The claim that institutions matter for economic growth and development has so far received a more extensive theoretical treatment than an empirical or methodological one. Basing our approach on a coevolutionary conception of relations between law and the economy, we link theory to method and explore three techniques for analysing legal institutions empirically: ‘leximetric’ measurement of legal rules, time-series econometrics and interview-based fieldwork. We argue that while robust measurement of institutions is possible, quantitative techniques have their limits, and should be combined with fieldwork in a multiple-methods approach.

In this paper, we investigate the relationships between informal institutions – proxied for by measures of religiosity – and levels of entrepreneurial activity, both productive and unproductive, using cross-section US state-level data. In doing so, we evaluate Baumol's (1990) conjectures on the role of institutions in determining whether entrepreneurs will channel their efforts toward wealth-generating activities or toward zero- or negative-sum rent-seeking. We distinguish between measures of both the belief (e.g., the frequency of prayer) and belonging (e.g., church attendance) that have been stressed by authors such as Barro and McCleary (2003). We find that several religious variables significantly and negatively correlate with a state's productive entrepreneurship score. Alternatively, most religious variables in our data do not correlate significantly with unproductive entrepreneurship. We also find that the percent of individuals reporting as atheist/agnostic is positively associated with productive entrepreneurship.

The issue of firm ownership is an ongoing debate. For several decades, contractarian theory has undoubtedly shaped the academic debate in both law and economics. Proponents of this approach suggest that shareholders can legitimately be considered the owners of a firm because they hold shares. This approach, though attractive, is legally incorrect. Legal scholars have noted that a corporation cannot legally belong to shareholders or other stakeholders; no one owns the firm (and a corporation). The question of firm ownership masks the following crucial issue: Who should govern the firm? In this article, after returning to the theoretical debate on firm ownership and explaining why a firm cannot be owned, we shall analyze power as the core of firm governance. This approach is a potentially relevant and accurate way to address the problems of specific human investment, collective creation and productive (consummate) cooperation in modern firms.

The current paper explores the municipal debt crisis that resulted from the panic of 1873, which caused a significant number of local governments in the United States to default on their debt obligations. The aftermath of that episode was one of constitutional change meant to constrain municipal governments from pursuing similar activities in the future. This paper empirically investigates the impact that these restrictions had on municipal borrowing costs, analyzed from bond yield data taken from several major US financial markets, so as to evaluate how binding and significant markets actually perceived these constraints to be. Overall, the results suggest that borrowing costs were lower for municipal governments that faced more stringent creditor guarantees regarding the issuing and repayment of debt, hard budget constraints, and also strict debt limits, while tax limits generally increased borrowing costs. These results not only conform too much of the current literature regarding the political economy of institutional constraints on public finance, they also add several important insights, especially when comparing defaulting to non-defaulting municipalities.

While trust and group size in socio-economic processes have been well investigated separately, approaches to synergize them have been rare. After addressing basic conditions for institutionalized cooperation, the agency capability of preferential mixing is introduced in order to determine the carrier group of an institution of cooperation. That platform typically assumes a meso-size smaller than the initial arena. Habituation and generalization within and across overlapping platforms then may lead to first contextual trust. This has to be carried over from individual platforms into the larger public of the whole economy to constitute general trust. The practical relevance of this analysis is illustrated through the fact that even superficially similar economies show different socio-economic performance and trajectories. Our results suggest investigating their inner deep structure of overlapping meso-sized platforms as a critical factor.

In this paper, we emphasize the role of institutions as the underlying basis for economic and social activity. We describe and compare different institutional classification systems, which is rarely done in the literature, and show how to empirically operationalize institutional concepts. More than 30 established institutional indicators can be clustered into three homogeneous groups of formal institutions: legal, political and economic, which capture to a large extent the complete formal institutional environment of a country. We compute the latent quality of legal, political and economic institutions for every country in the world and for every year. On this basis, we propose a legal, political and economic World Institutional Quality Ranking, through which we can follow whether a country is improving or worsening its relative institutional environment. The calculated latent institutional quality measures can be especially useful in further panel data applications and add to the usual practice of using simply one or another index of institutional quality to capture the institutional environment. We make the Institutional Quality Dataset, covering up to 197 countries and territories from 1990 to 2010, freely available online.

Economic historians tend to explain the rise of the cooperative form in agriculture from the advantage of cooperative over private factories in reducing transaction costs with suppliers. This study provides a first test of this thesis using data on 1,130 dairy factories in The Netherlands. Indeed, we find that cooperative factories performed significantly better than private factories. The persistence of private factories in certain regions can be explained by first-mover advantages.