Chapter 2 discusses the limitations of applying a Neoliberal framework to paradiplomacy, and critiques the paradiplomacy scholarship for its conceptions of subnational interests and agency. It introduces a novel theoretical framework for paradiplomacy by expanding upon holistic Constructivism. Rather than conceiving paradiplomacy as driven by material interests, this framework emphasizes normative and ideational factors in the construction of paradiplomacy as an intersubjective social institution, reflective of identities and interests at domestic, national and international levels. The chapter argues that paradiplomacy—as an institutional fact—is an ongoing artifact of practice undertaken and sustained by a wide variety of subnational state and non-state actors in competition with one another and with central governments.