Routledge, 2008),
Ch. 8.
57 Peter Ho, ed., Developmental Dilemmas: Land Reform and Institutional Change in China (New York:
Routledge, 2005).
58
Benedict J. Tria Kerkvliet, The Power of Everyday Politics: How Vietnamese Peasants Transformed National
Policy (Ithaca, NY: Cornell University Press, 2005); Edmund Malesky, Leveled Mountains and Broken
Fences: Measuring and Analyzing De Facto Decentralization in Vietnam, European Journal of Southeast
Asian Studies 3:2 (2004), 307337; and Brian Van Arkadie and Raymond Mallon, Vietnam: A Transition Tiger?
(Canberra: Asia Pacific Press at Australian National University, 2003).
59
Thanh Thuy Vu, Messaoud Zouikri, and Bruno Deffains, The Interrelationship between Formal and Informal
Decentralization and Its Impact on Subcentral Governance Performance: The Case of Vietnam, CESifo
Economic Studies (2014).

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on context, Gryzmala-Busse finds that informal institutions can replace, undermine, and
reinforce formal institutions irrespective of the latters strength in the post-communist
democracies of the Czech Republic, Hungary, Poland, and Slovakia.60
These observations are not limited to post-socialist contexts where formal institutions
may be expected to be in flux, and therefore, more susceptible to informal adaptations. In his
study of the relationship between the European Parliament and the European Unions
Council, for example, Henry Farrell identifies a recursive relationship between formal and
informal institutions such that (adaptive) informal institutions created in response to formal
rules may influence subsequent adjustments to formal institutions.61 Even in the United
States, an established democracy known for its formal political institutions, unwritten rules
perform critical mediating functions by supplementing and clarifying ambiguities in
parchment institutions.62 They are fundamental components of political processes in the US
rather than distracting aberrations. Azari and Smith further suggest, that the interface
between formal and informal institutions is itself dynamic, and that written and unwritten
rules can each promote change in the other.63 As mentioned earlier, common law can have
similar dynamic effects vis--vis formal institutions, with varying consequences for
democratic governance.
Conclusion
Historical institutionalism has contributed significantly to our understanding of
institutional development, but avoided direct theorization of informal institutions, even while
specifying modalities of endogenous institutional change that occur through distinctly
informal pathways and practices. This hesitance derives from a division of labor

60

Gryzmala-Busse, The Best Laid Plans.

Henry Farrell and Adrienne Hertier, Formal and Informal Institutions Under Codecision: Continuous
Constitution-Building in Europe, Governance: An International Journal of Policy, Administration, and
Institutions 16, 4 (October 2003): 577-600.
62
Azari and Smith, Unwritten Rules: Informal Institutions in Established Democracies.
63
Ibid, 43.
61

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segmented by regional/developmental expertisethat evokes Gabriel Almonds concern
about the rise of various schools and sects[sitting] at separate tables in the discipline of
political science.64 His reflection may be extended to the rise of institutional analysis in
recent decades. Even within the sub-field of comparative politics, we have tended to study
separate institutions. Fortunately, there is emergent recognition that formal institutions
should not be analyzed in isolation from informal ones, and that informal institutions merit
dedicated attention without presuming them to be pathological. As Scott Radnitz explains,
The persistence of informality in an otherwise formalized world challenges basic
assumptions about the evolution and organization of society, and must be dealt with on its
own terms.65
Future research should thus start from the premise that all institutional eco-systems
include both formal and informal components, irrespective of regime type, level of
development, or geographic region. Such a stance would encourage students to interrogate
the origins, the reproduction, and the evolution of informal institutions in interaction with the
dynamics derived from the study of formal institutions in historical institutionalism. In
particular, certain modes of endogenous institutional transformation already point to informal
practices and processes. Conversion describes informal means of re-appropriating formal
institutions for new purposes. Layering need not exclude informal institutions. As seen in
the sub-category of adaptive informal institutions, the broader institutional context may be
multi-tiered, such that formal institutions articulate the formal rules of the game, giving rise
to adaptive informal institutions that compromise, subvert, and even facilitate reforms of
formal institutions. The concept of institutional bricolage from sociological
institutionalism and anthropology captures the patchwork of possibilities for identifying

64

Gabriel A. Almond, A Discipline Divided: Schools and Sects in Political Science (New York: Sage
Publications, 1989).
65
Scott Radnitz, Informal Politics and the State (Review Article), Comparative Politics (April 2011), 362.

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potential sources of recombinant change.66 Dennis Galvin refers to the mutually
transforming synthesis of formal and informal institutions as institutional syncretism.67 In
contrast to situations where formal institutions co-opt informal ones, or vice versa, syncretic
institutions represent wholly novel institutions fashioned out of changes in both their formal
and informal components. Such processes may lead to institutional drift, as new policies are
prioritized to the neglect of those supporting earlier priorities. Even institutional
displacement may occur through syncretic re-engineering of formal and informal institutions
over time.
Adopting a more holistic approach to institutional analysis has implications for the
manner in which political scientists, including historical institutionalists, conceive of political
development and governance. Rather than equating modernization with the elimination of
informality, informal institutions should be incorporated when evaluating the extent of
institutionalization in a political economy. In practice, this entails a departure from the
state-centric theorizing that intersected with the rise of historical institutionalism. All
institutions are subject to third party enforcement of some sort, but formal institutions are
more likely to be documented and enforced by the state. Yet in many of the examples
reviewed above, state agents also abide by unwritten rules and allow informal institutions to
flourish, either directly or indirectly. Moreover, these informal institutions may be
competing or substitutive, rather than merely complementary or accommodating. Even
though the modern Weberian state monopolizes the legitimate use of force, individual state
institutions do not necessarily monopolize legitimacy. Different sections, levels, and policies
of the state are subject to contestation by both state and non-state actors. Informal
institutions that pose challenges to one part of the state may be valued in others. The

66

Frances Cleaver, Reinventing Institutions: Bricolage and the Social Embeddedness of Natural Resource
Management, The European Journal of Development Research 14, 2 (2002): 11-30.
67
Dennis Galvin, The State Must Be Our Master of Fire: How Peasants Craft Culturally Sustainable
Development in Senegal (Berkeley: University of California Press, 2004).

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possibility of incongruence in inter-bureaucratic and central-local priorities provides clues
into the circumstances under which informal institutions could become formalized. Internal
inconsistencies in formal rules, coupled with gaps between formal institutions and groundlevel realities provide inviting opportunities for entrepreneurial actors to create adaptive
informal institutions. In short, future scholarship in historical institutionalism would be
enriched by recognizing that a host of informal institutions structure political governance and
the distribution of resources even in societies with well-established formal institutions.
Ample opportunity remains for detailing and theorizing the dynamics of informal institutions
in their own right.