Beyond the general prediction that institutional adaptation will be
partial and incremental, I am also interested in the trajectory of institutional
adaptation. While there is little deductive knowledge on historical
institutional development (Pierson, 2004: 139), different logics of
incremental change can be inferred from case studies literature. Two possible
logics are relevant in the double tax regime: ‘layering’ and ‘conversion’
(Thelen, 2003: 226–30; Streeck and Thelen, 2005). In the first of
these modes of institutional change, a new arrangement is layered on
top of an existing one. Institutional entrepreneurs may lack the capabilities
to reform an institution directly; therefore, they have an incentive
to work around the existing institution in order to exact at least some
kind of change. They attempt to bypass the existing arrangement and
in so doing will slowly and indirectly affect its institutional trajectory.
Depending on the goals of the designers of the layered institution, an
existing institution may receive external support or it may gradually be
subverted.