Embedded Politics

Industrial Networks and Institutional Change in Postcommunism
Gerald A. McDermott
An empirical analysis of changing industrial processes in the postcommunist Czech Republic


Embedded Politics offers a unique framework for analyzing the impact of past industrial networks on the way postcommunist societies build new institutions to govern the restructuring of their economies. Drawing on a detailed analysis of communist Czechoslovakia and contemporary Czech industries and banks, Gerald A. McDermott argues that restructuring is best advanced through the creation of deliberative or participatory forms of governance that encourages public and private actors to share information and take risks. Further, he contends that institutional and organizational changes are intertwined and that experimental processes are shaped by how governments delegate power to local public and private actors and monitor them.

Using comparative case analysis of several manufacturing sectors, Embedded Politics accounts for change and continuity in the formation of new economic governance institutions in the Czech Republic. It analytically links the macropolitics of state policy with the micropolitics of industrial restructuring. Thus the book advances an alternative approach for the comparative study of institutional change and industrial adjustment.

As a historical and contemporary analysis of Czech firms and public institutions, this book will command the attention of students of postcommunist reforms, privatization, and political-economic transitions in general. But also given its interdisciplinary approach and detailed empirical analysis of policy-making and firm behavior, Embedded Politics is a must read for scholars of politics, economics, sociology, political economy, business organization, and public policy.

Gerald A. McDermott is Assistant Professor of Management in The Wharton School of Management at The University of Pennsylvania. His research applies recent advances in comparative political economy and industrial organization, including theories of social networks, historical institutionalism, and incomplete markets to analyze issues of economic governance, firm creation, and industrial restructuring in advanced and newly industrialized countries. As evidenced by Embedded Politics, his current focus is on problems of institutional and organizational learning in the formation of meso-level governance institutions in emerging market and postsocialist economies.

McDermott also works as Senior Research Fellow at the IAE Escuela de Direccion y Negocios at Universidad Austral in Buenos Aires, and he has served as Project Coordinator at the Inter-American Development Bank. He has consulted for the Finance, Private Sector, and Infrastructure Division at the World Bank and advised the Deputy Foreign Minister of the Czech Republic. In addition he has published many papers and book chapters on entrepreneurship, privatization, institutions, and networks in Central Europe and Latin America.

Praise / Awards

  • "The collapse of communism represented not only a political event, but also a major economic experiment. How should these countries move toward capitalism? What should be the role of the central state and regional governments? This book by Gerald McDermott provides the most sustained analysis to date of why reform without politics is bound to fail. He proposes that local governance structures that allow for deliberation and dialogue permit experimentation and evolutionary change. It is a major challenge to one-size-fits-all theory propounded by the World Bank, IMF, and the mainstream policy advice."
    —Bruce Kogut, Co-Director, Reginald H. Jones Center for Management Policy, Strategy, and Organization, University of Pennsylvania
  • "McDermott's painstaking research provides unparalleled insight into the problems confronting post-socialist firms as they seek to reconfigure the networks that had sustained them under the planned economy in order to face the new demands of the market. Yet he never loses sight of the crucial intersection of these local dramas with the sweeping actions of state authorities, showing how policy as much responded to firms' adaptive strategies as shaped them. The result is a powerful and innovative synthesis of the best ideas in economic sociology and political economy, and a work that should command the attention of all scholars of industrial change."
    —David M. Woodruff, Associate Professor of Political Science, Massachusetts Institute of Technology
  • "An outstanding piece of scholarship that moves beyond static descriptors of network structures. McDermott portrays a rich picture of how meso-level associative ties in the socialist past continue to animate organizational dynamics in the post-socialist period. His 'embedded politics' approach highlights the tensions created by joint control of network properties."
    —David Stark, Arnold A. Saltzman Professor of Sociology and International Affairs, Columbia University
  • "Embedded Politics traces the Czech Republic's new economic institutions to political struggles framed by existing industrial networks. This intelligent and compelling book challenges the one-size-fits-all prescriptions for post-Communism offered by both neoliberals and neo-Gerschenkronians. In the Czech Republic, the new economic rules of the game did not follow a simple prescription—they depended on the structure of the particular industry. McDermott's approach holds great promise not only for explaining postcommunism, but for explaining economic and industrial policies generally."
    —Frank R. Dobbin, Professor of Sociology, Princeton University
  • "This book provides the most detailed empirical analysis available anywhere of industrial restructuring during the turbulent transition from communism to capitalism during the 1990s in the Czech Republic. The transition is interpreted through an innovative framework that systematically analyzes the complicated interconnection between change in micro-level social and industrial networks in the economy with macro-level processes of state reconstruction and intervention. The book will be a rewarding read for anyone in political science, sociology, and management interested in rethinking the basic processes that structure industrial process."
    —Gary Herrigel, Associate Professor of Political Science, University of Chicago
  • "McDermott surpasses Stark and Bruszt's remarkable Postsocialist Pathways with an empirically detailed study of the effects of network properties on the micro-motives of actors. In so doing, he provides policy makers with an important new analytical tool for policy design: McDermott argues that policymakers should treat transitions as an open-ended, multiparty, deliberative process. This is a real advance in scholarly approaches to market transitions, which previously saw the transitioning economy either as a tabula rasa upon which decision makers were free to impose their choices or as a historically constrained structure not amenable to policymaking."
    —John Gould, Graduate School of International Studies, University of Denver
  • ". . . should be a must-read for everyone interested in the post-Communist economy."
    —Lawrence King, Yale University, American Journal of Sociology, January 2003
  • ". . . the best historical account in print of Czech industrial policy under communism. . . . McDermott's book makes a substantial contribution to the sociological literature on transitions by providing a unique account of industrial transformation at the mesolevel of interfirm networks. Few have looked at the privatization process and its impact on interfirm networks in such detail. The book also makes a major contribution to sociological institutionalism by focusing on processes of formal and informal institutional change during the transition to capitalism. . . . It presents a striking study of the interaction between formal institutional changes, past legacies, and informal norms in the creation of capitalism in contemporary Europe."
    Contemporary Sociology
  • "Gerald A. McDermott's book is among the most important works on the postcommunist economic transition. Anyone who wants to understand how industrial restructuring happened in eastern Europe must read this book. McDermott's detailed knowledge about Czech industrial and economic policy is impressive. Work on industrial restructuring usually takes the form of looking for relationships between outcomes and the presence of certain causal factors. McDermott delivers the process, as it unfolded. . . . McDermott argues that the success or failure of embedded politics hangs on the quality of political institutions, whether they allow deliberation, dialogue, and dabbling and inhibit catalepsy, cronyism, and corruption. How political institutions come to acquire these qualities calls for another book. McDermott's argument forces us to think in new and creative ways about industrial restructuring and the postcommunist transformation."
    Slavic Review
  • "Embedded Politics is an important book to read for those interested in network theory and institutional change. McDermott demonstrates the close interconnections between the micro-events that define the proximate causes of network transformation and the macro-events that lead to the restructuring of authority relations at both the national and regional level. He presents an image of network transformation in post-communist countries as an interplay between economic and political change processes, an approach McDermott identifies as a theory of 'political embeddedness.'"
    Administrative Science Quarterly

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Copyright © 2002, University of Michigan. All rights reserved.

Product Details

  • 6 x 9.
  • 336pp.
  • 10 drawings, 37 tables.
Available for sale worldwide

  • Paper
  • 2003
  • Available
  • 978-0-472-06803-6

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  • $34.95 U.S.

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