Daniel Maman

The Emergence of Business Groups: Israel and South Korea Compared

This paper examines the emergence of business groups in Israel and South Korea. The paper questions how, in very different institutional contexts, similar economic organizations emerged. In contrast to the political, cultural and market perspectives, the comparative institutional analysis adopted in this research suggests that one factor alone could not explain the emergence of business groups. In Israel and South Korea, business groups emerged during the 1960s and 1970s, and there are common factors underlying their formation: state-society relations, the roles and beliefs of the elites, and the relative absence of multinational corporations in the economy. To a large extent, the chaebol are the result of an intended creation of the South Korean state, whereas the Israeli business groups are the outcome of state policies in the economic realm. In both countries, the state elite held a developmental ideology, did not rely on market forces for economic development, and had a desire for greater economic and military self-sufficiency. In addition, both states were recipients of large grants and loans from other countries, which made them less dependent on direct foreign investments. As a result, the emerging groups were protected from the intense competition of multinational corporations.

Who Accumulates Directorships of Big Business Firms in Israel?: Organizational Structure, Social Capital and Human Capital

This article studies which of the directors of the largest corporations in Israel were invited to sit on additional boards of directors between the years 1974 and 1988. The article compares organizational affiliations, and the human and social capital of directors who accumulate directorships with those who do not. The study uses logistic regression to discern which variables increase the likelihood of being invited on to an additional board. The findings strongly support the hypothesis that it is a combination of the structure of the national economy and human and social capital of the directors which determines who will join additional boards.

The politics of institutional reform: The ‘Declaration of Independence’ of the Israeli Central Bank

ABSTRACT Over the last two decades, increasing numbers of central banks in both developed and developing countries have gained independence from political echelons and other state bureaucracies, becoming important actors in the political arena with the capacity to significantly affect the configuration and functioning of national economies. Through a detailed process-tracing analysis, this paper studies the institutional turning point in the position of the Israeli central bank within the state institutional configuration: namely, the amendment of the Bank of Israel Law in 1985 which prohibits the central bank from providing loans to the government to finance budgetary deficits. The analysis focuses on the conditions that facilitated the institutional change, as well as on the actors and mechanisms that were involved in the process. This legislative amendment, which opened the path to the increasing independence of the Bank of Israel, was the result of the constitution of a new cross-national field of policy-making, comprised of both local and foreign political actors: the Israeli Ministry of Finance, the US government and a cross-national network of Israeli and American academic economists. Mechanisms of both inter-state dominance and expert power operated and interacted with each other within this field, producing synergetic effects that fostered the dynamic that led to central bank independence.

Research Note: Interlocking Ties within Business Groups in Israel—A Longitudinal Analysis, 1974-1987

This article focuses on longitudinal changes in interlocking ties within business groups in the Israeli economy during the years 1974-1987. In contrast to societies where the individual firm is the significant actor, in societies where business groups prevail, the interlocking directorate is one of the means of controlling and coordinating firms in the group. This article discusses some of the factors which led to the differences in interlocking ties within business groups in the Israeli context, including patterns of ownership, and management strategies adopted by groups.

Diffusion and Translation: Business Groups in the New Israeli Corporate Law

Diffusion is one of the most broadly studied topics in the social science; yet, this concept is under-theorized because studies ignore what happens when institutional principles and practices that originated elsewhere arrive at an organization or society. Translation is the most important mechanism involved, and theorizing translation requires understanding to institutional conditions and the actors involved: Their motivation and interests and the relationships among them. This article focuses on corporate law reform in Israel, specifically questioning why the new corporate law does not refer to business groups, which form a salient part of the Israeli big-business economy. This article suggests that the Americanization of the Israeli legal culture was materialized via local actors who imported U.S. ideas while adapting them to existing legal culture. However, this process was not the result of a non-conflicting diffusion of ideas; rather, it was caused by manifest conflicts with non-state actors over desirable legal arrangements and economic and political interests.

THE STUDY OF WAR AND THE MILITARY IN ISRAEL: AN EMPIRICAL INVESTIGATION AND A REFLECTIVE CRITIQUE

This article reports an empirical investigation of the study of war and the military in Israel and offers some reflective thoughts on our findings. We explore the social and political conditions under which academic knowledge about “things military” in Israel has been, and is being, produced. By academic knowledge we mean the publicly available theories, methods, and findings produced in universities and research institutes. Concretely, we refer to the plethora of articles, books, and edited collections published over the past thirty years in the social sciences. We do not, however, deal with research in clinical psychology or psychiatry, or with strategic studies, international relations, and conventional military history, although these fields have been sources of a good deal of research in Israel. By “things military” we mean social and cultural concerns related to (and derived from) the armed forces, war, and provisions for “national security.” Thus, we are concerned with studies related to the Israel Defense Forces (IDF) as an institution that is characterized by certain professional and organizational features and that must constantly manage its relationship to a variety of social groups and representatives of the state. In a complementary manner, we refer to studies that explore the ways in which the state and society manage their relations with Israel’s armed forces. To be sure, in the past few decades a general weakening of the hold of security considerations on public policies and debates has been coupled with growing misgivings about, and questionings of, the military sphere or arena as the definer of Israeliness. Yet the military remains a central institution in Israel, and military matters continue to be of central importance for public and private lives. Indeed, this basic continuity is still evident in such diverse areas as the prominence of defense concerns for national policy and planning, the sheer quantity of resources still granted the IDF, and the importance of military service for many social and cultural groups. 1

Mobilizing globalization in local political fields: The strengthening of the central bank in Israel

ABSTRACT The strengthening of central banks is frequently considered as a direct consequence of globalization. This paper offers an alternative explanation which considers this process as the result of political processes taking place first and foremost within local political fields. Yet we consider globalization as an important component in the politics of institutional reforms, by serving as a resource mobilized by political actors striving to improve their position in the local political field. We show how the central bank in Israel appealed to the normative power of worldwide accepted institutional models, to the authority of international financial organizations, and to the disciplinary power of global financial markets, claiming that the adoption of central bank independence is imposed by the imperatives of globalization. We claim that the ability of central banks to conduct a credible politics of inevitability is based on their privileged location as nexus between the global and local fields.

The clash between legal and business logic: business groups in the new Israeli corporate law

Planned institutional change presents an uncommon opportunity for institutional entrepreneurs to advance their innovations. The dispute of why the new Israeli corporate law, enacted at the end of 1990s, does not refer to business groups, which form a salient part of Israeli big business, opens a window through which the conflict between two different and competing types of logic may be viewed. The carriers of legal-professional logic were legal academics and state officials, who opposed the inclusion of a special chapter or any other reference to business groups within the new corporate law based on US legal ideas, and especially on the ‘Law and Economics’ perspective. In contrast, the carriers of business logic were interest groups and professional associations that sought to appropriate the legal and economic advantages resulting from organizing business in the form of business groups within the new law, without protecting the rights of minority shareholders and, more importantly, without enabling state agencies to intervene in the governance of their businesses.