International Relations. A self-Study Guide to Theory

Assumptions of neoinstitutionalist theory 
1)
States are the principal actors in world politics.
2)
Rationality assumption: world politics can be analyzed as though states 
were unitary rational actors that calculate the costs of alternative cours-
es of action and seek to maximize their expected utility across a set of 
ordered objectives. Like neorealism, neoinstitutionalist theory is based 
on microeconomic theory and seeks to explain an actor’s behavior by 
specifying a priori utility functions for actors. 
3)
The neorealist assumption that states seek power and calculate their in-
terests accordingly will be modified. Power and influence are seen to be 
important state interests (as ends and means), but the implication that to 
seek power is always the overriding state interest is rejected: “Under 
different systemic conditions states will define their self-interest differ-
ently.” (Keohane 1986b: 194) 
4)
Neoinstitutionalist theory is based on the assumption that the value of 
power resources for influencing state behavior depends on the goals of 
states: “Power resources are differentially effective across issue-areas…” 
(Keohane 1986b: 194). 
For the outcomes of international politics (the explanandum) this implies, 
that different patterns of outcomes in different issue areas can be anticipated 
with hypotheses. The differences have implications for the ability of actors to 
link issue areas and use power resources from one area to affect the results in 
another (Keohane 1986b: 195). We will return to this issue in Step 2, which 
is devoted to the neoinstitutionalist explanation of international politics. 
With regard to the level of analysis and in terms of concepts and assump-
tions, the modifications do not affect the fundamental belief that neoinstitu-
tionalism shares with neorealism, that a theory should be elaborated at the 
systems level. There are two reasons behind this belief: first, the context in 
which a state’s actions take place has to be appreciated before a state’s actual 
actions can be accounted for and second, because a “good structural theory” 
is easier to test than a theory at state level. It would therefore most effectively 
fulfill the requirements for acquiring scientific knowledge as stipulated by 
positivism according to Lakatos (Keohane 1986: 18; 1986b: 193). 
1.2.
The objective and core question of neoinstitutionalist theory 
So far, we know that neoinstitutionalist theory aims to develop a systemic 
theory that is built on structural realism, but is also able to deal with the dif-

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ferences between issue areas and the implications these differences have for 
exercising power in order to reach state goals. The modified structural ap-
proach is seen as the basis for further systemic research.
The following question lies at the core of neoinstitutionalist theory: 
“How can order be created out of anarchy without superordinate power 
(…)?” (Keohane 1986b: 199) Whereas in neorealist theory, order is created 
either by exercising power or by hegemony, neoinstitutionalist theory be-
lieves that the core problems of anarchy can be reduced under conditions of 
interdependence and through the institutionalization of international coop-
eration. What are the conditions for interstate cooperation? Why and how do 
states construct international institutions? Neoinstitutionalist theory there-
fore forms part of the research into questions of order in international poli-
tics. Theoretical work on international regimes is particularly devoted to 
these questions.
Neoinstitutionalist theory also investigates the effects of international co-
operation and institutions on peace and stability in international politics, i.e. 
through questions relating to peaceful change: “Under what conditions will 
adaptations to shifts of power, e.g. in current technologies or in fundamental 
economic relationships, take place without severe economic disruption or 
warfare?” (Keohane 1986b: 198, 199)
The outcomes of international politics to be explained here differ from 
those put forth in neorealism. Neorealism as a balance-of-power theory ex-
plains large-scale patterns of state action over long periods of time. It is an 
important approach to the study of conflict, bargaining and war (Keohane 
1986b: 188-170). In contrast, neoinstitutionalist theory seeks to explain out-
comes of international politics such as international cooperation and changes 
to the rules and institutions that regulate relations among governments in 
world politics. 
1.3.
Normative perspective and significance of IR as policy analysis 
The issues of change and peaceful change are crucial for assessing the nor-
mative perspective at the heart of neoinstitutionalist theory. For Keohane, neo-
realist theory is unable to explain change and provides a pessimistic view of 
international politics (Keohane 1986: 18). Neoinstitutionalist theory strongly 
rejected the “pessimistic” neorealist view right from the start. “Reasons of 
humanity” define the need to find a way “out of the trap” of anarchy and pro-
vide hope for a stable world order: “If we are to promote peaceful change, we 
have to focus not only on the basic long-term forces that determine the shape 

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