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Limiting the Unintended Consequences of Institutional Change

Students of institutional change pay insufficient attention to the conditions under which institutional reform produces unintended procedural and policy consequences. The authors contend that the broader institutional context in which an altered institution is embedded influences the likelihood and extent of such unintended outcomes. Three aspects of this environment are particularly important. First, a reformer's access to policy instruments may allow him or her to monitor compliance and sanction noncompliance with the altered institution. Second, normative understandings can reinforce or work against specific institutional reforms. Finally, the organization of decision-making authority within the state determines the ability of state and societal actors to derail institutional change and its intended consequences. Two empirical investigations illustrate the argument: congressional attempts in the 1980s to limit executive authority over U.S. policy in Nicaragua and the institutional reforms Margaret Thatcher implemented to advance a market-oriented industrial strategy.