Ville-Pekka Sorsa

Institutional Change and the Financialisation of Pensions in Europe

Pension reform in European political economies has increased the institutional proximity of local pension arrangements and emerging retirement-income institutions with the prospects of global financial markets and conventional investment practice. Applying new institutional theory to case studies of pension reforms in Finland, Germany and France, we find that this increasing relational proximity is deeply embedded in existing institutional practices typical of each political economy, simultaneously supporting continuity and change. This suggests that the linearity inherent in debates over convergence and divergence in comparative capitalism needs to move to more multidimensional understandings of political–economic variety more sensitive to agency in order to grasp what is ultimately occurring as political economies transform and interact, particularly under conditions of financialisation.

Social Responsibility and the Political: Studying the Politics of Social Responsibility in Institutional Investment

The political aspects of social responsibility (SR) have been much debated in academia, but so far there has been little attention paid to how the political usage of SR discourse shapes everyday practices in organizations. The first purpose of this essay is to develop a framework based on post-foundational political thought and institutionalist approaches to SR in order to explain how the usage of SR discourse shapes activities in organizations. The second purpose is to demonstrate the application of this framework in order to analyse the politics of SR in institutional investment. This article first studies what kind of theoretical foci are provided by influential reviews in SR and socially responsible investment (SRI) literature. It then demonstrates, by means of a sample case study focused on Finnish pension insurance companies, how SR discourse can politically shape institutional investment practices. The findings suggest that SR discourse can politically shape investment practice by means of factors that would typically be excluded from explanation if studied on the basis of the literature reviewed.

Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy

ABSTRACT Scholars of financialisation have argued that the emergence of finance-led grow regimes requires new instruments for effective conduct of economic policy. In this scholarship, central banks have been seen as the most promising actors to utilise one of the most synergetic policies, the maintenance of high and stable prices of financial assets. Since the financial crisis of 2007–8, central banks of the developed world have adopted various unconventional monetary policy measures that serve this function. But will these unconventional measures become institutionally legitimate and institutionalised as conventional practice, as suggested necessary by scholars of financialisation? In this paper, we answer to this question by studying the institutional legitimation of the Federal Reserve’s Quantiative Easing (QE) programmes. We argue that the QE programmes have been legitimated successfully but with institutional legitimation strategies, which cause institutional pressures that question the potential of QE from becoming a regular policy instrument and practice.

Institutional work and accountability in public-private partnerships

The large-scale emergence of public–private partnerships (PPPs) has drawn attention to the mechanisms of accountability in PPPs. However, there has been little research yet on how the institutional logics of the mechanisms are instituted, and there is still little knowledge on the role of accountability in the governance of PPPs. The purpose of this article is to develop a theoretical framework for studying the institutional logics of accountability in PPPs by including institutional work projects in an analysis. The theoretical framework is applied in a single case analysis of the Finnish public–private pension system TyEL. The case study reveals accountability gaps and changes previous understanding of the role of public accountability in governance of PPPs.

Nation Branding as Sustainability Governance: A Comparative Case Analysis:

The role of governments in business and society research has remained underexplored, and recent studies have called for further investigations of mechanisms of government intervention. In response to this call, this article studies how nation branding communication can govern businesses toward sustainability by providing qualifications for sustainable business, legitimizing these qualifications, and attaching national aspirations to business conduct that meets these qualifications. A comparative exploratory analysis of the nation branding materials of Denmark and Finland shows that while the two nations qualify business sustainability in similar ways, differences exist in the legitimization of business sustainability and the national aspirations attached to sustainable business conduct. Both countries emphasize principles of efficiency and renewability in their sustainability qualifications. However, while Finland clearly seeks to attract firms to the local business environment to increase exports and improve the local economy, Denmark ascribes more heterogeneous value to sustainable business.

Fostering Pension Fund Capitalism Without Financializing Pensions? The Evolution of Policy Ideas in Finnish Pension Fund Investments

The promotion of pension fund capitalism has been considered an intrinsic part in the financialization of European pension systems. The evolution of Finnish pension system challenges this relationship: Finnish pension funds have embraced the idea of international portfolio management, but this shift has not been accompanied with path departures in pension policy. The case calls for more nuanced analyses of gradual political shifts in the ‘asset side’ (i.e. investment policy) of different varieties of pension fund capitalism and the relationship with the shifts in the ‘liability side’ (i.e. pension benefits) of pension politics. The paper studies the evolution of policy ideas over investments in the Finnish mandatory earnings-related pension scheme for private sector employees. The descriptive analysis reveals a gradual ideational shift from neo-corporatist style national economic development focus to an international portfolio management driven investment focus. Moreover, the ideas leading to new investment policies have been only periodically coupled with pension policy issues.

The Production of Institutional Facts in Economic Discourse

Abstract Economic discourses are dominated by stylized facts and other statements of fact concerning the institutional economic order. Yet, there is still very little knowledge on how exactly facts are formed in economic discourse, how they serve as a means for rendering issues “economic”, and how they legitimize, renew and change institutions. This article introduces a theoretical model for studying the relationships between the presentation of institutional facts, institutional change and processes of economization. The model is based on John R. Searle’s theory of speech acts, on the so-called discursive institutionalism in political science and the study of institutional entrepreneurship as a political activity. The model is then applied on a limited scope to study the construction of institutional facts concerning public sector economies in three Finnish government and consultant reports. The key empirical findings conclude that the most common institutional facts are produced either by generalizing individual facts for various institutionalized activities or by combining one fact into various meanings. These facts are used to legitimize various policies, including cuts in public spending, strengthening the power of experts, increasing budgetary stability, lengthening working careers and the increase in public sector productivity.

'How Institutional' are Institutional Investors? The Institutional Life of US Occupational Pension Funds

Pension funds form an own domain within the general domain of finance as their institutional environments and arrangements of investment differ from other sub-domains. This working paper studies the institutional organization of the field of US occupational pension funds with new institutional theory including discussions on cultural economy approach to social studies of finance. US occupational pension fund investment actions are constituted and affected by various relevant institutions that are usually very diffused. The funds operate in heterogeneous regulative and normative environment in terms of form and sources, but the environment is somewhat homogeneous in substance. They face numerous constraints in their institutional environment, but most of these constraints simultaneously enable and give mandate and legitimization to various kinds of actions thus limiting the effectiveness of most constraints. The most restricting feature in the field level is the incentive to mimetic replication of conventional investment practice, which suggests that occupational pension fund investments are dependent on conventional models of investment whereas they are among the only actors that are capable of changing the very same models in the domain of finance. The main result of the paper in case of the organization field observed is that organization and governance methods can break conventional patterns and broaden the horizon of all pension fund actions enabled by their institutional environment. This may require, however, very strong institutional entrepreneurship in order to change investment behavior and especially corporate engagement practices in the occupational fund sector due to its cultural-cognitive restrictions.