Planning Theory

http://plt.sagepub.com

Institutional Transformation and Planning: From Institutionalization

Theory to Institutional Design
E. R. Alexander
Planning Theory 2005; 4; 209
DOI: 10.1177/1473095205058494

The online version of this article can be found at:

http://plt.sagepub.com/cgi/content/abstract/4/3/209

Published by:

http://www.sagepublications.com

Additional services and information for Planning Theory can be found at:

Email Alerts: http://plt.sagepub.com/cgi/alerts

Subscriptions: http://plt.sagepub.com/subscriptions

Reprints: http://www.sagepub.com/journalsReprints.nav

Permissions: http://www.sagepub.co.uk/journalsPermissions.nav

Citations http://plt.sagepub.com/cgi/content/refs/4/3/209

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 209

Article

Copyright © 2005 SAGE Publications

(London, Thousand Oaks, CA and New Delhi)
Vol 4(3): 209–223
DOI: 10.1177/1473095205058494
www.sagepublications.com

INSTITUTIONAL TRANSFORMATION
AND PLANNING: FROM
INSTITUTIONALIZATION THEORY TO
INSTITUTIONAL DESIGN

E.R. Alexander
University of Wisconsin-Milwaukee, USA/APD-Alexander planning &
design, Tel-Aviv, Israel

Abstract For planners, institutional transformation is important in

two ways. From the positive aspect they need to know their insti-
tutional environment: institutionalization theory can help. Three
‘schools’ of institutionalization theory are presented: ‘Historical’,
‘Rational Choice’ and ‘Sociological Institutionalism’. The normative
aspect of institutional transformation is institutional design: planning
often demands this. Institutional design is defined and described: what
is it, where is it done, and who does it. The article identifies the
institutional-agent interactions that are the media and tools of insti-
tutional design, and reviews some of the knowledge base for insti-
tutional design practice under the headings of governance,
coordination, and agency.

Keywords agency theory, coordination, governance, institutional

design, institutional transformation, institutionalization, institutions

209

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 210

210 Planning Theory 4(3)

Introduction: institutional
transformation and planning
If planning is the translation of ideas into action, and the planner’s goal is
the transformation of society (Friedmann, 1987), then institutional trans-
formation must be a critical aspect of planning. That is because there is only
one way to effect significant and lasting social change: changing the people
who make up society. And there are only two ways of changing people:
changing individuals, and changing institutions.
Understanding institutional transformation is important for planners
because institutions are a critical aspect of everything planners do. ‘A living
institution . . . is a collection of practices and rules . . . (of) appropriate
behavior for actors in specific situations . . . embedded in structures of . . .
explanatory (and) legitimating . . . meaning’ (North et al., in Raad-
schnelders, 1998: 568). All planning, then, takes place within a specific insti-
tutional context, or often in sets of different and varying ‘nested’
institutional contexts as indeed do all societal activities.
To be effective actors, planners must understand something about insti-
tutions in general, and know their specific institutional contexts in particu-
lar. Until recently, planning theory and education have contributed little to
this end, but successful planners (in the widest sense: both professional
practitioners and all those others actively involved in planning processes
and decisions) are well endowed with intuitive and experiential appreci-
ation of their institutional contexts. Here we are talking in the positive
sense: understanding how and why ‘living’ institutions are born, grow,
change, and die.
But there is a more compelling link between planning and institutions: a
great deal of planning involves institutional transformation. Institutional
transformation as an intentional objective of deliberate intervention means
institutional design: some have even suggested that ‘planning is institutional
design’ (Innes, 1995: 140). Though I would not go so far, planning often
demands institutional design.
First, there is the institutional design of the planning process itself, a
problem that often presents itself when existing planning systems and insti-
tutions are flawed or perceived as inadequate for their purposes. Next, if a
policy or plan includes new programs or projects, institutional design is
needed to answer the question: how will these be organized and imple-
mented?
When plan or policy implementation demands new organizations or
the reorganization of existing ones, planners again confront a task of
institutional design. This is also the case for most complex undertakings
that require the creation of new interorganizational linkages or trans-
formation of existing networks, to concert the necessary decisions and
actions among the involved organizations. Finally, if a policy or plan

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 211

Alexander Institutional transformation and planning 211

involves new or amended legislation or regulations, it needs institutional

design.
All these examples also suggest that there are different approaches to
institutional design, which varies significantly according to context: I call
them ‘objective’ and ‘subjective-dialogic’ institutional design.1 The first
appears in situations where the object of the undertaking – the institutional
structures and/or practices that are to be changed – is outside the insti-
tutional design agents’ own institutional context, or at least that is how they
perceive it. In the second the institutional design effort is aimed at the
agents’ own institutional context. The institutional change agents’ aware-
ness that they are an integral part of the institutional design object demands
a reflexive-dialogic approach that differs significantly from the first.
This account of the relevance of institutional transformation for planning
reveals two different ways of looking at institutional transformation, which
are important for planners: positive and normative. As we shall see later,
they are both essential because they are complementary and interdepen-
dent. The one: positive understanding of institutional transformation,
enabling more effective action in institutional contexts, means descriptive-
explanatory knowledge based on reflexive experience, empirical observa-
tion and analysis. The other: normative understanding of institutional
transformation, means knowing how to effect intentional change. Deliber-
ately creating and changing institutions, and affecting institutions, insti-
tutional structures and practices is institutional design.
This article addresses both of these two aspects of institutional trans-
formation. A brief review of positive knowledge from institutional analysis
focuses on institutionalization theory. There follows a discussion of insti-
tutional design, which, while a bit more extended, is also very condensed. It
defines and explains institutional design and reviews the limited knowledge
that exists, with the aim of raising awareness in the planning community and
ultimately to enable planners’ reflexive practice of institutional design.2

Institutional analysis and

institutionalization theory
Obviously, there is a close link between models or processes of institutional
analysis, theories of institutionalization, and institutional design. It is useful
to trace their relationship, so as to understand the interaction between them
and avoid confusing them.
Theories of institutionalization drive our approach to institutional
analysis and institutional design, and there is an intimate reciprocal
interaction between (normative) institutional design and (descriptive-
explanatory) institutional analysis, just as there is between the prescriptive
and analytical aspects of any applied field (such as, say, psychology or

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 212

212 Planning Theory 4(3)

economics). Hall and Taylor (1998) identified three ‘schools of thought’

about institutionalization: the historical approach, the ‘rational choice’
approach, and the sociological approach.
‘Historical institutionalism’ defines institutions as systems of formal and
informal rules, norms and practices in polities or political economies. This
is the traditional approach to institutions, tending to see institutions associ-
ated with formal organizations. It offers a broad long-range perspective,
focused on path-dependency and a heightened awareness of unintended
consequences. Empirically based in history and political science, and
oriented primarily to institutional analysis, this approach is hardly relevant
for normative institutional design.
‘Rational choice institutionalism’ is associated with institutional econ-
omics (e.g. North and Williamson),3 its behavioral assumptions premise
rational actors with fixed preferences and values. Emphasizing the role of
strategic information and behavior in institutional emergence and change,
this school of thought attributes the origin of institutions to deliberate
design and voluntary agreement among actors (Hall and Taylor, 1998).
Clearly this approach is highly compatible with normative institutional
analysis4 based on a ‘logic of efficiency’ that leads directly to ‘objective’
institutional design. Nevertheless, its theoretical models and analytical tools
can also be deployed in a dialogical-recursive process of institutional
analysis and design.
‘Sociological institutionalism’ began as a subfield of organization theory,
focused on institutional forms and procedures in organizations (perhaps in
reaction to prior preoccupation with structure). In contrast to the ‘rational
choicers’, ‘sociological institutionalism’ concluded that institutionalization
in organizations was not a result of a strategic search for maximum
efficiency. Instead, institutional forms and practices are adopted for legiti-
macy, in a ‘logic of social appropriateness’ rather than ‘a logic of instrumen-
tality’. Institutionalization is a historic accretion of culturally specific forms
and practices (even including organizational myths and ceremonies), with
their origins and diffusion related to their specific contexts: sectors, societies
and subcultures.
This approach defines institutions broadly, seeing them as including
symbolic systems, moral values and societal norms. Blurring the distinction
between institutions and culture, ‘sociological institutionalism’ sees culture
itself as a form of institution, where institutions give social life its meaning
in an interactive and mutually constituitive relationship between insti-
tutions and action (Hall and Taylor, 1998). For institutional analysis and
design, ‘sociological institutionalism’ has several implications: it prescribes
recursive-dialogic rather than objective-rational institutional design, and its
‘logic of social appropriateness’ suggests the use of ‘goodness-of-fit’ assess-
ment rather than rigorous criteria in designing and evaluating institutions.
Hall and Taylor (1998) itemize the strengths and limits of each of their
‘institutionalisms’, finding enough common ground to warrant a synthesis.

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 213

Alexander Institutional transformation and planning 213

A blend of ‘rational choice’ and ‘sociological institutionalism’ offers a useful

basis for institutional analysis and design, where the former provides useful
models and rigorous analytical methods and tools, while the latter can
complement these with a theoretical foundation for analyzing and inferring
individual and collective preferences and values. This proposal is consistent
with my own approach to institutional design.

Institutional design: what is it?

The concept and term of institutional design are relatively new,5 linked to
a renewed interest in institutions (Powell and DiMaggio, 1991) and the
emergence of the institutionalist approach in planning theory (Healey, 1998,
1999; Verma, 2005). Interest in institutional design has spread to fields
ranging from economics to organization theory, but much about it is still
unclear. What exactly is institutional design? When and why is it needed?
Who does it, when, why, and how?
Institutional design means designing institutions: the devising and real-
ization of rules, procedures, and organizational structures that will enable
and constrain behavior and action so as to accord with held values, achieve
desired objectives, or execute given tasks.6 By this definition institutional
design is pervasive at all levels of social deliberation and action, including
legislation, policymaking, planning and program design and implementa-
tion.
Acknowledged sociological definitions reflect this view, which recognizes
institutions as ranging from the US Constitution to the Thursday night card
game at O’Brady’s bar.7 It is also implied in (the rare) work on institutional
design, from devising common resource pool associations (Ostrom, 1990)
to designing principal-agent relationships (Weimer, 1995). In retrospect we
can recognize that institutional design was invoked (whether consciously or
not) in the creation and implementation of all formal institutions (constitu-
tions, laws, organizations, regulations, plans and programs of action) that did
not evolve (as many did) spontaneously or informally.
The evolutionary transformation of institutions, informal though it may
be and however spontaneous it may seem, also involves institutional design.
This follows if we recognize that the evolution of human institutions (unlike
involuntary biological evolution) is the product of intentional decisions –
even when agents did not anticipate the consequences. Institutional design,
then, occurs whenever institutions ‘are created and changed through human
action either through evolutionary processes of mutual adaptation or
through purposive design’ (Scharpf, in Gualini, 2001: 49).8

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 214

214 Planning Theory 4(3)

Where is institutional design, and who does it?

In discussing institutional design, it is helpful to distinguish between three
different ‘levels’ of institutional design, though it is important to remember
that these are rather analytical distinctions on what is really a multidimen-
sional continuum. In a sense, each ‘level’ may be found ‘nested’ in its
adjacent levels.
At the highest ‘level’ institutional design is applied to whole societies or
addresses significant macro-societal processes and institutions, what is
sometimes called ‘constitution writing’ (Putnam, 1998; Flyvberg, 1998).
Though institutional design is often (mistakenly) limited to this level, the
drafting and adoption of national and supra-national constitutions (e.g. the
EU) are classic cases of this kind of institutional design.
But this ‘level’ is not limited to constitutions. New legal codes and
processes are another instance, from the Code of Hammurabi to the Code
Napoleon. Innovative and wide-ranging strategic political-administrative
programs are also institutional design at this level; examples range from the
Emperor Augustus’ reorganization of the Roman Republic, to the post-
Second World War Marshall Plan for Europe. These often occur after major
societal discontinuities: social upheavals and revolutions; historical
examples are too numerous to cite.
Statesmen (if they have been successful) or politicians (if not) are heavily
involved with this level of institutional design, usually supported and
advised by lawyers and administrators. Planning practitioners have not
been included among the salient actors, historically because they did not
exist, and contemporaneously because this level of strategic policy is
somewhat divorced from the topic areas in which they are qualified. By
contrast, more recently economists have come to play a more important
advisory role.9
Of most interest to planners is the meso-level, which involves the insti-
tutional design of planning and implementation structures and processes.
This includes establishing and operating interorganizational networks,
creating new organizations and transforming existing ones, and devising and
deploying incentives and constraints in the form of laws, regulations, and
resources to develop and implement policies, programs, projects and plans.
This level of institutional design is associated with professional planners’
fields of practice: physical planning and land development, local economic
development, housing, transportation and infrastructure, environmental
policy, and (more peripherally) social and human services.
Planning-related examples of this ‘level’ of institutional design are too
numerous to survey. To give just a few illustrations: public-private partner-
ships for central city development; public (in-kind and/or subsidized)
housing programs; local economic development programs and organiz-
ations; neighborhood development processes, including special purpose
organizations such as CDCs; urban revitalization programs and

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 215

Alexander Institutional transformation and planning 215

organizations, for example, the US Model Cities and NDP programs, the
British GIA program; planning, implementing and managing new com-
munities (Britain’s New Towns program, the US ‘Greenfield’ new towns and
its New Community Development program) and planned community
development projects and programs in many other countries; environmental
management programs and organizations, for example, river basin manage-
ment authorities, natural hazard reduction programs; and planning and
implementing major strategic infrastructure and development projects.10
At this ‘level’ of institutional design, while elected decision-makers and
appointed officials still have leading roles, administrators and experts in the
respective fields and policy areas are significant actors. As the above
examples suggest, these may and often do include planners who are active
in the relevant arena in their positional (public bureaucratic or organiz-
ational) or practitioner (expert consultant) capacities. Still, here too lawyers
and economists are heavily involved as advisors.
The lowest ‘level’ of institutional design involves intra-organizational
design, addressing organizational sub-units and small semi-formal or
informal social units, processes and interactions, such as committees, teams,
task forces, work groups etc. This occurs in every field of endeavor, from the
global corporation implementing its ‘matrix’ form of organization through
task-related work groups, to the players of the O’Brady’s Bar weekly poker
game setting rules for who pays for drinks and when.
Intended to ensure effective and timely task performance, this kind of
institutional design is involved in establishing and managing planning
processes and policy, plan, or project implementation. A regional trans-
portation planning agency’s participatory structure of citizen and technical
advisory committees for developing its metropolitan mass transit plan is this
kind of institutional design. Formal mediation and conflict resolution
processes, for example, in environmental planning controversies (Susskind
and Field, 1996) involve such institutional design. The problem of split
loyalties of city agency neighborhood planners (to their public employer or
to their neighborhood community ‘clients’) (Needleman and Needleman,
1974) is a typical institutional design problem at this level.
As these examples show, planners continually confront this kind of insti-
tutional design challenge in their practice, as, indeed, do other professionals,
managers and administrators in responsible positions. This ‘level’ of insti-
tutional design involves almost everyone who is charged with structuring
and managing an organization or organizational processes to ensure effec-
tive performance.

‘Doing’ institutional design: media and knowledge

Despite increasing interest in institutional design, prior discussion has been
rather vague about what the institutional designer actually does. What is the

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 216

216 Planning Theory 4(3)

‘material’ on which institutional design works? What are the ‘tools’ insti-
tutional design can apply? How can we ‘do’ institutional design and what
information base can offer a source of knowledge for application?

Elements and tools

A physician works with medical science on the human body; an architect
works with space, form, and materials on the physical-built environment, an
economist works with economic theory and analysis on economic trans-
actions and socio-economies. What is the ‘material’ of institutional design?
We can call institutional-agent interactions (see Table 1) the ‘material’ of
institutional design.
These interactions can have two (not always mutually exclusive) roles.
One role is as a subject or product of institutional design: these are the
‘elements’ of institutional design. Examples of structural ‘elements’ are laws
(affecting behavior through agency and social processes) and organizations

TABLE 1 Institutional-agent interactions – elements of institutional

design
Type a Public/formal Tacit/informal

Performative Transactions1 Episodes

Events
Customary behaviors
Structural ‘Cultural’ institutions ‘Ontological’ institutions
Laws Norms
[Agency, process] Rules/regulations Habits
Standards Practices
[Structure] Governments Knowledge/world-views
Markets: Languages
‘hybrid’ markets2 ‘Games’
artificial/quasi- Informal social networks
markets3 Associational/kinship
Interorganizational networks
networks4
Organizations

Notes: a Elements of institutional design in the table (e.g. Laws, Governments) are shown in
italics. Impacts, or interactions intended to be affected by ID, in the table (e.g. Transactions,
Practices) are underlined.
1. As defined in Alexander (2001a: 50–1).
2. See Alexander (2001a: 55) and Williamson (1985).
3. See Alexander (1995: 227–35).
4. See Alexander (1995: 199–266).
Source: After Table 2 (A map of institutional/agent interaction) (Bolan, 2000: 29, after Low,
1997).

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 217

Alexander Institutional transformation and planning 217

(structuring individual and collective interactions). Both of these are also

public and formal – that is why they can be the subjects, tools, and products
of institutional design.
The other role of institutional-agent interactions is to be the ‘objects’ of
institutional design. They are the interactions institutional design is
intended to affect, and through which institutional design’s impacts are
experienced in the course of significant institutional or social change. The
only public-formal interaction in this role is formal transactions, for
example when an institutional design modification of a law (e.g. residency
requirements) changes a formal transaction (e.g. voting as a political trans-
action), or a regulation (e.g. setting currency exchange rates) affects
contracts (in economic transactions).
All the other ‘objects’ of institutional design – the institutional-agent
interactions through which institutional design aspires to affect action and
behavior – are tacit-informal; that is also why they cannot be positive insti-
tutional design elements, that is, institutional design tools or the subjects of
active design manipulation. Performative interactions in this role include
events and customary behaviors. A case of the first is when legislation or
another form of institutionalization ‘creates’ a social event that later
becomes enshrined in tradition: classic examples are Thanksgiving in the
US and Bastille Day in France. The second is rife in every societal domain:
institutional design affecting individual11 customary behaviors; topical
examples range from smoking (changed by legislation) to carpooling
(encouraged by differential road pricing).
Other ‘objects’ of institutional design are structural: norms, habits and
practices – which Low (1997) called ‘ontological institutions’ – and tacit
systems of knowledge and world-views. There are some institutional-agent
interactions that do not seem to be the objects of deliberate institutional
design intervention, though they could be the unintended arenas of its
effects. These include episodes, languages,12 tacit-informal ‘games’ – like
practices, and informal social (including associational and kinship) networks.

Knowledge and practice

What knowledge is there, based on theory and experience, that can be
useful13 for institutional design in real-life contexts? The answer is: not
much. There are three reasons for this: 1) ignorance, primarily because insti-
tutional design is such a new concept that applicable knowledge can only
be eclectic; 2) the nature of design (in any field, not just institutional design)
which makes much scientific-systematic knowledge less than relevant for
practice; and 3) complexity: the risk of the ‘ecological fallacy’ limits practi-
cal application of generalized theories or principles to specific cases. The
multi-party nature of institutional design, too, leaves an unavoidable
residue of irreducible uncertainty and ignorance: institutional design
problems are ‘wicked’ problems.

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 218

218 Planning Theory 4(3)

Nevertheless, there are three general areas of knowledge that may offer
some support to the would-be institutional design ‘practitioner’;14 they
correspond more or less with the ‘levels’ of institutional design mentioned
above. The first is governance, most relevant at the higher levels; the second
is coordination, applicable mainly at the meso-level; the third is agency,
useful at the micro-level but also upwards.

Governance
Not to be confused with government, governance addresses not only the
state, but all the sectors and actors involved in ‘the processes of regulation,
coordination and control’ (Pierre, 1999: 376) that enable or constrain the
actions of members of a society. Knowledge about governance is spread
across many disciplines including philosophy, jurisprudence, political
science, sociology, and economics. There is one body of knowledge focusing
on governance, which is especially relevant for institutional design: trans-
action cost theory (TCT).
Originating as a branch of institutional economics, TCT offers plausible
explanations for the emergence of various forms of governance, and also
provides a kit of (conceptual) tools for institutional analysis and design. A
repertoire of forms of governance emerges from transaction-related adap-
tations of the ‘perfect’ market (for completely independent transactions)
through ‘hybrid’ forms of governance for ‘mixed’ transactions, to integrated
organization (the public bureau or the corporate firm) for recurring or
extended transactions with high interdependence and uncertainty.
Institutional design can draw on knowledge aggregated in integrated
TCT. The first stage must be institutional analysis of the design setting,
viewing it as a sequence of transactions involving all the relevant actors.
Detailed analysis of the critical transactions can match the subject process
with appropriate forms of governance. This was done, for example, for land
use planning and development control systems, where the relevant setting
was the land development process and property market (Alexander, 2001a,
2001b).

Coordination
Just as governance is a major concern at the highest levels of institutional
design, coordination is important at the next levels. At the meso-level co-
ordination involves interorganizational networks and complex organiz-
ations, extending into the micro-level as simple organizations,
intra-organizational units and informal societal units. At these levels, the
concept of interorganizational coordination (IOC) structures (Alexander,
1995) provides the elements of an architecture of institutional design.
The first step in the institutional design process must be a systematic
institutional analysis. The next step is to draw on a generic repertoire of
IOC structures to specify a set of alternative feasible IOC structures or

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 219

Alexander Institutional transformation and planning 219

more complex IOC systems specific to the relevant setting, which might
respond to the institutional design problem. Evaluation of their appropri-
ateness and prospective effectiveness will be based more on ‘goodness of fit’
than on tentative models of poorly understood relationships (Alexander,
2000).

Agency
For the lowest level of institutional design, agency theory offers an import-
ant conceptual tool. In agency theory the individual is the unit of analysis,
and agency addresses interactions in principal-agent roles. Agency theory
tries to account for (and avoid) conflicts between principals and agents,
identify (and minimize) agency costs, and explore alternative governance
mechanisms, incentives and monitoring devices to reduce agency costs, and
ensure maximal alignment of principals’ and agents’ interests.
Agency theory research reveals the sources of task-implementation
problems confronting simple hierarchical organization. These include
employment supervision and incentives, complex supervisor-agent inter-
dependencies, horizontal and vertical coordination and team-related
problems such as hidden action, moral hazard, concealed information,
opportunism, and ineffective incentives for managers and executives (Miller,
1992). For institutional design, agency theory is particularly relevant for
public or mixed public-private institutions, because it offers a plausible
account for some typical public sector inefficiencies, attributing them to
inadequate responses to multi-task and multi-principal-agent problems.

Conclusion
In this article I explored the links between institutional transformation and
planning with two purposes in mind. One is consciousness-raising: to make
planning theorists, educators and reflective practitioners more aware of the
importance of institutions, and to direct them to the domains of relevant
knowledge.15 These offer positive knowledge about institutions and institu-
tionalization to help them to understand the institutional contexts that
frame almost everything they do.
The second purpose is to give the planning community a better aware-
ness of institutional design. As the normative aspect of institutional trans-
formation, institutional design is in fact an integral and essential part of
many planning and planning-related practices. To be effective in many of
their roles, planners need a reflexive consciousness of institutional design,
and an intuitive or acquired skill at institutional design is the hallmark of
the successful practitioner. Institutional design is not a craft that will ever
have a usable ‘handbook’, and this article does not come close to being a
comprehensive account.

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 220

220 Planning Theory 4(3)

Here I have presented a condensed definition and review of institutional

design: its actors, contexts, and the ‘institutional-agent interactions’ that are
its tools. Some possible sources of knowledge for institutional design are
identified under the headings of governance, coordination, and agency.
Planners’ exposure to these could enable more reflexive and systematic
institutional design, toward better planning practice.

Notes
1. This deliberately differs from Gualini’s (2001) terminology, as discussed under
Institutional Design below.
2. Parts of this article are based on and elaborated in Alexander (2002, 2004).
3. This is Hall and Taylor’s description; I would extend this ‘school of thought’ to
include game-theory based theories of institutionalization and institutional
analysis (e.g. Aoki, 2001) and institutional design (e.g. Calvert, 1995).
4. A typical exponent is Aoki (2001).
5. To the best of my knowledge, the term seems to have been used first in a
political science paper by John Brandl (1988).
6. I could not find any clear definition of institutional design in any of the
previous discussions of or references to institutional design (e.g. Brandl, 1988;
Innes, 1995; Weimer, 1995; Tewdr-Jones and Allmendinger, 1998; Bolan, 2000)
though some definitions are implied. Gualini (2001) is an exception: he devotes
considerable attention to defining institutional design, but his final definition is
incorrect as argued below.
7. Some of the discussion is at odds with this definition, limiting its concern
primarily to the higher levels of governance (e.g. Bolan, 1991) or asserting the
failures of ‘constitution writing’ (Flyvberg, 1998: 234–6). This is consistent with
a multi-layered sociological model that identifies institutions only with the
highest societal level (Scott, 1994).
8. This definition erases Gualini’s distinction between institutional design, which
he associates exclusively with ‘the expression of an innovative intentionality, of
a design rationality’, and ‘institution building’: the ‘unintentional, emergent,
path-dependent dimension’ of institutional change (2001: 25, 49); for the fallacy
in Gualini’s argument, see Alexander (2006).
9. In some people’s view, in this role economists are usurping a function that
planners should aspire to have (Markusen, 2000; Sanyal, 2000).
10. For more detail on institutional design cases, see Alexander (2006).
11. That is what distinguishes them from practices (below), which have a collective
and structural dimension that customary behaviors do not.
12. This is probably true for the most part, though languages are not immune from
institutional design. Contrary examples include the deliberate creation or
revival of languages (e.g. Balasa-Indonesian and Hebrew), the ‘regulation’ of
language (e.g. the Académie Française) and the institutionalized oversight of
IT ‘languages’ and protocols.
13. This term is used here deliberately, to distinguish between applicable

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 221

Alexander Institutional transformation and planning 221

knowledge with normative institutional design implications, and other

knowledge – theoretical and positive-empirical – about institutions and
institutionalization (e.g. regime theory, post-Marxist regulation theory,
neo-Gramscian institutionalization theory, Bourdieu’s ‘field’ and ‘habitus’,
Giddensian institutional analysis, Foucault’s genealogies and governmentality)
that is undoubtedly highly relevant to understanding institutions, but from
which I believe it is difficult or impossible to extract design-relevant
prescriptions. I encourage any who disagree with this assessment to share with
us the institutional design implications they can draw from these or other
authorities.
14. This does not pretend to be an exhaustive review of the possible
knowledge-base for institutional design. For example, besides the general areas
reviewed below, there are other useful sources for knowledge and skills, for
example, games theory (see Calvert, 1995 and Aoki, 2001) and the design of
common pool resource associations (Ostrom, 1990; Ostrom et al., 1994).
15. I am referring here to the overview of institutionalization theories; in reviewing
the literature the focus was not institutionalization (which is beyond the scope
of this article) but institutional design.

References
Alexander, E.R. (1995) How Organizations Act Together: Interorganizational
Coordination in Theory and Practice. Amsterdam: Gordon & Breach.
Alexander, E.R. (2000) ‘Inter-organizational Coordination and Strategic Planning:
The Architecture of Institutional Design’, in W. Salet and A. Faludi (eds) The
Revival of Strategic Spatial Planning, pp. 159–74. Amsterdam: Royal
Netherlands Academy of Arts & Sciences.
Alexander, E.R. (2001a) ‘A Transaction-cost Theory of Land Use Planning and
Development Control’, Town Planning Review 72(1): 45–75.
Alexander, E.R. (2001b) ‘Governance and Transaction Costs in Planning Systems:
A Conceptual Framework for Institutional Analysis of Land-use Planning and
Development Control – The Case of Israel’, Environment and Planning B:
Planning & Design 28(5): 755–76.
Alexander, E.R. (2002) ‘Acting Together: From Planning to Institutional Design’,
paper presented at XIV AESOP Congress, Volos, Greece, 10–15 July.
Alexander, E.R. (2004) ‘Planning and Institutional Transformation: Cases and
Problems in Institutional Design’, paper presented at XVI AESOP Congress,
Grenoble, France, 1–4 July.
Alexander, E.R. (2006, forthcoming) ‘Institutional Design for Sustainable
Development’, Town Planning Review 77(1).
Aoki, M. (2001) Toward a Comparative Institutional Analysis. Cambridge, MA:
MIT Press.
Bolan, R.J. (1991) ‘Planning and Institutional Design’, Planning Theory 5/6: 7–34.
Bolan, R.J. (2000) ‘Social Interaction and Institutional Design: The Case of Housing in
the U.S.’, in W. Salet and A. Faludi (eds) The Revival of Strategic Spatial Planning,
pp. 25–38. Amsterdam: Royal Netherlands Academy of Arts & Sciences.
Brandl, J. (1988) ‘On Politics and Policy Analysis as the Design and Assessment of
Institutions’, Journal of Policy Analysis and Management 7(3): 419–24.

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 222

222 Planning Theory 4(3)

Calvert, R.L. (1995) ‘The Rational Choice Theory of Institutions: Implications for
Design’, in D.L. Weimer (ed.) Institutional Design, pp. 63–94. Boston, MA:
Kluwer.
Flyvberg, B. (1998) Rationality and Power. Chicago, IL: University of Chicago
Press.
Friedmann, J. (1987) Planning in the Public Domain. Princeton, NJ: Princeton
University Press.
Gualini, E. (2001) Planning and the Intelligence of Institutions. Aldershot: Ashgate.
Hall, P.A. and Taylor, R. (1998) ‘Political Science and the Three New
Institutionalisms’, in K. Soltan, E.M. Uslaner and V.I. Haufler (eds) Institutions
and Social Order, pp. 15–43. Ann Arbor: University of Michigan Press.
Healey, P. (1998) Collaborative Planning: Shaping Places in Fragmented Societies.
Basingstoke: Macmillan.
Healey, P. (1999) ‘Institutionalist Analysis, Communicative Planning and Shaping
Places’, Journal of Planning Education and Research 19(2): 211–22.
Innes, J.E. (1995) ‘Planning is Institutional Design’, Journal of Planning Education
and Research 14(2): 140–3.
Low, N. (1997) ‘What Made it Happen? Mapping the Terrain of Power in Urban
Development’, Planning Theory 17: 88–112.
Markusen, A. (2000) ‘Planning as Craft and as Philosophy’, in L. Rodwin and
B. Sanyal (eds) The Profession of City Planning, pp. 261–74. New Brunswick:
CUPR-Rutgers, The State University of New Jersey.
Miller, G.J. (1992) Managerial Dilemmas: The Political Economy of Hierarchy. New
York: Cambridge University Press.
Needleman, M.L. and Needleman, C.E. (1974) Guerillas in the Bureaucracy: The
Community Planning Experiment in the U.S. New York: Wiley.
Ostrom, E. (1990) Governing the Commons: The Evolution of Institutions for
Collective Action. New York: Cambridge University Press.
Ostrom, E., Gardner, R. and Walker, J. (1994) Rules, Games and Common Pool
Resources. Ann Arbor: University of Michigan Press.
Pierre, J. (1999) ‘Models of Urban Governance: The Institutional Dimension of
Urban Politics’, Urban Affairs Review 34(3): 372–96.
Powell, W. and DiMaggio, P. (eds) (1991) The New Institutionalism in
Organizational Analysis. Chicago, IL: University of Chicago Press.
Putnam, R.D. with Leonardi, R. and Nanetti, R. (1998) Making Democracy Work:
Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press.
Raadschnelders, J.C.N. (1998) ‘Evolution, Institutional Analysis and Path
Dependency: An Administrative-History Perspective on Fashionable
Approaches and Concepts’, International Review of Administrative Sciences
64(4): 565–82.
Sanyal, B. (2000) ‘Planning’s Three Challenges’, in L. Rodwin and B. Sanyal (eds)
The Profession of City Planning, pp. 312–33. New Brunswick: Center for Urban
Policy Research, Rutgers, The State University of New Jersey.
Scott, W.R. (1994) Institutions and Organizations. Thousand Oaks, CA: Sage.
Susskind, L. and Field, P. (1996) Dealing with an Angry Public: The Mutual Gains
Approach to Resolving Disputes. New York: The Free Press.
Tewdr-Jones, M. and Allmendinger, P. (1998) ‘Deconstructing Communicative
Rationality: A Critique of Habermasian Collaborative Planning’, Environment
& Planning A 30(11): 1975–99.

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009

02_alexander_058494 (jk-t) 19/10/05 4:35 pm Page 223

Alexander Institutional transformation and planning 223

Verma, N. (ed.) (2005, forthcoming) Institutions and Planning. New Brunswick:

CUPR-Rutgers, The State University of New Jersey.
Weimer, D.L. (1995) ‘Institutional Design: Overview’, in D.L. Weimer (ed.)
Institutional Design, pp. 1–16. Boston, MA: Kluwer.
Williamson, O.E. (1985) The Economic Institutions of Capitalism. New York: Free
Press.

Ernest Alexander, Emeritus Professor of Urban Planning at the University of

Wisconsin-Milwaukee (USA), teaches and practices in Israel. He is the author
of Approaches to Planning: Introducing Current Planning Theories, Concepts
and Issues (2nd edn, 1992) and How Organizations Act Together: Interorganiz-
ational Coordination in Theory and Practice (1995). His research interests
range from planning theories and rationalities through institutions and
organizations, and his interest in evaluation has led to research on substantive
plan evaluation and planning rights.

Address: APD-Alexander planning & design, 41 Tagore St. #11, Tel-Aviv

69203, Israel. [email: eralex@inter.net.il]

Downloaded from http://plt.sagepub.com at University of Groningen on March 16, 2009