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Defining "Informal Rules / Regulations"

install_kdid
July 8, 2010 3:20 pm

Hi.
So we've heard some interesting examples of social norms and how they affect different aspects of value chains. Based on this and our other experiences, please would you share your thoughts on how best to define informal rules / regulations.

The wiki says they are “norms and customs established by the social institutions of gender, race, ethnicity, class and religion.”

  • What do you think about this definition?
     
  • How would you define informal rules and codes of conduct?

You might like to refer to the draft Framework also

 

Mike Albu

 

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Comments (0)
Apr 28, 2010   14:38

This comment is a little out of the stream of conversation because it goes back to what informal rules are... by my definition these are behaviors generally accepted by a group of people (either small or large) which are not captured by specific laws, regulations, contracts etc. Such rules may be adopted by a majority or a minority of the population in a society and they compensate or fill in a lacuna in legislation. Sometimes this is because the group which has these informal rules is not recognized as important by the majority... sometimes it is because the group has its own important goals which others might reject as unimportant  or irrelevant. It does not matter what country you pick... there are illustrations everywhere of informal rules in different sub groups.. national, regional/gender/ class/ etc..Once the rules are captured by a specific set of laws or acknowledged guidelines, they cease to be informal and become formal, at least within the setting of whatever group you study....and they are easier to see and understand even if you don't belong to the group. Such informal rules cover a broad range of things and may pertain to how you speak, how treat someone else, how you appear, how you behave in business and what you expect of others etc.

The important thing here is that an outsider has to be quiet and listen long enough to figure out what the unwritten rules are....and this takes time, a lot of time. All too often in outsider -financed projects, facilitators come in with their own interpretation of how people should act and behave AND what behaviors they observe mean. This is true even when "participant' approach is adopted because outsiders come in and hear only what they already understand... i must say the basis for my comments is long exposure (long ago) to the Sarvodaya Shramadana movement in Sri Lanka which DOES attempt to let people define for themselves what they think is important and how they want to go about carrying out whatever this objective is.....

Lucy Creevey

 

 

Apr 28, 2010   17:00

Thanks, Lucy, for commenting on the wiki definition of "informal rules" ("norms and customs established by the social institutions of gender, race, ethnicity, class and religion"). I think your description is more complete and we will incorporate it into the wiki definition. Do others have comments on the definition that we can use to revise the wiki?
 
I think the point that informal rules are "generally accepted by a group of people" is super important. The group might be large or small, majority or minority, powerful or weak, it doesn't matter. What matters is that the norms are shared by the group and they set the standards for what is generally considered acceptable behavior.
 
Does that help to explain why it is easier to build effective relationships between value chain actors who share similar backgrounds? Since they share norms of behavior, they can predict what each other will do. I guess that is one of the benefits of what they call "bonding social capital". (Do you even agree with the premise that it is easier to build relationships between people with similar backgrounds? Maybe you have seen situations where that is not the case?) Others participants have pointed out that historical events, especially conflicts, can destroy that predictability and the trust that goes with it.
 
Similarly, is it harder to build relationships between people from different backgrounds, such as between buyers and sellers from different social classes? This would require what they call "bridging social capital". Have you found that it is hard for value chain actors to create those kinds of relationships? If  so, how can that process be facilitated?
 
Elizabeth Dunn

 

Apr 29, 2010   15:00

The generic description provided by Lucy is very helpfulyet at the same time if I was hired to go do VCA how would I even start to get at the informal regulations in the market I am to study? I have been in Guatemala for 2 months now studying the informal regulations shaping the criollo avocado market. Last year I was also here for 2 months and I hit the wall, this year I returned with revised instruments that include asking questions about who does what and then disaggregating the data accordinglygender, race, ethnicity. This has shed more light on how the market is regulatedLadinos approach the world very differently than Mayans, and different ethnic groups have different capacities in the chainthere are some ethnic groups with more capital thus they are higher up the chain. Gender plays out with mobility and access to capital too.

Ok so what does this have to do with defining informal regulations of the market? This discussion has revealed how behaviour, mind sets, cultural mores, path dependency (history), and so many other factors affect how VCs operate. I have found that these factors are reflected in the social institutions of race, gender, ethnicitywhich provide me with a framework to begin to investigate and then analyze a market.

Defining informal rules as "generally accepted by a group of people" I think would be hard to implement in a VCA framework. I think we are all interested in broadening the existing VC framework which has BEE as a key component, and we are all in agreement that the BEE is shaped by formal and informal rules. The formal regulations have been defined as laws, treaties, standards, licenses etc. and we know how to investigate these. If we define informal regulations as rules generally accepted by a group of peoplehow do we investigate that?

The BEE is all about the rules of the game. Douglass North who is an Institutional Economics was the one who coined the term rules of the game to define institutions which are comprised of formal and informal constraints that shape human interactions. Institutions are designed to achieve efficient outcomes (North, 1992) and to reduce uncertainty for players in the game (North, 1998, North, 1999).

Ok this is academic, but if we can put our bias of academics aside for a moment, the term rules of the game is something all of us can understandeven the people we work for and withthe disadvantaged. So how can we define the rules of the game that socially regulate markets?

Mary Morgan

Mary Morgan
Economic Development Consultant
mmorgan@economicsunplugged.com
www.economicsunplugged.com

On Wed, 28 Apr 2010 17:00:05 -0400
Impacts of Social Norms

Apr 28, 2010   00:22

I think this definition is a bit restrictive. Some of the examples we have had today--not wanting to appear successful, not investing in "food" crops, treating cattle as a means of building social capital--don't immediately seem to be linked to gender, race, ethnicity, class or religion. Maybe if you dig deep enough you will find that these institutions do influence informal rules, but it is not immediately apparent.  What about things like a reticence to learn or donor dependency? Such things may be more linked to past experience than to the institutions identified in the wiki. Maybe the wiki should say "influenced by social institutions of gender, etc." or "established in part by the social institutions of gender, etc."??

Ruth

 

Apr 28, 2010   05:40

We see informal rules as norms and conduct that often rely
on or have emerged from past instructions and formed habits 
influenced by culture, religion, gender, self-interests
(dominant/influential groups), etc.  In some cases, it would seem
that informal rules emerge as a response or  means to alter formal
institutions that do not function to the benefit of the majority or a
dominant group.


Marian/SDCAsia







At 12:22 PM 4/28/2010, Impacts of Social Norms

Apr 28, 2010   08:00

Hi, Marian!
 
Your last sentence is really intriguing: "In some cases, it would seem
that informal
rules emerge as a response or  means to alter formal
institutions that
do not function to the benefit of the majority or a
dominant
group."

Can you give us an example or two to
help us understand this better?
 
Thanks!
 
Elizabeth

Apr 29, 2010   05:30

Hi Elizabeth ... We are not so sure whether we are correct
in our perception but it would seem that sometimes informal

rules emerge as a response or  means to alter formal institutions
that  do not function to the benefit of the majority or a

dominant group :-) ...


Below is an example:


The personalized economic relations or the suki system (similar to
preferred supplier-buyer relations) proliferated in efforts to find ways
to minimize risks and vulnerabilities to opportunistic behaviour and
cheating (both trader and farmer) in response to the perception that
formal rules/institutions are not that reliable.  In a sense, people
generally do not believe that a written marketing agreement would protect
them from opportunistic behavior and cheating. Likewise, there is a
general perception especially in rural areas that these written
agreements can protect the rich but not the poor as they do not have
the resources and power to run after the buyers who may cheat them. The
depth of the suki relationship differs with each relation but over time,
repetitive transactions with the same person develops trust. On both
sides, there is reduced search, negotiation, and monitoring costs because
the suki lives up to the norms and values of reciprocity and comes close
to becoming part of the family mindset.  The bonds between people
engaged in exchange are determined by informal rules or social
institutions and serve to enforce the terms of the exchange.


The formation of suki relationship though is also facilitated  by
the social structure. Filipinos, particularly those that belong to
distinct cultural groups, are more regionalistic than nationalistic.
Filipinos can relate more to their region of origin, than to the
Philippines as a whole. In this sense, Filipinos lack a national trust
culture, as compared to Korea and Japan. Filipinos are generally more
conciliatory, less trusting, and risk averse. Kinship structure motivates
the Filipino's behavior.


Sorry to be late in posting.  We were on field work during the past
days.





Marian/Ivan




At 08:00 PM 4/28/2010, Impacts of Social Norms

Apr 29, 2010   09:40

So--formal and informal rules interact in interesting--and
sometimes surprising--ways. What you've observed in Philippines are
similar to what we found in Guatemala as part of an AMAP research study.
Like you, we found that written (formal) contracts between buyers and
sellers carried no more weight than informal agreements. What mattered more was
the building of trust through repetitive transactions. Only when that trust had
been established were buyers and sellers willing to invest in each other and
expose themselves to greater risks from the other side's possibly failing
to honor agreements.
 
Thanks for clarifying.
 
Yesterday, Jayantha shared another interesting example of
the interaction of formal and informal rules related to lagoon fishing
in Sri Lanka. In that case, the traditional (informal) system
allocated sections of the fishery to women for the purpose of harvesting prawn.
As traditional social norms collapsed (due to social and political changes),
women's access to the resource was crowded out. When it came time to
formalize the fisheries management, the project implementer intervened to ensure
that women regained access to the resource and a voice in the management of
the resource. What was once a social norm broke down and was reinstated through
formal rules.
 
It would be great to hear other examples of the interaction
between formal and informal rules. How can/should project implementers
intervene in this process?

 

Apr 29, 2010   10:50

Formal and Informal Rules Interaction --- complete text of
Example 2


Example 2. 

There are cases when introduction of market norms can cause social norms
to fade away or cause the weakening of social relationships. In the
Philippine setting, for example,  suki relationships or preferred
buyer-supplier relationship becomes strained when behavior of one of the
parties enters the realm of market norm (e.g., processor starts enforcing
penalty for late deliveries,  when a buyer informs suppliers that
they have policies and cannot treat their suki differently than everyone
else, or when supplier demands the same terms of payment as he does with
other traders). The abrupt re-entry of one party into the realm governed
by market norms is perceived as a betrayal.


Similarly, there is a danger of bringing social norms into a space that
must rely primarily on market norms to drive revenue as it can change
behavior of players.  For example, once a business makes its
relationship more social with customers, customers then expect the
benefits of a social relationship, such as instant payment not being
required. When expectations related to being friends are not met, 
it may cause a long-lasting damage to social relationships.


As such,  it is oftentimes necessary to facilitate shifts from
social to market norms (or vice versa) in an incremental manner and to
make sure that each of the parties are eager to shift and tweak on
governance norms that have negative impact on competitiveness parallel to
ensuring that positive social norms are sustained and valued. 



It was also observed in our project that oftentimes people didnt mind
doing certain tasks for free because it was seen as a social norm. The
minute money was involved, market norms came into play and peoples
involvement and behaviour changed.  As such, in very remote and poor
communities it was oftentimes more viable for our project to build on
indigenous social structures of learning rather than imposing fee-based
business development services delivery structure.  In many
cases,  the amount that households can afford to pay was very
minimal and was often seen by community-based providers as not worth
their time which eventually led to the fading away of the services or
complaints on the very low payments vis--vis time spent.  From our
experiences, it is the social normspride in being called up

Apr 29, 2010   10:20



Example 1. Informal rules can contribute to the effectiveness of formal
rules. If the norm is to abide by formal rules (e.g., adherence to
grading standards even if the buyer does not always check), then it
becomes less costly to enforce the regulations. If this is not the case
(e.g., all in procurement --- no grading/sorting --- as the norm in
most trading activities in Mindanao)  then the standards set by
government agencies become a paper tiger or a substantial amount of
resources is needed to enforce the regulations (e.g., buyers have to send
their own people to check on quality right at the point of purchase).
Norms of civic cooperation reduce enforcement costs by leading
individuals to internalize the value of standards and regulations even
when the probability of detection for violation is negligible.


Example 2. 

There are cases when introduction of market norms can cause social norms
to fade away or cause the weakening of social relationships. In the
Philippine setting, for example,  suki relationships or preferred
buyer-supplier relationship becomes strained when behavior of one of the
parties enters the realm of market norm (e.g., processor starts enforcing
penalty for late deliveries,  when a buyer informs suppliers that
they have policies and cannot treat their suki differently than everyone
else, or when supplier demands the same terms of payment as he does with
other traders). The abrupt re-entry of one party into the realm governed
by market norms is perceived as a betrayal.


Similarly, there is a danger of bringing social norms into a space that
must rely primarily on market norms to drive revenue as it can change
behavior of players.  For example, once a business makes its
relationship more social with customers, customers then expect the
benefits of a social relationship, such as instant payment not being
required. When expectations related to being friends are not met, 
it may cause a long-lasting damage to social relationships.


As such,  it is oftentimes necessary to facilitate shifts from
social to market norms (or vice versa) in an incremental manner and to
make sure that each of the parties are eager to shift and tweak on
governance norms that have negative impact on competitiveness parallel to
ensuring that positive social norms are sustained and valued. 



It was also observed in our project that oftentimes people didnt mind
doing certain tasks for free because it was seen as a social norm. The
minute money was involved, market norms came into play and peoples
involvement and behaviour changed.  As such, in very remote and poor
communities it was oftentimes more viable for our project to build on
indigenous social structures of learning rather than imposing fee-based
business development services delivery structure.  In many
cases,  the amount that households can afford to pay was very
minimal and was often seen by community-based providers as not worth
their time which eventually led to the fading away of the services or
complaints on the very low payments vis--vis time spent.  From our
experiences, it is the social normspride in being called up

Apr 28, 2010   04:30

I agree with Ruth about digging deeper
and finding connections that may not be apparent initially.
Some work we did in the aloe market
system in Kenya a few years back showed the impact of food aid on the aloe
business. The main areas for harvesting aloe were food insecure and periodically
they would receive large amounts of food aid. For the months this happened the
aloe business dried up because no-one needed or wanted to collect aloe (which
was not surprising since it was a risky activity as the areas were also prone to
cattle rustling). So in the analysis it was important for market system actors
(and supporters) to understand all these connected issues and take account of
them.
 
 
Alison Griffith
Practical Action

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