Concept of Path Dependency - Assignment Example

Name: Name of the Institution: Date: Q1. Discuss the usefulness of concept of ‘path dependency’ demonstrating its usefulness in explaining Australia’s history of institutional continuity and change. In your answer, discuss three examples of how the concept can be applied. The concept of ‘path dependency’ refers to underlying forces that are self-regulating and self-reinforcing which leads to organisational locks-in. These forces have direct impact on individual and corporate decisions (Sydow, Schreyogg & Koch, 2009). The concept explains how certain model guides every activity within a certain economy. This mechanism leads to behavioural development resulting into institutional rigidity. However, it is important to understand the aim of this concept. In most cases, there is a lot of deviation from the set goals especially in organisations that allow too much flexibility. To ensure that every individual within the institution sticks to corporate objective, path dependency is created. It is further argued that path dependency model emphasise on continuity rather than change (Martin, 2010). This implies that proponents on this particular economic model insist on strict adherence to established traditions. In this case, people tend to rely on experiences and occurrences when making choices especially in commercial transactions. This theory preserves people’s way of doing things and economic prosperity where the model adopted is effective enough to facilitate productivity. In reference to Australia’s history, path dependency is linked to organisational routines that shape individual behaviour (Botterill, 2011). Most institutions in Australia especially in public sector have maintained this model for long period. However, this idea has received sharp criticism from change oriented economists and social scientists. This is due to its tendency to resist emerging changes. A good number of scholars argue that adopting path dependency model hinders innovation and creativity (Tont, Argent & Plummer, 2012). It therefore leaves no room for corrective measures especially when the model in use proves ineffective in addressing current social and economic challenges. Nevertheless, path dependency concept plays a critical role in harmonising transition, change as well as continuity in institutional management. Emergence of technological advances in both service and production sectors calls for change in operation without affecting desirable aspects of organisations. Emphasis is put particularly in rural regions in Australia where need for embracing technology is given high attention. Advanced technology is mainly attributed to high production with low operational cost. During the last two decades, deep-seated socio-economic processes transformed industrial sector in rural Australia. Old-style agriculture and resource-based factories were exposed to competitive forces due to government’s commitment to policy reforms. This development brought about dynamism in structures thus shaping economic geographies in rural Australia. During this period, Australian scholars engaged more diverse and vibrant blend of methodological perspectives emerging from cultural theory and political economics (Tont et al, 2012). Due to this ‘intellectual project’, dependent and dynamic comprehensions were realised in rural areas unlike practice of descriptive land use observed for long period. Usefulness of path dependency is demonstrated clearly by exposing its limitation thus allowing adjustment in policy reforms in major sectors of economy. In Australia, interaction of socio-political and socio-economic processes allowed the emergence of new rural geography. Due to this change, economic restructuring and social well-being of the rural population is realised (Van der Heijden, 2013). As a result, economy of the whole country is directly affected by the changes and at the same time, aspect of path dependency is maintained. This is where the model in use provides for adjustment in policy where such policy is aimed at realising the set goals and objectives. Path dependency and technological innovation are harmonised thus creating flexibility. In its effort to maintain historical practices, Australian Wheat Board (AWB) Limited is particularly identified as an ideal example of negative impact of model of path dependency. It is argued that this institution greatly offended humanitarian programmes of its time than any other (Botterill, 2011). The government of the day decided to adopt a different model that would allow change in operation while maintaining the positive aspects. This case addresses institutional continuity and change in Australia. In early twentieth century, Australia is said to have the highest income per capita in the world. Although this economic posterity came to decline in 1890 depression, the country was able to regain its strength before 1945 (Meredith & Dyster, 2013). This happened due to economic models Australian institutions adopted by then. They allowed adjustment where necessary while sustaining structural competitiveness. There are several areas where an organisation or the government can apply path dependency model. Most institutions adopt it in policymaking and development where past decisions become major reference points. While addressing the flaws of this model, management tend to believe it still has something positive to offer. In this case, institutions correct the negative aspects of the model thus allowing it to adapt changes (Howlett, 2009). Most judicial operations apply path dependency model since the institutions tend to retain its culture especially where it produces good performance. In Australia, department of metropolitan planning has adopted path dependency model in its operations. Although current development plan contains modern features to make the structures sophisticated, they still borrow a lot from last century’s plans. Bunker (2012) observes that new developments have maintained that old processes. This scholar attributes this aspect to the fact that technological advancement does not affect nature of structures. It only makes the work easier and building stronger while maintaining the old plan. This makes it possible for Australia to achieve its original goals in urban development. The government and other corporate bodies implement the original plan since any change in technology does not really affect it. It only makes it easier to implement thus applying path dependency model. The idea of path dependency is vital in helping people to understand the aspect of collective actions. Every decision that is adopted collectively by the people is purely based on future expectations. One of the key aspects of such decision is allowance for change that might happen in future (Heinmiller, T. 2009). This attracts common action since people have the understanding on what they do and why. In this case, such action binds other subsequent decisions. A good example is where the whole country is governed using collective decision of the people through constitution. Institutions also develop their internal policy to govern current and future affairs with an aim of sustaining good culture. Q2. Explain the role of the Fair Work Commission in regulating the Australian labour market. Relationship between the employer and the employee is the key determinant of performance in any organisation. As a result, the whole economy in the country is affected either positively or negatively depending on its nature. In respect of this, it is the mandate of the government to ensure that labour relations in the country is suitable for economic growth and development. This is because economy cannot do well in an environment full of unfair labour practices. In realisation of this fact, Australian government in 2009 set up Fair Work Commission to deal with matters relating to labour relations. This agency was put up to replace Australia Industrial Relations Commission (Stwart, 2011). Although the current body is slightly different in terms of structure, scope of work and processes, the major mandate remains the same with earlier one. This agency, in the view of the government is capable of dealing with challenges facing the labour market in Australia. Fair Work Commission as a labour regulatory agency has a main responsibility of creating and sustaining suitable labour relations for socio-economic welfare. To fulfil this particular mandate, the commission carries out four key functions. They include approving enterprise agreements, resolving claims of unfair dismissal, salary & wage fixation and setting minimum requirement or standards (Stwart, 2011). By doing this, fair play is assured in the place of work thus setting a reliable platform for corporate competence. In the long run, both public and private institutions are able to report positive results in terms of profit. In addition, suitable working atmosphere is set up hence making it employee friendly. Lack of this kind of regulation makes most institutions to collapse thus affecting the economy in general. Australian government sought to avoid this scenario by establishing this regulatory body through Fair Work legislation. This aspect alone makes the agency legitimate thus gaining public confidence and support within the country. By approving all enterprise agreements within Australia, Fair Work Commission aims to ensure that it addresses root cause of labour challenges. Enterprise agreement refers to terms and conditions that employees and employers voluntarily and mutually accept (Gupta, 2012). Such agreement is binding and regulates relationship between the two parties. Most labour conflicts and industrial strikes originate from these agreements. In most cases, employers have more influence in the deal and most of them use this aspect to undermine rights of their employees. This scenario results to unsuitable working conditions which lead to industrial unrest. To address this specific challenge in the labour market, the agency goes through these agreements to ensure compliance to laws which guard human rights and dignity in the place of work (Stwart, 2011). Every enterprise agreement in all organisations operating within Australia has to go through this commission for approval. Failure to this, the agreement becomes null and void. This reduces cases of industrial unrest which hampers socio-economic development in the country. Cases of unfair dismissal cater for considerable percentage of causes of industrial unrest in an economy. This is where employer procedurally terminates the services of an employee. This attracts industrial action especially from labour union. This interrupts normal operation of an organisation thus affecting its productivity and returns. When these cases happen in regular intervals, the company is likely to collapse. This affects entire sector and economic progress at large. To counter this scenario, Fair Work Commission has a mandate to address the issue of unfair dismissal in the labour market. The affected party takes the case in form of a complaint and the commission determines the case in accordance with relevant laws. This gives the public a fair hearing thus providing confidence to working population in the economy. The main aim of the agency in performing this mandate is to protect social development of individual worker in the economy. As a result, process of economic growth and development able becomes solid. The issue of wage is also vital in creating sustainable process of economic development. The amount an employee gets at the end of particular period i.e. at the end of every month determines his or her purchasing power. The amount also determines the standard of life for that same employee. To ensure that workers get fair share of his labour in an organisation, Fair Work Commission has the mandate of fixing wages (Stwart, 2011). It does this by considering the prevailing cost of living and employee contribution towards the economy. This enables the employee to live comfortable and affordable life thus motivating him or her to work harder. The commission’s mandate is to provide guideline on lowest amount certain class of workers should earn at the end of the month (Thornthwaite & Sheldon, 2011). The organisation is at liberty to provide any form of financial motivation as its budget can allow. This function protects employees from wage-related discrimination where some get higher pay than others in the same level. Fair Work Commission also set minimum labour standard for all organisations working within Australia. This role seeks to regulate the quality of employees working in the economy. Furthermore, it also helps to control services and products in the country thus creating competitiveness in different sectors of economy (Thornthwaite & Sheldon, 2011). The set standards act as a benchmark and every institution observes that requirement during staff acquisition process. The organisation is able to get the right person for a particular job thus enabling it to achieve its objective easily. It also regulates the movement of labour from outside the country to ensure the organisations admit suitable people in their workforce. In reference to the above role, Fair Work Commission is one of the key institutions that determine economic development and sustainability in Australia. It brings the balance between the interest of the organisations and interest of workers. When there is harmony and satisfaction in the place of work, the organisation is able to realise its goals. This becomes beneficial to country’s economy at large since people are able to appreciate the need for quality output and value for human resource competence. Through this commission, the government is able to monitor corporate performance and to prevent any dangerous aspect on time. This has enabled the Australia economy to thrive and withstand challenges since its establishment several years ago. Q3. Discuss the importance of national competition policy since 1995 and the role of the Australian Competition and Consumer Commission. National competition policy remains to be one of the key aspects of economic reform in Australia. It serves as a landmark microeconomic revolution program which stimulates multi-sector growth in the market. The program applies concept of competitive markets as a key principle (Kendall, 2013). This concept aims at serving the best interest of consumers in the market since players provide competitive products and services. Establishment and implementation of national competition policy has had various benefits towards socio-economic welfare of Australian community. The country is able to deal with rising economic challenges as well as develop sustainable internal programs. National competition council has the mandate of implementing this critical policy (Dodgson, Hughes, Foster, & Metcalfe, 2011). This body acts as a research and regulatory agency on the matters relating to economic competition within Australia. Its main function is to provide the reliable recommendation on accessibility of monopolistic services by third party. The aim of this function is to provide third-party protection against any form of manipulation. National competition council is a legal agency and draws its powers and mandate from Competition and Consumer Act 2010. Remarkable importance of national competition policy is that the community is now able to access competitive services from all providers operating within the market (Banks, 2010). The issue of monopolistic protection no longer apply thus allowing healthy inter-corporate competition. To ensure that the council is competent enough in carrying out its mandate, it comprises of president and councillors with diverse professional backgrounds. In addition, it gets support from ten member secretariat which advises the council on various matters relating to its functions. The secretariat also analyses and represents all deliberations of the council. Australian competition and consumer commission has a primary mandate of ensuring total compliance of Competition and Consumer Act, 2010 (Schaper, 2010). This is the law that provide protect consumers by regulating business operations. In the long run, the commission aims at benefitting the Australian community by creating sustainable balance in terms of business profitability and public accessibility to competitive services. In doing this, the commission is able to promote fair play in markets thus benefiting all the interest groups. It regulates quality of products by ensuring that producers comply with healthy and safety standards as set in the relevant act. It also receives claims from members of the public in case of any element of non-compliance. It deliberates on the claims and makes recommendation in relation to the applicable laws and regulations. Besides giving recommendations, Australian Competition and Consumer Commission have powers to enforce the relevant laws in Federal Court. This is to ensure that all stakeholders observe and comply with consumer protection laws (Schaper, 2010). The power to enforce Competition and Consumer Act by taking court action ensures that the commission is able to operate efficiently and deliver its mandate effectively. Any party who engage in non-competitive business activities are put under strict watch. Individuals and corporates within Australian market ought to adhere to all provisions of Competition and Consumer Act. Denying such powers to the commission equals to frustrating its operations. This would make it incompetent and wastage of public resources. However, enforcement power makes it effective in serving the community. Competition and Consumer commission is also responsible for regulating various industries in different sectors of economy. In respect of this, the commission assists these industries by ensuring that there is adequate access to public infrastructure (Banks, 2010). This ensures that the government provides equal opportunity for all firms in the market to avoid unfair advantage to few corporates. In the same way, equal fines and penalties apply to all players operating in the same industry in case of irregularity. Due to this, no single firm is able to get neither undue favour nor discrimination in accessing infrastructure. The commission sees to it that every firm in all sectors of economy receive equal treatment. In this case, this commission lays favourable ground for business growth and fair competition among firms within the same industry. Competition and consumer commission has a role of educating both the consumers and producers on issues relating to their rights and obligations. This includes all the business owners who operate in Australian market. As integral stakeholders in the economy, consumers and business owners need to get adequate information especially concerning Competition and Consumer Act. Knowing and understanding the law that regulate them makes it possible for them to comply (Meredith, & Dyster, 2012). The commission conducts educative sessions through various platforms to carry out this particular mandate. This makes it easier for the commission to interact with other stakeholders thus becoming familiar with each other. Through educative forums, this agency creates friendly environment for competitors to interact and exchange ideas (Brown, R. 2012). This aspect is very healthy for socio-economic development in any market. Key players in the economy are also able to air their views towards this regulatory body which in turn addresses any issue of concern. Members of public also report what goes on in the ground to the commission during education sessions. As independent regulatory authority, Australian Competition and Consumer Commission is one of the key stakeholders in the economy. No single economy in the world can grow without proper and objective control. This commission is able execute its mandate due to the fact that it has power to regulate the market without external interference. It uses its prosecution power to enforce the relevant law expeditiously. Existence of this body is therefore crucial in creating and maintaining sustainable economic pace in Australia. The general public acquires reliable purchasing power due to price and quality control mechanism. Fair internal competition encourages residents to operate business and attracts external investors. This kind of regulation also boosts small businesses thus increasing revenue for investors. In addition, price and quality control gives residents reliable purchasing power which raises government revenue through indirect taxes. By establishing this commission, the governments of Australia ensure that the whole country realises full benefits of competition policy. It also aims at creating favourable environment for trade to both consumers and suppliers. As a result, the economy is able to grow and record sustainable benefits. References: Banks, G. (2010, December). Successful reform: past lessons, future challenges. In Annual Forecasting Conference of the Australian Business Economists. Botterill, L. C. (2011). Life and death of an institution: the case of collective wheat marketing in Australia. Public Administration, 89(2), 629-643. Brown, R. (2012). 5 The UN Guidelines For Consumer Protection: Making Them Work in Developing Countries. CONSUMERS IN THE INFORMATION SOCIETY, 113. Bunker, R. (2012). Reviewing the path dependency in Australian metropolitan planning. Urban Policy and Research, 30(4), 443-452. Dodgson, M., Hughes, A., Foster, J., & Metcalfe, S. (2011). Systems thinking, market failure, and the development of innovation policy: The case of Australia. Research Policy, 40(9), 1145-1156. Gupta, U. (2012). Enterprise Agreement 2009-2012, Deakin University. Heinmiller, T. (2009). 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