Instrumentalism, power maximisation, or legitimation? Understanding the European Commission’s response to the Global Financial Crisis, 2008-10
Creators: name: Davies, Cleo Sparham
Publisher: name: The University of Edinburgh
Year: 2020
Subjects: Global Financial Crisis 2008
European System of Financial Supervision
supervisory reforms
framework for governance
organizational legitimacy
European Commission
decision-making
perceived expectations
motivation
organizational behaviour

description: In October 2008, as Europe and the world stood in the midst of unpreceded turmoil on global financial markets, the European Commission launched a process that resulted in a proposal to create a European System of Financial Supervision (ESFS) in the EU; these proposals included the regulations to create three European Supervisory Authorities (ESAs) on Financial activities. These reforms generated a lot of scholarly output between 2009 and 2011. Studies focused on the suitability of the solutions put forward by the Commission or the preferences of the member states in shaping the reforms. But despite the more prominent role of the Commission and other International Organizations (IOs) in decision-making processes and governance frameworks after the Global Financial Crisis (Helleiner, Pagliari, and Zimmermann 2010) the Commission’s motivations for action in designing the post Global Financial Crisis supervisory reforms and framework for governance remained under-investigated. Recently, European integration scholars have sought to rebalance the intergovernmental reading of European decision-making post Global Financial Crisis by revisiting and expanding the conceptual definition of supranational entrepreneurship (Howarth and Roos 2017; Bauer and Becker 2014). However, an in-depth empirical investigation of the Commission’s motivations for action is lacking. Furthermore, this literature tends to assume that the Commission is motivated by delivering higher technical efficiency and facilitating collaboration (instrumental), or by rational choice calculations to maximize its influence vis a vis other institutions or the member states (power maximizing). Less explored is the possibility that the Commission’s actions may be guided by a concern for securing legitimacy in its environment. In contrast to predominant accounts of organizations as motivated by power maximizing or instrumental goals, this thesis draws on theories that view organizations as concerned first and foremost by survival and legitimacy (Powell and DiMaggio 1991), and as deriving organizational legitimacy from mirroring norms and expectations in their environments (Brunsson 2002; Scott et al. 1994). This approach allows for the investigation of the cognitive dimension of preference formation inside the Commission; and it allows for a conceptualisation of organizational fields in which boundaries between organizations and their environment are fluid and norms are mutually constitutive. Using an interpretivist approach, the analysis focuses on understanding the perspective of those people involved in decision-making to investigate different motivations guiding action: power-maximization concerns to increase influence, instrumental concerns to provide a solution to the problem revealed by the crisis, and legitimacy concerns to conform to perceived expectations. Through interviews and document analysis, this thesis offers a rigorous empirical analysis of the different motivations that guided the Commission’s actions in the decision-making process to create the three European Supervisory Authorities. The analysis suggests that the Commission was driven by a richer set of substantive goals than is assumed or hypothesised by instrumental and power-maximization approaches. Though valuable, these approaches to organizational behaviour provide a truncated or narrow platform for exploring motivations for action: they tend to black box preferences and don’t take into account the cognitive dimensions in decision-making thereby also portraying an overly schematic relationship of the organization and its environment. The approach adopted in his thesis develops a more nuanced theoretical account of the study of motivations for action in the Commission with insights for the study of behaviour in international organizations (IOs) more generally.