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First published 2008

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 Contents

Notes on Contributors viii

Introduction 1
Royston Greenwood, Christine Oliver, Kerstin Sahlin and Roy Suddaby

SECTION I FOUNDATIONAL THEMES 47

1 Legitimacy in Organizational Institutionalism 49

David L. Deephouse and Mark Suchman

2 Isomorphism, Diffusion and Decoupling 78

Eva Boxenbaum and Stefan Jonsson

3 Institutional Logics 99
Patricia H. Thornton and William Ocasio

4 Organizational Fields: Past, Present and Future 130

Melissa Wooten and Andrew J. Hoffman

SECTION II INSTITUTIONAL DYNAMICS 149

5 The Work of Meanings in Institutional Processes and Thinking 151

Tammar B. Zilber

6 Power, Institutions and Organizations 170

Thomas B. Lawrence

7 Institutional Entrepreneurship 198

Cynthia Hardy and Steve Maguire

8 Circulating Ideas: Imitation, Translation and Editing 218

Kerstin Sahlin and Linda Wedlin

9 Organizational Implications of Institutional Pluralism 243

Matthew S. Kraatz and Emily S. Block
vi

10 Microfoundations of Institutional Theory 276

Walter W Powell and Jeannette A. Colyvas

11 Institutions and Transnationalization 299

Marie-Laure Djelic and Sigrid Quack

SECTION III APPLICATIONS 325

12 Traditions as Institutionalized Practice: Implications

for Deinstitutionalization 327
M. Tina Dacin and Peter A. Dacin

13 New Forms as Settlements 352

Hayagreeva Rao and Martin Kenney

14 Social Movements and Failed Institutionalization:

Corporate (Non) Response to the AIDS Epidemic 371
Gerald F Davis and Peter J.J. Anderson

15 Institutions and Corporate Governance 389

Peer C. Fiss

SECTION IV INTERFACES 411

16 Beyond Constraint: How Institutions Enable Identities 413

Mary Ann Glynn

17 Institutionalism and the Professions 431

Kevin T Leicht and Mary L. Fennell

18 Institutionalism and Globalization Studies 449

Gili S. Drori

19 Organizational Institutionalism and Sociology: A Reflection 473

C.R. Hinings and Pamela S. Tolbert

20 Coalface Institutionalism 491

Stephen R. Barley

21 New Sociology of Knowledge: Historical Legacy and Contributions

to Current Debates in Institutional Research 519
Renate E. Meyer

22 Systems Theory, Societal Contexts, and Organizational Heterogeneity 539

Raimund Hasse and Georg Krücken

23 Charting Progress at the Nexus of Institutional Theory and Economics 560

Peter W Roberts
 vii

24 Ecologists and Institutionalists: Friends or Foes? 573

Heather A. Haveman and Robert J. David

25 Networks and Institutions 596

Jason Owen-Smith and Walter W Powell

26 Institutional-Level Learning: Learning as a Source of Institutional Change 624

Pamela Haunschild and David Chandler

27 Social Movements and Institutional Analysis 650

Marc Schneiberg and Michael Lounsbury

28 Examining 'Institutionalization': A Critical Theoretic Perspective 673

David J. Cooper, Mahmoud Ezzamel and Hugh Willmott

29 Taking Social Construction Seriously: Extending the Discursive

Approach in Institutional Theory 702
Nelson Phillips and Namrata Malhotra

30 Institutional Leadership: Past, Present and Future 721

Marvin Washington, Kimberly B. Boal and John N. Davis

SECTION V REFLECTIONS 737

31 Is the New Institutionalism a Theory? 739

Donald Palmer, Nicole Biggart and Brian Dick

32 How to Misuse Institutions and Get Away with It: Some Reflections on
Institutional Theory(ies) 769
Barbara Czarniawska

33 Been There, Done That, Moving On: Reflections on Institutional Theory's

Continuing Evolution 783
Paul Hirsch

34 Reflections on Institutional Theories of Organizations 790

John W Meyer

Index 813
 Notes on Contributors

Peter Anderson is a former doctoral student in management and organization at the Ross
School of Business at the University of Michigan. His research is focused on the relationship
between shared leadership and members' perceptions of their value to an organization. He is
currently pursuing his Masters in Education to teach social studies at the secondary level.

Stephen R. Barley is Charles M. Pigott Professor of Management Science and Engineering,

Co-Director of the Center for Work, Technology and Organization at Stanford's School of
Engineering and Co-Director of the Stanford/General Motors Collaborative Research
Laboratory. He has previously edited the Administrative Science Quarterly, and was founding
editor of the Stanford Social Innovation Review. He edited Between Craft and Science:
Technical Work in the United States (Cornell University Press, 1997), and recently published
(with Gideon Kunda) the book Gurus, Hired Guns and Warm Bodies: Itinerant Experts in the
Knowledge Economy (Princeton University Press).

Nicole Woolsey Biggart is Professor of Management and Sociology, and holds the Jerome J.
and Elsie Suran Chair in Technology Management at the University of California, Davis. She is
currently serving as Dean of the Graduate School of Management. Nicole is interested in the
institutional structure of economic relations and has studied the direct selling industry, family
firms and business groups in Asia, and microcredit lending. While her empirical interests have
been varied she has largely approached analysis from a Weberian institutional perspective and
grounds her work historically. She has also written extensively on institutional theory.

Emily Block is a Ph.D candidate at the University of Illinois at Champaign-Urbana. Her

research focuses on how organizations actively shape institutions and promote field-level
change. Her doctoral dissertation explores the process through which industry associations and
non-governmental organizations facilitate and direct the emergence of self-regulatory
governance institutions related to sustainable forestry practices.

Kimberly B. Boal is Rawls Professor of Management at the Rawls College of Business, Texas
Tech University. He was Co-Editor-in-Chief of the Journal of Management Inquiry (1997-
2006). He served on the Board of Governors of the Academy of Management from 2001 to
2004, and as President of the Western Academy of Management in 1998-2000. He was twice
awarded the Joan G. Dahl Presidential Award by the Western Academy of Management. His
research on worker attitudes and motivation, leadership, organizational change, strategic plan-
ning, mergers and acquisitions, and corporate social responsibility has been published in
Academy of Management Executive, Academy of Management Review, Administrative Science
Quarterly, Journal of Management, Leadership Quarterly, and Strategic Management Journal,
and books.

Eva Boxenbaum is Assistant Professor in the Department of Organization at Copenhagen

Business School, where she is also a member of the Centre for Management Studies of the
Building Process The focus of her research is on the institutionalization of innovative
management practices, in particular, how management practices are translated, implemented,
and sometimes
 ix
decoupled when they are brought into new national contexts. Her regional areas of expertise are
Canada, Denmark, France, Quebec and the United States. Most of her empirical work is
comparative in scope and spans multiple levels of analysis, the aim being to shed light on
processes of institutionalization. She has published in Strategic Organization, Journal of
Business Strategies, American Behavioral Scientist and in several international anthologies.

David Chandler is a Ph.D candidate in organization theory and strategy at the University of
Texas at Austin. His broad area of research interest lies at the intersection between the
organization and its institutional environment. Specifically, he is interested in change processes
of organizational adoption, learning, and imitation. He is also interested in the strategic impli-
cations of corporate social responsibility and firm/stakeholder relations. His publications in this
area include the textbook Strategic Corporate Social Responsibility (Sage, December 2005).

Jeannette A. Colyvas is an assistant professor in learning and organizational change at

Northwestern University's School of Education and Social Policy. Her research interests include
organizations and entrepreneurship, comparing public, private, and non-profit forms of
organizing, and institutional change. Colyvas' work examines the relationship between insti-
tutions and resources, practices and their meanings, and how social and technical categories
develop and become institutionalized. Her current research examines university-industry
interfaces, focusing on the translation of basic science into commercial application and its
ramifications for careers, identities, and public science.

David J. Cooper is the CGA Chair in Accounting at the University of Alberta and Director of
the Ph.D program for the School of Business. He has written or edited seven books and over 70
articles (in journals such as Accounting, Organizations and Society, Administrative Science
Quarterly, and Organization Studies). He is a joint editor of Critical Perspectives on
Accounting, and serves on the editorial boards of seven other journals. His current research
examines the development and implementation of strategic performance measurement systems
in multinational organizations, as well as the emerging systems of global regulation of
professional accountants.

Barbara Czarniawska holds a Chair in Management Studies at GRI, School of Business,

Economics and Law, G6teborg University, Sweden. Her recent publications in English are A
Tale of Three Cities (2002), Narratives in Social Science Research (2004) and A Theory of
Organizing (2008). She edited Global Ideas (with Guje Sevón, 2005), ANT and Organizing
(with Tor Hernes, 2005), Organization Theory (2006) and Management Education &
Humanities (with Pasquale Gagliardi, 2006).

Peter A. Dacin is Kraft Professor of Marketing at the Queen's School of Business, Queen's
University, Canada. His research areas include corporate reputation and identity, consumer
judgment formation, and sociological approaches to understanding communication and
consumption. He is currently working on several projects focused on understanding
communication and coordination effects between marketing organizations and various types of
consumption communities. His work has been published in a variety of academic journals,
including the Journal of Marketing, Journal of Marketing Research, Journal of Consumer
Research, Journal of the Academy of Marketing Science, and the Journal of Business Research.

M. Tina Dacin is the E. Marie Shantz Professor of Strategy and Organizational Behavior in the
Queen's School of Business, Queen's University, Canada. Her research interests include
x
institutional change, organizational traditions, social entrepreneurship and partner selection in
alliances. She is currently working on several projects that examine the intersection between
culture and institutions. Her work has been published in the Academy of Management Journal,
Academy of Management Review, Accounting, Organizations, and Society, Journal of
Management, Journal of World Business, Organization Science, and the Strategic Management
Journal.

Robert David (Ph.D, Cornell University) is Associate Professor of Strategy & Organization and
Cleghorn Faculty Scholar at the Desautels Faculty of Management of McGill University. He is
also Director of the Center for Strategy Studies in Organization at McGill. He studies the
evolution of industries and organizational forms from an institutional perspective. Robert has
published articles in Research Policy, Strategic Management Journal, Academy of Management
Journal, and Organization Science.

Gerald Davis is Wilbur K. Pierpont Collegiate Professor of Management at the Ross School of
Business and Professor of Sociology, the University of Michigan. His research examines the
influence of politics and social networks on the institutions of corporate governance and the
effects of financial globalization on social structure and politics. Recent books include
Organizations and Organizing: Rational, Natural, and Open System Perspectives (with W.
Richard Scott) and Social Movements and Organization Theory (co-edited with Doug McAdam,
W. Richard Scott, and Mayer Zald).

John N. Davis recently completed his Ph.D in leadership at Texas Tech University and is
currently on the faculty at Coastal Carolina University. In June 2008, he will move to the Kelley
College of Business at Hardin-Simmons University to become an assistant professor of manage-
ment. His research examines how leaders change over time, with special emphasis on charisma.

David Deephouse is an Associate Professor in the Department of Strategic Management and

Organization at the University of Alberta School of Business. He received his Ph.D from the
Carlson School of Management at the University of Minnesota. His research interests include
legitimacy, reputation, and organizational similarity, especially on the media's role in them.

Brian Dick is a Ph.D candidate in the Department of Sociology at the University of California,
Davis. His research interests include social theory, the philosophy of the social sciences, organ-
ization studies, and science and technology studies. He is currently working on his dissertation,
which consists of a historical and sociological analysis of the proliferation of superstring theory
among physics departments. This work develops the concept of scientific legitimacy drawing on
ideas current in organization studies and science and technology studies.

Marie-Laure Djelic is Professor at ESSEC Business School, Paris. Her research interests range
from the role of professions and social networks in the transnational diffusion of rules and
practices to the historical transformation of national institutions. She is the author of Exporting
the American Model (Oxford University Press, 1998), which obtained the 2000 Max Weber
Award from the American Sociological Association. She has edited, together with Sigrid Quack,
Globalization and Institutions (Edward Elgar, 2003) and together with Kerstin Sahlin-
Andersson, Transnational Governance (Cambridge University Press, 2006).

Gili S. Drori is a lecturer in Stanford University's International Relations Program and Director
of the IR Honors Program. Her research interests include the comparative study of science,
social progress and rationalization, globalization, and governance. Her interests on world
 xi
culture, global health, technology entrepreneurship, and higher education have appeared in her
books: Science in the Modern World Polity: Institutionalization and Globalization (2003, co-
authored with John W. Meyer, Francisco O. Ramirez and Evan Schofer), Global E-litism:
Digital Technology, Social Inequality, and Transnationality (2005), and World Society and the
Expansion of Formal Organization (2006, co-edited with John W. Meyer and Hokyu Hwang).

Mahmoud Ezzamel is Cardiff Professorial Fellow, Cardiff University. His main research
interests are in the areas of the interface between social theory and organization analysis, with
particular emphasis on accounting practice. He has published papers in Administrative Science
Quarterly, Academy of Management Journal, Accounting, Organizations and Society,
Organization Studies, Journal of Management Studies, Organization, as well as in other leading
accounting and management journals.

Mary L. Fennell is Professor and Chair of the Department of Sociology at Brown University.
She coauthored (with Richard Warnecke) the book The Diffusion of Medical Innovation: An
Applied Network Approach (Plenum, 1988). Her work has been published in Health Affairs,
Health Services Research, Administrative Science Quarterly, the Journal of Health and Social
Behavior, and the Academy of Management Journal. Her current research continues in areas of
nursing home quality of care differences (with Vince Mor), cultural competence in nursing
home care (with Melissa Clark), and studies of change over time in professional work,
professional labor markets, and professional organizations (with Kevin Leicht; Professional
Work, Blackwell 2001). She served Brown University as Dean of the Faculty from 2000 to
2004.

Peer C. Fiss is an assistant professor of strategy at the Marshall School of Business at the
University of Southern California. His current research interests include corporate governance,
framing and symbolic management, and the use of set-theoretic methods such as Qualitative
Comparative Analysis (QCA) in management and the social sciences. His articles have appeared
in journals such as the Administrative Science Quarterly, American Sociological Review,
Academy of Management Journal, Academy of Management Review, and the Strategic
Management Journal.

Mary Ann Glynn is Professor of Organization Studies, Professor of Sociology, and Fellow and
Research Director for the Winston Center for Leadership and Ethics at Boston College. She is
the nationally elected Program Officer for the Academy of Management, Managerial and
Organizational Cognition Division. Her research has been published in Academy of
Management Journal, Academy of Management Review, Organization Science, Strategic
Management Journal, Journal of Applied Psychology, Journal of Management Studies, Journal
of Marketing, and Poetics: International Journal of Empirical Research on Art, Media, and
Literature, and edited books.

Royston Greenwood (Ph.D, University of Birmingham, UK) is TELUS Professor of Strategic

Management in the Department of Strategic Management and Organization, School of Business,
University of Alberta. His research focuses upon the dynamics of institutional change,
especially at the field-level of analysis. His favored empirical settings involve professional
service firms. Recently, his research has explored how and why large professional service firms
developed new organizational forms, with particular reference to how they are 'theorized' and
thus legitimated. One paper from this research stream won the Academy of Management
Journal's 2006 Best Paper Award. His work has appeared in Administrative Science Quarterly,
xii
Academy of Management Journal, Academy of Management Review, Organization Science, and
Organization Studies. He is a founding co-editor of Strategic Organization.

Cynthia Hardy is Professor of Management at the University of Melbourne and co-director of

the International Centre for Research on Organizational Discourse, Strategy & Change. Her
recent research includes a focus on institutional entrepreneurship and institutional change from a
discursive perspective, and has been published in Academy of Management Journal, Academic
of Management Review. She has also co-edited a special issue of Organization Studies on
institutional entrepreneurship. Other research interests revolve around the study of power and
politics in organizations, organizational discourse theory, and critical discourse analysis. She has
published Discourse Analysis: Investigating Processes of Social Construction, as well as co-
editing a special issue of Organization Studies on organizational discourse and the Sage
Handbook of Organizational Discourse. In total, she has written over 60 journal articles and
book chapters; and published twelve books and edited volumes.

Raimund Hasse is associate professor for Sociology, Organization and Knowledge at the
University of Lucerne, Switzerland. His research interests include organization theory and new
institutionalism. His book Wohlfahrtspolitik und Globalisierung (2003) deals with the interplay
of organizational and polítical changes. Other publications have dealt with changes in the
organization of work, with organizational impacts of new technologies, and with issues of
innovation. Currently, Raimund Hasse is conducting a research project that investigates the
formation of new organizations.

Pamela Haunschild is the Herbert D. Kelleher/MCorp Professor of Business as well as Chair of

the Department of Management at the McCombs School of Business, University of Texas-
Austin. Her research involves studying organizational (and inter-organizational) learning
processes, especially how and under what circumstances organizations learn from their errors.
She is also interested in issues related to networks and corporate governance as well as how
governance decisions are affected by network information and influence. Her work has been
published in several key management journals, including Administrative Science Quarterly,
Organization Science, and Management Science.

Heather A. Haveman is Professor of Sociology and Organizational Behavior at the University

of California, Berkeley. Her research investigates organizations' responses to shifting internal
and external conditions, the impact of organizational change on performance and survival, and
the consequences of organizational structures and dynamics for employees' careers and the
composition of organizations' work forces. She has published in Administrative Science
Quarterly, the American Sociological Review, the American Journal of Sociology, the Academy
of Management Journal, and Organization Science.

Bob Hinings is Professor Emeritus in the Department of Strategic Management and

Organization and Senior Research Fellow in the Center for Entrepreneurship and Family
Enterprise, School of Business, University of Alberta. He is currently carrying out research into
health care organization. He is also involved in research into the organization of the Canadian
wine industry. All of his research is concerned with organizational change.

Paul Hirsch is the Allen Professor of Strategy and Organization at Northwestern University’s
Kellogg School of Management. He has received the "Distinguished Scholar" award from the
 xiii
Academy of Management's Division of Organization and Management Theory. He has also
served as Chair of this division, and on the boards of the American Sociological Association's
Sections on Economic Sociology, and Organizations, Occupations and Work. His early study of
"Organizational Effectiveness and the Institutional Environment" helped expand the field's
traditional focus on firms, to include industries and organizational fields, political economy and
regulation. He remains interested in the changes wrought by deregulation and similar insti-
tutional failures as the collapse of the Savings and Loan industry and, more recently, the large-
scale losses suffered by lenders and borrowers connected to the wide-spread failure of subprime
mortgage loans.

Andrew (Andy) Hoffman is Holcim (US) Professor of Sustainable Enterprise at the University
of Michigan. He has published five books and over fifty articles and book chapters on
environmental and social issues as they relate to business. He recently published the report
Getting Ahead of the Curve: Corporate Strategies that Address Climate Change with the Pew
Center on Global Climate Change. His book From Heresy to Dogma was awarded the 2001
Rachel Carson Prize. He serves on the editorial board of Organization & Environment. His
research deals with the nature and dynamics of change within institutional and cultural systems
and he applies that research towards understanding the cultural and managerial implications of
environmental protection and sustainability for industry.

Stefan Jonsson is currently a researcher at Uppsala University, Sweden. His research centers on
the interaction of norms, the spread of ideas and market structures. His earlier work centers on
norms that guide competitive behavior across firms and how these can lead to a systematic
undervaluation of the use of some new practices. More recently, he has focused on the role that
media plays in the structuring of markets and the spread of bad reputation.

Martin Kenney is a professor in the Department of Human and Community Development at the
University of California, Davis, and a senior project director at the Berkeley Roundtable on the
International Economy. He has been interested in the processes by which entrepreneurs
commercialize new technical developments, and through this process, enact new industries. Of
particular interest to him are the mechanisms by which regions develop institutions to support
entrepreneurial activity and the geography and dynamics of these support networks. His recent
research is in three areas: the evolution of the venture capital industry in the U.S. and globally,
the entrepreneurial support networks and genealogies of entrepreneurship in regions, and the
emergence of India as a leader in offshore service provision.

Matt Kraatz (Ph.D, Northwestem University) is an associate professor in the Department of

Business Administration at the University of Illinois. His scholarly interests include
organizational adaptation, governance, identity, leadership, and other institutional processes. His
research has been published in the Academy of Management Journal, the Strategic Management
Journal, Organization Science, and the American Sociological Review.

Georg Krücken (Ph.D, Bielefeld University, Germany) is professor of Science Organization,

Higher Education and Science Management at the German University of Administrative
Sciences in Speyer. After studying sociology, philosophy, and political sciences at Bielefeld
University and the University of Bologna, he worked as an associate professor at Bielefeld until
2006. From 1999 to 2001 he was a visiting scholar at the Department of Sociology at Stanford
University. He taught as a guest professor at the Institute for Science Studies, University of
Vienna, and at the Centre de Sociologie des Organisations, Sciences Po, Paris. His research
interests include
xiv
science studies, organizational studies, the management of higher education, and neo-
institutional theory.

Thomas B. Lawrence (Ph.D, University of Alberta) is Weyerhaeuser Professor of Change

Management, and Director of the CMA Center for Strategic Change and Performance
Measurement at Simon Fraser University in Vancouver, Canada. After receiving his doctorate in
1993 he was on the faculty of the University of Victoria until2002. His research focuses on the
dynamics of power, change and institutions in organizations and organizational fields.

Kevin T. Leicht is Professor of Sociology, Director of the Social Science Research Center, and
co-Director of the Institute for Inequality Studies at The University of Iowa. He is editor of
Research in Social Stratification and Mobility. His research examines the relationship between
globalization and economic development, and their relationship to the production of social
inequality. His work has appeared in The American Sociological Review, American Journal of
Sociology, Social Forces, and The Academy of Management Journal.

Michael Lounsbury is Associate Professor of Strategic Management and Organization at the

University of Alberta School of Business and the National Institute of Nanotechnology. His
research focuses on the relationship between organizational and institutional change, entre-
preneurial dynamics, and the emergence of new industries and practices. He has published
research on topics such as social movement activism and the construction of the recycling
industry, and the professionalization of money managers in the mutual fund industry. He is
currently investigating the co-evolution of nanoscience and nanotechnology. Professor
Lounsbury serves on a number of editorial boards and his work has been published in
Administrative Science Quarterly, Academy of Management Journal, Academy of Management
Review, Strategic Management Journal, and Organization Studies. In addition, he is the series
editor of Research in the Sociology of Organizations, and co-editor in-chief of Journal of
Management Inquiry.

Steve Maguire is Associate Professor of Strategy and Organization in the Desautels Faculty of
Management at McGill University. His research focuses on institutional and technological
change resulting when commercial, scientific and political struggles intersect around social or
environmental issues. His doctoral dissertation draws lessons from society's experience with the
insecticide DDT and was awarded the Academy of Management's 'Organization and Natural
Environment (ONE)' Best Doctoral Dissertation Award in 2001. He has also studied the
pharmaceutical industry, analysing the impact of the empowerment of people living with
HIV/AIDS on the commercialization, availability and accessibility of HIV/AIDS treatments.

Namrata Malhotra is on faculty in the Tanaka Business School, Imperial College, London,
UK. Her research is focused on understanding processes of organizational change, especially in
professional service organizations. She has been involved in projects investigating change
processes in Australian, British, and Canadian law firms. Currently, she is pursuing research
examining institutional change processes in law firms.

John W. Meyer is Professor of Sociology, emeritus, at Stanford. He has contributed to

organizational theory, comparative education, and the sociology of education, developing lines
of thought now called sociological institutional theory. Recently, he completed a collaborative
study of worldwide science and its impact on national societies (Drori, et al., Science in the
 xv
Modern World Polity, Stanford, 2003). Another collaborative project, on the impact of global-
ization on organizational structures, has just been published (Drori et al., eds., Globalization and
Organization, Oxford 2006). He now studies the rise and impact of the world human rights
regime, world curricula of mass and higher education, and the global expansion of higher
education.

Renate E. Meyer is Professor for Public Management at Wirtschaftsuniversität Wien, Austria.

Her research interests include the communicative construction of institutions and related
framing processes, the role of meaning in processes of institutional maintenance and change,
and the conceptualization of time. Her recent work addresses translations and alignments of
global management concepts to local opportunity structures, social identities, and the
development of communicative institutions. Renate is particularly interested in combining
qualitative and quantitative research. She is currently co-editing a volume on institutions and
ideology.

William Ocasio is the John L. and Helen Kellogg Distinguished Professor of Management and
Organizations at the Kellogg Graduate School of Management, Northwestern University. His
research integrates institutional, cognitive, and political perspectives to explain organizational
decision making and organizational change. Current research projects include examining the
role of vocabularies of organizing in shaping decision making, and developing a political capital
perspective on power in organizations.

Christine Oliver is the Henry J. Knowles Chair of Organizational Strategy in the Schulich
School of Business at York University, Toronto. Her work has appeared in Administrative
Science Quarterly, Academy of Management Review, Organization Studies, Academy of
Management Journal, Advances in Strategic Management, Journal of Management Studies,
Strategic Management Journal, and American Sociological Review. Christine is on the editorial
board of the Journal of Management Studies, and is a past Representative-At-Large on the
Academy of Management Board of Governors. Christine is past Associate Editor (1993-1996)
and Editor (1996-2003) of the Administrative Science Quarterly.

Jason Owen-Smith is Assistant Professor of Sociology and Organizational Studies at the

University of Michigan in Ann Arbor. He is interested in institutional and organizational
change, innovation, the dynamics of complex social and economic networks and the
commercialization of academic research. His current project focuses on the intersection of
science, technology, and commerce in academe with particular emphasis on the ramifications of
patenting, licensing, and university-industry collaborations.

Donald Palmer is Professor of Organizational Behavior and Associate Dean for Research in the
Graduate School of Management at the University of California, Davis. He is also Editor of
Administrative Science Quarterly. He has conducted quantitative empirical studies on corporate
strategy, structure, and inter-organizational relations. And he is currently embarked on a series
of qualitative empirical studies of organizational wrongdoing, the first of which appeared in
Management Inquiry and the second of which is in press at Research in Organizational
Behavior.

Nelson Phillips is Professor of Strategy and Organizational Behaviour at Tanaka Business

School, Imperial College London. His research interests include knowledge management,
technology strategy, institutional theory, social entrepreneurship, management in cultural
industries, and international management. He has published over 60 academic articles and book
xvi
chapters, including articles in the Academy of Management Journal, Academy of Management
Review, Management Science, Sloan Management Review, Organization Science, Journal of
Management Studies, Journal of Business Ethics, and Organization Studies. He has also written
two books: one with Cynthia Hardy, Discourse Analysis (2002) and a second with Stewart
Clegg and David Courpasson, Power and Organizations (2006).

Walter W. Powell is professor of education and affiliated professor of sociology, organizational

behavior, management science and engineering, and communication at Stanford University. He
is also an external faculty member at the Santa Fe Institute. He works in the areas of organ-
ization theory, social networks, and economic sociology. He is particularly interested in the
processes through which knowledge is transferred across organizations, and the role of networks
in facilitating and hindering innovation processes. With Jeannette Colyvas, he is studying the
origins of organizational practices that eventually become codified and institutionalized. With
Hokyu Hwang, he is studying the consequences of increased professionalization in the nonprofit
sector, and its impact on civil society organizations. With Jason Owen-Smith, he is studying the
evolving network and institutional structures of the life sciences field and the reshaping of the
boundaries of public and private science.

Sigrid Quack is a research fellow at the Max Planck Institute for the Study of Societies in
Cologne. Her books include National Capitalisms, Global Competition and Economic
Performance, which she edited together with Glenn Morgan and Richard Whitley, Globalization
and Institutions, edited with Marie-Laure Djelic and Grenzüberschreitungen – Grenzziehungen
(Edition Sigma 2006, edited in German with Ariane Berthoin Antal). She has also published
articles in Cambridge Journal of Economics, Environment and Planning, International Journal
of Human Resource Management, Organization, Organization Studies and Theory and Society.

Hayagreeva Rao is the Atholl McBean Professor of Organizational Behavior at the Graduate
School of Business, Stanford University. He studies the social and cultural causes of
organizational change.

Peter Roberts' primary research interests relate to how the behavior and performance of
organizations evolve over time. He has studied these issues in diverse settings, including the
pharmaceutical industry, the retail banking industry, the hotel industry, and the global wine
industry. His research has been published in Academy of Management Review, American
Journal of Sociology, Journal of Economic Behavior and Organization, Organization Science,
and Strategic Management Journal. Peter has also served on the faculties of Columbia
University, Carnegie Mellon University, and the Australian Graduate School of Management.

Kerstin Sahlin is professor of management at Uppsala University. Her research interests

include transnational governance, transformed public-private relations, governance of health
care and universities, and the travels of management ideas. She recently edited Transnational
Governance: Institutional Dynamics of Regulation (Cambridge University Press, 2006, with
Marie-Laure Djelic) and The Expansion of Management Knowledge: Carriers, Flows and
Sources (Stanford University Press, 2002, with Lars Engwall). She is currently the Deputy Vice-
Chancellor of Uppsala University

Marc Schneiberg is the John C. Pock Professor of Sociology at Reed College. He researches
variety and change in economic organization, with particular emphasis on collective and public
alternatives to for-profit corporations in the American economy. He is currently completing an
 xvii
NSF-funded study of private, public, and cooperative enterprise. His research on alternatives,
organizational form, and social movements appears in Politics and Society, American Journal of
Sociology, American Sociological Review, Research in the Sociology of Organizations, and
Socio-Economic Review.

Mark Suchman is professor of Sociology at Brown University. His research interests center on
the relationship between law and organizations, particularly the role of legal institutions in
formally and informally legitimating innovation and entrepreneurship in the information
technology, nanotechnology, and healthcare sectors. In addition to his work on legitimacy, he
has also written on inter-organizational disputing, on the "internalization" of law within
corporate bureaucracies, and on contracts as social artifacts.

Roy Suddaby is an associate professor at the Alberta School of Business. His theoretical focus
is on processes of institutional change. His research has been published in Administrative
Science Quarterly, Academy of Management Journal, Journal of Organizational Behavior,
Accounting, Organizations and Society and Human Relations. Roy serves on the editorial boards
of Administrative Science Quarterly, Academy of Management Review, Academy of
Management Journal, Organization Studies, Journal of Management Studies and the
Scandinavian Journal of Management. He is currently studying corporate art collections.

Patricia H. Thornton is Associate Professor of Management at Duke University Fuqua School

of Business and Visiting Associate Professor at Stanford University Department of Sociology.
Her interests are in organization theory, economic sociology, and entrepreneurship. Her book
Markets from Culture: Institutional Logics and Organizational Decisions (2004) shows how
institutional logics influence executives' discovery and development of market opportunities.
She has authored reviews of entrepreneurship literature in the Annual Review of Sociology and
the Handbook of Entrepreneurship Research. Currently, she is researching on how institutional
logics affect innovation discovery and the strategic decision to use network relations in product
development and distribution and also is comparing the long-term survival rates of internal
corporate ventures with ventures founded independently.

Pamela S. Tolbert is a professor and chair of the Department of Organizational Behavior in the
ILR School at Cornell University. Her research is broadly focused on processes of
organizational change, the role of organizations in social stratification, and the impact of
occupations on organizational structures. She has served on the editorial boards of
Administrative Science Quarterly, American Sociological Review, Organization Science,
Journal of Engineering and Technology Management and Sociological Forum, as the book
review editor for Administrative Science Quarterly, and as an associate editor for Management
Science and the Academy of Management Review.

Marvin Washington is an Associate Professor of Physical Education and Recreation with a

joint appointment with the Faculty of Business at the University of Alberta. His research interest
focuses on the creation and evolution of institutions and organizational fields. He has recently
examined the creation and evolution of U.S. collegiate athletics and this work has been
published in Academy of Management Journal, Organization Science, Organization Studies, and
Journal of Sport Management.

Linda Wedlin is assistant professor and lecturer at the Department of Business Studies, Uppsala
University. Her current research includes a project on transnational regulatory reform in higher
education and research, a study on local academic governance in practice, and a study
xviii
on the restructuring of interest representation in public rule-making. Recent publications include
a book, Ranking Business Schools (Edward Elgar, 2006), analyzing the role of ranking practices,
as new means of evaluation and monitoring, in the structuring of the international management
education field.

Hugh Willmott is Research Professor, Cardiff Business School. He has previously held full
professorial appointments at the Universities of Cambridge and Manchester and visiting
appointments at the Universities of Copenhagen, Lund and Cranfield. His books include Making
Quality Critical, The Re-engineering Revolution, Managing Knowledge, Management Lives,
Studying Management Critically and Fragmenting Work. He is interested in developing critical
analyses of diverse aspects of management and has published widely in social science and
management journals. He currently is a member of the editorial boards of the Academy of
Management Review, Organization Studies and Journal of Management Studies. Further details
can be found on his homepage: http://dspace.dial.pipex.com/town/close/hr22/hcwhome.

Melissa Wooten is assistant professor in Sociology at the University of Massachusetts Amherst.

She received her doctorate in Management and Organization from the University of Michigan in
2006. Her dissertation research focuses on change in historically black colleges after the
American Civil Rights Movement. She uses institutional theory to investigate the processes
leading to homogenization among historically black colleges, private Northeastern liberal art
colleges, and public universities located in the American South.

Tammar B. Zilber is a lecturer in Organization Theory at the School of Business

Administration, the Hebrew University of Jerusalem, Israel. She is interested in cultural worlds
within and without organizations. Using qualitative methods like ethnography, narrative analysis
and discourse analysis, she explores symbolic aspects of institutional processes. Among the
issues she examined in recent years were the translation of institutional meanings over time and
across social spheres; the role of stories in institutional entrepreneurship; and institutional
maintenance as narrative work.
 Introduction
Royston Greenwood, Christine Oliver, Kerstin Sahlin
and Roy Suddaby

The motivation for this Handbook arose from 2. We focus upon 'organizational institutionalism'.
Several variants of institutional analysis have
a conversation with Don Palmer, who raised been identified. Hall and Taylor (1996) propose
the question of whether organization theories three basic schools of thought: rational choice
in general have life cycles. Given the prolif- institutionalism, historical (comparative)
eration of theoretical paradigms, do organi- institutionalism, and organizational
zation theories build into coherent conceptual (sociological) institutionalism. The material
frameworks supported by diligently covered in this Handbook does centre upon
conducted empirical work, or do they organizational institutionalism, but we are less
sure of the accuracy of the depictions provided
fragment into proliferated confusion? That by Hall and Taylor (1996) or Campbell (2004).
conversation never proceeded to a compara- In fact, we propose to show how institutionalist
tive assessment of organization theories. But research applied to organizational behaviour
it did lead to the present volume. It seemed, in has evolved over time and that much of this
late 2004, when the idea of a Handbook was work does not fit neatly into the classifications
mooted, an appropriate moment to take stock offered by Hall or Campbell. Our stance is not
of the institutional perspective on to ask, what is distinctive of 'organizational
institutionalism'? But, instead: 'What does the
organizations because we were approaching institutional perspective tell us about
the thirtieth anniversary of seminal papers organizational behaviour?'
that not only triggered revitalization of inter- 3. Our timeframe emphasizes contributions made
est in the role of institutions but became since 1977. The late 1970s were great years for
known as the new institutionalism. organization theory. In a very short span of
It is important at the outset to set down years, at least three of the enduring perspectives
certain scope conditions for this volume: within organizational theory were initiated:
resource dependence theory, ecology theory,
and institutional theory. In 1977, two papers
1. Our interest is in understanding organizations. (Meyer & Rowan, 1977; Zucker, 1977)
How and why do organizations behave as they introduced what became known as new
do, and with what consequences? These are the institutionalism. We do not deny that
overarching questions of organization theory. institutions and institutional processes had been
'Organizational institutionalism' is the applica- examined prior to that date (see Hirsch, Chapter
tion of the institutional perspective to those 33 this volume). On the contrary, the study of
questions. institutions has a long and
2
respected tradition (see DiMaggio & Powell, In this section we review how the 'so-called
1991; Hinings & Tolbert, Chapter 19 this institutional perspective' (Carroll, Goodstein
volume; and Barley, Chapter 20 this volume). & Gyenes, 1988: 238) has evolved since
However, the body of institutional work post-
1977 has a focus that warrants our treatment of
1977. By doing so we are, in one sense,
1977 as a starting point. retrospectively tracing the social construction
of institutional theory over the past three
decades. We review how the term has been
used in the main organization theory journals.
THE SOCIAL CONSTRUCTION OF We examine how theorists and researchers
have understood the term and we uncover the
'INSTITUTIONAL THEORY'
organizational issues and questions to which
Institutional theory is perhaps the dominant the theory has been applied. We suggest
approach to understanding organizations. Its certain pivotal moments when either the
popularity is shown in Figure 1.1, which definition or the application of the theory
reports the number of citations to Meyer and shifted. Our motivation is to understand what
Rowan (1977). The steady rise in citations is makes an institutional story different from
impressive. And it is clear from these statis- other theoretical perspectives. This is not an
tics that institutional theory is an entrenched easy task given institutional theory's
and prevalent approach. Moreover, as 'definitional thicket' (Zucker, 1987: 457).
Haveman and David (Chapter 24 this volume) Moreover, any attempt to arrange nearly 30
point out, institutional theory has dominated years of research and theorizing can be
submissions to the Organization and Manage- challenged. Ours, we admit, is a subjective
ment Theory Division of the Academy of arrangement and our procedure means we
Management. may miss hidden nuggets. Nevertheless, there
But what is it? And why is it so are some reasonably obvious temporal
popular? What aspects of organizational signposts. Thus, we begin by examining the
behaviour does it address? And how well does period between 1977 and 1983, when several
it do so? papers established the foundations of the 'new'
institutionalism.
 3
Foundations: 1977-83 Following Weber, Meyer and Rowan were
interested in the rationalization and diffusion
The conceptual foundations of modern orga- of formal bureaucracies in modern society,
nizational institutionalism were established in which they saw as arising from two condi-
the works of Meyer and Rowan (1977), tions: 'the complexity of networks of social
Zucker (1977), Meyer and Rowan (1983), organization and exchange' and 'the institu-
DiMaggio and Powell (1983), Tolbert and tional context' (1977: 346). Most attention,
Zucker (1983), and Meyer and Scott (1983). both in their paper and in subsequent work,
Collectively, these papers set the course for was given to the institutional context, but it is
much of the next three decades, although, as worth remembering that 'relational' networks
we shall note, many of the works that fol- were seen as important influences. Meyer
lowed were sometimes selective in their (1977) and Scott (1983), for example,
interpretations. anticipated that complex networks of
In the late 1970s, prevailing perspectives interactions between organizations would
within organization theory largely portrayed increase the occurrence of rationalized myths,
organizations as agentic actors responding to that complex and conflicted fields would give
situational circumstances. Senior managers rise to a greater variety of organizational
steered organizations by interpreting their forms, and that field complexity would
contexts and taking appropriate actions. increase the likelihood of myths becoming
Structural-contingency theory saw organiza- codified into formal regulations and laws.
tions adapting to circumstances of scale, task Finally, they pointed out that rationalized
uncertainty and strategic scope by appropriate myths are diffused through relational
selection of structural arrangements. networks. Networks/fields are thus both
Resource-dependence theory analyzed how antecedents of rationalized myths and
organizations sought to affect the supply of vehicles for their transmission (most clearly
critical resources by managing their depend- set out by DiMaggio & Powell, 1983 - see
encies on other organizations (e.g. by careful below).¹
placement of directors). Even the behavioural Nevertheless, the idea that captured the
theory of the firm assumed adaptation to imagination was that organizations are influ-
market and performance circumstances, albeit enced by their institutional context, i.e. by
within the limits of bounded rationality. widespread social understandings (rational-
Ecological theory was the exception, empha- ized myths) that define what it means to be
sizing the inability of organizations to be rational. Elsewhere, and less prosaically,
adaptively managed, although even in this Meyer and Rowan (1983: 84) referred to the
case the problem was not that managers could institutional context as 'the rules, norms, and
not effect organizational adaptation, but that ideologies of the wider society'. Zucker
they could not do so quickly enough. Each of (1983: 105) looked to ‘common
these theoretical perspectives focused on the understandings of what is appropriate and,
relationship between an organization and its fundamentally, meaningful behaviour'. And
environment and examined how organizations Scott (1983: 163) offered 'normative and
adapted - or attempted to adapt - so as to cognitive belief systems'. The underlying
secure an appropriate 'fit'. The environment, focus of early institutional theorists, in short,
moreover, was the 'technical'/market setting, was the role of shared meanings, institutional
much as assumed in accounts provided by processes (such as cultural prescriptions,
economists, and the behaviour of executives Zucker, 1977) and institutional conformity.²
(organizations) was intendedly (if boundedly) Because organizations are expected to
rational. It was against this context that Meyer behave rationally, Meyer and Rowan pro-
and Rowan's (1977) celebrated paper posed that rationalized myths are accepted as
appeared. prescriptions of appropriate conduct.
4
Organizations conform to them - i.e. become equated institutionalized organizations with
isomorphic with their institutional context in the not-for-profit and governmental sectors,
order to signal their social fitness and gain precipitating a particular stream of research
legitimacy in the eyes of critical constituen- (see below) that contrasted organizations in
cies. It is by 'appearing to be rational' (Scott, highly institutionalized settings with those
1983: 160) that organizations avoid social where institutional influences were presumed
censure, minimize demands for external to be much weaker. Later, institutional ideas
accountability, improve their chances of would be unapologetically applied to all
securing necessary resources and raise their organizations, and technical contexts would
probability of survival. be treated as institutional constructions.
However, it was believed that conforming Given the originality of Meyer and
to institutional rules might conflict with the Rowan's (1977) paper, it inevitably contained
requirements of technical efficiency (Meyer underdeveloped themes and some conceptual
& Rowan, 1977: 310; Zucker, 1987: 445). ambiguities. There was, for example, no
Therefore, conformity may be ceremonial, 'a definition of 'institution'. Instead, the reader is
form of confidence game' (Pfeffer, 1982: 246) left to assume that institutions are taken-for-
producing 'surface isomorphism' (Zucker, granted rationalized myths. Other definitions
1987: 672). Ceremonial conformity is of 'institution' appeared early in the
achieved by deliberately decoupling symbolic institutional literature, with inevitable later
practices from the organization's technical confusion. One definition referred to
core. Decoupling occurs, in other words, if institutions as types of organizations, such as
the prescriptions of institutional contexts are prisons, mental hospitals, nursing homes, and
contradictory to the exigencies of technical orphanages. Another definition referred to
contexts. Ceremonial conformity may also institutions as sectors (see Hasse & Krücken,
occur because institutional contexts are often Chapter 22 this volume), such as 'education',
pluralistic and inconsistent (an observation of 'büsiness', and 'armies'. A final definition
some theoretical significance, as will be echoed antecedent work (e.g. Hirsch, 1975),
shown later). The idea set out in the 1977 equating institutions with the major agencies
paper, that institutional prescriptions run of the political economy (e.g. unions, the
counter to efficiency considerations, was professions, regulatory agencies of the State).
qualified by Meyer and Scott (1983), who It is thus not surprising that Haveman and
referred to institutional and technical David (Chapter 24 this volume) should
exigencies as dimensions that can vary in challenge institutionalists 'to reach agreement
their relative salience within a given setting. on the meaning of central constructs and wean
A more fundamental challenge would come themselves from using the vapid term
from Carroll, Lee and Rao, (1986; see also institution, which means everything and
Meyer, Scott & Strang, 1987; Zucker, 1987; therefore nothing'. (For a contrary view, see
Powell, 1991) who pointed out that technical Czarniawska, Chapter 32 this volume.).
contexts (e.g. markets) are themselves insti- Our purpose here is not to provide the or
tutionally defined. even a definition of institution; rather, we are
All organizations were envisaged as sub- interested in tracing how others defined it
ject to institutional influences, but not to the over the past 30 years. Nevertheless, and for
same extent. Organizations whose technolo- the record, we understand the term to refer to
gies are not clearly linked to given outcomes more-or-less taken-for-granted repetitive
and whose outputs are difficult to evaluate are social behaviour that is underpinned by nor-
particularly sensitive to the need to appear mative systems and cognitive understandings
rational (Meyer & Rowan referred to them as that give meaning to social exchange and
institutionalized organizations). Perhaps not
surprisingly, much early institutional work
 5
thus enable self-reproducing social order. 'Institutionalization' and 'institutionalized'
Institutions are characterized by lack of overt were defined by Meyer and Rowan.
enforcement, their survival resting upon 'rel- Institutionalization is the process by which
atively self-activating social processes' 'social processes, obligations, or actualities
(Jepperson, 1991: 145; see also Zucker, come to take on a rule-like status in social
1977). Although institutions exist at the level thought and action' (Meyer & Rowan, 1977:
of the individual (e.g. a handshake in western 341). Something is 'institutionalized' when it
societies), the organization (e.g. the use of has that rule-like status. In a famous turn of
formal accounting controls, particular struc- phrase, Zucker concluded that institutional-
tures, and impersonal personnel practices), the ization means that 'alternatives may be liter-
field (e.g. hierarchies of status between ally unthinkable' (1983: 5). Tolbert and
categories of occupations or between organi- Zucker (1983: 25) suggested three indicators
zations that affect hiring patterns and of institutionalized practices: they are widely
alliances), or society (e.g. a legal system followed, without debate, and exhibit
based upon due process), organizational permanence.
institutionalism is primarily interested in The notion of institutionalized behaviour
institutions and institutional processes at the as something widely practiced and taken-for-
level of the organization and the organiza- granted, however, was not entirely unam-
tional field (although not exclusively - see, for biguous. On the one hand, Meyer and Rowan
example, Djelic & Quack, Chapter 11; Drori, referred to 'binding' and 'powerful institu-
Chapter 18; and J. Meyer, Chapter 34 this tional rules' that are 'in some measure beyond
volume). the discretion of any individual participant or
Meyer and Rowan also omitted to provide organization' (1977: 344). Similarly, Tolbert
a formal definition of 'institutional context', and Zucker (1983: 22) referred to
other than that it contains rationalized myths. organizations as 'captives of the institutional
Tolbert (1985: 2) followed suit: 'widespread environment in which they exist'. In this
social conceptions of appropriate organiza- imagery, institutions are 'environments' that
tional form and behaviour constitute the insti- are 'out there' and to which organizations
tutional environment of organizations'. As we respond (Zucker, 1987). Zucker (1977), in a
note below, over the next two decades 'institu- perceptive and rigorous application of Berger
tional context' would continue to prove a trou- and Luckman's (1967) ideas, insisted that
blesome concept, partly because the term was ideas and practices are institutionalized when
used to cover two very different ideas - con- they have achieved the attributes of exteriority
text as symbolic/cultural influences (as in the and objectivity. As such (and this is a
Tolbert quote), and context as the regulatory distinctive feature of Zucker's account),
framework of state and professional agencies institutionalized acts require no monitoring or
(e.g. Scott & Meyer, 1983). The latter enforcement but persist solely through
approach is closer to that of institutional econ- transmission from one generation to another.
omists than to our reading of Meyer and Yet, on the other hand, notions of ceremo-
Rowan (1977). To us, accounts of how regu- nial adoption and decoupling imply foresight
latory agencies (institutions) shape organiza- and choice. Even more striking are statements
tional behaviour are incomplete institutional that 'organizations ... often play active roles in
explanations unless they show how regulatory shaping [institutional] contexts' and that
frameworks embody, enact or transmit 'powerful organizations attempt to build their
societal norms and values. Otherwise, goals and procedures directly into society as
referring to regulatory frameworks as 'the institutional rules' (Meyer & Rowan, 1977:
institutional context' risks confusing 29-30). Similarly, when Meyer and Rowan
institutional theory with resource-dependence advise that in highly institutionalized
or political-economy explanations.³
6
contexts managers need to exercise 'sagacious That idea arose from DiMaggio and Powell
conformity' if they are to understand (1983), who began from the same motivation
'changing fashions and governmental pro- as Meyer and Rowan, namely, to understand
grammes', they imply a lever of active man- the rationalization of modern society. But
agement as organizations adapt to their DiMaggio and Powell reframed this question
institutional environments. Rao and Kenney's into: 'why is there such startling homogeneity
examination (Chapter 13 this volume) of new of organizational forms and practices?' (1983:
forms as settlements is a compelling 147). The answer, they proposed, resides in
illustration of this active management as an the structuration of organizational fields. As
antecedent to institutionalization. This recip- fields mature, 'there is an inexorable push
rocal tension between institutions as culturally towards homogenization' as 'powerful forces
hegemonic (with organizations 'bound' by emerge that lead them (organizations) to
taken-for-granted rationalizations) and become more similar to one another' (1983:
institutions as enacted and reconstructed (with 148). Homogenization, point out DiMaggio
organizations responding 'strategically' to and Powell, is field or sector-specific,
institutional pressures) is a 'long-standing although this does not preclude ideas diffus-
tension' (Hinings & Tolbert, Chapter 19 this ing across sectors because fields have their
volume) within sociology and thus, not sur- own histories and institutional processes.
prisingly, would become a central theme in Boxenbaum and Jonsson (Chapter 2 this
institutional thinking. volume) suggest that DiMaggio and Powell's
In outline, then, the basic elements of the emphasis upon field-level -structuration
institutional thesis put forward in the late processes was a nuanced advance from the
1970s and early 1980s were as follows: initial institutional statements, because it
'represented a move towards a more cognitive
and constitutive view of organizations'.
1. organizations are influenced by their However, DiMaggio and Powell's framing of
institutional and network contexts. The the problem was often misinterpreted by later
institutional context consists of rationalized researchers, who treated homogeneity as
myths of appropriate conduct;
2. institutional pressures affect all organizations
synonymous with institutional isomorphism,
but especially those with unclear technologies when in fact homogeneity is only one possible
and/or difficult to evaluate outputs. effect of institutional pressures and one that is
Organizations especially sensitive to not, in our view, a definitional one.4 We
institutional contexts are institutionalized elaborate upon this point later.
organizations; The most cited contribution of the 1983
3. organizations become isomorphic with their paper was its discussion of how institutional-
institutional context in order to secure social
approval (legitimacy), which provides survival
ization actually occurs. DiMaggio and Powell
benefits; proposed three 'mechanisms of diffusion':
4. because conformity to institutional pressures coercive, which occur when external
may be contrary to the dictates of efficiency, constituents - typically powerful organiza-
conformity may be ceremonial, whereby tions, including the State - cajole or force
symbolic structures are decoupled from an organizations to adopt an organizational ele-
organization's technical core; ment; normative, which arise primarily from
5. institutionalized practices are typically taken-
for granted, widely accepted and resistant to
professionalization projects; and mimetic,
change. which occur when uncertain organizations
copy others either because others' actions are
believed to be rational and/or because of a
These elements awaited empirical verifi- desire to avoid appearing deviant or back-
cation. ward. These mechanisms of diffusion are
The above summary contains no statement usefully considered as explaining the
that organizations converge upon the same
response to their institutional environments.
 7
motivation for adoption. Coercive isomor- narrowly whereas later work embraced a
phism occurs because organizations are widening array of issues and concerns. Thus,
motivated to avoid sanctions available to the initial line of inquiry looked at the adoption
of the bureaucratic organizational form within a
organizations on which they are dependent. given sector or field (i.e. at the process of
Normative isomorphism occurs because rationalization), whereas later inquiries looked
organizations are motivated to respect social at a wider range of organizational forms,
obligations. And mimetic isomorphism occurs practices and behaviours, and at the
because organizations are motivated by their construction of the field itself. But the central
interpretation of others' successful focus is the organization and its relationship
behaviours.5 As Mizruchi and Fein (1999) and with its context.
2. the essential answer provided by institutional
Boxenbaum and Jonsson (Chapter 2 this theory emphasized (and still emphasizes) the
volume) note, most empirical studies have play of widely-shared and taken-for-granted
been portrayed (often erroneously) as studies social values and ideas. As Meyer and Rowan
of mimetic isomorphism, although, as we note (1977: 346) famously put it: 'institutional theo-
momentarily, this is not necessarily indicative ries in their extreme forms define organizations
of institutional processes. Hasse and Krücken, as dramatic enactments of the rationalized
(Chapter 22 this volume) return to European myths pervading modern societies'. Critically,
the institutional explanation is not derived from
scholars - such as Luhman and Giddens - who the calculated self-interest of organizational
inspired early institutional theorists, in order actors, nor from the imperatives of instrumental
to show how institutional theory could functionality. Instead, the institutional
overcome simplified notions of homogeneity explanation emphasizes that organizations seek
and instead develop better explanations of legitimacy and survival not efficiency, and
heterogeneity and variation. highlights the role of cognition and obligation,
One insight in the DiMaggio and Powell not self-interest.
paper that was much less influential was the
connection between institutional processes
and 'the influence of elite interests' (1983: Early years: 1983-91
147). This insight was largely inspired by
Rordieu's notion of fields (e.g. Mohr, 1998).
The same theme is evident in Tolbert and Immediately following publication, most
Zucker (1983), and would be raised again by citations to Meyer and Rowan (1977) and
DiMaggio (1988). However, attention to the Zucker (1977) were incidental rather than
political consequences of institutional substantive. Authors simply acknowledged
processes would be largely lost in subsequent that social values affect organizations and/or
institutional work (and in much of that organizations adopt structures in order to
organization theory in general - see Stem & legitimize themselves.6 Often, these ideas
Barley, 1996; Perrow, 2002; Hinings & were juxtaposed against those of structural
Greenwood, 2002). contingency theory. Few attempts were made
To take stock. By 1983 the initial founda- to actually test institutional ideas and, overall,
tions of organizational institutionalism had Meyer and Rowan's influence was rather
been established. Two features are worth modest.7 North American reviews of organi-
emphasizing because they are defining themes zation theory that appeared in the early to mid
of our subject matter: 1980s gave sparse attention to institutional
work (e.g. Van de Ven & Joyce, 1981; Zey-
1. the central question addressed by early Ferrell, 1981; Astley & Van de Ven, 1983;
formulations of institutional theory was: Why Galaskiewicz, 1985). The very term
and with what consequences do organizations 'institutional' was not established. Fligstein,
use particular organizational arrangements that for example, referred to 'organizational
defy traditional rational explanations? As we homogeneity theory' (1985: 377).
will show, this question was initially
Galaskiewicz (1985) wrote of the literature
interpreted somewhat
'on legitimation'. Only Scott (1981) and
8
Pfeffer (1982) were sufficiently prescient to (means of transmission) explored how ideas
seriously acknowledge the institutional are transmitted across organizations.
perspective.
Outside of North America, Meyer and Processual studies
Rowan's ideas caught the interest of Swedish The most systematic and nuanced approach to
scholars who showed especial interest in the the institutional literature was initiated by
notion of decoupling (e.g. Brunsson, 1985, Tolbert & Zucker (1983) who looked at the
1989). Public sector reforms were observed to diffusion of civil service employment prac-
be primarily rhetorical in form and the goal of tices across US local governments over an
'modernization' was found to have little effect extended period. Adoption reflected incorpo-
upon operational practices. These empirical ration of practices 'modelled after the business
observations confirmed the Meyer and Rowan corporation, where personnel selection and
thesis of decoupling. But Scandinavian promotion were presumably based on merit ...
researchers also recognized that organizations ' (Tolbert & Zucker,8 1983: 25). A point
confront and handle multiple and worth emphasizing is that Tolbert and Zucker
contradictory institutions and expectations. explicitly identified the 'rationalized myth' -
Brunsson (1989), in particular, theorized on business efficiency via hiring based on
'organizational hypocrisy' whereby expertise - to which municipalities were
organizations 'talk' in one way yet act in responding. The logic of Tolbert and Zucker's
another in order to cope with contradictory study is that diffusion involves two stages,
contextual pressures. Scandinavian research each defined by the motivation for adoption.
also discerned what would later be referred to Early adopters of an idea are motivated to
as the 'translation' process (see Boxenbaum & improve operations, 'for example, by stream-
Johnsson, Chapter 2; Czarniawska, Chapter lining procedures or reducing conflict'
32; and Sahlin & Wedlin, Chapter 8 this (Tolbert & Zucker, 1983: 26), whereas later
volume). Despite these emerging themes, the adopters are motivated to secure social legiti-
impact of Scandinavian research upon North macy by appearing 'modern, efficient and
American thinking was initially rather slight. rational' even though the procedures were not
Gradually, the institutional thesis received especially functional. Tolbert and Zucker
fuller treatment and was 'confronted with data' interpret the second stage of diffusion to mean
(Scott, 2004: 464). But very quickly, studies that, as increasing numbers of organizations
claiming to be within the institutional adopt an innovation, the innovation itself
perspective showed a diversity of approaches becomes 'progressively institutionalized, or
and a rather casual use of the term institu- widely understood to be a necessary compo-
tional. We begin, however, with four sets of nent of rationalized organizational structure.
studies that clearly reflected the idea of insti- The legitimacy of the procedures themselves
tutions as rationalized myths. The first set serves as the impetus for the later adopters'
(which we label processual) demonstrated that (1983: 35). An important insight, here, is that
organizations are motivated to achieve it is the justification underlying adoption that
legitimacy by adopting practices widely signals whether an institutional effect is being
believed to be rational. The second (cross- observed. (Tolbert & Zucker did not actually
category) examined the proposition that measure whether late adopters were motivated
institutionalized organizations converge by legitimacy concerns, or whether they
around practices assumed to be rational. The secured it. They concluded that, because the
third (cross-national) compared practices in functional imperatives that explained early
different countries, testing whether distinct adoptions did not explain later adoptions,
cultural values result in different institutional processes must have been at
organizational behaviours. The fourth work. This is treating institutional theory as
the default option).
 9
The Tolbert and Zucker study was pivotal, (legitimated) ideas (myths) within an organi-
for three reasons. It was the first large-scale, zational field are associated with adoption of
quantitative, historical analysis of institutional particular organizational strategies and struc-
effects. It focused upon cognitive forms of tures. Third, Fligstein is not addressing the
legitimacy. And it set in train a series of Weberian question of why society is becom-
studies seeking to confirm the two-stage ing increasingly rationalized. Fligstein dis-
model of diffusion. This model was largely connected the study of institutional processes
but by no means always found in other from the study of rationalization. Thereafter,
studies, but is often treated as one of the basic the study of institutional processes was free to
insights of institutional theory. Zilber examine any aspect of organizational form.
(Chapter 5 this volume), however, raises the Finally, Fligstein offers an alternative to the
important caution that, by focusing upon the two-stage model of change, showing how
diffusion of structures rather than upon disruptive changes in legal frameworks enable
underlying motivations, there is a high risk shifts in organizational behaviours by altering
that erroneous conclusions will be drawn. patterns of incentives and opportunities (see
A second diffusion study with a historical also Baron et al., 1986; Edelman, 1990,
perspective9 was conducted by Fligstein 1992). This model of change, the exogenous-
(1987). Fligstein showed that the backgrounds shock model, became the dominant portrayal
of those holding top positions in large for the next two decades (see below).
corporations changed over the course of 60
years. From 1919 to 1939, manufacturing Cross-category comparisons
personnel dominated but thereafter were A series of studies, mostly from researchers
increasingly displaced, first by sales and from Stanford University (Pfeffer & Cohen,
marketing personnel and from 1959 onwards 1984; Tolbert, 1985; Baron & Bielby, 1986;
by finance personnel. Manufacturing person- Fennell & Alexander, 1987; Pfeffer & Davis-
nel dominated initially because firms were Blake, 1987; Eisenhardt, 1988) examined
largely non-diversified. But the emergence of Meyer and Rowan's (1977) idea that govern-
the multidivisional form led to the rise of the ment and non-profit organizations were more
sales and marketing function because that likely than commercial organizations to use
function was believed to have the appropriate employment practices presumed (by the
skill set for the new strategy. Then, anti-trust researchers) to be exemplary practices. By
legislation, which curtailed opportunities for and large, these studies supported the idea
vertical and horizontal diversification, pro- that not-for-profit organizations are especially
vided the conditions for unrelated diversifi- sensitive to institutional influences. A
cation to emerge as the dominant strategy and different observation was made by Baron,
the ascendance of finance officers. Fligstein's Jennings and Dobbin (1988), who tracked the
analysis is thus a broad one, but it contains a diffusion of modern personnel from man-
mimetic explanation of diffusion: 'once new ufacturing industries to service industries (i.e.
actors established themselves in one set of from a setting low in institutional sensitivity
firms, their counterparts in other firms were to one with high institutional sensitivity).
able to use that fact as a basis of gaining Baron et al. explained their findings by saying
power' (1985: 56). that once practices were extensively used in
Three features of Fligstein's study deserve manufacturing they became the standard of
recognition. First, he links control of the good practice. Another extension of cross-
organization to intra-organizational power category research was provided by Sheets and
struggles. Second, he never uses the terms Ting (1988) who showed that diffusion even
'rationalized myths' or 'legitimacy', but his within a category of institutionalized
study traces how generally accepted organizations is dependent not only
10
upon the need for legitimacy, but upon appropriate structures. Yet, in some ways, this
whether organizations are within networks explanation is the closest to the ideas of
that 'transmit normatively expected employ- Meyer and Rowan.
ment practices' (610). These cross-category
studies were discontinued by the end of the Other themes
decade. Other themes were explored but to a lesser
extent. Pfeffer and Davis-Blake (1987), in a
Cross-national comparisons rare study of consequences, examined how
A third approach hypothesized that social stereotypes of 'women's work' and its worth
values in different countries (especially those results in patterns of compensation that
that are relatively cohesive and isolated, such disadvantage women. Torres (1988) showed
as Japan), would use different organizational how professions shape regulatory structures
practices (for a review, see Lincoln & so as to preclude organizational forms
McBride, 1987). This approach directly chal- inconsistent with their interests. Imershein
lenged the structural-contingency assumption and Rond (1989), in a strangely neglected
of culture-free 'laws' of organizations. Lincoln paper, traced how competing societal values -
et al. (1981) compared the attitudes of 'altruism' and 'efficiency' - precipitated
Japanese and US workers in 28 Japanese- struggles between interest groups who
owned organizations located in the United promote different organizational forms and
States. They found that the two groups of how state regulators resolved these disputes.
employees preferred different organizational Not all studies were entirely supportive of
arrangements. Organizations with 'inappro- the institutional argument (see for example,
priate' structures, i.e. that did not reflect Pfeffer & Cohen, 1984; DiPrete, 1987; Finlay,
employee preferences, experienced employee 1987; Oliver, 1988). But most were.
dissatisfaction. Lincoln et al.'s study was the Moreover, evidence was collected from an
first in a series of studies through the 1980s array of practices, including personnel
that analyzed the effects of national culture procedures (Tolbert & Zucker, 1983),
(e.g. Bimbaum & Wong, 1985; Lincoln et al., boundary-spanning strategies (Fennell &
1986; Carroll et al., 1988; Hamilton & Alexander, 1987), corporate committee
Biggart, 1988). Evidence of cultural (institu- structures (Harrison, 1987) and accounting
tional) effects was usually found, but see practices (Covaleski et al., 1986).
Bimbaum and Wong (1985). Furthermore, evidence was taken from a
range of settings, including universities
Means of transmission (Pfeffer & Davis-Blake [add 1987]), hospitals
Showing the spread of practices per se does (Fennell & Alexander, 1987), school districts
not explain how institutional influences pen- (Strang, 1987), publicly traded corporations
etrate organizations, a question that began to (Baron et al., 1986), municipalities (Tolbert &
be addressed late in the 1980s (and even more Zucker, 1983), the long-shore industry
in the 1990s). Several means or agents of (Finlay, 1987), Hungarian agricultural co-
diffusion were observed, including operatives (Carroll et al., 1988), US federal
professional networks (Baron et al., 1986; bureaucracies (DiPrete, 1987), social welfare
Sheets & Ting, 1988), government agencies agencies {Oliver, 1988), and even the funeral
(Baron et al., 1986), management consultants industry (Torres, 1988). The sheer range and
(Ghoshal, 1988) and senior executives diversity of practices and settings was
(Harrison, 1987). Each of these means of dif- impressive, leading Zucker (1987: 443) to
fusion would be extensively examined in the comment that: 'institutional theories have
1990s. But one thesis not picked up was spread rapidly, a testimony to the power of
Lincoln et al.'s (1981) idea that structures are the imaginative ideas developed in theoretical
adopted because of employee expectations of and empirical work'.
 11
One reason for the expanding scope and organizations respond in similar fashion to
diversity of institutional ideas was their suc- institutional processes. Given this finding,
cessful juxtaposition with other theoretical Fombrun (1989: 439) rightly asked: 'If
perspectives. Initially, institutional accounts isomorphism obtains, how then are we to
were largely contrasted with structural- explain the apparent variety of organizations
contingency theory because of that theory's that nonetheless co-exist within industries...?'
assumption of efficiency as the key dynamic This question, we believe, points to the
driving organizational behaviour. But, later, confusion raised earlier over the idea of
institutional approaches were linked, often in isomorphism. As initially proposed, isomor-
a complementary way10 to resource depend- phism refers to the relationship between an
ence and population ecology (for a review of organization and its institutional context. But,
the 1980s, see Singh & Lumsden, 1990). Not isomorphism was (and still is, unfortunately)
all observers were impressed by these often taken to mean that all organizations will
theoretical overlaps (Zucker, 1989, 1991, pp. respond in the same way. Yet, organizations
104-5). Nevertheless, insights achieved by confront institutional contexts containing
combining institutional and ecological multiple and inconsistent myths that allow for
analysis (see Haveman & David, Chapter 24 multiple yet equally legitimate responses (a
this volume) and resource dependence theory feature explicitly recognized by Meyer &
continue to be productive. Rowan, 1977: 356 and by Scott, 1983: 161).
By the late 1980s, increasing references were
being made to the 'substantial discord' within
Taking stock: 1987-91 institutional environments rather than the
'effortless evolution of common sense
By the end of the 1980s, ambiguities in the understandings' implicit in earlier work
institutional story were becoming apparent, as (DiMaggio, 1991: 268; see also Imershein &
were issues that were not receiving adequate Rond, 1989; Baxter & Lambert, 1990).
attention (Perrow, 1986; Neilson & Rao, Further, it was recognized that
1987; Scott, 1987; Zucker, 1987, 1988; 'institutionalized myths differ in [their]
DiMaggio, 1988; Fligstein & Dauber, 1989; completeness' (Meyer & Rowan, 1977: 354),
Oliver, 1991; Powell & DiMaggio, 1991). providing scope for strategic choice in how
One concern was that the majority of studies they are interpreted (Scott, 1991). Finally,
had been of the public sector and not-for- Fligstein (1985) had shown that complex
profit organizations. Meyer and Rowan's def- organizations constitute arenas of struggle
inition of 'institutionalized organizations' as where groups compete for power and selec-
those with weak market forces had naturally tively appeal to institutional pressures to
turned attention to governmental and not-for- legitimate their claims. For all these reasons,
profit organizations. Towards the end of the the idea that organizations would become
decade, however, this overly narrow under- aligned with their institutional contexts in the
standing of where institutional processes same way became less acceptable.
would occur was being discarded as scholars Even if the institutional context is very
recognized that 'markets' were institutions. clear and uniform in its demands, it is not
We pointed out above that the first authors to clear that diffusion of any practice per se sig-
make this point were Carroll et al. (1986) but nifies an institutional effect. If a firm believes
Zucker (1987) and Powell (1991) strength- another to have superior knowledge and to
ened the call for examination of all types of have acted rationally, copying that firm is an
organizations.¹¹ act of vicarious learning, and, arguably, a
A second ambiguity surrounded the purposely 'rational' decision. In contrast, if a
concept of isomorphism. We noted earlier that firm adopts an innovation because it believes
several studies reported that not all that doing so provides legitimacy,
12
that behaviour is an institutional effect. hiring of expert staff, and use of personnel
(Several leading researchers - see Haveman & practices of a bureaucratic form. (Here we
David, Chapter 24 this volume, for example - see, again, the academic interest in rationali-
view legitimacy as a defining element of zation). After the War, personnel practitioners
institutional explanations). Convergence shifted their focus and claimed (successfully)
around a similar set of practices, in other that they had expertise relevant to the
words, could signal competitive or immediate post- War problems of labour-
institutional isomorphism¹² (see Haunschild & management relations such as productivity
Chandler, Chapter 26 this volume, for an measurement. Moreover, personnel officers
elaboration of this argument). But few mobilized themselves and began their
diffusion studies conducted in the 1980s made professionalization 'project' (Abbott, 1988).
this distinction (neither did those conducted in Baron et al.'s paper is a rich story of insti-
the following decade). Instead, tutional processes, embracing mimetic, coer-
'institutionalization' became associated with cive and normative mechanisms. But we wish
diffusion irrespective of the (unexamined) to highlight that it uses 'institution' in two
motivations for adoption. Moreover, it was ways. On the one hand, institutions are
assumed (wrongly) that a lack of convergence 'models' that become cultural prescriptions.
indicates the absence of institutional As such, institution is being used in the same
processes. way as it was by Meyer and Rowan (1977).
A third ambiguity concerned the nature of On the other hand, institutions are the regula-
an institutional explanation. We illustrate this tory agencies of the political economy. In this
ambiguity by summarizing an excellent paper second usage the institutional context is not
(Baron et al., 1986) that used 'institutional' in one of ideas and symbols but of agencies and
a rather different way to that put forward by policies. By the end of the 1980s, Baron et al.
the core foundational papers. Baron et al. set thus illustrate how the term institution had
out to 'sketch an institutional explanation' acquired two meanings: as rationalized myths
(1986: 352) of the spread of modern within a cultural context; and as a framework
personnel administration in the US during and of (primarily State) regulatory agencies and
after World War II. The explanation provided policies. The former is the focus of Meyer and
is that new personnel methods were adopted Rowan (1977). The latter would become the
when 'certain institutional pressures' favoured focus of the confusingly termed 'new
adoption. What were these 'institutional institutionalism' (see, for example, Ingram &
pressures'? During World War II, there was Inman, 1996; Ingram & Clay, 2000; Ingram &
increased federal intervention in labour Silverman, 2002). But, this latter form of
markets, especially through the War 'institutional explanation' need not (and in
Production Board and the War Labour Board. some later studies, did not) explicitly embrace
These agencies sought to stabilize employ- socio-cultural elements. Instead, institutions
ment and reduce turnover in industries critical would be defined, simply, as the regulatory
to the War effort by encouraging firms to framework. The diffaculty, with this usage is
adopt particular employment practices. that it fails to separate an institutional from a
Moreover, the War Manpower Commission resource-dependence perspective. For us,
placed responsibilities upon firms for provid- inclusion of regulatory frameworks as
ing data on their manpower needs, which led 'institutions' is appropriate only if it is made
to increased use of job analysis and job eval- clear that those institutions embody taken-for-
uation. In effect, federal agencies were pro- granted societal norms and values, and if
viding 'models for personnel management' these values are explicitly identified. This
(1986: 371) underwritten by 'strong incen- distinction between institutions as cultural
tives' (1986: 373). These models included the prescriptions, and
creation of personnel departments and the
 13
institutions as regulatory frameworks, would 'strategic', depending on various contingen-
recur over the next decade and beyond. cies in the organization and its environment.
A fourth ambiguity concerned the basic Oliver's analysis identified possible strategic
questions that institutional theory seeks to responses and the likely antecedents of their
answer. The foundational papers ask why adoption.
there is an increasing rationalization of soci- Paradoxically, others believed that much
ety and use of bureaucratic organizational institutional work held an oversimplified
forms. But organization theorists are (more?) approach to agency. Neilson and Rao (1987)
interested in institutionalized patterns of criticized existing work for: 'treating legiti-
behaviour, irrespective of whether those macy as something to be managed in a func-
practices are indicators of rationalization. We tional sense by dominant coalitions. This
referred earlier to Fligstein's (1985) tracking creates the serious risk of oversimplifying
of the use of the multidivisional form, which legitimacy into a matter of marketing and
is an interesting question to organization the- effective presentation rather than approaching
orists. But it is not an application of the it as a complex process of socially con-
Weberian question of increasing rationaliza- structing reality' (1987: 525).¹³ (This
tion. The multidivisional form (M-form) is no observation, curiously, is particularly appro-
more an indicator of rationalization than is, priate today.) A key difference between these
say, the functional form that the M-form different standpoints is that Neilson and Rao
displaced, or the network form that followed. were criticizing images of agency carried out
This turning away from Weber's (and Meyer within an existing institutional setting,
& Rowan's and DiMaggio & Powell's) focus whereas DiMaggio was interested in how that
upon rationalization would be increasingly setting might be changed. For us, both
characteristic in the 1990s and would serve to criticisms had merit. Nevertheless, it was
expand the scope of institutional applications. widely assumed at the beginning of the 1990s
that institutional theory did not take sufficient
New directions? account of how actors (i.e. organizations)
DiMaggio (1988) complained that institu- were able to work on their institutional
tional work risked being marginalized unless context in order to promote their interests.
it could incorporate 'the reality of purposive, This imagery, however, increasingly sees
interest-driven, and conflictual behaviour' institutional contexts as 'out there', as
(1988: 5). Organizations, he rightly com- constraints on an organization, rather than as
plained, were portrayed as caught within the something with which the organization
constraints of institutionalized norms. interacts and thus constructs.
Consequently, institutional theory could not Another proposed new direction, put for-
explain fundamental change. To progress, ward by Powell (1991), concerned the conse-
DiMaggio argued, institutional theory would- quences of institutional behaviour. A core
have to incorporate an account of agency and assumption of the institutional story is that if
address a series of critical questions: How are organizations conform to institutionalized
new organizational forms created and legiti- norms, they gain legitimacy and improve their
mated? Who has the power to legitimate a survival prospects. But few studies in the
novel form? Who are the 'institutional entre- 1980s, other than those adopting the eco-
preneurs'? How are 'core institutions' logical perspective, examined whether
delegitimized? Building on DiMaggio (1988), conformity did generate legitimacy, and, if so,
Oliver (1991) incorporated resource-depend- with whom; nor did they examine whether
ence theory and suggested that organizational legitimacy led to organizational survival. One
responses to their institutional environment exception was Singh et al. (1986), who
may be proactive or even observed that endorsement by external agen-
cies (an indicator of legitimacy) reduced the
14
liabilities of newness of social service organ- institutional perspective. For example,
izations. Little attention was also given to the Richard Daft's best-selling organization
broader political consequences of institutional theory textbook referred to institutional theory
structures, even though, as we noted earlier, for the first time in the sixth edition,
the connection between institutional processes published in 1997. Admittedly, most text-
and elite interests was raised in several of the books referred to institutional theory more as
original formulations. This gap in research an interesting aside than as a core construct,
(exceptions included Baron et al., 1986; but by the middle of the decade the perspec-
Imershein & Rond, 1989; Baxter & Lambert, tive was firmly established as one of the cen-
1990) prompted DiMaggio and Powell (1991: tral approaches of organization theory (see for
30) to lament that 'power and interests have example, Aldrich, 1999). Moreover, in terms
been slighted topics in institutional analysis'. of research, the 1990s was a theoretically rich
There was, however, growing awareness period with an expanding agenda of
towards the end of the 1980s that applications and greater systematization of
organizations are not unitary entities and that ideas. Initially, there was a focus on showing
their responses to institutional processes may isomorphism and its dynamics. But, by the
be less homogeneous and less automatic than middle of the decade, attention had turned to
originally envisaged (e.g. Fligstein, 1985, the examination of legitimacy, typically
1987; Hinings & Greenwood, 1988). Looking accompanied by a more agentic approach. A
back, Powell commented that: ' ... much of the further line of research examined institutional
imagery of institutional theory portrays change, again often with an agentic approach
organizations too passively and depicts (as indicated by adoption of 'institutional
environments as overly constraining. There is entrepreneurship' as a central organizing
a wide range of institutional influences, and term). Finally, there was a renewed interest in
internal responses to these pressures are more the notion of 'institutional logics', which
varied than is suggested by our initial represented a welcome return to the
arguments.' (1991: 194; see also, DiMaggio, importance of cultural symbols. In other
1991). words, several of the challenges raised at the
In summary, as the decade turned institu- end of the 1980s were being addressed, but,
tional theory was clearly established within as we shall see, not all of them.
organization theory as a productive lens Before reviewing these research themes, it
through which to understand organization- is worth noting that the concept of institution
context interactions. But if the promise of continued to be troublesome and used in sev-
institutional theory was to be realized there eral different ways. As before, some
was a need to show the underlying motiva- researchers referred to cultural models, others
tions of institutional effects (rather than treat to the State or its policies, some simply
them as the default option), to pay greater avoided the term and pointed instead to
attention to (and explain) the variability of presumed institutional effects (e.g. mimetic
responses to conflicting institutional pres- behaviour). Godard (1999: 683), rather
sures, to incorporate more agentic and politi- politely, thought the theory had become
cal dimensions, and to explicitly look at how 'increasingly amorphous'. Davis et al. (1994:
institutions arise, change and with what con- 550), in similarly diplomatic tones, found the
sequences. Did this happen? meaning of institution 'somewhat unclear'.
Scott's (1995: xiv) masterful review noted that
'institution' had acquired new meanings 'much
Expanding horizons: 1991-2007 like barnacles on a ship's hull'. For most
theorists, however, the problem was put aside.
Most textbooks that appeared after 1991 Much like the early days of organization
would include some (albeit limited) theory, when a tacit
discussion of the
 15
agreement occurred to stop attempting to on instrumental grounds' (Davis et al. 1994:
define 'organization', there emerged an 551). This latter condition, however, is rarely
unwritten assumption that we intuitively insisted upon in empirical work (although, see
know what we mean by institution and thus Brunsson, 2006). Instead, institutionalization
have no further need to define it. has become accepted as the process whereby
Scott (1995) brought order to the various things become institutionalized, which, in
strands of institutional analysis by distin- turn, simply means that things are more or
guishing between the regulative, normative less taken for granted.14
and cultural-cognitive 'pillars' or elements that
underpin institutions. Analytically, these are Institutional isomorphism
separate elements and have been selectively Studies of isomorphism were salient in the
emphasized by different theorists. One early to mid 1990s and elaborated upon the
consequence has been the crystallization of processual and transmission studies of the
the two nascent approaches of the 1980s previous decade. The two-stage model was
(institutions as cultural models, institutions as examined, with mixed results. Despite this
regulatory frameworks), and, worryingly, an inconsistent support, the model began to be
increasing disconnect between them. In treated as having 'canonical status'
practice, as Scott later acknowledged, the (Schneiberg & Lounsbury, Chapter 27 this
three pillars are often found together but the volume). However, research in the 1990s
cultural-cognitive pillar provides 'the deeper increasingly recognized that institutional
foundations of institutional forms ... the infra- contexts were complex, often consisting of
structure on which not only beliefs, but norms competing institutional demands (see
and rules rest' (Scott, 2004: 5). For this Boxenbaum & Jonsson, Chapter 2; Hasse &
reason, Phillips and Malhotra (Chapter 29 this Krücken, Chapter 22; and Kraatz & Block,
volume) would prefer that researchers focus Chapter 9 this volume). There was thus
exclusively upon the cultural-cognitive, which growing interest in why and how organiza-
they declare as the distinctive insight of tions interpret and respond differently to their
organizational institutionalism. Scott, contexts.
however, urges researchers to specify which Three approaches developed to explain
pillars are operant in which settings, how they why organizations in general are more or less
unfold, and with what effects. Few receptive to institutional pressures. The dom-
researchers, however, have satisfactorily inant approach was structural and examined
operationalized the three pillars (Mizruchi & how institutional prescriptions are mediated
Fein, 1999) and in some instances (e.g. by an organization's position in a social (net-
Kostova & Roth, 2002) they are deliberately work) structure, with position defined by the
blended to form a composite 'institutional degree of centrality, status, or simply by ties
profile'. Nevertheless, Scott's pillars have to other organizations. Where you are, in this
become one of the most-cited contributions in approach, determines what you do. Interest
the institutional literature. was shown in which organizations serve as
The notion of 'institutionalized' was less models for others to copy, and in the means
troublesome, typically interpreted to mean by which information and/or expectations are
something that is widely used and more or transmitted. Board interlocks, 'perhaps the
less taken-for-granted. Davis et al. (1994), most-studied social structure in organization
following Zucker (1977), offered a useful but theory' (Davis & Greve, 1997: 12), were
tough definition, proposing that a practice or extensively examined. (A smaller number of
belief - is institutionalized if it is widely studies examined the role of spatial proximity
accepted without recourse to analysis as the but recognition of the role of geographic
best way of meeting technical requirements, communities became rather lost and has only
and, 'is able to withstand challenges based recently resurfaced).
16
An intriguing twist was provided by approaches. R. Meyer (Chapter 21, this
Westphal and Zajac (2001) who observed that volume) adds that US dominated institutional
network ties are not only conveyers of theory lost contact with some of its European
institutional pressures but conduits for theoretical 'forefathers'.
knowledge of how to avoid them. Another A second approach to understanding orga-
interesting study (Davis & Greve, 1997) nizational responses to institutional pressures
compared the diffusion of two practices - the looked at intraorganizational factors.
poison pill, and golden parachutes for CEOs - Greenwood and Hinings (1993) emphasized
and found that, although both practices that organizations are coalitions of diverse
diffused, they did so in very different ways. professional interests that contest which of
One diffused rapidly, the other more slowly. several institutional models (archetypes)
One diffused in linear form, the other in the should be adopted. Han (1994) identified the
classic S-curve. Further, the dynamics driving importance of status, observing that high and
diffusion were also different. This study, in low status firms are less likely than interme-
other words, highlighted the complexities of diate status firms to engage in mimetic
diffusion (which were thrown into relief by behaviour. Kossek et al. (1994) demonstrated
the comparative method) and considered the the effects of demographics and gender in
social processes whereby practices are shaping organizational responses. Beck and
actively justified to particular constituencies. Walgenbach (2005) turned attention to more
Both studies noted that organizations can act traditional contingency variables, such as
upon their institutional contexts (see also organizational size (which increases the like-
Davis & Anderson, Chapter 14 this volume). lihood of adoption) and technology (cus-
Although we are including the diffusion tomization decreases adoption). These and
studies of the early and mid 1990s as part of similar studies confirmed that organizations
the institutional story, these studies would are unlikely to respond uniformly to institu-
often combine institutional with organiza- tional processes, although the 'choice-set'
tional learning theory or network theory - (Greenwood & Hinings, 2006) of options is
Young, Chams & Shortell (2001) actually institutionally defined.
referred to the 'network/institutional per- Towards the end of the 1990s, a third
spective' - and it was not always clear whether approach, as yet not fully developed, turned
the authors' focal interest was diffusion or attention to notions of organizational identity.
isomorphism. Few studies, moreover, went How organizations respond to their contexts
beyond rates of adoption as indicative of is affected by how far institutional pressures
whether practices had become established and are consistent with the history and broader
taken-for-granted, even though, as Rao et al. norms that define an organization to its
point out, 'adoption is sometimes followed by members (Elsbach & Kramer, 1996; Fox-
regret and abandonment' (2001: 503). Wolfgramm et al., 1998; Labianca et al.,
Nevertheless, the diffusion of presumed 2001; Kostova & Roth, 2002). The relation-
institutional effects began to be treated as ship between institutional processes and
evidence of institutional processes, even organizational identity is complex and recip-
though the motivation and meanings rocal (see Glynn, Chapter 16 this volume)
underlying adoption were not established, and with institutionalized social categories and
even though it was rarely established that symbols providing the materials from which a
adoption was permanent ('internalized', to use claimed identity is constructed (who we are is
Kostova & Roth's term, 2002). Zilber defined by whom we profess to be like) and
(Chapter 5, this volume) attributes the neglect by which identity is displayed. Organizational
of meaning and process to the preference for identity, in other words, mediates how
quantitative, macro-level methodologies organizations interpret and respond to
rather than more interpretive, qualitative institutional expectations.15
 17
Implicit in the above three approaches, to a mid 1990s (e.g. Scott, 1995; Christensen,
greater or lesser degree, was the idea that Karnoe, Pedersen & Dobbin, 1997; Hirsch &
institutional models or prescriptions are 'out Lounsbury, 1997; Stinchcombe, 1997), was
there'. This assumption is clearest in the being answered. Research in the 1990s had
structural approach to diffusion, which basi- turned decidedly agentic and remained so,
cally tested whether a particular structural perhaps too much so, into the 2000s.17
form or technique was adopted or not. A very
different imagery, referred to earlier, is pro- Legitimacy
vided by the Scandinavian school, which If the motivating question of the 1980s had
emphasizes the diffusion of ideas through a been 'Why is there such startling homogeneity
process of 'translation' (see Czamiawska, of organizational forms and practices?'
Chapter 32 and Sahlin & Wedlin, Chapter 8 (DiMaggio & Powell, 1983: 147), one of the
this volume). Instead of treating institution- two motivating questions from the mid 1990s
ally prescribed structures and practices as 'out became 'How do organizations acquire,
there' and as adopted more or less 'as is', manage and use legitimacy?' (the second was,
translation assumes that ideas and practices How do institutional arrangements change? -
are interpreted and reformulated during the see below). We attribute this shift in attention,
process of adoption. Several studies in this at least partly, to the growing acceptance that
tradition focused on the interplay of translated neither institutional contexts nor
ideas and transformed organizational organizations are homogeneous. But it may
identities (Sahlin-Andersson, 1996; Sevón, also have been a response to the amplified
1996; Hedmo et al., 2006; Wedlin, 2006). appeal for inclusion of interests and agency.
Inevitably, translation implies deliberate and For example, one approach drew upon
accidental or unintended transformations of impression management theory to show how
ideas as they transfer from one setting to organizations acquired and sustained social
another, and the potential for continuous approval (e.g. Elsbach & Sutton, 1992;
adjustment and change, much as anticipated Elsbach, 1994; Arndt & Bigelow, 2000). A
in Giddens' notion of structuration. The rather different and interesting example of
Scandinavian approach was thus more faithful agentic behaviour is Westphal and Zajac's
to the social constructionist principles of (2001) study of why some organizations that
institutional thought. Early Scandinavian announce stock repurchase plans (announce-
contributions had been relatively ignored, but ments favourably received by investors) fail
pivotal statements by Czarniawska and Sevón to implement them (with the result that CEOs
(1996) and Sahlin-Andersson (1996) retain discretion over the allocation of corpo-
generated increased attention in North rate resources). According to Westphal and
America.16 These works observed that Zajac, the decoupling of announcements from
imitators are often motivated to become implementation was especially likely in
similar to other organizations and yet seek to corporations with powerful CEOs. In other
distinguish themselves. words, 'powerful actors mediate institutional
Studies of diffusion and translation clearly effects' (2001: 207; see also Zajac &
allowed for agentic action. Organizations Westphal, 2004). Again, we see the recogni-
were no longer presented as conforming to tion of agency and the role of interests in how
institutional demands, but as making sense of organizations respond to institutional pres-
them, adapting them, enacting them, and sures. (More recently, we see 'embedded
working upon them (e.g. Glynn, Chapter 16 agency' featured as a core characteristic of
this volume). This is a very different image to institutional logics - see Thomton & Ocasio,
that conveyed at the beginning of the decade, Chapter 3 this volume.)
indicating that DiMaggio's call for inclusion Renewed interest in legitimacy went hand
of agency and interest, a call amplified in the in hand with two developments. First, there
18
were attempts to give greater precision to Only a minority of studies during this
what the term means. Suchman's (1995) period explicitly examined whether conform-
classic statement distinguished between ity to cultural prescriptions delivered social
pragmatic, moral, and cognitive legitimacy, legitimacy and/or improved organizational
and identified the various audiences who survival chances and/or affected performance
confer it. Aldrich and Fiol (1994) separated in other ways. Early in the 1990s, studies that
sociopolitical from cognitive legitimacy. Ruef examined the consequences of conformity
and Scott (1998: 877) and Scott et al. (2000) largely concluded that legitimacy did, indeed,
crystallized (and in our view raised the follow conformity, but were less clear on
standard of the research bar) by declaring the whether performance was affected. Later,
need to specify much more clearly which several studies connected legitimacy
organizational elements are affected by positively with performance (see Deephouse
institutional processes, which audiences & Suchman, Chapter 1). Higgins and Gulati
confer legitimacy, and what form of (2003), for example, provided an insightful
legitimacy is being conferred. Interestingly, account of how legitimacy affects the ability
most studies that followed would point to of young firms to attract prestigious invest-
external audiences, such as the media and ment banks as lead underwriters for initial
professional associations; only a minority public offerings_ Arthur (2003; see also
noted the role of internal audiences (e.g. Staw Deeds, Mang & Frandsen, 2004) showed that
& Epstein, 2000; Pollock & Rindova, 2003). legitimacy gained from adoption of work-
The important point is that greater specificity family human resource initiatives affected a
was being introduced (see Deephouse & company's share price. Zimmerman and Zeitz
Suchman, Chapter 1 this volume). (2002) traced how legitimacy enabled new
Interest in legitimacy also led to a call for ventures to grow by assisting their acquisition
better empirical measures. Zucker (1989) had of resources. In sharp contrast, Kitchener's
questioned the use of density (the number of (2002: 411) study of academic health centres
organizations with a particular arrangement) in the US revealed that 'uncritical adoption of
and called for better proxies of cognitive managerial innovations can prove to be more
legitimacy. In the mid 1990s, this argument malignant than benign in their implications'
flared into a spirited debate between Baum and Denrell (2003) provided a theoretical
and Powell (1995) and Hannan and Carroll explanation for why mimetic behaviour will
(1995) with the former advocating use of result in poorer performance. A rather
richer and multiple measures, such as different take on the role of legitimacy was
certification contests, credentialing provided by Sherer and Lee (2002), who note
mechanisms, training programmes, and so that high legitimacy enables organizations to
forth. Despite these attempts to obtain greater deviate from established practices. Overall,
conceptual precision and more credible these results demonstrate the complexity of
empirical indicators, Foreman and Whetten the relationship between legitimacy and
would later complain that 'there is little performance.
agreement on how it (legitimacy) is defined
and/or measured' (2002: 623). Deephouse and Institutional entrepreneurship and change
Suchman (Chapter 1) reaffirm this complaint, DiMaggio's (1988) challenge that institutional
but also note, encouragingly, that efforts are theory should provide an account of
being made to use richer empirical indicators, deinstitutionalization and institutional change
such as media statements, certification and was met by a flurry of work. A pivotal
licensing, endorsements, and links to expression was the Special Issue of the
prestigious organizations. Academy of Management Journal (Dacin,
Goldstein & Scott, 2002). Later, institutional
entrepreneurship emerged as a key term and
 19
became almost synonymous with institutional analogies, i.e. existing cognitive frameworks
change. In fact, from the later 1990s the focus are used to make sense of ambiguous or novel
of institutional change was the construction events. Few studies have replicated this
and legitimation of new practices (see Hardy theme.
& Maguire, Chapter 7 this volume). Such was In contradiction to Leblebici et al.'s idea of
the appeal of this proposed research agenda endogenously driven change, most North
that understanding institutional American19 studies followed the assumption
entrepreneurship became a cottage industry of the 1980s that institutional change is trig-
from about 2000 and indicates, again, the gered by an exogenous shock or 'jolt' (Meyer,
currently strong agentic emphasis within 1982), whereby change happens as a
institutional work. Organizations became consequence of external factors 'smacking
treated as the independent rather than the into stable institutional arrangements and
dependent variable in processes of creating indeterminancy' (Clemens & Cook,
institutional change. 1999: 447). The exogenous shock model
An important early study6f institutional retains the image of highly institutionalized
change focused upon the organizational field. settings exhibiting stability and relative inertia
Leblebici, Salancik, Copay and King (1991) over long periods. Gradually, however,
took account of the variety of actors typically institutional fields came to be seen as more
embraced within the definition of field (actors conflicted and pregnant with suppressed
too often neglected in later studies that interests (see Hasse & Krücken, Chapter 22,
claimed to be field-level analyses) and and Wooten & Hoffman, Chapter 4 this
provided an insightful account of how inter- volume). And, as the 1990s ended, the exoge-
actions between them evolved within the US nous model was revitalized by the inclusion
radio broadcasting industry from its inception of social movement theory (see Davis &
in the early 1900s to the mid 1960s. The Anderson, Chapter 14; Schneiberg &
paper explicitly addressed the conundrum of Lounsbury, Chapter 27; and Rao & Kenney,
agency, asking how actors can reflect upon Chapter 13 this volume). Social movement
and change institutionalized practices in theory not only provides a language for
which they are embedded. Leblebici and his understanding how radically new ideas are
colleagues provided four important contribu- framed and theorized in order to further their
tions, three of which shaped the trajectory of acceptance, but assumes explicit contestation
subsequent research. First, they explicitly between actors whose interests are disadvan-
theorized at the level of the organization field, taged and repressed. All of these depictions
which became the level for institutional contrasted sharply with the portrayals of the
analysis (see Wooten & Hoffman, Chapter 4 1980s. Instead of institutional settings being
this volume). Second, they argued that the seen as highly stable, permanent and charac-
locus of change within a field is likely to be terized by conformity, they were now treated
'fringe' or peripheral actors because these as contested terrains contoured by variation,
organizations are less embedded within, and struggles and relatively temporary truces (or
less privileged by, existing institutional 'settlements', Rao & Kenney in Chapter 13).
arrangements.18 Third, they emphasized the This new imagery raised the profile of power
importance of 'internal contradictions' relations (see Lawrence, Chapter 6 and R.
(Leblebici et al., 1991: 337) that emerge as Meyer, Chapter 21 this volume).
fields develop, thus providing the starting One worry about the attention given to
point for an endogenous explanation of political struggles is that the institutional
change, an idea that remained largely ignored dimension sometimes recedes into the back-
until it was revisited by Seo and Creed ground. A critical contribution of institutional
(2002). Finally, Leblebici et al. (1991) noted analysis is its recognition that actors are not
how new technologies invoke use of motivated solely by self-interest.
20
Yet, at times, studies that analyze the strate- personnel professionals theorize responses in
gies used by actors/entrepreneurs to achieve ways that persuade managers to see the poli-
institutional change often ignore how and cies not as onerous 'red-tape', but as technical
why institutional forces shape the strategies ways of improving efficiency (for example,
accepted as appropriate and the choice of by securing a better fit between employee
strategies made by particular actors. Unless skills and job requirements). Theorizing com-
political processes are explicitly couched pliance in this way achieves two things. It
within an institutional context, the resultant enhances the value and status of the personnel
story becomes premised upon actors behaving profession (by reinforcing their interests);
quasi-rationally and knowingly pursuing their and, it links compliance to perceived
interests. For us, this would be a political or efficiency, giving it the status of 'rational'
resource dependence account, not an behaviour. Through these processes, in other
institutional one. words, practices become rationalized myths.
A very different and important approach to Four features of the above studies deserve
institutional change followed the definition of highlighting. First, they offer a rich account of
institution as the apparatus and policies of the the dynamics of change. They show how
State (Edelman, 1990, 1992; Dobbin, 1992, legislation creates interests (e.g. the profes-
1993; Edelman, Abraham & Erlanger, 1992; sions, or new industries) which construct
Dobbin, Sutton, Meyer & Scott, 1993; compliance behaviours. They show how pro-
Edelman, Erlanger & Lande, 1993; Dobbin & fessions use legislation to enhance their
Dowd, 1997, 2000; Edelman & Suchman, influence and scope of activity. They look at
1997; Edelman, Uggen & Erlanger, 1999). A the role of power both within and between
sub-emphasis within this perspective was the organizations and industries. Second, these
relationship between organizations and the studies began to show that legislation is not
law. There is much to admire in these papers. simply a structure of incentives and opportu-
One theme is that laws and regulations create nities but a reflection of cognitive schema that
and/or enhance interests. Dobbin (1992), for are historically contingent. As Edelman and
example, showed how legislation encouraged Suchman (1997: 482) put it, 'organizations
development of the private insurance instrumentally invoke or evade the law' and
industry. Edelman (1992) linked legislation 'look to the law for normative and cognitive
on 'due practice' to the evolution of the guidance, as they seek their place in a socially
personnel profession. Once established, these constructed cultural reality'. As such, these
interests/agencies make it difficult to reverse studies began to combine the two definitions
public policy (a point initially made by Baron of institutions (i.e. institutions as regulatory
et al., 1986). Another theme is that frameworks, and institutions as cultural
professionals interpret public policy and models). Third, these studies discussed how
develop responses that, after legal testing in policies and practices become constructed as
the courts, diffuse across the profession. In enhancing efficiency and thus as 'rational'
this way, organizational responses converge behaviour, and thus eventually taken-for-
and become reproduced through professional granted. Finally, these studies do not assume
networks and enforced by the mechanisms of that new practices/models already exist.
professional discipline. Interpretations of, and Instead, they point to the reciprocal
responses to, public policy are in part relationships involving professions, regulators
constituted by the implicit models embedded and organizational managers in constructing
within the legal system (e.g. conceptions of business models in response to ambiguous
fair treatment, due process, etc.). Such legislation. As Scott (2004: 9) notes, 'this
interpretations resonate with legal institutions implies a transmutation over time of
such as the Courts, enhancing their regulative into normative and cultural-
acceptance and thus legitimation. Further, cognitive elements'.
 21
Much of this work failed to become incor- Dobbin work, to draw upon institutions as
porated into the majority of studies that have regulatory structures (although not coercively
appeared in the organization and management enforced) and institutions as cultural
journals. For example, of the 12 articles on expressions. Second, much of the work points
institutional change published in the Special to transnational agencies as the source of soft
Issue on Institutional Change of the Academy laws and traces the diffusion of practices
of Management Journal (Dacin et al., 2002), across societies.20
only four refer to either Dobbin or Edelman
and none provides a full account of how those Institutional logics
authors combined regulatory and cultural The introduction of institutional logics into
notions of institutions. Most work has contemporary institutional theory is com-
continued to treat the regulatory institutional monly attributed to Friedland and Alford
processes as synonymous with coercive (1991), who were concerned to move institu-
processes arising from the power of state tional thinking forward by incorporating an
agencies or from organizational hierarchies, explanation for institutional change. They
and thus has basically collapsed this proposed that modern capitalist societies have
component of institutional analysis into 'central institutions' that have 'potentially
resource dependence theory, ignoring the incompatible' institutional logics. It is the
more nuanced approach of Edelman. In short, incompatibility of logics that provides the
two discrete institutional communities have dynamic for potential change. The picture is
developed, each drawing on different of actors recognizing opportunities for change
predecessor works and each being cited by because of their location at the interstices of
different colleagues. conflicting logics and instigating change by
There is a risk of a third discrete commu- 'appealing' to these logics. Thornton (2004)
nity. Scandinavian research over the last developed these ideas furthest and refined the
decade has focused not upon the role of the list of central institutions.
State, but upon the emergence of 'soft' regu- Thornton and Ocasio (Chapter 3, this
lations (e.g. Mörth, 2004; Djelic & Sahlin- volume) caution that the term 'institutional
Andersson, 2006). For these theorists, the logic' is in danger of becoming 'a buzz word'.
institutional change of interest is the dis- Moreover, and as is usual in institutional
placement of coercive, state-level regulations work, definitions and usage vary. An
by more voluntary regulations such as stan- important distinction is between those, such
dards (Brunsson & Jacobsson, 2000), rank- as Thornton, who retain the idea that logics at
ings (Wedlin, 2006), and accreditations the field level are nested within higher-order
(Hedmo, 2004). These softer regulatory societal institutional logics, and others (the
structures are developed and applied by non- majority) who identify logics within a field
governmental agencies (note, for example, the without referencing their societal patronage.
influence of The Financial Times and of Despite these differences, as the century
accreditation bodies such as the AACSB upon turned, exploration of how institutional logics
business schools!) and elicit compliance shape organizational behaviours and how
because they provide legitimacy (Djelic & those logics are historically dependent
Sahlin-Andersson, 2006). Two features of this became a vibrant research theme. As
work are worth noting. First, it represents Thornton and Ocasio (Chapter 3 this volume)
another attempt to bridge the two definitions point out, a clear implication of the logic
of institution. Because of their voluntary construct is that there will be variation across
nature, soft regulations only work in sectors, fields and historical periods, contrary
conjunction with relative cultural homo- to the later ideas of Meyer (e.g. see Drori,
geneity. There is, therefore, in this work, the Chapter 18 this volume).
same attempt observed in the Edelman and
22
TAKING STOCK political actors, operate upon their environ-
ments for either instrumental or social gain.
Tracing the historical developments of insti- In the third period (1991 to the present),
tutional theory from 1977 to the present, we we have argued that the most conspicuous
have sought to reflect on the most prominent theoretical developments surrounded
themes and constructs that continue to define institutional isomorphism (as a more complex
the distinctive substance of the theory's con- phenomenon inclusive of network-, intra-
tribution. To that end, we analyzed three time organizational-, identity- and translation-
periods. The foundations period, from 1977 to based responses to institutional pressures);
1983, laid the substratum of important legitimacy as agency (together with
constructs - institution, institutional context, clarification of the construct by Suchman,
institutionalization, and isomorphism - upon 1995); institutional entrepreneurship and
which the initial articulations of the theory change (embracing the characterization of
were built. Where construct definition was organizations and their fields as conflicting,
lacking in the literature during this period, we contested, or legally constituted terrain); and
have offered our own. Five basic elements of institutional logics. Furthermore, empirical
institutional theory during this period were work had broadened to include a wider range
summarized, together with our interpretation of industries and practices (although hospitals
of the overall questions and potential answers were a favoured site!). By the end of the
which institutional theory examined and, period, much of the theoretical story had been
importantly, continues to examine, thereby confirmed by the detailing of previously
giving coherence and continuity to a inferred steps (e.g. by showing how ideas
perspective which has otherwise proliferated move between organizations and which
in multiple directions across diverse empirical organizations serve as models). The com-
settings and topics. plexity of institutional effects had been rec-
The second time period, 1983 to 1991, ognized (e.g. that not all organizations
revealed the development of four areas of succumb easily to institutional processes, that
study - processual, cross-category, cross- the dynamics and pacing of diffusion can vary
national, and means of transmission - by type of innovation, that the dynamics of
encompassing, respectively, diffusion, com- adoption are different to those of abandon-
parisons between State or nonprofit agencies ment, and that the intensity of institutional
and commercial organizations, national cul- processes varies over time). Insights into
ture, and the role of networks, consultants and institutional change had been much advanced,
executives in transmitting or communicating although emphasis primarily remained on
institutional values and beliefs. During this exogenous explanations. These were all
period, researchers also initiated combinations important elaborations. Moreover, attention
or juxtapositions of institutional theory with had begun to turn towards highly significant
other perspectives (resource dependence issues: the emergence (and disappearance) of
theory, population ecology, for example). organizational forms; the creation of markets;
Ambiguities emerged around the meaning of the adoption and abandonment of market
isomorphism (occasionally misapplied as strategies; the interaction of organizational
inevitable homogeneity) and institutional behaviour and financial markets; the adoption
context (as cultural prescriptions versus of affirmative action in organizations and the
regulatory policies, the latter being defensible determinants of workplace violence; the
as an institutional construct only insofar as institutional antecedents of environmental
they reflect societal norms and values). management and sustainability. These are
Nonetheless, this period, we suggest, also important issues within organization theory.
spawned material insights into how Aldrich (1999: 53), for one, concluded that:
organizations, as active agents and 'Despite
 23
pressures from applied fields to focus on same point, accusing researchers of 'measur-
narrow issues such as efficiency and intraor- ing only the outcome while assuming the
ganizational problems, institutional theory has process'. Mizruchi and Fein (1999) also noted
succeeded in expanding organizational that most researchers report their findings as
studies' scope and vision'. Clearly, there has evidence of mimetic effects but use empirical
been no withering of institutional effort. measures that could just as easily be
As the literature of the 1990s and the interpreted as reflecting normative and/or
present decade gave expression to a startling coercive processes. These criticisms, unfor-
outgrowth of the theory's explanatory possi- tunately, still apply (cf. R. Meyer, Chapter 21
bilities, the introduction of Scott's (1995: this volume). Nevertheless, mimetic behav-
2001) three pillars and his accompanying iour is assumed (wrongly) within organiza-
magisterial review of the field brought an tional theory as indicative of institutional
impressive (and influential) integrative focus processes and as empirically confirmed.
to the most generative period of institutional Haunschild's (1993) study, for example, is
theory's development. Nevertheless, the extensively cited as evidence of institutional
broadening scope of institutional applications mimesis but only a minority of those doing so
heightens the risk of theoretical incoherence. have acknowledged Haunschild's own
However, before drawing our own cautious interpretation of her results.
conclusions about the current status of insti- For this reason, future research might
tutional theory, let us first suggest directions benefit from more nuanced explanations of
(the whithering) for future research and then the processes behind, and reasons for,
reflect in the Conclusions on our level of mimetic behaviour. Research should attempt
optimism around the question initially posed to interpret and identify the institutional
about the extent of coherence versus prolifer- logics (Thomton, 2002; Thomton & Ocasio,
ation in the theory's future. Chapter 3 this volume) or structures of shared
values and beliefs that induce and propel
imitation (cf. Czarniawska, Chapter 32 and
New directions? Sahlin & Wedlin, Chapter 8 this volume).
Another approach might be to contrast the
We suggest eight directions for future literature on bandwagon effects (Abrahamson,
research. These reflect both our concerns 1996; Henderson & Cool, 2003) with current
about the state of institutional theory and our knowledge of mimetic isomorphism to
reading of the recent growth in interest of illuminate with more subtlety and accuracy
particular research areas. the distinction between technically rational
First, although some progress has been and legitimating motivations of organizational
made, studies still struggle to relate institu- imitation. In the interests of broadening
tional processes to learning and to clearly attention beyond mimetic processes, further
separate institutional effects from vicarious elaboration of coercive and normative
learning (competitive isomorphism). By and mechanisms also appears warranted (Kock,
large, diffusion studies have continued to 2005; Haunschild & Chandler, Chapter 26
assume that convergent behaviour indicates this volume). For example, recent theory
the functioning of institutional processes (see development applying an institutional
Haveman & David, Chapter 24 and Zilber, perspective to government and policy making
Chapter 5 this volume) even though, at the has begun to illuminate government efforts to
beginning of the. 1990s, Haunschild had overturn or reinterpret bargains with foreign
pointedly remarked that: '[w]e know that investors (Henisz & Zelner, 2005). The
acquisitions are imitated, but we don't know institutional literature's rather selective
why' (1993: 588). Later in the decade, emphasis on imitative or vicarious learning
Mizruchi and Fein (1999: 664) made the also invites a broader
24
application of the theory to other forms of processes' (Zilber, 2006: 281). Translation, as
organizational learning, and it may be partic- previously noted, refers to the transformation
ularly relevant to the current emphasis in the of ideational and material objects within and
organizational learning literature on learning during the process of adoption, diffusion,
through exploitation (replication or refine- and/or institutionalization (Czarniawska &
ment of existing routines) versus exploration Joerges, 1996; Czarniawska & Sevón, 2005;
(concerted variation and experimentation) Zilber, 2006). Its emphasis on the symbolic
(March, 1991; Gupta, Smith & Shalley, aspects of institutionalization (Sahlin-
2006). Just as the replication of existing rou- Andersson, 1996), the complexities sur-
tines may be partially explicable by institu- rounding the construction of rational myths,
tionalized, legitimized or taken-for-granted and the travel of ideas across organizational
understandings, so too may learning through fields (Rao, 2004; Djelic & Sahlin-Andersson,
exploration occur along entirely new trajec- 2006; Thornton & Ocasio, Chapter 3 this
tories through the intervention of institutional volume), offers the promise of more rich and
entrepreneurs (Maguire, Hardy, & Lawrence, detailed insights into how institutional
2004; Greenwood & Suddaby, 2006). These practices and processes migrate and diffuse
theoretical conjectures, however, await across fields and over time.
empirical validation. Another timely extension to future
Second, many studies have been research on diffusion might draw inspiration
parsimonious in their account of institutional from Sanders and Tuschke's (2007: 33) study
processes. Meyer and Rowan's (1977) of diffusion across distinct fields, particularly
emphasis upon taken-for-granted cultural in cases where practices spread 'from one
models has become somewhat reduced in institutional environment, where it is widely
some accounts to mapping the diffusion of prevalent and taken-for-granted, to another
highly specific managerial practices, or, in environment, where its introduction violates
later studies, to organizational foundings. all three of Scott's pillars of legitimacy'. The
Many of the earlier diffusion studies, in par- possibility of viral institutional diffusion that
ticular, tended to tell a less expansive story, jumps from one institutional field to another,
deploying large-scale analysis to rigorously where its spread is unexpected, offers a more
examine very narrowly drawn hypotheses. rigorous test of the power and limits of insti-
Stinchcombe (1997) was particularly critical tutional diffusion and the coercive, normative
of the tendency to 'mathematize' institutional and cognitive forces underlying diffusion
effects, accusing its proponents of missing trajectories that are sufficiently powerful to
'the guts' of institutional influences. infiltrate unexpected terrain. As Sanders and
Not all diffusion researchers have Tuschke (2007) observe, we may also
restricted their attention to specific manage- generate new understanding about how
rial practices. D'Aunno, Sutton and Price organizations learn from multiple or differing
(1991), for example (see also Schneider, institutional contexts. Leicht and Fennel
1993), compared the adoption and the conse- (Chapter 17 this volume) examine an instance
quences of competing mental-health care of 'viral diffusion' in their analysis of the
models. These models have broad implica- diffusion of managerial logics and practices
tions, including the choice of organizational from the corporate sector to the professions.
form, the scope of professional status, and the Third, for the most part, institutional
kinds of technologies to be deployed. As work has remained stubbornly silent on issues
such, this study is very different in its scope of social power, although, as we noted above,
than most diffusion studies. It is also note- incorporation of social movement theory
worthy that 'recent theoretical developments holds considerable promise (e.g. Rao &
have moved from a "diffusion" to a "transla- Kenney, Chapter 13 this volume). There have
tion" model for understanding institutional also
 25
been some attempts to examine issues of An inviting door into the dark side of
stratification and entrenched patterns of dis- institutional processes comes from
crimination (e.g. Lucas, 2003), social position researchers who have applied institutional
(e.g. Battilana, 2006) and the relationship theory to sustainability and environmental
between institutionalized beliefs and patterns issues (e.g. Jennings & Zandbergen, 1995;
of intraorganizational privilege (e.g. Zilber, Hoffman, 1999; Hoffman & Ventresca, 2002;
2002). Suddaby et al. (2007) analyzed the link Bansal & Clelland, 2004; Bansal, 2005; Davis
between the Big Four accounting firms and & Anderson, Chapter 14 this volume). To the
non-governmental transnational organizations extent that sustainability researchers see
such as the World Trade Organization, and unresolved tensions between instrumental and
cautioned against the loss of professional moral solutions to environmental destruction,
accountability. But these remain rare institutional theory's refutation of exclusively
exceptions. Two examples, both of which rational economic motives of organizational
refer to the functioning of financial markets, behaviour may serve as a useful bridge to less
illustrate the relative neglect of elite interests instrumentally reasoned" and more socially
and social power. Hayward and Boeker justified bases for studying societal-level
(1998) documented how security analysts rate harm. In a suggestive case study of ISO
their firm's clients' securities more favourably standard adoption, Boiral (2007), for
than other analysts rating the same securities. example, examined corporate greening as an
These biases were concealed through institutionalized rational myth and revealed
symbolic acts (codes of ethics, Chinese walls) the extent to which the adoption of
that legitimated investment banks as environmental standards was a ceremonial
trustworthy and beyond reproach. (This and potentially hypocritical environmental
façade of legitimacy surrounding the strategy.
operations of professional service firms would Overall, however, we have limited
collapse some years later following the Enron understanding of how power, conflict and
affair). Westphal and Zajac (1998, 2001) fundamental social interests affect and are
analyzed how corporations adopt but fail to affected by institutional processes. There have
implement symbolic practices (such as long- been clarion calls for giving attention to the
range incentive plans for chief executives) in systemic structures of power and domination
order to appease shareholders and manipulate that define institutions and that privilege their
share values. On the one hand, this can be ruling elites. Useful frameworks have been
seen (as it was by Westphal & Zajac) as an advanced (e.g. Lawrence, Winn & Jennings,
example of decoupling. On the other, it could 2001; Hargrave & Van de Ven, 2006; Cooper,
be seen as willful manipulation of shareholder Ezzamel & Willmott, Chapter 28 and
perceptions in order to affect share prices. Lawrence, Chapter 6 this volume). But
Both of these studies, in other words, empirical work is badly needed. As suggested
uncovered the dark side of symbolic or by Hasse and Krücken (Chapter 22, this
legitimating behaviour - namely, the use of volume) and R. Meyer (Chapter 21, this
symbols to adversely affect certain societal volume) issues of power and conflict could be
interests while privileging others - but illus- more thoroughly understood if current
trate how we too often neglect to assess the conceptual tools of organizational institu-
societal consequences of institutionalized cor- tionalism were to be combined with the
porate behaviour. Fiss (Chapter 15 this closely related European sociology of knowl-
volume) extends this perspective by analyzing edge and system theories.
corporate governance through an institutional Fourth, most studies have portrayed
lens, observing how coalitions of actors con- institutional processes as fully formed
struct 'moral orders' that determine the power (Aldrich, 1999: 52) and underplayed Meyer
structure of corporations. and Rowan's (1977) emphasis that
institutional
26
contexts are socially constructed. Barley and with whom) change as fields mature (see also
Tolbert (1997: 93) attempted to redress this Owen-Smith & Powell, Chapter 25 this
imbalance, first by criticizing institutional volume). Anand and Watson (2004)
theory's neglect of how institutional arrange- demonstrated the role of 'tournament rituals',
ments are 'created, altered, and reproduced', such as the Grammy Awards, in field
and second by proposing incorporation of construction. Greenwood and Suddaby (2006)
Giddens' theory of structuration (for an early looked at professional associations as forums
attempt to do so, see Phillips, Lawrence & within which members of a profession define
Hardy, 2000). Barley and Tolbert's (1993) and theorize its appropriate boundaries.
central concern, that most researchers had Fligstein (2002) looked at how regulatory
simply assumed the existence of institutions, institutions and economic activity develop
was largely correct, although there were symbiotically and coalesce into stable fields.
exceptions. Edelman's work, for example, as Garud, Jain and Kumaraswamy (2002) traced
described above, clearly addressed institu- the tensions and political dynamics involved
tional creation, albeit at a much more societal in adoption of field-wide common
level than perhaps intended by Barley and technological standards. Brunsson and
Tolbert (1997). Suchman and Cahill (1996) Jacobsson (2000) looked at emerging
had traced how interactions between Silicon standardization procedures. Wedlin (2006)
Valley lawyers and their clients constructed looked at rankings of business schools and
and then reproduced normative models of Djelic and Sahlin-Andersson (2006)
appropriate behaviour in the venture capital explained the institutional dynamics of new
industry. Bacharach, Banberger and regulations (cf. Sahlin & Wedlin, Chapter 8
Sonnenstuhl (1996) had analyzed the this volume). All of these studies are steps
micropolitics of dissonance reduction that towards understanding processes of institu-
enabled transformational change within an tional construction. Powell and Colyvas
organization (see also Johnson, Smith & (Chapter 10, this volume) and Colyvas and
Codling, 2000). At a more macro-level, Powell (2006) elaborate key questions of this
Ingram and Inman (1996) had tracked how research agenda, including how categories
regulatory 'institution building' arose from and routines emerge, and illustrate how
collective action. By and large, however, archival materials may be used to address
institutional studies had not been overly con- them.
cerned with how institutions arise. Separating institutional construction
Following publication of Barley and (how institutions and fields emerge) from
Tolbert's paper, various developments institutional reproduction, is not easy and
addressed their concerns. The late 1990s saw more attention has been given to the former
early stirrings of interest 'discourse theory' than the latter. But an important and
(Phillips & Hardy, 1997; see Phillips & imaginative line of research is Zuckerman's
Malhotra, Chapter 29 in this volume), 'narra- exploration of 'categorical imperatives'
tives' (Czarniawska, 1997 and Chapter 32, (Zuckerman, 1999, 2000; Zuckerman & Kim,
this volume), and the role of 'rhetoric' 2003; see also Rao, Monin & Durand, 2003;
(Zbaracki, 1998; Suddaby & Greenwood, Durand, Rao & Monin, 2007). Zuckerman's
2005). Related work by Lawrence et al. work has a broader theoretical purpose, but it
(2002) examined how 'proto-institutions' rightly identified the failure of institutionalists
(institutions in the making) can evolve from to demonstrate 'that defying classification'
interorganizational collaboration. Powell, (i.e. deviating from socially accepted
White, Koput and Owen-Smith's (2005) cognitive frameworks) 'invites penalties'
award-winning study of network structures in (1999: 1399). A core theme of organizational
the US biotechnology industry provided a institutionalism is that deviation from socially
complex account of how the bases of defined expectations of appropriate conduct
affiliation (who partners are,
 27
often subtly, projected onto social actors who useful analysis of the conditions conducive to
are cajoled into conforming by self-activating institutional entropy, deinstitutionalization
mechanisms of disapproval. Zuckerman's has remained largely neglected (see Dacin &
work is a rare, early examination of this social Dacin, Chapter 12 this volume). As Scott put
process. More work in this area is clearly it, institutional work has failed to capture the
warranted. 'arc of institutionalization' (2005: 472),
Interestingly, current work on cognition focusing instead upon 'the middle moment'
in the strategy literature has remained (2005: 471). Ahmadjian and Robinson's
divorced from Scott's well-recognized (2001) (2001: 647) remark that 'deinstitutionalization
cognitive pillar and from the scope of is not simply institutionalization's converse'
institutional research on the construction and raises the call for better understanding of how
transmission of organizational practices as institutions decline.
shared cognitions and logics (Daniels, As a means of introducing more
Johnson & de Chernatony, 2002). Roberts integration to the literature on institutional
(Chapter 23, this volume) makes the similar change and to push for its fuller theoretical
point that 'much less in the way of published treatment, Hargrave and Van de Ven (2006)
work seems to be integrating Scott's (1995) developed a typology that identifies four
cognitive pillar with economic perspectives internally consistent and distinct models of
on organizations'. Notwithstanding work by institutional change, which they label
Porac and his colleagues (Porac, Thomas, institutional design, institutional adaptation,
Wilson & Kanfer, 1995), the strategic institutional diffusion, and collective action
management literature has confined its work models. Stated briefly, the institutional design
on cognition primarily to cognitive biases and model 'focuses on the intentional behaviours
to the information processing limitations and of an individual entrepreneur engaged in the
effects of actors' cognitive maps ('mental creation or revision of an institution to
models') in making strategic decisions (Huff, achieve his or her goals'; the institutional
1997; Tripsas & Gavetti, 2000). By adaptation model 'explains how and why
juxtaposing notions of cognitive maps and organizations conform to forces in the
schemas with Scott's (2001) characterization institutional environment'; the institutional
of the cognitive pillar in institutional theory, diffusion model 'focuses on how and why
we may learn more about how such cognitive specific institutional arrangements are
maps become taken-for-granted as appropriate adopted (selected) and diffused (retained)
or legitimated mental models in the first place among institutional actors in a population';
(Hasselbladh & Kalinikos, 2000) and how and the collective action model 'examines the
these models become shared across decision construction of new institutions through the
makers confronting similar challenges and political behaviors of many actors who play
environments (cf. also Czarniawska, Chapter diverse and partisan roles in the
32 this volume). organizational field or network that emerges
Fifth, the study of institutional change around a social movement or technical
brought forward several attempts to identify innovation' (Hargrave & Van de Ven, 2006:
the stages of institutionalization. Tolbert and 867-8). These authors call for further
Zucker (1995) identified three stages, but theorizing around the collective action model,
ignored how arrangements might erode and which they view, correctly, as the most recent
be displaced. Greenwood et al. (2002) sug- of the four models of institutional change, and
gested five stages, from deinstitutionalization the one least understood. Overall, their work
through to diffusion/translation and subse- brings a welcome movement toward
quent re-institutionalization. But despite early integration in the literature on change and
attention from Oliver (1992) and Davis et al. provides a set of categories for distinguishing
(1994), and Clemens and Cook's (1999) among widely different types and stages of
institutional change.
28
Nevertheless, 'much theorizing remains to be (e.g. Djelic, 1998; Guler, Guillen &
done' (Hargrave & Van de Ven, 2006: 884). MacPherson, 2002; Sahlin-Andersson &
Sixth, there is a growing interest in Engwall, 2002; Djelic & Quack, 2003; Djelic
cross-national studies. Until recently, there & Sahlin-Andersson, 2006; Drori, Chapter 18
was a concern that institutional work was this volume). Frenkel's (2005) study of how
becoming distilled through the lens of US state-level institutional power structures
cultural and social dynamics. Such an imported two management models - scientific
ethnocentric perspective risked missing management and human relations from
interesting and important institutional effects different cultures demonstrated how cross-
(Biggart & Hamilton, 1990; OITU, Biggart & national translation occurs and how these
Hamilton, 1991; Guillen, 2001). Mizruchi and management models changed their social
Fein had speculated that the myopic focus of meaning as they moved from one culture to
US scholars is a consequence of 'the domi- another. Some researchers have examined
nantly held view among leading North how 'institutional distance' (Kostova, 1999)
American organizational researchers that between parent MNCs (almost always, US
emphasizes cognitive decision-making corporations) and foreign countries affect
processes at the expense of inter-organiza- investment and expansion decisions.
tional power and coercion' (1999: 677). In Seventh, institutional theory has gained
short, Mizruchi and Fein feared that North enormously for many years from its combi-
American researchers were reproducing a nation with, or incorporation of, other theories
world-view (rationalized myth?) that provides (see the Interfaces section of this volume for
'a limited picture of the world' (1999: 680). the most current examples of this important
The concern about an ethnocentric work). Somewhat surprisingly, a particularly
focus may have been premature. Recent work pronounced growth in the application of
reveals that a significant number of studies institutional theory to mainstream strategy
are applying institutional theory to an inter- topics has not been accompanied by the
national context and, in doing so, are opening explicit juxtaposition of institutional theory
up the relevance of the theory to new topics, and specific strategy theories, apart from a
such as foreign entry mo de (Yiu & Makino, limited and selective combination of institu-
2002), foreign investment and the impact of tional theory with the resource-based view
host country governments (Henisz & Zelner, (Oliver, 1997), transaction cost theory (Yiu &
2005), capital structures in foreign economies Makino, 2002), and agency theory (Young,
(Keister, 2004), the choice of international Stedham & Beekun, 2000). Institutional
alliance partner (Hitt, Ahlstrom, Dacin, theory has been increasingly applied to topics
Levitas & Svobodina, 2004), and firm in strategy as diverse as mergers (Krishnan,
turnaround (Bruton, Ahlstrom & Wan, 2003). Joshi & Krishnan, 2004), firm heterogeneity
Several theorists gained insight into these and (Walker, Madsen & Carini, 2002), firm
similar practices by combining organizational diversification (Peng, Lee & Wang, 2005), the
with comparative institutionalism (e.g. Djelic effects of corporate boards on firm
& Quack, 2003). For us, it is especially performance (Peng, 2004), firm reputation
interesting to note the growing application of (Rhee & Haunschild, 2006), the legitimacy of
institutional theory to emerging economies strategic alliances (Dacin, Oliver & Roy,
(e.g. Peng, 2003; Keister, 2004; Vaaler & 2007), and managers' mental models of
McNamara, 2004; Child & Tsai, 2005; competition (Daniels et al., 2002). The
Chang, Chung & Mahmood, 2006; Dobrev, literature has witnessed almost no attempts,
Ozdernir & Teo, 2006). Work on the politics however, to combine, more comprehensively,
of institutional translation across cultures also a strategy theory with institutional theory.
holds future promise
 29
An exciting direction for future research environment is the level of analysis (see
may be the juxtaposition of institutional Wooten & Hoffman, Chapter 4 this volume).
theory and the dynamic capabilities frame- Other levels of analysis have been rarely con-
work (Teece, Pisano & Shuen, 1997; Helfat & sidered. For example, few studies treat the
Peteraf, 2003; Helfat, Finkelstein, Mitchell et organization as the level of analysis (Ocasio,
al., 2007), arguably one of the more 1994) or examine how the organization might
prominent perspectives in current strategy be treated as an institutional context for
theory. This framework focuses on firms' understanding intraorganizational behaviour.
capabilities to 'integrate, reconfigure, and An interesting exception was Goodrick and
release resources to match and even create Salancik's (1996) study of how cesarean
market change' (Eisenhardt & Martin, 2000: section surgeries varied by type of hospital
1107). Specifically, dynamic capabilities refer and the ambiguity of institutional standards
to the capacity for rent appropriation and within them. Using hospital-level data, they
profit stemming from an organization's found that when uncertainty was greatest,
'capability to effectively coordinate and hospital characteristics significantly influ-
redeploy internal and external competences ... enced cesarean section rates. Their work
to achieve congruence with the changing showed how technical practices become
business environment' (Teece, Pisano & embedded in institutional frameworks at the
Shuen, 1997: 515). To our knowledge, no one organizational level, and how these frame-
has addressed institutional theory's works come to define the ways in which
implications for this strategic perspective (or technical forces operate. We see considerable
vice versa). In examining an organization's promise in this change to an intraorganiza-
existing routines and the factors that facilitate tional level of analysis for expanding insights
or impede organizational change, the theory into institutional processes. Recent scholars
of dynamic capabilities shares institutional have made a compelling case for an intraor-
theory's interest in how organizational ganizational level of analysis by combining
practices become entrenched in the cognitive an institutional perspective with such micro-
repertoire of organizational routines, and the theories as prospect theory and the threat-
ways in which the changing environment rigidity hypothesis (George, Chattopadhyay,
molds them. Further research, therefore, Sitkin & Barden, 2006). Washington, Boal &
might extend dynamic capabilities theory to Davis (Chapter 30, this volume) adopt an
consider the ways in which the adoption and explicitly intraorganizational perspective as
diffusion of norms and values in the they integrate institutional and leadership
institutional environment impede rent theories.
appropriation or, alternatively, how insti- While any number of
tutional legitimacy sustains or even intraorganizational phenomena might be
accelerates the flow of resources and informed by an institutional perspective (see
information to organizations for developing for example, Quaid's 1993 article on job
their capabilities. evaluation as an institutional myth), we are
Eighth, and finally, institutional theory particularly intrigued by Weber and Glynn's
evolved as an antidote to the overly rationalist (2006) call for an exploration of the
and technocratic perspectives of the 1960s. It connections between institutional and sense-
emphasized the role of cultural forces within making perspectives. Weber and Glynn
an institutional context and homed in on the (2006: 1639) note that a recurrent criticism of
organizational field as the level at which such Weick's (1995) influential work, specifically
cultural pressures are more evident. As a its 'neglect of the role of larger social and
consequence, the overwhelming majority of historical contexts in sense-making', can be
studies now take for granted that the partially addressed by showing how the
organizational field or institutional context may be an important part
of sense-making
30
within organizations. Treating the organiza- they are also located within communities.
tion as the institutional context for sense- Only recently has institutional work begun to
making would also go far, we believe, in acknowledge that communities may influence
adding to institutional theory. In its own neg- the particular expression of rationalized myths
lect of the more micro-dynamics of sense- and institutional logics to which organizations
making, institutional theory has relinquished have to respond. Marquis (2003), Marquis et
the opportunity to develop a richer theory of al. (2007), Magan Diaz, Greenwood, Li and
the intersubjective processes of perception, Lorente (2007), and Marquis and Lounsbury
interpretation and interaction that establish the (2007), have each recognized that local or
core of a micro-level understanding of regional communities are part of the
institutionalization. Therefore, like DiMaggio institutional context. Marquis (2003), for
and Powell (1991) and Zucker (1987) we example, traced the elite social organizations
continue to see value in amending and cultural associations that connect
institutional theory to include more elaborated organizations within a bounded geographical
micro- foundations and we propose that theo- setting. Magan et al. (2007) suggested that
rists might begin with Weick's (1995) formu- connections between organizations and local
lation of sense-making in organizations. This political elites influence decisions on the
focus on sensemaking also accords with utilization of human resources.
recent criticisms of institutional theory that These studies imply that the concept of
have suggested the need for more emphasis organizational field may have been consid-
on 'the various ways by which ideas are ered unduly narrowly, and the roots of the
objectified i.e. developed and embedded into field concept may prove helpful in order to
solid and durable social artifacts' within make it into a more elaborate conceptual tool
organizations (Hasselbladh & Kallinikos, (Martin, 2003; Mohr, 2005; Djelic & Sahlin-
2000: 699). A rare example of this theoretical Andersson, 2006). Although it has proved,
purpose underlies Johnson, Smith and and will continue to be, a useful level of
Codling's (2000) conceptualization of priva- analysis, it may have become too abstract and
tization as a series of individual actors' thus divorced from the socio-political
attempts to enact and make sense of a change community within which institutional and
from a 'public' to a 'privatized' institutional organizational processes occur. As Magan et
template through micro-level processes of al. put it: 'Analytical abstraction, intended to
script development. In this volume (Chapter better capture contextual influences, has
32) Czarniawska calls for an elaborate under- resulted in blindness to how communities
standing of how ideas are objectified, but also affect organizations. The relationship between
of how they form in relation to new communities and organizations was, of
technologies. course, integral to early institutional work
Unlike the call for better understanding (Selznick, 1949) but that focus has largely
of intraorganizational processes, a second disappeared. A return to the traditional
challenge to the dominance of field-level emphasis upon community would be timely'.
analysis emphasizes how the abstractness of We agree.
the field concept may have inadvertently
disembedded institutional analysis. The field
concept originally developed (see Wooten &
Hoffman, Chapter 4 this volume) because of
dissatisfaction with the term 'industry', which CONCLUSIONS
neglects the role of agencies such as
professional and trade associations, regula- If institutional theory is decidedly not wither-
tors, the media and the State. However, ing over time in its use and migration within
organizations are not only set within a field, and across the discipline of organization
 31
theory (as the sheer number of recent journal Our eight foregoing directions for future
articles bears witness), we still need to ask research reveal our own position on the
whether its power to explain organizational theory's strengths, limitations, and opportuni-
phenomena is withering in light of its rather ties. We see that there is still much for institu-
splintered proliferation. Our answer is a tional theory to address. More broadly, we
somewhat emphatic no, not only because we have three reasons to feel that the overarching
see thematic cohesion around its basic theo- strengths and contributions of institutional
retical question and 'answer', but because we theory far outweigh our few lingering but by
continue to find its questions infinitely inter- no means irrevocable misgivings about the
esting, its capacity to contextualize organiza- theory.
tional phenomena beneficial, and its tolerance First, a review of institutional theory
for theoretical and methodological pluralism from its early foundations to its current
advantageous to knowledge sharing within applications reveals an impressive tradition of
organization analysis. We began this interfacing with numerous other theories (e.g.
Introduction by identifying the central ques- network theory, resource dependence theory,
tion of institutional theory that we felt gave ecology theory) to explain a correspondingly
value to its perspective as originally broad range of organizational phenomena
developed by early institutional theorists: why (e.g. organizational structure, change, iden-
and with what consequences do organizations tity, alliances, foreign entry). The use of
exhibit particular organizational institutionalism with so many other theories
arrangements that defy traditional rational and topics rather than in relative isolation is,
explanation? We see the perpetuation of this we believe, a conspicuous and significant
central question to the present day as the strength. For as Nobel prizewinner Erwin
intellectual stimulus that gives coherence to a Schrodinger (1951: 6) observed: ' ... [i]t seems
theory that in other respects has expanded its plain and self-evident, yet it needs to be said:
applications to an impressively wide array of the isolated knowledge obtained by a group of
topics. Similarly, we identify the 'answer' specialists in a narrow field has in itself no
emphasized by institutional theory as laying value whatsoever but only in its synthesis
claim to unique insights into the play of with all the rest of knowledge'.
widely shared or taken-for-granted social Institutionalism's proliferation,
values and ideas that complement, if not defy, however, comes at the expense of linguistic
calculative rationality and instrumental specificity. Even the term 'institutional' defies
functionality. Perhaps the most notable shift precise definition, leaving it open to
in emphasis and interpretation over the past alternative conceptual constructions that are
three decades has been from treating the adapted to the topic at hand. It is for this
context of social values and ideas as reason, among others, that we encourage a
influences upon organizations, towards greater focus on developing a more common
recognition of the interplay of organizations vocabulary in future developments of the
with their contexts. It is our position that the theory. Thus, while we are delighted by the
endurance of institutional theory's theory's range of application, we continue to
fundamental question and answer is a testa- hope for further consensus around construct
ment to the resilience and robustness of the definition.
perspective. In answering the query stated at We also believe that the
the outset of the Introduction, we reject the underspecification of institutional theory's
notion that theories invariably fragment into constructs is not altogether an incontestable
proliferated confusion. The coherence and impediment to theory building and research.
endurance of institutional theory's core ques- We share Barbara Czarniawska's view
tion and answer run through most institutional (Chapter 32, this volume) that 'the strength of
work, bringing a surprising semblance of institutional theory lies in the tolerance of its
order to a literature that exhibits rich variety. propagandists.'²¹ We view the present scope
of contributors to institutional theory's growth
as an indication of an
32
epistemological pluralism that tends to dis- discourse, power elites, history and the 'iron
courage polarizing styles of arguments or the- cage' of conformity pressures. Therefore,
matic quests for a monopoly on truth. It is not while not asserting that institutional theorists
that all elements of institutional theory are are ideologically agnostic, either individually
inevitably reconcilable with all approaches or or in the aggregate, we nonetheless do not see
perspectives; indeed, this is far from the truth the institutional theorists that populate our
(see Cooper et al., Chapter 28 this volume). journals and bookshelves as pre-oriented
Rather, the stunning variety of topics and toward contempt for the persistence of
methodologies drawing on institutional theory phenomena or the status quo, even when such
that we now witness in the literature is itself persistence is unjust or dysfunctional. Our
evidence, in our opinion, of the inventiveness disdain (we hope) is for the injustices of
and flexibility of the many who apply it. In practices and not for the stability of a practice
the interests of guarding this pluralism, we per se.
tend, therefore, to favour the broader It is our hope as well that indicators of
construct definition of 'institutions' put institutionalization be sufficiently neutral to
forward by Scott (1995: 33): avoid foreclosing on avenues of research into
different manifestations of institutionaliza-
Institutions consist of cognitive, normative, tion. Rather than insistence on a single
and regulative structures and activities that measure of institutionalization as that which
provide stability and meaning to social is strictly socially embedded, taken-for-
behaviour. Institutions are transported by
various carriers - culture, structures, and
granted, or, alternatively, rooted in power, we
routines - and they operate at multiple levels favour Selznick's (1996) notion of institu-
of jurisdiction. tionalization as a comparatively neutral
concept, receptive to whatever arguments best
Such a definition increases specificity explain it, depending on the context in which
but encourages continued application of it occurs. Building on his early charac-
institutional theory to multiple levels, topics, terization of institutionalization as indicative
and settings. of that which is infused with value beyond the
Second, a distinct advantage of institu- technical requirements at hand, Selznick
tional theory, we would argue, is its singular (1996: 271) suggests that we judge the degree
refusal to accept reality at face value, and to to which a phenomenon is institutionalized as
do so without the accompanying baggage of the extent to which it is expendable: '[t]he test
cynicism. Institutional theory throws open the is expendability, that is, the readiness with
possibility that any cherished aspect of which the organization or practice is given up
organizational life may be nothing more than or changed in response to new circumstances
a theoretical artifact, but the theory's implicit or demands'. This position is consistent with
agenda is not to heap ex ante scorn on the Scott's (2001: 213) exhortation that 'we try to
causes of misguided or overly-rationalized avoid and, to the extent possible, eliminate
behaviour. Agnostic about the reasons for the theoretical arguments based on exclusivist
taken-for-granted understanding or social (often, dichotomous) thinking'-, (e.g. if the
consensus surrounding institutionalized cause of persistence is social then it cannot be
structures and behaviours, institutional political, or vice versa).
researchers have been free to roam in the the- Third, institutional theory has an
oretical territory of political domination, important capacity to stimulate
unconscious reasoning, or social acceptability contextualization. Just as we cannot make
to stake out their claim for theoretical feasible improvements in knowledge of
superiority in explaining institutionalization. market economies by wishing away their
Thus, institutional researchers have been able social context (see Roberts, Chapter 23 this
to trace the source of institutionalization and volume), so it is the case that
persistence to factors as varied as interorga-
nizational collaboration, shared norms,
 33
we cannot understand such knowledge with- and extended. The last section, Reflections,
out recognizing that it is socially constructed presents essays from leading intellectuals,
within a broader context. Institutional theory who reflect on the past and future of organi-
has aided us in contextualizing the phenom- zational institutionalism, offering sometimes
ena we study, whether that context encom- provocative but always engaging insights and
passes regulatory, historical, political, observations. An important feature of the five
cognitively tacit, or socially embedded set- sections as a whole is that the contributors are
tings. Indeed, such contextualization is a distinctly international and include not only
distinguishing (and distinguished) feature of many of the leading contributors to
institutional theory and research. institutional thinking of the past three
Notwithstanding its capacity to decades, but exciting new voices.
stimulate the contextualization of many Overall, on the w(h)ithering of institu-
phenomena, institutional theory is tional theory we remain fervent optimists, and
simultaneously under threat of serving the the quality and richness of this volume's
role of 'default option' in the development of contributions bear strong witness to this point
organization theory. We see limited but of view. Institutional theory is withering
somewhat alarming use of institutional theory neither in its scope nor its relevance, and we
by other theorists who engage institutional see no obstacles to a lively and productive
theory as a convenient but under-theorized growth in the theory's future. Perhaps Dick
catch-all for what their own theories cannot Scott is correct in predicting that 'the major
readily explain. The distinctive aspect of contributions of institutional theory to
institutional-theory-as-default research is not organizational studies may still lie ahead'
necessarily its inaccuracy, but, rather, the (2005: 473). If there is a danger, perhaps it
meagreness with which institutional theory is lies in the suppleness of the theory's fit to so
applied; that is, the lack of depth or richness many topics, and the corresponding
in its use and the rather perilous distance from temptation to assume that it explains
institutional theory's core concepts, everything:
assumptions, and arguments. Our intent is not
to discourage interfacing between theories, None of us can go a little way with a theory.
but to urge a more comprehensive application When it once possesses us, we are no longer
of institutional explanations to the topics they our own masters. It makes us speak its words,
and do violence to our nature. (Newman,
inform. 1907: 222)
To that end, all the chapters in this book
are outstanding models for future engagement Let us not, therefore, become blind
with the theory. The chapters are grouped into adherents. Institutional theory's seeming
five distinct sections: Section I reviews the inclusiveness may lure us into believing we
Foundational Themes, recounting the initial possess a relatively comprehensive tool for
ideas that excited attention and showing how explaining the social character of
those ideas have been tested and enhanced. organizations and environments, that is, at
Section II, Institutional Dynamics, contains a best, incomplete and, at worst, distinctly
series of insightful reviews of current myopic. The size (and enthusiasm) of
scholarships and agendas for future work. institutional theory's following is arguably the
Section III, Applications, illustrates the most insidious threat to its capacity to reflect
extensive range of significant issues and creatively and critically on its limitations and
contemporary problems to which institutional thus to keep developing constructively as a
theory can be applied. Section IV, Interfaces, theory of organizations. Moreover, an
explores points of intersection with other institutional perspective starts from a good
theories, illustrating how the relevance and question that remains only partially
potential of organizational institutionalism answerable within the limits of its own
continues to be sharpened assumptions (see Kraatz &
34
Zajac, 1996; Bowring, 2000). We remain, the phrase 'logic of appropriateness'. March empha-
nonetheless, optimistic about its future sized that many decisions are not based on the cal-
because it has been relatively robust across culation of future consequences but are the outcome
of decision 'rules' or routines. March was developing
different epistemological styles and differing a view of organizations as institutionally embedded
disciplinary expertise, finding commensurable and, even though his ideas were anchored in deci-
justification for both political and social sion-making studies of bounded rationality (e.g.
rationales, and for both reflexive and more March & Simon, 1958; Cyert & March, 1963), deci-
reductionist explanations of organizational sion-making ambiguity (e.g. March & Olsen, 1976)
action. If institutional theory becomes too and, more broadly, political science (e.g. March &
institutionalized, however, its own legitimacy Olsen, 1989), these ideas did not develop in isolation
from other contributions to institutional theory.
may exert an isomorphic or homogenizing Sahlin and Wedlin (Chapter 8 this volume) review
effect on the richness and breadth of the influence of this line of research, especially on
explanations it currently contributes to our Scandinavian institutionalism. It is notable that three
understanding of organizational processes and of the primary theorists of institutional theory - John
phenomena. And that, should it happen, Meyer, Dick Scott and Jim March - were based at
would be a signal of a withering theory. Stanford.
4 Scott (1983: 161) explicitly qualified any
tendency towards homogeneity: 'While there may be
some convergence in the general overall pattern
NOTES exhibited by organizations, we are more impressed
by the variety of forms and practices encountered.
1 As we note below, Mohr (2005) showed We see organizational environments as becoming
that institutionalist theories have evolved essentially more highly organized but not necessarily in the
in two directions. The dominant trend has directly same manner; and the cultural beliefs governing
followed DiMaggio and Powell (1983) and organizational practice, while similar in promoting
privileged studies and explanations of networks and rationalization, still vary in their particular specifica-
interactions. The other trend, centring around John tions for differing types of organizations'.
Meyer's work, has privileged studies and 5 Before progressing, we wish to make the
explanations of meaning. Mohr finds this division following comment. Meyer and Rowan (1977) and
unfortunate and sees great potentials in bringing the Zucker (1977) were clearly influenced by Berger
two aspects of field back together (Djelic & Sahlin- and Luckman (1967). Berger and Luckman proposed
Andersson, 2006 argue in the same direction). that social stability occurs in three stages: actors
2 Emphasis upon social values and cognitive interact and, over time, their interactions become
systems differentiates 'organizational 'habitualized'. Conforming to habitualized patterns
institutionalism' (not a term used by Meyer & makes social interactions predictable and thus
Rowan) from other versions of institutionalism. orderly. Subsequently, habitualized actions become
Historical institutionalism, for example, betraying 'reciprocal typifications of action', i.e. the habits are
its origins in comparative political science, focuses reciprocally reflected upon and conceptualized as
upon structures (institutions) of the state (e.g. state roles (i.e. they become 'objectified'). Once reciprocal
agencies, corporate economic actors such as unions typifications are passed on to third parties, especially
and trade associations) and traces how those new generations, then reciprocal typifications
structures enable and shape the access of organized become regarded as 'real' and natural, i.e. they
interests in decision-making processes. Rational acquire 'exteriority' (Berger & Luckman, 1967: 58)
choice institutionalism, similarly, also treats (self-) or, in Tolbert and Zucker's terms, they become
interest as the key driver of behaviour within a 'sedimented' and taken-for-granted. A recurrent
context of incentives and opportunities. The criticism of institutional theory is that much research
sociocultural approach to organizational institu- focuses upon the objectification stage (Tolbert &
tionalism, in contrast, does not see motivation as Zucker refer to it as 'semi-institutionaiization') rather
exclusively (or even primarily) interest-driven and in than the sedimentation (full-institutionalization)
doing so provides 'an important corrective' to other stage. In this volume, Renate Meyer argues that the
organizational perspectives (DiMaggio, 1988). legacy from Berger and Luckman has largely
3 A related but more micro approach to the become less visible in later developments of
institutional context emerged from the research pro- organizational institutionalism, and she shows that
gramme of Jim March, also at Stanford. March many of the recent questions posed by theoreticians
coined in the field could find much inspiration and
clarification from Berger and Luckman's work.
 35
6 For example, Alan Meyer (1982), in been created (e.g. Bacharach et al., 1996; Djelic &
discussing how hospitals responded to a doctors' Quack, Chapter 11, this volume) This latter usage
strike referred to Meyer and Rowan as follows: clearly connects more closely to the definition of
'Hospitals inhabit highly institutionalized 'institution' as regulation.
environments that may foster the construction of 15 An interesting application of identity
superficial structural facades. Meyer and Rowan theory would be to connect institutional theory with
(1977) argue that ceremonial structures harmonizing concepts of 'celebrity firms'. Rindova, Pollock and
with societal ideologies attract resources and Hayward (2006) propose that celebrity firms (firms
promote the survival of such organizations. But this that attract a high level of public attention and posi-
study suggests that ceremonial structures may also tive emotional appeal from being different) are
promote survival and resource conservation by socially constructed primarily by the media, and
harmonizing with organizational ideologies'. that, once having achieved celebrity status, a firm
7 Most empirical work came from Stanford behaves so as to retain that status. From our point of
University (in addition to Meyer & Scott, there was view, the conferring of celebrity upon non-
a stream of papers from Jeffrey Pfeffer, Kathy conforming firms may serve to legitimate deviance
Eisenhardt and Jim Baron). and thus contribute to the prospect of institutional
8 The idea of translation involved the entrepreneurship and change.
movement of ideas across organizations. An 16 More recent studies have extended the
interesting parallel is Barley's (1986) interest in the translation theme to the movements of ideas across
'slippage' within organizations as individuals draw national institutions (e.g. Djelic, 1998; Sahlin-
upon institutionalized norms to enact their roles. Andersson & Engwall, 2002).
9 These early studies applied a long historical 17 See J. Meyer (Chapter 34, this volume),
perspective on institutionalization. They were for a critical discussion of this development. Meyer
designed around - and reinforced the notion that (1996) used the term 'soft' actor to emphasize actors
institutionalization involves long historical and inert as culturally constrained and dependent.
processes. Even though calls for more historical 18 Earlier, we commented upon Bourdieu's
studies are often heard, many of the later diffusion influence on the early institutional theorists. Very
studies applied a much shorter time span. This defi- soon direct references to his work largely ceased, at
ciency means, among other things, that the long term least in North American studies. Later, however,
consequences (e.g. are they retained) of adopting some of the main assumptions and results from
new organizational elements have been largely Bourdieu's work on fields reappeared (e.g. Wedlin,
neglected. 2006). One such finding is that changes in fields
10 But not always. Oliver (1988) for example, develop as so called pretendents - trying to enter and
deliberately contrasted institutional theory with pop- exact influence over the field - challenge dominating
ulation ecology and strategic choice theory, in order incumbents. Dominating actors seek to defend the
to assess its validity (it failed the test!) status quo and protect their own central role in the
11 An excellent statement on this issue is field. This framework directs the theorist's attention
Biggart & Delbridge (2004). to the periphery of organizational fields as the likely
12 Abrahamson (1991: see also, Abrahamson source of change (cf. Bourdieu, 1977, 1984).
& Rosenkopf, 1993) distinguished institutional from 19 Because of its focus on translation,
competitive 'bandwagon' pressures and showed how European research was more inclined to view
the latter also produces the two-stage diffusion change as the consequence of endogenous and
model from which institutionalists erroneously infer exogenous forces.
institutional processes. Early and late adopters in the 20 A very influential work underpinning
diffusion curve can be motivated by managerial much of this work is Power (1997).
perceptions of the competitive risks of non-adoption. 21 This observation was reinforced by a
13 Broadly speaking, Neilson and Rao were heavily attended 2006 conference on institutional
correct. But a small number of studies did contribute theory hosted by the University of Alberta, which
to better understanding of the reciprocal interaction brought together quant jocks, interpretivists, critical
between organization and context, both at the level theorists, organizational theorists, strategy theorists,
of the strategic group (e.g. Porac et al., 1989), and at discourse analysts, ecologists, and micro-
the level of the organization (e.g. Barley, 1986). organizational behaviour theorists, applying
14 Even the term institutionalized, however, institutional theory to everything from identity to
had subtle variations of usage. As noted here, for political mobilization. The most striking aspect of
most people it meant that something is taken for this conference was the relative ease and pronounced
granted: i.e. objectified as the natural order of things tolerance with which participants were able to
(Tolbert & Zucker, 1995). But, in some instances, converse across widely differing ontological
institutionalized meant that a formal organization or assumptions, interests, and methodologies.
rule had
36
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 SECTION I

Foundational Themes
 1
Legitimacy in Organizational
Institutionalism
David L. Deephouse and Mark Suchman

INTRODUCTION concept formation is always simultaneously

the process of concept transformation,' and
Legitimacy is a central concept in organiza- legitimacy has been no exception.
tional institutionalism. The term 'legitimacy' Nonetheless, despite its diversity, the
dates back to the dawn of organization literature on legitimacy displays more than
theory; however, for most of the past century, enough coherence and commonality to merit
research on legitimacy emerged only slowly an integrative review.
and was fragmented across several distinct This chapter is organized as follows. Our
social science literatures. Since 1995, exploration begins with an overview of past
however, the body of relevant scholarship has theoretical and empirical research on legiti-
grown rapidly and in a variety of directions. macy. This discussion includes some basic
Much of this new literature (like much of the suggestions on the dimensions, sources, and
literature that preceded it) has been highly subjects of legitimation, as well as on key
theoretical, invoking legitimacy as an legitimation processes, antecedents and con-
explanatory concept rather than examining it sequences.¹ Second, we consider the rela-
as an empirical property. Empirical accounts, tionship between legitimacy and two other
to date, have focused on exploratory case types of social evaluation that have recently
studies of legitimacy being gained or lost, gained prominence in organization studies,
while only a handful of investigations have namely status and reputation. Finally, we
employed legitimacy as a variable in conclude with several recommendations for
hypothesis testing. Perhaps because of this advancing legitimacy research in the future.
heavy skew toward theory development
versus theory testing, the legitimacy concept
has exhibited substantial plasticity as it has THE EVOLUTION OF
evolved from its earliest institutionalist ORGANIZATIONAL LEGITIMACY
usages (e.g., Meyer & Rowan, 1977; Meyer
& Scott, 1983). As Wright (1985: 292) has Over the years, the conceptualization and
observed, 'the process of explication of organizational legitimacy has
50
displayed substantial elasticity. Taken as a New institutional theory started develop-
whole, this elasticity has resulted in some ing in 1977 with the articles by Meyer and
productive conceptual evolution but more Rowan (1977) and Zucker (1977). Although
conceptual stretching (Osigweh, 1989). As a Zucker only mentioned legitimacy once in
result, the existing literature offers a plethora passing, Meyer and Rowan made it a central
of definitions, measures, and theoretical focus of their analysis, invoking the term at
propositions, not all of which are fully com- least 43 times in some form. Their summary
patible with one another. While some might graphic (1977: 353, figure 2) placed 'legiti-
argue that this intellectual thicket is overdue macy' and 'resources' together in the same
for a wholesale pruning, here we limit our- box, and suggested that both of these
selves to the more modest task of mapping survival-enhancing outcomes may result not
the underlying terrain, seeking to identify only from being efficient but also from
both the features that have become increas- conforming to institutionalized myths in the
ingly well established and widely accepted organizational environment. Although Meyer
over time, and the features that have and Rowan (1977) did not offer an explicit
remained relatively ambiguous and contested. definition of legitimacy, they presaged many
of the dimensions explicated in the mid-
1990s by stating that legitimacy can result
The development of legitimacy from suppositions of 'rational effectiveness'
theory in organizational (later termed pragmatic legitimacy), 'legal
institutionalism mandates' (regulatory or sociopolitical
legitimacy), and 'collectively valued
Most reviewers credit Weber with purposes, means, goals, etc.' (normative or
introducing legitimacy into sociological moral legitimacy). They also highlighted how
theory and thus into organization studies legitimacy insulates the organization from
(Johnson et al., 2006; Ruef & Scott, 1998; external pressures. 'The incorporation of
Suchman, 1995). Weber's analysis of the institutionalized elements provides an
legitimacy of different authority types is well account (Scott & Lyman, 1968) ... that
known to many organization theorists. More protects the organization from having its
generally, however, his writings also discuss conduct questioned. The organization
the importance of social practice being becomes, in a word, legitimate ... And
oriented to 'maxims' or rules and suggest that legitimacy as accepted subunits of society
legitimacy can result from conformity with protects organizations from immediate
both general social norms and formal laws sanctions for variations in technical
(Weber, 1978). Parsons (1956, 1960) applied performance' (Meyer & Rowan, 1977: 349,
Weber's ideas and viewed legitimacy as 351).
congruence of an organization with social In 1983, Meyer and Scott discussed legiti-
laws, norms and values. This formulation macy in much more depth, including offering
was later embraced by many organization a more thorough definition:
theorists, including Dowling and Pfeffer
(1975), Pfeffer and Salancik (1978), and We take the view that organizational legitimacy
Czarniawska-Joerges (1989). Ironically, refers to the degree of cultural support for an
however, the early institutionalist literature organization - the extent to which the array of
established cultural accounts provide
was more enthusiastic in embracing Weber's explanations for its existence, functioning, and
concept than in adopting his jurisdiction, and lack or deny alternatives ... In
conceptualization. Meyer and Scott (1983: such a[n] instance, legitimacy mainly refers to
201), for example, commented that the many the adequacy of an organization as theory. A
references to Weber as a defining account of completely legitimate organization would be one
legitimacy were 'unfortunate, given Weber's about which no question could be raised. [Every
lack of clarity on the point.' goal, mean, resource, and control system is
necessary, specified, complete, and without
alternative.] Perfect legitimation
 51
is perfect theory, complete (i.e., without uncer- resonates with Child's (1972) strategic choice
tainty) and confronted by no alternatives (p. perspective, which holds that legitimate
201) organizations enjoy substantial latitude to
choose their structures, products, markets,
One noteworthy feature of this definition factors of production, etc. That is, a
is its emphasis on legitimacy's 'cognitive' legitimate organization has largely unques-
aspects - explanation, theorization, and the tioned freedom to pursue its activities:
incomprehensibility of alternatives. This 'legitimate status is a sine qua non for easy
focus continues to enjoy substantial currency, access to resources, unrestricted access to
especially within neo-institutional sociology markets, and long term survival' (Brown,
(cf. DiMaggio & Powell, 1991). 1998: 35).
Some theorizing expanded on Meyer and In addition to offering these foundational
Scott's (1983) formulation, embracing the definitions, early legitimacy research also
basic proposition that legitimacy can be con- built on the work of Pfeffer and Salancik
ceptualized as the presence or absence of (1978) to examine how organizations gain or
questioning, but suggesting that questioning lose legitimacy. Galaskiewicz (1985) found
is as likely to arise when a familiar organiza- that organizations often sought to enhance
tion is unsatisfactory as when a satisfactory their legitimacy by donating to charities,
organization is unfamiliar. Along these lines, forming director interlocks, and obtaining
Hirsch and Andrews (1984) considered two external endorsements. Ashforth and Gibbs
types of questions: (1990) proposed two general approaches,
'substantive' and 'symbolic,' and a total of ten
Performance challenges occur when organizations
are perceived by relevant actors as having failed to specific actions, many drawn from
execute the purpose for which they are chartered impression management theory. They also
and claim support. The values they serve are not at highlighted three purposes for legitimation
issue, but rather their performance in 'delivering efforts: Gaining, maintaining, or defending
the goods' and meeting the goals of their mission legitimacy. Both of Ashforth and Gibbs' con-
are called into serious question ... Value challenges
place the organization's mission and legitimacy for tributions proved fertile: Elsbach (1994;
existence at issue, regardless of how well it has Elsbach & Sutton, 1992) further integrated
fulfilled its agreed-upon goals or function .... impression management and institutional
[Both] entail fundamental challenges to the theories in her studies of the Act Up,
legitimacy of an organization's continued EarthFirst!, and the California cattle industry;
existence. Each places the target in an inherently
more unstable situation than is addressed in com- and Suchman (1995) further explored the
parative or longitudinal examinations of adminis- distinct purposes (or, as he relabeled them,
trative efficiency. 'challenges') of gaining, maintaining, and
repairing legitimacy.
Pfeffer and Salancik's foundational state- The year 1995 could be viewed as a
ment of resource-dependence theory (1978) pivotal point in the development of
adopted a similar 'negative definition' of legitimacy theory. Scott published his review
legitimacy, asserting that 'Legitimacy is book Institutions and Organizations. He
known more readily when it is absent than wrote: 'Legitimacy is not a commodity to be
when it is present. When activities of an possessed or exchanged but a condition
organization are illegitimate, comments and reflecting cultural alignment, normative
attacks will occur' (1978: 194). Knoke (1985: support, or consonance with relevant rules or
222) restated this in the affirmative, defining laws' (1995: 45). And Suchman published his
legitimacy (in the context of political comprehensive 'Managing legitimacy:
associations and interest groups) as 'the Strategic and institutional approaches' in the
acceptance by the general public and by 1995 Academy of Management Review. He
relevant elite organizations of an observed that legitimacy was
association's right to exist and to pursue its
affairs in its chosen manner.' The ability to
pursue its own affairs
52
'an anchor-point of a vastly expanded theoret- Dimensions of legitimacy
ical apparatus addressing the normative and
cognitive forces that constrain, construct, and The conceptual dimensions of legitimacy
empower organizational actors,' but he also received much attention in the mid-1990so
cautioned that the existing literature provided Stryker (1994) distinguished between behav-
'surprisingly fragile conceptual moorings. ioral consent to rules, attitudinal approval of
Many researchers employ the term rules, and cognitive orientation to rules,
legitimacy, but few define it. Further, most Aldrich and Fiol (1994: 648) distinguished
treatments cover only a limited aspect 000' between cognitive and sociopolitical legiti-
(1995: 571, italics in the original). To remedy macy, 'Cognitive legitimation refers to the
these weaknesses, Suchman offered the spread of knowledge about a new venture…
following inclusive, broad-based definition: Sociopolitical legitimation refers to the
'Legitimacy is a generalized perception or process by which key stakeholders, the
assumption that the actions of an entity are general public, key opinion leaders, or
desirable, proper, or appropriate within some government officials accept a venture as
socially constructed system of norms, values, appropriate and right, given existing norms
beliefs, and definitions' (1995: 574). Within and laws.' Scott (1995), in effect, subdivided
this scope, he delineated two basic Aldrich and Fiol's 'sociopolitical' category to
perspectives, an institutional view arrive at three dimensions of legitimacy -
emphasizing how constitutive societal beliefs regulative, normative, and cognitive - linked
become embedded in organizations, and a to his three pillars of institutions, Suchman
strategic perspective emphasizing how (1995) proposed a broadly similar trichotomy
legitimacy can be managed to help achieve using the labels 'pragmatic,' 'moral' and
organizational goals. 'cognitive' legitimacy; however, he went on
These two publications raised the to combine this basic framework with two
visibility of legitimacy, especially among temporal textures (episodic versus continual)
management researchers studying for-profit and two substantive foci (organizational
organizations. Aldrich and Fiol (1994) had actions versus organizational essences), in
already highlighted the importance of order to arrive at a typology containing
legitimacy to entrepreneurs, and within a few twelve distinct legitimacy types: pragmatic
years, Kostova and Zaheer (1999) legitimacy comprising exchange, influence,
reconsidered legitimacy in the context of the interest, and character; moral legitimacy
multinational enterprise. Meanwhile, at a comprising consequences, procedures,
more theoretical level, Oliver (1997) drew persons, and structures; and cognitive
heavily on arguments about legitimacy to legitimacy comprising predictability,
integrate institutional theory with the plausibility, inevitability, and permanence.
resource-based view of the firm, and Together, these efforts to explicate the
Deephouse (1999) developed strategic various dimensions of legitimacy allowed
balance theory to address the tension between more researchers to become involved in the
differentiating to attain profitability and development of institutional theory at both
conforming to attain legitimacy. This period theoretical and empirical levels.
also witnessed a sharp upsurge in references There has been some effort recently to
to legitimacy with the broader management reconsider these dimensions, Archibald
literature, And this heightened attention led (2004) equated sociopolitical legitimacy with
to a number of significant refinements in the regulative legitimacy and combined norma-
field's understandings of the dimensions, tive and cognitive legitimacy in a new cate-
subjects, and sources of legitimacy, as well as gory called cultural legitimacy, Cultural
of the processes, antecedents, and legitimacy accrued over time in professional
consequences of legitimation.
 53
and cultural contexts, whereas sociopolitical relationships (pragmatic legitimacy), and
legitimacy was more directly managed within fundamental meanings (cognitive legiti-
political contexts. Bitekhtine (2006) began to macy), as well as norms and values of the
disentangle the concepts by drawing on one profession and the larger social system
of the fundamental tools of construct validity, (moral legitimacy) (cf., Greenwood,
the nomological network (Cronbach & Suddaby, & Hinings, 2002; Suchman, 1995).
Meehl, 1955). Bansal and Clelland (2004) Perhaps for this reason, some recent
brought forth a contextually focused institutional studies of professional
dimension called corporate environmental associations (Greenwood et al., 2002; Jones
legitimacy. & Manev, 2002) have avoided the term
In surveying this terrain, we note two per- normative legitimacy, emphasizing instead
sistent sources of confusion. The first centers that professions often seek to influence many
on the term 'normative legitimacy.' In general different dimensions of legitimacy at once.
sociological usage, 'normative culture' We applaud this trend and propose that future
connotes the shared value premises that researchers use professional legitimacy to
structure collective assessments of the good refer to legitimacy conferred by professional
and the bad, that which is to be desired and endorsement (on any grounds), whereas
that which is to be shunned, right and wrong normative legitimacy should refer to
(Suchman, 1997). Norms, in this sense, are legitimacy conferred by any audience
everywhere - within people, groups, organi- (including but not limited to professionals)
zations, and social systems. Congruence with on primarily normative grounds (cf.,
such norms lies at the heart of legitimacy as Suchman, 1995, 1997).
conceptualized by early institutional sociolo- A second significant source of confusion
gists (e.g., Weber, 1978; Parsons, 1956, in the current literature involves the nature
1960; see also DiMaggio & Powell, 1991); and measurement of the 'taken-for-granted'
and such norms motivate most of the 'value component of cognitive legitimacy. As
challenges' identified by Hirsch and Andrews Aldrich and Fiol (1994: 648) note, 'The
(1984). In contemporary organizational highest form of cognitive legitimation is
institutionalism, however, 'normative legiti- achieved when a new product, process, or
macy' is often equated with DiMaggio and service is taken for granted.' Taken-for--
Powell's (1983) concept of 'normative iso- grantedness - an absence of questioning - is
morphism,' which has come to connote not not, however, easy to measure, especially
congruence with general social values, but because asking one's research subjects about
rather congruence with the particular ethics it is, in itself, a form of questioning. One
and worldviews of formal professions.² These increasingly popular measurement strategy
competing usages are highly problematic. To involves counting the number of organiza-
restrict normative legitimacy to 'professional tions or the number of media articles, with
endorsement' marginalizes the sorts of greater numbers indicating greater legitimacy
broader societal norms and values that have (Archibald, 2004; Carroll & Hannan, 1989a;
been seen as important since Weber. At the Hybels, Ryan, & Barley, 1994). Although
same time, it also marginalizes the less promising in some contexts, this approach
normative, more instrumental and/or may be more appropriate for emerging
cognitive aspects of professionalization. industries, organizations, or practices, than
Meyer and Scott (1983: 202), for example, for more established ones. There are fewer
argue that professional groups, such as automobile companies and media articles
'lawyers, accountants, intellectuals,' convey about automobile quality today than there
legitimacy by virtue of their 'collective used to be (Abrahamson & Fairchild, 1999;
authority over what is acceptable theory'; but Hannan, Dundon, Carroll, & Torres, 1995),
'acceptable theory' involves cause and effect but the automobile industry remains deeply
taken-for-granted. Perhaps as
54
industries become increasingly established, The possible subjects of legitimation are
population counts become decoupled from almost innumerable. Johnson (2004: 10-11)
taken-for-grantedness, in part because the offers a partial list, including: 'an act, a rule, a
taken-for-grantedness of existing firms procedure, a routine, a distribution, a
reduces the legitimacy of entrepreneurship position, a group or team, a group's status
more than it reduces the legitimacy of structure, teamwork, a system of positions, an
consolidation. Similarly, with regard to authority structure, an organization,
media articles, the taken-for-grantedness of a organizational symbols, an organization's
well-established activity may be reflected in form, practices, services, programs, a regime,
the complete absence of press coverage, a system of power, and a system of inequality
because the subject has blended into the (to name a few).' Two additional subjects of
cultural landscape and is no longer seen as legitimation that have drawn attention in
requiring social scrutiny or as being management research recently are company
'newsworthy' according to prevailing jour- founders and top management teams (Certo,
nalistic practices (Itule & Anderson, 1994; 2003; Cohen & Dean, 2005; Deeds, Mang, &
Shoemaker, 1996). Frandsen, 2004; Higgins & Gulati, 2003,
2006). Indeed, at this point, it appears that
almost anything can be a subject of
legitimation. In the future, researchers may
Subjects of legitimation face the challenge of aggregating lowerlevel
subjects of legitimacy in order to assess
'Subjects of legitimation' are those social legitimacy of a higher-level subject, such as
entities, structures, actions, and ideas whose evaluating the legitimacy of a new venture by
acceptability is being assessed. Alternative the legitimacy of its products, structure, and
terms include 'levels' (Ruef & Scott, 1998), top management team. Such an effort may
'focuses' (Suchman, 1995: 583), or 'objects' run into the problem of aggregation, such as
of legitimation (Johnson, 2004). Here, we use described in stakeholder research (Rowley &
'subjects' for several reasons. First, this term Berman, 2000; Wartick, 2002). Alternatively,
is both familiar and encompassing. Second, it researchers may decide that only a limited
reflects the idea that legitimacy is socially selection of attributes can be valid subjects of
constructed and emerges out of the subject's legitimation - that is, the research community
relation to other rules, laws, norms, values, might seek to specify legitimate subjects of
and cognitive frameworks in a larger social legitimation. Given the real-world
system. Third, it serves as a reminder that complexity and plasticity of legitimacy
legitimacy can be quite subjective at times, dynamics, however, we do not particularly
particularly when an organization is seeking advocate this latter, artificially exclusive
to gain or defend legitimacy in the face of strategy.
opposition (Ashforth & Gibbs, 1990;
Suchman, 1995). Finally, subjects aren't
necessarily passive but instead may be active Sources of legitimacy
in creating legitimacy (Ashforth & Gibbs,
1990; Suchman, 1995); examples include the 'Sources of legitimacy' are the internal and
European business schools who created the external audiences who observe organiza-
legitimating agencies that would then tions and make legitimacy assessments (Ruef
accredit them (Durand & McGuire, 2005), & Scott, 1998: 880). Meyer and Scott (1983:
and the Big 5 accounting firms who were 201-2) focused on those 'who have the
actively legitimating the multidisciplinary capacity to mobilize and confront the organ-
practice at the same time that they were ization,' not so much in terms of power but in
adapting it for use (Greenwood et al., 2002). authority over cultural theory. They classified
these sources into two basic groups. The first
are those who 'have standing and license,
derived from the organization's legitimating
 55
account of itself', most commonly the State. Empirical support for this relationship has
The second are those who have collective been found in many organizational forms,
authority over what is acceptable theory (e.g., such as newspapers, automobiles, and British
lawyers, accountants, intellectuals). These motorcycle manufacturers (Carroll &
may not be the only relevant sources, Hannan, 1989a; Hannan & Carroll, 1992;
however. In Suchman's definition (1995: Hannan et al., 1995; Wezel, 2005). Although
574), legitimacy implies congruence with some institutionalists (e.g., Zucker, 1989;
'some socially constructed system of norms, Baum & Powell, 1995) argued that density
values, beliefs, and definitions,' but, as the fails to capture the richness of the institu-
word 'some' suggests, the possible sources of tional environment, Carroll and Hannan
such legitimating accounts are not inherently (1989a, b), Hannan and Carroll (1995) and
restricted to any fixed set of gatekeepers. Hannan et al. (1995) rebutted that density is a
Thus, a central issue for legitimacy research parsimonious indicator of legitimacy that
is identifying who has collective authority enjoys predictive validity for a remarkably
over legitimation in any given setting. The wide array of organizational populations.
answer depends to a large extent on the focus Other researchers in both the institutionalist
of the research question. For instance, when and ecological camps responded by incorpo-
Suddaby and Greenwood (2005) examined rating additional indicators of society-wide
the debate between the US law and legitimacy, most notably time-period vari-
accounting professions about what a ables based on institutional regime changes
professional services firm should be, the or stages of the adoption cycle (e.g., Arthur,
issue was fairly specialized and the social 2003; Ruef & Scott, 1998). For further dis-
system narrowly drawn. In contrast, an cussion of these developments, see the
examination of the legitimacy of the global companion Chapter 2 by Boxenbaum and
energy industry after the Exxon Valdez oil Jonsson and 24 by Haveman in this volume.
spill would need to encompass popular Somewhere between specific legitimacy-
opinion, state regulators, industry analysts, granting authorities and society-at-large as a
political activists, and expert 'epistemic com- source of legitimacy stand the media. As
munities' (Adler & Haas, 1992) throughout suggested by Baum and Powell (1995; see
the world system. also Dowling & Pfeffer, 1975), the media are
Many researchers have finessed these dis- one institutionally rich indicator of society-
tinctions by treating society-at-large as a wide legitimacy, and researchers have been
source of legitimacy, especially over long working with media data since the 1990s. At
periods of time. This approach is particularly the population level of analysis, Hybels,
common in institutional studies of diffusion Ryan, and Barley (1994) measured the
(e.g., Strang & Soule, 1998; Tolbert & legitimacy of the US biotech population by
Zucker, 1983), which build on the linkage counting newspaper articles about the
between cognitive legitimacy and mimetic population in each year. Concurrently,
isomorphism³ to argue that the more Deephouse (1996) used media data to
numerous the adopters of a practice, the more measure the public legitimacy of individual
widespread its acceptance and the greater its organizations in the financial sector. Media
legitimacy. Similarly, 'density dependence' reports were subsequently used to measure
research in organizational ecology has treated legitimacy by Lamertz and Baum (1998),
the number of organizations in a population Abrahamson and Fairchild (1999), Pollock
as a determinant of the organizational form's and Rindova (2003), Bansal and Clelland
legitimacy within the external social (2004), and Deeds et al. (2004), etc.
environment. However, as Deephouse (1996) pointed out,
evidence from journalism and mass commu-
nications strongly suggests that media
56
reports not only reflect but also influence the the legitimacy of a voluntary social service
opinion of the general public (Fombrun & organization by whether it was listed in the
Shanley, 1990; McCombs & Shaw, 1972; community directory of Metropolitan
Schramm, 1949). Thus, the media should Toronto, registered as abona fide charity with
rightfully play a dual role in legitimacy Revenue Canada, and endowed with a large
research, serving both as an indicator of (and therefore presumably interorgani-
legitimation by sociey-at-large and as a zationally embedded) board of directors.
source of legitimacy in their own stead. Later papers enumerated similar connections
This duality is particularly noteworthy in to government, industry leaders, and other
the case of 'prestige media,' such as The New authorities in the institutional environment
York Times or The Wall Street Journal, (Baum & Oliver, 1991; Baum & Oliver,
which have figured prominently in legitimacy 1992; D'Aunno, Sutton, & Price, 1991).
studies. Empirically, prestige media provide Thus, charitable donations, interlocking
appealing indicators of society-wide directorships, and strategic alliances with
legitimacy because they are now readily prestigious partners have all been identified
available in electronic form, reducing the as important sources of legitimacy for the
often prohibitive burden of selecting and firms involved (Cohen & Dean, 2005; Deeds
coding a media sample (Carroll, 2004; et al., 2004; Galaskiewicz, 1985; Higgins &
Conway, 2006). Their presence in libraries Gulati, 2003, 2006; Miles, 1982; Oliver,
makes them amenable to historical research 2001).
(Mezias & Boyle, 2005). Theoretically, how- Three important interrelated issues emerge
ever, prestige media are particularly likely to from this review of the sources of legitimacy.
influence that which they are taken as meas- The first is a recognition that many common
uring, because they are produced by and for sources of legitimacy are themselves organi-
societal elites, aspirants to elite status, and zations. For instance, regulatory legitimacy
other participants in the cultural mainstream. results from rulemaking and enforcement
Prestige media often set the agenda for less activities within the agencies of the State.
prestigious media outlets (Boyle, 2001; Gans, Legitimacy-enhancing interorganizational
1979), and they are routinely targeted by relationships, too, arise from decisions by
organizations and institutional entrepreneurs other organizations to affiliate with the
seeking to build or repair legitimacy. Further, subject entity. And media stories, whether
with a few significant exceptions, prestige legitimating or de-legitimating, do not appear
media tend to be culturally conservative, out of a vacuum, but instead are produced by
acting as a stabilizing force in society, and organizations, as Hirsch (1977) reminded us
perhaps exacerbating the disparities between thirty years ago. Thus, the granting of
legitimate and illegitimate actors (e.g., Gitlin, legitimacy is as amenable to organizational
1980). analysis as is the pursuit.
Beyond society-at-large and the media, a We frame the second issue as a question:
third often-mentioned source of legitimacy Are there legitimate sources of legitimacy?
derives from interorganizational relations: A This depends in part on the research question
subject becomes legitimate when it is con- and the social system(s) of interest. Consider
nected to legitimate others (Galaskiewicz, whether organized crime or official
1985). Pfeffer and Salancik (1978), for corruption is legitimate. Jepperson (1991:
example, explain how the American Institute 149) stated that some elements, such as fraud,
for Foreign Study burnished its legitimacy by bribery, organized crime, and political
obtaining endorsements from prominent corruption, can be institutionalized without
political figures. And in perhaps the first sta- being legitimate. Nonetheless, within some
tistical study of organizational legitimacy, social systems, be they networks of organized
Singh, Tucker, and House (1986) measured criminals or particular national
 57
polities, even these 'social pathologies' may rejections - rather than on positive accounts,
in fact be accepted as legitimate - certainly in endorsements and adoptions (Hirsch &
the pragmatic sense of being seen as useful Andrews, 1984; Meyer & Scott, 1983). Many
and the cognitive sense of being taken-for- case studies, for example, examine organiza-
granted, and at least occasionally in the moral tions such as Nike and Exxon that have faced
sense of being ethically permitted, as well. legitimacy challenges. Deephouse (1996) was
Thus, an individual might be willing to bribe perhaps the first to apply this approach in
a police officer in one nation but not another, statistical research by measuring the extent to
and an organization might be willing to bribe which commercial banks were constrained by
a regulator in one nation but not another. The regulators and challenged in the media. One
legitimacy of criminal punishment varies; for of his measures was the presence of a
instance, many jurisdictions ban capital regulatory decision that explicitly limited the
punishment. One group's terrorist is often strategic choices of the bank in question. For
another group's freedom fighter. Given this this approach, the absence of legitimacy
'legal pluralism' (Merry, 1988), can challenges is an indicator of whether the
researchers meaningfully distinguish between organization is 'accepted' in the sense of
conventionally legitimate sources such as being left to pursue its activities without
public authorities and formal professions (the interference from cultural authorities.
two groups listed by Meyer and Scott, 1983) However, the presence of questioning may
and unconventional but often potent some times be as ambiguous as the absence
competitors such as criminal underworlds, of endorsement, given that in some domains
ethnic enclaves, and rejectionist sects? (academic meetings and presidential press
The third issue is the nature of the assess- conferences come to mind) questioning can
ments that sources make in determining be a ritualized display of attentiveness rather
whether to grant or withhold legitimacy. than a genuine challenge to legitimacy.
Most statistical studies focus on the presence, We close our discussion of legitimacy
absence or intensity of support from any sources with a statement from the resource-
given source. But while it may be fairly clear dependence perspective: 'We suspect that
that the presence of an endorsement or the legitimacy need not be conferred by a large
occurrence of an adoption implies support segment of society for the organization (or
(Galaskiewicz, 1985; Hannan & Carroll, subject) to prosper.' (Pfeffer & Salancik,
1992; Tolbert & Zucker, 1983), what does 1978: 194). The survival of many structures,
the absence of an endorsement or an adoption organizations and organizational forms
indicate? In some cases, such as charitable without ringing cultural endorsement
registration in an organizational field where suggests that there may be some truth to this.
non-profit status matters and registration is But in the absence of broad-based cultural
open to all, unregistered organizations would support, the characteristics of those particular
certainly appear to lack legitimacy (Baum & sources that do grant endorsement may
Oliver, 1991; Baum & Oliver, 1992; Singh et matter quite a bit.
al., 1986). In contrast, the absence of a board
interlock with a prestigious firm conveys
much less information about whether the Legitimation
subject organization is acceptable, desirable,
or culturally supported, except perhaps from Generalizing from Maurer (1971), Ashforth
the perspective of the prestigious firm. and Gibbs (1990), and Walker and Zelditch
Some researchers focus on negative (1993), (de-)legitimation is the process by
assessments - questions, challenges, and which the legitimacy of a subject changes
over time. Following Van de Ven (1992), we
use the term process narrowly as the order or
58
sequence in which things happen. The more (1997) found that conformity to Total Quality
general use of the term process includes a set Management practices enhanced the
of explanations for explaining a variance likelihood that a hospital would earn
theory and as a category of concepts; these endorsement from the Joint Commission on
are discussed elsewhere in this and other Accreditation of Healthcare Organizations
reviews. (JCAHO), a major source of legitimacy in the
Legitimation is closely related to diffusion US healthcare sector. And Glynn and Abzug
and institutionalization, and there is sufficient (2002) found that conformity in orga-
research to specify a general process. For nizational names increased their under-
instance, Johnson et al. (2006) integrated standibility to a wide range of business and
research in social psychology and non-business audiences. Findings like these
organizational sociology to develop a four- reinforce Suchman's (1995: 587) prescription
stage model of legitimation consisting of that the best way to gain legitimacy is often
innovation, local validation, diffusion, and simply to 'conform to environments.'
general validation. In general, we expect the Suchman, however, also notes that
dynamics of legitimation to parallel those of organizations sometimes gain legitimacy by
institutionalization (Lawrence, Winn, & manipulating, rather than conforming to,
Jennings, 2001), but exceptions to our environments. Along these lines, a large
expectations may make interesting case number of studies have examined how texts,
studies. Moreover, there is greater need for generally construed, can be used to gain
research on the order in which different legitimacy for some subjects and challenge
sources confer legitimacy and the different the legitimacy of other subjects (Phillips,
dimensions of legitimacy are conferred. A Lawrence, & Hardy, 2004). In an early study
notable example of this is by Greenwood et of organizational impression management,
al. (2002). They offered a six-stage model of for example, Elsbach (1994) found that
institutional change in highly profession- accounts that acknowledge failings or make
alized fields. They proposed that moral and reference to the institutional environment are
pragmatic legitimacy was theorized in stages superior to accounts that deny responsibility
four and five and cognitive legitimacy or make reference to the technical
occurred in stage six. environment. More recently, Suddaby and
Greenwood (2005) examined the discursive
struggle between proponents and opponents
Antecedents of legitimacy of multidisciplinary partnerships in profes-
sional services, and Vaara, Tienari, and
Meyer and Rowan (1977) suggest that both Laurila (2006) identified five 'discursive
technical efficiency and conformity to insti- legitimation' strategies, which they labeled
tutional myths can be precursors of legiti- normalization, authorization, rationalization,
macy.4 Deephouse (1996) was perhaps the moralization, and narrativization.
first to test these relationships directly. He
found that conformity and efficiency
increased banks' legitimacy in the eyes of Consequences of legitimacy
regulators, consistent with the regulators'
interest in the stability of the banking system; The consequences of legitimacy have also
in contrast, he found that only conformity received considerable attention. At least since
had a positive effect on legitimacy in the eyes Meyer and Rowan (1977: 353), institu-
of the media, assumed to be both a leader and tionalists have argued that legitimacy
a recorder of the public's norms and values enhances organizational survival. Supportive
(Dowling & Pfeffer, 1975; Fombrun & evidence abounds: Legitimacy measured by
Shanley, 1990). Similarly, Westphal et al. endorsements and interorganizational
 59
relationships increased survival rates among legitimacy studies. Legitimacy continues to
Toronto non-profits (Baum & Oliver, 1991, appear most frequently in theoretical analy-
1992; Singh et al., 1986), and both manage- ses; however, the number of descriptive case
rial and technical legitimacy reduced exit studies has increased substantially, and
rates for US hospitals (Ruef & Scott, 1998). efforts at confirmatory hypothesis testing
Organizational ecology, too, has lent support (although still relatively rare) seem to be on
to this claim, finding that legitimacy (meas- the rise.
ured by the density of firms in an industry)
increases survival rates across a wide range
of organizational populations (Hannan & LEGITIMACY AND OTHER SOCIAL
Carroll, 1992). EVALUATIONS
Other, more proximate consequences have
been examined as well. The strategic view of These developments have brought legitimacy
legitimacy sees it as something that can be research into overlap with a variety of other
manipulated to achieve organizational goals ways of describing the social evaluation of
(Suchman, 1995), and researchers have long organizations. In recent years, the most
posited that '[l]egitimacy affects the compe- prominent of these kindred concepts have
tition for resources,' (Pfeffer & Salancik, been 'status' (e.g., Podolny, 1993; Phillips &
1978: 201; see also Parsons, 1960). More Zuckerman, 2001) and 'reputation' (Fombrun
recently, as an interest in legitimacy has & Shanley, 1990; Fombrun, 1996). Although
spread into the strategic management litera- a full synthesis of these largely independent
ture, researchers have developed and tested literatures would go well beyond the scope of
hypotheses predicting how various types of the present chapter, one might productively
legitimacy would affect other performance ponder to what extent and in what ways legit-
measures, such as the value of initial public imacy, status, and reputation are either equiv-
offerings (IPOs) (Cohen & Dean, 2005; alent or distinct. In this section, we briefly
Deeds et al., 2004; Higgins & Gulati, 2006; compare and contrast what we see as the key
Pollock & Rindova, 2003), stock prices connotations of each term.
(Zuckerman, 2000), stock market risk
(Bansal & Clelland, 2004), and stakeholder
support (Choi & Shepherd, 2005). Definitions and distinctions

The definitions of status and reputation are at

Summary least as diverse, ambiguous, and contested as
the definition of legitimacy. We will explore
As the preceding discussion demonstrates, some of the sources of this ambiguity and
research on legitimacy has expanded in many contestation below, but as provisional work-
directions over the past three decades. Initial ing definitions, we offer the following,
concern with the effect of legitimacy on sur- adapted from the literature:
vival has expanded to include effects on other
types of organizational success. Legitimacy  Status is 'a socially constructed,
has been dimensionalized into as many as intersubjectively agreed-upon and accepted
twelve types, and the recognized sources of ordering or ranking' of social actors
legitimacy have been extended well beyond (Washington & Zajac, 2005: 284), based on
the two enumerated by Meyer and Scott the esteem or deference that each actor can
claim by virtue of the actor's membership in a
(1983) - those with standing and license and
group or groups with distinctive practices,
those with authority over what constitutes values, traits, capacities or inherent worth (cf.,
acceptable theory. These developments have Benjamin & Podolny, 1999; Weber, 1946).5
created opportunities for a wide variety of  Reputation is a generalized expectation about
a firm's future behavior or performance based
on
60
collective perceptions (either direct or, more by obeying norms instrumentally as long as
often, vicarious) of past behavior or the benefits of doing so exceed the costs; and
performance (cf., Ferguson, Deephouse, & by cynically displaying the outward indicia
Ferguson, 2000; Fombrun, 1996; Rindova et of conformity, while making as few substan-
al., 2005).6 tive accommodations as possible. Thus, all
three literatures also, at least implicitly,
To illustrate the potential for overlap among engage two central questions: (a) how
legitimacy, status, and reputation, consider successful can cynical displays of conformity
the following two examples from recent be, absent internalization?7 and (b) to what
empirical research: Higgins and Gulati extent does surface conformity lead over time
(2003) report that the prior job histories of a to internalization, despite initial cynicism?
firm's upper echelon employees, such as Fundamentally, to what extent can
affiliations with certain prominent industries legitimacy, status, or reputation, be feigned
like pharmaceuticals, increase the likelihood without either being internalized by organi-
that the firm can garner endorsements from zational participants or being discovered by
leading investment banks; Deeds et al. (2004) curious outsiders, such as competitors, the
similarly report that US high tech firms with media, or the state?
founders or managers from top ten research The similarities between these literatures
universities and Master of Business arise because legitimacy, status, and reputa-
Administration (MBA) programs receive tion share many antecedents, consequences,
higher IPa valuations. In both studies, the measures, and processes. Indeed, one could
employee-background variables are charac- no doubt find instances in the prior literature
terized as measures of legitimacy - a plausi- where different authors use different mixes of
ble claim, given that past affiliations could the three terms for essentially the same
indicate managerial competence and hence empirical referents. Given this, any progress
pragmatic legitimacy, managerial propriety toward precision and parsimony will
and hence moral legitimacy, or managerial inevitably come at the cost of contradicting at
conventionality and hence cognitive legiti- least some prior usages; we doubt that
macy. But prominence and prestige are also anyone could prune this conceptual thicket
often associated with status; and a track while leaving every branch fully intact.
record of experience, training and visibility Nonetheless, we believe that researchers
might easily foster reputation. Is the choice throughout these intertwined literatures
among these labels merely stylistic, or do would benefit from clarifying and, where
their implications differ? possible, disentangling the three focal
Certainly, the literatures on legitimacy, concepts. Juxtaposing legitimacy, status, and
status, and reputation have many traits in reputation reveals important connotations of
common. They all focus on cultural factors in each that would remain largely invisible if
organizational life. They all suggest that the three were considered only in isolation.8
organizations can garner resources by Goring our own oxen first, we can begin
conforming to prevailing social norms. And by suggesting that legitimacy, in contrast to
they all emphasize that 'objective' perform- status and reputation, is fundamentally
ance criteria are not always salient or even dichotomous. Despite some usages to the
evident, and that organizational behaviors contrary (see below), legitimation is largely a
may be social signals as well as technical question of 'satisficing' to an acceptable level,
operations. Thus, all three literatures depict and the absence of negative 'problems' is
social perceptions of conformity as being more important than the presence of positive
central determinants of organizational achievements. Legitimacy is also
success. Moreover, all three recognize that fundamentally non-rival: it is rarely a zero-
organizations can create such 'social percep- sum game within any given
tions of conformity' in at least three different
ways: by embracing and internalizing norms;
 61
population; indeed, positive feedback loops ostracism, and individuals move between
and a 'logic of confidence' (Meyer & Rowan, groups primarily through sponsorship, not
1977) tend to produce win-win ceremonies of competitive performance. From this, it
mutual affirmation among legitimate actors. follows that, whereas legitimacy is
Further, legitimacy is fundamentally fundamentally homogenizing, status is
homogenizing, producing herd-like fundamentally segregating: Lower-status
conformity along whichever dimensions the groups tend to imitate higher-status groups as
prevailing rational myths establish as a way of earning group honour; however,
legitimacy-defining. Further, precisely higherstatus groups tend to jettison status
because legitimacy is non-rival and markers as soon as those markers become
homogenizing, it paints with a broad brush contaminated by imitation. Significantly,
and tends to attach to all entities that share a because status is group-rival and segregating,
given form. Although firms, structures and it tends to attach to self-aware cliques or
even individuals can achieve legitimacy on 'status groups,' rather than to individual social
their own, the more common pattern is for actors or entire populations. Entry into these
each instance to be legitimated by conformity cliques is usually based on a mixture of
with a collectively legitimated template.9 ascription and achievement (or, one might
Finally, legitimacy is fundamentally political. say, legitimacy and reputation), but entry is
Because it is linked to authority, legitimacy more a matter of favor than dessert objective
generally produces a taken-for-granted right performance and legitimacy in the eyes of
to act and command within a particular outsiders matter far less than acceptance by
sphere of activity. This political aspect is the status group itself. Finally, status is
embedded within the etymological roots of fundamentally honorific; it reflects cultural
legitimacy in the Latin lex or legis, meaning capital and habitus (Bourdieu, 1986), and it
law. It is also consistent with the central elicits deference and tribute: 'Status generates
place of the state - as both licensor and social esteem and special, unearned (i.e.,
enforcer - in much legitimacy research. non-merit-based) benefits known as privi-
Indeed, state certification is arguably the core leges, which are granted to and enjoyed by
archetype of legitimation, to which most high-status actors in a social system'
other legitimation mechanisms are linked by (Washington & Zajac, 2005: 284). Status also
either implication or analogy. implies an ability to valorize (or contaminate)
Status reflects the relative position of by association - as illustrated by admission
social groups within a hierarchy of collective into an elite club, or rejection by the 'in'
honour (cf., Weber, 1946). Consequently, in crowd.
contrast to legitimacy, status is More so than either legitimacy or status,
fundamentally ordinal and categorical, reputation involves an explicit extrapolation
varying less within groups than across from past to future behavior. Thus, strictly
groups. This allows empirical distinctions speaking, reputations can be as multidimen-
between, for example, the upper-, middle-, sional and idiosyncratic as the behaviors that
and lowerstatus tiers in an industry (Podolny, they summarize.10 Certainly, reputation can
1993; Deephouse & Carter, 2005; Phillips & extend beyond product and service quality
Zuckerman, 2001). Further, whereas legiti- (the focus of most economic discussions of
macy is fundamentally non-rival, status is reputation), to include being a tough
fundamentally 'group-rival.' That is, status is competitor, a good place to work, an
positive sum within status groups, but environmentally sensitive manufacturer, etc.
negative sum across groups. Groups compete (e.g., Shapiro, 1983; Weigelt & Camerer,
for status through solidarity displays, 1988; Benjamin & Podolny, 1999; Carter &
collective mobility projects, and out-group Deephouse, 1999; Washington & Zajac,
2005; Rindova, Pollock, & Hayward, 2006).
62
Nonetheless, in contrast to both legitimacy fundamentally dichotomous, legitimacy can
and status, reputation is fundamentally a con- appear continuous (or at least ordinal) by
tinuous measure, placing each actor on a virtue of what might be termed 'pointalism':
continuum from best to worst - or, more Because legitimacy is always assessed by
often, on many such continua. As a ranking multiple audiences and with respect to
of actors, reputation is fundamentally rival: multiple activities, an organization can
On any given continuum, reputation is con- become 'more legitimate' by becoming legit-
tingent on relative standing, and hence a imate to more audiences in more of its activ-
firm's position can usually only increase at ities. Second, legitimacy can vary in its
the expense of competitors. Reputation is certainty and security. Thus, a firm can
also fundamentally differentiating: become 'more legitimate' by becoming more
Reputation dynamics encourage organiza- clearly legitimate, more firmly legitimate, or
tions to distinguish themselves from their both.
peers either substantively or by advancing Another source of confusion involves the
claims to uniqueness, often despite minimal assertion that legitimacy is fundamentally a
outward differences. Because reputation is property of forms or populations, rather than
rival and differentiating, it tends to attach to of self-defined groups (à la status) or individ-
individual actors, ranking each firm even ual firms (à la reputation). A casual perus al
when the distinctions involved are of the empirical literature would turn up
substantively trivial.¹¹ Finally, if legitimacy is many instances when this assertion seems not
political and status is honorific, reputation is to hold, and when legitimacy, instead,
fundamentally economic: In effect, reputation appears quite similar to group-level status or
becomes an input into potential exchange firm-level reputation. Upon closer inspection,
partners' expected utility functions. Given however, most of these counter-examples
that boundedly rational actors can never prove to be special cases, such as when a
know the actual outcomes of transactions in form has only one real-world instantiation
advance, would-be exchange partners must (e.g., the United Nations) or when a group
turn to reputation in order to map one erects such high status barriers that it
another's past performances onto present becomes virtually a population unto itself,
preferences. This means that favorable incommensurable with other organizations in
reputation is often a strategic resource that its domain (e.g., the 'Big 8, 6, 5, or 4'
firms can exploit for competitive advantage accounting firms). Moreover, even in these
(cf., Barney, 1991; Deephouse, 2000; Roberts special cases, legitimacy's underlying conno-
& Dowling, 2002). tation of being a population-level property
seeps through: One hallmark of legitimacy is
the (mythological) assumption that
legitimation arises from alignment with
Confusions and conflations universal principles, rather than from the
idiosyncratic, culturally-specific
Despite these differences in connotation, the maneuverings of a particular firm or group of
prior literature frequently confuses and firms; hence, in claiming legitimacy, unique
conflates legitimacy with both status and rep- entities tend to present themselves as
utation.¹² One common source of difficulty is exemplars of an abstract form, even if they
reflected in the recurrence of phrases like are the only exemplar in existence. (An
'more (or less) legitimate': In the past, attack on the UN becomes an attack on world
researchers have often treated legitimacy as a government; an appeal for the international
continuous variable, obscuring an important space station becomes a tribute to the human
distinction between legitimacy and both spirit of exploration.)
status and reputation. The sources of this A third cause of confusion is the fact that
usage are two-fold: First, despite being observers (both academics and practitioners)
 63
often rely on overlapping information inputs frequently identified a favorable reputation as
to assess legitimacy, reputation, and status. a resource that can yield significant com-
Sometimes these inputs are simply too petitive advantages (e.g., Barney, 1991;
generic and multivocal to be characterized as Deephouse, 2000; Roberts & Dowling,
indicators of one form of social evaluation 2002).
versus another. This, for example, is clearly The situation becomes more complicated,
true of charitable donations and directorship however, when one reverses the causal
interlocks, two of the most common legiti- arrow, to make success an independent rather
macy/status/reputation measures in organiza- than a dependent variable. Reputation,
tion studies (Davis & Greve, 1997; Fombrun, legitimacy and status can each be bolstered
1996; Galaskiewicz, 1985). But even when by successful performance - but in decidedly
well-established 'reputational intermediaries' different ways. Success enhances reputation
purport to be distilling objective data about directly, by demonstrating an ability to
past performance (as is the case, for example, perform. Indeed, the link between past
in the US News and World Report rankings performance and future potential is arguably
of educational programs), conflation remains reputation's defining element. Success
almost inevitable (cf., Sauder & Lancaster, enhances legitimacy, too, but mostly
2006). Evaluators, like all social actors, have indirectly: Success often signals cultural
cognitive limitations (Simon, 1976), and as a acceptance and an ability to deliver on
result, unique, infinitely multidimensional commitments, both of which affect whether
reputations get reduced, in practice, to a an organization can sustain a self-confirming
small number of socially constructed ranking 'logic of confidence' (Meyer & Rowan,
criteria. And significantly, both the choice of 1977). But success, in itself, is not enough.
criteria and the methods of measurement are Legitimacy rarely attaches to organizational
heavily shaped by the same institutional forms, such as criminal gangs or 'pirate' radio
logics and honor-markers that determine stations, that 'succeed' in culturally
legitimacy and status. inappropriate endeavors or by taking short-
A fourth reason for confusion is that legit- cuts around culturally prescribed practices.
imacy, reputation, and status are all related to Finally, while success may enhance status as
success. As discussed above, each of these well, it does so only obliquely at best.
favorable social evaluations can enhance per- Success may provide currency (literal or
formance: Legitimacy can be crucial to gar- figurative) for procuring the indicia of status-
nering resources from external audiences, to group membership; but status groups tend to
commanding the loyalty of internal partici- be resistant to the success of arrivistes,
pants, and (in its cognitive forms) to avoiding interposing new bases of distinction (i.e.,
misunderstandings and miscues among 'moving the bar') in order to maintain group
external and internal constituencies alike. boundaries (Weber, 1946). Given these
Copious evidence also links status to success. different mechanisms, the relative impact of
For instance, Benjamin and Podolny (1999) success on reputation, legitimacy, and status
found that the status of a winery led to higher may vary. For instance, Deephouse and
prices, even after controlling for the winery's Carter (2005: 355) showed that financial
product quality. performance had a stronger effect on
And the impact of reputation on subse- reputation than it did on legitimacy.
quent outcomes has been well-known, at least Figure 1.1 depicts our nested conceptual-
since Merton (1968) famously identified the ization of legitimacy, reputation, and status,
'Matthew Effect' in the sociology of and their relationships to resource flows.
science.¹³ In organizational studies, research Stakeholders (on the left) exchange resources
on the resource-based view of the firm has with organizations in a focal industry,
population, or sector (on the right); the lines
64

represent bi-directional resource flows of words, no matter what the components of the
inducements and contributions, such as marketing mix illegitimate organizations
employee effort and compensation (Barnard, offer, a substantial group of stakeholders will
1938: 94; Mareh & Simon, 1958: 84).14 For not transact with them. Thus, as many
illustrative purposes, we can group stake- authors have suggested in the past, legitimacy
holders dichotomously, although stakeholder affects market access: 'An organization
research offers ample evidence of more fine- which can convince relevant publics that its
grained differentiation (Clarkson, 1995; competitors are not legitimate can eliminate
Mitehell, Agle, & Wood, 1997). Consistent some competition' (Pfeffer & Salaneik, 1978:
with our discussion above, organizations in 194; see also Brown, 1994, 1998; Deephouse
the figure are grouped into two legitimacy & Carter, 2005). A few examples may be
classes (legitimate and illegitimate), and enlightening: One is gambling, divided into
within each class organizations are clustered state-sanctioned and other forms. Many
by status (high, medium, and low). In addi- customers who would happily buy a state
tion, each organization possesses a unique lottery ticket would never consider placing
reputation, subscripted by the organization's wagers with a bookie, even at substantially
rank within its legitimacy and status cohort. more favorable odds. Another example is
The essence of the figure is that certain petroleum marketing. Certain stakeholders
stakeholders will exchange resources only who are concerned about the environment
with legitimate organizations and will not may refuse to patronize Exxon and Shell in
engage in transactions with others. In other reaction to the Exxon Valdez and
 65
Brent Spar incidents, although some of those (Home winemakers who sell their product
same stakeholders may have forgotten less outside of state-licensed facilities might
de-legitimating accidents caused by other exemplify an illegitimate group, with limited
producers. A third example comes from the market access regardless of either reputation
British Columbia forestry industry, where the or status.) In general, within a legitimacy
province recently decided to grant timber class and status group, stakeholders will
access only to contractors who could demon- favor those organizations with the strongest
strate acceptable safety standards, not only in reputations. The literature suggests at least
their own operations but also in the opera- two noteworthy caveats, however: First,
tions of their sub-contractors. In announcing some stakeholders may have idiosyncratic
the new policy, the provincial Forests preferences, leading them to weight certain
Minister nicely captured the importance of aspects of reputation differently from the
legitimacy for market access: 'no one is going norm among stakeholders as a whole; this
to get one of those tenders unless they have allows organizations to adopt niche strategies
safety procedures applied through their that cater to specific subsets of the stake-
operation . . . they are a safe company and holder pool. Second, stakeholders will often
they meet our standards.' (Kennedy, 2006: give more credence to (or be more cognizant
S3). of) reputational hierarchies within 'core'
As Figure 1.1 suggests, each legitimacy versus 'peripheral' groups; this suggests that
class may contain several status groups. For the impact of reputation may be moderated
visual simplicity, we depict a simple 'low,' by legitimacy and status, such that legitimate,
'medium,' and 'high' division. This trichotomy high-status actors will enjoy the greatest
is fairly common in the recent status returns on their past achievements (cf.,
literature, and for some industries, such as Phillips & Zuckerman, 2007; Beck, Horan, &
automobile manufacturing, these three broad Tolbert, 1978).
status groups may suffice. In other industries, As the preceding paragraphs suggest, the
however, status distinctions are likely to be interrelationships among legitimacy, status,
much more fine-grained; for instance, and reputation offer numerous research
Benjamin and Podolny (1999: 574) identified opportunities. One empirical approach would
41 distinct status groups among California be to cross-classify legitimacy classes (e.g.,
wineries. Although not illustrated in the Yes/No), status groups (e.g., High/
figure, stakeholders may also be divided into Middle/Low) and reputational ranks (e.g.,
status groups. When this is the case, and High/Low), and then examine the size, char-
when organizations and stakeholders acteristics, and consequences of each of the
recognize one another's status hierarchies, resulting 12 categories. Past research has
entities in each population may seek to avoid adopted essentially this approach: For
contamination by limiting their contact with instance, studies of top business schools
lower status entities in the other. This suggest that this sector possesses relatively
dynamic tends to reproduce the status clear status groupings (at least at the high
hierarchies on both sides of the exchange. end), many rankings systems, and a few
Within any given status group, each legitimating agencies (Corley & Gioia, 2000;
organization has a reputation based on many Durand & McGuire, 2005; Elsbach &
dimensions, such as product quality, work- Kramer, 1996; Gioia & Thomas, 1996;
place practices, community involvement, etc. McKee, Mills, & Weatherbee, 2005; Wedlin,
(Fombrun, 1996). In the case of winemaking, 2006). Looking at the California wine indus-
such components might include a reputation try, Benjamin and Podolny (1999) attempt to
for producing award-winning wine, for being differentiate the effect of product quality and
a good place to work, for having great winery status affiliations on success. And looking at
tours, or for donating generously to charities. architectural services, Jones and Manev
66
(2002) explore how legitimacy and status reputations are often taken into consideration
affect reputation. (at least formalistically) when legitimacy
At a theoretical level, much work remains sources make endorsement and affiliation
to be done on how the processes of legitima- decisions. Finally, as mentioned previously,
tion, reputation-building, and status-seeking status affects reputation by increasing the
intersect and overlap (Rao, 1994; Vidaver- returns to past achievements; and reputation
Cohen, 2006). Figure 1.2 suggests a few of affects status both by determining an actor's
the most plausible interconnections: At their standing within a particular status group and
cores, legitimacy, status, and reputation stem by conditioning the likelihood of sponsored
from fundamentally different sources, with mobility from one status group to another.
legitimacy reflecting conformity to various At the risk of oversimplification, much of
social guidelines, while status reflects ascrip- this discussion might be encapsulated in the
tion and group mobility, and reputation following equation:
reflects achievement and self-presentation.
However, the three also influence one Prestige = Legitimacy + Legitimacy *
another. Legitimacy affects status because a (Status + Reputation + [Status * Reputation])
commitment to avoid illegitimate activities
may be a criterion for status-group member- 'Prestige,' here, denotes an organization's
ship; and status affects legitimacy because capacity to achieve objectives by virtue of
membership in a high-status group may enjoying a favorable social evaluation.
create presumptions of proprietary that cush- Without legitimacy, prestige will be low,
ion the impact of minor rule violations while regardless of the organization's status or rep-
at the same time increasing the penalty for utation. However, legitimacy alone is rarely
breaches that are so egregious as to threaten enough to achieve much beyond the most
the honor of the group as a whole. mundane tasks. Rather, legitimacy empowers
Legitimacy affects reputation because the organization to enunciate claims based on
legitimate actors are often both more visible both status and reputation - and status and
and more credible in their self-presentations; reputation further augment one another
and reputation affects legitimacy because through the visibility, credibility, and mobil-
ity effects described above.
 67
Before closing, we should perhaps note and Kotha (2007) demonstrated that
that legitimacy, status and reputation are Amazon.com became the exemplar of e-
hardly the only social evaluations to appear commerce in the 1990s; and Bowen (2004)
in recent organizational literature. Others highlighted a US pharmaceutical firm as an
include accreditation, certification, credibil- exemplar of ethical decision making.
ity, and accountability, as well as the related Somewhat similarly, celebrities are entities
concepts of the 'exemplar' and the 'celebrity.' 'that attract a high level of public attention
To a large extent, these terms simply re- and generate positive emotional responses
district and re-label the terrain that we have from stakeholder audiences' (Rindova et al.,
explored above. For instance, business school 2006: 51; Hayward, Rindova, & Pollock,
accreditation associations have been 2004). Celebrities (and possibly exemplars)
described as legitimating agencies (Durand & benefit disproportionately from their position,
McGuire, 2005), and accountability and based on the economics of superstars (Rosen,
credibility are linked to trust, a central 1981). These benefits could be compared to
component of both legitimacy and reputation. the privileges of high-status actors, discussed
Certification, too, could be incorporated into above (Washington & Zajac, 2005).
models of either legitimacy, status, or
reputation (cf., Schnatterly, Ward, & Lee,
2006). Some of the most well-known certifi-
cations are those of the International INTEGRATIVE DISCUSSION
Standards Organization (e.g., ISO 9000 and
ISO 14000), which - consistent with our view
of legitimacy - are open to any company that We conclude by presenting several integra-
meets a set of predetermined criteria (Beck & tive recommendations. The first is to recog-
Walgenbach, 2005; Boiral, 2003; cf., Guler, nize that legitimacy and its dimensions are
Guillen, & MacPherson, 2002; ISO 9000 analytic concepts, not fully separable empir-
News, 1996).15 This type of dichotomous, ical phenomena. The second is to further
non-rival certification can be distinguished investigate the workings of various sources
from a 'certification contest,' defined as 'a of legitimacy and the workings of legitimacy
competition in which actors in a given at multiple levels of analysis. The third is to
domain are ranked on the basis of embrace diverse perspectives, improving our
performance criteria that key stakeholders understanding of organizational legitimacy
accept as credible and legitimate' (Rao, 1994; by drawing on the work of other disciplines
Wade, Porac, Pollock, & Graffin, 2006: 644). such as law, mass communications, and
'Certification contests legitimate political science.
organizations, generate status orderings, and As a starting point, we urge legitimacy
create favorable reputations' (Rao, 1994: 29; researchers not to become fixated on defend-
Wade et al., 2006); however, whether they ing the purity and independence of the differ-
accomplish each of these tasks better or ent dimensions of legitimacy. As suggested
worse than other evaluation mechanisms above, the assertion that a legitimate organi-
largely remains to be determined. zation must offer an 'acceptable theory' of
Finally, exemplars and celebrities are itself (Meyer & Scott, 1983: 202) is broad
migrating into organizational studies. An enough to encompass a variety of such legiti-
exemplar is a singular subject that sets the mating accounts - from claims about cause
standard for a certain social act, form, or and effect (pragmatic legitimacy), to invoca-
actor. For instance, Greenwood and Empson tions of collectively valued ends (moral legit-
(2003) proposed that professional imacy), to constitutive suppositions about
partnerships may be an exemplary definitions and meanings (cognitive legiti-
governance mechanism; Rindova Petkova, macy) (Greenwood et al., 2002; Meyer &
68
Scott, 1983; Stryker, 1994; Suchman, 1995). for the legitimation of certain subjects and
Early in the development of organizational the de-legitimation of others (Elsbach &
institutionalism, Meyer and Scott (1983: 214) Sutton, 1992; Rao, Morrill, & Zald, 2000;
observed that 'the literature on legitimacy Strang & Soule, 1998). These efforts and
tends to distinguish sharply between its counter-efforts are often adjudicated (albeit
cognitive and normative aspects. This may not always fully resolved) by courts and other
overemphasize Western dualism.' More public authorities as a corollary of the state's
recently, Scott (1995: 143-4) has written that ostensible monopoly of legitimate force
'distinctions ... among [the three pillars of (Edelman & Suchman, 1997; Suddaby &
institutions] are analytical in the sense that Greenwood, 2005).
concrete institutional arrangements will be Overall, then, we see a growing role for
found to combine regulative, normative, and research on institutional politics, which
cognitive processes together in varying Stryker (2000: 190) defined as the 'strategic
amounts.' As applied to legitimacy, any act of mobilization and counter-mobilization of
legitimation may operate on a variety of diverse institutional logics.' Without
dimensions. For instance, regulatory approval prejudging the findings of such research, the
of a new pharmaceutical not only confers literature to date suggests a central position
regulatory legitimacy but also (a) enhances for rhetorical, discursive, and technical strug-
the 'cognitive' comprehensibility and taken- gles over what is legitimate and who is
for-grantedness of the new compound, (b) authorized to theorize and certify (e.g.,
indicates that the entity is consistent with the Hensmans, 2003; Lounsbury, 2007; Phillips
'moral' value of good health, and (c) confirms et al., 2004; Suddaby & Greenwood, 2005;
the entity's demonstrable 'pragmatic' benefits. Vaara et al., 2006). Future research might
Similarly, Rao (1994) reasoned that also consider the evolution and ecology of
certification contests in the early days of entire populations of legitimacy sources.
automaking provided both normative Given that concepts from legitimacy research
justification and cognitive validation for the have been used to study the births and deaths
young industry - as well as pragmatic of organizations, future research could
promotion for those fortunate firms that examine the births and deaths of legitimating
could demonstrate superior capabilities. agencies or rule systems (Jennings, Schulz,
Instead of further reifying analytic distinc- Patient, Gravel, & Yuan, 2005). Along these
tions among the various dimensions of legit- lines, Durand and McGuire (2005), McKee,
imacy, researchers might do well to attend Mills, and Weatherbee (2005), and Wedlin
more closely to the workings of various (2006) examined the creation and expansion
sources of legitimacy.16 The sources and sub- of business school accreditation agencies,
jects of legitimacy are embedded in complex and one could imagine a similar approach to
networks of social influence and communi- studying the proliferation of business-school
cation (Carter & Deephouse, 1999; reputation rankings. In this way, one might
Granovetter, 1985; Rowley, 1997): Subjects arrive at a 'community ecology' of
seek endorsement from various sources and legitimacy, in which the legitimacy,
are pleased when they receive it, but certain competition, and population density of
sources may have a larger impact than others. subjects and sources - as well as of advocates
For instance, regulatory approval of a new and activists - might interact and coevolve.
pharmaceutical usually means more than We also believe that future research
publication of a non-refereed research study should examine legitimation at multiple
funded by the drug's developer. Meanwhile, levels within organizations, among
subjects may not be the only entities seeking organizations, and within organizational
to affect a given source's deliberations: Social fields - and that these investigations should
movements often actively advocate include the interactions
 69
among the levels.17 For example, Holm lacks an overarching theory of legitimation to
(1995) presented a 'nested systems' view, to guide inquiry.' Since that time, researchers
examine how various sources contributed to have made progress in developing not a
the legitimation and de-legitimation of single overarching theory, but multiple theo-
mandated sales organization in Norwegian ries matched to particular dimensions and
fisheries. More recently, Rubtsova and Dowd sources of legitimation. Increasingly these
(2004) examined cultural capital at the theories have drawn on other disciplines, a
macro-, meso-, and micro-levels, Sine, trend which we believe will and should
David, and Mitsuhashi (2007) examined the continue. For instance, Stryker (1994),
effects of firm and sector legitimacy on new Suchman and Edelman (1996), Edelman and
ventures, and Crumley, Lounsbury, and Suchman (1997) and Edelman, Fuller, &
Greenwood (2006) examined how social MaraDrita (2001) have extended arguments
actors attempted to legitimate and delegiti- from the 'law and society' tradition to explore
mate the role of acupuncture within the insti- the impact of institutional ambiguity and
tutionalized western healthcare system. Such contestation. Analogously, Carter and
cross-level studies are still in their infancy; Deephouse (1999), Deephouse (1996),
however, eventually research on how individ- Deephouse & Carter (2005), Kennedy
uals within groups within organizations grap- (2005), and others have adapted mass com-
ple with particular subjects of legitimation, munication theory to explore the role of the
such as equal employment opportunity guide- media and public opinion. In the future, bor-
lines (Edelman, 1992), may yield useful rowings from political science and public
insights into the legitimation of authority administration may similarly enrich the
systems in general, a central topic in social legitimacy literature's depiction of regulators
psychology (Berger, Cohen, & Zelditch, and other public sector legitimation sources.
1972; Johnson et al., 2006). Equally important, though, will be exchanges
As researchers begin to explore the work- with other branches of organization theory
ings of various sources of legitimacy, impor- itself. After all, many sources of legitimation
tant differences in kind are likely to emerge. are organizations in their own right (Hirsch,
To facilitate productive dialog, we propose 1977; Scott, 1987), and their actions need to
the following tentative distinctions: be understood in organizational terms.
Legitimacy agents are those organizations, The development of an overarching theory
such as accreditors and regulators, of legitimation remains unfinished business.
specifically established to confer legitimacy More than a decade after Suchman's 1995
on a certain set of subjects (Durand & review, we still find that 'most treatments
McGuire, 2005). Legitimacy mediators are cover only a limited aspect' (1995: 571) of
other social actors, such as the media, who this complex but crucial subject. A more
make or convey implicit or explicit legiti- adequate formulation would contain careful,
macy assessments as a side-effect of their widely-accepted definitions, would examine
routine operations. And legitimacy guidelines more aspects of the concept, and would
are abstract legitimacy-relevant constructs incorporate both strategic and institutional
embedded in society at large, such as views. One practical challenge on the road to
language, values, norms, social rules, etc. We this destination arises from the norms of the
use the term 'guidelines' to highlight the fact business school world, in which many legiti-
that these constructs may be in flux, may macy researchers now work. Rewards there
vary according to local conditions, and may increasingly favor journal publications over
not be enforced as strictly, as consistently, or longer works, arguably impeding the
as formally as might be implied by the more construction of comprehensive explanations
commonly used phrase 'social rules.' for phenomena that are too complex to be
In an early review, Galaskiewicz (1985: explicated in the space of 30-40 pages.
298) stated 'this literature [on legitimacy]
70
Nonetheless, recent years have seen the efficiency and institutional conformity as two largely
arrival of several exemplary books, such as distinct attributes.
5 Here, we focus on organizational status. Thus,
Scott et al.'s (2000) examination of the 'ranked social actors' in question are organizations,
healthcare organizations and Wedlin's (2006) and the 'groups' are, for example, the upper, middle
examination of European business schools. and lower tiers of an industry or the federal, state, and
And other research programs have yielded local levels of a government.
impressively cumulative sequences of journal 6 This definition is consistent with reputation's
etymological roots in Latin as re-putare, 'to think back
articles, such as the work on professional upon.' In managerial and economic usages, however,
service firms conducted by scholars at the this 'thinking backward' is often associated with 'acting
University of Alberta (e.g., Suddaby & forward.' For instance, if a company has a reputation
Greenwood, 2005; Greenwood et al., 2002; for product quality, then customers are more likely to
Hinings, Brown, & Greenwood, 1991). These pay extra for its products; if a company has a
reputation for being a bad place to work, then recruits
efforts represent a solid start, but whether will avoid it and employees will seek new jobs
they will lead to a more comprehensive and elsewhere (Fombrun, 1996; Weigelt & Camerer,
holistic understanding remains to be seen. 1988).
Hinings (2006) has advocated the pursuit of 7 For obvious reasons, questions like this link all
ambitious, largescale research programs to three literature to a fourth literature (not reviewed
here) on organization impression management (e.g.
reach new heights in our understanding of Elsbach, 1994; Elsbach & Sutton, 1992).
complex organizational phenomena. 8 Readers who quail at constraining their favorite
Legitimacy is clearly one of those complex term should take comfort from our focus on
phenomena, and we agree that a large-scale connotations rather than denotations. We see no need
research program may be in order. We note, to narrow the permissible usages of any particular
term at this time; however, much can be learned from
however, that this program would require the exploring how legitimacy, status, and reputation may
efforts of many people over many years. Can carry differing overtones even when applied to similar
such concerted endeavors become legitimate phenomena.
again? 9 This is self-fulfilling to some extent: Entities that
manage to achieve legitimacy on their own often
become the templates for legitimate forms. As the
original instance is imitated, its initially idiosyncratic
NOTES claim to legitimacy becomes reinstitutionalized at the
level of the form as a whole.
1 Given the large volume of relevant research, our 10 In this sense, organizational reputation is quite
coverage here is necessarily only partial. Other close to organizational identity - with the caveat that
informative reviews of legitimacy scholarship include reputation emphasizes identity as assessed by trans-
recent essays by Stryker (1994, 2000), Suchman action partners, rather than identity as internalized by
(1995), Ruef and Scott (1998), and Johnson, Dowd, representatives of the organization itself.
and Ridgeway (2006). 11 Reputation can also apply to groups of firms
2 Arguably, DiMaggio and Powell, themselves, (Ferguson, Deephouse, & Ferguson, 2000; Wry,
may have intended their arguments about profes- Deephouse, & McNamara, 2006). But the strategic
sionals merely to illustrate one way in which any groups that sometimes appear in reputation research
norms, whether general or specific, might generate are not necessarily equivalent to status groups, since
isomorphism in an organizational field. Be this as it the former are united by shared performance profiles,
may, the linkage between normative isomorphism and while the latter are united by collective honor claims.
professionalization has now become so firmly rooted 12 Here, we confine ourselves to addressing over-
in the organizational literature as to be virtually a laps between legitimacy and status and between
matter of definition. legitimacy and reputation. Overlaps between status
3 DiMaggio (1995) has expressed caution about and reputation, although equally common, are left for
the facile assumption that cognitive legitimacy and another day.
mimetic isomorphism necessarily go hand in hand. 13 The label refers to a verse from the biblical
However, few others in this tradition have taken his Book of Matthew: 'For unto everyone that hath shall
concerns to heart. be given, and he shall have abundance: but from him
4 One might argue that prevailing definitions of that hath not shall be taken away even that which he
efficiency are, themselves, institutional myths. Most hath' (Matthew XXV: 29, King James Version).
institutionalist scholarship, however, treats technical
 71
14 Here, the size of the boxes is arbitrary; how- Barney, J. 1991. Firm Resources and Sustained
ever, future research might empirically assess the rel- Competitive Advantage. Journal of
ative magnitudes of various sub-groups. Management, 17: 99-120.
15 Over 127,000 firms worldwide had met ISO Baum, J. A C, & Oliver, C. 1991. Institutional
9000 targets by 1996.
linkages and organizational mortality.
16 These two endeavors are not mutually exclu-
sive, of course. We mean merely to indicate which of Administrative Science Quarterly, 36 187-218.
the two we would give priority. Baum, J. A C, & Oliver, C. 1992. Institutional
17 Stryker (2000 187, 191) and Scott (1995) have embedded ness and the dynamics of organi-
both noted that despite the potential for both top-down zational populations. American Sociological
and bottom-up approaches to institutions, most cross- Review, 57: 540-559.
level work to date has taken a top-down approach. Baum, J. A C, & Powell, W. W. 1995.
Cultivating an institutional ecology of organ-
izations: Comment on Hannan, Carroll,
Dundon, and Torres. American Sociological
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 2
Isomorphism, Diffusion
and Decoupling
Eva Boxenbaum and Stefan Jonsson

INTRODUCTION questions and dimensions to the original

propositions. Our aim in this chapter is to
A longstanding question in organization bring clarity to this body of literature by first
research is what makes organizations more or establishing the state 'of the art and then
less similar to each other. Early organization identifying important areas in need of further
theorists pointed out that organizations that research.
share the same environment tend to take on A central idea of institutional isomor-
similar forms as efficiency-seeking phism is that organizations conform to
organizations seek the optimal 'fit' with their 'rationalized myths' in society about what
environment. Institutional theories of constitutes a proper organization. These myths
organization have added two related claims. emerge as solutions to widely perceived
First, organizations adapt not only to technical problems of organizing and become
pressures but also to what they believe society rationalized when they are popularly believed
expects of them, which leads to institutional to constitute the proper solutions to these
isomorphism. Organizations need a societal problems. As more organizations conform to
mandate, or legitimacy, to operate and this is these myths they become more deeply
gained by conforming to societal expectations. institutionalized, which subsequently leads to
Second, when adaptations to institutional institutional isomorphism (Meyer and Rowan
pressures contradict internal efficiency needs, 1977). Institutional isomorphism is facilitated
organizations sometimes claim to adapt when by processes that further the diffusion of
they in reality do not; they decouple action ideas, practices and prescribed organizational
from structure in order to preserve structure among organizations (DiMaggio and
organizational efficiency. A large number of Powell 1983). While diffusion was introduced
empirical studies have subsequently refined as a mechanism that led to isomorphsim,
the related propositions of institutional many empirical researchers have implicitly
isomorphism and decoupling, and also reversed this causal link. The result is that
introduced new there has been little empirical work with
isomorphism as the
 79
outcome of diffusion, while there is a wealth We begin the chapter with an outline of
of empirical studies that invoke institutional the early theoretical formulations, where we
isomorphism as the cause of diffusion. explicate the initial core theoretical statements
Furthermore, we notice a recent shift in insti- of isomorphism and decoupling and proceed
tutional literature toward the acknowledge- to trace how decades of empirical research
ment of heterogeneity in the institutional have contributed to the refinement of these
environment (cf. Dacin, Goodstein and Scott statements. This refinement has taken place
2002). An emphasis on isomorphism as a against the backdrop of a wider shift within
driver of diffusion rather than an outcome institutional theory towards a greater
coupled with a growing sensitivity to hetero- recognition of heterogeneity in the
geneity of institutional environments is prob- institutional environment and in
ably why we find surprisingly little empirical organizational response to institutional pres-
evidence of institutional isomorphism; extant sures. We discuss how this shift has impacted
evidence is simply not conclusive. on our understanding of isomorphism and
The second claim about organizational decoupling and end the chapter with a
similarity is that organizations decouple their discussion of what we identify as neglected
formal structure from their production areas of research, as well as the relationship
activities when institutional and task environ- between institutional isomorphism and
ments are in conflict, or when there are con- decoupling. It is our hope that this juxtaposi-
flicting institutional pressures. Decoupling tion of empirical findings with our reflection
enables organizations to seek the legitimacy on the interaction among isomorphism,
that adaptation to rationalized myths provides diffusion and decoupling catalyzes new and
while they engage in technical 'business as exciting research questions that can propel
usual'. While decoupling is a core idea in institutional theory forward.
institutional theory, it has received relatively
little scholarly attention (see e.g. Scott 1995),
although this trend seems to be reversing. We EARLY THEORETICAL STATEMENTS
review the empirical research that has refined
the notion of decoupling and the factors that Isomorphism
have been found to predict or mediate this
response to institutional pressure for Why are organizations so strikingly similar?
conformity. DiMaggio and Powell (1983) proposed that
Despite the centrality of isomorphism and institutionalized ideas pressure organizations
decoupling within institutional theory and to adopt similar structures and forms, and as a
their close theoretical ancestry, little attention result they become increasingly similar. It was
has been devoted to examine how they relate not a new idea in organization theory that
to each other. We recognize that this absence organizations in the same environment over
provides for 'several interesting future time also come to share their appearance.
research avenues; for instance whether or not Already Weber argued that the 'iron cage of
the ease of decoupling within an rationality' and that competitive forces in
organizational field influences the likelihood society would pressure organizations to
and speed of institutional isomorphism, or similarity in structure and action. Rational
whether decoupling is more likely in a adaptation theorists then claimed that organi-
heterogeneous or mature institutionalized zational similarity results from efficiency-
environment. A fruitful empirical and seeking organizational adaptation to a similar
theoretical research agenda is to clarify the task environment (Scott 1995). Playing down
relationship between isomorphism and the aggregate effects of organization-level
decoupling under different field conditions. adaptation, population ecology theorists have
80
subsequently argued that environmental com- similar practices and structures (for instance
petitive selection forces leave the surviving Galaskiewicz and Burt 1991; Mezias 1990).
organizational population structurally similar. These three pressures can also be thought
Institutional isomorphism was distinct of in terms of topographical directions from
from these perspectives in its assertion that where isomorphic pressures emanate in an
organizations became similar not through organizational field: regulative pressures
adaptation to an external or technically normally come from above (the state) whereas
demanding environment or through the mimetic and normative pressures often stem
'weeding out' of technical and social misfits, from horizontally positioned peer
but through adaptation to a socially organizations or groupings. Strang and Soule
constructed environment. The timing of the (1998) also liken the three pressures to a
statement about institutional isomorphism mapping of diffusion channels in terms of
should be understood against the backdrop of external diffusion pressure on the organiza-
a longstanding interest within organizational tion, such as the state, peer pressure across
sociology in the structure of organizations, a firms, or internal diffusion pressure from
heritage from open-systems theories of the professional information networks.
1960s, and the development of the population DiMaggio and Powell then propose a
ecology school from 1977 and onwards (Scott dozen hypotheses relating to how organiza-
2004). tions subject to isomorphic pressures respond
DiMaggio and Powell outlined three pres- to an increasingly institutionalized environ-
sures that lead organizations to become ment. These hypotheses, which set the arena
increasingly similar: coercive, mimetic and for much of the subsequent empirical work on
normative pressures. Coercive pressures result isomorphism, range from predictions about
from power relationships and politics; proto- the degree of isomorphism at the level of an
typically these are demands of the state or organizational field to the rate by which
other large actors to adopt specific structures different kinds of organizations are expected
or practices, or else face sanctions. Coercive to morph to similarity within the field. The
pressures are not only by fiat but can also hypotheses relate to questions that were, at the
result from resource dependence, such as time, topical in organization theory, most
demands to adopt specific accounting notably questions about organizational
practices to be eligible for state grants or structure, implications of resource dependence
requirements of ISO certification to become a across organizations, the effects of orga-
supplier (see for instance work by Edelman nizational and field goal ambiguity, and the
1992; Guillen 2001; Sutton et al. 1994). level of professionalization of the workforce.
Mimetic pressures arise primarily from While these theoretical statements and
uncertainty. Under conditions of uncertainty propositions were meant to further our
organizations often imitate peers that are understanding of how organizations became
perceived to be successful or influential increasingly similar over time, empirical
(Haveman 1993; Palmer, Jennings and Zhou research fairly soon re-directed their use to
1993). Normative pressures pertain to what is further our understanding of the diffusion of
widely considered a proper course of action, practices and ideas, which means that some of
or even a moral duty (Suchman 1995), such as the fundamental ideas of institutional
when there are signals from the organizational isomorphism still await confirmation.
environment that the adoption of a particular
practice or structure is a correct moral choice.
Normative pressures are often associated with
professions because the similar education and Decoupling
training instil similar professional values of
what is 'proper', which is then carried into When organizations are pressured to adapt to
organizations with professionals who then societal rationalized myths about what
tend to favour the adoption of
 81
organizations should look like and do, they without actually adapting relies critically on
face two problems: First, the rationalized the 'logic of confidence and good faith', i.e.
myths may not comprise an efficient solution that people trust that the organization does
for the organization, and second, competing what it says it will (Meyer and Rowan 1977:
and internally inconsistent rational myths can 357), which means that organizations that
exist simultaneously. Meyer and Rowan decouple must avoid close inspection or else
(1977) proposed that organizations decouple they are exposed as frauds. A corollary to the
their practices from their formal or espoused decoupling proposition is that when institu-
structure to solve these two problems of tional pressures lead to decoupling, organiza-
institutional pressures. In effect, decoupling tions will do their best to avoid scrutiny or at
means that organizations abide only superfi- least to control the process of scrutiny.
cially by institutional pressure and adopt new
structures without necessarily implementing
the related practices.
The idea of organizations decoupling EMPIRICAL EXAMINATION
structure and action reflected the perspective·
of organizations as loosely coupled systems Given the voluminous research on institu-
that became popular in the mid-1970s. A tional isomorphism and decoupling, it was
group of organizational sociologists and social necessary to structure the review of empirical
psychologists proposed loose coupling as a work according to themes that emerged as
solution to problems of change and reform in salient after a first reading of the literature.
US public schools (Hallet and Ventresca These themes are partially chronological. In
2006). In a challenge to the dominant system the discussion section, we touch on the
theory where organizations were seen as development of these themes in relation to the
coherent units composed of densely linked wider theoretical developments within
and interdependent elements, they proposed institutional theory.
instead that organizational elements are
loosely coupled to one another. Drawing on
this insight they investigated different kinds Isomorphism
of couplings and how these are created (e.g.
Weick 1979) also in relation to decision- Similar to what?
making processes (March and Olsen 1976). In A central question with respect to isomor-
contrast to the more general idea of phism is what the relevant environment is to
organizations as loosely coupled systems, which organizations are thought to become (or
Meyer and Rowan refer specifically to a form not become) isomorphic? While this is a
of loose coupling that is a disconnect between question that is not often discussed, a broad
organizational practice and organizational dividing line can be drawn between empirical
structure, where the former is determined by studies that conceptualize the institutional
perceived efficiency concerns and the latter environment in terms of technical and goal-
results from institutional pressure for setting features, i.e. societal sectors (Scott and
conformity. Meyer 1983), and studies that consider the
In its original statement, decoupling can environment to be a socially constructed 'field'
be a rational response to demands for organi- (DiMaggio and Powell 1983). The social
zational adaptation that are inconsistent or sector approach differs from an organizational
harmful to the organization; by decoupling, field perspective in the conceptualization of
organizations achieve legitimacy through the institutional environment as external and
espoused action but remain efficient or con- exogenous to organizations; it is the technical
sistent through actual action, which enhances nature of the production task that determines
their survival prospects. Gaining legitimacy the nature of the institutional
82
environment, a factor that changes through we direct the interested reader to the work by
technical development rather than organiza- John Mohr (2005).
tional action. Seeing the institutional environ-
ment as a field, in contrast, positions the
institutional environment as a result of a Similar in what?
structuration process that involves all field Another important question about isomor-
actors (Powell and DiMaggio 1991; Zucker phism is in what respect organizations are
1987). A further difference is that the concept supposed to become similar. The early theo-
of institutional sectors is hierarchical in retical statement by DiMaggio and Powell is
nature, with clear distinctions between hori- ambiguous on this topic, suggesting that iso-
zontal and vertical ties (Scott and Meyer morphism can be detected by 'the lessening in
1983), whereas the field essentially represents variance around some central dimension'. This
a relational non-topographical space that ambiguity essentially left subsequent
stems from its ideational roots within network empirical researchers to their own devices
theory (Mohr 2005). (Oliver 1988; Scott and Meyer 1994). The few
The perspective on the environment is studies that have investigated isomorphism as
important to our understanding of how iso- an outcome emphasize different dimensions
morphic pressures can be thought to operate and levels in their measurements of similarity.
on organizations. An organizational sector Meyer, Scott and Strang (1987) investigated
approach, which broadly defines the relevant isomorphism in the structure of U.S. schools
environment as input-output relations, makes and found more evidence of isomorphism at
technological shifts important drivers of higher levels of the administrative system,
changes in isomorphic pressures. If, in levels that were further removed from the
contrast, the arena for isomorphic pressures is local task environment of education. Meyer
thought of as socially constructed by and colleagues (1997) also investigated the
organizations, then the source of isomorphic structure of national educational systems in a
pressures is instead partly endogenous to the large-scale empirical study of world systems,
organizations. An important point is that this and they show that educational systems are
theoretical dividing line between two becoming increasingly similar across the
perspectives on the nature of the institutional globe, especially so in countries that are more
environment is seldom reflected in empirical tightly integrated into the 'western cultural
studies (see, however, Scott 1987; Zucker account'.
1987). What we see instead are empirical Other studies have focused more closely
definitions of 'organizational fields' that are on isomorphism in what organizations do.
largely coterminous with the theoretical con- Levitt and Nass (1989) investigated isomor-
cept of societal sectors (for instance the typi- phism in the output of college text book pub-
cal 'industry' definition of a field), which are lishing, where they found isomorphism to be
then matched with DiMaggio and Powell's more prevalent in the mature academic field
theoretical apparatus of isomorphism in a of physics than in sociology. Kraatz and Zajac
socially constructed field. Very few, if any, (1996) showed that in a maturing field of U.
studies of institutional isomorphism match S. higher education, the scope of college
DiMaggio and Powell's idea of isomorphic programs decreased in homogeneity, instead
forces with a constructionist definition of the of increased, suggesting that isomorphism did
organizational field. This may be unproblem- not occur, at least not in the programs that
atic, we do not know, but it needs further the- colleges offered. Lifting the level of analysis
oretical and empirical work. As it is beyond to that of national economic systems, Orru,
the scope of this chapter to focus on the Biggart and Hamilton (1991) showed that
thorny issue of the relevant definition of what corporate governance structures are more
organizations are supposed to morph with, similar within, than across, national
economies in the Far East.
 83
The common feature of these empirical isomorphic pressures. Early studies found that
studies is the ambiguity of the relevant mimetic pressures emanated most strongly
dimension and level of analysis where simi- from actors that are considered similar (Greve
larity should or should not occur in order to 1998), successful and prestigious (Haveman
confirm the presence of institutional isomor- 1993). In addition, Haunschild (1993) found
phism. This ambiguity makes it difficult, even mimetic pressures to operate through
after three decades of research, to determine networks of board members. Other studies
the degree of empirical support for the found normative pressures to influence the
proposition of institutional isomorphism, manner in which large U.S. firms adopted
including its limitations. More theoretical new accounting standards (Mezias 1990) and
work clearly needs to be done in this area to the multidivisional form (Palmer, Jennings
render institutional isomorphism an empiri- and Zhou 1993). Empirical support was also
cally falsifiable theoretical proposition. found for the claim that legal measures lead to
coercive diffusion pressure. Edelman (1992)
showed that coercive employment equity laws
Similarity as diffusion? made organizations change their structure and
Even if the above studies on isomorphism are subsequently their practice even if
not always directly comparable, at least they organizations were quite influential in
try to measure isomorphism as an outcome interpreting what it meant to comply.
variable, which is not the case with the Among the three isomorphic pressures,
majority of studies that invoke institutional mimesis has received the most attention
isomorphism. Rather than test isomorphism as (Mizruchi and Fein 1999). One reason for this
an empirical outcome, these studies have focus on mimetic pressures, as Mizruchi and
typically turned to the mechanisms through Fein argue, is that power perspectives are out
which isomorphism supposedly happens, i.e. of vogue among North American social
the three isomorphic pressures outlined by scientists, which is why coercive and norma-
DiMaggio and Powell. In studying these tive isomorphic pressures have received less
mechanisms without also investigating the attention. Another plausible explanation is
resulting isomorphism, institutionalists have that mimesis is easier to study with
often drifted very close to the prolific field of quantitative methods while it is more difficult
diffusion studies. An example of the to collect data on normative pressures or to
confluence of institutional and diffusion illuminate the exercise of coercion in large
studies is the investigation of the spread of quantitative studies. A third possible
administrative reforms by Tolbert and Zucker explanation is that normative and coercive
(1983). They tested coercive pressures against processes receive attention in other theoretical
mimetic pressures and found that coercive traditions or in specific institutional
pressures were more effective than mimetic literatures, such as European institutional
pressures in spreading anew practice. It is a schools (cf. Mizruchi and Fein 1999).
typical research strategy within diffusion These empirical studies that invoke
studies that invokes institutional theory and institutional isomorphism do not investigate
test one (or more) of the isomorphic pressures the resulting level of isomorphism in the field,
against an efficiency or resource dependence but instead elaborate on the mechanism by
perspective, in order to explain the diffusion which practices spread. They do so under the
of certain practices and structures (for implicit assumption that diffusion equals
instance Kraatz and Zajac 1996; Palmer, isomorphism, an assumption that certainly
Jennings and Zhou 1993). needs verification.
The various diffusion studies that invoke
theories of isomorphic pressures can be
organized according to the focal type of the
84
Similarity in a heterogeneous environment isomorphism (Boxenbaum and Battilana
The very idea of institutional isomorphism 2005; Schneiberg 2002; Townley 2002; Zilber
presupposes an institutional environment with 2002).
which the organization can morph. A crucial
question is how institutional isomorphism can
occur where the institutional environment is Similarity and heterogeneous
not homogenous. Part of the answer may be organizational response
ambiguities in the original theoretical Apart from an increasing attention to hetero-
formulation of institutional isomorphism, in geneous institutional pressures, serious orga-
particular with respect to how the institutional nizational thinkers have also challenged the
environment (i.e. the organizational field or assumption that, once subjected to institu-
social sector) and its effects can be identified tional pressures, organizations either conform
and delimited (cf. Mohr 2005). or die (cf. DiMaggio 1988; Perrow 1986;
Early studies of isomorphism in organiza- Scott 1991). This topic evokes the larger
tional fields conceptualized the organizational question within institutional theory of whether
field as unitary and examined how or not institutions are fully internalized in
institutional pressures affected organizations, actors (i.e. 'social facts') or if actors can
presumably in an equal manner (Scott 2001). comprehend and thereby 'game' them (Zucker
In more recent studies the field has increas- 1987). The division between institutions as
ingly become conceptualized as ambiguous social fact and institutions as visible
and heterogeneous with multiple institutional limitations on action splits empirical work on
pressures that often result in conflicting pres- the effect of isomorphic pressures. One line of
sures for conformity. Isomorphic pressures research adopts the more agentic approach
have been found to interact with competitive where actors can strategize and manipulate
pressures and space (D’Aunno, Succi and institutional pressures; in this research it is
Alexander 2000; Dacin 1997) and vary over organizational similarity and not difference
time (Dacin 1997; Ruef and Scott 1998). An that needs to be explained, organizations have
example of the effects of variation in the local choice. This form of institutionalism received
competitive context is provided in a study of a boost after Powell and DiMaggio (1991)
isomorphism in U.S. higher education, where argued that institutional analysis needs to do
Kraatz and Zajac (1996) show that the away with the organization as an 'institutional
increasing maturity of the field does not lead dope'. A key issue within this literature is
to homogeneity (isomorphism) in educational whether isomorphism is attractive when all
programmes because of a simultaneous organizations occupy the same strategic and
increase in competitive pressure to resource space (Deephouse 1999; Greenwood
differentiate student programmes. The struc- and Hinings 1996). The other line of research
ture of networks through which the 'markers is a less agentic approach where organizations
of similarity' travel, i.e. how entities diffuse, internalize institutional pressures to a greater
can also limit the resulting isomorphism extent. As institutions constitute actors and
within an organizational field. Greve (1996) actions, there is no consciousness involved in
studied the spread of new competitive strate- following norms; conformity comes naturally
gies among radio stations and found that and deviance is almost unthinkable. Here it is
mimetic pressure led to practice polymor- not similarity, but difference, that needs to be
phism (islands of homogeneity) because explained. Isomorphism is not guaranteed,
imitation networks were geographically and will, for instance, not happen when there
bounded in markets. Similar findings are also are cognitive or capability limitations on
reported in a number of qualitative studies of becoming isomorphic (Goodrick and Salancik
the spread of practices and the resulting 1996). This latter direction is most clearly
articulated in European books on
 85
translation, editing and globalization (for self-evident and desirable. When a practice or
instance Djelic and Quack 2003; Sahlin and structure is implicitly adapted to local institu-
Engwall 2003). tions, it is broadly referred to as translation or
Within an agentic perspective, editing (see the chapter on translation). We
organizations are seen as active agents that thus see the larger division between institution
can respond differently, within certain bound- and actorhood reflected in studies on
aries, to institutional pressure (Ingram and institutional isomorphism; after 1991 there are
Clay 2000). Oliver (1991) argued that relatively fewer studies of isomorphism as an
organizations under certain circumstances outcome presumably because of a greater
have leeway to act strategically in the face of emphasis on actorhood in institutional theory
isomorphic pressures. She proposed five in general. It would be interesting to follow up
strategic responses that are available to on this preliminary observation with a meta-
organizations that face institutional pressure study that relates the larger shifts in
to conform. The first one, acquiescence institutional theory to how institutional
(conformity), is essentially the response that isomorphism is studied empirically.
leads to isomorphism while the second one,
compromise, can manifest as decoupling
(Scott 2001). The third and fourth, avoidance
and defiance, are two forms of resistance that Decoupling
organizations display when they disagree with
the objectives of the constituents who put Does decoupling occur?
pressure on them to adopt a new organi- Several empirical studies have sought to con-
zational element. Manipulation, the fifth firm the existence of decoupling. For instance,
response, is akin to institutional entrepre- in a study of affirmative action policies in a
neurship in the sense that it implies a deliber- small liberal arts college in the United States,
ate attempt to change institutions in a certain Edelman et al. (1992) found that the
direction. Oliver's theoretical argumentation affirmative action officer exercised significant
has triggered a number of empirical studies flexibility in the hiring process although he
(see for instance Goodrick and Salancik 1996; had issued policies that reflected affirmative
Ingram and Simons 1995) that relate strategic action legislation. By means of decoupling, he
considerations to isomorphism. conferred legitimacy upon the college while
In the non-agentic tradition, where simultaneously attending to divergent
institutions are 'social facts', organizations concerns related to its teaching staff.
may also respond heterogeneously, but for a Similarly, Brunsson and Olsen (1993) found
different reason. Several studies link organi- that a radical reform at Swedish Rail was
zational responses to environmental formally implemented without significant
contingencies, demonstrating how time, space impact on daily operations. While
and local competition introduce variation in management thought that the reform would
organizational response to isomorphic result in near chaos, they discovered to their
pressures, even where the institutional pres- surprise that rail traffic and operational
sures are fully internalized (Beck and supervisors were virtually undisrupted by the
Walgenbach 2005; D'Aunno, Succi and reform. Decoupling made it easier for
Alexander 2000; Dacin 1997; Jonsson 2003). management to make decisions on reform
At other times organizations are simply not since operational departments were collabo-
able to perfectly replicate an institutionally rative as long as the reform did not affect their
sanctioned structure or practice. That is the work in any significant way. Collectively,
case even if institutional pressures have been these studies provided some empirical support
internalized to such an extent that adoption of for Meyer and Rowan's proposition that
a structure or practice is perceived as formal structure can be, and often is,
decoupled from production activities.
86
Why do organizations decouple? efficiency, whereas recent studies suggest that
Institutional decoupling carries with it a risk decoupling is a result of heterogeneous
of detection where it would no longer confer organizational fields with multiple and often
legitimacy, but probably shame, on the contradictory pressures on the organization
organization. So why do organizations (cf. Heimer 1999; Ruef and Scott 1998).
decouple? One suggestion is that organiza- Faced with simultaneous contradictory pres-
tions decouple if they experience strong sures, organizations survive by engaging in
coercive pressure to implement a new practice decoupling. For instance, George et al. (2006)
(Seidman 1983), and all the more so if they proposed that decision makers resort to
distrust the actor that asserts pressure on them decoupling when they face ambiguity in their
(Kostova and Roth 2002). Another possibility reading of the environment. They may
is that decoupling increases as an respond to heterogeneous pressure for
organizational field becomes more homoge- conformity by conforming to select institu-
neous. Investigating the introduction of long- tional pressures and ignoring others. Aurini
term CEO compensation plans, Westphal and (2006) found, for instance, that educational
Zajac (1997) showed that early adopters were institutions routinely shed some of the most
more likely than late adopters to implement sacred schooling scripts, but flourished
adopted incentive plans. Their research anyway because they responded to new
(Westphal and Zajac 1994, 1997) indicates pressures, such as consumer demands for
that decoupling is most likely among reluctant individualized education programmes. They
(later) adopters that respond to normative decoupled some institutions to be able to
pressure, a finding that is corraborated by a implement others, recognizing that there were
study of financial analysts who initiated several ways to obtain legitimacy in this
coverage of firms. Analysts who initiated cov- heterogenous field.
erage late were also more likely to abandon Decoupling structure from practice can
their actions earlier (Rao, Greve and Davis take multiple forms simultaneously. Nils
2001). First movers and adopters are eager to Brunsson (2002) suggests that organizations
implement while late movers more readily solve the dilemma of contradictory demands
decouple, a response that they hide behind by meeting some demands by talk, others by
seeming enthusiasm. A study by Fiss and decisions, and yet others by action. They are
Zajac (2006) concluded, for instance, that required to do so, he argues, because if they
organizations that fervently proclaim their act consistently with what is said and what is
conformity to demands for strategic change decided in a situation of conflicting demands,
are less likely to be the ones that actually then they will satisfy only one interest at the
implement structural changes. This intriguing expense of the others. In resorting to
question of how isomorphism relates to decoupling, organizations increase their
decoupling is one that deserves careful atten- chance of survival as they prevent conflicts
tion in future research. from escalating. A study of the Danish Red
Cross came to a similar conclusion, showing
Decoupling as a response to field that the organization became more robust
heterogeneity when it decoupled ideology and structure
In their initial formulations, Meyer and from concrete programmes and activities
Rowan suggested that decoupling was a (Christensen and Molin 1995). Decoupling
response to two organization-level problems: thus turned out to be a safeguarding
contradictions with internal organizational mechanism in a heterogenous field, an attempt
efficiency and contradictions among multiple to compose with conflicting demands in a way
institutionalized pressures. Early studies that minimizes risk.
focused primarily on decoupling as a response The move to embrace heterogeneity in
to save internal organizational empirical studies has not been accompanied
 87
by a commensurate theoretical elaboration. organizations to decouple for proactive
Researchers have noted, however, that organ- reasons rather than for defensive reasons.
izations in the same organizational field do
not respond similarly to the same pressures, What predicts decoupling?
an observation that indicates that decoupling Even when subjected to similar institutional
may be related to factors in the individual pressures, some organizations decouple while
organization. others do not. The interesting question in this
regard is which organizational variables affect
Decoupling as a strategic response? whether an organization engages in
In their initial formulation, Meyer and Rowan decoupling. One suggestion is that decoupling
proposed that decoupling consists in adopting follows naturally from a realization that the
a structure for legitimacy purposes, but not organization may derive financial benefits
implementing it in practice because of a from it. In one of the first quantitative studies
(perceived) conflict with technical efficiency of decoupling, Westphal and Zajac (1998)
concerns. Oliver (1997) found empirical found that the market price of corporations
evidence for the proposition that decoupling is increased when they adopted a legitimate
critical to an organization's success. This practice, regardless of whether they
relationship was particularly strong when implemented it or not. This finding validates
resource stringency was high and Meyer and Rowan's proposition that
organizations depended on constituents in the decoupling is a pragmatic response to
task environment who held control over land, conflicting pressures to ensure both legiti-
labour, capital and suppliers. Stringent macy and technical efficiency. Others have
regulation made organizations engage in less refined their theoretical proposition by inves-
decoupling. tigating which variables mediate the act of
Recent developments in the decoupling decoupling. Naturally, the prerequisite is here
literature has broadened the scope of decou- that organizations are aware of the possibility
pling from a defensive action, which Meyer of decoupling and consider it to have a
and Rowan wrote about, to something akin to strategic advantage.
impression management. For instance, brand Power dynamics has been identified as an
managers of up-market wineries deliberately important variable that mediates the desire to
decoupled projected images from internal decouple and the action of decoupling. In a
practices to create powerful brand images, longitudinal study of the response of large
which apparently increased their profits U.S. corporations to pressure from external
(Beverland and Luxton 2005). In another sources to adopt stock repurchase
example of the proximity to impression man- programmes, Westphal and Zajac (2001)
agement, Elsbach and Sutton (1992) investi- found that organizational power dynamics
gated how radical social movement mediated the ability of organizations to
organizations acquired legitimacy and decouple. While organizations derived
mobilized constituent support. They found legitimacy from adopting the stock repurchase
that spokespersons shifted attention away programme, top executives had a personal
from controversial actions toward socially interest in not implementing these
desirable goals that were endorsed by broader programmes in practice. Decoupling occurred
constituents. They simultaneously decoupled more frequently when top executives had
their illegitimate activities from their legiti- power over boards to resist external pressure
mate organizational structures. There is much for change. There is further evidence for
room to investigate the strategic aspects of external pressure as a mediating variable
decoupling in future research. It may be between the desire to decouple and the act of
fruitful, for instance, to map the motivations doing it. A survey of 302 senior financial
and conditions that lead executives showed that executives were less
likely to decouple the
88
company's ethics code from strategic deci- effects of such pretence. It is not always
sions when they experienced strong pressure possible to sustain a purely ceremonial adop-
from market stakeholders like suppliers, cus- tion. For instance, Edelman's (1992) study of
tomers or shareholders (Stevens et al. 2005). organizations that initially decoupled the
Decoupling also became infrequent when the Employment Equity and Affirmative Action
ethics code was already integrated into daily Legislation revealed that the adopted structure
activities through ethics code training eventually affected practice, leading to real
programmes. structural change. Employees that were hired
Finally, empirical research suggests that into the formal structure tried to fulfill their
networks and coalitions also mediate the mandate even if it was meant to be entirely
decoupling response. Westphal and Zajac symbolic. They elaborated formal structures
(2001) found that top executives who had and created visible symbols of compliance in
prior experience with decoupling or who had an effort to interpret what it meant to comply.
social ties to organizations that did, were more This finding poses new interesting questions
likely to engage in decoupling themselves. A about whether or not decoupling is sustainable
consensus on decoupling formed among top over time. Decoupling may lead to full
executives who had no personal interest in implementation after some time simply
implementing a new practice, which because most individuals refuse to see
facilitated the decision to decouple. On the themselves as only ceremonial props (Scott
other side of the equation, Fiss and Zajac 2001). It seems that an organizational image
(2004) found that decoupling was least likely that is persistently inconsistent with how
in companies where powerful and committed organizational members see themselves will
actors cared strongly about implementation eventually provoke a corrective action
and could influence the organizational (Dutton and Dukerich 1991; Fiss and Zajac
response. This finding came from a study of 2006). However, if the adopted structure
over 100 of the largest publicly traded employs no people, e.g. a stock-option
German companies in the period 1990-2000. programme, then time passed may not affect
Social networks also prevented decoupling in the likelihoood of actual implementation.
a study of recycling (Lounsbury 2001) and Decoupling may persist over very long
made organizations in another study imitate periods of time. It could be fruitful to
each others' corporate acquisition activities investigate the conditions under which
independently of institutional pressure from organizations can continue to decouple their
the field (Haunschild 1993). These findings structures from their practices. This is all the
are intriguing. They not only confirm that more relevant for organizations that rely on
strategic alliances have a legitimating effect time to overcome the tendency to decouple,
(Dacin, Oliver and Roy 2007), but they also such as in adopting quotas to eliminate gender
point to new areas of investigation in the or race bias in recruitment.
interface between institutional theory and
social network studies. One topic that could
be interesting is the effect that coalitions,
networks and strategic alliances have on the
desire and ability of organizations to engage DISCUSSION -
in decoupling. CAUSAL RELATIONSHIPS
Sustainable over time? Our review of empirical studies on isomor-
While the idea that actors sometimes only phism and decoupling revealed that some
pretend to do something that is socially aspects of the initial theory formulations have
desirable is theoretically powerful, it is also received empirical verification, while
limited because it overlooks the dynamic
 89
others have been refined or qualified. The past the process of diffusion for the outcome of
decades of empirical research have isomorphism provides at best a limited test of
consolidated and sharpened the sometimes institutional isomorphism. Moreover, as
initially vague formulations of institutional others have pointed out, the outcome of
theory, but there are also important aspects similarity may also be explained by compet-
that have escaped scrutiny altogether. Most ing theoretical frameworks, particularly
striking is the limited research attention that resource dependence theory (Scott 1987;
has gone into confirming some of the core Zucker 1987). It is important to the theoretical
causal relationships of institutional theory. A development of institutional theory that the
number of empirical studies have in a relationship between diffusion and iso-
piecemeal manner investigated theoretical morphism be sharpened significantly, both
concepts and mechanisms without questioning theoretically and empirically.
or verifying whether these generate the A closely related point is that the causal
theorized outcomes. One case in point is that relationship between legitimacy and diffusion
empirical examinations of institutional also needs better articulation. Citing Meyer
isomorphism and decoupling have developed and Rowan (1977), DiMaggio and Powell
along separate lines of inquiry, even though (1983) explained that 'as an innovation
these concepts are tightly coupled theoreti- spreads, a threshold is reached beyond which
cally. Somewhat simplistically, inquiries adoption provides legitimacy rather than
associated with institutional isomorphism improves performance'. While institutional
have explored the external consequences of isomorphism presupposes that legitimacy is
institutional pressures, i.e. organizational the driving force behind diffusion (cf. Meyer
similarity, whereas decoupling research has and Rowan 1977), diffusion may also occur
investigated how organizations deal internally without any legitimacy-seeking behaviour.
with institutional pressure for conformity. Not everything that diffuses enhances
Before we discuss the relationship between organizational legitimacy. For instance,
the two terms, let us point out some other organizations may replace an existing
causal relationships within each line of structure with another one if they receive a
inquiry that merit careful attention in the substantial state subsidy to do so. They are
future. neither forced, uncertain, or under any moral
obligation to do so, they simply see an
opportunity to control costs, and it leads to
Isomorphism isomorphism. While many organizations may
adopt this structure, it is farfetched to argue
Although institutional isomorphism has that their adoption is an example of
attracted much research attention, a number of institutional isomorphism when it is not
causal relationships have not received the driven by legitimacy concerns.
careful empirical attention that they deserve. Similarly, the causal relationship between
First, there is the relationship between iso- institutionalization and diffusion could benefit
morphism and diffusion. There is a natural from more clarification. In the widely popular
empirical affinity between isomorphism and 'two-stage model' suggested by Tolbert and
diffusion, but this empirical affinity can be Zucker (1983), diffusion is assumed to lead to
theoretically treacherous. The majority of the institutionalization. This finding subsequently
studies that invoke the concept of institutional became established within institutional theory
isomorphism has treated the diffusion of a as the 'two-stage model' of institutionalization,
particular practice or structure as the outcome which suggests that a practice is introduced as
variable of interest, under the implicit the result of an efficiency search, and then, as
assumption that diffusion leads to isomor- it is adopted by others over time, it becomes
phism. A research strategy that substitutes
90
institutionalized and adoption efficiency and core causal relationships to avoid that
ceases to predict further spread (see for institutional theory becomes an ambiguous
instance Westphal, Gulati and Shortell 1997). umbrella-term for assorted organization
However, as pointed out by Scott (1995), a theory. There is currently a tendency for
sharp increase in the rate by which an inno- institutional theory to expand into dimensions
vation is adopted need not reflect more insti- of organizational life that have traditionally
tutionalization. The two-stage model of been associated with other theories. While
institutionalization thus closely resembles the such expansion may enrich institutional
standard two-stage diffusion model from the theory by making it more comprehensive, it
1950s (Katz, Levin and Hamilton 1963), the also draws attention away from clarifying core
main difference being that the contagion causal relationships. The causal relationships
phase is renamed institutionalization phase. among isomorphism, diffusion, legitimacy,
An important point is that there are plausible and institutionalization need to be
alternative explanations to the second stage in strengthened significantly. Herein lies an
the diffusion phase, such as social level important challenge for future theoretical and
learning (Levitt and March 1988) or other empirical research, one that we think should
general 'bandwagon' processes (Abrahamson take precedence over expansion of the scope
and Rosenkopf 1993). To convincingly of institutional theory.
demonstrate that a practice diffuses quickly
because it becomes institutionalized,
empirical research must provide other indica- Decoupling
tors of institutionalization than a simple
increase in the number of adopters Although there is less empirical research on -
(Schneiberg and Clemens 2006). It should be decoupling than there is on institutional iso-
shown that adoption is associated with morphism, isomorphic pressures and diffu-
changing norms, collective beliefs or laws, sion, we have seen a surge in attention to
and studies should identify the conditions decoupling in recent years. There is reason to
under which diffusion is causally related to believe that this trend will continue as
institutionalization. institutionalists pay increasing attention to
Future research should also address the organizational and individual factors in the
relationship between isomorphism and field processes of institutionalization and deinsti-
heterogeneity. The growing recognition of tutionalization. Decoupling research may
heterogenity in the institutional environment reveal the seeds of an endogenous model of
calls for reflection on how isomorphism fits institutional change, but first the notion of
with the core claims of institutional theory. If decoupling needs clarification and alignment
organizations become isomorphic with the with isomorphism.
total complexity of their institutional Meyer and Rowan defined decoupling as
environment, as some studies suggest a deliberate disconnection between organiza-
(Goodrick and Salancik 1996; Heimer 1999), tional structures that enhance legitimacy and
then the notion of isomorphism resonates with organizational practices that are believed
predictions of 'requisite variety' in early within the organization to be technically effi-
population ecology and systems-oriented cient. Some empirical studies have interpreted
theories (Scott 2004). This possibility prompts structure to include organizational elements
the provocative (and evocative) question of such as programmes, policies, images and
whether institutional isomorphism still has a decisions. In so doing they came very close to
place as a distinct theoretical and empirical confounding decoupling with the more
concept (cf. Kraatz and Zajac 1996). We think general notion of 'loose couplings' (cf. Weick
it does, but institutionalists need to sharpen 1979). The theoretical idea of organizations as
core concepts loosely coupled systems is
 91
more comprehensive in scope than the idea of though the pattern is still obscure. Late
decoupling in institutional theory. Studies that adopters seem more likely to engage in
examine weak links between changing decoupling than early adopters, but why is
organizational practice and organizational this the case? Perhaps organizational or indi-
decision making (e.g. Child, 1972) are thus vidual variables explain this pattern, perhaps
better characterized as studies of loose power relations within a field influence the
coupling than of institutional decoupling. likelihood of decoupling. Is there a 'middle-
Studies of decoupling need to be distinguish- status conformity' situation (Philips and
able from studies of loosely coupled organi- Zuckerman 2001) or does a central position in
zations in a similar manner to the need for the field makes it more illegitimate for an
empirical studies of institutional isomorphism organization to engage in decoupling? Or is
to be distinguishable from diffusion studies. decoupling directly correlated with isomor-
The aspect of decoupling that has phism in such a way that decoupling becomes
received most attention so far is what predicts more common once the field reaches a certain
or mediates the act of decoupling. As our point of maturity? Attention to the causal
review revealed, some organizational relationship between isomorphism and
variables have already been identified; they decoupling has been almost entirely neglected
include perceived advantages of decoupling, so far and should be given priority in future
internal power dynamics, and concerns about research.
the organizational image. In addition, The neglect of how isomorphism and
empirical research has identified inter- decoupling relate to each other may well
organizational variables such as external contribute to widening the gap between
network formations and the power of external agentic and non-agentic approaches in insti-
stakeholders. We think more attention should tutional theory. This gap also increases when
be devoted to investigating the interaction empirical studies investigate only one level of
among the already identified variables that analysis at a time. Individual and
seem to predict or mediate institutional organizational levels of analysis are most
decoupling, though it may also prove fruitful common in agentic studies whereas non-
to consider other organizational or inter- agentic studies are more likely to use the field,
organizational variables. The unintended the industry, or the nation as the level of
effects of decoupling, such as whether it analysis. Naturally, the gap will decrease if
affects morale and fosters cynicism within the more empirical studies use a multi-level
organization, certainly merits attention as approach (cf. Schneiberg and Soule 2004).
well. Furthermore the central prediction of Perhaps the first step is to theoretically
decoupling that organizations actively avoid formulate how isomorphism and decoupling
evaluation would imply that entire groups of relates to one another in light of the initial
(isomorphic) organizations collectively theory formulations and the past decades of
embrace opaqueness in structure and actions. empirical research. The variables that
Such a broad prediction would be interesting correlated with decoupling in empirical
to verify empirically, perhaps also to contrast studies can certainly inform this research
with recent movements towards greater agenda, in addition to representing an area
transparency and accountability, not least in where our knowledge of decoupling needs to
public management. As there has been be furthered in future research.
virtually no scholarly attention paid to this
topic, this is an area of research that should be
particularly fruitful. Other institutional perspectives
Some field-level variables also seem to
influence the likelihood of decoupling, Our review is based on 'journal institutional-
ism', or what can be called mainstream
92
institutional organization analysis, where Sahlin-Andersson and Engwall 2003). For
there is a predominance of U.S. research and instance, a historical analysis of Copenhagen
researchers (cf. Mizruchi and Fein 1999). Business School showed that the organization
Other incarnations of organizational institu- gradually absorbed elements of different
tionalism have developed in parallel to main- myths from their institutional environment,
stream institutionalism, although these are which resulted in an organization that
often less widely known and accessible as embodies five different models that are
they tend to be written in languages other than loosely coupled to one another (Borum and
English. We want to recognize these writings Westenholz 1995). What appears as
because they address some of the decoupling may simply be a multi-faceted
shortcomings of mainstream institutional organization that has conformed to changing
theory, such as an excessive focus on mimetic isomorphic pressures over a long period of
processes, insufficient attention to the study of time while not fully discarding the old insti-
practice, and limited use of qualitative tutional elements.
methods. As we know of one specific type, The focus on organizational practice has
Scandinavian institutionalism (for an led Scandinavian institutionalism to engage
overview see Czarniawska and Sevón 1996; more readily with practice-oriented literatures.
Czarniawska and Sev6n 2003), we briefly The notions of loose couplings, sense-making,
review some of the main points where we see actants and translation, which are drawn from
that Scandinavian institutionalism can offer the work of Jim March, Karl Weick, Bruno
interesting and complementary perspectives Latour and Michel Callon, have importantly
on the core themes of our review. influenced Scandinavian institutionalism.
A Scandinavian tradition of institutional- Decoupling and translation have received
ism emphasizes the study of organizational much attention in local research, perhaps
practice and engages researchers in reflective accentuated by the formation in 1988 of the
theorizing that also takes into account the role Scandinavian Consortium for Organizational
of the observer. One line of argument is that Research (Scancor) at Stanford University.
isomorphism is an illusory effect of particular Another line of inquiry in Scandinavian
research strategies that create distance institutionalism is to apply an interpretive
between the observer and the phenomenon. angle to the study of institutions. According to
For instance, when researchers use archival interpretivism, practice is always mediated by
data to study institutional change over a an interpreter, whether the interpreter is the
period of several decades, they are more likely object of study or the researcher conducting
to see something that looks like isomorphism the study. For instance, research showed that
than if they had collected observational data maverick film directors rely on their own
in a contemporary organization. In other strategic interpretations when they decide to
words, the further distanced the observer is, in differentiate themselves from other film
terms of abstracting or simplifying the object directors in the organizational field of film-
under study, the more isomorphism there will making (Alvarez et al. 2005). Similarly, key
seem to be (Forssell and Jansson 2000). This players in the organizational field of Danish
stance would explain the observation that the hospitals strategically reinterpreted the same
clearest evidence of isomorphism is found institutionalized belief to fit their own
within the world systems literature, where the political preferences (Borum 2004). The act of
unit of analysis is highly aggregated. In interpretation is not always conscious and
contrast, case-based research provides strategic, it is often implicitly governed by
excellent evidence for the variation in institutionalized beliefs and norms. A non-
organizational response to institutional Scandinavian study on school teachers in
pressures (for instance Djelic and Quack California showed, for instance, that
2003; or
 93
teachers' preexisting beliefs and practices that merit careful attention in future research.
implicitly mediated the nature of the message Disproportionate attention has been devoted
that teachers delivered in the classroom to studying the relationship between isomor-
(Coburn 2004). The non-strategic approach to phic pressure and diffusion, to the neglect of
interpretation, which is informed by Actor the associated outcomes of decoupling and/or
Network Theory, is evident in the literature on isomorphism. An effect of this is that some of
translation, which posits that ideas and the causal relationships that define
practices undergo change every time they are institutional theory have largely escaped
applied in a new organizational context empirical inquiry. This limitation weakens
(Czarniawska and Joerges 1996; Sahlin- institutional theory and restricts its extension
Andersson 1996). These interpretive studies into other levels of analysis that carry with
suggest that decoupling is an act of them new independent and intervening
interpretation that is shaped by contextual and variables. The greatest risk, as we see it, is
institutionalized factors. This line of inquiry that institutionalism becomes a catch-all
has gained international recognition in recent phrase for various organization theories.
years in parallel to increased interest in how Institutionalists put the explanatory power of
organizations respond to institutional institutional theory at risk if they do not
pressures. prioritize to validate the core claims of insti-
tutional theory before adding new layers of
complexity to its core claims.
An interesting discovery was that surpris-
CONCLUSION ingly little attention has been devoted to
examining how isomorphism and decoupling
interact with each other. Organizations sup-
This chapter presented the theoretical formu- posedly adopt new organizational structures to
lations of isomorphism and decoupling and enhance their legitimacy, and then decouple
carefully reviewed the empirical research that these same structures from their practices to
has been conducted on these two central maintain technical efficiency in a competitive
theoretical concepts in institutional theory. quest for survival. We see real potential in
These are central concepts because they set combining and juxtaposing what we know
institutional theory apart from other organi- about isomorphism and decoupling to develop
zation theories. Isomorphism plays an a stronger and more dynamic theory of
important role in organization theory as an institutions. As we noted in our review, many
alternative to efficiency-based explanations of interesting questions have never been asked.
organizational change (Scott 1987; Zucker For instance, does decoupling become more
1987), and decoupling provides an explana- frequent when a field becomes more
tion for why organizations seem to be isomorphic or mature? Perhaps the possibility
constantly reforming (Brunsson and Olsen of decoupling is crucial for obtaining a high
1993). In a more general sense, these two level of isomorphism in an organization field.
concepts have also moved structuralist and It is certainly possible that such insights could
cultural/symbolical understandings of organ- provide answers to the vexing question of
ization closer to one another (Lounsbury and how best to measure isomorphism. It may also
Ventresca 2003; Scott 2001). open an intriguing avenue for studying
The first contribution of this chapter was endogenous institutional change processes
to delineate how empirical studies have without resorting to methodological
carved out the initial formulations of isomor- individualism.
phism and decoupling respectively. A related Another striking finding of this review of
contribution was to highlight some ambiguous empirical studies is the conflation between
causal relationships that pertain to theories of institutional studies and diffusion studies.
isomorphism and decoupling and
94
We noted that there is a close but complicated Will the organizational field level become
relation between diffusion (i.e. the spread of depopulated, or will other research commu-
things) and isomorphism. In many cases nities migrate to this area of inquiry and take
diffusion is a prerequisite for isomorphism, on the challenging task of clarifying the link
but diffusion need not always lead to between different levels of analysis?
isomorphism; conversely all that looks similar A related fundamental question is
need not be the result of diffusion (cf. Zucker whether isomorphism is a useful and distinct
1987). Isomorphism and diffusion have often theoretical concept if we believe in a world of
been conflated in empirical studies where the fragmented institutional environments. For
spread of something is treated as an outcome instance, is institutional isomorphism a more
synonomous with isomorphism. It is useful concept than that of 'requisite variety'
commonplace to contrast mimetic isomorphic that was proposed in the 1960s? If this
pressure with efficiency and/or resource question is answered in the negative, then we
dependence theory as an explanation for the need to reflect upon how important the theo-
spread of a particular form or practice (see for retical concept of isomorphism is to institu-
instance the well-cited studies of Fligstein tional theory. Conversely, would the notion of
1985; Haveman 1993; Palmer, Jennings and legitimacy still have meaning and be
Zhou 1993). The conflation of institutionalism sufficiently distinct without the assumption of
and diffusion is unfortunate because diffusion some form of homogeneity in the
studies include a larger set of phenomena organizational field?
where practices are not necessarily adopted
for legitimacy gains. In contrast, legitimacy is
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 3
Institutional Logics
Patricia H. Thornton and William Ocasio

INTRODUCTION findings. Last, we critique the literature on

institutional logics and suggest how the
The phrase, 'institutional logic' has become approach can be used to further advance the
somewhat of a buzz-word. Buzz words are study of organizations and institutions.
over used; as a result their meanings often get The research on institutional logics repre-
distorted and overextended and they burn-out sents an impressive variety of empirical con-
of existence. Mizruchi and Fein (1999) texts, from thrifts (Haveman and Rao, 1997),
showed in the institutional theory literature higher education publishing (Thornton and
how meanings get distorted and then taken Ocasio, 1999), health care organizations
for granted. To avoid misunderstandings of (Scott et al., 2000), colleges and universities
the institutional logic concept and to build on (Gumport, 2000), consumer research
research in this genre, now is the time to (Moorman, 2002), mutual funds (Lounsbury,
reflect on definitions and the theoretical and 2002), French cuisine (Rao, Monin, and
methodological contributions this perspective Durand, 2003), equity markets (Zajac and
brings to the analysis of institutions. Westphal, 2004), accounting firms
We begin by defining the concept of an (Thornton, Jones, and Kury, 2005),
institutional logic and how it emerged as part occupational prestige rankings (Zhou, 2005),
of the development of institutional theory and architects (Jones and Livne- Tarandach
since the 1970s. Second, we illustrate the (Forthcoming), among others. Given the
institutional logics approach as both a meta- incredible diversity of research topics, what
theory and a method of analysis. Third, we are institutional logics?
present a select review of the literature
emphasizing how the institutional logics
approach makes headway in addressing sev- DEVELOPMENT OF INSTITUTIONAL
eral limitations and tensions identified by THEORY
scholars of institutional analysis. In this
review we focus on an analysis of the To understand the concept of institutional
implicit and explicit social mechanisms logics we must first place it within the con-
employed in these studies, not on the text of institutional theory and institutional
description or strength of their empirical analysis. The study of institutions has a long
100
history in organizational analysis, beginning legitimacy rather than efficiency as an
with Selznick's (1948, 1949, 1957) empirical explanation for the success and survival of
analyses of organizations and the institutional organizations (Tolbert and Zucker, 1983).
environment, and Parson's (1956) theorizing, Friedland and Alford's (1991) seminal
which emphasized how institutions function essay, together with empirical work by
to integrate organizations with other Haveman and Rao (1997), Thornton and
organizations in society through uni- Ocasio (1999), and Scott et al. (2000),
versalistic rules, contracts, and authority. created a new approach to institutional analy-
In the 1970s a new approach to institu- sis which posited institutional logics as
tional analysis emerged with Meyer and defining the content and meaning of institu-
Rowan (1977) and Zucker (1977), who high- tions. While the institutional logics approach
lighted the role of culture and cognition in shares with Meyer and Rowan (1977),
institutional analysis. From a macro perspec- Zucker (1977), and DiMaggio and Powell
tive, Meyer and Rowan (1977) emphasized (1983, 1991) a concern with how cultural
the role of modernization in rationalizing rules and cognitive structures shape
taken-for-granted rules, leading to isomor- organizational structures, it differs from them
phism in the formal structures of organiza- in significant ways. The focus is no longer on
tions. Organizations had to conform to the isomorphism, whether in the world system,
requirements of external environments for society, or organizational fields, but on the
legitimacy, meaning that parts of organiza- effects of differentiated institutional logics on
tions had to be loosely coupled from their individuals and organizations in a larger
technical core. Meyer and his colleagues variety of contexts, including markets, indus-
were concerned with the importance of tries, and populations of organizational
rationality in the account of western culture, forms. Institutional logics shape rational,
and viewed the development of formal orga- mindful behavior, and individual and organi-
nizational structures as part of world society zational actors have some hand in shaping
and its cultural system (Meyer, Boli, and and changing institutional logics (Thornton,
Thomas, 1987; Meyer, Boli, Thomas, and 2004). By providing a link between
Ramirez, 1997). From a micro perspective, institutions and action, the institutional logics
Zucker (1977) also emphasized the taken-for- approach provides a bridge between the
granted nature of institutions, and the role of macro, structural perspectives of Meyer and
cultural persistence as a measure of insti- Rowan (1977) and DiMaggio and Powell
tutionalization. (1983) and Zucker's more micro, process
DiMaggio and Powell (1983) extended approaches. Situated forms of organizing are
Meyer and Rowan's (1977) focus on isomor- linked with beliefs and practices in wider
phism from the societal level to the level of institutional environments in ways that
organizational fields. With their emphasis on address the critique of isomorphism and
coercive, normative, and mimetic sources of diffusion studies (Hasselbladh and
isomorphism, DiMaggio and Powell's Kallinikos, 2000).
approach led to an explosion of empirical
analysis. In DiMaggio and Powell (1983), the
effects of cognition are mainly viewed
through mimetic isomorphism - focusing on DEFINITIONS OF INSTITUTIONAL
mindless behavior in response to cultural LOGICS
rationalization. Subsequently, what they
termed 'the new institutionalism' also became We present definitions of the institutional
largely identified with a rejection of logics approach and then return to how it dif-
rationality as an explanation for organiza- fers from the new institutionalism. The term
tional structure, and an emphasis on institutional logics was introduced by Alford
 101
and Friedland (1985) to describe the contra- thereby contingent set of rules, premiums and
dictory practices and beliefs inherent in the sanctions that men and women in particular
institutions of modern western societies. contexts create and recreate in such a way
They describe capitalism, state bureaucracy, that their behavior and accompanying
and political democracy as three contending perspective are to some extent regularized
institutional orders which have different and predictable. Put succinctly, an institu-
practices and beliefs that shape how individ- tional logic is the way a particular social
uals engage political struggles. world works.' Jackall, like Friedland and
Friedland and Alford (1991) further devel- Alford, views institutional logics as embod-
oped the concept in the context of exploring ied in practices, sustained and reproduced by
the interrelationships between individuals, cultural assumptions and political struggles.
organizations, and society. They view But the emphasis for Jackall is on the norma-
institutions as supraorganizational patterns of tive dimensions of institutions and the intra-
activity rooted in material practices and institutional contradictions of contemporary
symbolic systems by which individuals and forms of organization; in contrast the focus
organizations produce and reproduce their for Friedland and Alford is on symbolic
material lives and render their experiences resources and the inter-institutional
meaningful. Rejecting both individualistic, contradictions of the inter-institutional
rational choice theories and macro structural system, for example between the market and
perspectives, they posited that each of the the family and the professions and the
institutional orders has a central logic that corporation.
guides its organizing principles and provides Building on the developments of the
social actors with vocabularies of motive and concept by both Jackall (1988) and Friedland
a sense of self (i.e., identity). These practices and Alford (1991), Thornton and Ocasio
and symbols are available to individuals, (1999: 804) defined institutional logics as 'the
groups, and organizations to further elabo- socially constructed, historical patterns of
rate, manipulate, and use to their own advan- material practices, assumptions, values,
tage (Friedland and Alford, 1991: 232, 248, beliefs, and rules by which individuals
251-252). produce and reproduce their material subsis-
For Friedland and Alford (1991) the core tence, organize time and space, and provide
institutions of society - the capitalist market, meaning to their social reality.' According to
the bureaucratic state, families, democracy, this definition institutional logics provide a
and religion - each has a central logic that link between individual agency and cognition
constrain both the means and ends of individ- and socially constructed institutional
ual behavior and are constitutive of individu- practices and rule structures. While Friedland
als, organizations, and society. However, and Alford's approach is both structural and
while institutions constrain action they also symbolic, and Jackall's is both structural and
provide sources of agency and change. The normative, Thornton and Ocasio's (1999)
contradictions inherent in the differentiated approach to institutional logics integrates the
set of institutional logics provide individuals, structural, normative, and symbolic as three
groups, and organizations with cultural necessary and complementary dimensions of
resources for transforming individual identi- institutions, rather than separable structural
ties, organizations, and society. (coercive), normative, and symbolic
A separate, albeit related, conception of (cognitive) carriers, as suggested by
institutional logics was developed by Jackall alternative approaches (e.g., Scott, [1995]
(1988). In his ethnographic analysis of ethical 2001).
conflicts in corporations, Jackall (1988: 112) While varying in their emphasis, the vari-
defines institutional logic as 'the complicated, ous definitions of institutional logics all
experientially constructed, and presuppose a core meta-theory: to understand
102
individual and organizational behavior, it The eventual result was that first manufactur-
must be located in a social and institutional ing, then marketing succumb in power and
context, and this institutional context both control to those in finance. Updating his data
regularizes behavior and provides opportu- on corporate control, Fligstein (2001) devel-
nity for agency and change. The various oped a shareholder value conception of
dimensions of the meta-theory are further control as distinct from the earlier finance
elaborated in Section IV. conception - shifting influences away from
the corporate venue to that of the market.
For Fligstein (1985, 1987, 1990), individ-
Precursors ual executives are the primary carriers of the
contending conceptions of control. However,
Research sometimes referred to as logics of these conceptions may not be explicitly
action provides precursors to the institutional institutionalized. For example, Ocasio and
logics approach - similarly being based on an Kim (1999) suggest that the alternative
interdependent set of logics that provide conceptions of control were never institu-
some context for social influence on actors' tionalized in the organizational field, as none
actions in a domain. We highlight the exam- of them became dominant. While Fligstein's
ples that illustrate different logics of action work is similar to the institutional logics
operating either within or between institu- approach because of its implicit interplay of
tional orders - Fligstein's (1987, 1990) three institutional sectors - the professions, the
conceptions of control within corporate gov- corporation, and the State, the emphasis on
ernance, DiMaggio's (1991) two conflicting the utilitarian individual and the power-
models to organize the field of art museums, oriented organization motivated subsequent
and Boltanski and Thevenot's ([1986] 1991) work leading to the institutional logics
multiple modes of justification to evaluate approach that more systematically integrated
agreements situated between six different conflict and cultural perspectives.
worlds. In reviewing these examples note the In another example of logics of action,
relatively early and similar dates of publica- DiMaggio (1991) develops ideal types of
tion and that all the examples involve an organizing the organizational field of art
analysis of conflicting logics without focus- museums, the Gilman and the Data models,
ing on isomorphism. to understand how competing cultural models
Fligstein (1990) identified three formed the basis of a power struggle to
competing conceptions of control that guide redefine the field; a struggle between the elite
the governance of large industrial firms: the upper classes and their social circle of
manufacturing, marketing, and finance collectors and curators and the new class of
conceptions. For Fligstein, both intra- museum professionals fueled by the expan-
organizational power struggles (Fligstein, sion of higher education in the fine arts. The
1987) and field-level struggles to control case reveals the structuration of organiza-
market competition and contest state tional fields is a contested process between
legislation shaped the formation of these these two cultural models. However, there is
competing conceptions, or logics of action. an evolutionary ordering with the creation of
Executives' views on how to best run the a standardized body of knowledge, the
corporation were selectively influenced by organization of professional associations, and
their experience in the corporation. the collective definition of a field, being
Employees' ability to fight it out among each historically prior to the diffusion of the Data
other in the rise to the top of the corporation Model.
occurs in a Chandlerian (Chandler, 1962) Boltanski and Thevenot (1991) apply a
world of significant economic and industrial taxonomy of cultural repertoires that present
change, organizational and professional inno- different justifications of worth to understand
vation, coupled with a powerful State.
 103
how people disagree, compromise, and on the role of institutions and institutional-
conclude more or less lasting agreements. ization in shaping logics than the approaches
Identified with the tool kit school, they view of Friedland and Alford (1991) or Jackall
culture as a social resource that individuals (1988). While sharing with the institutional
use strategically, culture is more than logics perspective a focus on culture as a
motivating action - it also justifies it. source of agency (Swidler, 1986; DiMaggio,
Boltanski and Thevenot illustrate in a variety 1997), these precursors differ from an institu-
of scenarios of interactions that what is tional logics approach by deemphasizing the
legitimate changes depending on the context structural and normative constraints imposed
in which it is negotiated and evaluated, the by institutional logics.
ideal types being six different worlds - the
inspired, domestic, fame, civic, market, and
industrial. Compromises are less fragile when
there is groundwork to embed them in the META-THEORY OF INSTITUTIONAL
specific arrangements of these worlds LOGICS
assuming that the embedding is congruent
with the worlds. Transposing or putting The institutional logics approach incorporates
together elements extracted from the a broad meta-theory on how institutions,
descriptions of the various worlds of worth through their underlying logics of action,
can cause actors to be placed in incongruent shape heterogeneity, stability and change in
or compromising situations, depending on the individuals and organizations. Not all aspects
particular scenario. An intuitively awkward of the meta-theory have been incorporated
example illustrates their point. 'At home, to into every application of the institutional
get his children's attention, a father presents a logics perspective, due to differences among
glowing picture of his ability to direct a authors in emphasis, and partially to the
project at work .... The first combines limitations of the journal publication process.
elements borrowed from the domestic world Here we propose five principles that in our
(a father and his children), from the world of judgment underlie the meta-theory and
fame (attract attention, present a glowing provide opportunities for theoretical
picture), and from the industrial world development and refinement.
(ability to direct a project) (Boltanski and
Thevenot, 1991: 227). This is an incongruous
transfer of worth from different worlds since
fathers do not receive attention based on Embedded agency
industrial worth through the eyes of their
children. Perhaps the core assumption of the institu-
Fligstein's (1985, 1987, 1990), DiMaggio's tional logics approach is that the interests,
(1991) and Boltanksi and Thevenot's ([1986] identities, values, and assumptions of indi-
1991) approaches all posit the existence of viduals and organizations are embedded
conceptions, models, or logics at a within prevailing institutional logics.
supraorganizational level, and either Decisions and outcomes are a result of the
implicitly or explicitly emphasize the role of interplay between individual agency and
culture in shaping and interpreting individual institutional structure (Jackall, 1988;
and organizational activities. These examples Friedland and Alford, 1991; Thornton and
also illustrate the interrelationship between Ocasio, 1999). While individual and organi-
individuals, organizations, and the zational actors may seek power, status, and
environment and how logics interpenetrate economic advantage, the means and ends of
multiple levels of analysis from the social their interests and agency are both enabled
psychological to the levels of the and constrained by prevailing institutional
organizational field and societal sector. These logics (Giddens, 1984; Sewell, 1992).
approaches are less focused, however,
104
This assumption, which over time has levels as an important mechanism for organi-
become known as embedded agency (Seo zational and institutional change.
and Creed, 2002; Battilana, 2006;
Greenwood and Suddaby, 2006), distin-
guishes an institutional logics approach from Society as an inter-institutional
rational choice perspectives on institutions system
(North, 1990; Ingram and Klay, 2000) which
presume individualistic interests. This The main innovation of Friedland and Alford
assumption also distinguishes an institutional (1991) is to conceptualize society as an inter-
logics approach from macro structural institutional system. To locate behavior in a
perspectives which emphasize the primacy of context requires theorizing an inter-institu-
structure over action (DiMaggio and Powell, tional system of societal sectors in which
1983; Meyer et al., 1987; Meyer et al., 1997; each sector represents a different set of
Schneiberg and Clemens, 2006) and expectations for social relations and human
Parsonian (Parsons 1956) perspectives on and organizational behavior. In Friedland and
institutions, which posit a separation of insti- Alford's words, the capitalist market,
tutional from economic or technical sectors bureaucratic state, democracy, nuclear
(e.g., Meyer and Scott, 1983). family, and Christian religion are key institu-
The embeddedness of agency presupposes tional sectors, each with its own distinct
the partial autonomy of individuals, organi- logic. Thornton (2004: 44-45) elaborated this
zations, and the institutions in society in any typology in a review of a series of empirical
explanation of social structure or action studies to include six sectors - markets,
(Friedland and Alford, 1991). Society corporations, professions, states, families,
consists of three levels - individuals compet- and religions.
ing and negotiating, organizations in conflict Viewing society as an inter-institutional
and coordination, and institutions in contra- system allows sources of heterogeneity and
diction and interdependency. All three levels agency to be theorized and to be observed
are necessary to adequately understand soci- from the contradictions between the logics of
ety; the three levels are nested (embedded) different institutional orders. There is not just
when organizations and institutions specify one source of rationality, as in world systems
progressively higher levels of constraint and approaches (Meyer et al., 1997), but multiple
opportunity for individual action. sources. Rather than positing homogeneity
Rather than privileging one level over and isomorphism in organizational fields, the
another, this perspective suggests that while institutional logics approach views any con-
individual and organizational action is text as potentially influenced by contending
embedded within institutions, institutions are logics of different societal sectors. For exam-
socially constructed and therefore constituted ple, the health care field is shaped by the
by the actions of individuals and organ- institutional logics of the market, the logic of
izations (Berger and Luckmann, 1967). This the democratic state, and the professional
suggests that cross-level effects are critical. logic of medical care (Scott et al., 2000).
One limitation, however, is that most The inter-institutional system enables two
research, whether theoretical or empirical, advances in institutional analysis. First, it is
tends to emphasize one level over another. non-deterministic, that is no institutional
Friedland and Alford (1991), despite their order with its accompanying principles of
direct call for multiple levels, emphasized the organization and logics of action is accorded
role of the societal level. Recent work on causal primacy a priori. Second, the inter-
institutional entrepreneurship (Battilana, institutional system provides researchers with
2006; Greenwood and Hinnings, 2006) has an understanding of the institutional
incorporated the relationship between foundations of categories of knowledge.
 105
Key constructs in the analysis of organiza- utilities - and these values and utilities cannot
tion, such as efficiency, rationality, participa- be traded off as simple economic alternatives.
tion, and values are not neutral, but are Thus, an important underlying assumption is
themselves shaped by the logics of inter- not whether motivation and action are
institutional system. rational or irrational; instead the argument is
As posited by Friedland and Alford (1991: how the comparative conflict and conformity
260) 'Categories of knowledge contribute to of institutional logics (which are both
and yet depend upon the power of institutions material and cultural) influence human and
which make them possible. Without organizational behavior (Thornton, 2002).
understanding the historical and institutional This assumption reflects a cultural turn in
specificity of the primary categories of the study of conflict and agency. This
analysis, social scientists run the risk of cultural turn is motivated by the thorny ques-
elaborating the rationality of institutions they tion of how individual agents know they have
study, and as a result become actors in their economic or political struggles on their hands
reproduction.' and what is an appropriate way to respond to
them. For example, Thornton and Ocasio
(1999) and Thornton (2004) showed that
The material and cultural resource competition was actually greater in
foundations of institutions higher education publishing in the era of the
editorial logic - but this competition was
A key assumption of an institutional logics interpreted differently and responded to in a
perspective is that each of the institutional non-conflictual manner. With the rise of a
orders in society has both material and cul- market logic, resource competition, although
tural characteristics (Friedland and Alford, less significant, had greater effects on
1991). For example, both the family and reli- organizational actions and decisions.
gion, while typically not considered part of Stinchcombe (2002: 429) has commented
the economic sphere, are directly involved in around this issue - needing culture to define
the production, distribution, and consumption the meaning of power and competition -
of goods and services (Becker, 1976). viewing it as a causal sequencing problem.
Similarly, markets, while often not consid- His argument is that if power is theorized as a
ered part of the cultural sphere, are directly first-order construct in explaining change,
shaped by culture and social structure, independently of culture, two problems need
including networks of social relationships as to be addressed. First, power is created in the
well as structures of power, status, and dom- course of action: it does not occur prior to the
ination (Granovetter, 1985). Rather than action that it explains. Second, the decision to
privileging material or cultural explanations use power is an intentional, strategic choice;
of institutions, an institutional logics per- however, it is not always possible for actors
spective recognizes that institutions develop to know the cultural framing or menus of
and change as a result of the interplay available options in advance of any action.
between both of these forces. Thus, instrumental political theories of action
In explaining human behavior and organi- may be incomplete explanations because the
zational structure, Friedland and Alford necessary sequence of events is unlikely to
(1991) argued that theories which 'retreat occur. Consequently, cultural explanations
from society,' - emphasizing market mecha- are necessary adjuncts to structural
nisms to aggregate individual utilities and explanations.
preferences, organizational competition, In making way for the role of culture in
technology, and resource dependence - begin shaping action, institutional logics
to fail. Instead, institutional sectors, for incorporate both the symbolic and the
example families, professions, states, and
religions locate the origins of values and
106
normative components of culture. Following on resource dependencies and political
Geertz (1973) and Douglas (1986), interests.
DiMaggio and Powell (1991) and Friedland An institutional logics approach views
and Alford (1991) highlighted the symbolic norms as drawn from experience and exem-
and cognitive dimensions of institutions and plars of the institution (Jackall, 1988; Ocasio,
institutional logics. But symbolic and cogni- 1999). Norms imply ambivalence about uni-
tive explanations of institutions and institu- versalistic principles, with both dominant and
tional logics are incomplete without also subsidiary norms co-existing. This suggests a
incorporating the normative dimensions probabilistic, rather than a deterministic view
(Hirsch, 1997; Mizruchi and Fein, 1999). of adherence to dominant norms of behavior,
Sociologists, rejecting the strong view of and the identification of specific contingen-
internalization of universalistic values and cies where subsidiary norms prevail.
cultural norms proposed by Parsons (1951)
and early Merton (1957), have been reluctant
to rely on social norms as an explanation for Institutions at multiple levels
behavior. Even DiMaggio and Powell (1983),
in discussing the normative forces driving The institutional logics approach as meta-
isomorphism, emphasized the role of formal theory provides tremendous capacity to
education, legitimating authorities, and develop theory and research across multiple
professional networks, with an unclear role levels of analysis. For Friedland and Alford
for social norms, per se. An institutional (1991) the focus was on societal-level logics
logics approach, in contrast, emphasizes how and their effects on individuals and organiza-
institutions provide social actors with a tions. But the meta-theory that has emerged
highly contingent set of social norms is broader, and institutional logics may
(Jackall, 1988), where behavior is driven not develop at a variety of different levels, for
by a logic of consequences but by a logic of example organizations, markets, industries,
appropriateness (March and Olsen, 1989). inter-organizational networks, geographic
The requirement of norms as a critical communities, and organizational fields. This
dimension of institutions and their underlying flexibility allows for a wide variety of mech-
logics does not imply universalism, moral anisms to be emphasized in research and
behavior by individuals, nor deeply theoretical development and may be one
internalized values, all part of Parson's reason the term institutional logics has caught
(1951) conceptions of norms. An institutional on among scholars (Kuhn, 1962).
logics approach shares with Granovetter Theoretical mechanisms are elements of
(1985) and others the oversocialized critique theory that operate at a different level of
of Parsons, while at the same time suggesting analysis (e.g., individuals or organizational
that ignoring norms implies an under- fields), than the main phenomenon being the-
socialized view of individual and orized about (e.g., organizations or groups).
organizational behavior. A focus on To identify the effects of mechanisms across
identification (see below) as the mechanism levels of analysis makes the theory more pre-
by which cultural norms exert their effects cise as well as more general (Stinchcombe,
over individuals and organizations (Kelman, 1991). Therefore, to apply the institutional
1956, 2006; O'Reilly and Chatman, 1996) logics meta-theory it is critical that the level
distinguishes an institutional logics approach of analysis at which institutionalization
from an over-socialized conception of occurs be clearly specified, whether at a
institutions that focuses on internalization societal level (Friedland and Alford, 1991),
and value commitments and an under- or at other levels.
socialized conception that focuses For example, Haveman and Rao (1997), in
their study of the coevolution of institutions
 107
and organizations in the California thrift societal level. Jackall argues that the formal
industry, studied how with the rise of bureaucratic logic, as characterized by Weber
Progressivism, changes in institutional logics ([1922] 1978), had little affinity with
at the societal level affected the formation of American individualistic affinities and
distinct organizational forms at the industry cultural values, with the hybrid logic of
level. In particular, their analysis shows how patrimonial bureaucracy thereby emerging.
plans that embodied bureaucratic logics and Thornton and Ocasio (1999) focus on the
rational decision making were more likely to formation of industry-level institutional
thrive than those that embodied a community logics in higher education publishing. They
logic and mutual cooperation among actors. propose that industries are a relevant bound-
The emphasis here is on institutional logics at ary for establishing institutional logics
the societal level affecting the selection of because producers in an industry establish a
alternative forms at the organizational level. common identity through social comparisons,
A secondary, and less developed, aspect of status competition, and structurally
the coevolutionary process in the paper sug- equivalent network positions (White, 1992).
gests that as organizational forms that Their analysis and the subsequent research by
embody a particular institutional logic evolve Thornton (2001, 2002) focus on the effects of
and become institutionalized at the industry shifts, at the industry level, from an editorial
level, the corresponding societal-level insti- logic to a market logic. While focusing on
tutional logics further evolves and becomes industry-level logics that both emerge from
further institutionalized. and sustain market competition, these logics
The emphasis on societal-level institutions do not emerge in the industry de novo, but
is illustrated by the work of Bhappu (2000), are shaped by higher-order societal
which draws on anthropological analysis of professional and market logics. The link
the ancient Japanese family system to argue between industry-level logics and the logics
how the institutional order of the family is of the inter-institutional system is further
the origin of the institutional logic of developed by Thornton (2004).
Japanese corporate networks. Scott et al. Research on institutional logics adopting a
(2000) examine how societal-level profes- field-level perspective has emphasized the
sional, government, and managerial-market existence of competing logics within the
logics shape the transformation of the health field. For example, in a qualitative analysis of
care organizational field, from one dominated U.S. academic health centers, Kitchener
by professional logics to one where the three (2002) explores the effects of competing
logics co-exist and no single one dominates. managerial and professional logics on the
In Jackall's (1988) ethnographic analysis, responses to merger initiatives. Reay and
the emphasis is on institutionalization at the Hinings (2005) adopt a similar approach in
organizational level. Here the focus in on the their analysis of structural change in
structures of managerial careers and how Canadian health care organizations.
they shape the formation of a managerial Greenwood and Suddaby (2006) focus
ethos that shapes decision making and action instead on contradictions between institu-
in organizations. The formal structures of the tional logics in organizational fields and
organizations combine with institutionalized suggest that boundary bridging organizations
practices of fealty and patronage to create an are sources of change in institutional logics
institutional logic termed patrimonial (see below). Lounsbury (2007) examines
bureaucracy. While clearly focusing on orga- competing trustee and professional logics in
nizational-level institutionalized practices, the mutual fund industry. In his analysis
Jackall's analysis suggests how these geographic communities are also a source of
practices also reflect cultural forces at the institutionalization of logic, as Boston and
New York are centers of the
108
trustee and professional logics respectively, Zajac and Westphal's analysis of historical
leading to different patterns of organizational contingency in financial markets (2004) is
change in the two areas. notable in viewing markets themselves as
The variety of levels of analysis studied shaped by institutional forces. The paper
suggests the fecundity of the institutional finds that the emergence of an agency
logics perspective. The breadth of the meta- perspective in the 1980s led to historical
theory may have encouraged imprecision in shifts in stock market response to stock
research, and it could be inferred that any repurchases, from an unfavorable reaction,
logic or interpretive scheme, at any level of consistent with a professional logic, to a
analysis, may be characterized as an institu- favorable one, consistent with an agency
tional logic. We suggest otherwise. logic. The paper suggests that the market's
Institutional logics are more than strategies or reaction to particular corporate practices are
logics of action as they are sources of not, as financial economists contend, simply
legitimacy and provide a sense of order and a function of the inherent efficiency of such
ontological security (Giddens, 1984: Seo and practices, but are influenced by the prevailing
Creed, 2002). Research on competing institutional logic.
institutional logics, as some of the work on However, note with the current rise of reli-
organizational fields described above, often gion in world discourse that institutional
is not precise on the level of which logics logics, both in their elaboration and relative
become institutionalized, or whether they pattern of dominance between institutional
should be considered institutional logics at orders, are not simply an evolutionary or
all. linear model of development driven by scien-
tific progress or market rationalization. Here
the institutional logics approach departs dis-
Historical contingency tinctly from Meyer and his colleagues' work
noted earlier on modern rationalization. For
Historical contingency is a key meta-theoret- example, Thornton, Jones, and Kury (2005)
ical assumption of the institutional logics illustrate other models of the historical
approach. In general this assumption is con- contingency of institutional logics that show
sistent with institutional theory, which cyclical or punctuated equilibrium functional
focuses attention on how larger environments forms in their comparison of the cases of
affect individual and organizational behavior. accounting and architecture.
While the six institutional orders of the inter- Many studies reveal findings that are valid
institutional system in western societies in one historical time period but not in others.
previously identified have remained Thornton (2004: 127) presents a meta-analy-
influential, empirical observation also sis partitioning the findings on the higher
informs us that they differed in development education publishing studies by universal and
and importance over time. For example, particular effects. Founder and ownership
modern societies have greater emphasis on effects were found to be universal across
corporate and state influences and earlier time, whereas relational and structural effects
societies in general emphasized family and were particular to a historical period in which
religion to a larger extent. In particular, an institutional logic prevailed. Many find-
during the last 30 years the prominence of ings typically predicted by resource depend-
market logics has been found in multiple ence and economic theories are found to be
studies in various contexts, including historically contingent. Note that the models
Thornton and Ocasio (1999) in higher educa- in this meta-analysis controlled for differ-
tion publishing, Scott et al. (2000) in health ences in organization age, size, and resource
care, Lounsbury (2002) in financial interme- competition and other macro economic
diation, Zajac and Westphal (2004) in equity variables. Note also that the meta-analysis
markets, and Meyer and Hammerschmidt
(2004) in public management.
 109
design controls for differences in industry, contingency is a focus of the analysis
product market, data set, population and (Thornton, 2004: 126-127). They also can
sampling methods, and statistical modeling accommodate data at multiple levels of
procedures. The universal founder effect analysis, for example at the individual, orga-
suggests the persistence of individual entre- nizational, and environmental - making it
preneurs or leaders to hang tough on a logic possible to partition material from cultural
of action, regardless of contradictory logics effects (DiMaggio, 1994). The challenge of
prevailing in their surrounding environment. measuring cultural effects is often
The objective of recognizing historical approached by examining how one or more
contingency as a meta-theoretical assumption of the institutional orders of the inter-institu-
is to explore if the effects of economic, tional system are changing in its strength of
political, structural, and normative forces influence on individual and organizational
affecting individuals and organizations are behavior. These types of studies require
indeed historically contingent. Moreover, the identifying a scientific boundary to draw a
goal is not to develop universal theories of population or sample for hypothesis testing -
organizational behavior and structure but to such as an industry, market, or profession.
examine whether such theories, often Note that the organizational field concept is
assumed to be universal through time and problematic in this sense, unless it can be
space, are instead particular to historical time defined, for example as a geographic
and cultural environments (Thornton, 2004: community, positional community, i.e. CEOs
130-133). of Fortune 500, or inter-organizational
network.
The development of interpretive methods
enriches the possibilities of the types of data
INSTITUTIONAL LOGICS AS and data gathering methods available for
METHOD OF ANALYSIS researchers to examine the content and
meaning of institutions. Scott et al. (2000),
Theory and methods go hand-in-hand and the for example, used content analysis of publi-
meta-theoretical principles reviewed in the cations to identify the key terms important to
preceding section have been examined the actors of the professions and corporate
through the creative development of meth- institutional orders of the health care system
ods. While many social science researchers and then measured the frequency of vocabu-
have been skeptical of cultural effects laries associated with the institutional orders,
(DiMaggio, 1994), in our view researchers signaling the emergence and decline of these
are rising to the challenges of measuring the alternative institutional logics.
effects of content, meaning, and change in Phillips and Hardy (2002: 55) define
institutions using the institutional logics methods from discourse theory and describe
perspective. In this endeavor, we comment how they have been borrowed to further
on the use of event history analysis, interpre- develop institutional theory and methods.
tive methods, triangulation, and ideal types. Data sources include, for example, inter-
Foundational studies have combined event views, focus groups, archival documents and
history (Tuma and Hannan, 1984) and inter- records, naturally occurring conversations,
pretive methods, for example from archival political speeches, newspaper articles, novels,
records (Haveman and Rao, 1997), personal stories, cartoons, and photographs. Methods
interviews (Thornton and Ocasio, 1999), and of analysis include, for example, genealogy,
content analysis of professional journals ethnography, conversation analysis, content
(Scott et al., 2000). Event history models typ- analysis, narrative analysis, critical discourse
ically use historical time (not organization analysis, and rhetorical analysis that make
age) as the clock, particularly when historical use of a variety of 'texts,'
110
including spoken words, pictures, symbols, Swedberg (2005: 3), in drawing from
and cultural artifacts among others. Suddaby Weber, gives an example. 'When the wood-
and Greenwood (2005), for example, used cutter brings down his axe on the wood, it
rhetorical analysis of vocabularies (words) to can be a case of wage labor, provision for
expose contradictory institutional logics one's household, or form of recreation - and
embedded in historically different which one it is depends on the meaning with
understandings of professionalism to explain which the action is invested.' In the Appendix
the multidisciplinary partnership as a new we include examples of ideal types devel-
organizational form. oped from the analysis of the effects of insti-
While this vibrant resurrection and devel- tutional logics in three industries, higher
opment of qualitative methods strengthens education publishing, accounting, and
the capacity to interpret meanings, we architecture.
caution that the strength of the foundational DiMaggio's (1991: 271) analysis of the
studies of the institutional logics perspective two models of organizing art museums is a
has been on triangulation of types of data and precursor to bringing back the use of ideal
methods of analysis - being reliant on both types in institutional analysis. His categories
qualitative and quantitative methods. One on the Y axis focused on the mission, defini-
method that integrates interpretive and tion of art, legitimate perception, education,
hypothesis testing approaches is the use of major publics, control, strategy, building, and
ideal types. living artists - showing how the X axis spec-
Ideal types are a method of interpretive ifies the Gilman and Data models varied on
analysis for understanding the meaning that these universal dimensions. Rao et al. (2003)
actors invest their actions with. They were also used ideal types in their characterization
first developed by the classic theorists as a of classical and nouvelle French cuisine to
theoretical tool to facilitate intelligible understand how new logics displaced old and
comparisons (Weber, 1922). Researchers ushered in new role identities. Their
have further developed this method of analy- categories on the Y axis examine the dimen-
sis to suggest testable hypotheses (Thornton sions of culinary rhetoric, rules of cooking,
and Ocasio, 1999). archetypal ingredients, role of the chef, and
In theory building, ideal types require the organization of the menu - showing how the
development of formal typologies composed X axis defined the two characteristics of
of two parts: (a) the description of ideal types classical and nouvelle cuisines. However,
and (b) the set of assertions that relate the what is the causal connection between
ideal types to the dependent variable (Dotty DiMaggio's and Rao et al.'s ideal types and
and Glick, 1994). While often derived from the inter-institutional system? Should we, for
empirical observation, ideal types are not for example, intuit that the Gilman Model was
describing an organizational field, but instead influenced by the institutional logics of the
are theoretical models for comparing the family and the Data Model by the logics of
effects of various meanings in a location with the professions and the state?
a definable boundary. They do not precisely Thornton and Ocasio (1999: 808-809) and
conform to reality because of deliberate Thornton (2004) explicitly anchor the higher
simplification to afford comparative analysis education publishing ideal types in the
and multidimensional classification of domains (orders) of the inter-institutional
phenomena not restricted by the events of the system - revealing their origins. Their
selected cases. Ideal types assign a categories on the Y axis examined form of
hypothetical meaning that can be used as a capitalism, organizational identity, legiti-
yardstick to compare and contrast macy, authority structures, mission, focus of
hypothesized and actual meaning and attention, strategy, logics of investment, and
behavior. rules of succession - showing how the X axis
 111
specifying the editorial and market logic 1991). Collective identities also emerge
varied on these general elements. Once among populations of organizational forms
derived from interview and archival data they (Haveman and Rao, 1997; Carroll and
pushed the standards further by externally Hannan, 2000), market competitors (Porac et
validating the ideal types with publishers' al., 1989; White, 1992; Peteraf and Shanley,
experiences and their use in the Stanford 1997; Thornton and Ocasio, 1999), and
University Publishers College.¹ industry associations (Aldrich and Fiol, 1994;
King and Lenox, 2000).
As collective identities become institution-
alized, they develop their own distinct insti-
HOW LOGICS SHAPE INDIVIDUAL tutional logic, and these logics prevail within
AND ORGANIZATIONAL ACTION the social group (Jackall, 1998). These
effects of institutional logics are emphasized,
Collective identities and identification among others, in the work of Haveman and
A mechanism by which institutional logics Rao (1997), on the theory of moral senti-
exert their effects on individuals and organi- ments embodied in the collective identities of
zations is when they identify with the collec- organizational forms; in Thornton and Ocasio
tive identities of an institutionalized group, (1999)'s shift from an editorial logic to a
organization, profession, industry or popula- market logic in the collective identity of
tion (Tajfel and Turner, 1979; March and competitors in the higher education
Olsen, 1989). A collective identity is the publishing market; in Jones and Livne
cognitive, normative, and emotional connec- Tarandach's (Forthcoming) rhetorical
tion experienced by members of a social strategies of architects based in the institu-
group because of their perceived common tional logics of business, profession, and state
status with other members of the social group that focus attention on distinct competencies
(Polleta and Jasper, 2001). Collective - servicing clients, building great
identities emerge out of social interactions architecture, or managing facilities, and in
and communications between members of the Lounsbury's (2002) analysis of collective
social group (White, 1992). As individuals identities embodied in professional
identify with the collective identity of the associations in the field of finance. In all of
social groups they belong to they are likely to these cases, albeit at different levels of
cooperate with the social group (Tyler, 1999; analysis, identification with the respective
Brickson, 2000), abide by its norms and institutional logics occurs directly, as the
prescriptions (March and Olsen, 1989; identification with the collective is equivalent
Kelman, 2006), and seek to protect the to the identification with the institutional
interests of the collective and its members logic prevailing in the collective, whether
against contending identities (Tajfel and they are organizational forms, market
Turner, 1979; White, 1992). competitors, or professional associations, or
Individuals are members of multiple social any other social grouping.
groups with a collective identity, including
professions and occupations (Abbott, 1988; Contests for status and power
Fine, 1996; Glynn, 2000), gender, racial and The contests for status and power are rela-
ethnic groups (Cerulo, 1997; Lamont and tively universal mechanisms for individual
Molnar, 2002), social movements (Benford and organizational actions. However, an
and Snow, 2000; Rao et al., 2003), and indi- institutional logics perspective suggests that
vidual organizations (Selznick, 1957; Albert these mechanisms are conditioned by pre-
and Whetten, 1985; Dutton and Dukerich, vailing institutions (Fligstein, 1996;
112
Thornton and Ocasio, 1999; Lounsbury and a market logic created a shift from status
Ventresca, 2003). While power and status driven by reputation within business practice
differences are present in all organizations, to reputation driven by normative conformity
researchers can identify the sources of power to increasingly mathematical economics.
and status, their meaning and consequences Professional finance associations led the
by understanding how these power and status transformation to a market logic in this field.
differences are associated with the prevailing New professions such as money management
institutional logic. Institutional logics shape and securities analysis helped diffuse new
and create the rules of the game, the means- financial theories such as portfolio and risk
ends relationships by which power and status management, and status within the field
are gained, maintained, and lost in organiza- became increasingly determined by
tions (Jackall, 1988; Ocasio, 1999; familiarity and expertise with new financial
Lounsbury and Ventresca, 2003). Social theories. As social actors gained status and
actors rely on their understandings of institu- position by their reliance on financial theo-
tional logics in the competition for power and ries, the market logic gained prominence in
status and in doing so generate the conditions the field.
for the reproduction of prevailing logics. Zhou (2005) relies on an institutional logic
For Jackall (1988), competition for power, perspective to explain occupational prestige
status, and position in organizations shapes ranking. Building on Weber's argument that
the creation and reproduction of a patrimo- social statuses or social honors are related,
nial bureaucratic logic in U.S. corporations. but distinct from one's economic resources or
Managers, driven by career concerns, estab- structural positions, Zhou is searching for an
lish and maintain a system of patronage and explanation of how a hierarchical ordering of
fealty, where strong social ties to those in occupations must be recognized through a
position of authority determine power and meaning system shared by members of the
privilege in organizations. Achieving career same community. He proposes an institu-
success requires social actors to play by the tional logic of social recognition to explicate
rules, with language use and symbolic the causal mechanisms. What is appropriate
management serving to reproduce the formal and legitimate must be seen as transcending
structure, while promotion patterns parallel self-interests and group boundaries, and be
the patrimonial structure, serving to accepted by a large audience. Overall,
reproduce the informal status hierarchies and occupation prestige should vary system-
power structures. atically with the basis for making legitimate
Thornton and Ocasio (1999) focus on the claims and with group membership as a
link between institutional logics and power function of their inclusion into the realm of a
structures. They find that under an editorial shared institutional logic (Zhou, 2005: 98).
logic, publishers' means and ends are shaped
by author-editor relationships, and power Classification and categorization
structures are determined by organization A key mechanism by which institutional
size and structure. Under a market logic, logics shapes individual cognition is through
publishers' means - end relationships are social classification and categorization
shaped by resource competition and acquisi- (DiMaggio, 1997). Cognitive psychologists
tions, and power structures are determined by emphasize the importance of categories in
competition in the product market and the shaping individual cognition (e.g., Rosch,
market for corporate control. 1975; Medin, 1989). While psychologists
Lounsbury (2002) focuses on status who study categories typically emphasize the
competition and status mobility in the field of study of categories of objects occurring in
finance. A shift from a regulatory logic to nature, the classification and categorization
 113
of social and organizational categories is Categorization processes have been partic-
determined by social institutions (Douglas, ularly central to work on institutional logics
1986; Searle, 1995). Given the institutional- that focuses on logics residing in competing
ization of categories, individuals take for organizational forms (Haveman and Rao,
granted that the categories of organizing 1997; Rao et al., 2003). Distinct categories of
activity such as CEO, return on assets, human forms are shaped by changes in societal level
resources, corporate governance, institutional logics (Haveman and Rao,
multidivisional structures, patents, 1997). At the organizational field level, Rao
restaurants, to name but a few common sub- et al. (2003) explore how changes in the
jects of study, are not categories that exist in categories of French cuisine led to self-
nature but socially constructed, institutional categorization by industry entrepreneurs and
categories (Berger and Luckmann, 1967). triggered institutional transformation. Rao et
Institutional logics provide agents within al. (2005) explored how organizational
organizations with socially constructed change occurs through bricolage among
systems of classifications that constitute categories of organizational products
categories of social actors (Mohr and associated with alternative institutional
Duquenne, 1997), organizational forms logics.
(Haveman and Rao, 1997), products Research has also explored how changing
(Lounsbury and Rao, 2004), and organiza- logics lead to changes in the meaning of
tional agendas (Ocasio and Joseph, 2005). existing categories. Ruef (1999) explores the
Changes in institutional logics lead to the shift to a market logic in the heath care field
creation of new categories (Rao et al., 2003) by examining the changing systems of
and to changes in meaning of existing cate- categories that underlie discourse among
gories (Ruef, 1999; Ocasio and Joseph, technical, managerial, and policy-oriented
2005). Categories, as a basic unit of cogni- health care professionals. Ruef's analysis
tion, do not imply mindless cognition, as do focuses on the relationships among linguistic
schemas and scripts, but are a necessary categories and finds that a historical shift in
component of all mindful, agentive behavior. logics results in changes in the meaning of
Mohr and his collaborators have underlying categories of organizational
emphasized the link between systems of forms. With the rise of a market logic there is
categories and institutional logics. Mohr and increased integration of issues of financing
Duquenne (1997) analyze the changing insti- and risk bearing across the various forms in
tutional logics in poverty relief by examining the organizational field, and less focus across
how they provide a different system of the spectrum on issues of access. With the
classification of the poor (distressed, desti- rise of a market logic the meaning of a
tute, fallen, deserving, homeless, indigent, hospital or a health maintenance organization
misfortunate, needy, poor, stranger, and shifts, as do other organizational forms, with
worthy) and the categorization of organiza- less differentiation among forms in their
tional practices (giving advice, giving food, focus on financing.
giving money, paying a person to chop wood,
placing a relief applicant in an asylum, and so Attention
on). Mohr and Guerra-Pearson (Forthcoming) Contemporary perspectives on organizational
studied how categories of actors, attention emphasize how organizational
organizational forms, and organizing responses to economic and social factors are
activities varied by competing institutional mediated by the attention of organizational
logics. Breiger and Mohr (2004) develop decision makers (Ocasio, 1995, 1997).
network methodologies among systems of Theoretical and empirical research provides
categories to empirically measure institu- key mechanisms to explain
tional logics.
114
how institutions moderate organizational organizational attention to market forces that
attention. are salient under a market logic, but not
In a theoretical analysis of how organiza- under an editorial logic. Thornton (2004: 44-
tions respond to economic adversity, Ocasio 45) further developed the role of institutional
(1995) proposed that institutional logics logics in structuring attention by linking
affect the allocation of attention to alternative these organization and industry level analyses
schemas for perceiving, interpreting, evaluat- to societal-level institutional logics. Relying
ing, and responding to environmental on content analysis, Glynn and Lounsbury
situations. According to theory of allocation (2005) examine the shifts in focus of
of attention, institutional logics provide indi- attention by newspaper critics of the Atlantic
viduals and organizations with a set of rules Symphony Orchestra from an aesthetic logic
and conventions - for deciding which prob- prior to a strike at the orchestra to a market
lems get attended to, which solutions get logic post-strike. Consistent with the effects
considered, and which solutions get linked to of institutional logics on attention, they find
which situations (March and Olsen, 1976). that pre-strike newspaper critics, in their
Ocasio (1997) suggests two mechanisms by reviews, focus attention on the virtuosity and
which institutions structure attention: (1) by musical interpretation (associated with an
generating a set of values that order the legit- aesthetic logic) and post-strike critics
imacy, importance, and relevance of issues increased their attention to ticket sales,
and solutions; and (2) by providing decision production of recordings, and audience
makers with an understanding of their reactions (consistent with a market logic).
interests and identities. These interests and The ascendancy of the market logic did not
identities generate in turn a set of decision imply, however, a rejection of aesthetic con-
premises and motivation for action. cerns, but the blending of the two logics.
Thornton and Ocasio (1999) developed In his study of competing logics in the
the role of industry-level institutional logics mutual funds industry, Lounsbury (2007)
in structuring attention in organizational relies on attention as a mechanism to show
decisions on executive succession. The how non-growth funds and Boston-based
theory was further developed in application funds focus attention on the issue of product
to decisions on acquisitions (Thornton, costs, while growth funds and New York-
2001), and the rise of multidivisional based funds focus attention on the issue of
structures (Thornton, 2002) in the higher fund performance. The empirical results sup-
education publishing industry. The core of port this argument, demonstrating how the
the argument in these empirical studies is that effects of market forces are contingent on
institutional logics focus the attention of prevailing organizational logics, as mediated
decision makers on issues and solutions that through processes of attention.
are consistent with prevailing logics.
Institutional logics focus attention on issues
and solutions through a variety of mecha-
nisms, including determining their appropri- CHANGE IN INSTITUTIONAL
ateness and legitimacy, rewarding certain LOGICS
forms of political behavior in organizations,
shaping the availability of alternatives, and 'How can actors change institutions if their
selectively focusing attention on environ- actions, intentions, and rationality are all
mental and organizational determinants of conditioned by the very institution they wish
change. A key finding of these empirical to change' (Holm, 1995: 398). The institu-
analyses is that the effects of resource tional logics approach sheds light on this
competition and resource dependencies are problem of embedded agency by conceptual-
not universal effects, but are contingent on izing society as an inter-institutional system
 115
in which logics are characterized by cultural also symbolic. To use an analogy to the
differentiation, fragmentation, and contradic- bricoler (Levi-Strauss, 1966), institutional
tion (DiMaggio, 1997). This differentiation, entrepreneurs creatively manipulate social
fragmentation, and contradiction is evident relationships by importing and exporting
both within and between institutional orders cultural symbols and practices from one
(Friedland and Alford, 1991). We focus on institutional order to another. In theory, the
three mechanisms of change: institutional different social locations of the institutional
entrepreneurs, structural overlap, event orders bring to light different cultural tools
sequencing, and a fourth topic, often an for institutional entrepreneurs (Thornton,
antedecent or consequence of change - 2004). Note the focus on cultural resources as
competing institutional logics. distinct from material resources; culture
being something people strategically use,
Institutional entrepreneurs deploy, and mobilize. This focus is consistent
Institutional entrepreneurs are the agents that with the meta-theory of the institutional
create new and modify old institutions logics approach which views culture as both
because they have access to resources that a motivation as well as a justification of
support their self-interests (DiMaggio, 1988). action.
By definition, institutional entrepreneurs can There are several mechanisms that institu-
play a critical role in perceiving institutional tional entrepreneurs use to manipulate cul-
differentiation, fragmentation, and tural symbols and practices, for example
contradiction by virtue of the different social story telling (Zilber, 2006), rhetorical
locations they may occupy in the inter- strategies (Suddaby and Greenwood 2005;
institutional system and in taking advantage Jones and Livne- Tarandach, forthcoming),
of the opportunities it presents for institu- and tool kit approaches (Swidler 1986;
tional change (Thornton, 2004). Fligstein Boltanski and Thevenot 1991).
(1997), for example, describes how entrepre- Suddaby and Greenwood (2005) showed,
neurs perceive and exploit contradictions in for example, in their study of organizational
institutional logics to further their self-- forms in the accounting industry, how institu-
interest. DiMaggio (1988: 14-15) argues that tional entrepreneurs used 'rhetorical strate-
the creation of institutions requires an gies' to reinterpret and manipulate prevailing
institutionalization project in which the symbols and practices. Rhetorical strategies
claims of institutional entrepreneurs are sup- or 'institutional vocabularies' were used by
ported by existing or newly mobilized actors entrepreneurs to affirm or discredit the dom-
who stand to gain from the success of the inant institutional logic which defined the
institutionalization project (DiMaggio, 1991). legitimacy of organizational forms. To
The challenge for the institutional discredit an institutional logic and bring
entrepreneur is to create an environment to about institutional change, entrepreneurs
successfully enact the claims of a new public exposed the contradictions or ameliorated the
theory. Sometimes this involves institutional contradictions by associating them with
entrepreneurs organizing from the center of broader cultural analogies (Douglas, 1986;
an established environment (Suddaby and Strang and Meyer, 1994).
Greenwood, 2005) and at other times it may In returning to Holm's (1995) concern
stem from the periphery of emerging fields with embedded agency, Leca and Naccache
(Maguire, Hardy, and Lawrence, 2004). (2006) argue from a critical realist
However, the environments that institu- perspective that the concept of institutional
tional entrepreneurs enact to garner control of entrepreneur does not completely address the
resources are not just material, they are paradox of embedded agency because the
concept by definition does not take into
account the interrelated sequencing of
116
structures and actions and the causal emer- interesting because it is inconsistent with
gent properties of both structures and actions. extant theory which would predict change
They argue for a critical realist approach in from the periphery, not the center of the field.
which actors use the causal powers of pre- They argue that contact with institutional
existing structures to create new institutions logics in multiple and different organizational
or challenge existing ones. We highlight their fields increases the awareness of and
important insight as it motivates our experiences with contradictions in logics,
subsequent discussion of structural overlap which lowers constraints and embeddedness
and event sequencing. of actors and enables central actors to
become institutional entrepreneurs.
Structural overlap
Structural overlap occurs when individual Event sequencing
roles and organizational structures and func- Event sequencing is defined as the temporal
tions that were previously distinct are forced and sequential unfolding of unique events
into association (Thornton, 2004). Mergers that dislocate, rearticulate, and transform the
and acquisitions are an example of structural interpretation and meaning of cultural sym-
overlap when organizational actors from bols and social and economic structures
divergent cultures are forced into association, (Sewell, 1996: 844). For example, this can be
triggering a change in institutional logics changes in cultural schemas, shifts of
guiding the firm. Structural overlap across resources, and the emergence of new sources
systems with differentiated logics creates of power. As noted above, because structures
contradiction in organizations and are often overlapping, any rupture has the
organizational fields, creating entrepreneurial potential of cascading into multiple changes,
opportunities for institutional change. particularly when the events are characterized
For example, Stovel and Savage (2005) by heightened emotion, collective creativity,
showed how a merger wave exposed compet- and ritual. The accumulation of events can
ing institutional logics and triggered the elab- result in a path-dependent process in which
oration of the modern, mobile, bureaucratic shifts in the symbolic interpretation of events
career in the financial sector. Thornton, are locked in place by simultaneous shifts in
Jones, and Kury (2005) illustrated how the resources. Such sequencing produces more
structural overlap when accounting firms events that reinforce or erode the dominance
incorporated management consultants into of the incumbent logic.
their organizations brought professional and Event sequencing has been used as an ana-
market logics head to head and conflicted the lytical method to address the problem of
focus of attention of accountants from over- embedded agency or what Barley and Tolbert
seeing the accuracy of client's books to using (1997) term conflation and the problem of
exposure to accounting ledgers to identify reducing structure to action or action to
consulting clients. Greenwood and Suddaby structure. (How such event sequences inter-
(2006), in their analysis of a pioneering new sect to reveal causation has been extensively
organizational form, the multidisciplinary examined in the literature on historical com-
practice (MDP) within the field of business parative methods of analysis (Abbott, 1990;
services, theorize a case of structural overlap Griffin, 1992; Sewell, 1992, 1996)). There
in which elite organizations are more likely are several ways to assess the impact of event
to come into contact with competing and sequencing on institutional change for
contradictory logics because they bridge example, nominal and ordinal comparisons
different organizational fields. They point out and narrative analysis (Mahoney, 1999).
that this case of institutional change is These are different strategies of
 117
macro-causal analysis ways that researchers culture a monolithic and coherent influence
iterate between theory and history in on actors that results from socialization
identifying the causes of an outcome. The (Parsons, 1951). Instead, conceptualizing
narrative analysis method is used to society as an inter-institutional system
understand the ordering of circumstantial implies that the institutional orders have
detail in searching for analogies that are the modularity and decomposable elements. The
foundation for new and convincing accounts. decomposable nature of institutional logics
In the institutional logics literature, it is the allows for theorizing the fragmented and
institutional orders of the inter-institutional contradicted nature of cultural influences,
system that provide the meta-theory which revealing this not only at different levels of
points to these analogies and that prevent the analysis, for example individuals and
analysis from getting bogged down in the organizations, but also in specific contexts in
minutia of historical details. which individuals actively import and export
For example, the case of the change in elements of institutional logics across institu-
institutional logics in higher education tional orders (Thornton, 2004). Thus, the
publishing from 1958 to 1990, from an decomposability of the elements of the inter-
editorial (based in the logics of the family institutional system makes it possible to
and the professions) to a market logic, observe the influence of cultural institutions
reveals the causally linked events that inter- from the standpoint of the vertical coherence
acted to produce a shift in the prevailing and fragmentation of different levels of
institutional logic (Thornton, 2004). Event analysis, not only bottom up or top down
sequencing is also shown to play a role in (Schneiberg and Clemens, 2006), but also
institutional change in the accounting from the horizontal blending and segregating
profession (Thornton, J ones, and Kury, of the elements of different orders of the
2005). Hoffman and Ocasio (2001) theorize inter-institutional system. This, for example,
what determines public attention to events enables theorizing institutional change
that trigger institutional change. processes such as bricolage, which is the
So what are the implications of individuals creation of new practices and institutions
and organizations in a sea of cultural from different elements of existing
fragmentation and contradiction? It means institutions (Levi-Strauss, 1966). Thus, in
that to study cultural institutions researchers returning to the question of embedded
need a theoretical framework that can agency, the institutional entrepreneur does
accommodate how individuals' norms may not disembed from the social world to create
deviate from norms at higher levels of change - structures and actions are separable
analysis, for example at the level of (Leca and Naccache, 2006), allowing
individuals as distinct from corporate institutional entrepreneurs to hop and bridge
management or professional associations from one social world to another. Our review
(DiMaggio, 1997: 265). This multi-level and leads us to be encouraged that literatures on
multi-contextual requirement calls for a organizations and culture are converging,
theory that conceptualizes how to partition creating these fresh views on the topic of
'units of cultural analysis' and the relations agency.
among them (Holm, 1995). We argue that the
inter-institutional system is well suited to this Competing logics
task because each institutional order has dis- A focus on competition between alternative
tinct organizing principles, cultural symbols, institutional logics has guided research on
and logics of action that clarify how to define institutional change. This diverse literature
units of cultural analysis. Culture is not just encompasses a wide variety of mechanisms
amorphously out there in 'thin air' as per the to explain the effects of competing
critique of culture as a world system, nor is
118
logics on change, including environmental Other studies on competing institutional
selection pressures, political contestation, and logics highlight power struggles among pro-
social movements. We emphasize that ponents of alternative logics. Reay and
competing logics are not, by themselves, an Hinings' (2005: 375) description of the
explanation for change in institutional logics Alberta Canada case of health care services
but an antecedent or a consequence. bears similarities. Their lens focuses on a
Moreover, competing logics can facilitate recomposition of an organizational field in
resistance to institutional change as in the which competing institutional logics of med-
case of the contest between the institutional ical professionalism versus business-like
logics of global corporate and local health care is driving a radical change
professional banking (Marquis and process. They conceptualize the organiza-
Lounsbury, 2007). The causal mechanisms tional field as a battlefield where power
for institutional change reside not in struggles motivated by competing institu-
competition per se, but on a combination of tional logics get played out. The structure of
the effects of market selection pressures, the field and the dominant institutional logic
power of institutional actors, and changes in changed, but the previously dominant logic
the relative prevalence of societal-level of medical professionalism was only subdued
institutional logics, which unfortunately in rather than eliminated. The power ended up
many studies is typically unspecified. being distributed between the two powerful
Much work has utilized both case and actors - the physicians and the government -
quantitative studies of competing logics in creating a countervailing or stabilizing
professional and occupational domains, for tension.
example finance, health care, accounting, and Meyer and Hammerschmid (2006: 1012)
culinary. Comparing and contrasting studies analyze to what extent an old administrative
across professional and occupational contexts orientation is being replaced with a new
reveals the vibrant ecology of competing managerial logic in the Austrian public
institutional logics of the interinstitutional sector. They trace institutional change by
system. observing how state bureaucrats make use of
Early research by Haveman and Rao social identities that are derived from com-
(1997) on mutual funds, described above, peting institutional logics. They have found
adopted a selection meta-theory, positing evidence of the formation of a new manage-
how environmental selection pressures rial identity created by individuals who
favored organizational forms more congruent mixed a new orientation with more orthodox
with their institutional environments. beliefs on public administration.
Similarly, the Scott et al. (2000) historical Research on competing logics has also
account of the Bay Area health care system is incorporated a social movement perspective.
exemplary in describing institutional change For example, Rao, Monin, and Durand
from a setting once dominated by the institu- (2003) show how social identity movements
tional logics of the medical professions to underpin reinstitutionalization in the culinary
one greatly influenced by the logics of the professions by contrasting the institutional
state, the corporation, and the market. Their logics of the classic and nouvelle cuisine
study shows how the logics of the state in movements. Change in logics and change in
terms of new regulatory systems disempow- the adherence to a logic take place through
ered those of the professions, in particular the four mechanisms, the sociopolitical legiti-
more powerful and higher priced MDs, macy of food critics as activists, the theoriza-
creating an avenue for managers of corporate tion of new roles, prior defections by peers
logics in the form of managed care and new and gains to peers, and gains to defectors as
organizational forms such as Health identity-discrepant cues. In essence, institu-
Maintenance Organizations (HMOs), Point of tional logics and professions undergo change
Provider Organizations (PPOs), and surgi-
centers to become commonplace in the health
care system.
 119
when activists gain control of professional A market in one historical and cultural con-
societies, critique the traditional logic, and text is not the same as a market in another
proffer a solution hinging on a new institu- (Fligstein, 1996). Similarly non-market
tional logic. Note, the theory doesn't fore- institutions, such as professions, the family,
shadow why critic activists chose to engage and religion are also economic structures and
in an institutional deconstruction project. One are not independent from market forces of
can surmise the influence of other social demand and supply (Friedland and Alford,
movements that are supported by other 1991).
domains in the professions and even other Second, institutional logics do not emerge
institutional orders, for example the more from organizational fields - they are locally
generic health movement. instantiated and enacted in organizational
Overall, the studies of competing institu- fields as in other places such as markets,
tional logics focus either on strategies of industries, and organizations. Institutional
action at a lower level of analysis, for exam- logics stem from the institutional orders of
ple an organizational field, for example Reay the inter-institutional system (Friedland and
and Hinings (2005), or on how a higher-level Alford, 1991), not as commonly miscon-
institutional logic at the societal-sector level strued from an organizational field (Scott,
transforms strategies of action in a lower- 2001: 139). Institutional logics through
level domain, for example Haveman and Rao various mechanisms may get reshaped and
(1997) and Meyer and Hammerschmid customized in an organizational field.
(2006). This difference may be partly However, an organizational field is a level of
reflected in the research design, for example analysis; it is a place where institutional
the qualitative study of a case versus the logics get played out, but not by itself a
quantitative analysis of a specific instan- theoretical mechanism. Friedland and Alford
tiation of an institutional order. These differ- (1991: 244) have commented around this
ences may also be reflected in how the issue:
camera lens is focused. That is, if you get
close to the action as qualitative researchers defining the boundaries of an organizational
are able to do, one is more likely to interpret field, within which there are strong pressures for
the action as a power struggle when indeed it conformity, is difficult and potentially
tautological. The approach seems to assume that
may also reflect the operation of higher-level formal attributes of organizational fields can be
institutional forces. specified independently of the institutional arena
in which they are located. But, we would argue,
it is the content of an institutional order that
shapes the mechanisms by which organizations
MISCONCEPTIONS REGARDING are able to conform or deviate from established
INSTITUTIONAL LOGICS patterns. These institutional orders, and the
specific relations between them, delimit types of
organizational fields.
With respect to the institutional logics
approach there are several misconceptions in Third, ideal types are not a description of
our view that we feel compelled to comment what happens in an organizational field. Ideal
on. One is a continued juxtaposition between types are formal analytical models by which
institutional and market structures (e.g., to compare empirical observations across
Greenwood and Suddaby, 2006). While mar- institutions. Therefore, ideal types are best
kets are economic structures - they are also developed at least in pairs, if not multiple
institutions. They function because of a set of characterizations. Instead, often what are
formal laws and normative expectations often mischaracterized as ideal types are a
about them and these normative expectations description of a particular case study rather
have changed through time and space. than a set of findings that can be refuted or
generalized and aggregated.
120
Fourth, most studies of institutional logics theory requires increased attention to its
do not in some way tie their analyses back to microfoundations. DiMaggio's (1997) paper
the institutional orders of the inter- on culture and cognition is a start, providing
institutional system. This is partly due to a link between the microfoundations of
page limitation requirements of the journals cognitive processes and the cultural
and a focus on other alternative units of structures inherent in institutional logics. But
analysis. In other cases it appears due to the cognitive theory is only part of the story. The
authors who do not focus on causal relation- Carnegie School is another source and the
ships both up and down stream. To simply recent call for a neo-Carnegie perspective
and briefly recognize these multi-level may also yield answers (Gavetti, Levinthal,
relationships is important to further the and Ocasio, 2007). Given the rejection of
development of the institutional logics rational choice theory, how embedded inter-
approach as it systematically advances and ests, identity and commitments playa role is
foreshadows questions for future study. For an important topic for further theoretical
example, why do culinary critics, the lynch development and empirical research.
pin of the four mechanisms that begin the New methodologies that make use of web-
shift in chef identities, decide to favor based experiments show promise in research
nouvelle over classic cuisine? Are these linking levels of analysis and also in
critics, for example, increasingly under partitioning causes and effects by level of
market pressures or have professional pres- analysis, helping to specify the underlying
sures changed in some way? theoretical mechanisms (Thornton, 2004).
For example, Salganik, Dodds, and Watts
(2006) show the micro-macro linkages in
SUGGESTIONS FOR FUTURE how people select songs. This partitioning
RESEARCH also should address the meta-theoretical
assumption of incorporating both the material
The main intellectual hurdle in institutional and cultural. However, incorporating both is
analysis is in many respects the same as it is not enough - what is needed is theory and
for sociological theory more generally. We methods to partition these effects - that is to
need to better understand how macro-level understand the autonomy of culture from
states at one point in time influence individ- economy (DiMaggio, 1994).
uals' orientations to their actions, preferences, Future research needs to move beyond
beliefs; how these orientations to action implicit assumptions and to engage explicit
influence how individuals act; and how the discussion of the underlying theoretical
actions of individuals constitute the macro- mechanisms, that is the clear identification of
level outcomes that we seek to explain. the 'gears and ball bearings behind the statis-
Moreover, how does the stability of tical models' (Davis and Marquis, 2005).
institutional logics change systematically by Without formalization of the theory and
level of analysis - is it more stable or change- methods, studies of institutions cannot build
able at the top or bottom, macro- or micro- upon or invalidate one another and the social
level of analysis? This is a big theoretical science of institutions cannot grow systemat-
question. ically (Pfeffer, 1993). Instead, it will be
We need more work on the microfounda- forgotten as it was in the past (Hughes, 1939;
tions of institutional logics. Work on institu- Selznick, 1949, 1957).
tional logics is inherently cross-level, Most research on institutional analysis has
highlighting the interplay between individu- revealed the effects of market rationalization
als, organizations, and institutions. While the or state regulation; the latter is more about
embedded agency of actors is a key meta- resource dependence than institutional analy-
theoretical assumption, as discussed above, a sis. In theory, other underlying patterns of
fully developed perspective on institutional institutional change should exist. Given the
 121
interpenetration of institutions across levels in institutional change, we need work on
this raises the question of what implications institutional logics, at various levels, organi-
this has for the rise of market logics in soci- zations, industries, fields, societies, and
etal sectors where you would not expect to world systems can themselves be institution-
see markets operating, such as in the case of alized and deinstitutionalized. In examining
families and the rising salience of religions in this issue it is important to distinguish
a world system. between changes in logics and changes in
Institutional change occurring in the practices. What constitutes an institution
global multi-national context provides fertile remains an unresolved conceptual issue for
ground for new research. Contrary to the field. How and why actors manipulate
Friedland and Alford's (1991) formulation, and switch institutional logics and in
the institutional logics perspective and in particular cases in which manipulations and
particular the inter-institutional system is an switches are not supported by cultural
analytical tool not limited to expectations of analogy are important empirical papers to
Western culture. It is also useful in analyses anticipate.
of international contexts as evidenced by
recent applications examining the influence
of cross-national institutional logics on CONCLUSION
employee training (Luo, 2007) and business
group restructuring in emerging economies With the exception of DiMaggio and Powell's
(Chung and Luo, forthcoming). (1983) theory of isomorphism, institutional
We think there is a healthy growth of theory has lacked coherence. Subsequently,
measurement strategies of institutional logics two papers have affected the abandonment of
on the horizon. Most quantitative research on isomorphism theory and the cognitive meta-
institutional logics has relied on indirect theory espoused by DiMaggio and Powell
measures of institutional logics, attempting to (1991), namely that of Kraatz and Zajac
bolster this approach by combining research (1996) and Hirsch's (1997) (in our judgment
methodologies and triangulating historical inaccurate) critique of Scott's ([1995] 2001)
and interview methodologies with emphasis on the cognitive perspective. The
quantitative methodologies. Content analytic impact of these papers left institutional
methodologies by Scott et al. have been theory adrift with Scott's 'carriers'
attempted, albeit these have not been perspective. As a result, much of what is
incorporated directly into the literature. called institutional theory these days is not
Research on vocabularies and cultural very institutional at all. Instead it is about
structures provide opportunities in this area resource dependencies, political struggles,
and the use of techniques employed in mar- social movements, and other mechanisms
keting such as focus groups and the field test- which, while important, are really about non-
ing of ideal types. More cross-over research institutional forces driving institutional
is needed between network and institutional change. Within this political sociological
scholars as network methodologies offer a vein, culture is relegated to the narrower
well-established set of methods that can be topic of how groups and social movements
used for direct measurement of the meaning make use of rhetoric and framing to be
of cultural categories (Breiger and Mohr, persuasive (Suddaby and Greenwood, 2005).
2004). The institutional logics approach provides an
How institutional logics become institu- important remedy to this theoretical drift
tionalized and deinstitutionalized continues away from institutional effects, by highlight-
to be a vibrant vein of work. Synthesis of the ing how the cultural dimensions of institu-
state of what we know in this realm is tions both enable and constrain social action.
needed. While work on institutional change We review how the institutional logics
has focused on the role of competing logics approach is a systematic way to theorize and
122
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APPENDIX
129
 4
Organizational Fields: Past,
Present and Future
Melissa Wooten and Andrew J. Hoffman

INTRODUCTION external environment, institutional theory

asks questions about how social choices are
shaped, mediated and channeled by the insti-
The term 'institutional theory' covers a broad tutional environment. Organizational action
body of literature which has grown in promi- becomes a reflection of the perspectives
nence and popularity over the past two defined by the group of members which
decades. But consistency in defining the comprise the institutional environment; out of
bounds of this activity has not always been which emerge the regulative, normative, and
easy. The lament of DiMaggio and Powell in cultural-cognitive systems that provide
1991 still holds true today: 'it is often easier meaning for organizations (Scott, 1995,
to gain agreement about what it is not than 2001). Action is not a choice among unlim-
about what it is' (1991: 1). There are a great ited possibilities but rather among a narrowly
number of issues that have and continue to defined set of legitimate options. As an
remain divisive within this literature and organization becomes more profoundly
among related literatures that apply institu- aware of its dependence on this external
tional arguments (i.e. economics, political environment, its very conception of itself
science, and history). What these literatures changes, with consequences on many levels.
have in common, however, is an underlying As this happens, Selznick states, 'institution-
skepticism towards atomistic accounts of alization has set in' (1957: 7). Hence,
social processes, relying instead on a convic- institutionalization represents both a process
tion that institutional arrangements and social and an outcome (DiMaggio, 1988).
processes matter in the formulation of While not highly emphasized in early
organizational action (DiMaggio and Powell, institutional analyses (i.e. Selznick, 1949,
1991). 1957), the central construct of neo-
At its core, the literature looks to the institutional theory has been the organiza-
source of action as existing exogenous to the tional field (Scott, 1991). Strictly speaking,
actor. More than merely suggesting that the field is 'a community of organizations
action is a reaction to the pressures of the that partakes of a common meaning system
 131
and whose participants interact more fre- where an organization's actions were struc-
quently and fatefully with one another than tured by the network of relationships within
with actors outside the field' (Scott, 1995: which it was embedded (Warren, 1967).
56). It may include constituents such as the Warren used the example of community
government, critical exchange partners, organizations such as banks, welfare organi-
sources of funding, professional and trade zations, churches, businesses, and boards of
associations, special interest groups, and the education, working in conjunction with one
general public - any constituent which another to elucidate the importance of taking
imposes a coercive, normative or mimetic the 'interorganizational' field as a unit of
influence on the organization (DiMaggio and analysis. By focusing attention on this level
Powell, 1991; Scott, 1991). But the concept of analysis, researchers could better under-
of the organizational field encompasses much stand the decision making processes among
more than simply a discrete list of con- distinct organizations that, while having
stituents; and the ways in which the institu- dissimilar goals, felt it necessary and advan-
tional literature has sought to capture this tageous to interact with one another to
complexity has evolved over the past accomplish a given task.
decades, and continues to evolve. In this As studies of interorganizational relations
chapter, we present this evolution, discussing evolved, scholars broadened the field to
the past, present and future of this important include organizations that were not necessar-
construct. We illustrate its early conceptual- ily bound by geography or goals, but instead
ization and present its progression in a way made up a recognized area of institutional
that invites scholars to both consider their life. These could include organizations that
work within this historical trajectory and produced similar services or products,
contribute to its further development. We suppliers, resource and product consumers,
conclude the chapter with our thoughts on regulatory agencies, and others (DiMaggio
promising avenues for future research within and Powell, 1983). What these organizations
this domain. had in common was that they comprised a
community of organizations that partook of a
common meaning system and whose partici-
pants interacted more frequently and fatefully
ORGANIZATIONAL FIELDS: with one another than with other
EARLY INCARNATIONS organizations (Scott, 1995). Such evolving
definitions focused on the organizational
field as a means to understand the impact of
For early neo-institutional theory, the central rationalization on organizations.
unit of analysis was variously referred to as The behavior of organizations within
the institutional sphere (Fligstein, 1990), fields was said to be guided by institutions:
institutional field (Meyer and Rowan, 1977; the cultural-cognitive, normative, and regula-
DiMaggio, 1991), societal sector (Scott and tive structures that provided stability and
Meyer, 1992), and institutional environment collective meaning to social behavior (Scott,
(Orru, Biggart and Hamilton, 1991; Powell, 1995). These structures acted as 'social facts'
1991). But the term organizational field which organizational actors took into account
(Scott, 1991) has become the accepted term when determining appropriate action
for the constellation of actors that comprise (Zucker, 1977; Meyer and Rowan, 1983).
this central organizing unit. Like Bourdieu's The transmission of social facts from one set
field (1990, 1993), where an agent's actions of actors to another caused them to take on a
within the political, economic, or cultural rule-like and taken-for-granted status, and
arena were structured by a network of social thus become institutionalized (Zucker, 1977).
relations, institutional theorists conceptual- Once a social fact had become
ized the organizational field as the domain
132
institutionalized, it provided actors with tem- Zucker (1983) looked to the spread of civil
plates for action which created unified or service reforms at the turn of the twentieth
monolithic responses to uncertainty that led century as resulting from the pressure of legal
to isomorphism; a commonality in form and requirements or the examples set by fellow
function (DiMaggio and Powell, 1983). The cities.
central notions of organizational field Early field-level analyses allowed some
research focused on understanding the degree of diversity in action, based on
processes that guided the behavior of field primacy in institutional adoption. For
members in unconscious ways. example, first adopters within a community
Meyer and Rowan (1977) suggested that of organizations tended to take action out of
the incorporation of elements (i.e. structures, concerns for efficiency. But, later adoptions
practices, procedures, etc.) from the institu- followed a different diffusion process with
tional environment imbued an organization adoption of structures and practices designed
with legitimacy. Thus, for example, 'admin- to mimic the behavior of prior adopters.
istrators and politicians champion programs Tolbert and Zucker's (1983) study of the
that are established but not implemented; adoption of civil reforms by cities provides
managers gather information assiduously, but an exemplar of this phenomenon. Their study
fail to analyze it; experts are hired not for found that characteristics such as the percent-
advice but to signal legitimacy' (DiMaggio age of foreign-born residents and the size of
and Powell, 1991: 3). An organization that the city influenced the adoption of civil serv-
appeared legitimate increased its prospects ice reforms thought to improve city function-
for survival because constituents would not ing in the early phases of the municipal
question the organization's intent and pur- reform movement. However, over time the
pose. As increasing numbers of organizations city demographics no longer influenced the
incorporated common institutional elements, adoption of such reforms. The authors
most (if not all) organizations at the field concluded that, in the later periods, civil
level became homogeneous in structure, service reforms had taken on a legitimated
culture, and output (DiMaggio and Powell, status and as such, became viewed as a nec-
1983). Much of the research using this notion essary signal of a properly functioning
of the organizational field centered on the municipal system.
premise that organizations sought survival Much work in the organizational field
and legitimacy as opposed to efficiency arena sought to identify institutionalization
(Orru, Biggart and Hamilton, 1991). by contrasting the adoption of practices for
For example, Fligstein (1990) depicted the rational or institutional motives, and by
industry-wide transformation of executive detecting how the quest for collective ration-
leadership in America as resulting from shift- ality led to homogeneity within field-level
ing pressures from the government. populations. Of particular interest was the
DiMaggio (1991) cited the causes for the role of the state and the influence of the
accepted form of art museums in American legal/regulatory environment in leading
cities in the 1920s and 1930s as the result of organizations to collectively develop appro-
efforts by museum workers to define a pro- priate responses that ultimately led to unifor-
fession through conformity to demands from mity in organizational form or structure.
foundations, particularly the Carnegie For instance, Edelman (1992) studied
Foundation. Leblebici, Salancik, Copay and organizations subject to affirmative action
King (1991) argued that the generation and and equal employment opportunity legisla-
acceptance of practices and technologies tion. This legislation required organizations
within the American radio broadcasting to incorporate members from historically
industry were the result of the actions of underrepresented groups into their hierarchy.
influential industrial actors. And Tolbert and Yet, the ambiguity of the legislation did not
 133
specify how an organization should demon- logic dominated the industry. When a
strate its compliance (i.e. how an organiza- market-logic dominated the industry,
tion could demonstrate that it had indeed publishers that followed an imprint strategy
incorporated women, racial/ethnic, and reli- and those with distribution contracts faced a
gious minorities into its operations). In greater risk of acquisition than other
response to this uncertainty, field-level actors publishers. Yet, when an editorial-logic
pushed for the creation of Affirmative Action dominated the industry, imprint and
and Equal Employment Opportunity distribution strategies had no significant
(AA/EEO) offices as a way to demonstrate effect on a publisher's likelihood of being
their compliance with the new regulations. acquired, suggesting that, as the field-level
As other field members - namely the govern- logic changed, the acquisition behavior of the
ment - took the establishment of an AA/EEO organizations within the field changed as
office as evidence of compliance, the adop- well.
tion of these offices became widespread. A While the Marquis and Thornton studies
similar process also led to the implementa- highlighted the temporal dimension of cogni-
tion of grievance systems (Sutton and tive processes, another study by Davis and
Dobbin, 1996), internal job markets (Dobbin, Greve (1997) highlighted the corresponding
Sutton, Meyer and Scott, 1993) and maternity spatial dimensions by noting that cognitive
leave policies (Kelly and Dobbin, 1999). perceptions regarding the legitimacy of a cor-
After focusing on the mimetic and regula- porate practice varied based on the social and
tive forces which led to adoption and isomor- geographic distance among managers and
phism within an organizational field, board of director members. The implementa-
institutional research took the so-called 'cog- tion of the golden parachute, a practice that
nitive turn' (Lindenberg, 1998; Meindl, provided protection to top managers in the
Stubbart and Porac, 1994). Work within the event of a hostile takeover, spread among
organizational field domain turned towards firms within the same region, whereas the
understanding the cultural and cognitive adoption of a poison pill, a practice that made
processes that guided field members' hostile takeover prohibitively expensive,
behavior. Researchers sought to uncover the spread among firms that shared a board of
material practices and symbolic constructions director tie. Their investigation suggested
that served as organizing templates for field that the proximity of actors affected the dif-
members (Friedland and Alford, 1991). fusion of firm behavior within a field.
These field-level 'logics' provided organiza- Throughout this early stream of research,
tions with schemas to guide their behavior. the overarching emphasis on similarity
For example, Marquis (2003) highlighted remained a constant. The organizational field
the cultural-cognitive templates that guided was conceived as predominantly static in its
the construction of inter-corporate network configuration, unitary in its makeup and
ties. Firms located in communities that began formed around common technologies, indus-
before the era of auto and air travel had more tries, or discrete network ties (DiMaggio,
locally based director connections than firms 1995; Greenwood and Hinings, 1996).
located in communities that began after auto Regulative, normative and cognitive
and air travel became prevalent. Moreover, influences bred homogeneity in the
this logic of locally based network ties aggregate. But this emphasis within the
continued to guide the behavior of the firms literature soon became the subject of
in older communities long after auto and air criticism.
travel became prevalent.
In other work, Thornton (2001) studied
the evolution of logics within the higher ORGANIZATIONAL FIELDS:
education publishing industry and found that PRESENT CONFIGURATIONS
acquisition patterns varied according to
which Beginning in the late 1990s, scholars argued
that the institutional literature placed too
134
much emphasis on the homogeneity of orga- 1995; Kraatz and Zajak, 1996; Greenwood
nizational populations and not the processes and Hinings, 1996). This new line of reason-
that created this outcome (Hirsch, 1997). ing attended to several key aspects of field-
This focus on isomorphism as the 'master level processes: moving beyond stability and
hypothesis' (Hoffman and Ventresca, 2002) inertia to introduce notions of change within
was seen by many as an unfortunate outcome the field; considering the role of
of early theory development and the misrec- organizational self-interests and agency
ognized empirical insights possible from within that context (Covaleski and Dirsmith,
institutional analyses. Critics contended that 1988; DiMaggio, 1988; Perrow, 1985) and
it facilitated a popular misconception of the advancing the view that some firms can
theory as embodying stability and inertia as respond strategically to institutional pressures
its defining characteristics. Homogeneity of (Oliver, 1991) to become what might be
form and practice was treated as evidence of called institutional entrepreneurs (DiMaggio,
institutional theories of organization (Kraatz 1988; Fligstein, 1997; Zucker, 1988;
and Zajac, 1996). DiMaggio, reflecting on Lawrence, 1999).
'what theory is not' (1995) suggested that The first target for reconfiguring concep-
core institutional claims in his oft-cited 1983 tions of the field addressed the notion of
paper (DiMaggio and Powell, 1983) suffered change. As observers of the social world,
asymmetric attention: scholars knew that change happened even
within highly institutionalized contexts. Yet
Somewhat to my surprise, ... papers ... cited our prevailing theory did not handle such
paper as support for the proposition that all occurrences adequately, in part because of
organizations become like all others, regardless the way in which scholars defined and
of field. Somehow the network argument that we
authors regarded as so central had been deleted
operationalized organizational fields. Where
in the paper's reception. Within a few more previous definitions of the field centered
years, the paper had turned into a kind of ritual around organizations with a common tech-
citation, affirming the view that, well, nology or market (i.e. SIC classification), the
organizations are kind of wacky, and (despite field began to be seen as forming around the
the presence of 'collective rationality' in the issues that became important to the interests
paper's subtitle) people are never rational and objectives of a specific collective of
(DiMaggio, 1995: 395).
organizations (Hoffman, 1999). Issues
defined what the field was, drawing linkages
Scholars called for efforts to 'end the
that may not have been previously present.
family quarrel' between old and new institu-
This important clarification led to a con-
tionalism (Hirsch and Lounsbury, 1997) and
ception of the organizational field that would
to bring agency, politics and change 'back'
bring together various field constituents with
into the institutional literature (DiMaggio,
incongruent purposes, not common technolo-
1988; Brint and Karabel, 1991; Hirsch and
gies or industries that assured some com-
Lounsbury, 1997; Perrow, 1986; DiMaggio,
monality of interests. Rather than locales of
1995; Greenwood and Hinings, 1996),
isomorphic dialogue, the field became con-
resurrecting it from the earlier traditions of
tested; a 'field of struggles' (Bourdieu and
macro-organizational literature (i.e. Selznick,
Wacquant, 1992) where constituents engaged
1947). In all, these criticisms were aimed at
in 'a war or, if one prefers, a distribution of
redressing the over-socialized view
the specific capital which, accumulated in the
(Granovetter, 1985), that depicted recipients
course of previous wars, orients future strate-
of field-level influence as a homogenous col-
gies' (Calhoun, 1993: 86). Organizations
lection of organizational actors, each behav-
engage in field-level conflict, out of which
ing according to a social script designed by
they gain skills and capital for future conflict.
the social environment.
In response, emergent studies examined
organizational field member actions in light
of their institutional contexts (i.e. Holm,
 135
Thus, the organizational field became seen Seo and Creed (2002) highlighted an impor-
as dynamic and capable of moving towards tant interest that served as an impetus for
something other than isomorphism; evolving change: field members' need to reconcile
both through the entry or exit of particular contradictory institutional arrangements.
organizations or populations (Barnett and According to the authors, organizational
Carroll, 1993; Hoffman, 1999; Scott, Reuf, fields were connected to and embedded
Mendel and Caronna, 2000) and through an within other and conflicting institutional
alteration of the interaction patterns and systems. As field members tried to reconcile
power balances among them (Brint and these differences by bringing the various
Karabel, 1991; Greenwood and Hinings, institutional rules in line with their needs and
1996). Others added that fields remained interests, the fields inevitably changed.
conflicted even when institutional norms Most recently, Schneiberg (2007) has
were apparently 'settled' because powerful suggested that change and variation comes
actors were continually working to maintain from within fields. If fields are indeed places
their legitimacy (Lounsbury and Glynn, where struggle and contestation take place,
2001). With the field defined more in terms then inevitably these struggles leave behind
of contestation and debate, institutions were organizational practices and forms that suffer
seen more as 'the products of human design, defeat. These ideas may lay dormant for a
[and] the outcomes of purposive action by time, but field members often resurrect these
instrumentally oriented individuals' expired forms of organization and practice
(DiMaggio and Powell, 1991: 8), such that which in turn, leads to increased variation
we may expect to find more opportunity for within the field.
deviance and agency among field members These theoretical accounts of change were
(Hirsch, 1997). used to develop new empirical insights.
Several authors developed theoretical Emergent research looked not at homogene-
accounts of the sources of agency, change, ity but at variation and change among organ-
and variety within' institutions and organiza- izations within a field as signs of institutional
tional fields. Oliver (1991) suggested that processes. For instance, by investigating the
organizations crafted strategic responses and decline of the conglomerate organizational
engaged in a multitude of tactics when con- form among the 500 largest American indus-
fronted with the pressures presented by the trial firms, Davis, Diekmann and Tinsley
institutional environment. She argued that an (1994) studied the abandonment of a well-
organization's willingness and ability to institutionalized practice among organi-
conform to institutional pressures depended zations within a field rather than the adoption
on why these pressures were being exerted of such practices. Lounsbury (2001) provided
(cause), who was exerting them (con- an explanation of the institutional factors that
stituents), what these pressures were influenced variation in the adoption of two
(content), how or by what means they were recycling practices among U.S. colleges and
exerted (control), and where they occurred universities. The study highlighted the
(context). From this perspective, all organi- internal organizational dynamics of colleges
zations within a field did not march quietly that chose to incorporate recycling duties into
down the path towards homogeneity. current waste management policies in
Greenwood and Hinings (1996) pushed relation to those colleges that chose to create
further to combine thoughts from both the old a new recycling administrator position.
and new institutionalism literatures by This newfound emphasis on institutional
developing a framework for understanding change culminated with the publication of a
how the internal interests and conflicts of an special issue of the Academy of Management
organization's members influenced the orga- Journal, with each article in this volume
nization's response to institutional pressures.
136
seeking to interpret change and agency importance, and organizational responsibility
within an organizational field through the for recycling were interpreted within these
lens of institutional theory (Dacin, Goodstein networks helped account for variation in
and Scott, 2002). organizational response to this issue. By link-
But, despite the insights that this new area ing theory and argument from cognitive strat-
of research brought to bear on organizational egy theory on issue interpretation to
fields, early notions which implied that institutional analysis, the authors provided an
individual organizations can respond strate- explanation of heterogeneity in field-level
gically to field pressures (Oliver, 1991) or behavior.
may strategically influence the process of Other work focused on the interconnected-
field change (Lawrence, 1999) treated the ness of organizations and the field by analyz-
organization and the field as separate and ing the role of institutional entrepreneurs
distinct. The firm 'responded' to pressures by (DiMaggio, 1988; Fligstein, 1997; Lawrence,
either adapting to or resisting those pressures. 1999) in shaping the discourse, norms and
Critics argued that the interaction between the structures that guide organizational action
firm and field was not unidirectional nor was (Maguire, Hardy and Lawrence, 2004). As in
it free from interpretation and filtering all field-level debates, certain organizations
processes. This introduced concerns for have the ability to influence the rules of the
sense-making, issue interpretation, selective game (Fligstein, 1990). Yet, even powerful
attention, and cognitive framing among field actors cannot simply impose new logics and
members (Dutton and Dukerich, 1991; Scott, norms on a field. At some level, the norms
1994; Hoffman and Ocasio, 2001; Hoffman must be accepted by other actors (Beckert,
and Ventresca, 2002). The demands of the 1999). The actors that lobby for the
field were not uniformly understood by all acceptance of these new logics, norms, and
members. Organization-level dynamics practices illustrate the work that institutional
caused field members to filter and alter envi- entrepreneurs engage in to create and build
ronmental demands. Further, members trans- legitimacy.
mitted their interests back towards the field. Suddaby and Greenwood's (2005) study of
The process of interaction became recursive the creation of multidisciplinary practices
as the social structure of the field became provided insight into this process. The estab-
both the 'medium and outcome of the lishment of practices that included both
reproduction of practices. Structure enters accountants and lawyers threatened the
simultaneously into the constitution of social previously agreed upon boundaries between
practices, and "exists" in the generating the accounting and legal professions. Thus,
moments of this constitution' (Giddens, creating a firm that included both lawyers
1979). and accountants within the same hierarchy
Scott (1994) claimed that the essence of required institutional entrepreneurs to
the field perspective was its ability to analyze provide a legitimating account for this orga-
the ways in which organizations enact their nizational form. To build legitimacy
environment and are simultaneously enacted entrepreneurs developed rhetorical strategies
upon by the same environment. The work of which served two purposes. First, they
Bansal and Penner (2002) illustrated this included institutional vocabularies that
process by investigating the interpretive articulated the logic behind new organiza-
processes among four newspaper publishers. tional practices and forms. Second, these
The authors highlighted the importance of rhetorical strategies included language which
regional networks in influencing the frames accounted for the pace and necessity of
and enactment processes developed to change within the organizational field.
address the recycled newsprint issue. They Recent discussions have taken the notion
found that the way in which feasibility, of the institutional entrepreneur further by
 137
acknowledging that institutional entrepre- in highly-structured fields of activity
neurs do not act alone or in isolation. (Edelman, 1990; Guthrie and Roth, 1999;
Individual agents form political networks and Washington and Ventresca, 2001). For
coalitions to act as 'important motors of example, Zilber's (2006) study highlighted
institution-building, deinstitutionalization, the ways in which Israeli society, culture, and
and reinstitutionalization in organizational fields are intertwined. High technology was
fields' (Rao, Monin and Durand, 2003: 796). mythologized as a tool, enabling the creation
This conception provided a bridge between of useful products, an area where gifted
institutional theory and social movement individuals excelled, and as a vehicle for
theory (Davis, McAdam, Scott and Zald, national development and societal progress
2005), focusing attention on the ability of within the Israeli popular press. Each of these
social movements to give rise to new organi- myths was found at the level of the
zational fields and change the demography of organizational field as high technology
existing organization fields (Rao, Morrill and companies incorporated elements of these
Zald, 2000). myths in the job descriptions contained
Social movement scholars have long rec- within employment advertisements. As a
ognized the connection between their work result, rationalizations of the benefits and
and organizations (McCarthy and Zald, 1977; purposes of high technology to Israeli society
Strang and Soule, 1998; Campbell, 2005). were incorporated within the employment
McCarthy and Zald (1977) incorporated con- activities of the high technology
cepts from organization theory to develop organizational field.
their resource mobilization perspective. In sum, the critiques of new institutional
According to this perspective, the availability theory led to streams of field-level research
and accumulation of resources served as an that focused on change, variation, and agency
impetus for the formation of social discussed above. But, while the past and
movement organizations that bear a present of organizational research differed
remarkable resemblance to other goal- from one another in terms of the outcome
directed, hierarchical organizations. studied, they were connected by their
Moreover, those social movement conceptualization of fields as 'things' that
organizations with similar preferences for produced outcomes. More recent critiques
change constituted the social movement have suggested that the future of field
industry, a unit of analysis not unlike the research lies not in the further emphasis on
organizational field. Organizational change outcomes but instead in conceptualizing
agents became parts of these collective fields as mechanisms (Hoffman and
movements, using shared and accumulated Ventresca, 2002; Davis and Marquis, 2005).
resources and power to 'overcome historical This refocus allows for the specification of
inertia, undermine the entrenched power collective rationality and the possibility that
structures in the field or triumph over alterna- fields serve as mechanisms for bringing
tive projects of change' (Guillen, 2006: 43). about phenomena other than similarity
These actions were often conducted in oppo- (DiMaggio and Powell, 1983; Washington
sition to others in similarly configured collec- and Ventresca, 2001). We address these
tive movements (Zald and Useem, 1987; themes in the third section of this chapter.
Meyer and Staggenborg, 1996).
Other work sought to understand the bidi-
rectional influence of organizations and fields
built on the linkages between organizational ORGANIZATIONAL FIELDS:
fields, culture, and societal institutions. In THE FUTURE
particular, researchers sought to explain how
ideas and beliefs about organizational strate- In the final portion of this paper, we offer our
gies and practice became standard and spread thoughts on the future of organizational field
138
research. We develop our arguments regard- proximity of actors (Warren, 1967) or issues
ing future directions based on the critiques of (Hoffman, 1999), fields as relational spaces
past and present research as focusing on the stresses the notion that organizations become
outcomes of field membership as opposed to connected within the same field when they
the processes that hold the members of a field begin to take note of one another. This does
together. We encourage those involved in not mean that actors formalize their relations
organizational field research to focus on via hierarchical arrangements or network ties
collective rationality within fields: how it is (Djelic and Sahlin-Andersson, 2006). Instead,
developed, which field members contribute one actor takes note of another and through
to its development and maintenance, how it is this process of referencing one another,
transmitted to other actors, and how it actors bring a field into existence. Out of a
changes over time. relational notion of the field emerge several
Scott (2001) defined the field as a commu- critical issues concerning formation, evolu-
nity of organizations that partake in a tion, and boundaries.
common meaning system and whose partici-
pants interact more frequently and fatefully  Why does one relational space with this set of
with one another than with actors outside the actors form and not another? Why do
field. DiMaggio and Powell (1983) defined disparate organizations and populations come
the field as those organizations that in the together at the field level? How and why do
aggregate represent a recognized area of fields form? What processes drive some
organizations to interact more frequently and
institutional life. While both of these defini-
fatefully with one another than with other
tions treat the field as a collective of organi- organizations, thus creating the boundaries of
zations, they also present an underlying a field?
notion that represents a future conception of
the field; one where the field is a locale in Research must highlight the organizational
which organizations relate to or involve dynamics that lead actors to engage one
themselves with one another. A definition another and start the field-level structuring or
that in some ways brings us back to the restructuring process. It is not evident, for
influence of Bourdieu - where a field is as example, why petrochemical companies
much about the relationship between the would willingly engage environmental
actors as it is about the effect of the field on groups without understanding the dynamics
the actors. of field-level engagement in field studies (i.e.
To move away from the current focus on Hoffman, 1999). Future research should
field outcomes and towards an understanding investigate the dynamics that lead to field
of why field-level interactions remain vital to creation and the contextual factors that lead
organizations, fields must be seen, not as to one field form over another. For example,
containers for the community of relations that form around a common tech-
organizations, but instead as relational spaces nology, say coal production, are not likely to
that provide an organization with the be similar to those relations that form around
opportunity to involve itself with other actors an issue such as environmental protection.
(Wooten, 2006). Fields are richly Such differences will undoubtedly influence
contextualized spaces where disparate the character of the field (Stinchcombe,
organizations involve themselves with one 1965) and the specification of collective
another in an effort to develop collective rationality.
understandings regarding matters that are Entrance to or engagement within the field
consequential for organizational and field- is often precipitated by disruptive events such
level activities. as exogenous shocks that provide the impetus
Moving beyond the notion of fields as for organizations to make sense of a
being constructed around the physical reconfigured environment. Disruptive events,
 139
such as the threat of a hostile takeover become contested. Thus, the Grammy
(Davis, 1991), regulatory changes (Edelman, Awards represent the site where conflicts
1992), environmental catastrophes (Hoffman among members are engaged and resolved.
and Ocasio, 2001) or rituals (Anand and The petition for new categories represents a
Watson, 2004) create contradictions within disruptive event and the current members
the environment (Seo and Creed, 2002) and engaging with the relational space of the field
force organizations to (re)analyze their sur- (i.e. the Grammy Awards) develop a new
roundings. Fields serve as the sites in which collective rationality about which artists
organizations come together to do this sense- belong within the field and which do not.
making work. Future research will address An actor's attempt to gain membership
what drives organizations to interact with one strains the existing order within an estab-
another and how those configurations are lished field. Field members that once had
formed. It will also hold open the possibility limited interactions with one another may
that the field is not always in use. Instead, the band together because of a common interest
field comes alive when organizations decide in locking a particular actor out of the field,
to interact with one another and this is the thus changing the pre-existing coalitions.
moment that researchers are encouraged to Under such circumstances, every aspect of a
direct their attention towards as it provides field's character is challenged. As new actors
tentative answers to the questions now being push for admittance, the interorganizational
posed. structures and coalitions that once supported
the field no longer make sense and the
 Once formed, how do fields evolve and mutual awareness among the field members
change? What are the dynamics by which that they are involved in a common enterprise
engagement takes place? must be revisited.
This leads to an appreciation for con-
The essence of a field is its ability to serve as tending logics as a force for institutional
the meeting place where organizations have change (Seo and Creed, 2002; Suddaby and
the opportunity to involve themselves with Greenwood, 2005). Reay and Hinings (2005),
one another. Positioning fields in this manner for example, develop a theoretical model to
brings scholarship back to the core concepts explain change in mature organizational
of the literature, refocusing on the fields by emphasizing the role of competing
development of 'collective rationality' (Scott, institutional logics as part of a radical change
2001), rather than the impact that collective process. Rather than explaining the sources
rationality has on the field. But that field of change, they investigate how a field
structure is not static. It evolves in makeup, becomes re-established after the
interconnections and conceptual frames. implementation of a radical structural
For example, Anand and Watson's (2004) change. Studying fields at these moments of
study of the Grammy Awards illuminates this restructuring increases our understanding of
emerging conception of the organizational how collective rationality is developed.
field. In addition to providing the music
industry's members with an opportunity to  How can the activities within field-level
meet annually and celebrate one another's populations be identified and defined? How
accomplishments, the music industry as a do field members relate to one another?
field is engaged at this event. Artists fight for
the creation of categories particular to their While field constituents' actions may be
genre to legitimate their status as field mem- initially conducted in opposition to one
bers. The addition of new genres to the music another (Zald and Useem, 1987; Meyer and
industry causes the boundaries of the field to Staggenborg, 1996; Davis, McAdam, Scott
140
and Zald, 2005), protracted institutional creation stage of the field, it is highly
engagement can yield a gradual merging of unlikely that all members of an organiza-
interests with a concurrent alteration in the tional field would need to advocate on the
structure of the field itself. However, until field's behalf. A more feasible scenario
that happens, the field is not a collective of would involve a select number of field mem-
isomorphic actors, but an intertwined bers devoting their time and energy towards
constellation of actors who hold differing this task while other field members focus
perspectives and competing logics with their attention on other activities also vital to
regard to their individual and collective the field's emergence. With greater focus on
purpose (McCarthy and Zald, 1977). As such, the different types of work that actors
an appreciation for the diversity of activities perform comes a need for a language to
and beliefs must be incorporated into field- articulate these distinct institutional roles.
level arguments, directing attention towards Labels for each member of the community of
the development of a terminology for the organizations become necessary according to
differing roles that field members play. the type of institutional activities performed.
Every social group has roles that members General terminology like buyer, supplier, or
must adopt to perpetuate the group's exis- regulatory agency will no longer provide a
tence. Moreover, these roles typically confer sufficient explanation of the role
different responsibilities for the actors within organizations adopt or the work they perform
them. For instance, the role of 'mother' has a within the field.
different set of behavioral expectations than Labeling organizations in this manner will
the role or 'brother.' Within field research, we provide deeper clarity on the collective
have been neglectful of the differing roles understanding held by each field member
that field members have. The exceptions may regarding which actors perform what roles
be our focus on entrepreneurs or change within the field. Just as organizational
agents. Yet, even in this case, we label a members can reduce uncertainty over work
member as an entrepreneur or not, a change roles by developing agreement about the
agent or conversely a protector of the status- responsibilities that come with organizational
quo. Conceptualizing the field as a relational roles, field members can also reduce the level
space dictates that we take a closer look at of uncertainty they face by developing a
the way in which actors relate to one another, corresponding understanding of what type of
especially the roles that certain members work each field member is responsible for
adopt to advance the field. given their role within the field.
Lawrence and Suddaby's (2005) review of Though we strongly encourage scholars to
institutional theory provides a typology of the move away from the focus on outcomes
different types of activities that actors engage within field research, we recognize that it
in to create, maintain, and disrupt institutions. may be difficult to wean ourselves off of this
For example, during the creation stage actors line of inquiry. Therefore, we highlight
advocate on behalf of an institution by several avenues of research based on the
mobilizing political and regulatory support. relational space perspective on fields.
During the maintenance stage, advocacy
becomes less important and actors instead  Beyond discerning appropriate behavior, what
aim to police the activities of others to ensure do the disparate organizations hope to gain
the institution's continuation. This suggests from their involvement with one another?
that at the level of the organizational field,
different actors engage in various tasks. For As we move beyond the depiction of
example, during the organizations as mere recipients of institu-
tional pressures, it is also time to advance
 141
conceptions of what organizations take away  How is field-level interaction affected by
from field membership. If we take the field as mechanisms and structures internal to the
a relational space, we can envision other uses individual organization, and how does this
for the field beyond discerning appropriate interaction change those mechanisms and
behavior. Field-level interactions are best structures?
understood as mechanisms by which other
organizational phenomena occur. For Future organizational field research will
example, some have begun to investigate the focus on the processes of participating in a
field-level processes by which organizational field and what this participation ultimately
identities are formed. Within the means for the inner workings of an organiza-
organizational literature, identity is typically tion (Hoffman, 2001). To date, field research
presented as an organizational level property has largely provided an explanation of macro
developed internally by the members of an to macro transitions; field-level interactions
organization. While research has suggested lead to changes in structure, culture, and
that organizational identity is influenced by output at the aggregate field levels. Moving
outside parties (Dutton and Dukerich, 1991; forward, field research will serve as a bridge
Elsbach and Kramer, 1996), the general between the macro and micro by providing
consensus holds that an organization's detailed explanations of how field-level
identity is what members see as central, interactions influence internal organizational
distinctive, and enduring about the phenomena. This direction acknowledges that
organization (Albert and Whetten, 1985). the field is made up of various actors that
Wedlin (2006) challenges this conception of constitute a community of organizations
organizational identity formation by (DiMaggio and Powell, 1983; Scott, 1995,
positioning the organizational field as the site 2001) while simultaneously acknowledging
in which organizations develop their identity. that organizational and field-level factors are
In this view, identity formation is seen as an interconnected in a reciprocal relationship.
inherently social and interorganizational Future research will continue to bridge the
process and the field is the place in which old and new institutionalisms in an effort to
organizations take on this task. understand how field membership aids other
Other work has sought to understand how intra-organizational processes. As discussed
field membership influences phenomena such earlier, prior attempts to connect these
as hiring (Williamson and Cable, 2003) and literatures imported the concepts of agency
collaborative tie formation (Kenis and and interests from the old-institutionalism to
Knoke, 2002), both processes that had been explain how organizational field members
thought to be reflective of dynamics internal resisted isomorphic pressures. While this
to the organization. This is not to suggest that represents progress on one front, problems
scholars recast every organizational process still remain with the way in which agency
as being dependent upon field-level and interests are conceptualized in the
membership, as this would push the literature institutional domain. Currently, both the old
towards an over-socialized view once again. and new institutionalisms present the
However, it does suggest that envisioning concepts of agency and interests in an
organizational fields as influential to the atomistic fashion. Each holds that an
development of intra-organizational organization's self-interests are developed
processes exposes a host of possibilities for internally and cause the organization to
research projects that shed light on the undertake some action such as cooptation or
institutional factors that influence an resistance (Oliver, 1991). Yet, Scott (1991)
organization's daily functioning. insisted that institutions define the ends and
shape the means by which interests are
determined and pursued. The formation and
142
pursuit of interests must be seen as the prod- 2006). In the process of translation, the
uct of field-level engagement. Just as original meaning of an organizational
research has recast organizational identity practice changes as individual field members
formation as a field-level process, so too will incorporate these items into their own
research reconceptualize organizational organization. Much like literal translations
agency and self-interests by focusing on the from one language to another often have no
possibility that field-level engagement meaning, incorporating a prevailing practice
enables an individual organization's pursuit 'as-is' into an organization may not yield the
of self-interests. This will redirect more intended consequences. Instead, field
attention to the way in which the field pro- members must determine how to bend and
vides an organization with a context to enact shape a prevailing organizational practice
agency. such that it will hold meaning for their own
organization and the field facilitates this
 How do institutions spread or diffuse within translation process. As organizations relate to
field-level populations? one another within the field, they can
determine how other members incorporated
Just as institutional scholars (particularly the predominant practices and use this
within North America) emphasized mimetic knowledge to determine how best to mold
or taken-for-granted forces as the primary these practices for use within their own
mechanism by which organizational field organization.
members became homogeneous to one Another byproduct of the emphasis on the
another (Mizruchi and Fein, 1999), we have diffusion model has been that theoretical and
also emphasized the diffusion model as an empirical work using this model leaves the
explanation for how institutional rules are impression that the widespread adoption of a
adopted and spread throughout an organiza- practice within an organizational field equals
tional field. Theoretical and empirical works institutionalization. Zeitz, Mittal and
in the institutional literature imply that orga- McAulay (1999) caution us to reconsider.
nizational practices spread through fields like The authors suggest that, just as organiza-
wild-fires, with members succumbing to tions adopt a practice en masse, they may
pressures to adopt these practices. Moreover, also abandon the practice with the same vigor
field members adopt these practices intact in a short amount of time. Instead of focusing
without adjusting or manipulating them to fit on the presence of a practice at a finite
their specific needs or context. Yet, more moment in time, the authors implore
recent research suggests that the uncritical researchers to focus on the micro-processes
adoption of practices encouraged by the dif- that allow a practice to take hold and become
fusion process accounts for the failure of 'entrenched' within an organizational field
these practices to deliver the promised (Zeitz et al., 1999). Future research will draw
benefit to organizational functioning attention to the relational dynamics which
(Kitchener, 2002). facilitate not only the widespread adoption of
As we begin to view the field as a highly certain practices over others, but also provide
interactive relational space, relying so greater understanding of the intra-
heavily upon the diffusion model will no organizational processes (i.e. identity, inter-
longer suffice. Work within the European ests, agency) that facilitate the entrenchment
tradition provides an alternative of certain practices over others.
understanding of how institutional norms and
rules take hold at the field level. Instead of
diffusing through a field, organizational CONCLUSION
practices are translated from the institutional
level to the organizational level (Czarniawska This chapter offers views on how the central
and Joerges, 1996; Zilber, concept of institutional theory - the
 143
organizational field - has changed over the ACKNOWLEDGMENTS
past three decades. It presents a trajectory
that began by focusing on the dynamics that
led to conformity in behavior among organi- We would like to thank John Campbell, Marie-
zations and evolved towards understanding Laure Djelic, and the editor for helpful comments
the dynamics that allow for heterogeneity, on previous drafts. The first author would like to
thank Dartmouth College’s Sociology
variation, and change. The chapter ends with
Department and Policy program for their support
thoughts on where the future of organiza- during the writing of this chapter.
tional field research lies, suggesting that
scholars orient their research towards the
processes that encourage field formation and
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 SECTION II

Institutional Dynamics
 5
The Work of Meanings in
Institutional Processes and
Thinking
Tammar B. Zilber

The interest in the role of meanings in institu- conceptual formulations, I will argue that
tional theory is both old and new. While studies that examine the dynamics of mean-
meanings were at the heart of early neo- ings in institutionalization reinterpret the
institutional thinking (e.g. Meyer & Rowan, social constructionist approach from which
1977; Zucker, 1977; DiMaggio & Powell, institutional theory had originated, and offer
1983), and while they constitute much of its a unique perspective that complements the
unique contribution vis-á-vis other open- mainstream studies. Specifically, the focus on
system theories (Scott, 2007), the very meanings highlights the particular, con-
exploration of meaning was somewhat textual, the political, and the on-going
neglected later on, especially in the empirical processes involved in institutionalization.
inquiry of institutions. Thus, our My aim is twofold: Offering a reading of
understanding of the work of meaning in institutional processes as depicted by studies
institutional processes had been limited that deal with meanings; and, on another
(Dobbin, 1994a; Friedland & Alford, 1991; level of analysis, point to the
Hasselbladh & Kallinilos, 2000). institutionalization of the study of meanings
Lately, however, we have seen a renewed within our discipline. I start with a short
empirical and theoretical interest in the exposition of what I mean by 'meaning' and
ideational aspects of institutional processes. the procedure I followed in gathering those
What do these studies tell us about institu- works which constitute the data set for this
tional processes that we have not known review. I will then offer a reading of this
before based on studies that focus on the collection of empirical and theoretical works,
more tangible - structural and practical - mainly by analyzing the notion of
aspects of institutions? Answering this ques- institutional processes they offer. Finally, I
tion will be my main concern in this chapter. will discuss a few directions for further
Based on a review of empirical studies and research.
152
THE MEANING OF 'MEANING' the term 'meaning' to denote those aspects of
institutions that are ideational and symbolic,
to distinguish them from the material aspects
While the role of meanings was central to of institutions. Of course, meaning and the
early theoretical formulations of neo-institu- material are intertwined, constituting each
tional thinking, to date we do not have an other. Meanings are encoded in structures
agreed upon terminology for 'meaning.' and practices, while structures and practices
Following Meyer and Rowan's (1977) express and affect those meanings. And still,
'rational myths' - the shared meanings and for analytical purposes, it is worthwhile to
understandings associated with social struc- focus our attention on meaning alone, and
tures - other related concepts abound in the take stock of our understanding of its dynam-
literature, including 'analogies' (Davis, ics, and implications, for institutional
Diekmann & Tinsley, 1994), 'discourse' processes and theory.
(Phillips, Lawrence & Hardy, 2004), 'legiti- I collected empirical studies and theoreti-
mating accounts' (Creed, Scully & Austin, cal formulations that explicitly deal with
2002), 'linguistic framing' (Hirsch, 1986), meanings in institutional processes. Many, if
'management rhetoric' or 'rationales' (Kelly & not most, publications in the area of institu-
Dobbin, 1998), 'rationalities' or 'institutional tional theory pay respect to meaning, as part
myths' (Townley, 2002), and 'theorizing' of the institutional explanatory model, with-
(Greenwood, Suddaby & Hinings, 2002; out directly measuring it or dealing with its
Strang & Meyer, 1993). Given this dynamics (Mohr, 1998: 347). I looked
polyphony of terms (apparently with some instead for papers that treat 'meanings' -
nuanced yet important differences between broadly defined - as their main concern.
them), I chose to craft this review using a These include theoretical conceptualizations
bottom-up approach. Rather than offer a that deal with the role of meanings in institu-
clear-cut definition of 'meaning' and point to tional processes, as well as empirical investi-
its implications to institutional theory, I gations that explore meanings and their
follow the way meanings were dealt with by dynamics. I started my search with a central
researchers in the field of institutional theory database of journals, the 'Web of
- publishing and presenting their work within Knowledge', using the key word ‘institution’,
the community of institutional scholars. and looking for papers that were published in
Through a content analysis of published the various outlets included in this database
works that deal with 'meaning' and in the field of organizational theory (e.g.
institutionalization, I came to (one possible) Academy of Management Journal, Academy
understanding of what institutional scholars of Management Review, Administrative
consider as 'meaning' and its role in Science Quarterly, Organization Studies,
institutional processes. Organization Science, Human Relations,
But, obviously, there is no logical way of Journal of Management, Journal of
totally avoiding some initial definition that Management Inquiry, Journal of
directs what is to be included in the review. Management Studies) as well as in sociology
Hence, to begin with, meaning is defined as (American Journal of Sociology, American
'what is intended to be, or actually is, Sociological Review). Next, since works that
expressed or indicated' (Random House deal with meanings are somewhat peripheral
Webster's 1998: 1191), and in our context, in our field (using qualitative research
meaning is what is signified in institutional methods,¹ and often carried out by European
structures and practices. I try to analytically scholars), I tried to be more inclusive by fol-
concentrate on 'meanings' as a separate object lowing the bibliographies of journal articles,
of inquiry. 'Meaning' refers then to that which trying thus to tracing also relevant books and
is not structure or practice per-se-that is to book chapters in a snowball manner.
the untangible. Accordingly, I use
 153
Once the data set was compiled, I used the sharp contrast to functionalist theories of
tools of my trade to analyze it. I conducted a organizational structure, Meyer and Rowan
content analysis of these works (Lieblich, (1977) claimed that organizations are 'dra-
1998), looking for the more specific ways matic enactments of the rationalized myths
they define and use 'meaning', and the way pervading modern societies' (346). The main
they portray its role in institutional processes. idea was that while the adoption of
After reading each paper, noting its institutionalized elements may not ensure the
theoretical question, methodological effective operation of an organization, it will
approach, findings and contributions, I asked confer legitimacy upon it, and this legitimacy
myself what depiction of institutionalization is critical to its survival: 'vocabularies of
the paper offers. I then analyzed the structure which are isomorphic with institu-
collection of papers, looking for similarities tional rules provide prudent, rational, and
between these depictions. As I was interested legitimate accounts. Organizations described
in what is unique about meanings in in legitimated vocabularies are assumed to be
institutional processes, I chose to frame my oriented to collectively defined, and often
review vis-á-vis studies of the structural and collectively mandated, ends' (349).
practical. Thus, I will highlight those aspects Zucker, in her study of cultural persistence
that are common to the different approaches (1977), highlighted the specific role of mean-
towards meaning, rather than exploring ing in institutionalization. Treating
detailed nuances within them. institutionalization as a dependent variable
and looking for independent variables to
explain it, she claimed that it is the meaning
of an act - the degree to which it is 'perceived
EARLY BEGINNINGS to be more or less exterior and objective'
(728) - that determines the degree of its
The emphasis on meaning was at the heart of institutionalization. Moreover, she also
neo-institutional thinking in its very early studied the effect of institutionalization on
formulations in the 1970s. We find much ref- the transmission, maintenance and resistance
erence to shared meanings, culture and myths of cultural understandings.
in the work of various early theoreticians of In their quest to define the isomorphic
neo-institutionalization. To begin with, forces at play in institutionalization,
institutions were understood as social DiMaggio and Powell (1983) followed suit
constructions (Berger & Luckmann, 1966), with an emphasis on the central role of
that is, structures, practices and meaning sys- ideational elements in structuring organiza-
tems that come to be taken for granted tions (and organizational fields). Each of the
through their repeated social enactment - isomorphic pressures (the coercive, mimetic
which involves, first and foremost, language and normative) can thus be extracted from,
and other symbolic expressions and artifacts. and in any case is built upon, cultural expec-
More specifically, Meyer and Rowan termed tations, shared cognitions and beliefs. The
the notion of 'institutionalized myths', relating isomorphic forces were described then as
to 'rationalized and impersonal prescriptions 'great rationalizing' forces in action.
that identify various social purposes as And finally, in his 'omnibus' conceptual-
technical ones and specify in a rule-like way ization of institutions, Scott (most lately
the appropriate means to pursue these techni- 2007) argued that institutions have regula-
cal purposes rationally ... [These myths are] tive, normative and cultural-cognitive ele-
beyond the discretion of any individual par- ments. The latter 'involves the creation of
ticipant or organization ... [they are] taken for shared conceptions that constitute the nature
granted as legitimate, apart from evaluations of social reality and the frames through
of their impact' (1977: 343-344). In which meaning is made' (Scott, 2003: 880).
154
The cultural-cognitive pillar directs attention processes as involving the travel of ideas.'
to the taken for granted meanings that under- Rational actors are in full control over their
lie the institutional order. The theoretical actions, motivated by goals that they pursue
emphasis on meaning is further reflected in through the use of technologies and the
Scott's (2007) conceptualization of 'institu- resources at their disposal. Meanings and
tional carriers' in which he distinguishes symbolism, depicted as potentially having
between four types - artifacts (material cul- power of their own, have no place in this pic-
ture), routines (habitualized behavior), rela- ture. Second, since neo-institutionalists hold
tional systems (personal and organizational that 'institutional beliefs, rules and roles
networks) and symbolic systems. Institutions come to be coded into the structure' of organ-
are carried through 'various types of symbolic izations (Scott, 1987: 506), in most institu-
schemata into which meaningful information tional studies, the very institutionalization of
is coded and conveyed' (Scott, 2003: 882). a structure or practice is taken to testify that it
Meaning, then, had a central place in the won legitimacy, without probing into the
development of early neo-institutional think- meanings and cultural processes involved.
ing. In fact, it is the attention to meanings, Researchers studied structural and practical
culture and symbols - the non-technical dimensions of institutions, assuming - rather
environment, as it was termed - that is con- than directly studying - their symbolic,
sidered to distinguish the neo-institutional meaningful character. Third, methodological
school from its 'old' predecessor, as well as preferences may be responsible as well
from other open system theories in our disci- (Bowring, 2000; Schneiberg & Clemens,
pline (Scott, 2007). Notwithstanding this the- forthcoming). Again, in the lingo of institu-
oretical emphasis on meaning, most tional theory itself, longitudinal, quantitative
empirical studies of institutionalization in the studies are the taken-for-granted procedure in
past 30 years focused on structures and our discipline. They serve as a social
practices, relegating meaning to the back- resource that wins legitimacy, whereas quali-
ground (Farashahi, Hafsi & Molz, 2005; tative studies do not fit within 'the way things
Hasselbladh & Kallinikos, 2000; Glynn & are done.' Meanings elude quantification, do
Abzug, 2002; Jepperson, 1991; Zilber, 2002). not allow for causal inferences and
Three main explanations to this state of explanations in the form of correlations
affairs come to mind, and they can all be con- between clear causes and effects. Instead,
ceptualized in neo-institutional terms. The meanings call for 'after the fact' interpreta-
first has to do with the taken-for-granted tions, and for case studies with thick accounts
assumption about the social carrier of institu- rather than broad generalizations all of which
tions, the second is the outcome of a taken-- do not fit nicely with the positivistic
for-granted epistemological assumption, and paradigm current in our discipline.
the third is related to the taken-for-granted
method for exploring institutions. Thus,
Meyer (1996: 241-242) ascribes this ten- TAKING STOCK
dency to the 'typical American version' of
institutional theory, which assumes the Recently, however, we see a renewed empir-
'rational actor': 'These actors have prior pur- ical and theoretical interest in meanings in
poses, clear boundaries, definite technolo- institutionalization. The linguistic turn in
gies, unified sovereignty, clear internal organization studies (Alvesson & Karreman,
control systems, and definite and discrete 2000), and the growing acceptance of quali-
resources to employ. This starting point tative research methods (Van Maanen, 1998)
makes it difficult to think about institutional and of critical approaches (Alvesson &
Deetz, 1996) within our discipline, all partly
 155
as a result of the influence of European-based they employ were central to the diffusion of a
scholars (Usdiken & Pasadeos, 1995) new institutional logic within the field.
contributed to this change. Taken together, Townley (2002) offers a rare inquiry into the
this body of works highlights four various meanings of institutionalized myths
dimensions of the institutional order - being and their effect on the process of institution-
particular, contextual, conflictual and ever alization. Based on interviews and archival
dynamic. These attributes are of course data, Townley shows how the introduction of
interconnected, but for the sake of analytical a new practice of business planning and per-
clarity I will differentiate between them in formance evaluation to a division of the
the following discussion, and exemplify each provincial government in Alberta, Canada,
separately. was affected by the meanings relevant actors
saw in them. Using Weber's typology of four
types of rationality as an interpretative
The particularities of schema, she follows the ways her informants
institutionalization made sense of the changes, and how these
different understandings shaped their
Recent studies have emphasized the ways in reactions thereof.
which institutionalization occurs in relation Indeed, once the particularities of institu-
to the specific content of the meaning tionalization are explored, it was found that
systems involved. Rather than depicting the seemingly 'same' institutional practices
institutionalization as governed by universal and structures may be infused with different
laws, studies of meaning highlight the partic- meanings by different actors, and hence have
ularities of the process, and the importance of differential institutional effects. Zilber
specific meanings in explaining the micro- (2002), in her study of a rape crisis center
processes of (de)institutionalization, both on that evolved under the dual, sometimes com-
the organizational (Prasad & Prasad, 1994; peting, institutional pressures of a feminist
Ritti & Silver, 1986; Wicks, 2001; Zilber, ideology and a therapeutic worldview,
2002) and field levels (e.g. Clark & Jennings, showed how the very same institutionalized
1997; DiMaggio & Mullen, 2000; Ferguson, practices were understood differentially by
1998; Hargadon & Douglas, 2001; Quaid, different members. Practices which origi-
1993; Rao, Monin & Durand, 2003; Scheid- nated from a feminist ideology and were
Cook, 1992; Townley, 2002). understood as such by members who carried
For example, Wicks' (2001) study of a the feminist institution, were reinterpreted by
mine explosion highlights the crucial role of therapeutically oriented members as
the institutionalization of what he calls the reflecting a therapeutic rationale. Based on
'mindset of invulnerability' that, among other this ethnographic study, Zilber claims that the
factors, allowed the accident to happen. difference in interpretation - the work of
Based on textual analysis of secondary data, meaning - allowed for the co-existence of the
Wicks shows specifically the crucial role of two quite different institutions in one organi-
meanings - embodied in the masculine zation. At the field level as well, DiMaggio
identity of coal miners and the embrace of & Mullen (2000) showed how the very 'same'
risk as part of their job - in overlooking dan- practice - the ritual of 'music week' - was
gers and acting in ways that raised the risks. celebrated differentially in different commu-
Rao, Monin & Durand (2003), in their study nities across the USA. DiMaggio & Mullen
of the rise of the Nouvelle Cuisine in French (2000) connected the various construction of
gastronomy, highlight the role of meanings as the 'music week' as a civic ritual to various
embodied in identity at the field level as well. characteristics of the local adopting
They show that the meanings ascribed to the communities. These studies show, then, that
role of chefs and the various practices to fully understand the dynamics of
156
institutionalization, one must attend not only anti-whaling and popular culture discourses,
to institutionalized structures and practices, and charted the changes in the discursive
but to their (specific) meanings as well. construction of whales and human-whale
interaction. The change in this case is dra-
matic, from the negative to the positive,
Institutionalization in context which they term the change from Moby Dick
to Free Willy. While 150 years ago whales
Current studies of meaning in institutional were depicted as dangerous animals, these
processes underscore the contextuality of days they are perceived as endearing crea-
institutions. They attest to the complex tures to be respected and enjoyed. If not for
connections and interactions occurring this depiction, whale-watching could not
between the institutionalized and the have developed as a commercial field.
meaningful environment within which it is However, this change in the macro-cultural
embedded. Thus they argue that institutional- depiction of whales, apparent in North
ization occurs in relation to the ways America in general, dramatic as it was, was
meanings are contextualized within systems only a precondition for the emergence of the
of meanings at the field and societal levels field of commercial whale-watching. For a
(e.g. Holm, 1995; Lawrence & Phillips, new institutional field to emerge, entrepre-
2004; Zilber, 2006a; Zilber, 2006b). For neurial action was needed. This entrepre-
example, in her study of Israeli hi-tech indus- neurial activity included the local use and
try, Zilber (2006a) followed the imagery of manipulation of macro-cultural discourses.
Israeli hi-tech in two social arenas (the For example, when the field of commercial
societal versus the field level), and through whale-watching grew, it encountered the
time (the boom and bust of the hi-tech indus- critic that the many boats surrounding the
try world-wide). Based on the analysis of whale's habitats were 'harassing' the whales.
newspaper articles and want-ads, Zilber Whale-watchers reacted by building on the
connects the prevalent rational myths of humanization and anthropomorphization of
Israeli hi-tech to generic rational myths in the whales, apparent in the popular and in the
Israeli society more generally, showing how anti-whaling discourses. They thus argued
the same cultural building blocks were used that the whales were 'urban whales', that is
differentially in different institutional arenas that they had already habitualized to the
and in different points of time to construct presence of humans, so that the heightened
the meaning of hi-tech and its importance. commercial activity did not harass them. This
Zilber claims that this process of translation study shows the embeddedness of an
of generic into specific rational-myths in the emerging institutional field, and of entrepre-
process of institutionalization is related to neurial activity, within various meaningful
material fluctuations over time and to the contexts. If we were to study the institution-
dynamics of the different institutional arenas. alization of whale-watching in Canada by
Lawrence and Phillips' (2004) study of the following only the structural and practical
emergence of commercial whale-watching in dynamics, we would have missed the impor-
Canada exemplifies the importance of tant role played by meanings at both the
reference of actors to the meaningful socio- broad cultural and local levels.
cultural environment for the emergence of a That institutions are sensitive to their
new institutional field. They show how meaningful context is especially apparent in
changes in what they call 'macro-cultural comparative studies that follow the travel of
discourse' concerning the nature of whales institutional structures and practices across
created the very opportunity for commercial national borders (e.g. Boxenbaum, 2006;
whale-watching. Based on the analysis of Frenkel, 2005; Mazza, Sahlin-Andersson &
various texts, they followed the regulatory, Pedersen, 2005; Meyer & Hammerschmid,
 157
2006; Saka, 2004). For example, Meyer and have picked up this emphasis and showed
Hammerschmid (2006) studied the transla- how power and power relations are articu-
tion of market managerialism in the Austrian lated through meanings. They show that since
public sector. Based on managers' answers to relevant institutional meanings are like
open questions in a survey, the authors ana- cultural building blocks that are multiple
lyzed their social identities as reflections of (Friedland & Alford, 1991) and nested within
institutional logics. They found that Austrian each other (Holm, 1995), actors must choose
executives used both old administrative logic and manipulate them in the process of inter-
and new market managerialist logic in pretation. And actors do so in relation to
constructing their social identities, thus re- conflicting interests and in lieu with their
defining and translating the seemingly global different subject positions (Maguire, Hardy
logic of market managerialism into the local & Lawrence, 2004). Instilling institutional
context. In the same vein, based on an structures and practices with meaning is thus
ethnographic study of the translation of the interest-driven and carried out through power
American practice of diversity management relations dynamics.
in Denmark, Boxenbaum (2006) highlighted These dynamics are especially apparent in
the importance of the strategic framing of the the context of institutional change (e.g. Arndt
practice to its implementation in a new & Bigelow, 2000; Borum, 2004; Carruthers
context. & Babb, 1996; Creed et al., 2002;
Studies of the meaningful aspects of Greeawood et al., 2002; Munir & Phillips,
institutionalization call our attention to the 2005; Oakes, Townley & Cooper, 1998;
peculiarities and embeddedness of institu- Suddaby & Greenwood, 2005), as well as in
tionalization. Rather than viewing it as a uni- the creation of new institutions (e.g. Dejean,
versal process, they highlight its particularity Gond & Leca, 2004; Lounsbury & Pollack,
and contextuality: the specific contents of 2001; Maguire et al., 2004; Maguire &
institutional structures and practices affect Hardy, 2006). For example, Munir and
their institutionalization, and those contents Phillips (2005) explore the efforts made by
are embedded within larger meaning systems. Kodak to transform the depiction of photog-
Thus, to understand institutionalization, we raphy as a way to push forward its new tech-
need to explore its meaningful particularities nology. Based on the analysis of texts created
and its context, both at the organizational and and disseminated by Kodak (advertisements,
interorganizational levels. company documents and annual reports), as
well as industry reports, trade journals,
newspapers, historical accounts of photogra-
Institutionalization as phy and photographic technology and the
a political process historical period more generally, they offer
an account of Kodak's introduction of the
Power relations were always part of the insti- roll-film camera in 1882. They show how
tutional model. However, early formulations Kodak, as an institutional entrepreneur,
highlighted the overwhelming, deterministic 'engage(d) in discursive strategies to
power of the institutional order over anyone transform the "meaning" embodied by par-
operating within it. Only with Oliver's paper ticular technologies, by producing new
on strategic responses (1991) we see a move concepts, objects and subject positions' (p.
to 'empower' the actors vis-à-vis the institu- 1666).
tionalized structure. And only after Similarly, Oakes, Townley and Cooper
DiMaggio's (1988) call for a perspective (1998), in their study of the introduction of
which takes politics into account, do we start business planning to the provincial museums
to see explorations of power and politics by and cultural heritage sites of Alberta, Canada,
and between various actors. Recent studies explore the way business planning is
158
a political tool, by virtue of its 'monopoly of The struggle over meaning involved in
legitimate naming', that is by its ability to institutionalization is especially apparent in
define meanings: 'They actively construct the studies that follow discursive efforts of
seeable and the sayable by specifying what competing institutional actors. Creed, Scully
will be documented and what will be ignored & Austin (2002) follow the way various
... Through a process of naming, actors offer different 'legitimating accounts'
categorizing, and regularizing, business plan- for and against policies that rule out work-
ning replaced one set of meanings, defined place discrimination on the basis of sexual
by the producers within the field, with orientation and identity. Based on the analy-
another set that was defined in reference to sis of public testimonies, media accounts,
the external market' (p. 273, 277). As well, position papers and interviews with relevant
Greenwood, Suddaby and Hinings (2002), workplace activists, they identify five differ-
studying the change in the jurisdiction of ent frames used by different parties to the
accounting firms in the field of professional debate, each connected to different cultural
business services in Alberta, Canada, explore building blocks, and invoking different social
the way professional associations actors aim identities. Suddaby and Greenwood (2005)
at legitimating change by theorizing it - that follow the various rhetorical strategies used
is by interpreting, representing and translat- by competing parties in their efforts to
ing relevant issues in a way that justifies the (de)legitimate an institutional change. Using
change. Based on the analysis of archival and the emergence of a new organizational form -
interview data, they offer a model of multidisciplinary partnership - as their case
institutional change that highlights the role of study, they explore the jurisdictional struggle
such theorization in the diffusion of new between proponents and opponents of the
institutional practices. innovation. They show that this struggle was
The very ability to theorize, or offer theo- taking place on a rhetorical level. The two
rizations for public consumption, is political parties - each comprising a multitude of
in nature. Maguire, Hardy and Lawrence organizational actors - made up two
(2004), who highlight the role of theorizing discursive communities. They used different
in the entrepreneurial activity behind the institutional vocabularies (arguments and
emergence of the field of HIV/AIDS treat- words) and relied upon different texts to
ment advocacy in Canada, explore the way invoke two different logics of professional-
entrepreneurs work to occupy subject posi- ism, according to which legitimacy should be
tions that will allow them to engage in such established. As well, each party relied upon
theorization and comer legitimacy over the and invoked different understandings of
new practices they advocate. change. Proponents and opponents of the new
These studies exemplify then the power of organizational form used, then, various
language and of actors in the processes of institutional vocabularies, and relied upon
institutional change and emergence, as various understandings of change as part of a
language constructs reality in lieu of the political effort to further their interests
agenda of institutional actors. This is not a through this discursive struggle.
simple process. Institutional entrepreneurs Hence, rather than seeing institutions as
need to balance novelty and tradition, as they all-encompassing, deterministic and hege-
try to frame new (or changing) practices in monic forces, the exploration of meanings
ways that will provide them legitimacy and highlights the political nature of institution-
will not raise too much resistance (Lounsbury alization (Phillips et al., 2004). Studies of
& Pollack, 2001). Such framing may involve meanings (re-framing, re-packaging,
some manipulations of meaning, creatively theorizing, etc.) all 'highlight the often
tailoring accounts that (hopefully) serve contested and incomplete character of insti-
actors' interests (Arndt & Bigelow, 2000; tutionalization projects, often neglected in
Hargadon & Douglas, 2001).
 159
standard accounts of new practice diffusion' designed to regulate' (p. 406-7). Based on the
(Lounsbury & Pollack, 2001: 321). Meanings analysis of professional personnel literature,
are thus understood as an institutional survey of organizational practices, and
resource (Rao, Morrill & Zald, 2000), offered relevant legal cases, they follow the develop-
as well as constrained by the institutional ment of a shared definition of compliance
context (Lounsbury & Pollack, 2001). with civil rights law. Many parties took part
Various parties strive to further their interests in this process of construction of the law,
by manipulating this resource (thus offering among them organizations, personnel profes-
an interpretation of existing, changing or new sionals, and the courts. Central to this process
structures and practices that suit their of constructions were the meanings infused
interests). No less important, the study of the into organizational practices that were
interface of power and meanings joins the constructed as singling compliance with the
recent interest in agency in institutional law and thus sheltering organizations from
process, as it shows how interpretation legal intervention. While at the beginning
(meaning making) is a form of agency these meanings were 'myths,' that is they had
(Zilber, 2002), and it calls our attention to no foundation in legal reality, with time they
what Lounsbury and Glynn (2001) termed became rational as the courts adopted them.
'cultural entrepreneurship': Interpretative and This and other studies of the institution of
symbolic work that aims at legitimating new law (e.g. Christensen & Westenholz, 1997;
structures and practices. Edelman, 1992; Edelman, Abraham &
Erlanger, 1992) testify then to the on-going
process of institutionalization, and the
Institutionalization as important role of meaning in it. In the same
a work in progress vein, Grattet and Jenness (2001) follow the
construction of 'hate crimes' as a policy
The emphasis on specificity, contexts and domain in the US in the past four decades,
politics brings to the fore the multiplicity of highlighting the interrelations of multiple
the institutional order. We have multiple actors in the process. Based on an historical
meaning systems, multiple actors who hold analysis, they chart the roles of social
multiple interests and who work in relation to movements and interest groups in bringing
multiple contexts. They may or may not the idea of hate crime to social attention, the
share the same understandings, and they role of legislatures in translating it into
instill institutional structures and practices federal and state legislation, the role of the
with meanings, at least part of the time, to courts in the interpretation of these laws, and
further their own interests. Thus, institution- of the police and prosecution in enforcing it.
alization is understood as fluid and dynamic, Their analysis highlights, once again, the role
as an on-going process rather than an end of meaning in institutionalization: 'In its
point (DiMaggio, 1988). Meanings are cen- journey from social movement frame to leg-
tral to our understanding of institutionaliza- islative concept to judicial theory to law
tion as work-in-progress. One very well- enforcement practice, the meaning and policy
documented area in this regard is the significance of hate crime have undergone a
institutionalization of law. As Edelman, series of transformations .... each change
Uggen and Erlanger (1999) show in their reflects the unique demands placed on the
study of the institutionalization of grievance concept in the different institutional arenas
procedures, 'the meaning of law regulating that compose the American policy process.
organizations unfolds dynamically across Its meaning has been pushed and pulled in
organizations, professional, and legal fields new directions both within and across each
... the content and meaning of law is deter- new context, mutating in ways that ensure
mined within the social field that it is constancy as well as innovation'
160
(p. 691). Specifically, their analyses show institutionalization of structure and practices,
that in each institutional arena, policy influencing the very process of
concepts like 'hate crime' go through a institutionalization.
common process of solidification, by which Recent studies go further, trying to unpack
its definition becomes, at the same time, the underlying processes. For example,
more specific and restricted, as well as Ocasio and Joseph (2005) followed the evo-
expanding to new circumstances. More lution of vocabularies of 'corporate gover-
generally, then, these and other studies (e.g. nance' in the past three decades. Based on the
Anand, 2005; Anand & Peterson, 2000; analysis of media coverage in the New York
Phillips & Hardy, 1997) explore the central Times, a multitude of documents, and popular
role of meanings and interpretations in the and academic literature on corporate gov-
on-going construction of organizational ernance, they construct an historical account
fields. of the developments in the meanings of the
Moreover, institutions are not fixed, but term. Based on this case study, they offer an
may change, in response to field-level or evolutionary model of vocabulary change,
environmental changes (e.g. Reay & Hinings, one that depicts mechanisms of variation,
2005). Changes call for more interpretations selection and retention on the linguistic level.
and theorizing, as the reshuffling of the For example, linguistic variation stems from
institutional order needs to be legitimated non-routine events that need to be interpreted
(e.g. Greenwood et al., 2002). 'Change' itself and cannot be explained using current
need to be constructed as such (Munir, 2005). vocabularies. Selection is partially based on
While the meaningful dynamics of the resonance of new or diffusing terms with
institutionalization are especially apparent in already accepted concepts. And retention is
the emergence of new institutions or change achieved through theorization that stabilizes
of existing ones, many studies show that even and reproduces the meanings and
after structures and practices are vocabularies in use.
institutionalized, their meaning still Interestingly, it seems that the very
undergoes changes. In an early study that set process of institutionalization changes the
the path to many ideational explorations of relevant field in ways that require further
institutionalization, Hirsch (1986) showed - changes in the framing of those
based on business periodicals, interviews and institutionalized structures and practices.
transcripts of congressional reports and Lounsbury's and Pollack's (2001) study of
hearings and other publications - how the service learning in US higher education
'normative framing' of corporate takeovers exemplifies this complicated dynamics.
changed in tandem with the growing spread Based on interviews and the analysis of
of the practice. With time, the depiction of primary and secondary documents and trade
takeovers - 'the language used, the rituals periodicals, they follow the
followed, and the meanings attributed to the institutionalization of a new way of learning
event sequence by participants and dose and knowing - through personal experience
observers' (Hirsch, 1986: 802) turned from in the community, termed service-learning.
negative to positive. This linguistic framing, They show how the packaging of service-
Hirsch argued, served various cognitive, learning in US higher education was changed
social-psychological, and institutional through the years. Whereas early on, in the
functions, all facilitating the diffusion of the 1960s, service-learning was portrayed in
practice. This and other studies (e.g. Baron, revolutionary terms, as a means to transform
Dobbin & Jennings, 1986; Baron, Jennings & higher education, in the 1980s it was framed
Dobbin, 1988; Dobbin, Sutton, Meyer & within a functional discourse that highlighted
Scott, 1993; Kelly & Dobbin, 1998) show its capacity to improve students' learning.
how cultural framings change with the They explain this change in relation
 161
to the dialectics of a change in the broader Thinking of meaning and
higher-education field, as well as the specific institutionalization: theorization,
field of service-learning itself. The field of translation and discourse
service-learning is embedded within the field
of higher education in which a change from Many of the institutional studies of the 1980s
closed to open-system logic took place, thus and early 1990s were based on, and con-
creating the space for institutional change, tributed to, the conceptualization of institu-
enabling the institutionalization of the tionalization as diffusion (Creed et al., 2002;
innovative service-learning. But the very Czarniawska & Joerges, 1996; for a review,
institutionalization of service-learning see Strang & Soule, 1998). They followed the
entailed a change in its packaging. In its early diffusion of structures and practices across an
days, a revolutionary framing made sense, institutional field, using quantitative,
and was in line with the norms of the era. But longitudinal and macro-level methodologies
as service-learning became the mainstream, based on a positivistic paradigm. The
such framing became too threatening, and imagery of institutionalization created by this
thus the transformation into a more func- set of studies was of a universal and
tional framing, which again was also more in deterministic process, made of clearly
line with the spirits of the time. Thus, defined and clear-cut steps (Sahlin-
meanings are essential not only to the initia- Andersson, 1996): More and more firms
tion of institutional change, but also to its adopted - sooner or later - a certain institu-
constant maintenance. tionalized structure or practice. Adoption
Indeed, the recent interest in institutional itself was measured in clear-cut terms. So,
work and especially institutional maintenance while institutionalization was understood as a
(Lawrence & Suddaby, 2006) draws attention dynamic process, the process itself, once set
to the continuous processes of construction forth, was not problematized. It was con-
that are part of institutionalization. The on- sidered a question of volume (how many
goingness of institutions may be especially firms adopted) rather than quality (what does
apparent in its meaningful dimensions, as it is it mean to adopt, what is exactly adopted).
argued that symbols and meanings Moreover, the focus on diffusion 'across a
themselves are never stable: 'the essence of a single community' (Strang & Soule, 1998:
sign is that its meaning can never be 279) created a sense of a universal, homoge-
determined once and for all by a given lin- neous process of diffusion, one that is
guistic system, but always has the capacity to affected by characteristics of the population
break with a context and take on different and its interrelations, no matter where it
connotations. The sign is thus overflowed by resides. Finally, since those were macro-level
a plurality of signification, which cannot be studies, usually focusing on the field level,
finally stabilized' (Howarth, 1998: 273, and they neglected micro processes, including
see Derrida, 1982: 320-321). The meaning of issues of power and politics (DiMaggio,
institutional structures and ractices -like laws, 1988).
higher education or economic practices - Empirical studies of ideational aspects of
evolves dynamically, with various actors institutionalization, which highlighted the
engaged in negotiations and power plays, all particular, contextual, conflictual and on-
embedded within multiple fields and contexts going processes constituting the institutional
(Edelman, Uggen & Erlanger, 1999; Zilber, order, were coupled by more explicit
2008). Institutionalization is thus not only theoretical formulations of the dynamics of
about outcomes, but about the very process meaning. These theoretical formulations sug-
(Zucker, 1987) of how it is worked out con- gest at times alternative conceptualizations of
stantly, and the important role of meanings in the very notion of institutionalization. Thus,
that process. to begin with Strang and Meyer (1993)
162
offered the concept of 'theorization' as a crit- structures, practices and meanings as they
ical component for diffusion, whereas move across various boundaries, we are deal-
Czarniawska and Joerges (1996) and Sahlin- ing with adaptation, the transformations of
Andersson (1996) suggested we should ideational and material objects in the process
depart from 'diffusion' and use 'translation' of their movement. Sahlin-Andersson (1996)
and 'editing' instead as depictions of the highlighted especially the role of meaning in
institutionalization process. Most recently, this process. Since most organizations do not
Phillips, Lawrence and Hardy (2004) have a direct experience with the structures
conceptualized institutions as 'discourse' and or practices they implement, what they actu-
thus once again offered a new way to under- ally imitate are 'rationalizations - stories
stand institutionalization. constructed by actors in the "exemplary"
While early studies of institutionalization organization, and their own translation of
as diffusion were 'rich in structural mecha- such stories. The distance between the
nisms' (Strang & Soule, 1998: 270), Strang supposed source of the model - a practice or
and Meyer (1993: 492) argued that social an action pattern - and the imitating organi-
practices are always accompanied by zation forms a space for translating, filling in
'theorized accounts' which play a central role and interpreting the model in various ways'
in the very process of diffusion. 'Theorized (Sahlin-Andersson, 1996: 78-79).
accounts' chart abstract categories and outline Phillips, Lawrence and Hardy (2004)
the relationships between them (e.g. cause- offered a conceptualization of institutions as
and-effect). They are produced as part of the discourse, thus complementing the translation
efforts to make sense of the world, and are metaphor with a more general theoretical
the result of both individual-specific foundation, that of discourse analysis
theorizing, and the influence of globally (Phillips & Hardy, 2002). Institutions, they
available theories and models, promoted by argue, are 'social constructions constituted
'culturally legitimated theorists' (Strang & through discourse ... the structured
Meyer, 1993: 494-495) - like scientists, collections of texts that exist in a particular
intellectuals and professionals. Strang and field and that produce the social categories
Meyer (1993) hypothesized that theorizing is and norms that shape the understandings and
a diffusion mechanism so that the more behaviors of actors' (p. 638). Thus, the
theorization is complex and rich, diffusion production of texts is viewed as central to
will be more rapid, and less dependent on any institutional action. As actors strive to
social relations (for empirical examples, see make sense of reality and gain legitimacy,
Greenwood et al., 2002; Kelly & Dobbin, they produce texts. In order for these texts to
1998). affect institutional processes, they, need to
Building on Latour (1986), Czarniawska and become part of the relevant discourse. The
Joerges (1996) went a step further by genre of the texts, as well as their producers,
suggesting an explicit new metaphor to the and the links between the focal text and other
very process of the spread of practices and relevant texts all influence their institutional
structures across organizations, that of impact. Once texts are embedded in
'translation.' The 'diffusion' metaphor comes discourse, and as much as that discourse is
from physics and connotes a transmission of structured, coherent and supported by other
a given entity from one sphere to the other. discourses, it produces institutions, which in
The 'translation' metaphor, by contrast, their turn enable and constrain the production
comes from linguistics and connotes of more action, texts, discourses and
transformation so that whatever is translated institutions in a cyclic process. This
is being reshaped in a specific context conceptualization of institutionalization as
(Czarniawska & Sevon, 1996). Thus, instead discourse highlights the role of language and
of thinking of adoption of fixed meanings in the process, and
 163
offers new ways to conceptualize and study institutional processes 'do not have the theo-
institutional fields and institutional entrepre- retical tools by which to understand the insti-
neurship (see, for example, Maguire & tutional content whose diffusion they do
Hardy, 2006; Munir & Phillips, 2005). analyze' (Friedland & Alford, 1991: 243-
Theorization, translation and discourse all 244). Finally, the meaningful environment
offer then complementary new ways to think within which institutions reside was left
about the role of meaning, language and unexplored: 'the social and cultural processes
interpretation in institutional processes, and that make up the project of rationalization
about institutionalization itself. and shape the structure and functioning of
work organizations have either been
bypassed or given an exogenous status,
DISCUSSION reified to "reality," "society" or
"environment" and treated as independent
Meanings were at the heart of the neo- variables in cross sectional or longitudinal
institutional argument and contribution empirical research' (Hasselbladh &
(Farashahi, Hafsi & Molz, 2005; Hasselbladh Kallinikos, 2000: 697-698).
& Kallinikos, 2000; Glynn & Abzug, 2002; Recently, however, we have seen a surge
Jepperson, 1991; Zilber, 2002). However, of studies of meaning in institutional process.
early treatments of meaning were partial and Taken together, these studies help in adding
somewhat naïve. Meanings were mainly pluralism and variety back into institutional
understood in their formal characteristic. theory (Glynn, Bar & Dacin, 2000) by setting
Institutionalization meant that some forth a new formulation of institutions and
structures, practices and understandings have institutionalization - that of a local and partic-
come to be taken for granted. The content of ularistic process, context-sensitive,
institutions and the dynamic of such contents conflictual and on-going. They highlight
were not at center stage. It might be even anew the social constructionist dimension of
argued that many early neo-institutional institutional processes, thus reconnecting to
formulations were precisely saying that, the roots of the neo-institutional school
regardless of the content of institutions, (though with modifications). They remind us
certain processes will take place (the same that neo-institutional theory 'seeks to grasp
disregard to particularities was evident in the not the universal laws that generate social
treatment of structures and practices). Early practice, but the social practices that generate
theorists were talking then about meanings, universal laws' (Dobbin, 1994b: 123,
but in the abstract (or as a variable), regard- emphasis in original).
less of their specific content or dynamics. In Following Lawrence and Suddaby's
lieu of these depictions of meaning, most (2006) notion of 'institutional work,' the
empirical studies of institutionalization studies reviewed above highlight the 'work of
focused on structural or practical aspects, meaning' in institutional processes. Meanings
using them as proxies of meaning, rather than do not reside 'out there,' but rather are
exploring meaning directly (Farashahi, Hafsi socially constructed, and as such they take
& Molz, 2005; Hasselbladh & Kallinikos, part in the social construction of institutions
2000; Glynn & Abzug, 2002; Jepperson, themselves (Berger & Luckman, 1966). The
1991; Zilber, 2002). Thus, the meaning of work of meaning refers to the interpretations,
rationality itself was overlooked, as understandings and shared beliefs that are
rationality was treated as 'transparent and produced and processed through social
se1f-evident rather than meaningful' (Dobbin, action, and specifically through the efforts of
1994a: 218). The very content of institutions institutional actors engaged in power
was neglected as well, as students of relations and political negotiations, as these
are all embedded within particular
sociocultural and historical moments.
164
To further develop these understandings them perfectly. Still, the two models or
of institutional processes, students of metaphors represent two different ontologi-
meaning need to make more efforts at cal, epistemological and methodological
building upon existing theoretical approaches and result in different research
formulations and further exploring the agendas, and thus in different understandings
theoretical implications of their findings; and depictions of the subject matter itself that
bridge the current division of labor between is of institutionalization. The division of
studies of the material and ideational aspects labor between them is quite reasonable in
of institutionalization; explore meaning in terms of paradigmatic consistency, yet it
action; and renew our interest in limits the field as a whole. We know much
organizations as meaning systems. about the ways structures and practices dif-
Qualitative, linguistic and discursive fuse within a field. In recent years we also
inquiries in organization studies have been came to know much on how meanings are
blamed for being anecdotal, for concentrating translated as they travel a field. However,
'on symbols per se rather than on their what about the interrelations between them?
relationship to other aspects of organizational Is it possible to account, within one model,
life. It is, therefore, perhaps unsurprising that for the dynamics of the material and the
what was originally hoped would be a means ideational? Are there ways to bridge this con-
of enriching our understanding of ceptual as well as methodological dichotomy,
organizational processes has effectively been and explore the interrelations between
isolated from the mainstream of organiza- practices/structures and meanings? Whether
tional studies' (Brown, 1994: 874). Indeed, in positivistic or constructivist in approach,
writing this review I was struck by the gap researchers of institutionalization should be
between the implicit theoretical implications sensitive to the dynamics of meaning in the
of the collection of studies reviewed above, process, and find proxies and measures that
taken as a whole, and the deficiency in more closely adhere to both meaning systems
explicit theoretical articulations within them. and structural indicia of institutional
Specifically, while many of these studies processes. To date, there are only a few
offer rich and thick descriptions of interesting attempts at doing so (e.g. Rao, Monin &
case studies, they by and large do not build Durand, 2003).
upon or correspond with current While the integration of positivistic and
conceptualizations of the work of meanings constructionist approaches may yield
(e.g. theorizing, translation, discourse). To interesting insights into institutional
make a difference within the field of institu- processes, studies of meanings may also gain
tional theory, studies of meanings must insights from more sophisticated research
explore the dynamics and micro-processes of designs. Studies of the discursive tend to
theorizing, translation and discourse, and, focus on archival data, using various kinds of
once again, explicitly articulate their texts that are relatively accessible, like
implications for our understanding of the proceedings, professional and general media
social construction of institutions and the coverage and interviews. Fewer studies
institutional order. treated the dynamics of the discursive as a
Another potential avenue for further collective, on-going phenomenon. Thus, we
development of institutional theory through are still lacking an understanding of 'the
the study of meanings is by integrating the enactment of beliefs over time' (Porac,
study of the structural and practical with that Ventresca & Mishina, 2002: 595). We are
of the ideational and meaningful. To date, still missing in-situ and in-vivo studies of
there is a division of labor between the meanings 'in action,' the way meanings are
diffusion and translation/discursive models. enacted (e.g. Zilber, 2007). Studying the on-
Of course, these are two ideal types (in the going and unfolding processes of
Weberian sense) and no individual study fits
any of
 165
institutionalization will allow us to overcome NOTES
a serious bias in the study of institutional
processes - the fact that most studies are 1 However, this was not a criteria in my search, as
there are studies of meaning which use quantitative
retrospective and examine successful institu-
methods (e.g. Edelman, Uggen & Erlanger, 1999; Rao,
tional processes. We do not know what hap- Monin & Durand, 2003), and some qualitative studies
pens in attempts at institutionalization that of institutional processes that do not explore meanings
fail. Specifically, in regards to meaning, what and their dynamics (e.g. Child & Tsai, 2005; Edwards,
happens when one party tries to instill a Almond, Clark, Colling & Ferner, 2005).
certain institutional order or change of mean-
ings, and fails? How do other parties reject
those meanings, and how can we account for
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 6
Power, Institutions and
Organizations
Thomas B. Lawrence

INTRODUCTION relationship between power and institutions

(DiMaggio, 1988), and has been examined
The relationship between power and institu- primarily under the rubric of institutional
tions is an intimate one. Institutions exist to entrepreneurship (see Chapter 7 in this
the extent that they are powerful - the extent volume for an overview of this literature),
to which they affect the behaviors, beliefs and increasingly also in terms of the role of
and opportunities of individuals, groups, social movements in institutional change (see
organizations and societies. Institutions are Chapter 27 in this volume).
enduring patterns of social practice (Hughes, The relationship between power and insti-
1936), but they are more than that: institu- tutions was ignored in early neo-institutional
tions are those patterns of practice for which theory but has been addressed in more recent
'departures from the pattern are counteracted institutional studies of organization. The first
in a regulated fashion, by repetitively acti- wave of neo-institutional research in the late
vated, socially constructed, controls - that is 1970s and 1980s focused primarily on insti-
by some set of rewards and sanctions' tutions as myths and ceremony (Meyer &
(Jepperson, 1991: 145). Thus, power, in the Rowan, 1977), and in so doing tended to
form of repetitively activated controls, is avoid language that would associate institu-
what differentiates institutions from other tions and power. The research in this period
social constructions (Phillips, Lawrence & concentrated significantly on demonstrating
Hardy, 2004). The relationship between that enduring organizational structures and
power and institutions is also bi-directional. practices were often the result of institutional
A significant stream of research has docu- processes, and especially mimetic processes
mented the processes through which actors, whereby organizations adopted practices
individual and collective, affect the based on a need for legitimacy or to avoid
institutional contexts within which they work uncertainty, rather than some 'rational' search
(Lawrence & Suddaby, 2006). This brings for efficiency or effectiveness (DiMaggio &
agency and interests directly into the Powell, 1983; Hinings &
 171
Greenwood, 1988; Tolbert & Zucker, 1983). agency, and institutional resistance - each of
More recent work on institutions has moved which describes an aspect of how institutions
away from the focus on demonstrating the, and actors relate to each other in terms of
usually isomorphic, effects of institutions to power relations. Institutional control involves
exploring the roles of conflict, politics and the effects of institutions on actors' beliefs
agency in the evolution of organizational and behavior; institutional agency describes
fields. This includes work that examines the the work of actors to create, transform and
political effects of competing institutional disrupt institutions; and, institutional resist-
logics (Thomton, 2002; Thomton & Ocasio, ance represents the attempts of actors to
1999), the role of institutional arrangements impose limits on institutional control and
in creating political opportunities and medi- institutional agency. Although each of these
ating the influence of political actors dimensions has been the subject of
(Amenta & Halfmann, 2000; Amenta & significant study, either within the
Zylan, 1991; Bartley & Schneiberg, 2002), institutional literature or, in the case of
the intersection of social movements and institutional resistance, outside that literature,
institutional change (Lounsbury, 2001; there has been little recognition either of the
Lounsbury, Ventresca & Hirsch, 2003), and fundamental role of power in each case, or in
the role of institutional entrepreneurs in their status as elements of an interlocking
creating and transforming institutional system of institutional politics.
conditions (DiMaggio, 1988; Garud, Jain & I develop and explore this framework in
Kumaraswamy, 2002; Maguire, Hardy & four steps. First, I outline the notion of insti-
Lawrence,2004). tutional politics and each of its three dimen-
These recent streams of research point to sions. The second and third sections examine
the importance of considering power and institutional control and institutional agency,
politics when examining institutions and respectively. In each of those sections, I first
institutional change. They demonstrate that discuss relevant institutional research, and
incorporating power is critical to understand- then turn to forms of power that might under-
ing how institutions operate in society and pin each dimension - discipline and domi-
their relationship to organizations. Drawing nation in the case of institutional control, and
principally on case studies of organizational influence and force in the case of institutional
fields or instances of social policy, this work agency. I conclude each of those sections
has provided significant insights with respect with a discussion of resistance. I argue that
to the dynamics of institutional politics the dynamics of institutional resistance
(Bartley & Schneiberg, 2002; Stryker, 1994, depend on the form of power to which it is a
2000) and the institutional strategies associ- reaction, and so embed my discussion of
ated with different kinds of actors or different institutional resistance within the sections on
contexts (Greenwood & Suddaby, 2006; institutional agency and institutional control,
Lawrence, 1999; Maguire et al., 2004). rather than treating it separately. I conclude
Missing in this work, however, is a the paper with an exploration of a set of
systematic, theoretical consideration of the issues that emerge from the framework and
relationship between power and institutions. point to some future directions for research
In this chapter, I begin to address this on power, organizations and institutions.
issue by developing an organizing framework
for understanding the multi-dimensional
relationship between power and institutions, THE POLITICS OF INSTITUTIONS
and exploring some of the implications of
that framework. I argue that the relationship Overview
between power and institutions has three
dimensions - institutional control, Holm's (1995) study of institutional change
institutional in Norwegian fisheries highlights the
potential
172
analytical power of adopting an explicitly This institution effected a set of power rela-
political stance on institutions and institu- tions, directly between the rules and the
tional change, as well as suggesting the fishermen, and indirectly between the fisher-
contours of what a political perspective on men and the fish merchants who now faced a
institutions might look like. Holm's (1995: powerful, organized collective actor, rather
398) analysis explains the 'rise and fall of a than a set of relatively weak, unorganized
specific institutional form, the mandated individual fishermen.
sales organization (MSO), in Norwegian In further describing this example, Holm
fisheries', focusing on the 'interconnection (1995:405) points to a second type of
between the practical and political levels of relationship between power and institutions.
action', and the 'interaction of practices,
interests, and ideas'. This work highlights the A rule making all fishermen sell their catch
power of a number of institutions and a range through the organization, enforced by police and
of political/institutional strategies. I draw on the legal apparatus of the Norwegian state,
would immediately solve the free-rider problem.
it here to illustrate the theoretical framework Mobilizing the state's power behind the fisher-
for connecting power and institutions that I men's institutional project in this way was not a
develop in the rest of the chapter. simple matter, however. It would require, first,
The central institutional battle (Hoffman, that the fishermen's problem could be made so
1999) in Holm's (1995) story is between the important that it warranted a place on the
fishers and the fish merchants of Norway. political agenda; second, that the fishermen's
Holm's (1995: 404) first example of institu- solution would survive through the various
stages of the decision-making process; and third,
tional change in this battle provides a clear that the required number of votes be cast in their
example of the relationship between power favor.
and institutions:
Thus, the system of rules that would bind
The fishermen's common interest lay in the fishermen together and unite them against
restricting the supply of herring, which would
bring better prices. As long as they acted
the fish merchants did not just appear, but
individually, this option was not available. To required significant, complex forms of
solve their dilemma, the fishermen had to set up institutional work (Lawrence & Suddaby,
a rule system that allowed them to market their 2006). In order to institutionalize the rule in
herring collectively ... If we simply assume that law, the fishermen would need to engage in
the fishermen in this situation were rational and discursive strategies intended to frame the
acted individually, we cannot account for the problem as important, as well as building and
fact that [the rule system] was established and
successfully organized the herring trade for two
leveraging relationships with governmental
years without legal protection. To explain this, actors who could shepherd the project
we must look into the pattern of interaction through the bureaucracy. Thus, as much as
among the fishermen. The herring fishery in institutions are connected to power through
question was largely concentrated both in time their impact on the beliefs and behaviors of
and geographically, and the fishermen largely actors, they are also connected to power
came from the same area, had the same social through the strategies of actors that are
background, and operated the same type of
technology.
intended to transform institutional arrange-
ments through political means.
The rule system enacted by the fishermen The contours of power and institutions in
is a classic example of an institution - a set of Holm's (1995) study illustrate the theoretical
practices, for which compliance is enforced framework that guides the exploration of
through social and cultural mechanisms, in power and institutions in the rest of this chap-
this case implicitly through mechanisms of ter. These contours represent what I refer to
surveillance and shaming that are made as the 'institutional politics' of a situation.
possible by dense patterns of interaction and The concept of institutional politics, I argue,
common cultural backgrounds (Douglas,
1973).
 173
has three dimensions which need to be taken collective actors to create, transform, and
into account in order to understand how and disrupt institutions. Research that has high-
why institutional arenas are shaped and lighted this role has made power explicit,
changed in the way they are (see Figure 6.1). highlighting the connection between power
Each of these dimensions describes a role and agency, and the influence of actors on
that power plays in shaping the relationship institutional arrangements (DiMaggio, 1988;
between institutions and actors. I describe the Greenwood et al., 2002; Maguire et al., 2004;
first role of power as 'institutional control', Greenwood & Suddaby, 2006).
and illustrate it with the solid-line arrow The third, and least well-understood role
pointing from 'Institutions' to 'Actors' in of power with respect to institutions is what I
Figure 6.1. Institutional control describes the refer to as 'institutional resistance' - the work
impact of institutions on the behaviors and of actors to impose limits on both
beliefs of individual and organizational institutional agency and institutional control.
actors. In research that has highlighted this Although this role of power was highlighted
role, power is present but usually appears by Oliver (1991), its dynamics have been
only indirectly, observable primarily through relatively neglected in most institutional
the compliance of organizational actors to studies of organization. The interplay of these
institutional rules and norms (DiMaggio & three roles in an organizational field can be
Powell, 1983; Meyer & Rowan, 1977; described as the 'institutional politics' of a
Tolbert & Zucker, 1983). situation.
The second role of power is 'institutional
agency', represented in Figure 6.1 by the
solid-line arrow pointing from Actors to Power and institutional politics
Institutions. Institutional agency is conceived
of here as the work of individual and Before exploring each dimension of institu-
tional politics in the rest of this section,
174
I want to first provide an overview of the that works through routine, ongoing practices
approach I take to power in this chapter, and to advantage particular groups without those
the specific terminology I adopt. The study of groups necessarily establishing or
power has long been a central element of maintaining those practices (Clegg, 1989;
organization studies, with a large and long- Foucault, 1977; Hardy, 1994; Laclau &
standing literature on what leads to Mouffe, 1985). Systemic forms of power are
individuals, groups and organizations gaining associated with a wide range of phenomena,
power relative to others (Bachrach & Lawler, including socialization and accreditation
1980; Brass, 1984; Clegg & Dunkerly, 1984; processes (Covaleski et al., 1998),
Hickson, Hinings, Schneck & Pennings, technological systems (Noble, 1984; Shaiken,
1972; Jermier, Knights & Nord, 1994; 1984), and insurance and tax regimes
Mintzberg, 1983; Pfeffer, 1981; Pfeffer & (Simon, 1998). These forms of power tend to
Salancik, 1978). The variety of approaches work in an ongoing, prosaic fashion that are
and theories has meant that the concept of often not apparent as forms of power
power has been defined in a wide range of (Covaleski et al., 1998; Townley, 1993).
ways. In this chapter, I adopt the view that As illustrated in Figure 6.1, I argue that
power is a property of relationships such that institutional agency is underpinned by
the beliefs or behaviors of an actor are episodic forms of power. Institutional agency
affected by another actor or system. Thus, requires actors to mobilize resources, engage
power is a relational phenomenon, rather than in institutional contests over meanings and
a commodity (Clegg., 1989; Clegg, practices, develop, support or attack forms of
Courpasson & Phillips, 2006; Foucault, discourse and practice - all involving
1977): it is understood here as an effect of discrete, strategic acts of mobilization. In this
social relations, rather than something an chapter, I explore two forms of episodic
actor can 'have', 'hold' or 'keep in reserve'. So, power that I argue are fundamental to
when I talk about power in this chapter, I do institutional agency - influence and force. I
not refer to a capacity for effect, but rather further argue that institutional control is
the aspect of relationships in which there is associated with systemic forms of power. As
an effect.¹ discussed above, Jepperson (1991) argues
This definition of power leads to a distinc- that institutions are associated with automatic
tion between two basic modes in which forms of regulation that enforce compliance,
power operates and which corresponds in without involving episodes of action on the
large part to the dimensions of institutional part of interested actors. Regulations, norms
politics described above. The first mode of and taken-for-granted understandings have
power is 'episodic', which refers to relatively their roots, of course, in self-interested
discrete, strategic acts of mobilization behavior, but once established and associated
initiated by self-interested actors (Clegg, with sets of social, cultural or cognitive
1989). Historically, this mode of power has 'stakes' (Bourdieu, 1993), institutional control
dominated the study of power in operates as if significantly independent of
organizations through the development of any particular agent, or at least independent
two streams of theory (Hardy & Clegg, of the interests of such an agent. In
1996); one focusing on power as domination examining the relationship between
through ownership and control of the means institutional control and systemic forms of
of production (Braverman, 1974; Buroway, power, I concentrate here on two such forms
1979; Clegg, 1975; Clegg & Dunkerly, - discipline and domination.
1980); and one focusing on the role of power
as an alternative to formal authority in
organizations (Hickson et al., 1972; INSTITUTIONAL CONTROL
Mintzberg, 1984; Thompson, 1956). The
second mode of power is 'systemic' - power The concept of institutional control parallels
the classic sociological notion of 'social
 175
control', which 'referred to the capacity of a resource interdependence, whether it is an
society to regulate itself according to desired institutional phenomenon or an ad hoc,
principles and values' (Janowitz, 1975: 82). momentary negotiation (Pfeffer & Salancik,
Working from an institutional perspective, 1978). Thus, institutional and resource
our concern is not with the ability of societies dependence theories constitute overlapping
to regulate themselves, but with the ways in domains of concern rather than competing
which institutions organize, encourage and explanations; both approaches deal with
diminish particular forms of thought and resource-based institutional control, but each
action in organizational fields. Thus, there also includes other non-overlapping areas of
are two important conceptual shifts in interest.
moving from a focus on social control to
institutional control. First, consistent with the
more general shift in discussions of power Studies of institutional control
(Clegg et al., 2006), institutional control is
not understood as a capacity but as a Early neo-institutional writing on organiza-
relational effect of institutions on actors. The tions, beginning with Meyer and Rowan's
second shift is toward an understanding of (1977), and DiMaggio and Powell's (1983)
social systems as fragmented, contested classic pieces, focused significantly on
arenas in which coherent sets of 'desired institutional control, but left out an explicit
principles and values', are less likely than are consideration of power. Meyer and Rowan's
competing and conflicting principles and (1977) discussion of 'formal structure as
values enacted in discourse and action (Dyck myth and ceremony' provided a powerful set
& Schroeder, 2005; Hoffman, 1999). of images for understanding the nature of
In order to clarify the nature and scope of institutional control. Meyer and Rowan's
institutional control, we can contrast it with (1977) central argument was that 'organiza-
resource dependence as a basis for inter- tions are driven to incorporate the practices
organizational control. Drawing on exchange and procedures defined by prevailing
theory (Emerson, 1962), Pfeffer and Salancik rationalized concepts of organizational work
(1978) argue that the critical determinant of and institutionalized in society' (Meyer &
power among organizations is the control of Rowan, 1977: 340). Most critical to how
the flow of resources, such as money, research on institutional control developed is
physical resources, capital, and human their idea that organizational environments
resources. Institutional theories also are constituted by powerful myths that are
recognize the importance of resource flows 'highly institutional, and thus in some meas-
as a control mechanism (Meyer & Rowan, ure beyond the discretion of any individual
1977; W. R. Scott, 2001), but resource participant or organization' (Meyer & Rowan,
dependence theory is not a theory of 1977: 344). DiMaggio and Powell's (1983)
institutional control: theories of institutional examination of institutional isomorphism and
control focus on those aspects of a field collective rationality extended the focus on
which regulate behavior on an ongoing basis, compliance with powerful institutions, which
and set 'the rules of the game' (Holm, 1995; led both to compliance and the homogeniza-
Lawrence, 1999), including coercive and tion of organizational fields. DiMaggio and
resource-based forms of control, but also Powell's (1983) three sources of institutional
including many other forms of control, such control - mimetic, normative, coercive - have
as social and professional norms, and taken- become a taken-for-granted feature of institu-
for-granted assumptions about the world. tional theories of organization. Each of these
Resource dependence arguments also go describes a class of mechanisms which regu-
beyond institutional concerns, dealing with late the behavior of actors in a field through
any actor-to-actor relationship shaped by social and cultural systems rather than
mutual
176
through enforcement by a self-interested Oakes et al. (1998) argue that the most effec-
actor. tive forms of power with respect to maintain-
The first stream of empirical research that ing institutional control are those which are
emerged out of these theoretical discussions associated with little or no visible conflict
focused on the diffusion of innovation within (Covaleski et al., 1998; Lawrence et al.,
fields, and also largely ignored the role of 2001; Townley, 1997).
power (Baron, Dobbin & Jennings, 1986;
Leblebici, Salancik, Copay & King, 1991;
Mezias & Scarselletta, 1994; Slack & Power and institutional control
Hinings, 1994; Strang & Soule, 1998; Tolbert
& Zucker, 1983; Westphal, Gulati & Shortell, Looking across the theoretical and empirical
1997). This work demonstrated that the writing on institutional control, it is clear that
adoption of innovations depends significantly much of this work has left out any explicit
on the influence of social and cultural consideration of power. There is, however, an
systems which reduce uncertainty and image of power that is consistent with,
provide legitimacy and other resources to though often implicit in, this work. Both the
adopting organizations. The classic institu- earlier institutional discussions of control
tional argument regarding the diffusion of which large1y ignored power and the more
innovation has been that, as new practices are recent work that brings it in directly are con-
adopted for technical reasons by leading sistent with a conception of power as vested
organizations, the practices gain legitimacy in social and cultural systems, rather than in
which spurs adoption by other organizations, individual actors. This approach to power is
which avoid cognitive uncertainty and consistent with recent work in the sociology
normative sanction by mimicking the early of power that describes it as 'systemic' power
adopters (Tolbert & Zucker, 1983). that works through routine, ongoing practices
A second stream of work has brought to advantage particular groups without those
power more directly into institutional discus- groups necessarily establishing or
sions, examining the relationship between maintaining those practices (Clegg, 1989;
institutions and control in organizations and Foucault, 1977; Laclau & Mouffe, 1985).
inter-organizational networks. This work These forms of power tend to work in an
connects institutional research to the work of ongoing, prosaic fashion that are often not
Foucault and Bourdieu, through its focus on apparent as forms of power (Covaleski et al.,
cultural and social systems that effect institu- 1998; Townley, 1993). Understanding power
tional control within and across organizations as potentially systemic is not intended to
(Covaleski et al., 1998; Oakes, Townley & attribute 'will' or 'agency' to systems (social
Cooper, 1998; Lawrence et al., 2001; or technological), but rather to break any
Townley, 1997; Townley, 2002). Oakes et al. simple association between agency and
(1998), for instance, draw on the work of power (Clegg, 1989; Foucault, 1977). From
Bourdieu to examine business planning as a an institutional perspective, it seems impor-
mechanism of institutional control in a tant to embrace a definition of power that
government department. Central to their recognizes the power of the courts, profes-
findings is the idea that the effectiveness of sional associations, language, and social
institutional control comes from 'both redi- customs, as well as the actors that occupy
recting work and changing the identity of roles within these structures and who enact
producers'; in their case, business plans are these routines. Indeed, a cornerstone of an
described as a 'pedagogic practice that can institutional perspective is the idea that actors
fundamentally change organizational identi- are subject to forms of power that are
ties' (Oakes et al., 1998: 257). Consistent disconnected from the interests and actions of
with other work in this stream of research, specific others (Meyer & Rowan, 1977).
 177
When considering systemic forms of he was particularly aware of the need to
power, it is useful to differentiate between embed power in institutions which could
two major forms, one of which has received control the behavior of employees (and
attention in the institutional literature, and others) without direct episodes of managerial
one which has largely been ignored. The con- agency. The Ford Motor Company's use of
cept of power that is most closely connected discipline as a means of institutional control
to studies of institutional control is Foucault's stemmed from the problems it was facing
(1977) notion of discipline; although not with respect to its employees that were cre-
explicitly evoked in most institutional ated in part by the assembly line technology.
research, the idea of power exercised through In 1914, the company's annual turnover rate
mundane practices that revolve significantly was 416 percent and daily absenteeism ran
around the constitution of identity is core to between 10 percent and 20 percent. In
much, and especially recent, writing on response, Ford established another corporate
institutional control (Oakes et al., 1998; institution, when it launched the 'Five Dollar
Thomton & Ocasio, 1999). Discipline as a Day' - a profit-sharing plan that would apply
form of power involves an ongoing, systemic to 90 percent of its workforce, a plan so out
engagement with the target of power, and of the ordinary that the Wall Street Journal
relies on the agency of that target to have an accused Ford of promoting socialism. A cen-
effect (Clegg, 1989; Covaleski et al., 1998; tral aspect of the program was the set of con-
Jacques, 1995; Knights & Wilmott, 1989). ditions that dictated who was eligible to
Discipline works through the micro- benefit from it. Ford would only provide the
techniques, practices and procedures of profit sharing to those it deemed to be living
everyday life (Sewell, 1998; Sewell & a moral life, including 'every male employee
Wilkinson, 1992; Townley, 1993), and over 22 years of age who leads a clean, sober
consequently is often overlooked as a form of and industrious life, and who can prove he
power in organizations. An aspect of disci- has thrifty habits', and '[a]ll women employed
pline that is critical for its role as a basis for by the company who are deserving and who
institutional control is its capacity to provide have some relatives solely dependent upon
a basis for agency through the formation of them for support'. Alongside these rules, Ford
identity (Knights & Wilmott, 1989). established a Sociological Department, which
Discipline is concerned with shaping the investigated the home lives of Ford workers
actual formation of the subject, such that: in order to ascertain eligibility, and actively
'subjects come to recognize themselves as intervened with training and advice intended
discrete and autonomous individuals whose to lift standards of morality and living
sense of a clear identity is sustained through conditions. The Sociological Department
participation in social practices which are a focused particularly on Ford's newly
condition and consequence of the exerci se of immigrated workers, who, as Henry Ford
power' (Knights & Wilmott, 1989: 538). expressed, 'must be taught American ways,
Thus, disciplinary practices involve a form of the English language, and the right way to
power that can be understood as positive in live'. To that end, compulsory courses at the
its provision of identity and motivation to Ford English School included, 'industry and
organizational actors (Foucault, 1984). efficiency', 'thrift and economy', 'domestic
A wonderful example of discipline as a relations', and 'community relations'.
basis for institutional control comes from its Although disciplinary power is an impor-
use in the Ford Motor Company in the early tant and pervasive mechanism underpinning
20th century, as recounted in Stephen Meyer institutions, other important forms of
III's (1981), The Five Dollar Day. Although systemic power have been largely overlooked
Henry Ford ran the Ford Motor Company and in institutional studies of organization.
was responsible for many of its effects,
178
In particular, institutional research has tended other life chances, and the definition of
to ignore systemic power that works by demographic categories (Simon, 1988).
altering the range of options available to While these familiar practices seem relatively
actors - a form of power I describe as domi- banal and benign, they represent a significant
nation² (Lawrence et al., 2001). This form of shift in the production and structuring of
power can be embedded in a wide variety of power relations in societies:
social systems including material technolo-
gies (Noble, 1984; Shaiken, 1984), informa- Through the lens of representations thrown off
tion systems, and actuarial practices (Simon, by these practices, individuals, once understood
1988). In the context of institutional control, as moral or rational actors, are increasingly
understood as locations in actuarial tables of
systems of domination often take the form of variations. This shift from moral agent to
physical and social technologies that provide actuarial subject marks a change in the way
the context for action. The physical layouts power is exercised on individuals by the state
of office building, factories and universities, and other large organizations. Where power
for example, institutionalize particular pat- once sought to manipulate the choice of rational
terns of interaction among workers, and are actors, it now seeks to predict behavior and
often overlooked as political mechanisms situate subjects according to the risks they pose.
(Simon, 1988: 772)
(Brawn, Lawrence & Robinson, 2005).
Winner's (1986) examination of the politics
Thus, actuarial practices involve a form of
of artifacts examines numerous instances of
restrictive institutional control in which the
this, with the most famous being the many
lives of individuals are transformed, not
overpasses on Long Island, New York, which
through their own actions, but through their
are so low that they do not permit 12-foot
placement in a social order abstracted from
high public buses to use the parkways over
their lived experiences.
which those overpasses go. Winner (1986:
Although discipline and domination both
23) argues that this effect is not happen-
work though routine practices and systems,
stance, but rather that it was an intentional
there is a critical difference between the two.
control strategy of Robert Moses, the chief
Whereas disciplinary practices involve
architect of New York public works from the
'knowing' the individual through regimes of
1920s to the 1970s. Winner argues that
surveillance and training (Foucault, 1977;
Moses specified the overpasses in this way
Townley, 1993), systems of domination work
because: 'Poor people and blacks, who
by 'knowing' the population. Disciplinary
normally used public transit were kept off the
mechanisms of surveillance, normalization
roads because the twelve-foot tall buses
and examination all work to construct an
could not handle the overpasses' and were
image of the 'normal' subject in any defined
consequently limited in their access to 'Jones
social space, move actors toward uniformity
Beach, Moses' widely acclaimed public park'
and punish deviants. In contrast, systems of
(Winner, 1986: 23).
domination 'map out the distribution and
A more subtle form of institutional control
arrange strategies to maximize efficiency of
through domination is that which is embed-
the population as it stands' (Simon, 1988).
ded in systems that restrict the effects of
While the disciplinary practices replaced
action, rather than restrict action itself, as
techniques of coercion and intimidation that
illustrated by a wide range of actuarial
were less precise and engendered overt
practices. Actuarial practices involve the use
conflict (Clegg, 1989; Foucault, 1977),
of statistics to represent the characteristics of
systems of domination draw on our knowl-
a population, including the use of
edge of populations to extend this process
standardized tests of intelligence, aptitude or
even further, constructing even more precise
personality, the construction of probability
systems of institutional control which
tables reflecting life expectancies and
engender even less overt conflict.
 179
Resisting institutional control remainder of this section, I explore this
middle ground first in relation to the potential
Studies of resistance in the social sciences are for institutional resistance to discipline and
not rare. They tend, however, to focus on then to domination.
either resistance to broad, societal norms and
values (Kirsch, 2000), or on resistance to Resisting discipline
managerial control in organizations (Jermier,
Knights & Nord, 1994). Much less studied is Just as different forms of institutional control
the resistance of individuals and organiza- are associated with distinct dynamics and
tions to field-level rules, norms, and beliefs. effects, they are also associated with different
In this chapter, I adopt Barbalet's (1985: 531) forms of resistance. When looking at
position, that 'resistance imposes limits on resistance to discipline as a form of institu-
power. Indeed, it is through its limitations on tional control, space for potential resistance
power that resistance contributes to the strategies is opened up by two key require-
outcome of power relations'. Thus, institu- ments of discipline: enclosure and surveil-
tional resistance is understood as the work of lance. A key aspect of disciplinary systems is
actors to impose limits on institutional that they are 'inward' looking: discipline
control and institutional agency. works through routine practices and struc-
The first prominent recognition of institu- tures that shape the choices of actors by
tional resistance is in Oliver's (1991) discus- establishing boundaries of appropriate and
sion of the wide range of potential responses inappropriate behavior, but only for actors
to institutional pressures in which actors who understand themselves as members of
might engage: 'organizational responses [to the community, society or field within which
institutional pressures] will vary from con- those norms apply (DiMaggio & Powell,
forming to resistant, from impotent to influ- 1983; Douglas, 1986). In the Ford example,
ential, and from habitual to opportunistic' the Sociological Department developed pow-
(Oliver, 1991: 151). Oliver argues that actors erful systems and routines that shaped the
potentially respond to institutional pressures identities and actions of Ford employees, but
with five basic strategies that range from the for the most part it only affected Ford
most passive to the most active: 'acquiesce', employees (and perhaps their families), and
'compromise', 'avoid', 'defy', and 'manipulate'. in fact only those who were both eligible for
All but the end points of this set involve and desirous of the Five Dollar Day. So, to
attempting to impose limits on institutional the extent that Ford employees were profes-
control and thus constitute forms of institu- sionally mobile (based on skills or family
tional resistance. Despite Oliver's (1991) connections), they would have been able to
clear and influential statement regarding the avoid or deny the control of the Five Dollar
importance of institutional resistance, it has Day and its associated disciplining systems.
remained the most neglected aspect of A second requirement of discipline is con-
institutional politics. The 'acquiesce' strategy tinuous surveillance or members' perceptions
has been the dominant response described in of continuous surveillance (Barker, 1993;
studies of institutional control (e.g., Hinings Sewell, 1998). The range of forms and
& Greenwood, 1988; Tolbert & Zucker, intensities of surveillance associated with
1983); and the 'manipulate' strategy has been institutions is wide, but consistent across the
the focus of research on institutional agency range is the potential for noncompliance to be
(e.g. DiMaggio, 1988; Garud et al., 2002; registered by systems which will automat-
Maguire et al., 2004). There is, however, a ically punish, shame, embarrass, or penalize.
relative dearth of research on the 'middle In describing the role of surveillance in the
ground' strategies of 'compromise', 'avoid' historical development of discipline, Foucault
and 'defy'. In the (1977: 175) argues that, as large factories
developed, it became 'a decisive
180
economic operator both as an internal part of regulations, it reverted to old routines once it
the production machinery and as a specific had passed the regulatory inspection associ-
mechanism in the disciplinary power'. The ated with the new laws. The prospector bank
importance of surveillance in effecting also initially resisted the new regulation,
institutional control has only become more again minimally complying with the letter of
important and more effective since the indus- the law, and largely carrying on with busi-
trial revolution described by Foucault. As ness as usual. The motivation for this resist-
Sewell (1988: 401) argues, ance, however, differed significantly from
that of the defender bank: in the case of the
New technology has enabled the erection of a prospector bank, it 'seemed to resist change
surveillance superstructure throughout society because top management believed that the
that unobtrusively influences almost all aspects bank was already fulfilling institutional
of daily life, especially work life. ... The impact
of this surveillance, especially its ability to
expectations consistent with its "first to lead
instill a profound sense of self-discipline and the way" identity and thus did not think
self-control in many social settings, is so subtle change was needed' (Fox-Wolfgramm et al.,
that it often goes unnoticed. 1998: 117). The prospector bank's approach
to the legislation changed significantly, how-
Sewell's argument notwithstanding, sur- ever, when it failed a formal test of its com-
veillance cannot be taken for granted in sys- pliance: 'management interpreted the
tems of institutional control. It must be examination performance as an indication of
effected in some manner, and to the degree identity and image incongruence ... [and]
that actors can avoid or ignore it, institutional responded by internalizing the changes
control will be undermined. An example of needed to pass the test and incorporating
this dynamic and the potential for institu- these into [the bank's] ideology, strategy and
tional resistance it raises comes from Fox- other organizational and issue aspects of its
Wolfgramm, Boal and Hunt's (1998) "community leadership" so as to be
examination of the reaction of two West isomorphic with institutional forces' (Fox-
Texas banks with distinct strategic orienta- Wolfgramm et al., 1998: 120).
tions (one defender, one prospector) to new The resistance of the banks described by
regulation, which demanded the banks not Fox- Wolfgramm et al. (1998) illustrates the
'discriminate against any so-called red-lined limits of surveillance in many institutional
areas considered high risk in terms of loan systems, and especially those which are
repayment' (Fox-Wolfgramm et al., 1998: highly distributed and involve large numbers
91). Both banks resisted the institutional of actors. In this case, managers in both
pressure associated with the new law, but in banks were able to simply avoid making any
different ways and seemingly with distinct substantive changes in their operations for
motivations. Fox-Wolfgramm et al. (1998) significant time periods with no significant
argue that the defender bank initially engaged repercussions, largely because the processes
in 'identity resistance' - an attempt to ignore through which compliance was monitored
the new regulation, operating on a 'business occurred only periodically and with
as usual' basis, because of a lack of substantial prior warning.
congruence between the regulation and the
bank's current and envisioned identity and Resisting domination
image. The bank resisted by adopting a strat-
egy of 'minimal technical compliance', so that Resistance to domination has distinctly
'the bank complied with the letter of the law', different dynamics than does resistance to
spending 'minimal time and effort' (Fox- discipline. These differences stem from the
Wolfgramm et al., 1998: 104). Although the differential effects of discipline and domina-
bank then moved some way toward accepting tion on actors, and particularly groups of
and implementing the new actors. When systems of domination are
 181
effective, the potential for actors to resist, at theft from the organization, insubordination,
least directly, may be significantly reduced in intentional mistakes, sabotaging machinery or
comparison to disciplinary systems. Taking equipment, whereby the employee seeks to
cause harm to the organization and/or its
actuarial practices as an example illustrates property.
this dynamic. The most central technique in
the development of actuarial practices is the Institutional resistance to systems of dom-
classification of the individual within a ination, thus, present a paradox - although the
population based on some set of relevant ability of actors to compromise, avoid, and
variables. The relevance of these variables is defy institutional control based on dom-
dependent, however, on the task at hand, ination may be less than it is under systems
rather than on any phenomenological signifi- of discipline, the resistance that actors engage
cance for the individuals so classified. The in is likely to be more severe, and potentially
same is true for physical and technological more destructive. It may be difficult to avoid
infrastructures, which effect power relations the effects of overpass heights, but it is
based on 'objective' characteristics of popu- possible to vandalize overpasses and buses.
lations, which may or may not connect to This dynamic is an unexplored one in
their lived experiences. Simon (1988: 744) institutional studies of organization, but
argues that this aspect of actuarial practices could be a major issue when trying to
has significant consequences for our politics understand the effects and side-effects of
and our identities: 'By placing people in forms of institutional control that might seem
groups that have no experienced meaning for benign to the designers and implementers of
their members, and therefore lack the capac- those systems.
ity to realize common goals or purposes, ...
[people] may be stripped of a certain quality
of belongingness to others that has long INSTITUTIONAL AGENCY
played a role in our culture'. These classifi-
cations provide little basis for political action, The second role of power in institutional
and even potentially work to usurp the theory is 'institutional agency' - the work of
political foundations of existing groups. actors to create, transform, or disrupt
Lawrence and Robinson (In press) argue that institutions. Power and agency have been tied
an important effect of this dynamic is the tightly to each other in organization theory,
potential to provoke more significant, and more generally in the social sciences
destructive resistance, because in contrast to (Giddens, 1976, 1984). The capacity of
discipline, it can 'entail a greater loss of individual and collective actors to attempt to
autonomy, pose more serious threats to orga- realize their own interests was centrally
nizational members' identities, and may be important to the 'old institutionalism' (see
perceived as less procedurally just.' Because Washington, Boal and Davis, Chapter 30 in
direct, assertive resistance is problematic in this volume), and has re-emerged as an
reaction to systems of domination, Lawrence important focus for institutional research,
and Robinson (2007) argue that domination particularly with respect to institutional
will be associated with relatively severe, entrepreneurship and social movements.
'deviant' forms of resistance directed at Significant findings in this literature include
organizations or society as a whole, what the importance of relational and discursive
Robinson and Bennett (1995) refer to as strategies in effecting institutional change
'property deviance': (Garud et al., 2002; Lawrence & Suddaby,
2006; Maguire et al., 2004; Suddaby &
The distinctive quality of property deviance is
that it involves what might be described as very
Greenwood, 2006), the impact of field devel-
harmful behavior directed at the organization as opment (Greenwood & Suddaby, 2006;
a whole. This type of deviance includes such Lawrence & Phillips, 2004; Maguire et al.,
behaviors as
182
2004; Munir & Phillips, 2005), the role of Research on social movements has many
actors' identities in effecting their institu- similarities to the work on institutional entre-
tional strategies (Fligstein, 1997; Greenwood preneurship, particularly in their shared focus
et al., 2002; Hensmans, 2003), and the on the role of agents in effecting changes in
processes through which practices move institutional arrangements, and a tendency to
across space and time (Boxenbaum & examine this role through the deep analysis
Battilana, 2005; Czarniawska & Joerges, of individual cases of institutional agency.
1996). Research on both institutional What separates the two literatures, however,
entrepreneurship and social movements is is their understandings of the form and the
reviewed in other chapters in this volume roots of that agency (Schneiberg &
(see Chapters 7 and and 27, respectively), Lounsbury, Chapter 27 this volume).
and so I briefly summarize the broad Whereas institutional agency focuses
contours of this work and then focus on the significantly on the traits, strategies and
role of power in institutional agency. positions of individual actors (Battilana,
2006; Maguire et al., 2004), social
movements research highlights the role of
Studies of institutional agency – collective action motivated by structural
institutional entrepreneurship inequalities (Clemens, 1993; McAdam,
and social movements 1988). The strategies that each literature
highlights differ in ways that reflect their
The concept of institutional entrepreneurship emphasis on individual versus collective
(DiMaggio, 1988; Eisenstadt, 1980) action. While institutional entrepreneurship
describes the process through which new research highlights strategies focused specif-
institutions are created when 'organized ically on institutional rules (Garud et al.,
actors with sufficient resources (institutional 2001; Greenwood & Suddaby, 2006;
entrepreneurs) see in them an opportunity to Lawrence, 1999; Maguire et al., 2004),
realize interests that they value high1y' research on social movements focuses on
(DiMaggio, 1988: 14). Power in this stream strategies aimed at fostering and leveraging
of research is tied to the ability of actors to collective action, such as framing (Snow &
create new institutions, through the Benford, 1988; Snow, Rochford, Worden &
mobilization of resources. This work has Benford, 1986) and resource mobilization
examined the processes and practices (Jenkins, 1983; McCarthy & Zald, 1977).
associated with the creation of practices What is common across studies of institu-
(Boxenbaum, 2006; Lawrence, 1999; Munir tional entrepreneurship and social move-
& Phillips, 2005), technologies (Aldrich & ments is a concern for how interested actors
Fiol, 1994; Hargadon & Douglas, 2001; work to affect the institutions and fields that
Leblebici, Salancik, Copay & King, 1991), provide the institutional context within which
and forms of organizing (Greenwood, they operate. More clearly than in the case of
Suddaby & Hinings, 2002; Suddaby & institutional control, the study of institutional
Greenwood, 2005) that go against the institu- agency is the study of a set of political
tional norms or rules within which they are processes and practices in which power in
embedded. Research on institutional many forms is necessarily and obviously
entrepreneurship has shown that actors effect implicated.
institutional agency in a broad set of ways,
including technical and market leadership,
lobbying for regulatory change and discur- Power and institutional agency
sive action (Fligstein, 1997; Garud, Jain &
Kumaraswamy, 2002; Hoffman, 1999; Most research and writing on institutional
Maguire et al., 2004). agency is explicitly political in its accounts
 183
of how actors create, transform and disrupt interests', 'trying five things to get one',
institutions (Beckert, 1999; DiMaggio, 1988; 'convincing people one holds more cards than
Hensmans, 2003). The dominant image of one does', 'making others think they are in
power in this work is as an 'episodic' phe- control', and 'networking to outliers'.
nomenon, constituted in relatively discrete, Fligstein (1997: 403) goes on to argue that
strategic acts of mobilization initiated by the use of these influence tactics will depend
self-interested actors (Clegg, 1989). Research significantly on how 'organized' the fields are
on institutional entrepreneurship and social in which they operate. He argues that:
movements both describe actors mobilizing
resources, engaging in institutional contests When fields are less organized, their tactics are
over meanings and practices, developing, to bring together disparate groups in a large
supporting or attacking forms of discourse number of ways. As a frame begins to cohere to
organize the field, they act to propagate that
and practice - all practices involving discrete, frame and the social order it implies. Once in
strategic acts of mobilization. Similar to place, skilled strategic actors defend a status quo
institutional control, however, research on by deftly manipulating accepted meanings and
institutional agency has maintained a making sure that the 'goods' are being delivered
relatively narrow focus with respect to forms to those who dominate the organizational field.
of power, in this case focusing primarily on Under situations of crisis, actors committed to
influence. the status quo will continue to try to use
dominant understandings to structure action as
Influence is typically described as the abil- long as they can. Skilled strategic actors in
ity of one actor to persuade another actor to challenger groups will offer new cultural frames
do something they would not otherwise do and rules to reorganize the field.
(Clegg, 1989; French & Raven, 1959; Lukes,
1974). It potentially involves a wide range of Studies of institutional entrepreneurship
tactics, including moral suasion, negotiation, (e.g., Garud et al., 2002; Maguire et al.,
rational persuasion, ingratiation, and 2004) have demonstrated the importance of
exchange (Clegg, 1989; Lawrence et al., influence tactics similar to, or a subset those
2001; Maslyn, Farmer & Fedor, 1996). The delineated by Fligstein (1997). Moreover, the
literatures on institutional entrepreneurship issue of field development has become an
and social movements provide numerous important theme in examining different forms
examples of influence as a basis for of institutional agency and the question of
institutional agency. Fligstein's (1997: 398) what kinds of actors will engage in such
essay on the importance of social skills in action (Greenwood & Suddaby, 2006;
institutional entrepreneurship, for example, Lawrence & Phillips, 2004; Maguire et al.,
positions influence as central to institutional 2004).
entrepreneurship, which, as a form of 'skilled The study of institutional agency has
social action', 'revolves around finding and maintained a relatively narrow focus in terms
maintaining a collective identity of a set of of the forms of power it examines,
social groups and the effort to shape and particularly overlooking the use of force,
meet the interests of those groups'. Fligstein which works by directly overcoming another
goes on to articulate a list of tactics available actor's intentions or behavior (French &
to 'strategic actors', most of which are Raven, 1959; Lukes, 1974). The legitimate
examples of either influence or establishing use of physical force is generally restricted
conditions under which influence is possible: by communities and societies to specific
'agenda setting', 'framing action', 'wheeling agencies, such as prisons, psychiatric
and annealing', 'brokering', 'asking for more, hospitals, the military and police forces.
settling for less', 'maintaining goallessness Other organizations, however, also use what
and selflessness' 'maintaining ambiguity', might be described as 'bureaucratic force' on
'aggregating a regular basis: corporations fire employees;
bars forcibly remove disruptive patrons;
schools confiscate contraband substances;
universities expel poorly
184
performing students; and editors reject the on Seattle. The protestors were effectively
submissions of aspiring authors. organized into two main factions. The first,
The use of force, and especially of physi- and largest group was the 'paraders', who
cal force, is perhaps the most under-exam- were organized primarily by the AFL-CIO,
ined aspect of institutional politics in the and whose intention was to mount a large
organizational literature. Although explicit march to draw attention to their concerns.
physical force may be relatively rare in many The second group, the Direct Action Network
of the institutional settings we study, this (DAN), was an alliance of groups including
may be more of a reflection of the con- the Rainforest Action Network, Art &
strained empirical focus we have adopted in Revolution, and the Ruckus Society, whose
organization studies than the relative impor- aim was to 'shut down the WTO'. The main
tance of force in creating, maintaining and strategy of the DAN was to take over key
disrupting institutions. If we consider intersections, making it impossible for
institutional change from an historical delegates to reach the convention centre
perspective, it is clear that force has been a where the WTO talks were to be held. Early
critically important means by which states in the morning on the first day of the talks,
and state institutions have been created,
maintained and disrupted (Mann, 1993), and groups of protesters lock[ed] themselves
not only in the past (Mann, 2003). In a broad together with bicycle locks or tubes, covering
array of institutional arenas, including their linked arms to prevent police from
removing them individually. By 8 a.m., most of
healthcare, education, and more obviously the key intersections had been seized by the
policing and the prison system, the use of protesters, now reinforced by their second wave.
force by the state or state-sanctioned agencies
maintains many contemporary institutions. The next three days saw a range of force
The use of force as a basis for institutional and influence tactics used by protestors and
agency is associated both with attempts to law enforcement agencies. By 10 a.m. on the
disrupt institutionalized practices and with first morning, police were using tear gas, and
attempts to maintain institutions. Disrupting then later rubber and wooden bullets, pepper
institutions through force is most vividly spray, and mass arrests to try to disperse the
associated with protests in which protestors protestors. For their part, protestors relied
attempt to shut down some kind of institu- primarily on non-violent, passive forms of
tionalized activity by making it impossible resistance, using their numbers to overwhelm
for it to proceed. Perhaps the most famous police. From the protestors' perspective,
recent example of the use of force to both however, their key use of force was in terms
disrupt and maintain institutional arrange- of their effect not on police agencies, but on
ments was in the 'Battle of Seattle' that the WTO and its delegates: at 1pm on the
occurred around the 1999 World Trade first day, the WTO cancelled its opening
Organization (WTO) meetings in Seattle, ceremonies, and ultimately cancelled the
Washington.³ On November 30, 1999, Seattle talks completely. The strategy of the DAN
was meant to host the WTO talks that would protestors in this respect was to make it
involve representatives from the Western impossible for the WTO to proceed, in par-
industrialized countries, including a visit ticular by controlling Seattle streets and thus
from then President Clinton, the Asian forcing WTO delegates to stay at their hotels
industrialized countries, and, for the first rather than proceed to the convention centre.
time, developing countries in the South. In
response to these meetings, tens of thousands
of protestors, representing a diverse set of Resisting institutional agency
interests including labour, the environment,
the arts, and anti-poverty groups, converged Resistance to institutional agency involves
reaching compromises with institutional
 185
agents, avoiding their gaze or their ability to In the remainder of this section, I explore
punish non-compliance, or defying their the issue of resistance to institutional agency,
aims. Although its basic nature is similar to focusing first on institutional resistance to
resistance to institutional control, the flux and influence and then on institutional resistance
uncertainty that is tied to institutional agency to force. As with institutional resistance in
opens up more room for resistance, and more response to institutional control, the different
potential for creativity in effecting forms of forms of power that might underpin
resistance. Dirsmith, Heian and Covaleski institutional agency engender different possi-
(1997) provide a detailed description of bilities for resistance, and different resistance
resistance to institutional agency in their strategies.
study of forms of control in the Big Six
accounting firms. This study focused on the
attempt by large, professional accounting
firms to shift internal power relations by Resisting influence
importing 'a legitimated form of formal orga-
nizational practice, Management by objec- The potential for resistance to institutional
tives (MBO) ... in the hope of legitimating agency based on influence stems significantly
the actual application of control to the firm's from the uncertainty and complexity of
professional cadre' (Dirsmith et al., 1997: attempts to create or transform institutional
20). Dirsmith et al. (1997: 20) argue that the arrangements. Attempts to create, maintain or
use of MBO as a tool is important because it disrupt institutions through influence are
represents a 'familiar, abstract, objective, fraught with unintended consequences. These
proceduralized, client-sanctioned form of stem from the often indirect nature of
control' and thus challenges traditional, institutional agency, as actors affect
professional autonomy based on a discourse institutions by, for instance, working through
of 'business focus' and 'meritocracy'. third parties such as the state or professional
Institutional resistance, in this case, emerged bodies (Orssatto, den Hond & Clegg, 2002;
from the professionals in the firms who Russo, 2001), or developing (or
recognized MBO as a political tool, rather delegitimating) vocabularies of action and
than a neutral technology. Interestingly, belief which are only effective to the extent
resistance did not involve direct refusal, but that they are picked up and adopted by others
rather an indirect subversion of the aims and (Angus, 1993; Lawrence & Suddaby, 2006).
effects of MBO through the use of mentor Unintended consequences also result from
relationships: the intersection of multiple organizational
fields and sets of institutional arrangements
mentors recognized MBO for the political as (Phillips et al., 2004).
opposed to instrumental practice it was, and Dirsmith et al.'s (1997) study of resistance
transformed it into a means for advocating for to the implementation of MBO in accounting
their protégés, by enabling them to game the firms illustrates these dynamics. First, the
formal system, as in partnership proposal MBO system that senior management
orchestration to display the 'right numbers'.
attempted to implement in the accounting
(Dirsmith et al., 1997: 21)
firms provides a good example of a complex,
This study highlights the need for both multi-party system in which the sponsors of
resources and skills in effecting institutional the innovation are significantly dependent on
resistance. The mentors who helped their a range of other parties if it is to be success-
protégés game the MBO system had access to fully implemented and institutionalized. Such
the information necessary to know when and situations invite the possibility of resistance
how to manipulate the MBO system, and from others who perceive these new systems
held senior enough positions in their firms as not serving their interests. In this case,
that their subversions would likely go resistance came significantly from
unpunished.
186
professionals in the firm who saw the intro- These attempts, however, can lead to resist-
duction of MBO as an opportunity to advance ance on the part of targeted actors, and result
their own interests and resist the aims of the in framing contests in which each party
system sponsors. The resistance evidenced in attempts to convince the state agencies of the
this case also hinged on the interaction of greater legitimacy of their own claims. A
MBO with an existing institution - mentoring range of institutional resistance strategies is
- in the firms. The institutionalized positions also connected to the webs of organizational
and practices associated with mentoring fields and institutions within which
provided both the motivation and the means institutional agency occurs. These webs
for actors to compromise the newly provide space for targeted actors to reposition
implemented MBO system: the mentoring themselves when institutional pressures
process provided a set of interests to actors change.
that were in conflict with the MBO system,
and became the tool through which Resisting force
professionals gamed the new system. I
describe this as an example of institutional While institutional agency based on influence
resistance, rather than institutional agency, engenders resistance because of its attendant
because it seems that the accountants who uncertainty and complexity, I argue that the
were gaming the system were not so much use of force as a basis for institutional agency
attempting to either create or disrupt an has its own distinctive effects on institutional
organizational institution, as compromise and resistance. The nature of institutional
avoid its effects on themselves and those who resistance to force as a basis for institutional
they supported through mentorship programs. agency stems from the reaction that force can
More generally, the reliance of institu- tend to engender in its targets. The use of
tional agency on third parties and its situation force treats the targets of power as 'objects' in
within overlapping fields and institutions the sense that the exercise of power is not
provides the foundation for a range of strate- dependent on the agency or potential agency
gies for institutional resistance. The problems of targets (Lawrence et al., 2001; J. Scott,
of surveillance associated with reliance on 2001). Unlike influence, the use of force does
third parties opens up space for avoidance by not shape the will of the target, but rather
institutional actors. Influence depends on the achieves its ends despite that will. Such
ability of one actor to observe the degree of forms of power, I argue, tend to lead to
compliance of another (Pfeffer, 1981; Pfeffer greater resistance on the part of targets,
& Salancik, 1978), and so working through because they 'entail a greater loss of
the state or other third-party to effect autonomy, pose more serious threats to
institutional change or maintain a set of [actors'] identities, and may be perceived as
institutional arrangements may necessitate less procedurally just' (Lawrence &
developing some complex scheme for sur- Robinson, 2007). Moreover, unlike systems
veillance. The involvement of third parties of domination, which also treat targets as
also invites the possibility of co-optation objects, the episodic nature of force means
where targeted actors are able to influence that it is easily associated with specific
the actions of the third-parties and thus agents, at whom the resistance will likely be
undermine institutional agency. Social move- directed. This is because targets of force tend
ment organizations, for instance, often to aim their resistance at the perceived source
attempt to transform institutional arrange- of the harms that they perceive themselves as
ments by influencing the state, which might suffering (Berkowitz, 1993; O' Leary-Kelly,
in turn enact new legislation or enforce exist- Griffin & Glew, 1996). The resistance that
ing laws and rules (Benford & Snow, 2000). the use of force tends to engender may limit
its potential as an effective tool for
institutional agency, both
 187
because targeted actors will attempt to that has fallen into relative disregard.
compromise, avoid or defy the aims associ- Although the controlling effects of institu-
ated with its use, and, even when direct tions was the dominant concern in the early
resistance is difficult, they will tend to years of neo-institutional writing (DiMaggio
quickly revert to previous behaviors & Powell, 1983; Meyer & Rowan, 1977),
(Lawrence et al., 2001). attention to control has shifted significantly
toward a focus on the limits of control that
emerge from the existence of competing
STUDYING POWER AND logics and overlapping organizational fields
INSTITUTIONS (Rao, Monin & Durand, 2003; Thomton &
Ocasio, 1999). This shift suggests to me a
The framework I have described here sug- certain complacency with respect to institu-
gests that the institutional politics of an orga- tional scholars' understanding of institutional
nizational field can be conceived of in terms control - it is as if we understand how insti-
of an interplay of these three concepts. In the tutions control organizational actors and so
sections above, I have attempted to provide a have let go of that question to a significant
set of ideas from the literatures on power degree. The work of scholars such as
which could inform a more political analysis Foucault and Winner (and many others) on
of institutions and organizations, focusing discipline, domination and other forms of
particularly on the forms of systemic and systemic power suggests otherwise; it
episodic power that might underpin institu- suggests that the problem of institutional
tional control and institutional agency, and on control is far more complex than current
the dynamics of institutional resistance to institutional theories can address, and that
each of these forms of power. In this last many of the important details of how
section of the chapter, I explore five research institutional control occurs remain to be
issues that emerge from a consideration of worked out. A starting point for such work
institutional control, agency and resistance. would be the development of empirically
The first three focus on making power grounded analyses of how discipline and
explicit in institutional analysis, incorporat- domination support institutions, how specific
ing resistance, and attending to overlooked instances of those forms of power work in
forms of power including domination and different contexts, and the overall limits of
force. The last two issues focus on extending their effectiveness.
the scope of research on institutional politics Making power more explicit in studies of
to include sets of actors that are currently institutional agency would, I argue, also
missing. provide significant analytical benefits.
Specifically, I suggest that attending more
closely to power in institutional agency and
1. Making power explicit especially bringing in existing literatures on
influence and force could contribute signifi-
The first direction that I suggest emerges cantly to the development of generalizable,
from the discussion above is to make power a context spanning theory. Studies of institu-
more explicit element in institutional writing tional agency have tended to describe the
and research. I believe this would have strategies' of institutional agents with idio-
immediate consequences for the study of syncratic, study-specific sets of labels (e.g.,
institutional control and agency. For the Garud et al., 2002; Greenwood et al., 2002;
study of institutional control, I believe that Hensmans, 2003; Lawrence, 1999; Maguire
the explicit incorporation of power as a cen- et al., 2004), which make comparisons of the
tral concept could help re-energize an area dynamics and effects of institutional agency
problematic. Incorporating the language of
influence and force could provide a
foundation
188
for comparing and contrasting institutional understanding of what those socially
agency in a range of settings. constructed mechanisms might involve, with
a distinct focus on 'social' systems that rely
2. Broadening our conception of on normative and regulative mechanisms to
power: attending to domination maintain compliance. I argue that our analy-
nd force sis of those socially constructed institutional
mechanisms needs to expand to include the
The second issue that I suggest could provide built environment including mechanical and
a significant direction for research on institu- technological systems. Such systems,
tional politics is the broadening of traditional whether built from concrete or silicon, are
conceptions of power that have been relied often a critical element in the institutionaliza-
upon in the study of institutional control and tion of social practice. Moreover, I argue that
agency. Research to date has focused almost episodes of force are at least as important in
exclusively on forms of power that work by understanding institutional creation and
affecting the process through which actors transformation as the more subtle influence
perceive and react to the costs and benefits of processes which have dominated research on
various courses of action, by framing those institutional entrepreneurship.
costs and benefits, by affecting how those Fully incorporating domination and force
calculations are carried out, or by shifting the into our research on institutions and organi-
impacts of various actions such that, for zations may require an expansion of both our
instance, noncompliance with institutional- conceptual frameworks and our research
ized practices carries with it some significant methods. Where unwanted physical force has
cognitive, social or economic costs. Largely been examined in organization studies, for
missing from this analysis are systems of instance, it has largely been understood as
domination and episodes of force that deviant violence (O'Leary-Kelly et al., 1996).
directly overcome the intentions of actors While a deviance perspective highlights acts
rather than trying to affect those intentions. of violence in organizations that are clearly
The lack of attention to domination and important and problematic, it also overlooks
force might arguably be connected to a view a range of phenomena that are core to
of institutions as primarily cognitive or dis- understanding force as a foundation for
cursive phenomena (Lawrence & Phillips, institutions (Arendt, 1970; Harries-Jenkins &
2004; Phillips et al., 2004), which might van Doom, 1976; Heam, 1994), including
suggest that social practices held in place by 'violent' tactics such as forced injection of
physical or technological systems are not medication or physical restraints in a medical
'real institutions' (see Phillips and Malhotra, facility, incarceration and capital punishment
Chapter 29 in this volume, for a cogent pres- in the penal system, corporal punishment in
entation of this perspective). Such an argu- the school system, and acts of war by nations
ment, however, overlooks the distinctions in conflict. Moreover, attending to domina-
between institutions, the mechanisms which tion and force as bases of institutional control
underpin those institutions, and the streams and agency may also be facilitated by several
of action which create them. Phillips et al. methodological shifts. Documenting the role
(2004: 638) argue that institutions are best of these forms of power may depend on shift-
understood as 'social constructions ing away from actors' own accounts of how
constructed through discourse' that are asso- institutions are supported or were created,
ciated with 'self-regulating socially since domination and force may be
constructed mechanisms that enforce their understood by those involved as less socially
application'. Thus far institutional research desirable than other forms of power.
has maintained a relatively restricted Understanding the institutional role of domi-
nation may also require detailed analyses and
 189
presentation of the physical and technological the ways in which other individuals and
environment in ways that would be unusual organizations push back or deflect the
for an institutional study. Rather than rely impacts of those strategies. That an institu-
exclusively on interview quotations, for tion does not completely control all of the
instance, the presentation of data might actors it touches does not make it less
include diagrams of physical layouts, institutional. Attending to resistance brings in
representations of information systems, and the multiplicity of institutions and
summaries of actuarial categories. institutional logics that operate in any field.
Regulative frameworks often overlap in their
3. Getting real: incorporating jurisdictions and conflict in their
institutional resistance prescriptions. Moral orders overlap and
contradict one another, often providing room
A second issue for future research on power for actors to 'choose' the moral communities
and institutions concerns the role of resist- within which they will operate. Even taken-
ance in our theories and descriptions of for-granted beliefs are not usually taken for
empirical situations. I have argued that resist- granted by everyone, since multiple,
ance is a relatively neglected phenomenon in competing sources of meaning usually co-
institutional studies of organization. Studies exist in fields.
of institutional control have tended to focus Incorporating resistance could, therefore,
on the homogeneity of organizational be part of an important next step in the evo-
responses to institutional pressures, and the lution of institutional studies of organization.
consequent tendency for isomorphism in One thread in the evolution of institutional
organizational fields. Studies of institutional theory, at least since Meyer and Rowan's
agency have highlighted the success of (1977) classic statement, has been an
individuals and organizations in their increasing attention to the complexity of
attempts to transform institutional institutional phenomena (W. R. Scott, 2001).
arrangements. In neither of these traditions Taking resistance into account could advance
has sufficient attention been paid to those this process significantly, and promote stud-
actors who are able somehow to compromise, ies that incorporate the wide variety of actors'
avoid or defy systems of institutional control responses to institutions, as well as the
or episodes of interested agency. It seems to conditions that make this variety possible the
me that both deficiencies may result from a competing logics, overlapping fields, and
perceived need on the part of institutional intermediated institutional pressures which
scholars to demonstrate that the institutional provide the opportunity for actors to compro-
phenomena they are examining are 'real' - mise, avoid and defy institutional control and
that institutions do control actors' beliefs and institutional agency.
behaviors, or that agents really are capable of
creating or transforming institutions. 4. Where are the janitors and
Highlighting the limits of institutional control mechanics in institutional theory?
and agency may have been understood as Attending to the institutional work
potentially weakening those arguments. of maintaining institutions
In contrast, I argue that the time has come
for institutional scholars to adopt a more bal- A third issue for future research involves a
anced approach to their descriptions of insti- set of actors who are largely missing from
tutional phenomena, demonstrating both studies of institutional control. Perhaps the
institutional control and the ability of actors most distinctive and fundamental element of
to escape that control, and documenting an institutional approach to understanding
strategies for institutional agency as well as organizations and organizational life is an
190
understanding of behavior and belief as con- unrealistic account of its politics.
ditioned by enduring structures, practices, Descriptions of institutional control without a
rules, beliefs and norms. Institutionalized recognition of the institutional work of
social elements are largely understood as maintaining institutions suggest an overly
robust, enduring phenomena which provide stable and deterministic image of organiza-
the context for action - the background tional fields - systems of institutional control
against which local politics, negotiations, and would appear to effect stable patterns of
choice occur. What is missing from this behavior and belief unless they were chal-
image is a recognition of the work done by lenged either by institutional entrepreneurs or
actors in order to maintain institutions as by competing institutions. Incorporating the
such (Lawrence & Suddaby, 2006). Zucker institutional work of maintaining institutions
(1988) argues that a key issue in understand- points to the inherent instability of
ing institutions is that even in highly institu- institutional control mechanisms: systems of
tionalized arenas, entropy is a natural discipline and domination have the ability to
tendency that needs to be overcome. W. R. significantly control the behavior and beliefs
Scott (2001: 110) argues that 'most institu- of actors, but only to the extent that they are
tional scholars accord little attention to the maintained over time. The second problem of
issue of institutional persistence'. The per- overlooking the institutional work of
spective taken by these authors suggests that maintaining institutions is that it excludes
even though systemic power may underpin from institutional analyses the institutional
institutions, it does not do so without the roles of the non-elite actors who do not
ongoing aid of a variety of interested actors. occupy positions from which they might
This is not to revert to a rational actor model create or challenge institutions, but whose
of institutional control, where elites design work is essential to maintaining institutional
and manage social institutions. Instead, I order. Lawrence and Suddaby (2006) suggest
think it points to the importance of bringing six categories of institutional work aimed at
into institutional analysis the legions of non- maintaining institutions: enabling work that
elite actors whose work, and sometimes involves the creating of supportive rules;
purpose, it is to maintain social and policing so that compliance is ensured; deter-
organizational institutions - the institutional ring through the establishment of coercive
janitors and mechanics who deal with the barriers; valorizing and demonizing; creating
mess and breakdowns of institutional and sustaining institutional myths; and
mechanisms that occur as an everyday embedding the normative foundations of an
occurrence. institution into actors' routine practices.
This omission is hinted at by recent work These practices depend on the active involve-
on competing institutional logics and institu- ment of non-elite actors who do much more
tions as mediating political factors (Thornton than simply enact institutional control
& Ocasio, 1999; Bartley & Schneiberg, mechanisms - they creatively and reflexively
2002) that suggests our traditional image of work to support institutions and the
institutional control may be overly optimistic mechanisms that underpin them.
with respect to its ability to endure without
significant work on the part of institutional
actors (Lawrence & Suddaby, 2006; Scott, 5. Institutional side effects: where
2001) - who these actors are and what they are the homeless in our studies?
do, however, is currently not examined in the
institutional literature. This issue is critical The final issue I suggest as a future research
for understanding the connection between direction again concerns a second set of
power and institutions in two ways. First, an actors who are missing in traditional studies
understanding of institutional control that is of institutions and organizations. All
missing this perspective provides an institutions
 191
affect the distribution of power, resources benefited from the lessons learned in the
and risk in the organizational fields they HIV/AIDS arena, and from the templates for
structure (Bourdieu, 1993; Clegg, 1989; action and collaboration that the HIV/AIDS
Douglas & Wildavsky, 1983). This is a cen- community forged in their struggles for rapid
tral tenet of this chapter, and is consistent access to new treatments and alternative
with much of the research on institutional experimental designs. Others, however, seem
entrepreneurship and social movements that to have fared less well in this institutional
has informed the study of institutional battle. People living with HIV/AIDS in the
agency. Studies of institutional control have developing world, for instance, continue to
also moved toward recognizing the power suffer without the political resources to effect
effects of competing logics and institutional institutional change that the community had
change (Amenta & Halfmann, 2000, 1991; access to in the North. Moreover, research
Bartley & Schneiberg, 2002; Stryker, 2002; and treatment dollars are a scarce resource
Thornton & Ocasio, 1999). What none of which shifted significantly toward work on
these studies account for in any detail, how- HIV/AIDS potentially incurring significant
ever, are the 'side effects' of institutions - the costs to advancement in other disease areas.
impacts of institutionalized practices and Attending to the 'homeless' in institutional
structures on the myriad actors who are nei- research would require a much widened lens
ther party to their creation nor are contem- in our research designs and data collection
plated in their design. While it is clear, for and analysis strategies, and could be
instance, that the institutions that emerge out facilitated by drawing across boundaries on
of occupational contests (e.g., between work focused on issues of gender, race, age,
medical doctors and midwives) have a direct and class. Research designs that would be
impact on the practitioners of those sensitive to the effects of institutions on
occupations, there are a host of other actors, marginalized actors would need to ask
such as patients and their families, other broader questions than how did particular
medical practitioners, nurses, public health institutions emerge and how do they control
officers, and health policy makers who are specific groups; instead, they would need to
also affected but whose interests are less seek out the consequences of institutions
well-attended to institutional research. more broadly in a society, following the
Similarly, research on the work of HIV/AIDS traces of institutional impact outwards, as
activists and advocates has documented the well as 'inverting' the process by taking on
significant impacts on the power of doctors, perspectives well outside of the assumed
pharmaceutical companies and HIV/AIDS fields of influence to try to see the
community groups (Maguire et al., 2004). institutions from the margins. Data collection
Missing in this analysis, however, is the and analysis in such a process would need to
impact on HIV + individuals who were be flexible enough to capture unexpected sets
largely left out of this process, such as of findings and follow them through to their
intravenous drug users, as well as its impact natural conclusions, a process that might be
on other individuals living with other difficult in tightly designed qualitative or
diseases. This example points to the hetero- quantitative studies. Attending to and
geneous nature of institutional side-effects. understanding the side-effects of institutions
Although intravenous drug users were largely might demand a long and deep engagement
sidelined in the institutional contests around in a field, not only observing a population of
HIV/AIDS treatments, they later gained organizations, but also connecting with the
significant discursive resources in their individuals, groups and communities affected
attempts to construct drug addiction as by those organizations.
health, rather than a criminal, issue.
Similarly, members of other disease groups
192
CONCLUSION useful tool for helping to re-integrate rela-
tively isolated streams of institutional
In this chapter, I explored the intersection of research.
power, institutions and organizations. I have At this point in the history of institutional
argued that this can usefully be done by artic- theory, we are seeing the development of
ulating the contours of institutional politics - increasingly isolated streams of inquiry.
the interplay of institutional control, agency Studies of institutional control have evolved
and resistance in organizational fields. toward more sophisticated, quantitative meth-
Institutional control represents the impact of ods drawing significantly on ecological
institutions on the behaviors and beliefs of analytical techniques. In contrast, paradig-
actors. Institutional agency involves the work matic studies of institutional agency tend to
of actors to create, transform, maintain and be longitudinal, qualitative case studies.
disrupt institutions. Institutional resistance Institutional resistance has tended to be
describes the work of actors to compromise, examined primarily as a side issue, with little
avoid or defy systems of institutional control systematic theoretical attention or method-
and episodes of institutional agency. ological development, at least within the
Together, these describe the forms of power mainstream of institutional theory. Along
in play in organizational fields; their interac- with these differences in focus and method
tion significantly determines the evolution of has come a fragmenting of the community of
institutions, networks and subject positions scholars engaged in institutional work.
that structure the experiences and opportuni- Although this may be a 'natural' turn in the
ties of actors. evolution of a scholarly area, it also presents
There are, of course, other ways in which problems in terms of the development of
the dynamics of power in organizational institutional research which might address
fields could be described and analyzed. As I complex social problems that require under-
mentioned in the introduction, a great deal of standings of control and agency, as well as
work has been done connecting institutions resistance. Bringing power into institutional
and power in feminist, critical, post- analyses might provide the potential for a
structuralist and post-colonial traditions. more integrated, coherent approach to under-
Each of these approaches provides a standing the institutional dynamics of organi-
distinctive, valuable language for zational fields. More specifically, examining
understanding the interplay of power and an organizational field in terms of the three
institutions. In this chapter, I have attempted dimensions of institutional politics - control,
to develop a way of looking at this agency and resistance - could illuminate a
relationship that fits more closely with richer and more complex set of institutional
traditional concerns of institutional scholars, dynamics than has tended to be the case in
but, in so doing, have obviously replicated traditional institutional studies, which focus
many of the existing boundaries and blinders on only one of those elements. Giving equal
of institutional research. The framework weight to institutional control, agency and
developed here, however, need not be limited resistance will help to show both the
to addressing narrowly defined institutional interplay of these dimensions, and the limits
concerns. Understanding institutional control, of each.
agency and resistance could provide a useful
foundation for examining issues of
inequality, discrimination or oppression in
organizational fields. This limitation NOTES
notwithstanding, the framework developed in
this chapter has potentially important 1 A relational understanding of power is in
implications for institutional studies of part an attempt to avoid the distraction of a
organization. In particular, it could provide a physical
 193
metaphor for social power, as established by Administrative Science Quarterly, 38: 408-
French and Raven's (1959) distinction between 437.
power (capacity) and influence (the use of that Baron, J. N., Dobbin, F. R., & Jennings, P. D.
capacity). This distinction provides a problematic 1986. War and peace: The evolution of
foundation for discussions of power and modern personnel administration in U.S.
institutions, since discussions of power easily industry. American Journal of Sociology, 92:
become conflated with resources or other sources 350-383.
of power, and the forms of power become Bartley, T., & Schneiberg, M. 2002. Rationality
narrowed to those which occur through influence. and institutional contingency: The varying
2 Although the concept of domination has a politics of economic regulation in the fire
long and varied history in the social sciences, and insurance industry. Sociological Perspectives,
has been used in a wide variety of ways (Arendt, 45(1): 47-79.
1958; Habermas, 1972; Marx, 1906), I use it here Battilana, J. 2006. Agency and institutions: The
to describe a general category of forms of power. enabling role of individuals' social position.
While the term has been used in reference to Organization, 13 (5): 653-676.
'false consciousness' (Jermier, 1985; Marx, 1906), Beckert, J. 1999. Agency, entrepreneurs, and
'manipulation' (Clegg, 1975; Lukes, 1974), the institutional change: The role of strategic
overwhelming use of power, I use it simply to choice and institutionalized practices in
describe forms of power that support institutional organizations. Organization Studies, 20(5):
control through systems that restrict the range of 777-799.
options available to actors (Lawrence et al., Benford, R. D., & Snow, D. A. 2000. Framing
2001). processes and social movements: An overview
3 Data for this example taken from de and assessment. Annual Review of Sociology,
Armond (2000), and archived coverage from the 26: 611-638.
Seattle Times Berkowitz, L. (1993). Aggression: Its causes,
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Seatt!e Post-Intelligencer (http://seattlep-i. McGraw-Hill.
nwsource.com/wto Boxenbaum, E. 2006. Lost in translation: The
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 7
Institutional Entrepreneurship
Cynthia Hardy and Steve Maguire

INTRODUCTION considerations of agency, power and interests

into analyses of institutional fields (e.g.,
In this chapter, we review the emerging and Powell & DiMaggio, 1991; Greenwood &
rapidly growing body of organizational Hinings, 1996; Hirsch & Lounsbury, 1997).
research on institutional entrepreneurship. Some work suggests that individual
This term refers to the 'activities of actors institutional entrepreneurs play highly influ-
who have an interest in particular institu- ential, if not determining, roles in episodes of
tional arrangements and who leverage creating and transforming institutional
resources to create new institutions or to arrangements. Other writers, however, are
transform existing ones' (Maguire, Hardy & more cautious of attributing too much agency
Lawrence, 2004: 657); while institutional or causality to specific actors and have,
entrepreneurs are those actors to whom the instead, emphasized the collective,
responsibility for new or changed institutions incremental and multi-level elements of
is attributed. These concepts are most closely institutional entrepreneurship as a process,
associated with DiMaggio's (1988: 14) work including its unintended consequences. Our
in which he argued that 'new institutions arise purpose in this chapter is, then, to explore
when organized actors with sufficient different perspectives on the nature, role and
resources (institutional entrepreneurs) see in impact of institutional entrepreneurs, as well
them an opportunity to realize interests that as processes of institutional entrepreneurship.
they value highly'. Institutional entrepreneurs Underpinning much of the recent interest
can also work to maintain or to disrupt and in institutional entrepreneurship (e.g.,
tear down institutions, although there is far Dorado, 2005; Battilana, 2006; Leca &
less research in these areas as compared to Naccache, 2006; Garud, Hardy & Maguire,
studies of institution building and 2007) is the paradox of embedded agency
institutional change (Lawrence & Suddaby, (Powell & DiMaggio, 1991; Friedland &
2006). Alford, 1991; Sewell, 1992; Holm, 1995; Seo
The recent growth in the literature on inst- & Creed, 2002), which raises interesting
itutional entrepreneurship responds to calls questions for institutional theorists.
for institutional theorists to bridge the 'old'
and 'new' institutionalisms by reintroducing The theoretical puzzle is as follows: if actors
are embedded in an institutional field ... how
are they
 199
able to envision new practices and then subse- In this chapter, we explore how research
quently get others to adopt them? Dominant has sought to answer these and related ques-
actors in a given field may have the power to tions. We start by considering which types of
force change but often lack the motivation; actor take on the role of institutional entre-
while peripheral players may have the preneur, reviewing work exploring the
incentive to create and champion new
attributes of individual actors as well as the
practices, but often lack the power to change
institutions (Garud, Hardy & Maguire, 2007: place they occupy in the field. The second
961). section describes the field conditions that
help to initiate institutional entrepreneurship -
First, it is not clear how actors are able to how particular aspects of an institutional field
envision and champion new practices if they provide a context in which ideas for change
are embedded in an institutional field and can emerge and take hold. In the third section
subject to its regulative, normative and we consider the role of interpretive struggles
cognitive pressures. As Maguire (2007: 674) and, specifically, how contests over meaning
points out, 'actors who are truly embedded' are associated with processes of institutional
are not supposed to imagine, desire or realize entrepreneurship. In the fourth section, we
alternative ways of doing things 'because discuss intervention strategies - patterned
institutionalized arrangements and practices action by institutional entrepreneurs as they
structure cognitions, define interests and, in seek to change a field. Finally, we provide
the limit, produce actors' identities'. So, some insights on how this body of literature
although central, dominant actors may be has developed and the direction it might take
able to champion institutional change, they in the future by distinguishing between two
appear unlikely to come up with novel ideas different narratives of institutional entrepre-
or to pursue change because they are deeply neurship. We find that the majority of the
embedded in - and advantaged by - existing literature has developed around actor-centric
institutional arrangements. Resource-rich accounts that focus on particular institutional
central players are often unable 'to see entrepreneurs, and how and why they are
beyond prevailing "recipes" '; are committed able to transform fields. However, a different
to existing technologies; are 'exposed to narrative can also be identified - one that is
normative processes'; and have interests process-centric and emphasizes the struggle
'aligned with current practices' (Greenwood that accompanies processes of institutional
& Suddaby, 2006: 29; also see DiMaggio & entrepreneurship. It is this narrative that, we
Powell, 1983; Tushman & Anderson, 1986; feel, offers more promising avenues for
Porac & Thomas, 1990). Second, it is also future research in as much as it helps to
unclear how institutional entrepreneurs get ensure that the efforts of institutional theo-
other embedded field members to take up and rists to incorporate agency - in order to move
institutionalize new practices. Those actors beyond an over-emphasis on the constraining
that are most likely to imagine and desire effects of institutions - do not swing too far in
change are often located at the periphery - by the opposite direction.
being less embedded in and less privileged by
existing institutional arrangements, they have
more to gain from change and more ideas for
what it might look like (e.g., Leblebici, INSTITUTIONAL ENTREPRENEURS
Salancik, Copay & King, 1991). However,
they are also likely to lack the power and
resources necessary to realize it (Maguire, Who can become an institutional entrepre-
2007). Moreover, even central actors in neur? Who are the actors who 'break away
mature fields have to work to ensure that a from scripted patterns of behavíour' (Dorado,
wide range of other field members abandon 2005: 388) and strive 'to develop strategies
existing practices in favour of the new ones and shape institutions' (Lecca & Naccache,
that they are championing.
200
2006: 627). At a basic level, researchers have Other work has examined the characteris-
examined different types of actors that tics of institutional entrepreneurs using a dif-
initiate institutional change and act as ferent theoretical perspective - critical
institutional entrepreneurs, including: realism (Mutch, Delbridge & Ventresca,
individuals (Fligstein, 2001b; Kraatz & 2006; Leca & Naccache, 2006). For example,
Moore, 2002; Lawrence & Phillips 2004; Mutch (2007) uses Archer's (2003) work to
Maguire et al., 2004; Dew, 2006); study Sir Andrew Barclay Walker, who pio-
organizations (e.g., Dejean et al., 2004; neered the practice of directly managed
Demil & Bensedrine, 2005; Garud et al., public houses in England. Mutch (2007)
2002; Hensman, 2003; Leblebici et al., suggests that Walker was able to act as an
1991), especially in the professions (Edelman institutional entrepreneur because of his
& Suchman, 1997; Greenwood et al., 2002; reflexivity. Specifically, he was an
2005; 2006; Lounsbury, 2002); networks 'autonomous reflexive' - an actor who
(Dorado, 2005); associations (Demil & reflected in relative isolation from the con-
Bensédrine, 2005); and social movements cerns of others, as a result of which he was
(Lounsbury et al., 2003; Rao 1998; 2002; more likely to experience conflict with the
Rao et al., 2000). Researchers have, however, structures that surrounded him and, therefore,
explored more complex questions than to seek opportunities for change. Leca &
whether individuals, organizations or Naccache (2006) use critical realism to
collectives can act as institutional explore the activities of an organization,
entrepreneurs; accordingly, we examine work rather than an individual - ARESE, the first
that has linked institutional entrepreneurship company to act as a social rating agency in
to properties associated with particular types France. These authors show how, despite
of actors, as well as to specific positions in a being embedded, reflexivity allowed this
given field. organization to contribute to the institutional-
ization of Socially Responsible Investment in
that country.
Properties Work in the critical realist tradition, while
focusing on the institutional entrepreneur,
One approach to understanding who initiates also places considerable emphasis on the
institutional change focuses explicitly on the institutional context, reminding us that actors
properties - special characteristics, qualities are products of the institutional fields in
and abilities - which distinguish institutional which they operate. Although it has been
entrepreneurs from others in the field, and argued that many institutional studies tend to
allow them to envision and promote alterna- treat the actor, whether individual or organi-
tive arrangements. This work sees the institu- zational, as unproblematic (see the chapter by
tional entrepreneur as an 'analytically Ezzemal & Willmott in this volume), it is
distinguished social type who has the capa- important to remember that actors, interests,
bility to take a reflective position towards goals and strategies are institutionally,
institutionalized practices and can envision culturally and historically shaped (Friedland
alternative modes of getting things done' & Alford, 1991; Clemens & Cook, 1999;
(Beckert, 1999: 786, emphasis in original). Meyer, 2006). Which actors have 'the right to
At the level of the individual, the notion of an have interests, what interests are regarded as
institutional entrepreneur thus opens up reasonable or appropriate, and what means
avenues of research informed by cognitive can be used to pursue them are all products of
psychology and 'the development of socially constructed rules', meaning that 'who
systematic tools for predicting how indi- has the right to take self-determined and self
vidual cognition is translated into actions in interested actions - is expected to vary over
the institutional environment' (George, time and place' (Scott, 1995: 140).
Chattopadhyay, Sitkin & Barden, 2006: 348).
 201
In order to recognize the mutually government in Alberta, Canada imposed
constitutive nature of actors and fields, business planning practices on government
research has also focused more directly on departments by fiat (Townley, 2002). Sherer
the actor's position in the field in trying to and Lee (2002) found, in their study of law
ascertain who or what can act as an firms, that it was the most prestigious ones
institutional entrepreneur. that first adopted new personnel practices.
Similarly, it was the largest accounting firms
that (unsuccessfully) promoted the adoption
Positions of multi-divisional form in the Canadian
accounting field (Greenwood et al., 2002;
To focus more attention on how the actor is a Greenwood & Suddaby, 2006). In the field of
product of the field, researchers have investi- French cuisine, change in the form of nou-
gated the way in which fields create a limited veDe cuisine came from chefs 'in the centre
number of subject positions (Maguire et al., of the French culinary world who had
2001) or social positions (Battilana, 2006), received honors from the French state and
from which actors can take action (Bourdieu, had garnered plaudits from the Guide
1990). Subject position refers to those legiti- Michelin' (Rao et al., 2003: 804).
mated identities that are available in a field Such research has shown even central
(Oakes et al., 1998). Power relations among actors may not be as embedded in a single
actors are thus embedded in the field field as strong institutionalist views would
(Fligstein, 2001 b), including the capital or suggest. In fact, they may have access to
resources available to different actors, as well alternative practices in other fields through a
as a sense of the social 'game' - what variety of mechanisms. For example, many
Bourdieu calls 'habitus' (see Everett, 2002). leading French chefs visited Japan and
These relations and resources in turn provide obtained new ideas from a completely differ-
actors with institutionally defined interests ent culinary field to develop nouvelle cuisine
and opportunities (Bourdieu & Wacquant, (Rao et al., 2003). Large Danish organiza-
1992) and, in some cases, with the possibility tions introduced American practices of diver-
to exert power over the field at a particular sity management as a result of the influence
point in time (Bourdieu, 1986). Fields are of employees and consultants who had expe-
'structured systems of social positions within rience of other fields, including overseas
which struggles or manouvre take place over work and involvement in the feminist move-
resources, stakes and access' (Oakes et al., ment (Boxenbaum & Battilana, 2005).
1998: 260). In other words, actors do not Research has also shown that the large, elite
'have' power; instead, they occupy (or fail to accounting firms which introduced the multi-
occupy) subject positions that allow them to divisional form into the field of Canadian
exercise power in and on - a particular field. accounting were not as embedded as might
For example, Maguire et al. (2004), in their have been thought, given their central loca-
study of the emerging field of HIV / AIDS tion in a highly institutionalized mature field.
advocacy in Canada, found that the Greenwood and Suddaby (2006: 40) found
institutional entrepreneurs were actors who that these firms bridged a number of organi-
occupied subject positions that provided them zational fields, including those of their global
with legitimacy with respect to diverse clients. This 'boundary bridging' exposed
stakeholders; and enabled them to bridge them to alternative practices; while their
stakeholders in ways which facilitated access scope and size meant they were too large to
to dispersed resources. be effectively regulated by their profession;
Empirical studies have found that, despite and their reliance on in-house training
the paradox of embedded agency, institu- reduced their exposure to normative
tional change can be initiated by powerful influences.
actors located in dominant positions in
mature fields. For example, the provincial
202
Research has also shown how institutional entrepreneur, is the preferred direction for
change can also be initiated by less dominant, future research: the ability of institutional
peripheral actors. For example, despite the entrepreneurs to see or create 'a window of
fierce defence of traditional distribution opportunity' needs to be considered in rela-
networks in the American music industry, tion to the way in which the field produces
'disruptive challengers' like Napster were their interests, skills and stocks of knowledge
able to undermine 'status quo incumbents' (Meyer, 2006: 732), as we explore in the next
and open up space for new practices section.
(Hensman, 2003); fringe players initiated
change in the US broadcasting industry by
introducing new practices that were adopted
by dominant players to become conventions INITIATING FIELD CONDITIONS
in the field (Leblebici et al., 1991: 345);
while activist organizations, such as environ- Another line of enquiry concerned with
mental NGOs, played an important role in the resolving the paradox of embedded agency
institutionalization of recycling practices has tried to identify particular field
(Lounsbury et al., 2003). Compared to dom- conditions that create opportunities for insti-
inant actors, peripheral actors are expected to tutional entrepreneurship. We begin this
have less difficulty developing ideas for section by summarizing two approaches that
change: they are less likely to be connected explore the stimuli that appear to trigger
to other actors and, therefore, less aware of institutional entrepreneurship: uncertainty as
institutional norms and practices; and they well as other problems in a field for which
are more likely to be exposed to alternative new or changed institutions can serve as
ideas by being on the periphery of the field solutions; and tensions and contradictions
(Suddaby & Greenwood, 2006; Maguire, that exist, even in highly institutionalized
2007). They are also likely to be motivated to fields, which provide actors with margins of
bring about change since they are often dis- manoeuvre and opportunities for creativity.
advantaged by prevailing arrangements We conclude with a discussion of how the
(Leblebici et al., 1991). The paradox in this state of a particular field can facilitate institu-
situation is less about how such actors come tional entrepreneurship.
up with ideas for change; rather, it relates to
how these peripheral, marginal actors get
other field members to adopt them, as we Stimuli
discuss in more detail in the section on
intervention strategies below. Some research, especially work that adopts
In summary, individual and various types an economic approach to institution building
of organized, collective actors can act as and views actors as rational, argues that
institutional entrepreneurs. Some research uncertainty in a field prompts institutional
emphasizes institutional entrepreneurs' change as actors seek to reduce it. Generally
unique abilities and features that, in effect, speaking, uncertainty is 'the degree to which
make them a privileged 'species' of actor one future states of the world cannot be antici-
'increasingly endorsed with specific qualities pated and accurately predicted' (Pfeffer &
"normal" actors do not possess' (Meyer, Salancik (1978: 67) and, in economics, refers
2006: 732). Other research seeks to explain more precisely to situations where actors
who becomes an institutional entrepreneur cannot define rational strategies because they
with reference to the position they occupy in cannot calculate probabilities for decision
a field. It has been argued that the latter outcomes (Knights, 1921; Beckert, 1999).
approach, which seeks to establish an According to this view, institutions, because
institutional grounding of the institutional they structure and make predictable actors'
 203
behaviour, are solutions to the problems According to this work, new institutional
faced by cognitively limited actors whose arrangements are promoted by actors seeking
interdependence with other actors creates the to solve problems, such as reducing uncer-
possibility of opportunistic behaviour and tainty, in their institutional field. One would
increased transaction costs (Coase, 1937; therefore expect to see acts of institutional
Williamson, 1985; North, 1990). Working in entrepreneurship correlated with field-level
this tradition, Dew (2006: 16) elaborates the problems or a high degree of field-level
concept of Coasian-style institutional entre- uncertainty. Interestingly, drawing on
preneurship as 'the activity of initiating, Schumpeter's notion of an entrepreneur,
creating and leading organizations that spe- Beckert (1999: 783) argues the opposite:
cialize in developing institutional frame- 'strategic agency that violates existing
works that lower transaction costs' for other institutional rules can be expected in situa-
actors in the field. He offers the example of a tions characterized by relatively high degrees
grocery executive who pioneered the now of certainty within an institutional field'. This
widespread and institutionalized technology is because actors, if rational, need to be able
standards and associated practices for using to assign probabilities to the possible
bar codes and universal product codes, to consequences of their choices and to work
facilitate exchange relationships. out whether change is going to be profitable
In this way, institutional entrepreneurship or beneficial for them before taking action.
is associated with solving problems that have Consequently, this argument suggests that
been identified in a field. For example, uncertainty follows the 'creative destruction'
adverse performance of the major accounting of the institutional order that is associated
firms in Canada called into question the effi- with institutional entrepreneurship, rather
ciency of the traditional organizational form than preceding it. The exact nature of the
in the field, prompting some to adopt a new relationship between uncertainty and institu-
multi-divisional form (Greenwood & tional entrepreneurship is, therefore, not
Suddaby, 2006). Similarly, the inflexibility of entirely clear, and further research is
the Association to Advance Collegiate warranted.
Schools of Business (AACSB) m9del of Another body of work has focused on the
business education in light of increasingly tensions (Dorado, 2005; Zilber, 2002; Rao et
diverse student demands and business school al., 2003; Seo & Creed, 2002; Greenwood et
mandates created 'ambiguity, scarcity in al., 2006) and contradictions (Sewell, 1992;
legitimizing resources ... [and] selection Seo and Creed 2002; Rao et al., 2003) which,
pressures' which, in turn, led to moves to it is argued, are always present in fields -
expand the field to include European even mature ones - and which provide
business schools (Durand & McGuire, 2005: potential for institutional change. A range of
184). The rise of socially responsible writers have noted that, despite work that
investing in France created the problem of sees institutional fields as totalizing and
how to measure corporate social perform- shared phenomena, they are in fact riven with
ance, as a result of which institutional entre- inconsistencies and conflict (Friedland &
preneurs sought to institutionalize Alford, 1991; Holm, 1995; Hoffman, 1998;
standardized measures (Dejean, Gond & Clemens & Cook, 1999; Seo and Creed,
Leca, 2004). Once new practices are initially 2002). So, although institutional processes
adopted by some actors, evidence of their may appear to be stable because differences
effectiveness, such as positive market among actors are 'temporarily resolved by
feedback, increases their legitimacy among socially negotiated consensus', this
other actors and encourages their wider appearance of stability is 'misleading'
diffusion and adoption (e.g., Lee & Pennings, (Greenwood et al., 2002: 59). Boundaries are
2002). not static, conflicts among actors arise, and
204
structuration does not produce perfect repro- as considerable advantages can be derived for
duction (e.g., Holm, 1995). Institutions are those who succeed in influencing the way in
therefore not homogenous or complete inso- which a field eventually becomes structured
far as they do not precisely determine structured. Also the constraints are fewer
behaviour: multiple institutions may exist in compared to mature fields: there are no
a given field and conflict with each other; established patterns to mimic; widely shared
new members with different histories and values and norms have yet to develop; and
experiences may join a field; and existing power is more diffuse (Maguire et al., 2004).
members may have access to more than one Similarly, fields in crisis may also be par-
field and therefore exposure to a range of ticularly conducive to institutional entrepre-
practices (Clemens & Cook, 1999). neurship, as a crisis can bring to the surface
Institutional change thus results as human contradictions and tensions in even highly
praxis is brought to bear on these tensions structured, mature fields (Fligstein & Mara-
and contradictions: as individuals use Drita, 1996). These disruptive events
contradictions to reflect on and critique the (Hoffman, 1999), shocks (Fligstein, 1991),
limits of present institutional arrangements triggering events (Rao et al., 2003) or jolts
and to inspire ideas for new ones; and as they (Meyer, 1982) can take multiple forms social
mobilize and engage other actors in upheaval, technological disruptions,
collective action to reconstruct the field (Seo regulatory change, or the publication of
& Creed, 2002). books, reports, and media stories (e.g., Davis,
Diekmann & Tinsley, 1994; Garud, Jain &
Kumaraswamy, 2002; Lounsbury, 2002). For
States instance, Fligstein (2001a) shows how a
crisis in the European Union enabled the
Another body of work interested in identify- European Commission to act as an insti-
ing the field conditions that are most tutional entrepreneur and develop the Single
amenable to institutional entrepreneurship Market Programme. Disruptive events are
has focused on the particular state of the field capable of 'ending what has become locked
whether it is emerging, mature and stable, or in by institutional inertia' through the way
in crisis (Fligstein, 1997). Certain types of they create 'disruptive uncertainty for indi-
field have been associated with greater vidual organizations, forcing the initiation of
likelihood of institutional entrepreneurship. unorthodox experiments that diverge from
It has, for example, been argued that established practice' and 'throwing entire
emerging fields offer considerable scope for industries into the throes of quantum change'
institutional entrepreneurship because the (Hoffman, 1999: 353). Such events may
lack of institutionalized practices results in precipitate the entry of new players into an
fluid relationships, conflicting values, and the organizational field, facilitate the ascendance
absence of clearly identifiable norms - all of of existing actors, or change the intellectual
which, in turn, may pose problems that actors climate of ideas (Greenwood et al., 2002;
wish to solve; or provide opportunities on Greenwood & Suddaby, 2006). In so doing,
which they can capitalize (Maguire et al., they both disrupt existing practices and raise
2004). Child, Yu and Tsai (2007) show how awareness of possible new ones, thereby
the state took advantage of the emergent opening up greater opportunity for action.
nature of China's environmental protection In sum, certain stimuli - uncertainty, prob-
field to act as an institutional entrepreneur, lems, tensions and contradictions in a field -
drawing on developments in other fields can establish favourable initiating conditions
related to international environmental con- for institutional entrepreneurship by motivat-
cerns and domestic economic reform. ing and furnishing ideas for change.
Emerging fields may then be particularly Additionally, fields in particular states,
conducive to institutional entrepreneurship,
 205
especially emerging ones and those in crisis, meanings associated with practices, diffusing
are also more likely to present opportunities them intact and unchanged through a field;
for institutional entrepreneurship, although rather, all actors in the field are viewed as
some researchers argue that uncertainty, active interpreters of practices whose
problems, tensions and contradictions are, to meaning is, as a result, negotiated in ongoing,
some degree, features of all fields, even complex processes.
mature fields. Much of this work tends to In this regard, 'individuals' interpretations
conceptualize the state of the field as a set of can be seen as part of institutional agency the
objective conditions that trigger acts of insti- social actions that create, reproduce, and
tutional entrepreneurship. Munir (2005), change institutions' (Zilber, 2002: 236; see
however, argues that the way in which events also Kamoe, 1997). This work focuses atten-
are interpreted and given meaning is part of tion on the symbolic aspects of institutional
institutional entrepreneurship. In other words, change (see Zilber, Chapter 5 in this volume)
for an event to be deemed disruptive creating and, specifically, on how actors draw on dif-
a situation of uncertainty, contradiction or ferent discourses, and find new ways to
tension, causing a crisis, etc. requires that frame and theorize change. From this per-
actors interpret it as disruptive. The role of spective, institutional entrepreneurship is
interpretation in institutional seen to emerge from novel interpretations
entrepreneurship is discussed in more detail and ensuing struggles over meaning,
in the following section. although it also recognizes that, because
meanings of existing practices are supported
by existing logics, myths and discourses, they
may not be easily displaced. Meaning thus
INTERPRETIVE STRUGGLES takes on multiple roles in an institutional
field. First, it is the outcome for which actors
A growing body of work on institutional struggle. Different actors have stakes in par-
entrepreneurship examines interpretation and ticular meanings and attempt to assert their
explains institutional change with reference preferred ones (Grant & Hardy, 2004).
to complex, ongoing struggles over meaning Second, it is the medium through and ~ithin
among numerous actors, the outcomes of which power struggles take place as actors
which are not necessarily predictable or con- try to influence institutional change (Zilber,
trollable. Drawing on social constructionist 2006). In this regard, meanings are a resource
assumptions (Berger & Luckmann, 1967) to (Zilber, 2002) - they are drawn upon by
emphasize translation at the micro-level actors to support their positions and to
(Czarniawska & Joerges, 1996; Zilber, 2002) undermine those of opponents - and, at the
and discourse at the macro-level (Phillips et same time, a contextual constraint, since field
al., 2004; also see Phillips & Malhotra, and societal level logics (Lounsbury et al.,
Chapter 29 in this volume), this work builds 2003), myths (Zilber, 2006) and discourses
on the idea that institutions ate formed as (Phillips et al., 2004) are not infinitely
meanings come to be shared and taken for pliable.
granted. In contrast to the diffusion metaphor Drawing on these ideas, a growing body
that has dominated much of institutional of work has started to explore the processes
theory, and which 'connotes a transmission of of discursive struggle through which institu-
a given entity,' the translation metaphor tional entrepreneurship succeeds or fails. For
'connotes an interaction that involves example, Zilber (2002: 251) shows how
negotiation between various parties, and the struggle over the meaning of institutionalized
reshaping of what is finally being transmitted' practices at a rape crisis centre - whether they
(Zilber, 2006: 283). Actors are not viewed were 'feminist' or 'therapeutic' - affected
simply as carriers of institutional power relations inside the organization
206
and, as a result, the services that it provided, intended institutional change, usually with
but not in predictable, predetermined or reference to specific strategies for intervening
clearly managed ways. Similarly, Maguire in a field, as we discuss in the next section.
and Hardy (2006) examine the creation of a
new global regulatory institution - the
Stockholm Convention on Persistent Organic
Pollutants - which, consistent with the INTERVENTION STRATEGIES
discourse of 'precaution', bans toxic
chemicals based on uncertain scientific
knowledge of the risks they pose. The new Institutional entrepreneurship requires actors
institution was the outcome of discursive to dislodge existing practices (in the case of
struggle among actors over the meaning of mature fields), introduce new ones, and then
'precaution': some state and non-state actors ensure that these become widely adopted and
promoted the new discourse of precaution; taken for granted by other actors in the field.
while other actors countered with the legacy How do institutional entrepreneurs succeed in
regulatory discourse of 'sound science'. As a these activities to change institutional fields?
result, actors on both sides were forced to This question occupies a large portion of the
engage with and reconcile competing dis- literature, which focuses on identifying and
courses and it was out of this struggle that the explicating the strategic interventions made
particular institution emerged. In another by institutional entrepreneurs to bring about
study, Zilber (2007) shows how institutional change. Sometimes this work focuses directly
entrepreneurship in the high-tech industry in on the strategies and activities in which
Israel following the 2000 dot.com crash institutional entrepreneurs engage (e.g.,
involved the construction of a shared story of Lawrence, 1999); at other times, it focuses on
the crisis that reinforced the established insti- the skills and abilities required to carry out
tutional order. Yet, at the same time, actors these activities (e.g., Fligstein, 1997;
were also telling separate 'counter-stories' Perkmann & Spicer, 2007). We synthesize
that called for changes in the institutional the diverse work in this area in terms of three
order. Stories were both the medium of and a broad themes: the mobilization of resources;
resource for institutional entrepreneurship but the construction of rationales for institutional
not in a clear-cut, strategic way; actors used change, including the discursive processes
stories both to protect vested interests in the through which new practices are framed and
current institutional order, as well as to legitimated; and the forging of new inter-
agitate for change - all at the same time. actor relations to bring about collective
As these examples illustrate, this growing action. In this way, we show that institutional
body of work draws attention to meaning as a entrepreneurship involves the mobilization
collective achievement and emphasizes the and recombination of materials, symbols and
complex and contradictory processes through people in novel and even artful ways.
which it is negotiated and stabilized. This
work highlights not only the potential
'messiness' of institutional entrepreneurship
processes as discursive manoeuvre are met Resources
with counter-moves, but also the potential for
outcomes which are not necessarily those Resource mobilization has been central to the
originally intended by the actors involved. It notion of institutional entrepreneurship since
thus stands in contrast to the bulk of work on DiMaggio's (1988: 14) definition highlighted
institutional entrepreneurship which seeks to the necessity of 'sufficient resources' to create
explain the effectiveness or success of or change institutions. Despite this centrality,
institutional entrepreneurs in bringing about research is often vague as to what
 207
is meant by 'resources' as well as what is recruit allies that do. Several studies draw
done with them. Certainly, a wide range of attention to how institutional change in a
resources have been mentioned in the litera- given field depends upon other extant institu-
ture, including the use of finance, knowledge tions, especially legal and professional ones
or an actor's position within a social network in which institutions to be changed are nested
(Beckert, 1999); political, financial and (cf. Holm, 1995). In other words, the formal
organizational resources (Greenwood & authority of other actors such as the state and
Suddaby, 2006); material resources professional associations can be harnessed as
(Lawrence & Suddaby, 2006); cultural a resource to support change. For example, in
resources (Creed, Scully & Austin, 2002); his study of the early stages of the emergence
and discursive resources (Hardy & Phillips, of the automobile industry, Rao (2002)
1999; Hensman, 2003; Lawrence & Phillips, demonstrates how one mechanism for gener-
2004; Maguire & Hardy, 2006). In this ating constitutive legitimacy for innovative
section, we focus on material resources,¹ products around which new industries
which, research suggests, are mobilized by emerge is the enactment of laws that make
institutional entrepreneurs to be used as a the product legal and specify how it can be
lever against other actors - subsidiary actors, made, sold, used, etc., thus authorizing and
allies, and external constituencies - to nego- codifying understandings of the new artifact
tiate support for the change project in ques- and practices of using it. Similarly, Garud et
tion (DiMaggio, 1988). In some instances, al. (2002) note how the legal system can be
powerful actors may control sufficient drawn upon to create new rules or to enforce
resources to impose change on an institu- old ones, both of which can be used to
tional field by themselves (Dorado, 2005), advance institutionalization projects. Of
but it appears that, most of the time, institu- course, opponents of institutionalization
tional entrepreneurship involves a degree of projects can also seek to enroll higher author-
dependency on other actors and the resources ities, and different authorities may clash. So,
they control to make bargaining and negotiat- while Greenwood et al. (2002) show how
ing inevitable. This view is consistent with professional associations lent their authority
Colomy's (1998) claim that institutional to the elite accounting firms' adoption of a
entrepreneurs employ strategies that operate new multidivisional organizational form, they
through exchange mechanisms: support for a also note the ultimately determining role
project is contingent on the perception that played by the state in legislating an end to
tangible and/or intangible benefits are forth- experimentation with this form.
coming to other actors. Some entrepreneurial
strategies are premised on positive induce-
ments offered to prospective allies in Rationales
exchange for their support. Others are
premised on negative inducements in the Institutional entrepreneurship also involves
form of threats to establish a bargaining rela- interventions in the discursive or ideational
tionship in which the coerced party's 'best realm as actors construct rationales or rea-
hope is that it will be no worse off than it sons and communicate them to other actors
would have been had the coercive relation- concerning why they should support or, at a
ship never commenced' (Turner & Killian, minimum, not resist the institutionalization
1987: 298-299; quoted in Colomy, 1998: project in question. Much of this work draws
280). In this way, institutional entrepr- on social constructionist assumptions. A wide
eneurship involves materially rewarding range of terms from a variety of theoretical
supporters and punishing opponents. traditions have been used to characterize
If institutional entrepreneurs do not con- these processes, many of them overlapping.
trol rewards and punishments, they can We summarize this work here, highlighting
208
how it explores the content, context and out- appeals: existing practices are decried as
come of the communicative acts associated unjust and accused of being inefficient or
with institutional entrepreneurship. ineffective; and institutional entrepreneurs
One body of work examines how the have been shown to deploy an array of argu-
content of the institutional entrepreneur's ments that include different appeals for dif-
communication creates shared cognitions ferent constituencies in the field (Maguire et
(and emotions) that support institutional al., 2004). As a result, evangelical appeals
change. Perhaps the most common descrip- (Rao, 2002) in support of institutionalization
tion of the content of discursive interventions projects are often combined with 'rational' or
associated with institutional entrepreneurship 'technical' demonstrations of efficiency and
derives from social movement theory. This effectiveness. It is important, however, to
work has examined how institutional keep in mind that so-called rationality is
entrepreneurs provide entrepreneurial nonetheless socially constructed: 'entrepre-
accounts (Colomy, 1998) or legitimating neurs commonly invoke efficiency and effec-
accounts of their institutionalization projects tiveness strategically and ceremonially to
(Creed et al., 2002), in which they frame the advance their projects; the validity of these
changes in ways to generate collective action claims is rarely demonstrated in an unequiv-
(Benford & Snow, 2000; also see Lounsbury ocal way, however, and rests chiefly on the
et al., 2003; Garud et al., 2002). A 'collective project's perceived conformity to institutional
action frame' is a coherent interpretive myths' (Colomy, 1998: 289). In addition,
structure that accomplishes three tasks: punc- legitimating accounts often take the form of
tuation, which identifies a problem and stories or narratives (Lounsbury & Glynn,
defines it as important; elaboration, which 2001); contain rhetoric deployed strategically
includes a diagnosis of the problem describ- to increase their impact (Greenwood &
ing who or what is responsible for it, as well Suddaby, 2005); and are typically
as a prognosis describing what is required to communicated to audiences through the
correct it; and motivation, which encourages production, distribution and consumption of
actors to participate in change (Snow et al., texts (Philips et al., 2004).
1986; Creed et al., 2002). By using particular Another body of work describing the dis-
frames, institutional entrepreneurs can cursive interventions associated with institu-
increase the chances of successful institu- tional entrepreneurship draws attention to the
tional change. Frames may be transposed context in which legitimating accounts are
from the broader culture to a specific field produced. Appreciating that institutional
(Clemens & Cook, 1999; Seo & Creed, change is always situated in some historical
2002), or new ones may be built (Rao, 1998). and cultural context, research has shown how
Similarly, within institutional theory, the institutional entrepreneurs selectively adopt
study of theorization (Strang & Meyer, 1993; and deploy some of the alternative logics
Greenwood et al., 2002) has explored how available to them (Seo & Creed, 2002); and
institutional entrepreneurs specify a problem align their projects to master rules of society
with existing practices and justify new ones (Havemen & Rao, 1997), cultural accounts
as a solution. (Creed et al., 2002), professionalization proj-
In the case of both framing and theoriza- ects (Rao; 1998), or professional standards
tion, institutional entrepreneurs attempt to (Dejean et al., 2004). In order to gain accept-
discredit the status quo and to present the ance for change, actors typically position it in
alternative practices they are championing as terms of existing categories and schema
necessary, valid and appropriate in ways that (Hargadon & Douglas, 2001); and draw upon
resonate with other field members (Rao, available discourses (Hardy & Phillips, 1999;
1998). These legitimating accounts typically Lawrence & Phillips, 2004) to make change
combine normative and interest based meaningful to other actors in particular ways.
 209
A third body of work examines institu- among actors, such as collaborations, coali-
tional entrepreneurs' discursive interventions tions, and alliances.
in terms of the desired outcomes they are Institutional entrepreneurship is, then,
designed to achieve in relation to the targeted associated with various forms of collabora-
audience. The work varies in terms of the tive relations - partnerships, coalitions, etc. -
degree of to which this audience is accorded which require the cooperation of other actors.
a role in the change process. Sometimes, the For this reason it has been suggested that
audience is seen as contributing to institu- institutional entrepreneurs have unique
tional entrepreneurship in a reciprocal political and social skills (Perkmann &
relationship. For example, it has been argued Spicer, 2007), including 'the ability to induce
that institutional entrepreneurship involves cooperation among others' (Fligstein, 2001a:
sharing ideas (Boxenbaum & Battilana, 112). As a result, institutional entrepreneurs
2005) and participating in collective sense engage in a range of material and discursive
making (Edelman & Suchman, 1997) with interventions aimed at changing inter-actor
other actors, who thereby become part of the relations and bringing about collective action.
change process. Most work, however, places In so doing, institutional entrepreneurs do not
much more emphasis on a unilateral relation- work single-handedly; they engage with other
ship where the institutional entrepreneur: members of the field. Institutional
persuades other actors (Dew, 2006; Garud et entrepreneurship therefore seems to be
al., 2002); reorganizes their preferences predominantly a collective process.
(Fligstein, 2001a); aligns (Demil & We can, then, see a link between interven-
Benesdrine, 2005), translates (Maguire et al., tion strategies which mobilize material
2004) or aggregates (Fligstein, 1997) their resources and rationales and the subsequent
interests in relation to the institutionalization mobilization of actors to participate in
project; and builds consensus among collective action or to adopt new practices -
members of the field (Dew, 2006). In this actions in which actors might not otherwise
work, there is greater emphasis on the role engage, were it not for the interventions of
and skills of the institutional entrepreneur in institutional entrepreneurs. In this way, insti-
achieving the desired outcome; and less tutional entrepreneurship is tightly connected
concern for the role of other actors. to the exercise of power (Fligstein, 2001b).
Because institutional fields are arenas of
ongoing and shifting power relations that are
Relations only ever contingently stabilized, institutional
entrepreneurship can be seen as the
Institutional entrepreneurship often involves realignment of material, discursive and orga-
establishing new inter-actor relations to bring nizational forces around new relations and
about change, primarily - as much of the practices (Levy & Scully, 2007). It requires
work discussed above indicates - through 'the assent or, minimally, the acquiescence of
collective action (Dew, 2006; Aldrich & Fiol, various groups as well as the capacity to
1994; Garud et al., 2002; Lawrence et al., prevail aver opposition' (Colomy, 1998: 278).
2002; Wijen & Ansari, 2007). Given that The overt leveraging of material resources to
institutional entrepreneurship is about alter- ensure change even in the face of resistance,
ing deeply embedded norms, values and such as offering financial incentives,
practices, it is not surprising that it depends imposing penalities, or invoking formal
upon more than a single individual or organ- authority, etc., represents the exercise of the
ization. As a result, bath the mobilization of first dimension of power (Lukes, 1974).
material resources and the construction and Discursive interventions to create and
communication of rationales for change are communicate convincing
typically means to develop new relations
210
rationales represent the exercise of what international and global levels of analysis,
Lukes (1974) referred to as the third dimen- including national regulations governing
sion of power, which aims to create legiti- industrial wastes (Demil & Bensédrine,
macy for new practices and institutional 2005); the reconstitution of the European
change by managing meaning (Pettigrew, Union (Fligstein, 200la); and the Stockholm
1979); and to coopt opponents rather than to Convention on Persistent Organic Pollutants
confront them, thereby avoiding overt (Maguire & Hardy, 2006). It has also con-
conflict and resistance (Hardy, 1985). For tributed to the emergence of new industries
example, research has highlighted that insti- (Aldrich & Fiol, 1994), such as socially
tutional entrepreneurs use stories strategically responsible investment in France (Dejean et
to 'help induce cooperation from people in al. (2004), whale-watching (Phillips &
their group that appeal to their identity and Lawrence, 2004) and forensic accounting in
interests' (Fligstein, 2001b: 113; also see Canada (Lawrence, 1999), as well as inde-
Colomy, 1998). Similarly, much of the work pendent power production (Russo 2001),
informed by social movement theory shows craft brewing (Rao, 2002), the electricity
how framing is used purposefully to enroll industry (Hargadon & Douglas, 2001) and
allies and to build coalitions (Rao, 1998; Rao recycling (Lounsbury, Ventresca & Hirch,
et al., 2000). Less prominent in the literature 2003) in the US. New organizational forms,
are discussions of how institutional such as the multidivisional organizational
entrepreneurship involves exercising the form in publishing (Thornton, 2002) and
second dimension of power (Bachrach & accounting (Greenwood et al., 2002;
Baratz, 1962; Lukes, 1974) to manipulate Greenwood & Suddaby, 2006; Suddaby &
decision agendas, arenas and participants to Greenwood, 2005), have emerged from
bring about change (Hardy, 1994), although successful institutionalization projects.
agenda setting has received some mention Institutional entrepreneurs have promoted the
(see Fligstein, 2001b). In addition, perhaps adoption of new practices, ranging from the
because of a bias towards studying successful introduction of business plans in museums
instances of institutional entrepreneurship or (Oakes, Townley & Cooper, 1998); new
because of the interest in the 'heroic' forms of diversity management (Boxenbaum
entrepreneur, non-cooperative actors are & Battilana, 2005); new exchange media in
frequently ignored and actors that resist radio broadcasting (Leblebici et al., 1991);
change do not figure as prominently in and new technological standards (Garud et
analyses of intervention strategies as one al., 2002). Finally, institutional
might expect. We expand upon this entrepreneurship has led to new identities for
observation in the next section. individuals (Fligstein, 2001b; Maguire et al.,
2001; Creed et al., 2002: Rao et al., 2003)
and organizations (Rao et al., 2000;
INSIGHTS Greenwood et al., 2002; also see Chapter 16
on identity theory in this volume).
Most studies have found institutional entre- Some of these outcomes are more conse-
preneurs to be highly influential in shaping quential for the field than others, resulting in
their institutional fields, contributing to a major upheaval or transformation as power
range of outcomes that include the creation of relations among actors are reconfigured, and
new formal institutions, industries, organi- only after significant contestation and
zational forms, practices and identities. For struggle. Others represent changes that, while
example, empirical work shows that institu- they might be quite marked, do not entail a
tional entrepreneurship has resulted in new significant redistribution of capital
formal regulatory institutions at national, (Bourdieu, 1990) in the field - as a result of
 211
the institutionalization of new practices, elaboration requirements may be greater
dominant actors may do things differently but insofar as fluid, embryonic practices and
they remain dominant. In this way, we can relationships have to be stabilized but, even
see evidence of two different narratives of so, institutional entrepreneurs act with the
institutional entrepreneurship in the literature intention of securing a more dominant
- one that is more actor-centric and focuses position as the field emerges and matures
on the deliberate strategies of particular (Maguire et al., 2004). In other words, insofar
institutional entrepreneurs; and another as uncertainty has been reduced, problems
which is more process-centric and focuses on have been solved, or dominance has been
the struggles associated with institutional secured, the functionalist orientation presents
entrepreneurship. the resulting change as an improvement on
The majority of the literature constructs, the existing situation. However, the notion of
explicitly or implicitly, a narrative centred on 'better' institutional arrangements is rarely
the institutional entrepreneur. This narrative problematized; and the question of who
tends to be more functionalist, and to paint a benefits from - and who is disadvantaged by -
neat picture of relatively rational, linear, win- institutional entrepreneurship is rarely asked
win problem-solving activity where the in this narrative.
(usually successful) institutional entrepreneur In contrast, process-centric narratives
possesses a degree of reflexivity or insight focus on institutional entrepreneurship as an
(Seo & Creed, 2002; Mutch, 2007) that emergent outcome of activities of diverse,
allows them to identify opportunities for spatially dispersed actors (Lounsbury &
change as a result of some stimuli, such as Crumley, 2007), who face considerable diffi-
uncertainty or a recognized problem in the culty in achieving effective collective action
field (e.g., Beckert, 1999; Lee & Pennings, (Wijen & Ansari, 2007). This narrative
2002; Dew, 2006). Then, using their superior emphasizes diffuse struggles over - and
political and social skills, the actor intervenes through - meaning, where gains for one
strategically to realize institutional change group may imply significant losses for others,
through the combination and mobilization of providing greater scope for examining
resources, rationales and relations in creative conflict as well as failure. Narratives of this
ways (Fligstein, 2001a; 2001b). Other actors form tend to be adopted by researchers
play minor, supporting - and cooperative - interested in how particular - not necessarily
roles if they figure at all, and conflict is intended - outcomes are negotiated materially
pushed to the background. The new or and discursively. The outcomes that follow
changed institutions typically do not imply or from institutional entrepreneurship are
reflect a radical reconfiguration of power therefore more varied, ranging from: no
relations in the field: they are 'elaborative' change, perhaps because the struggle is self-
rather than 'reconstructive' projects (Colomy, defeating or because the prevailing
1998). For example, dominant players may discourses are too constraining; through to
adopt new practices but retain their radical change and the transformation of
dominance and, in fact, may change their power relations among actors in the field.
practices in order to remain dominant (e.g., Some researchers are sceptical, however, as
Greenwood et al., 2002, 2006). In fact, to the degree that power relations are trans-
institutional entrepreneurship activities are formed when non-dominant actors engage in
often described, in this narrative, as being institutional entrepreneurship, arguing that
directed at aligning change with - and often new institutional arrangements emerge from
embedding it in - existing values, logics and some form of 'hegemonic accommodation' as
practices, which results in minimal change in dominant actors cede only limited ground,
power relations (e.g., Hargadon & Douglas, typically through partnerships with more
2001). In the case of emerging fields, the moderate actors in the coalition pressing for
212
change (Levy & Scully, 2007). In addition, actor-centric narratives when it focuses on
the disadvantages and possible negative out- the activities of those occupying central,
comes of institutional entrepreneurship are dominant positions, especially in mature
more likely to be recognized in process-cen- fields, as does research that sees institutional
tric narratives. For example, in exploring a entrepreneurship as a form of problem-
project to de-institutionalize child labour in solving. The work on contradictions and
the world's largest soccer ball manufacturing tensions - even though socially construction-
cluster in Sialkot, Pakistan, Khan, Munir & ist - can also be actor-centric through the way
Willmott (2007) found that 'success' in it attributes the ability to make sense out of
eliminating child labour came at a high price, contradictions to specific actors, as well as
especially for the women stitchers, the the way it sometimes treats the state of the
majority of whom dropped out of the work- field and contradictions themselves as
force, often plunging their families into objective and unproblematic.
abject poverty. Attention is thus paid not only On the other hand, work that treats crises,
to protagonists during episodes of change the disruptive events, or other stimuli as phenom-
institutional entrepreneurs - but also to their ena that are discursively constructed appears
opponents and other members of the field to have more potential to produce process-
who may engage in some form of counter- centric accounts, especially when examining
framing (e.g., Creed et al., 2002), produce the unintended and serendipitous way in
counter-narratives (Colomy, 1998) or make which some events get constructed in ways
discursive counter-moves (Munir & Phillips, that prompt change, while other similar ones
2005). As a result, the purported benefits of do not (although work that highlights the
institutional change, as well as attributions of unique skill of particular actors in construct-
causality to only a handful of actors, are more ing these events as disruptive tends to be
likely to be problematized. more actor-centric). The work that explores
We acknowledge that the two narratives interpretive struggles and, specifically, how
are not necessarily mutually exclusive: actor- discursive struggle produces or changes the
centric accounts necessarily talk about nature of subject positions in a field, is also
processes in recounting the activities in more likely to result in process-centric narra-
which institutional actors engage; while tives. Similarly, some of the work on discur-
process-centric accounts inevitably single out sive intervention strategies, especially when
some actors for special attention, if only as a it juxtaposes the competing rationales offered
reference point for their narratives. We do by protagonists and antagonists as they press
not, therefore, intend to neatly divide the for and resist change or when it deconstructs
work that we have reviewed into two distinct explanations that naturalize why one
categories. Nonetheless, we can draw some rationale comes to be shared among actors, is
conclusions about broad patterns in the more likely to invoke a process-centric
literature. For example, work that emphasizes narrative.
the properties of particular actors which In comparing the two narratives, we
distinguish them as institutional entrepre- believe that the greater potential, as far as
neurs appears more likely to produce actor- future research is concerned, lies with the
centric narratives (although the recent interest process-centric narrative, for a number of
in critical realism in some senses combines reasons. First, the concept of institutional
both narratives: a concern for reflexivity entrepreneurship is not a neutral one, and
draws attention to the actor; while an actor-centric accounts are more prone to
emphasis on context attends to process). The naturalizing and celebrating certain actors as
work exploring how the position of actors 'exceptional' in some way, compared to
facilitates their becoming institutional process-centric ones. As Levy and Scully
entrepreneurs also tends to produce more (2007: 986) remind us, entrepreneurship
'conjures masculine images of heroic
individuals amassing wealth rather
 213
than collective action toward more demo- to largely ignore the non-cooperative reac-
cratic, egalitarian goals'. Concepts and termi- tions of other members of the field. Similarly,
nology that conjure images of activism, process-oriented accounts make it easier to
collective action and struggle may be more examine the phenomenon of failed instances
appropriate; and these are to be found more of institutional entrepreneurship, something
readily with research that attends explicitly that is virtually absent from the literature.
and seriously to process. Second, a focus on Finally, another area for future research is on
process and struggle encourages researchers the unintended or negative consequences of
to explore the conceptual and temporal institutional entrepreneurship.
boundaries of institutional entrepreneurship - We conclude this chapter by acknowledg-
where and when does it begin and end? ing there are dangers in the recent
Actor-centric narratives tend to treat this groundswell of interest in institutional
unproblematically, with researchers entrepreneurship. While it responds to the
commonly picking up the story of recognized need for institutional theorists to
institutional change after a problem or move beyond the constraining effects of
opportunity has been identified by the institu- institutions and to put agency back into
tional entrepreneur, to whom responsibility institutional analyses of organizations, there
for change is then attributed retrospectively. is a risk that the pendulum will swing too far
But what of the role of other actors, or the in the other direction - celebrating heroic
specific historical discursive context in which 'entrepreneurs' and great 'leaders' who bring
they find themselves, in constructing a given about change intentionally, strategically and
situation as a problem? Is this not also part of creatively - and, in so doing, reify fields,
the process of institutional change? And does actors and the process of change itself.
institutional entrepreneurship necessarily end Instead, we need research that interrogates
once new practices are initially adopted, or critically and in more depth the phenomena
does it include subsequent forms of that interest us, and we believe the way to do
'institutional work' (Lawrence & Suddaby, so is to keep matters of power and process
2006) undertaken to ensure their ongoing central to the study of institutional change.
reproduction?
Third, whereas the actor-centric narrative
does not preclude issues of power, it tends to ACKNOWLEDGMENTS
conceptualize it as something that some
actors possess, such as material resources that The authors gratefully acknowledge the
can be mobilized or formal authority that can financial support of the Social Sciences and
be exercised. The process-centric narrative, Humanities Research Council of Canada and the
on the other hand, can more readily Australian Research Council (Discovery funding
incorporate post-structuralist notions of scheme, project number DP 0771639).
power as being inextricably bound up with
knowledge and language, and as capturing all
actors in a field. It thus encourages more NOTE
fundamental and critical interrogations of
1 As can be seen from this heterogeneous list,
social reality and lends itself to more
the notion of resource mobilization can include
reflexivity on the part of researchers. In this material, symbolic and human/organizational
way, it offers a number of opportunities for resources. However, because of important
future research. One area that would prove differences among them, particularly how they
particularly fruitful for future research is the relate to power, we address them separately in
study of resistance to institutional terms of three themes - resources, rationales, and
entrepreneurship, about which we know relations. Broadly speaking, these themes
relatively little given the tendency, especially correspond to the three interlaced dimensions of
of the large number of studies presenting field structure - material, discursive, and
actor-centric accounts, organizational - proposed by Levy and Scully
(2007).
214
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 8
Circulating Ideas: Imitation,
Translation and Editing
Kerstin Sahlin and Linda Wedlin

Early institutional theoretical development When reading this paragraph 30 years

grew out of the observations that formal after it was published it is striking to note that
organizational structures become increasingly not only does this single paragraph
complex as new organizations emerge and as encapsulate the motives and problems behind
existing organizations incorporate new the entire theoretical development of organi-
practices and procedures. Such elaborated zational institutionalism, but it also largely
formal organizational structures, Meyer and portrays the development of this research tra-
Rowan (1977) convincingly showed, cannot dition over the three decades. Initially, the
be understood as devices for enhanced main focus was on individual organizations
coordination and control, but reflect societal and how their formal structures became at the
institutions, or rational myths. These basic same time increasingly complex and
notions were summarized in one paragraph of increasingly similar as they incorporated
the seminal paper of 1977: institutional elements from their environ-
ments. Subsequently, the research interest of
The growth of rationalized institutional structures many scholars turned to wondering about
in society makes formal organizations more how such institutional elements came to be
common and more elaborate. Such institutions are
myths which make formal organizations both
'littered around the social landscape.' Thus
easier to create and more necessary. After all, the they began to study the 'supply side' of
building blocks for organizations come to be lit- myths: how institutional elements came to be
tered around the social landscape; it takes only a produced and diffused. More recently several
little entrepreneurial energy to assemble them into studies have significantly developed our
a structure. And because these building blocks are
considered proper, adequate, rational, and neces-
knowledge of how such myths become 'con-
sary, organizations must incorporate them to avoid sidered proper, adequate, rational, and neces-
illegitimacy. Thus the myths built into rationalized sary' - thus how it becomes essential that
institutional elements create the necessity, the organizations incorporate them in order to
opportunity, and the impulse to organize rationally, avoid being considered 'illegitimate.'
over and above pressures in this direction created
by the need to manage proximate relational
In particular, we find such a progress of
networks. (345) research when we follow those studies that
 219
have focused especially on the circulating Scandinavian research on circulating ideas,
ideas that become rational myths. This and relates them to main issues and debates
research developed early in Scandinavia (see in organizational institutionalism.
e.g., Brunsson 1989; Brunsson and Olsen We begin by reviewing research focusing
1993; Czarniawska and Sevón 1996a). The mainly on the adopting organization - and on
Scandinavian scholars were early inspired by the processes through which individual
and learned from John Meyer's studies, organizations adopt ideas. Such research
thoughts and theories, but clearly mixed and reveals how and why ideas are attended to,
translated them together with other research adopted and incorporated in organizations.
traditions that had been influential in Imitation has been shown to be one main
Scandinavia for some time, or those that were mechanism through which organizations
emerging in Europe at the time. The become exposed to and pick up ideas.
Scandinavian studies built on studies of deci- Following on such conclusions, studies have
sion-making under ambiguity as developed paid special attention to who is imitating
by James March and his colleagues, on social whom and how, making use of the concepts
construction and institutionalization as of identity and fields. A number of studies
developed by Berger and Luckmann and have depicted adopting organizations as fash-
related European traditions and on studies in ion followers, emphasizing the social and
science and technology as developed by, temporal aspects of imitation and adoption.
among others, Latour, Callon, and Knorr- As important as understanding the drivers
Cetina. (See Czarniawska, Chapter 32 in this for adopting new ideas is seeing why and
volume, for an elaborated history on how ideas come to be 'littered around the
Scandinavian institutionalism.) Moreover, social landscape,' hence a second line of
institutional theories were incorporated into a research has focused on the construction,
tradition that was based primarily on qualita- supply and transfer of ideas. Ideas do not
tive studies with a long tradition of case stud- diffuse in a vacuum but are actively
ies and of dose studies of individual decision- transferred and translated in a context of
making processes, organizational change other ideas, actors, traditions and institutions.
processes and reforms. In this way, the This brings actors and interests into the
Scandinavian research primarily came to analysis. A common theme of these studies is
highlight the dynamic aspects of circulating that ideas do not remain unchanged as they
ideas; how and why ideas become wide- flow but are subject to translation. To imitate,
spread, how they are translated as they flow then, is not just to copy, but also to change
and with what organizational consequences. and to innovate. As diffused ideas are
Even if the dose ties between the translated throughout their circulation, and as
Scandinavian and American institutional they evolve differently in different settings,
scholars have continued to develop, as is they may not only lead to homogenization
evident in the edited volumes with but also to variation and stratification. The
contributions from Scandinavian and North concept of editing has served to describe and
American scholars (Scott and Christensen explain how such translation proceeds - thus
1995; Czarniawska and Sevón 1996a, 2005; further focusing on the dynamics of
Sahlin-Andersson and Engwall 2002; Djelic circulating ideas.
and Sahlin-Andersson 2006a), 'Scandinavian Even if many studies of circulating ideas
institutionalism' (Czarniawska and Sevón have paid attention to how ideas flow and
1996b) has largely developed along its own how they are edited as they circulate, empha-
path having only a limited impact on the sis in earlier research was on the travel routes
North American studies. Focusing specifi- and means rather than on the content of the
cally on this line of research, this chapter ideas as such (Meyer 1996: 250). Later, more
presents main themes and trajectories of the
220
emphasis was placed on the content and form HOW AND WHY DO ORGANIZATIONS
of the ideas that were spread. As already ADOPT IDEAS?
mentioned, ideas change as they flow. Ideas
in the form of models and practices can be Many scholars of organizations noticed in the
adapted, modified or reshaped, but ideas can 1980s and 1990s that organizations were
also take on new forms and meanings as they picking up popular ideas and seeking to
flow within and between contexts. Many incorporate them into their formal structures.
ideas have been found to form the foundation Those ideas that were most clearly observed
of and inspiration for new regulations in the to diffuse in such a way were often what
form of standards, guidelines, assessing appeared to be fashionable management
criteria and templates. This has triggered a ideas. These were techniques and models for
stream of research addressing issues on how better management, often introduced by
soft regulation and governance of the kind consultants or other proponents of improved
just mentioned emerges, and with what management, some of them specifically
results. It has also been accompanied by an labeled with acronyms that quickly become
increased interest in the consequences that part of management vocabulary. These waves
widely diffused ideas bring. Meyer and included total quality management (TQM),
Rowan primarily emphasized the ceremonial business process reengineering (BPR),
adoption of rationalized myths and the management by objectives (MBO), supply
decoupling of such myths from ongoing chain management (SPC), service manage-
activities of organizations. Subsequent ment, new public management (NPM),
research has pointed to a broader scope of project management, integrated management
consequences. Widely circulated ideas have control, intercultural management, knowl-
proved to result in or contribute to changes in edge management and others. In the early
individual organizations' identities, in field 2000s popular waves of ideas have included
transformations and in more general various forms of evaluations, assessments
institutional changes. and rankings, certifications and accreditation
Each of these research themes is discussed procedures and evidence-based guidelines.
in the following sections. Two important con- Together with those models organizations
clusions clearly run through this research tra- came to incorporate a new - and what was
dition, and are thus highlighted throughout seen to be more modern - terminology.
the chapter. First, while one main question Much, but far from all, of the early work
that initiated the research of organizational in this tradition was performed in
institutionalists was that of homogenization - Scandinavia, largely in studies of public
the program has increasingly become aware sector organizational reforms. Many of these
of the important consequences, in terms of were case studies of individual organizational
variation and stratification, that follow dif- reforms and thus the focus was on how
fused ideas. Second, while Meyer and Rowan individual organizations picked up, adopted
clearly emphasized the decoupling of and incorporated new ideas or organizational
ceremonially adopted ideas from organiza- elements. The introduction of new
tional practices, research has, over time, management principles was clearly evident in
clearly shown the consequential effects of this sector when references to private sector
such adopted ideas on formal structures as management were becoming increasingly
well as on day-to-day organizational common, but the imported ideas at the time
practices. Thus circulating ideas are not only still stood out as very different from the
ceremonially adopted but have been shown to administrative tradition of the public sector.
result in both organizational and institutional Striking examples were the introduction of
change. the service and customer concepts in the
public sector
 221
(see, e.g., Sahlin-Andersson 1996; Forssell to spread more widely than less effective
and Jansson 1996). The new terminology and ones. This reasoning may lead to a call for
the new techniques were introduced into the more historical studies to satisfy the need to
public sector organizations together with a go back to search for the original source.
widespread questioning of the previous ways Once we start analyzing and comparing
of working. Furthermore, the new techniques ideas, however, it is difficult to distinguish
did not always work as planned and were in any intrinsic success criteria for ideas that
many cases found to be decoupled from the will 'make it.' Hence, it is often pointless - if
daily operations (Brunsson 1989, 2006; not downright impossible - to find an origin
Brunsson and Olsen 1993). (Bourdieu 1977). So it appears to be not so
These observations were clearly in line much a case of ideas flowing widely because
with those proposed by both Meyer and they are powerful, but rather of ideas
Rowan and DiMaggio and Powell. Two kinds becoming powerful as they circulate. For
of observations, however, even if they did not example, some ideas seem to become popu-
stand in opposition to the assumptions and lar, not primarily because of their properties
propositions of Meyer and Rowan and but because of who transports and supports
DiMaggio and Powell, called for an extended them and how they are packaged, formulated
framework and additional conceptual tools. and timed (Czarniawska and Joerges 1996;
These reactions were elaborated in the edited Rovik 1998). Ideas become legitimate, popu-
volume Translating Organisational Change lar and even taken for granted as being
(Czarniawska and Sevón 1996a). First, even effective and indispensable as a result of
if instances of decoupling repeatedly having been adopted by certain actors in the
occurred, in many instances the introduced field (Tolbert and Zucker 1983; Westphal,
language and models did have clear conse- Gulati, and Shortell 1997). In this way,
quences in terms of how the organizations managerial fads and fashions evolve, some
and practices came to be identified, assessed ideas becoming popular for a time then
and presented. Diffused ideas could add to or disappearing again or becoming institution-
result in changes to organizational identities alized (Abrahamson 1991, 1996; Collins
and to what appeared as normal, desirable 2000). Again, historical and contextual
and possible - thus circulated ideas appeared studies are called for, but not solely with the
to trigger institutional change (Sahlin- aim of looking for the original source of dif-
Andersson 1996; Forssell and Jansson 1996; fused ideas; close studies of the circulation of
Brunsson and Sahlin-Andersson 2000; ideas do, in fact, show why some turn out to
Blomgren 2003). be so attractive and powerful. Furthermore,
The second, and more detailed set of the observations showed that such circulating
observations, point out that the framework processes need to be understood in social
that had been developed around the concept rather than physical terms. What was
of diffusion appeared too static and mechan- spreading were not ready-made and
ical in relation to the observations made. The unchangeable particles or goods, but ideas
concept of diffusion was easily associated subject to repetitive translation (see further
with a physical process, as though what was Czarniawska and Sevón 1996a; 2005;
spreading was a physical entity originating Czarniawska and Joerges 1996; Czarniawska,
from one source and (while gaining its power Chapter 32, this volume).
to spread from this source) then becoming The observations were far from new in
more diffuse and diffused. This view has led empirical terms. DiMaggio and Powell did
researchers and practitioners to seek best emphasize that models were not imported
practices to identify 'the original' source of an whole cloth, and Westney's work (1987) on
idea. The perspective is an instrumental one - the imitation and innovation that formed the
good and powerful ideas are assumed modern Japanese society clearly pointed to
the way in which imitated models were
222
transformed as they were transferred from interests, resources, identities and abilities,
one setting to another, and her analysis was but at the same time the analysis acknowl-
clearly one of institutional change. The imi- edges that these interests, resources, identities
tated models were not just ceremonially and abilities are neither stable nor intrinsic to
adopted, but formed the basis for building the individuals or organizations. Individuals and
modern Japanese society. organizations develop their interests,
In theoretical terms, however, the identities, resources and abilities in their
Scandinavian institutionalism, as social context, and partly from the ideas they
Czarniawska and Sevón (1996: 3) call it, pick up and in relation to those they imitate.
formed a conceptual framework that put Thus actorhood as such needs to be
these dynamics at the center and thus formed understood as a process of social construction
a more constructivist foundation than the one (Brunsson and Sahlin-Andersson 2000).
developed in the US. In addition, the Those individuals and organizations that
European studies were more micro and pick up ideas have been depicted not only as
qualitative than the mainstream US ones. acting according to a logic of appropriateness
but more specifically as fashion followers.
The word 'fashion' here points to the
Appropriateness and fashion temporal and social logics of processes of
adoption. In several early studies fashion was
Meyer and Rowan and DiMaggio and Powell sometimes coupled with fads; both of these
emphasized that the main motive for incorpo- were associated with the idea that certain
rating rationalized myths and for mapping desires and models came in waves.
those organizations that were seen as central Abrahamson (1996) illustrated the bell--
and successful was to gain or maintain legiti- shaped curve of the spread of popular ideas
macy. The Scandinavian scholars combined such as quality circles, stressing the wavelike
this insight with more of a micro-perspective, movement through which ideas flow among
as they studied the processes of adoption and organizations and between contexts. He
sought to make sense of how individuals and suggests that organizations adopt managerial
organizations acted in relation to the intro- practices and models, such as TQM, to
duced models. Organizations and individuals conform to general norms of rationality and
acted, they argued, according to a logic of progress.
appropriateness, as proposed by March Czarniawska and Sevón (2005) portray
(1981). When initiating changes and when fashion as the 'steering wheel' of translation
attending to and adopting new ideas, they and the flow of ideas. Fashion guides imita-
reasoned as follows: 'Who am I?,' What tion and the attention of actors to specific
situation is this?' and 'What does a person ideas, models and practices, and fashion
such as I, or an organization such as this, do identifies but also creates what is appropriate
in a situation such as this?' Thus, individuals and desirable at a given time and place. This
and organizations were depicted as clearly leads organizations to adopt, but also to
embedded in an environment that provided translate, these ideas, thus changing both
them with expectations, identities and rules what is translated and those who translate.
for action. Authors of management fashions stress
In an epilogue to the volume edited by the inherently contradictory nature of fashion
Czarniawska and Sevón (1996a), Meyer following: the adoption of fashionable prac-
commented upon what distinguished this tices and ideas is driven by both the need for
'European flavored' research from the main differentiation and the need for conformity
US tradition. He used the term 'soft actor' to with expectations and the practices of others.
clarify how these European writers saw This dynamic between differentiation and
actors as clearly embedded in cultural imitation provides the dynamic and the
material. A soft actor, thus, is an actor with driving
 223
force for idea diffusion (Rovik 1996). identifications and opens new avenues for
Fashion followers act differently in order to comparison and for creating new identities.
act in the same way. While building on the In this way fashions and trends largely form
recognition of Blumer (1969) that fashion is a through processes of imitation.
competition mechanism, the institutional When one views the circulation of ideas as
writers suggest that following fashion is processes of imitation, and as involving
simultaneously an act of conformism and dynamics of identity formation, it becomes
creativity (Czarniawska and Joerges 1996: dear that some organizations tend to be more
34-35) and that following fashion means both prone to imitate - and more receptive to
working within, thus reproducing, and widely circulated ideas - than others.
altering the existing institutional order. Thus, Moreover, some organizations and ideas are
fashion incorporates both change and imitated more than others. While DiMaggio
tradition (Czarniawska 2005; Rovik 1996). and Powell associated the mechanism of
The concepts of appropriateness and fash- mimesis to uncertainty, the dose studies of
ion both point to the social processes of idea individual organizational reforms and
circulation. Ideas are circulated as individuals imitation - suggest identification rather than
are exposed to each other and as they uncertainty to be the main explanatory
compare themselves with and view them- concept. Brunsson and Sahlin-Andersson
selves in relation to others. They define (2000) saw a common pattern in those
which problems require local solutions and management ideas that were triggering
shape plans about what to accomplish (this organizational reforms in the public sector.
fundamental insight has, interestingly They suggested, first, that the organizational
enough, become packaged as its own elements that were adopted by public sector
management concept - the benchmark with a units tended to come in packages or strings
whole set of management techniques rather than individually. They suggested
associated with it). Imitation is a basic further that those ideas were based on a
mechanism, then, through which ideas common identity program together they
circulate. reconstructed adopting units to become more
clearly identified with those associated
primarily with the adopted new 'ideas. This
Imitation and identification again paved the way for further imitation and
for further identity transformation.
Imitation is a basic social mechanism tying A main motivation for imitation is to
people together (Tarde 1902/1969). Actors become similar to others, and, even more, to
tend to imitate those they want to resemble become similar to the most prestigious, lead-
(Sevón 1996). As certain models, actors or ing organizations (Haveman 1993). Imitation
practices become widely known, they shape may also, however, be motivated by a desire
the wishes, ideals and desires of others and to distinguish oneself from others, to be
thus provide the impetus for further imitation. different. As explained by Czarniawska
Thus, perceived identity shapes imitation: (2005), building on Tarde (1890/1962), the
one imitates those one relates to and those processes of identity formation and of imita-
with whom one identifies. The process of tion both involve a process of alterity
imitation involves both self-identification and construction - the formation of perceptions of
recognition of what one would like to being different. As important as the question:
become (Sahlin-Andersson 1996; Sevón 'Who am I like?' is the question: 'How am I
1996). The opposite is also true, however, in different?' Both these motives are grounded
that imitation shapes identity. Imitation con- in identity. In order to understand and
structs new relationships, references, and explain, then, who is imitating whom
224
and why, we should also study who and what striving for coherence or conformity.
organizations identify with. The identity of a Moreover, peripheral actors challenge
subject - a person or an organization - is dominant understandings, which they try to
defined in relation to others; it is derived modify and/or displace. Central actors have a
from its reference to and relationship with tendency to protect and defend the status quo.
others. They may envision bending and adapting
The concept of organizational fields has dominant understandings somewhat, if only
been used to explore how organizations iden- to anchor and stabilize them further. This
tify themselves and thus what they seek to dynamic is behind active processes of
imitate. Groups of organizations whose imitation.
activities are defined in similar ways have
been conceived of as shaping organizational
fields. This notion has of course been a core Translation and editing
concept in organizational institutionalism.
There are many variants of such field models, Imitation is an active process, and can be dis-
building on various theories and taking tinguished from diffusion insofar as the latter
inspiration from a range of disciplines. Most is defined as a phenomenon whereby a cer-
commonly references are made to DiMaggio tain model, idea or practice, once created,
and Powell (1983). Elsewhere, we have spreads next to a number of passive recipi-
argued for the importance of looking beyond ents or trend followers. In contrast, imitation
this concept to trace the many frameworks has been conceptualized as a performative
and theoretical traditions that the field process (Sevón 1996). This points to the
concept refers to and builds on (Djelic and importance of understanding how ideas are
Sahlin-Andersson 2006b; Hedmo, Sahlin- translated, shaped and changed through
Andersson and Wedlin 2005). processes of imitation. The Scandinavian
When using the field concept to under- scholars emphasized the social aspects of
stand motivations for and processes of imita- idea circulation and thus found that the
tion, we especially build on Bourdieu's predominant conceptual framework with
notion of fields. Bourdieu (1977, 1984) physical connotations tended to lead
argued that fields were formed and held researchers' attention in unwanted directions.
together by the common belief in and Czarniawska and Sevón wrote:
upholding of the importance of certain activ-
ities. In this sense fields form reference sys- Diffusion suggests a physical process, subject to
tems, shaping the participants' attention laws of physics, and thus the explanation of phe-
structures and identities - what they view as nomena denoted by this term provokes a further
train of physical metaphors, like 'saturation' or
important issues (cf. March and Olsen 1995). 'resistance.' Latour (1986) proposes to replace it
The field may also be described as a system with translation calling attention to the richness
of relations - relations that have evolved of meanings associated with this term, of which
among the actors who define their activities only some are evoked in everyday life ... It is
as being concerned with similar issues. In the this richness of meaning, evoking associations
field a structure of central and peripheral with both movement and transformation,
positions evolves. Dominating organizations embracing both linguistic and material objects,
that induced Latour and Callon, and the
form reference points and models for the rest contributors of this volume after them, to borrow
of the organizations in the same field. the notion of translation from a contemporary
Coherent patterns of action and meaning thus French philosopher, Michel Serres. (1996: 6-7)
develop, even without any single actor or
group of actors intentionally It should be stressed that 'translation' here
is not used as a linguistic term, but points
both to movement and transformation. With
 225
this conceptual framework at hand these At first glance, editing processes might
authors could follow where and how manage- seem to be creative and open-ended.
ment ideas traveled. As management ideas However, the processes of translation were
were circulating they were translated into rather characterized by social control, con-
objects such as books, models and formism and traditionalism - thus following
presentations (see Czarniawska and Joerges rule-like patterns. Thus editing rules restrict
1996; Czarniawska and Sevón 2005) and and direct the translation - or editing - in each
these translations were done in the various phase of circulation. The term 'rule' did not
contexts and by the many actors involved in imply that there were written or explicit
circulating ideas. What is being transferred instructions for the telling and retelling of
from one setting to another is not an idea or a stories and ideas; neither did it imply that
practice as such, but rather accounts and these translations followed clear intentions
materializations of a certain idea or practice. and established techniques among the editors.
Such accounts undergo translation as they Although there are no explicit rules to follow,
spread, resulting in local versions of models edited stories reveal how these translations
and ideas in different local contexts were formed by the institutional setting in
(Czarniawska and Joerges 1996). Both those which they were performed. Thus they reveal
seeking to be imitated and those imitating rules that have been followed.
translate ideas and practices to fit their own As reforms and experiences are accounted
wishes and the specific circumstances in for and narrated, they tend to be framed and
which they operate. presented in familiar and commonly accepted
In search of a concept that could even terms so that they will make sense to a reader
more clearly be used to analyze how ideas or listener. Thus, experiences and reforms
were being transferred, transposed and tend to be presented to others in terms of
transformed as they circulated, one of the existing templates, examples, categories,
authors of this chapter chose to analyze the scientific concepts, theoretical frameworks
translation as an editing process (Sahlin- and widespread classifications that are
Andersson 1996). The choice of this concept familiar. These concepts, references and
followed studies of the circulation of the frameworks form the infrastructure of editing
customer concept into public sector and they restrict and direct how the accounts
organizations and studies of a fashion at the are given. In such a way widespread and
time - that of building research parks. Both well-known classifications may sort out what
studies showed how models or prototypes is being told as accounts are delivered and
that were seen as 'successes' were formulated transferred (cf. Bowker and Star 1999).
and reformulated as they circulated. Concepts, ideologies, examples, interests
Similarities were emphasized while and classifications are not the same every-
differences that might lead to the conclusion where. Those that dominate one setting, and
that the imitated prototype did not fit in the may be taken for granted in that setting, may
local setting were played down. In such be unknown or unpopular in another setting.
processes of translation, new meanings were The infrastructure, and thus the editing rules,
created and ascribed to activities and differs between situations and contexts. This
experiences. In each new setting, a history of specific infrastructure determines the editing
earlier experiences was reformulated in light of ideas and experiences. Each context in
of the present circumstances and visions. The which the editing of models and experiences
circulation was a continuous editing process takes place may be regarded as an editing
performed by a number of involved editors. infrastructure. We may thus describe the
Thus, those circulating management ideas process as one of recontextualizing experi-
were co-constructing these same ideas ences and models. When using the term
(Czarniawska and Joerges 1996, 2005;
Sahlin-Andersson 2001, Sahlin-Andersson
and Engwall 2002).
226
'editing' we want to emphasize that this interpreted as accounts of how reforms have
recontextualization may change the formula- proceeded. In the course of the editing,
tion as well as the meaning and content of accidental or coincidental circumstances are
experiences and models. removed, as are aspects that cannot be
Such editing rules may be more specific or explained and accounted for in simple terms.
more general, and by following the routes of The models that attract the interest of others
circulation one can see how different and that are deemed to be worthy of imitation
contexts provide different editing rules. are those whose implementation seems
However, our studies revealed three kinds of possible in another setting. Thus, models that
rules that appear to work more generally as are imitated are those that are presented as
ideas are widely circulating (see Sahlin- plannable, and the editing procedure may
Andersson 1996). A first set of rules involve emphasizing or ascribing intentions,
concerns the context. When models are actors, procedures, and effects to an observed
applied in a setting that is different from that and presented development. As procedures
of the prototype, time- and space-bounded are imitated they are often described as
features tend to be excluded. Specific local models. As experiences in one place are
prerequisites are de-emphasized or omitted. edited into a model they tend to be rational-
In such a way widely circulated ideas tend to ized, scientized and theorized (cf. Strang and
be formulated in general and abstract terms, Meyer 1993).
and ideas and experiences are made available A third set of editing rules concerns for-
for others to imitate or adopt (Greenwood, mulation. As circulating ideas and their
Suddaby and Hinings 2002; Rovik 1998). effects are presented and represented, they
Stripping models of their local context tends acquire labels and may also be dramatized as
to take place in several steps. For instance, it they are told in a certain kind of language.
may start when someone reports on her own These accounts acquire certain formats or,
practice or experience. This person may want stated differently, they are formed into narra-
to shape her presentation in a way that will tives of certain genres (Czarniawska 1997).
make this experience interesting to others, Concepts, categories, prototypical examples,
disregarding aspects that seem unique and counter-examples, references and ideological
too time- or location-specific and emphasiz- frameworks are used to structure, narrate and
ing those that seem to be general and make sense of a certain procedure or to draw
generalizable. Those who mediate ideas, others' attention to a certain development. In
experiences and models then do further order to attract attention, imitated prototypes
editing, and the cycle repeats when the model are reformulated in more dramatic terms, and
is adopted in a new setting. they are labeled in ways that make them easy
A second set of rules concerns logic. As to talk about and to remember, etc. They are
initiatives and effects are presented, the logic packaged and commodified with labels such
of the story is often reconstructed. as BPR, MBO, SPC, and TQM. In the editing
Developments may acquire a more rational- process various techniques may be packaged
istic flavor. Effects are presented as resulting under a common heading, or they may be
from identifiable activities, and processes are repackaged under a different heading than
often described as following a problem- they had' before (cf. Frenkel 2005; Solli,
solving logic. Attention may be paid to a Demediuk and Sims 2005).
certain aspect of a development, while other Through editing, an idea or an account of
aspects are omitted or erased. Plans tend to a practice may be formulated more clearly
circulate more easily than effects (Sahlin- and made more explicit; however, the editing
Andersson 2001; Hwang 2003). As these process may also change not only the form of
plans are circulated, however, they are often the idea or account but also its focus, content,
described as if were they effects - plans are and meaning. Even small reformulations of
 227
an idea, which may accrue as the idea is (e.g., Bäckström 1999; Sahlin-Andersson
transferred from one context to another, may 2001). Some techniques, however, seem
fundamentally change its meaning or focus. clearly connected to a certain program, even
Thus, it is only after the fact that one can when such a program is not explicitly
distinguish revolutionary or fundamental announced as the idea is attended to and
shifts from less substantial 'semantic'-type adopted. Organizational actors may have
changes arising from editing. Furthermore, been attracted by a certain technique or tool,
while some aspects of an idea may remain discovering only later that this technique
stable as the idea circulates, other aspects presupposed certain programmatic ideas.
may be transformed. Though labels often Vrangbaeck (1999) analyzed the introduction
remain the same as they diffuse easily of a system of customers' choice in the
between settings, this does not necessarily Danish healthcare system, calling it a 'Trojan
mean that the attendant technologies and horse.' This system was conceived and
meanings remain the same as the idea spreads argued for in technical terms, but when it was
from one context to another (see, e.g., Mazza, implemented it changed the logic of the
Sahlin-Andersson and Strandgaard Pedersen whole operation. New comparisons, frames
2005 Solli et al. 2005). of reference, assumptions, and overall objec-
When an idea is translated, it may also be tives were invoked by the newly introduced
reframed in terms of its supporting ideology. techniques (see also Blomgren 1999). In this
Such editing is clearly found if we follow the way, circulating and edited ideas can trigger
cluster of management ideas for the public identity change.
sector that have been circulating under the
label 'New Public Management.' In analyzing
this circulation Power (1997) built on a FLOWS, CARRIERS AND
useful distinction, taken from Rose and EDITORS OF IDEAS
Miller (1992), between, on the one hand,
programmatic or normative elements of a Even if the theoretical framework that was
certain practice and, on the other hand, its presented in the previous section clearly
technological or operational elements. While painted a broad pattern of idea circulation,
the programmatic element refers to the ideas, discussing travels and translations, most
aims and objectives of a certain practice, the empirical studies referred to above, primarily
technological element refers to the concrete focused on those organizations that incorpo-
tasks or routines of which this practice rated institutional elements from their envi-
consists. New Public Management's program ronment, and on how individual ideas or sets
has been extensively discussed and analyzed of ideas were attended to, translated and
in academic writings. However, when these edited in the local settings. The strong
ideas were circulating in practice, the pro- Scandinavian tradition of case studies of indi-
gram behind the techniques was not always vidual organizations, decision processes and
visible or explicit, but the technical elements, reforms kept many researchers' attention pri-
such as the introduction of new accounting marily on those organizations that adopted
systems, documentation instruments, pricing new ideas'. In subsequent studies, though,
systems or hiring and payment procedures, interest more clearly turned to understanding
were discussed and introduced in terms of where those ideas came from and how they
their technical elements. The program was were produced and circulated - or, to again
either hidden or it changed as ideas entered connect to Meyer and Rowan, how ideas
into new settings. Studies have suggested that came to be 'littered around the social
the link between the programmatic and landscape.'
technical elements of a circulating idea may The metaphor of travel has been used to
be loose and change over time describe the circulation of ideas to emphasize
228
that management ideas do not flow automat- Such imitation will likely lead to the homog-
ically, but follow certain often highly struc- enization of practices and to further emphasis
tured and well-worn routes (Czarniawska and on a single central model that becomes a
Sevón 1996a). Furthermore, translation of prototype to be imitated. Even if the dynam-
ideas is an active process: there are means of ics of this mode resemble those of diffusion,
transportation that carry the ideas from one in which a strong central idea or model drives
place to another. The travel metaphor is imitation, imitation in the broadcasting mode
helpful in the sense that it directs our atten- is driven by the active participation,
tion to travel routes and means of travel. initiatives, and motives of those doing the
Connections between actors in the field may imitating. Both those imitated and those
explain the likely routes through which ideas imitating are active shapers of the process
travel and the rate and speed of diffusion (Sevón 1996).
(Rogers 1983). The formation of networks March (1999: 199) distinguished between
and other contacts thus enables ideas to flow. this broadcasting mode and a chain mode of
With intensified interactions among carriers, imitation. While broadcasting, by definition,
channels have opened for the transfer of originates in one place and spreads all
ideas. However, as is the case with many around, in chain imitation an idea is imitated,
metaphors in organization theory, this one and then this imitation is in turn imitated, and
should be used with some caution. If taken so on. This is, in fact, the main mode of imi-
too literally, it may give the impression that tation as described by Tarde (1890/1962).
ideas flow via direct interaction. And the The one who is imitating may in fact have no
concept of imitation has sometimes led to a knowledge of the 'origin' of the model; thus
similarly limited view; imitation still seems we can sometimes discern only after the fact
to be understood primarily in terms of indi- that the imitation is part of a larger trend or
vidual relationships, in which a single actor development. This process is akin to the one
imitates one or several models. Many studies identified in relation to fashions: fashions
suggest, however, that greater emphasis may have no clear initiator, driver or direc-
should be placed on the complex webs of tion (Czarniawska 2005; Löfgren 2005). The
imitation processes, on how several imitation trend or fashion is created through chains of
and translation processes may be intercon- imitation and the ensuing translations.
nected, and on how one process of imitation Stressing that imitation may originate from
may lead to another. And just as the term 'cir- not only one source or model, this mo de of
culate' indicates, the processes involve not imitation highlights even further the active
only the transport, flow or movement through role of those involved in imitation.
established channels -like blood circulating The third mode of imitation is one in
through the arteries and veins of the body - which the relationships between those being
but also the distribution, spreading, imitated and those imitating are mediated by
transmission or broadcasting of messages to other organizations and actors. Imitation
wider groups. does not always proceed from those imitated
Based on our studies of the proliferation to those imitating. Many persons and organi-
of management education (Hedmo et al. zations act as carriers and/or mediators
2005), we distinguished between three modes (Sahlin-Andersson and Engwall 2002). The
of imitation. A first mode of imitation is one usual diffusion perspective, according to
in which a central model inspires imitation. which the diffusion of ideas takes place via
This can be called the broadcasting mode more or less automatic processes, and
(March, 1999: 137). In this mode, imitation is according to which the main explanation for
based on a specific model or core set of the success of an idea is its original strength,
ideas, which is picked up by actors in various has likely helped deflect the attention of
settings and incorporated into local practices. scholars from the actual carriers of ideas.
 229
Attention has instead been directed towards Max Weber, focused mainly on what they
the local settings where new practices are termed the 'primary carriers' of moderniza-
found and where ideas are received. A car- tion: technological production and the
rier's identity has often been reduced (usually bureaucratically organized state. However,
with the carrier's cooperation) to an entity the authors identified a multiplicity of
that only reports on what is going on in 'secondary carriers' related to these funda-
various places, but is itself neither an activat- ments of modern society that serve as
ing entity nor an actor with influence. For transmitting agencies for the knowledge and
example, researchers, media, expert commit- ideology derived from the primary carriers.
tees, and international organizations are Alvarez (1998: 38) translated the concept in
presumed to report on actions and events order to analyze 'the diffusion and consump-
occurring elsewhere, but without taking any tion of nusiness knowledge.' He analyzed
action or pursuing any interests in such these as secondary carriers and emphasized
events (such assumptions are demonstrated that such carriers 'can attain considerable
and analyzed, but also questioned, by autonomy as agents in themselves' (Berger et
Finnemore 1996; Barnett and Finnemore al. 1973: 9).
1999; and Sahlin-Andersson 2000). Along a similar line of conceptualizion,
Those who circulate ideas have been but using a different terminology, John
analyzed as carriers. For some, this concept Meyer (1994 1996) has used the term 'others'
may have a somewhat passive association: (inspired by G.H. Mead 1934) to capture
someone or something carrying a package, a such carriers with their specific features and
passenger, or even a disease. The way the activities, thereby distinguishing them from
concept has been used in studies of the circu- 'actors,' who are assumed to pursue their own
lation of ideas, however, has been to convey interests and policies and are held responsible
a mix of passivity and activity, of supporting, for their actions. Even though 'others' may
transporting, and transforming. Jepperson present themselves as neutral mediators, they
(1991) used the carrier concept to point to the engage in activities that are crucial for the
importance of activities to institutional circulation and translation of ideas. Such
development. Institutions do not just exist 'other' organizations not only mediate ideas,
independently but are enacted in a host of they also influence and shape the activities
supporting and reproducing practices. Even that take place under their auspices, as they
though such activities reproduce and 'discuss, interpret, advise, suggest, codify,
transform institutions, in highly institutional- and sometimes pronounce and legislate [and]
ized situations and settings these activities develop, promulgate, and certify some ideas
are embedded in institutions or they consti- as proper reforms, and ignore or stigmatize
tute enactments of institutions. Thus, one other ideas' (Meyer 1996: 244). To analyze
should distinguish such activities from how these 'others' translate and mediate
actions: 'If one participates conventionally in ideas, Sahlin-Andersson (1996; 2000)
a highly institutionalized social pattern, one conceptualizes them as editors. These editors
does not take action, that is intervene in a not only report on and transmit ideas and
sequence, make a statement' (Jepperson experiences, but also formulate and
1991: 148). Hence, both the reproduction and reformulate and thus frame and reshape them
the alteration of institutions involve activity: in the process. Moreover, they teach
this ongoing activity is directed and limited (Finnemore 1996) more or less directly -
by institutions while the activity reproduces other organizations how to act in order to be
as well as alters institutions (Scott 1995; see acknowledged as legitimate.
also Giddens 1979; 1984). The three modes of imitation - broadcast-
In their analysis of modernization, Berger ing, chain, and mediated - should be
and associates (1973), highly influenced by
230
understood as ideal types: although we will and practices in contemporary society.
find one or more of them when we study Relational models of diffusion underspecify
processes of imitation, they will not always the variety of effects following from direct
appear in their pure, ideal forms. These three interaction and interdependence as channels
ideal types are also used in analytical frame- of diffusion - thus we need to look beyond
works in imitation studies and, depending on network models of diffusion. They stress
which framework a particular study uses, one instead that linkages can be cultural - the
particular mode of imitation may be singled cultural understanding that social entities
out for identification and emphasis. It appears belong to a common category constructs a tie
to us that studies most often describe the between them. Such cultural linkages form
broadcasting or chain modes of imitation; the identities and identification that shapes and
mediated imitation mode, focusing on the directs processes of imitation and change, as
web of imitated and imitating actors and expectations and norms diffuse among actors
'others' who create, modify or circulate within the category or group. Diffusion
models and ideas to be imitated, has received within cultural categories is enhanced by
less attention. In practice, these three modes theorization, or the development of abstract
exist together and we have suggested that categories and generalized, complex models
such intertwined modes of imitation can be and patterned relationships (Strang and
analyzed as fields of imitation (Hedmo et al. Meyer 1993). Mediating organizations, again,
2005). play important roles in such processes. Media
Sahlin-Andersson and Engwall (2002) and professional organizations, for instance,
used the carrier concept when analyzing theorize practices and models for change,
those who are professing, providing, and driving organizational as well as institutional
circulating management ideas. With the change and development (Rao, Monin and
expansion of carriers such as consultants, Durand 2003; Greenwood et al. 2002).
business schools and the media the supply of
management ideas has expanded. Thus,
Sahlin-Andersson and Engwall (2002)
claimed, the intensified circulation and adop-
tion of management ideas among organiza- FROM PROTOTYPES TO TEMPLATES
tions is largely supply driven. Abrahamsson
(1996) also stressed the role of such carrying The focus of research has recently turned
organizations, or 'others,' in forming fashions, from studies of how and why ideas circulate
naming them a 'fashion-setting community' to studies of what kinds of ideas circulate,
that continuously identifies ideas, fashions a and on how the nature of ideas changes, both
discourse that presents these ideas as rational as ideas circulate and as the institutional set-
and progressive, and markets these back to tings in which ideas spread change. We can
the management community. This way, the describe this change as a shift in focus from
fashion-setting community redefines ideas as prototypes to ideas as templates.
conceptions of what constitutes rational Prototypes are exemplars, models to be
progress in managerial practice and produces imitated and put into practice. Such proto-
waves of managerial fashions (Abrahamsson types are typically picked up and edited by
1996). those organizations that want to become, or
Still we should be careful to avoid letting be perceived as, successful in accordance
this seemingly actor- and action-focused ter- with the exemplary models. So, for instance,
minology lead us to see only the interactions when a number of municipalities developed
and actors. Strang and Meyer suggest that their civil services, this became known as a
relational models of diffusion are not enough successful model - or a prototype - to be
to explain the wide distribution of models imitated and other municipalities followed
 231
suit (Tolbert and Zucker 1983). Models for new century. Classification systems (Bowker
total quality management were associated and Star 1999), standards (Brunsson and
with success and thus were picked up by Jacobsson 2000) and rules (March, Schulz
organizations that wanted to become or and Zhou 2000) have increased in number
appear successful (Westphal et al. 1997) and, and have been developed and applied across
with reference to Silicon Valley, research organizations and around the world (Djelic
parks became associated with successful and Sahlin-Andersson 2006b). Evaluations
regional development and thus developed and audits (Power 1997), accounting systems
among regional planners into a prototype for (Meyer 1994; Olson, Guthrie and Humphery
how to enable development and growth (e.g. 1998), assessments and accreditation (Hedmo
Hall and Marcusen 1985; Saxenian 1988; 2004) and comparisons and rankings (Miller
Sahlin-Andersson 1996). We have shown 1996; Wedlin 2006) have all expanded and
above that these processes of imitation are become widespread.
largely mediated with consultancies, media Thus focus has shifted from management
organizations, international organizations and to regulation, from an intraorganizational to
the like carrying those models from one interorganizational focus, and from talk of
setting to another and at the same time efficiency to talk of transparency. In general
editing them into success models. this shift is clearly following the logic of an
More than models and prototypes for spe- audit society, the early signs of which
cific imitation, however, templates for Michael Power (1997) pointed out. With an
assessing and evaluating practices are also 'audit explosion' the logic of the financial
circulating among organizations and between audit has been replicated to new societal
contexts. These templates are frames or tar- arenas and issues, and it is seen as constitut-
gets that actors use to compare or benchmark ing a new system of governance that
their activities, and they prescribe how inculcates 'new norms and values by which
success should be assessed. Templates serve external regulatory mechanisms transform
as the currency, the medium of abstraction the conduct of organizations and individuals
used to assess, monitor and present practices. in their capacity as "self-actualizing agents" ,
These can be evaluation criteria, rankings, (Shore and Wright 2000). Thus, this 'audit
standards, or just widespread notions of what society' is a society where audits expand into
constitutes success that individuals, groups almost all aspects of social life, and
and organizations aspire to or compare them- operations and organizations are increasingly
selves with. The formulation and diffusion of structured in ways that make them 'auditable'
templates shape identities and identification (Power 1997; see also Strathern 2000).
with a category or group of organizations, 'Transparency' along with 'governance,'
and guide the search for models and organi- 'flexibility,' 'quality,' and 'performance' are
zations to imitate (Wedlin 2007). concepts that have spread almost universally.
In parallel with this emerging transparency
regime (Kjaer and Sahlin 2007) are
Soft regulation and governance techniques and. models for how to respond to
such monitoring. These techniques are ways
This change in research focus from of auditing and making auditable - they have
prototypes to templates has primarily been been characterized as transparency technolo-
triggered by empirical observations. The gies (Blomgren, and Sahlin 2007) or, more
most fashionable and popular organizational commonly, as soft modes of governing and
ideas during the 1980s and 1990s largely regulating.
concerned and strengthened management and Soft regulations are nonhierarchical rules
leaders. Slightly different ideas have come to that are not legally binding (Mörth 2004;
be most commonly circulating during the
232
2006). Furthermore, such rules are largely state-centered control and the rise of an 'age
informal and flexible in the sense that they of legalism' (Schmidt 2004). New regulatory
are open to interpretation and adjustment by modes - such as contractual arrangements,
those being regulated (cf. Kirton and standards, rankings and monitoring frames -
Trebilcock 2004). The domain and applica- are taking over and are increasingly being
bility of soft rules and the conditions for used by states, too (Hood, Scott, James et al.
compliance are being defined together with 1999). New organizations, alliances and
the rules themselves. Authority is not networks emerge everywhere. Particularly
predefined in the relationships between those salient is the almost exponential growth of
regulated and those regulating, but must be international organizations (e.g. Boli and
built into each governing relationship. Thomas 1999). An important task for many
Despite much general talk about deregula- of these organizations is to issue rules, but
tion, empirical observations point to the they may also be involved in elaborating and
increasing scope and breadth of regulatory activating processes to monitor adoption and
and governance activities of all kinds. The implementation of those rules.
intensity of the latter, in fact, is such that it Hence, we find that just as fashionable
would probably be more accurate, Djelic and management ideas circulated more or less
Sahlin-Andersson (2006c) suggest, to talk of worldwide during the previous decades, the
regulatory 'activism.' Regulatory activism can early 2000s have seen the circulation of
take the form of a re-regulation of certain various kinds of regulatory and governing
spheres that had already been regulated, but activities (Drori 2006). These bring templates
generally at the national level. This is the for organizing and for evaluating, assessing
case, for example, with education (Morgan and judging practices and procedures. We
and Engwall1999), health (Blomgren 2007), can point to organizational as well as
labor markets (Jacobsson 2004) and institutional consequences of the new
accounting and financial reporting (Tamm emerging trends. Before turning to these,
Hallström 2004; Botzem and Quack 2006). however, we need to say a few more words
All of those spheres are increasingly subject on the dynamics of the circulation of
to regulatory activities and initiatives with a templates.
transnational scope.
Regulatory activism can also take the form
of an expansion into new territories. This is Circulation of templates
the case, for example, with environmental
and pollution issues (Frank, Hironaka and The circulation of templates follows some of
Schofer 2000; McNichol and Bensedrine the same dynamics as the prototypes - the
2003; Power 2003); ethical, social and envi- management ideas - that featured in the
ronmental aspects of corporate activities 1980s and 1990s, and still do. They display
(e.g., Cutler, Haufler and Porters 1999; patterns of fads and fashion, they are picked
Kirton and Trebilcock 2004); the life and up and displayed as organizations seek to
rights of animals (Forbes and Jermier 2002); appear modern and rational, they are supplied
administrative procedures (Brunsson and and circulated by many carrying
Jacobsson 2000; Beck and Walgenbach organizations that look for ways of attracting
2002) or the structuring of love and intimate resources and attention, and they are per-
relationships (Franck and McEneaney 1999). ceived as ways for all these many organiza-
The present world, indeed, is a 'golden era of tions to seek more central and dominating
regulation' (Levi-Faur and Jordana 2005) positions in their respective fields. Some
marked by a profound transformation of consequences of their circulation appear
regulatory patterns (see also Braithwaite and familiar, too: they add to the elaboration and
Drahos 2000). We witness both the decline of increased complexity of organizational
structure, structures that are more or less
 233
decoupled from the daily operations of those shifting boundaries and organizations in flux.
organizations, and they lead to isomorphism, There is competition for claims to authority
at least as long as we look at the formal and the regulatory arena can be described as
organizational structures. However, recent a regulatory market - where demands and
studies have also pointed to additional drivers offers stimulate and reinforce each other. On
for and consequences of the circulation of the regulatory market the way to reach con-
these modern ideas.¹ trol or to react to regulations that are not
On a first level, the expansion of soft favorable to one's position and strategy is
regulations has been shown to be moved essentially to organize and drive a competing
respectively by distrust, the question of regulatory set-up. In a world where regula-
responsibility and the search for control. tion is expanding, the way to seek control is
Power (1997, 2004, 2007) showed that the not by avoiding regulation. Rather, a more
movement towards expanded regulation is promising strategy is to become actively
driven in part by a lack of trust. A diffuse dis- involved in issuing and supporting a
trust generates the need for activities that satisfactory regulatory scheme.
reveal, make transparent, and set rules, with a These drivers partly explain the expansion
view to building more trust. Those activities, of regulations that serve as the templates
however, may in fact not only solve problems related to which organizations and operations
but also reveal and suggest new problems and are being judged and assessed. The shape of
new questions. In the process, rather than such templates, on the other hand, has been
building trust, they could be undermining it explained by institutional forces that perme-
further, leading to still more requests for ate and shape our modern society.
auditing, monitoring and regulation. When characterizing these as institutional
Partly connected to this, we also find a forces, we refer to four meanings of 'institu-
'responsibility spiral.' Governance and regu- tions.' First, institutions are constitutive of
lation are in part about allocation of respon- actors, interests, relations and meanings; they
sibility. With the multiplication of regulatory push and pull activities in certain directions.
and governance activities, responsibilities This is precisely why we can conceive of
become diffused and dispersed. Furthermore, them as 'forces' (cf. Hoffman and Ventresca
the movement towards soft regulation has a 2002). Institutional forces should not be
tendency to reroute responsibility away from treated as external to the actors, as represent-
rule setters and towards rule followers. ing an environment to which actors are
Voluntary rules that are open to translation merely adapting. Second, institutional forces
mean that those who choose to follow the generally become taken for granted as the
rules, and to follow them in certain ways, are 'natural' way of being and doing; they
held responsible. This double blurring of become transparent to the actors themselves
responsibilities may drive the need for (cf. Douglas 1986). Third, institutional forces
regulation and governance still further, and at are self-reinforcing (Jepperson 1991). As
the local level expanded soft regulation may these forces shape relations, interests and
foster a culture of defensiveness (see Power bases for activities, the actions taken carry
2004). Organizational representatives then inscribed meanings and drive activities
have to allocate extended resources, not only further along the same path. Fourth, these
to follow rules but also to explain why they institutional forces constitute the 'rules of the
have chosen to follow certain rules in game,' providing frameworks for judging
particular ways or why they should be held which behavioral, organizing, discursive, and
responsible. interaction patterns are appropriate - thus
A third mechanism feeding the spiral they may be envisioned as the meta-
revolves around the search for control. Our templates of the modern organized world.
present world is in motion with unclear and
234
The newly emerging and circulating regu- Organizing is a third institutional force.
latory measures are structured and framed by Organizing, which in the present context is
the rise, expansion and influence of scientific defined as the almost universal reliance on
discourse throughout the world (Drori, formal organizational structure to order social
Meyer, Ramirez and Schofer 2003; Drori and relations, achieve particular goals, or solve
Meyer 2006). Actors, activities and settings particular problems, has resulted in what may
are largely shaped and authorized in the name be termed 'the organized society' (Perrow
of science. As already pointed out by Weber 1991, 2002), a society in which formal
(1919/1949), this is accompanied by a drive organizations become the key vehicles for
for transparency: Science becomes a governance and social order (see also Ahme
paradigmatic umbrella, in terms of which and Brunsson 2006). As such, organizing is
every aspect of the universe can and should also a way to manage risk and uncertainty
be interpreted and framed. In line with this (Power, 2007). Again the prevailing ideal of
we find that those templates - in the form of organizing is to order by making tasks, roles,
guidelines, standards and assessment criteria and relations explicit and subject to formal
- that are widely circulated are directly sup- description. This shapes a demand for
ported by references to science. The best classifications, guidelines, rules and
example of this may be the proliferation of scrutinizing measures.
evidence-based models. Such models were A fourth institutional force has been
first circulated in relation to medical treat- termed moral rationalization (Boli 2006), the
ment (Hult 2006) but have lately spread to all widespread assessment and celebration of
areas of modern life. Arguments have, for what is good or bad, excellent or insufficient
example, been raised for the need for usually based on moral judgments and
evidence-based management (Pfeffer and expressed in ranking lists, prizes, records,
Sutton 2006). credentials and celebrations, published
A second institutional force that underpins naming and shaming and the like and backed
the expansion, circulation and shape of soft up by a rationalized moral order that assumes
regulatory measures is marketization (Djelic basic cognitive and normative judgment
2006). In about a century, market logics have criteria.
moved from reflecting marginal ideas in a Finally, there is the urge towards rein-
few liberal intellectual centers to becoming a vented democracy, heavily emphasizing
structuring force of the world. Western soci- deliberation and thus the need for open
eties, at least, are being marketized to the accounts and open dialogues. Our world is, as
extent that markets are not only framed as Morth (2006) has convincingly shown,
superior arrangements for the allocation of increasingly permeated by a view of democ-
goods and resources in every sphere of eco- racy that emphasizes dialogue and delibera-
nomic, social or even cultural and moral life, tion and the autonomy of participating actors.
but are also increasingly defined and per- With this institutional development, we find a
ceived as the 'natural' way to organize and widespread quest for accounts and
structure human interactions (Djelic 2006). information on which participants in this
Today we find that marketization permeates deliberation can act, and with which partici-
and structures policies, reforms, discourses pants can be invited to take part in dialogues.
and ideologies in many places in the world. Not only does this institutional development
This progress of marketization comes, foster an increase in the quest for information
furthermore, under a highly scientized guise, on business developments as well as on all
particularly reflected in the other aspects of society, but, in order for the
professionalization of economics. A common deliberation to actually form into a dialogue,
argument for transparency is that markets, in there is a quest for critical scrutiny and for
order to function well, demand it. multiple perspectives on developments.
 235
The editing of corporations producing and editing presentations of them-
selves and their performance in light of such
Together the institutional forces described standard criteria for evaluation and descrip-
above foster the proliferation and circulation tion (Corvellec 1997; Pallas 2007). With this
of rules, standards, classification schemes, increased attention to self-presentation follow
evaluation procedures, rankings and monitor- changes in organizational structure.
ing that form an audit society (Power 1997), Studies of corporate branding (Schultz,
audit culture (Strathem 2000), transparency Antorini and Csaba 2005), of corporate
regime (Kjaer and Sahlin 2007) and golden expressiveness (Hatch and Schultz 1997) and
era of regulation (Levi-Faur and Jordana of corporate reputation (Fombrun 1996;
2005). With this changed nature of proliferat- Deephouse 2000; Pollock and Rindova
ing ideas we find that the main logics of 2003), as well as daily reports on the way
organizations appear to change too. The corporations are traded and valued on the
changed organizational logics that follow stock markets worldwide, all seem to reveal
those institutional changes have not attracted the central importance of the way corpora-
as much scholarly attention as has the issue tions are presented and conceptualized. In
of how new ideas emerge and proliferate how fact, many would claim that brands and
institutional change comes about. However, presentations are the core of many modern
studies from various research traditions point corporations. The way in which corporations
to a few tendencies of organizational changes are presented and monitored by the media
that follow the institutional changes that we may thus have a direct effect on their
have portrayed above. We can particularly finances, their development and even their
note how organizations become increasingly survival (cf., Jonsson 2005). Power (2007)
occupied with presenting themselves in ways showed that reputational risk has become a
that clearly remind us of those ways of 'the central management concern and he demon-
presentation of self' that were highlighted by strated the many ways in which organizations
Goffman (1959; see also, e.g., Ramirez 2006; govern reputation.
Power 2007). We have suggested the term 'edited corpo-
Empirical studies of fields such as health ration' to emphasize this (Engwall and Sahlin
care and management education have 2007). The activities of organizations are
emphasized the importance of monitoring increasingly geared, as described above, to
organizations, such as accreditation bodies the editing of texts picked up by the organi-
and media, in creating and circulating zation from the environment - management
templates within fields (Erlingsdottir and ideas, market information, news of competi-
Lindberg 2005; Hedmo, Sahlin-Andersson tors, and so on - or texts about the company
and Wedlin 2006 Wedlin 2006). These have intended for its stakeholders or for other uses.
provided categories and measures on the Further, the term 'editing' suggests the
basis of which activities and organizations presence of reciprocal processes in which
are compared, monitored, and assessed several individuals and units inside and
(Hedmo et al. 2005). It was particularly noted outside the corporation interact with one
that the entrance of these mediating bodies another. Moreover, such texts are shaped - in
was followed not only by more imitation fact, edited - according to those circulating
among organizations but also by an enhanced templates that we discussed above.
emphasis on self-presentation. The rules set The edited corporation, then, is a corpora-
by the monitoring bodies regulate what is tion that is clearly embedded in and
considered to be good and appropriate self- dependent upon circulated templates; it is a
presentation, and they also frame and corporation in which a great many activities
structure how the audience views the self- are devoted to editing work, and to managing
presentations. Organizations engage in and organizing for this embeddedness. The
edited
236
presentation of an organization and its activ- of monitoring and scrutinizing activities of
ities is not directed at an external audience the kind described above opens spaces for the
only. The templates also function as mirrors circulation of prototypical models for how
of organizational activities, whereby the those scrutinized organizations can be
edited organization appears in an auto- improved relative to the template measures.
communicative process in which activities Thus, with this shift we find a more densely
are presented in external assessments, populated institutional and organizational
rankings, media, audits, etc., which in turn landscape. Again studies have most clearly
informs people in the organization about their pointed to the emergence of new and
own situation and operations. increasingly complex institutional structures
As organizations, groups and individuals and procedures. A critical remark that has
categorize, give accounts of their activities, been made about much of organizational
and benchmark themselves in relation to institutionalism can be repeated relative to
templates, forming themselves according to the present studies: what is the limit? Which
the templates, these efforts can drive institu- forces drive in the opposite direction?
tional change. But rather than serving as Obviously there need to be some counter-
direct blueprints or models to be imitated or forces working against intensified circulation,
adopted, these templates shape identities and deinstitutionalization and variation, but these
identifications of organizations and groups are only rarely discussed in studies of
that can lead to 'identity-movements' that in institutionalization processes. Even if the
turn significantly alter institutional logics or Scandinavian studies reviewed in this chapter
practices (cf. Rao et al. 2003). The result of have sought to address these issues by
such change, however, is not necessarily or looking more closely at the dynamics of insti-
exclusively an increasing homogenization of tutionalization and circulation, many intrigu-
organizational structures or activities. Rather, ing and difficult questions about limits to
studies have noted both compliance and institutionalization, deinstitutionalization and
resistance to isomorphic pressures introduced deregulation remain largely unanswered.
by new evaluation and assessment systems
(Townley 2002), and have shown how
templates provided by monitoring activities NOTES
leave substantial room for diverse interpreta-
tions and local identity formation processes, 1 The following section about drivers for
thus mediating isomorphic pressures (Wedlin expanded regulation builds substantially on
2007). We can thus expect, and have Djelic and Sahlin-Andersson (2006b and c).
observed, both similarity and difference to
follow from the circulation and formulation
of templates. This is in line with contempo-
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 9
Organizational Implications of
Institutional Pluralism
Matthew S. Kraatz and Emily S. Block

Hence, social control, so far from tending to character of these organizations when he
crush out the human individual or to obliterate observed that the American university is ‘so
his self-conscious individuality, is, on the many different things to so many different
contrary, actually constitutive of and
inextricably associated with that individuality;
people that it must, of necessity, be partially
for the individual is what he is, as a conscious at war with itself’ (Kerr, 1963:8). In the
and individual personality, just in so far as he is university, as in many other organizations, it
a member of society. is the broader, heterogeneous institutional
(Mead, 1934:255) environment that imposes these multiple
identities, makes these disparate demands,
Institutional pluralism is the situation and thus generates these persistent and deep-
faced by an organization that operates within rooted tensions within the organization itself.
multiple institutional spheres. If institutions Because the pluralistic organization is a unit
are broadly understood as ‘the rules of the of multiple institutional systems, its internal
game’ that direct and circumscribe organiz- functioning reflects the contradictions
ational behavior, then the organiz-ation between the larger systems themselves.
confronting institutional pluralism plays in Prior empirical research has uncovered
two or more games at the same time. Such an numerous instances of organizations facing
organization is subject to multiple regulatory institutional environments which appear to
regimes, embedded within multiple exert pluralistic demands. These include
normative orders, and/or constituted by more hospitals (D' Aunno, Succi, and Alexander,
than one cultural logic. It is a participant in 2000; Denis, Lamothe & Langley, 2001),
multiple discourses and/or a member of more neo-natal intensive care units, (Heimer,
than one institutional category. It thus posses- 1999), rape crisis centers (Zilber, 2002), drug
ses multiple, institutionally-derived identities treatment centers (D'Aunno et al., 1991),
which are conferred upon it by different non-profit and public organizations
segments of its pluralistic environment. An (Brunsson, 1989; Dutton & Dukerich, 1991;
ideal-typical example of such an organization Stone & Brush, 1996), universities (Albert &
is the American research university. Clark
Kerr well-captured the pluralistic
244
Whetten, 1985); Cohen & March, 1986), Salancik, 1978) and more strategic variants
public schools (Rowan, 1982), public of institutional theory (Oliver, 1991;
broadcasters (Powell, 1988), arts Suchman, 1995; Zajac & Westphal, 1995)
organizations (Mouritsen & Skaerbaek, 1995; seem to present us with. However, it becomes
Alexander, 1996), Taiwanese computer firms considerably more challenging to think about
(Hung & Whittington, 1997), multi-national institutional pluralism when we see
firms (Kostova & Zaheer, 1999) and small institutional effects as constitutive and
businesses (Pickle & Friedlander, 1967). ideational; as suffusing the organization
Much recent research in stakeholder theory, rather than merely impinging upon it.
which has increasingly drawn from neo- Nonetheless, we believe that some critical
institutionalism, also emphasizes that insights and images begin to emerge when
corporations, in general, are properly viewed we embrace pluralism and cognitive
as pluralistic entities (Donaldson & Preston, institutionalism conjointly. Specifically, we
1995; Mitchell, Agle & Wood, 1997). are able to see an organization that may have
However, despite this common awareness of multiple institutionally-given identities, an
the existence of institutional pluralism, there organization that may be the structural
has to date been little apparent effort to embodiment or incarnation of multiple logics,
systematically assess its practical and an organization that may be legitimated by
theoretical implications. What are the multiple mythologies, and an organization
characteristic challenges and opportunities wherein very different beliefs and values
faced by organizations that operate in might be simultaneously taken for granted. In
pluralistic environments? How do short, we see an organization that may
organizations typically adapt to these genuinely be, like Kerr's university, ‘multiple
challenges and opportunities (structurally, things to multiple people.’
politically, symbolically, rhetorically)? What We are interested in understanding how
broader and more general lessons might this is possible. We are also interested in
researchers take away from the methodical elaborating pluralism's positive and negative
and sustained analysis of organizations that consequences for the organization, and in
dwell in pluralism's midst? These are the identifying the factors that tip the balance
broad questions that we set out to address in between them. Clearly, pluralism creates the
this chapter. potential for fragmentation, incoherence,
We are especially concerned with conflict, goal-ambiguity, and organizational
understanding the theoretical and practical instability (Stryker, 2000; Heimer, 1999). In
implications of what might be called an organization with multiple identities,
cognitive, or constitutive, pluralism. The purposes, and belief systems, no group is
hallmark of the neoinstitutional perspective is likely to be fully satisfied, and political
its focus on cognitive institutions that tensions are likely to be endemic. Such
constitute actors, define social realities and organizations may even resemble the
thus shape organizational behavior in subtle ‘organized anarchies’ or ‘garbage-cans’ that
but powerful ways (DiMaggio & Powell, March and colleagues vividly described
1991; Friedland & Alford, 1991; Scott, (March & Olsen, 1976; Cohen & March,
2001). This perspective on institutions may, 1986). However, we think that institutional
at first glance, appear to be incommensurable pluralism may create important opportunities
with the very notion of pluralism. It is for organizations, as well. We will suggest
relatively straightforward to envision a that institutionally-adept organizations are
pluralistic institutional environment if we see often able to simultaneously meet the
institutions as exogenous forces that exert expectations imposed by various institutional
competing coercive or normative demands on spheres in which they operate. Indeed, we see
the organization. Indeed, this is the very the ability to at least placate diverse external
picture that resource dependence theory constituent groups as
(Pfeffer &
 245
a minimum requirement for bare survival in But, we also believe that baseline levels of
the face of pluralism. More importantly, we pluralism are higher than commonly thought
also think that significant complementarities in many other settings. Thus, we hope that
often exist between institutionally given this paper's insights will apply well beyond
identities, such that the organization's ability the contexts from which they primarily
to successfully be one thing actually emanate.
enhances its ability to be others. Thus, we try The perspective that we develop on
to show how the same institutional pressures organization-environment relationships in
that threaten to divide the organization may, pluralistic contexts draws from several key
at least in some circumstances, hold it sources. The first of these is James March's
together instead. We focus much of our institutionalism (e.g., March, 1994; 1999;
attention on the search for these March & Olsen, 1995; 2004). His work
circumstances. converges with other neo-institutionalist
We organize the chapter around a thought in seeing institutions as basically
discussion of three important organizational constitutive of actors and their actions.
problems that have been the focus of much Specifically, he suggests that much
prior organizational research. These are the organizational decision making results from
problems of organizational legitimacy, an obligatory ‘logic of appropriateness’
organizational governance and, rather than a calculative ‘logic of
organizational change. We will suggest that consequence.’ Actors following a logic of
conventional neo- institutional explanations appropriateness obey institutional roles and
of these three critical organizational strive, often preconsciously, to fulfill the
phenomena become rather problematic when obligations that are inherent in their
we attempt to apply them to organizations institutionally-given identities.¹ But, March
operating in pluralistic contexts. More also stresses that actors possess multiple
specifically, we will show that these standard identities as a direct result of their multiple
accounts remain necessary, but are no longer institutional memberships. His theory is thus
sufficient in and of themselves. In a (at least implicitly) a pluralistic one.
pluralistic environment, organizational Our perspective is similarly influenced by
legitimacy requires symbolic conformity with sociological theories of identity that have
cultural norms and expectations, but also emerged within the symbolic interactionist
something more and different than this. In a tradition (e.g., McCall & Simmons, 1978;
pluralistic environment, organizational Stryker, 1980; 1987; Stryker & Burke, 2000;
governance is influenced by cultural logics Stryker & Serpe, 1982). These theories offer
that operate at the field level, but is in no explanations that are strikingly similar to
sense determined by these logics. In a March's, despite their typical focus on
pluralistic environment, organizational personal, rather than organizational, identity.
change is also compelled and constrained by They also offer additional concepts that have
field level institutions. But, these institutions been usefully applied at the organizational
combine with one another to yield variations, level (Pratt and Foreman, 2000). Stryker,
unintended consequences, and myriad Burke and other identity theorists parallel
opportunities for organizational action and March in arguing that actors are multiply
continuous change. In developing our constituted, receiving their various identities
arguments, we will draw heavily on examples from different segments of the pluralistic
from American colleges and universities, but society they inhabit. However, they augment
we will also produce examples from March's perspective by giving explicit
numerous other contexts. We believe that attention to processes of identity verification.
institutional pluralism is a variable feature of They suggest that actors seek to validate or
organizational environments, and one that is affirm their identities through processes of
particularly prominent in American higher symbolic exchange with different segments
education.
246
of their heterogeneous environments. It is their own, and which integrate and transcend
through these processes that the actor's their various socially-given identities.
various identities are legitimated (and de- Interestingly, he also argues that constituent
legitimated) over time. Sociological identity demands play a key role in facilitating this
theorists also provide a useful frame for quasi-integrative process (despite their
understanding intra-organizational identity inherently divisive potentialities).
conflicts, and for conceptualizing the Specifically, Selznick emphasizes that these
processes through which multiple, groups value cross-temporal consistency and
institutionally-derived identities may be revealed commitment, in addition to the
prioritized or integrated within the conformity which is more typically
organization as a whole. Specifically, they emphasized in neo-institutional accounts.
invoke Mead (1934) in drawing a critical Constituencies plainly want the organization
distinction between the notion of identity and to symbolize its commitments to their
that of self. They conceptualize the self as the particular beliefs and to fulfill their material
whole entity which encompasses an actor's needs. But, Selznick emphasizes that they
various socially-given identities. As we will want it to be self-consistent, trustworthy and
show, this distinction may be especially non-opportunistic, as well (i.e. to evince what
useful for understanding governance amid he called ‘organizational integrity’). We will
pluralism. In particular, we will argue that suggest that it is this preference which makes
organizational governance can be usefully possible the emergence of the autonomous
thought of as the process through which an (and distinctively competent) organizational
‘organizational self’ selects, prioritizes and/or self which Selznick first theorized.
integrates its various institutionally-given Before we progress to our consideration of
identities (and also as the process through the specific problems of organizational
which these identities conjointly construct an legitimacy, governance and change, we think
organizational self). that it may be useful to further clarify our
Finally, our perspective on the chapter's purposes and to comment upon its
organizational challenges and opportunities intended relationship to the extant literature.
created by pluralism also relies heavily on Most importantly, we wish to emphasize that
Philip Selznick's institutionalism (Selznick, our intent is fundamentally generative, rather
1949; 1957; 1969; 1992; 1996). Like March than critical. Though we do identify several
and the sociological identity theorists, apparent limitations of neo-institutional
Selznick sees the individual organization's accounts, we do this with an eye toward
environment as politically and ideologically promoting future research and theory on the
heterogeneous. His early research on the organizational implications of institutional
Tennessee Valley Authority vividly reveals pluralism (rather than to cast aspersions).
the destructive effects that this heterogeneity Second, we wish to stress that our efforts at
can have inside the organization (Selznick, theorizing are admittedly partial and largely
1949). However, he also provides important derivative. We think that the recognition of
insights about how organizations can thrive institutional pluralism points toward a major
and prosper in the midst of institutional void in our collective understanding of the
pluralism, both despite and because of it relationship between organizations and
(Selznick, 1957; 1969; 1992). Most critical institutions. The theory that we put forth here
among these insights is his argument that may constitute little more than a drop in very
some organizations can become institutions large bucket - and not an especially novel one
in their own right, as they hamess the at that. Virtually all of the ideas we develop
otherwise discordant forces in their pluralistic herein are appropriated from somewhere else
milieu. Selznick argues that such (although our reapplication of them may
organizations are able to forge identities constitute something of a contribution).
which are uniquely
 247
Finally, we would like to re-emphasize that From a neo-institutional perspective,
our chapter assumes an avowedly legitimacy primarily involves symbolic
organization-centric perspective (as its very conformity with cultural prescriptions and
title indicates). It is written in the tradition of understandings (Meyer & Rowan, 1977;
Barnard, Selznick, March & Simon, Deephouse, 1999; Ruef & Scott, 1998). The
Thompson and others who viewed the perspective holds that organizations tend to
individual organization as a proper end of adopt various practices and structures in
study in its own right. It diverges (at the order to create and maintain this conformity.
outset) from more recent scholarship that Importantly, it sees legitimacy as a source of
takes a core interest in field-level dynamics action as well as the product of it (Edelman,
and overarching institutional systems. Thus, 1992; Suchman, 1995; Oliver, 1991). An
to the extent that our chapter does criticize organization's institutionally-given identities
neo-institutionalism, it questions the create behavioral mandates, and its actions
perspective's value as a means to ends that can be understood as conscious or
are not necessarily its own. It also proposes unconscious efforts to fulfill these mandates.
new ends toward which the theory's core This notion of legitimacy as taken-for-
insights might be productively re-applied. grantedness parallels March's logic of
Specifically, our chapter pushes toward the appropriateness.
creation of an ‘institutional While we believe that this perspective
organizationalism’ which is quite distinct provides a necessary and appropriate starting
from (but potentially symbiotic with) the point for understanding organizational
‘organizational institutionalism’ which is the legitimacy, we encounter at least three
primary focus of this volume. We hope that important problems when we attempt to
the outlines of this perspective - and the basic apply it to organizations in pluralistic
need for it - will become apparent in the contexts. The first and least troubling of these
following pages. is that the pluralistic organization is
compelled to symbolize its commitment to
the norms, values, and beliefs of multiple
social systems. Thus, if taken for granted
INSTITUTIONAL PLURALISM assumptions are to drive its actions, they can
AND THE PROBLEM OF only do so after a specific institutional
ORGANIZATIONAL LEGITIMACY identity has been invoked (Heimer, 1999).
The organization must first be able to answer
A natural place to begin our discussion of March's troublesome question of, ‘who are
institutional pluralism's theoretical and we?’ before the appropriate institutional roles
practical implications is with the problem of or scripts can be activated. Further, if the
organizational legitimacy. Organizational organization tries to deliberately pursue
scholars have long viewed legitimacy as a legitimacy through strategic conformity, it
critical resource for organizations (Parsons, can only do so by conforming to multiple sets
1956; Pfeffer & Dowling, 1975), and this of institutional roles and successfully
focus has intensified with the rise of the neo- embodying multiple categorical standards.
institutional perspective (DiMaggio & Given these complexities, it may sometimes
Powell, 1983; Meyer & Rowan, 1977; be appropriate to think of the legitimacy of
Tolbert & Zucker, 1983). Suchman the ‘whole’ organization as the mere sum of
(1995:574) has defined legitimacy as a the legitimacy of its individual ‘parts.’ In
‘generalized perception or assumption that other words, inasmuch as the pluralistic
the actions of an entity are desirable, proper, organization enjoys social approval and
or appropriate, within some socially acceptance, this may be the cumulative result
constructed system of norms, values, beliefs, of its successful performance within its
and definitions.’ disparate
248
role identities. Clark Kerr is also reported to actual nature of organizational legitimacy
have quipped that his job as the University of (Heimer, 1999; Stryker, 2000). Taken for
California's Chancellor was to provide granted beliefs and assumptions obviously
parking for faculty, football for alumni, and affect these organizational decisions and
sex for undergraduates. While it is doubtful influence external responses to them. But,
that this comment reflected Kerr's true taken-for-grantedness is clearly not sufficient
thinking about his role or his university, it as an explanation for these actions or the
well-reflects an additive, ‘part-focused’ view reactions they engender.
of organizational legitimacy. A final problem with the neo-institutional
A second and more difficult problem in account of organizational legitimacy is that
applying the conventional account of organizations are typically expected not only
legitimacy is that pluralistic organizations to symbolize their agreement with prevailing
may not be able to compartmentalize or beliefs and to act in a culturally appropriate
separate their different institutional identities manner, but also to evince cross-temporal
from one another. The organization's consistency in their words and deeds. While
attempts to comply with the demands of one the organization may indeed be a prisoner of
constituency are likely to be observed by a cultural ‘iron cage’ (DiMaggio & Powell,
others, who may assign very different 1983), it is also held ‘hostage to [its] own
subjective values to the same displayed history’ (Selznick, 1992:232). In its search
symbols (Stryker, 2000; Glynn, 2000; Golden for legitimacy, it thus faces a ‘commitment
Biddle & Rao, 1997). In the language of the problem’ in addition to the ‘conformity
symbolic interactionists, organizational problem’ which has been our exclusive focus
efforts to verify or validate one identity may thus far. Early institutional theorists
invalidate another one (Stryker & Burke, including Commons (1970) and Selznick
2000; Pratt & Foreman, 2000). Further, (1957) well-recognized this problem and
various internal groups with different argued that displays of commitment were
constitutive beliefs and disparate notions of critical in building and maintaining
‘appropriate’ behavior are likely to come institutions (Stinchcombe, 1997). They
face-to-face in decision situations, similarly emphasized the de-legitimating
particularly strategic ones (Glynn, 2000). For effects of actions which violate commitments
example, hospitals routinely face decisions or otherwise convey opportunism. This
wherein their institutionally conferred concern with ‘credible commitment’ abides
identities as professional actors and market in contemporary perspectives which see
actors are both active. In such situations, the organizations primarily as solutions to
organization's efforts to fulfill its fiduciary collective action problems (Olson, 1965;
duties are likely to engender resistance and Britton & Nee, 1998; Ingram & Clay, 2000).
criticism from internal and external Neo-institutionalism, in contrast, says very
constituencies who identify with the little about how consistency and revealed
organization as a professional entity and commitment (or lack thereof) might affect
expect it to act primarily within this role. organizational legitimacy over time. Neo-
Analogously, financial constituencies also institutional accounts often do an excellent
regularly criticize corporations when they job of situating the organization within its
embrace social responsibilities that appear to broader cultural context, but they typically
fall outside of their narrow role as profit extract it from its own unique history of
making entities (cf. Friedman, 1970). In actions and transactions in so doing.
situations like these, organizational actions This omission is perhaps understandable,
appear to be co-produced by multiple as the commitment problem would appear to
identities and/or co-evaluated by multiple mostly vanish in situations where the
audiences. Such situations raise important organization and its constituencies are jointly
questions about the and
 249
wholly nested within a stable and culturally smelled of opportunism and thus reflected
homogenous field which is replete with negatively upon the ‘whole’ social actors
shared understandings and common scripts. who employed it.
However, the problem appears to re-emerge This counterintuitive finding and
quite dramatically in the presence of interpretation calls to mind Groucho Marx's
institutional pluralism. When an organization famous comment that he would never join a
is situated in a pluralistic context, its internal club that would have him as a member
and external constituencies are likely to (presumably because of the second order
recognize its capacity to abruptly change signal that his inclusion would send about the
direction and reprioritize its identities and character of the club as a whole). More
values. They can thus be expected to trust it seriously, it also coheres with a great deal of
only with hesitation, and to be particularly contemporary research on the psychology of
concerned with gauging its predictability and legitimacy, which has consistently shown
reliability. As a result, they may be especially that legitimacy judgments rest primarily upon
likely to employ what we will call ‘second perceived procedural fairness (a second
order’ evaluative criteria in assessing its order criteria) rather than distributive fairness
legitimacy. While they may react positively (a first order one) (Tyler, 1990; 2002). It is
when the organization symbolizes its also consistent with a vast body of research
agreement with their values and in other branches of the social sciences which
accommodates their near-term interests has revealed the powerful, emotional and
(these being ‘first order’ criteria), they are evidently preconscious responses that
also prone to look for evidence of displays of commitment (and opportunism)
commitment, trustworthiness, and non- can invoke (Frank, 1988; Nesse, 2001;
arbitrariness (second order criteria) in the Hauser, 2006). The upshot is that the
stream of decisions emanating from the organization seeking legitimacy in a
organization over time.² pluralistic context is likely to face what we
Further, and ironically, some first order will call the politician's dilemma, a
actions may send unintended second order conundrum which results from the interplay
signals, such that constituents come to think of the conformity and commitment problems.
less of the organization as a direct result of its Constituents obviously want the organization
efforts to please them. Love & Kraatz (2007) (and the candidate) to espouse their values
provide a rather striking example of this and to pursue policies that further their
phenomenon. They show that large American particular interests. But, they are also
corporations' reputations were badly attracted to revealed commitment and
damaged by their use of the practice of integrity, and repulsed by obviously
downsizing during the 1980s and 1990s. The opportunistic and arbitrary acts. In other
irony in this finding is that the reputations words, they are inclined to pass judgment not
they studied were ascribed by stock analysts only upon the legitimacy of organizational
(who strongly advocated downsizing and identities, but also upon the legitimacy of
publicly praised downsizing firms) and by (what at least appear to be) organizational
peer firm executives (most of whom revealed selves. They evaluate the organization not
their approval of the practice by engaging in only as a part of some socially constructed
it themselves). Love & Kraatz suggest that system of meanings and rules, but also as a
downsizing's negative effect on reputation social actor (which is what its divided social
occurred because of the negative signals that context appears to make it into).³
it conveyed regarding the trustworthiness and We see at least four basic ways in which
credibility (i.e. the ‘character’) of these firms. organizations may adapt to pluralistic
Downsizing was an attractive and highly legitimacy criteria. The most obvious effect
legitimate ‘part’ from the perspective of of inconsistent expectations is to engender
analysts and peer executives, but it also
250
resistance and conflict in and around the often viewed as being decoupled from the
organization. In other words, many core of the organization, or as merely
organizations adapt to pluralism by trying to symbolic, rather than substantive in nature
eliminate pluralism. The organization's (Meyer & Rowan, 1977; Lounsbury, 1999;
leaders may, for instance, deny the validity of Westphal & Zajac, 1994, 1998). While such
various external claims that are placed upon characterizations are sometimes apt, we think
it, attack the legitimacy of the entities making there may be a need for caution in drawing
the claims, attempt to co-opt or control these these conclusions in pluralistic organizations.
entities, and/or try to escape their jurisdiction We do not see how one can invoke the
or influence altogether (Pfeffer & Salancik, concept of decoupling without presuming to
1978; Oliver, 1991; Suchman, 1995). They know the organizational ‘core’ from which a
may, in short, attempt to ‘delete’ or thing is decoupled. It seems likewise
marginalize some of the institutional problematic to describe something as merely
identities and attendant obligations that symbolic unless we know where true
constituencies seek to impose upon their substance resides. As we have already seen,
organization (Pratt & Foreman, 2000). A this is a difficult trick in the pluralistic
similar dynamic may play out among internal organization with its multiple cores, diverse
constituencies, irrespective of managerial identities, varied substances, and complex
influence. Groups that identify with the symbolisms. Practices that are highly
organization for one reason and advocate a peripheral and inconsequential to the identity
particular organizational ideology may try to of one constituency may be all-important to
banish or permanently suppress other groups the identity and values of a different one.
and belief systems (Selznick, 1949). They Intercollegiate athletics in American
may, in fact, succeed in this task, effectively higher education seem to provide a
shedding identities and eliminating some of compelling example along these lines. It is
the pluralistic demands that initially gave rise quite difficult to grasp the importance
to the conflict. We shall discuss these (perhaps even the existence) of ‘big time’
possibilities in more detail in the subsequent college sports when we view the university as
section, as we explore pluralism's an organizational device for accomplishing
implications for organizational governance. its stated goals of knowledge creation and
For now, we will only note that while no dissemination. Excellence in quasi-
organization can be all things to all people, professional athletic endeavors is not
efforts to completely eliminate, silence, or mentioned in the mission statement of any
marginalize constituencies may prove self- university that we know of, and athletic
defeating in the long run. We suspect that the departments often seem to be formally cut off
effective management of pluralism may be a from the rest of the university's structure.
critical organizational (and managerial) Nonetheless, athletics are, empirically
capability. Its relative scarcity may be one speaking, a central part of most American
reason why most organizations do not universities' identities. For better or worse,
survive very long. the majority of people who identify with
A second approach to adapting to universities at all, identify with them through
pluralistic legitimacy standards is to their sports teams. Further, these
‘compartmentalize’ identities and relate identifications are often intense ones that
independently to various institutional have major implications for university policy
constituencies (Pratt & Foreman, 2000). The and resource allocations. And, while it may
organization may do this by sequentially be quite easy for many faculty members to
attending to different institutional claims, imagine a university without football, it is
and/or by creating separate units and likely the single most taken-for-granted part
initiatives that demonstrate its commitment to of the organization from the perspective of
the values and beliefs of particular
constituencies. Such initiatives are
 251
other influential constituencies. (One its mutual dependence upon another. This
sometimes wonders if society at large would may partially describe the relationship that
even permit our universities to exist without many athletic departments have with the
it). In sum, while college sports may be universities that house them. Some athletics
entirely beside the point from an academic departments seemingly tolerate academic
perspective, we do not think they can be standards without embracing them, and many
accurately classified as peripheral or faculties appear to feel similarly with respect
decoupled. Loose coupling would seem to be to sports (i.e. to view them as a necessary
a more suitable concept to describe the evil). The same general sort of relationship
evident reality of the situation, as this sometimes seems to exist between the
concept does not stipulate the existence of a research and teaching identities within
single organizational core (Orton & Weick, business schools. The line separating
1990; Weick, 1976). situations of reluctant mutual acceptance
The example of intercollegiate athletics is from those of true cooperation is not an
also useful in demonstrating the limitations especially bright one. We can certainly find
of loose coupling as an adaptation to specific examples of situations wherein
pluralism. Because athletic and academic athletics and academics (or teaching and
purposes are often almost entirely research) are mutually facilitative. Some
uncommensurated with one another, the corporations also seem able to find true
operative goals pursued by athletic and complementarities between their social
academic constituencies are frequently at responsibilities and their duties to their
odds. Because athletic departments are often shareholders (Hillman & Keim, 2001).
structurally and financially autonomous, they Nevertheless, tensions abide. Relationships
are also prone to make decisions that offend that are cooperative in their effect may
academic sensibilities and interests (e.g. remain quite conflictual in their process (and
massive investments in athletic facilities and vice versa). Balances that are struck among
multimillion dollar coaching salaries). various objectives, constituencies, and role
Finally, because academic and athletic identities are often precarious (Clark, 1956;
cultures are so vastly different (and Selznick, 1951).
sometimes hostile to one another), faculty This leads us to the final form of
and administrators are often reluctant to organizational adaptation which pluralistic
engage athletic issues directly. This legitimacy imperatives may produce.
reluctance perpetuates and exacerbates Specifically, it is possible that some
existing rifts (Bowen & Levin, 2003; organizations may be able to forge durable
Shulman & Bowen, 2001; Duderstadt, 2000; identities of their own and to emerge as
Zimbalist, 1999). institutions in their own right. To the extent
A third category of adaptations to plural- that this occurs, many of the organizational
ism aims at reining in such tensions. legitimacy problems mentioned above may
Specifically, organizations may also try to be mitigated, transformed, or even
balance disparate demands, play constituent- eliminated. An organization that becomes an
cies against one another, and/or attempt to institution may assume a ‘social fact’ status,
find more deeply cooperative solutions to the become a valued end in its own right, and
political and cultural tensions which plural- thus become capable of legitimating its own
ism creates (Pratt & Foreman, 2000; Oliver, actions, within limits (Goodstein, Blair-Loy
1991; Donaldson & Preston, 1995). As with & Wharton, 2006). It may become a self-
loose coupling, these adaptations may result directing entity which is not only a cultural
from strategic managerial action or emerge product, but also a producer of culture
more naturally from the interactions of (Pedersen & Dobbin, 2006). In the language
constituent groups. A degree of internal of relational sociology, it may attain
balance may evolve, for instance, as one ‘entitativity’ (Campbell, 1958; Emirbayer,
constituency grudgingly acknowledges 1997) and become a ‘thing with
consequences’ or a
252
‘site of causation’ (Abbott, 1996:873; institutionalization which we will discuss
Emirbayer, 1997:304; White, 1992). It may below). However, Selznick's would-be
also obtain the ability to integrate or institution appears to gain much in return for
somehow transcend the individual identities essentially giving itself up. What must be
which compose it, and which are imposed recognized, we believe, is: a) that it makes
upon it from without (Padgett & Ansell, multiple binding commitments and, b) that
1993; Padgett, 2001). these commitments are profoundly symbolic,
Selznick (1957) provides one important as well as material. While no organization
account of how this might occur within the can realistically be all things to all people at
pluralistic organization. As we have noted, he all times, this may be the precisely the point.
is keenly aware of the problem of pluralism, Because the Selznickian institution makes
and he sees institutionalization as a dynamic itself the receptacle for the ideals of multiple
and natural response to the ‘anxiety-laden groups and a vehicle for the realization of
problems’ (1957:39) which pluralism creates. multiple identities and purposes, it acquires
In his view, the end result of (of necessity) the capacity to reprioritize and
institutionalization is the emergence of an reinterpret ‘its’ identities, ideals, and
autonomous and unique ‘organizational self’ purposes as circumstances dictate. It also
(1957:21). This self possesses its own acquires the moral authority (i.e. the
purposes and distinctive competencies, and it legitimacy) to make reciprocal claims upon
is valued as an end in its own right, rather constituent identity groups. It makes these
than a mere means for achieving pre-existing claims on behalf of the organizational whole
or externally-given ends. Importantly though, (i.e. self) which is, somewhat miraculously,
Selznick does not see institutionalization as a conjured into existence as a result of the
process that somehow extracts the binding, constitutional commitments that the
organization from its constraining external organization makes to its various parts. In
context, or as one that negates the local other words, by agreeing unconditionally to
identities and parochial aims of its be both ‘this and that,’ the organization may
constituencies. To the contrary, he somehow become ‘the other,’ as well.
paradoxically argues that the organization's Because its diverse constituents perceive the
acceptance of ‘irreversible commitments’ is institution to be ‘theirs’ in some fundamental
the very cornerstone of institutionalization. sense, they come to value it as an end in itself
He likewise sees institutionalization as a and thus imbue it with purpose and meaning.
largely bottom-up (or outside-in) We think it is important to emphasize the
phenomenon. The Selznickian organizational critical role of symbolism in this
institution is ‘infused with value’ by its hypothesized process. If constituencies were
constituents and it is institutionalized only in sharply and solely focused upon the tangible
so much as it becomes the vehicle through outputs and near-term objectives of the
which these groups pursue their aspirations organization, creating and sustaining
and their ideals. While it develops a logic of cooperation amid pluralism might well be
its own and attains the ability to give identity impossible. However, people's tolerance of
to its members, it accepts identities and (or even preference for) symbolic displays of
logics from them in at least equal measure. commitment and conformity may help things
Accepting binding commitments and hold together. Symbolism, in short, may be
effectively surrendering to one's constituents what allows an organization to be multiple
would not appear at first glance to be a things to multiple people (Padgett & Ansell,
probable path to autonomy, distinctiveness, 1993; Ansell, 1997; Zajac & Westphal,
and organizational selfhood (much less 2004). It may enable the creation of a
adaptability, another presumed benefit of ‘coalition of identities’ that is more robust
and more sustainable than a mere coalition of
interests
 253
could realistically be. It is also important to governance takes place outside the
note, again, that ‘mere’ symbolism is not boundaries of individual organizations
sufficient according to Selznick's account. (Fligstein, 1991; Friedland & Alford, 1991;
While robust symbols can evoke powerful Thomton & Ocasio, 1999; Scott et al., 2000).
meanings and provide the institution with Governance, from a neo-institutional
needed autonomy, its commitments must be perspective, is largely (not exclusively) a
‘embodied’ and acted out if they are to field-level phenomenon. A now vast body of
engender the reciprocal commitment research has shown that the state, the
necessary to sustain the institution over time professions, and other field-level entities
(Stinchcombe, 1997). In other words, second profoundly influence the control structures,
order legitimacy criteria continue to be practices, and even basic purposes of
critical. Obvious disconnects between individual organizations (see Scott 2001 for a
rhetoric and subsequent actions are the very review). Second, the perspective emphasizes
antithesis of organizational integrity, and can that much governance work (perhaps most of
be expected to damage legitimacy it) is actually done by cultural or cognitive
accordingly.4 mechanisms, rather than the coercive,
interest-based, or value-based ones featured
in other institutionalisms (DiMaggio &
Powell, 1991). Shared beliefs and
INSTITUTIONAL PLURALISM understandings are thought to effectively
AND THE PROBLEM OF determine much of what goes on in
ORGANIZATIONAL GOVERNANCE organizations from day to day, and even to
deeply influence fundamental decisions about
We are also interested in understanding the organization's control, identity, and
pluralism's implications for organizational reason for being (Friedland & Alford, 1991;
governance. Governance, broadly conceived, Thomton & Ocasio, 1999; Greenwood &
has to do with questions of organizational Hinings, 1993; Hinings et al, 2004).
purpose and control (Hansmann, 1996; Neo-institutional insights regarding
March & Olsen, 1995; Williamson, 1996; organizational governance have manifested
Selznick, 1992). Studies of governance are themselves in a variety of ways. One
thus generally concerned with identifying influential strand of empirical research has
‘who rules’ organizations, with demonstrated that organizational purposes
understanding the ends toward which they and control structures are transformed over
are ruled, and with analyzing the means (e.g. time as the result of broader, historical shifts
incentives, structures, informal norms) in institutional logics (Fligstein, 1991;
employed to achieve those ends. Questions Thomton and Ocasio, 1999; Scott et al, 2000;
about the processes through which control Lounsbury, 1999; Dobbin, 1994). A second
and purpose are decided and changed over group of studies has emphasized the
time are also integral to the study of essentially cultural nature of organizational
organizational governance. forms. This work invites us to see
Given that institutions are, among many organizational forms as the embodiments or
other things, mechanisms of governance, it is incarnations of institutional logics, and
not surprising that institutional theories of all argues that cultural understandings imprinted
types have been widely applied in the effort in organizational forms at the time of
to explain governance phenomena. The main founding continue to constrain organizations
message of neo-institutionalism as regards throughout their lives (Haveman & Rao,
organizational governance appears to be 1997; Rao, 1998; Rao et al., 2003; Dobbin &
twofold. First, and most basically, the theory Dowd, 1997; Schneiberg & Bartley, 2001). A
draws attention to the fact that a great deal of third
254
manifestation is evident in neoinstitutional If multiple logics are active in and around an
studies of organizations' legal environments. organization, then no single belief system can
This research suggests that laws are often automatically perpetuate its dominance. If
‘endogenous’ to organizational fields, and various constituencies hold different notions
raises doubts about coercive or functionalist about the ‘appropriate’ allocation of power,
explanations of the law's effect on then something else besides a simple logic of
organizations. Rather, it presents legal appropriateness would seem to ultimately
compliance as a ‘special case of institutional determine who rules the organization. If the
isomorphism,’ and suggests that laws organization claims multiple, institutionally
typically govern organizations through defined identities and purposes, it would
mechanisms that are primarily cultural and seem that its governance must (at least
constitutive (Edelman, 1990; 2002; Edelman minimally) accommodate and validate these
and Suchman, 1997; Kelly & Dobbin, 1998; disparate identities and purposes. In short, it
Sutton & Dobbin, 1996). Finally, the neo- appears that the recognition of pluralism
institutional perspective on governance is leads to the re-emergence of some basic
also much evident in a growing number of political and structural problems that
studies which examine how social appeared to fade from significance with the
movements both create and transform field- rise of neo-institutionalism.
level institutions. This research suggests that We do not think that an organization
new cultural frames and governing logics which is simultaneously embedded in
wrought by social movements are multiple systems of governance can be
instrumental in creating, transforming, and/or adequately understood as a unit of any one of
extinguishing individual organizations and those systems. It is, at the least, a functioning
organizational forms (Davis & Thompson, part of each respective system. It is at most a
1994; Rao, Morill & Zald, 2000; Davis, system quite unto itself, as the preceding
McAdam, Scott & Zald, 2005; McAdam & section showed. In either case, much
Scott, 2005; Zald, Morill & Rao, 2005; governance activity clearly goes on within
Schneiberg & Lounsbury, this volume). This the pluralistic organization. It is responsible
view of organizational governance represents for internally settling issues that are unsettled
a major break from earlier theories that within the broader environment. Further,
tended to see the organization as an unstable because it possesses multiple objectives and
coalition of local interests, with goals and diverse constituencies, its overall purposes
internal power balances that are primarily are subject to change (perhaps extreme
determined by shifting resource dependencies change) over time. Cognitive mechanisms
in the task environment (March & Simon, would also appear to be insufficient as
1958; Cyert & March, 1963; Pfeffer & explanations for the control of such an
Salancik, 1978). organization. When one set of taken for
The elaboration of field-level governance granted beliefs confronts an alternative one,
processes represents a major accomplishment ‘legitimacy politics’ (Stryker, 2000) are
of neo-institutionalism. Its demonstration of likely to ensue within the organization.
the importance of cultural and cognitive Organizational structures and rules seem
governance mechanisms is equally necessary in order to contain and channel
impressive. Even institutional economists are these processes. This need seems particularly
now inclined to recognize the importance of acute within those organizations that sit upon
such mechanisms (North, 1990). However, cultural and societal fault lines, as inter-
the reality of institutional pluralism appears identity tensions are likely to be very deep-
to render neo-institutionalism incomplete as rooted and recurrent in such settings. The
an explanation for organizational governance, control of such organizations is likely to
as well as for organizational legitimacy. ‘circulate’
 255
between identity groups over time as a result mere result of their divergent beliefs, values,
of political processes (Ocasio, 1994; Ocasio and near-term objectives. But, in the ideal
& Kim, 1999). Persons who can credibly circumstance, the substance of intergroup
claim membership within more than one conflict may shift away from narrow
group may enjoy particular advantages in questions about what the organization should
these perennial internal contests for control do or provide, and toward larger (i.e. second-
(Burt, 1992; Lazega, 2001; Padgett & Ansell, order) questions about what it should be and
1993). aspire to. The focus of conflict may
Each of the organizational adaptations that simultaneously shift from near-term concerns
we described in the prior section can be to long-term ones. As these shifts occur, the
rightfully seen as approaches to organization may begin to become an end in
organizational governance, in addition to itself, and thus an institution in its own right
being strategies for pursuing legitimacy in (Selznick, 1957; 1969; 1992; 1996). Ongoing
the face of pluralism. Attempts to delete conflicts between identity groups
institutionally-given identities, to loosely subsequently become intra-institutional rather
couple them, or to balance them against one than extra-institutional. That is, they happen
another are all different ways for a pluralistic ‘for’ the organization, and within the
organization to cope with the twin problems constitutional framework it creates, rather
of deciding organizational purpose and than against or outside of it.5
control. The Selznickian institutionalization We do not know the frequency with which
process can be seen in the same light, and successful institutionalization processes
this adaptation merits additional discussion actually unfold in organizations. There are
under the governance rubric. numerous reasons to believe they might be
We think that the single most important rare and difficult. To begin, pluralism itself is
feature of the pluralistic organization may be a major threat to such processes as well as
its inchoate capacity to govern itself - and its their chief enabler. Workable identity
parallel ability to develop a self which coalitions (i.e. reasonably coherent
becomes the focal point of its governance organizational selves) likely become more
efforts. More tangibly, the pluralistic difficult to maintain as identities proliferate
organization has the capacity to constitute within an organization. Further, powerful
itself by choosing its identities and identity groups have the opportunity and
commitments from the menu of choices incentive to short-circuit institutionalization
presented by its would-be constituencies, and by using their power to narrow or rationalize
by society at large. This is an opportunity organizational purposes and effectively cut
which is clearly not available to the weaker identities out of the coalition. Such
organization that is a mere incarnation of an efforts may often be well intentioned, though
externally given cultural logic, or which is ultimately shortsighted. It is also important to
otherwise imprisoned within the iron cage of remember that self governance is an ongoing
a monistic and totalizing institutional field. process; one which is only set in motion
The pluralistic organization similarly has the when a nascent institution makes
opportunity to gain autonomy from its constitutional commitments. If the self-
constituencies, to reprioritize its identities as governing institution is to flourish, it must
needed, and to arbitrate between the claims actually follow-through on these
of the identity groups that jointly constitute commitments over time (i.e. act with
it. Perhaps most importantly, it may also integrity). It must also develop integrative
obtain the ability to harness and channel the mythologies and ‘robust’ symbols that
divergent energies of these constituencies. manage to satisfy the individual parts of the
Under all circumstances, these groups can be organization at the same time they draw these
expected to coexist somewhat uneasily as the parts together into an emergent whole
(Ansell, 1997; Atkinson, 1985;
256
Bernstein, 1971, Clark, 1970; Padgett & understood unless we also attend to the
Ansell, 1993; Selznick, 1957). The creation broader institutional orders which the
of formal and informal structures is likewise organization must actually bridge. This may
integral to any successful institutionalization be an important insight for stakeholder
project (Selznick, 1949, 1957). Finally, theorists. While these scholars express much
institutionalization also affords a large degree optimism about the benefits to be realized
of influence to human selves – who appear as from collaborative organizational
‘leaders’ within the process. The autonomous governance, they have said relatively less
and self-governing organizational institution about the profound ideological and political
can be a profoundly cooperative, socially challenges cooperative governance entails.
integrative, and highly durable entity. It can Organizations may be able to integrate their
also undergo a radical subversion of purpose, societally-given identities to a significant
become an instrument of elite domination, extent, but society itself remains divided.
and/or become insular and inertial in the face Neo-institutionalism helps us understand the
of a changing environment. Selznick (1957) nature and significance of these divisions
holds that institutional leadership (i.e. (Friedland & Alford, 1991).
‘organizational statesmanship’) is often
required to ensure the former outcomes and
avoid the latter ones. But, he also suggests
that such leadership is often most notable by INSTITUTIONAL PLURALISM
its absence. AND THE PROBLEM OF
These challenges notwithstanding, we see ORGANIZATIONAL CHANGE
an important opportunity for institutional
research which gives renewed attention to Our chapter's final section focuses on the
integrative processes of governance at the problem of organizational change, and
organizational level. Whether or not particularly on understanding change of the
pluralism ultimately leads to the development radical or transformative sort. We believe
of a self-directing organizational institution, that institutional pluralism has significant
its minimal effect is to make individual implications for this phenomenon and for our
organizations into important arenas of theoretical understanding of it. In order to
governance. Institutional researchers might understand these implications, it is first
learn much by peering more deeply into these useful to consider some key neo-institutional
arenas. However, we do not suggest that they insights about organizational change.7
should lose sight of broader, embedding To begin, the perspective helps us
institutions in so doing. As we have understand the main reasons why change is
emphasized, the individual identities which likely to be problematic for the organization.
contend for influence within the pluralistic Specifically, it suggests that prevailing
organization have societal roots.6 These roots institutions are apt to constrain change, and
are not severed even when an organization draws special attention to the role that
becomes an institution in its own right. Its institutionally-given identities play in subtly
autonomy and self-awareness may make it a perpetuating the organizational status quo
more effective and formidable player within (DiMaggio & Powell, 1991; Greenwood &
its pluralistic institutional context. But, it Hinings, 1993; 1996; 2006; D'Aunno et al.,
likely remains a creature of its social 2000). Second, the theory helps us
environment and it probably needs to be understand how change is likely to unfold
understood this way. The ability to tie within an organization. The most typical
together disparate institutional worlds may be expected pattern is one of punctuated
a major source of organizational equilibrium. In ordinary times, the
distinctiveness and competence. But, this organization is likely to engage in
governance capability cannot be incremental changes that basically
 257
converge with its core identity and cohere change somewhat less rare and remarkable
with its constitutive logic. However, these than it may appear from a neo-institutional
convergent periods are intermittently perspective. The deep-rooted tensions that
punctuated by shorter episodes of divergent are built in to the pluralistic organization
and revolutionary change (Greenwood & seem to make its mere ability to hang
Hinings, 1996; Greenwood & Hinings, together something of a mystery. It appears
2006). These disruptive spates are most likely more likely to be fraught with excessive
to be exogenously precipitated, to involve change than to be burdened with inescapable
significant conflict, and to be spurred on by inertia. Stability may thus be seen as a sort of
marginal or disadvantaged actors (as achievement (and perhaps a tenuous one).
revolutions typically are) (Leblebici et al., Second, pluralism problematizes the meaning
1991; Kraatz & Moore, 2002; Hirsch, 1986). of any given organizational change.
Finally, the perspective also offers important Categorizing a particular organizational
insights about the actual nature of radical change as convergent or divergent becomes a
organizational change. Because neo- troublesome task, one which requires
institutionalism conceptualizes the substantial judgment on the part of the
organization as a fundamentally cultural research (and perhaps on the part of the
entity, transformation is thought to occur change agent as well). Because the same
when one set of constitutive beliefs change often conveys different symbolic
ultimately gives way to another one. It is at meanings to different constituencies, it may
this point that the organization is truly be highly convergent (legitimate) with
reconstituted, becoming something radically respect to one identity, deeply divergent
different than it once was (Greenwood & (illegitimate) with respect to another, and
Hinings, 1996; 2006). This general account wholly irrelevant or unnoticed by a third.
of organizational transformation shares Finally, pluralism compels us to see
appreciable similarities with other punctuated particular changes not just in relation to
equilibrium models of change (Tushman & multiple external institutions, but also in
Romanelli, 1985; Gersick, 1991; Meyer, relation to the institution that the organization
Brooks & Goes, 1990), with configurational itself may have become. This means that we
approaches to organization (Miller & Friesen, need to ask how a given change fits with the
1984; Meyer, Tsui & Hinings, 1993), with organization's unique history and claimed
models of organizational learning that purpose. Is it at odds with the commitments
emphasize the deep tension between that the organization has itself embraced and
exploitation and exploration (March, 1991; evinced? How will it affect the balance of
1994, 1999), and with recent research in power within the organization's coalition of
organizational ecology which sees identities? We also need to ask how and if the
organizations' socially-given identities as key change fits with the organization's own
sources of inertia (Baron, 2004; Hannan et unique mythology and espoused mission,
al., 2006). which have presumably developed in order to
We believe that this perspective is quite integrate its identities and sustain the
useful as a starting point for understanding coalition among them. The answers to these
organizational transformation. But, we also questions are likely to determine not only the
think it becomes increasingly unsatisfactory local meaning actually assigned to a given
as institutional pluralism grows. Pluralism's change, but also the organization's ability to
basic implications for organizational change implement that change and its ultimate
are largely foreshadowed in our earlier consequences, as well.
discussions of governance and legitimacy. The most obvious pattern of
First, pluralism has the effect of organizational change that pluralism may
problematizing organizational stability and of produce is one of ongoing and largely
making uncontrolled flux.
258
This rather extreme consequence is especially Change processes like this one suggest that
likely to occur in loosely coupled the problem of controlling organizational
organizations. Under loose coupling, change may be of equal importance with the
autonomous identity groups can pursue their problem of initiating it (at least in pluralistic
respective aims with little interference from organizations). March (1981) and Tsoukas &
other groups and little oversight from a Chia (2002) have previously theorized
central authority. This situation would appear similar change processes, though their
to promote the type of organizational accounts are less closely linked to
dynamics that March and colleagues had in institutional arguments.
mind in their discussion of organizational Pluralism is likely to affect change
anarchies (Cohen & March, 1986; March & somewhat differently in an organization that
Olsen, 1976). Another important effect of has developed a stronger sense of itself and
pluralism is to create change processes that thus become institutionalized in the
are rife with unintended consequences Selznickian sense. One possibility for such an
(Merton, 1936; Selznick, 1949). Though organization is that its chosen commitments
constituent groups within the pluralistic will become anchors, constraining it in
organization may be able to act basically the same way that an externally
autonomously, their actions are apt to imposed identity might. Selznick (1957)
reverberate throughout the larger system as a himself warns of this potential, noting that
result of unrecognized (or disregarded) the creation of distinctive competencies is
interdependencies. Thus, organizations may often accompanied by the parallel emergence
sometimes be transformed almost by of distinctive incompetencies. However, this
accident. Kraatz & Ventresca (2007) provide is clearly not Selznick's dominant message.
one good example of such a change process To the contrary, he sees institutionalization as
in the context of American higher education. a process that tends to promote adaptation;
They study the diffusion of enrollment one which not only allows an organization to
management (EM), a now-controversial set change, but which may also allow (or even
of marketing practices and structures compel) it to change intelligently. We have
designed to increase enrollments, improve already elaborated the basic explanations for
college rankings, and maximize net-tuition this proposition. To review, the Selznickian
revenues. Enrollment management's wide institution: 1) possesses multiple
adoption has transformed the admissions institutionally-derived identities, thus
function, fundamentally changed the purpose escaping the constitutive iron cage that a
of financial aid, and helped make universities monistic field may impose, 2) is an
considerably more ‘market-driven,’ among autonomous ‘organizational self’ which is
other consequences. However, Kraatz & capable of reprioritizing, reinterpreting, and
Ventresca find that this change was adopted mediating between its identities according to
rapidly and widely with little apparent necessity, 3) has constitutional commitments
controversy. Admissions personnel embraced that put limits on its flexibility and compel it
the practice because it was an effective to act responsibly with respect to its
solution to technical problems, because it constituents and its history and, 4) is valued
allowed them to realize their job-specific not only as a means through which
goals, and because it was increasingly constituents pursue their individual aims but
deemed ‘appropriate’ by the emerging logic also as a non-expendable end in its own right.
of the growing EM profession. Though EM Together, these characteristics provide the
was (and is) highly illegitimate with respect organizational institution with the necessary
to the values and beliefs of many other motivation and opportunity for change. In the
identity groups in and around the university, right combination, they may also enable it to
this conflict remained latent until after EM change intelligently, as we shall discuss
was in wide use. further below.
 259
Selznick and his contemporaries provided and sometimes merely absurd. But, it is also
numerous examples of organizational sometimes genuinely desirable and emulable.
transformations resulting from The same basic processes which allow
institutionalization processes (Selznick, organizational purposes to be subverted and
1949; Clark, 1956; Zald & Denton, 1963; displaced in some organizational institutions
Messinger, 1955). The recurrent theme in allow other institutions to intelligently adapt
these studies was that individual to changing environments and thus continue
organizations essentially took on lives of to serve their constituents. An effectively
their own, obtaining remarkable fluidity as self-governing institution must, after all, be
their constituents infused them with value able to determine (and adapt) its basic
and strived to ensure their survival amid purposes. Though Selznick viewed
changing circumstances. More current institutionalization and its accompanying
examples of similar processes are common. changes as ‘fundamentally neutral,’ he had
Kraatz & Zajac (1996), for instance, found much to say about the factors that might push
that American liberal arts colleges widely the process in a positive or negative
adopted professional degree programs (which direction. In the ideal circumstance, the
were seemingly antithetical to their missions organizational institution is responsive to the
and identities) in the effort to survive demands of its pluralistic environment but
declining enrollments and changing student also responsible to its defining commitments
degree preferences. Suspitsyna (2006) shows and its history (Selznick, 1957; 2000). When
how economics departments in Russian these pressures effectively counterbalance
universities have transitioned to the teaching one another, the organization is unlikely to
of western economics, which they officially change too much or too little. The diversity
categorized as a false, ‘bourgeois science’ which pluralism builds into the system
during the Soviet era. Perhaps even more provides the variation and conflict necessary
striking is the Chinese communist party's to avoid competency traps (March, 1991),
recent push to integrate prominent capitalists which result from excessive homogeneity and
within its ranks (Kahn, 2002). What is a disproportionate emphasis on convergent,
noteworthy about all of these change exploitative change. At the same time, the
processes is not only that organizations have organization's historical commitments and
changed in ways that appear antithetical to sense of self keep it from engaging in
their (apparent) core identities, but that they excessive exploration and thus falling victim
have made these changes without renouncing to the obverse problem of the ‘failure trap’
those identities (and often in the very name (March, 1991). The relational structure of the
of them). We think that the occurrence of institution may also be instrumental in
such changes points to the existence of promoting intelligent adaptation, in that it
deliberative and adaptive organizational brings diverse identity groups into dialogue
institutions. These organizations appear to with each other and ultimately directs their
have been capable of escaping the constraints energies toward a shared (if necessarily
imposed by their institutional identities, and emergent and robust) organizational purpose
even of reinterpreting those identities in order (March & Olsen, 1995; Moore & Kraatz,
to serve their own changing needs and 2007).
purposes. Organizational change processes Institutionalization is likely to follow a
like these are difficult to conceive through less therapeutic path to the extent that these
the lens of either neo-institutionalism or forces are not in balance with one another.
organizational ecology, both of which tend to One way in which this balance may be
portray identities as externally imposed disrupted is through ‘opportunistic’
sources of constraint. adaptation. Selznick (1957) conceptualizes
The organizational ability for self- opportunistic changes as ‘irresponsible’ ones
transformation is sometimes tragic, that are undertaken without sufficient
sometimes ironic,
260
consideration of organizational commitments but they also allow the marginalized to
and competencies, and without necessary subvert it. While neo-institutional
regard for their longer-term consequences. perspectives on change tend to focus on
Attempts to pander to constituencies and cash precipitating organizational revolutions,
in on current fads may, for instance, fall in Selznick's theory suggests that revolution
this category. The flipside of opportunism is may be both unnecessary and ultimately
what Selznick calls utopianism. This occurs counterproductive. It suggests that the
when the organization becomes caught in its organizational vehicle might be taken in
past and holds to ideals that it can no longer many different directions by those who know
effectively realize. Importantly, Selznick sees how it works.
utopianism, as well as opportunism, as a key
threat to his master ideal of organizational
integrity. Within his pragmatist framework,
integrity requires the continued existence of DISCUSSION: SCHOLARLY,
the entity. It is not a virtue one ascribes to PRAGMATIC, AND HUMANISTIC
martyred organizations or doomed idealists. IMPLICATIONS
Of equal importance is the fact that integrity
can only be assessed on a case by case basis Our purpose in this chapter has been to draw
(and even then only tentatively). An greater attention to the phenomenon of
organization's choices may cause us to institutional pluralism and to lay out some of
reasonably question its integrity, but it may its organizational implications. We think that
also have commitments and reasons for its the problem is an important one for
actions that are not accessible to the analyst. organizational researchers, for would-be
Integrity (to the extent it exists) is a organizational leaders, and for other
characteristic of a dynamic organizational organizational constituents and members. We
self. All selves remain unique and somewhat will discuss these complementary
mysterious in the final analysis. implications in turn as we close the chapter.
We think that it is quite telling that
Selznick, as a sociologist, chose to make
leadership the focal point of his most Scholarly Implications
influential work on the process of
institutionalization. Clearly, he recognized We have already said much about pluralism's
that the complexities of institutionalization implications for organizational legitimacy,
provide individual persons with a great governance and change. Nevertheless, it may
ability to influence organizational change be useful to review and elaborate some of our
processes, both for better and worse. His key points with an eye toward promoting
work, especially Leadership in future research. We will also consider our
Administration, is largely concerned with chapter' s possible implications for a few
providing practical and moral guidance to other areas of study that we have not yet
these persons. Though Selznick's advice explicitly discussed.
seems primarily directed at the powerful, we
believe his perspective may also be of great Organizational legitimacy.
use to those trying to create change from Meyer & Scott (1983: 202) proposed that ‘the
within or outside the organizational legitimacy of a given entity is negatively
institution. Its major implication is that the affected by the number of different
organization is a relational entity which can authorities sovereign over it and by the
become whatever its constituents make it into diversity or inconsistency of their accounts of
(within some broad limits imposed by its how it is to function’ (reprinted in Scott,
history). Its robust identity and emergent 2001:60). Our discussion of the legitimacy
purpose may allow the powerful to co-opt it, problems faced by organizations in pluralistic
contexts began
 261
in a very similar place, but ended up ascribing legitimacy. In other words, they are
somewhere quite different. We likely to anthropomorphize organizations and
acknowledged that pluralism problematizes look for evidence of integrity and self-
legitimacy, but we also suggested that consistency in their actions (Selznick, 1957;
organizations may benefit from it and thrive Stinchcombe, 1997). If this is true, the
in its midst. We think that future research legitimacy seeking organization needs not
might give more attention to the possibility only to be multiple things to multiple people,
that organizational legitimacy can be additive but also something unto itself. It is hostage to
or even multiplicative rather than zero-sum its own history and to the identities and ideals
as Meyer and Scott seem to propose. We see it has claimed as its own (Selznick, 1996).
no obvious reason to predict that an While this dual imperative is the source of
organization cannot fulfill multiple purposes, the ‘politician's dilemma’ we identified, we
embody multiple values (or logics), and also suggested that this dilemma may carry
successfully verify multiple institutionally- the seeds of its own solution. The
derived identities. Indeed, we think that organization that recognizes its commitments
organizations that embody multiple values and takes responsibility for them may gain
and are successful at more than one thing needed autonomy and support from its
(e.g. research and teaching, satisfying constituents, even when its decisions are at
shareholders and environmental groups, odds with their near-term interests and
upholding professional standards and serving parochial values. At the same time, the
clients) may be especially legitimate for that practical necessity of responding to the
very reason. The contradictory standards and changing needs of constituents may liberate
expectations which are imposed by different the organization from the dead weight of its
constituencies no doubt put limits on these past. We think that future research examining
hypothesized integrative benefits, and thus organizational attempts to navigate the
block any path to organizational utopia. But, politician's dilemma (both successful and
as we have also suggested, the organization unsuccessful ones) may be revealing.
may attain substantial autonomy from
institutional authorities (who may not be
most accurately described as ‘sovereign’ over Organizational Governance
it) (Selznick, 1957; Oliver, 1991). Further, Our discussion of institutional pluralism also
the very fact that different institutional actors led us to the conclusion that institutional
care enough about an organization to levy govemance is an ongoing process which
multiple demands upon it may be the more transpires within the boundaries of individual
telling indicator of its actual legitimacy. organizations (as well as at higher levels). In
Consider the counterfactual situation wherein some cases, the pluralistic organization may
no demands are imposed and no support or merely serve as an arena wherein diverse
endorsement is offered in return. identity groups with different values and
We also think that future research on logics vie for influence and wherein recurrent
organizational legitimacy might give more bouts of ‘legitimacy politics’ occur (Ocasio
attention to the ‘commitment problem’ that & Kim, 1999; Stryker, 2000). Such an
we discussed and to the related idea that organization may constitute a sort of
organizations may acquire some capacity to ‘garbage can’ which is filled with
legitimate their own actions as they become institutional refuse (Heimer, 1999). However,
institutions themselves (Goodstein, Blair-Loy we also suggested that a more durable and
& Wharton, 2006). We suggested that stable ‘coalition of identities’ may emerge as
constituents attribute entitativity (Campbell, identity groups learn to co-exist and
1958; Hamilton & Sherman, 1996) to recognize their symbiosis. We further noted
organizations and apply second order criteria that some organizations may become
in effectively self-governing as they become
institutions
262
and develop distinctive ‘organizational while avoiding its obverse ('the tyranny of the
selves’ that somehow encompass, integrate, or’)? Is loose coupling a sufficient solution?
or transcend their externally-given identities Is the creation of quasi-democratic structures
(Selznick, 1957). and processes which grant voice, due process
We think that the examination of such and autonomy to diverse constituencies a
integrative processes poses a particularly viable option? Can organizations create
important opportunity for future research. We integrative mythologies and missions that
find it unfortunate and somewhat ironic that effectively bind together diverse constituents
much contemporary research on governance and somehow allow for the joint realization
seems to rule them out by assumption. The of incommensurable values? Can (or must)
dominant focus on governance as control they develop robust and multivocal identities
(whether by ownership, incentive, coercion, that allow them to be multiple things to
or cultural hegemony) often appears to blind multiple people (and to change) while
researchers to the very possibility of appearing to be unified and self-consistent? If
cooperation (i.e. of what Mary Parker Follett so, what sorts of rhetoric and symbolism are
called the ‘power with’ rather than ‘power effective at facilitating this quasi-integration?
over’) (Graham, 1995). Prevailing theories Finally, what role do people play in holding
seem particularly ill-suited to the analysis of together the pluralistic organization? What
organizations wherein constituencies kind of a mindset enables a person
cooperate in order to achieve wholly distinct (particularly a leader) to effectively function
purposes (e.g. making money and saving in the presence of so much diversity? We
lives, scientific research and professional would also like to see more research that
education etc.). We think that the examines failed attempts at cooperative
organization with such diverse purposes governance (and which describes them this
might be productively conceptualized as a way, rather than as the mere result of power
sort of ‘pluralistic social dilemma.’ Its politics or inexorable cultural forces).
constituencies are mutually dependent as in Selznick (1949) reminds us that organizations
the archetypical social dilemma (Hardin, are recalcitrant tools and shows how
1968). They require cooperation from other cooperation and idealism can give way to
groups in order to achieve their own ends, elite domination and goal displacement. But,
and each group has some ability to block the he also reminds us that the iron law of
others' attempts at goal attainment. But, oligarchy is not iron and not a law (Selznick,
because the purposes and values of each 1992). He stresses that ideals are called ideals
group are wholly distinct (and perhaps for a reason. The revealed impossibility of
fundamentally incommensurable) the perfect cooperation is no reason to abandon
recognition of mutual dependence and cooperative aims or to devalue organizations
potential symbiosis is greatly hindered. which achieve them only imperfect1y and
Purposes that are merely different are likely partially.
to be viewed as oppositional. The close
association of group identities with group Organizational Change
objectives likely exacerbates this problem Our discussion of organizational change
(Kramer, yielded at least three key insights for future
1991). research. First, we suggested that pluralism
We would like to see more theory and problematizes stability and makes
research which looks for organizational and organizational change less unusual and
managerial solutions to this basic dilemma of difficult than it often appears when viewed
governance. How do successful organizations through a neo-institutional lens. The same
realize what Collins and Porras (1994) institutional forces which might create
optimistically call ‘the genius of the and’ organizational inertia (operating in isolation)
can produce
 263
dynamic tensions and a potential for near- highly problematic when change recipients
constant change through their conjoint have the power to resist or ignore change
operation (March, 1981). This effect is likely initiatives (as they most often do in pluralistic
to be especially pronounced when an organizations). In contrast, even extreme
organization is loosely coupled, thus changes may be more readily accepted when
allowing various identity groups to pursue they are framed in a way that allows people
their distinct purposes in relative isolation to conserve their own sense of personal and
(Weick, 1976; March & Olsen, 1976). We organizational identity. This principle of
suggested that the unintended consequences ‘identity conservation’ may be a useful one
of such change processes may produce for change researchers to explore.
organizational transformation without
revolution (Kraatz & Ventresca, 2007). We Organizational Leadership
think that this implies a need for research Our chapter has also made numerous
which rethinks processes of radical references to leadership (or ‘organizational
organizational change (and perhaps expands statesmanship’). While this concept was a
the concept itself) (Greenwood & Hinings, notable casualty of the neo-institutional
2006). Second, we showed that pluralism revolution, we think that institutional
may facilitate organizational processes of pluralism has the effect of making leadership
institutionalization and identity formation both practically necessary and
that actually enable and productively guide philosophically possible. The pluralistic
adaptation. The organization that becomes organization does not automatically hold
valued as a non-expendable end in itself may itself together. Naturally occurring social and
acquire a significant (perhaps extreme) political processes may facilitate
degree of flexibility. But, institutionalization institutionalization and the formation of an
and identity formation may also put organizational-self. Political structures and
appropriate limits on adaptation and allow integrative mythologies may likewise help
the organization to avoid failure traps that sustain this emergent self. But, these
result from excessive and ill-considered processes and structures are not deterministic
changes which take it too far from its existing or final. Persons who find themselves at the
competencies and historical commitments top of (or in the middle of) pluralistic
(Selznick, 1957; Moore & Kraatz, 2007). organizations have much work to do in
These insights may have significant knitting them together (Selznick, 1957;
implications for contemporary change Gardner, 1990). We are also inclined to
research, especially in organizational ecology attribute agency to these persons. Because
and neo-institutionalism. These literatures they work at the nexus of multiple identities
emphasize that organizational identities (and multiple normative orders), they
affect change, but they tend to see these regularly find themselves in situations where
identities as externally imposed, fully they have ‘no choice but to choose.’ Their
constitutive and therefore constraining choices (even their default, taken-for-granted
(Zuckerman, 1999; Hannan et al, 2006). choices) may have very significant
Finally, our discussion of change also offered consequences for the evolution of their
some tangible advice for would-be change organizations (Emirbayer & Mische, 1998).
agents. Specifically, it suggested a practical We think it is reasonable to treat such
need to justify changes with respect to the persons as ‘sites of causation’ (Abbott,
organization's own claimed ideals, espoused 1996). We also think it is appropriate to
identity, and distinctive history (and with assign moral praise and blame to them (as all
respect to the ideals and identities of research which invokes the value-laden and
particular groups and persons therein). inescapably moral concept of leadership
Revolutionary rhetoric is likely to produce inevitably does) (Bums, 1978; Ciulla, 2004).
counter-revolutionary responses. This is Kraatz (2007) considers institutional
264
pluralism's implications for leadership in Jones, 1995). Stakeholder theorists have
more detail. based their arguments upon moral
philosophy, upon practical reasoning, and to
Organizational Identity a lesser extent upon empirical research. The
We have also said much about organizational implicit or explicit objective of most work in
identity in the preceding pages. Our chapter this area is to bring an end to shareholder
may have some implications for the narrower hegemony and to promote a more democratic
literature on this topic, despite our broader and cooperative social order within the
aims (and despite our acknowledged modern corporation. However, research in
ignorance of that literature's subtleties) (see this area says relatively less about how
Glynn's chapter in this volume for a more stakeholder governance might be achieved if
nuanced discussion). We think that our and when shareholders are deposed from
notion of the organization as a coalition of their preferred status. It also often appears
identities and as a (potentially) integrated somewhat naïve as to the political,
‘self’ may be particularly generative. The ideological and cultural challenges involved
identity literature has historically in creating and sustaining cooperation in any
conceptualized organizational identity as that complex, pluralistic organization. The
which is ‘central, distinctive and enduring’ stakeholder literature's arm's length
about an organization (Albert & Whetten, relationship to social scientific theory and
1985). This idea rests rather uneasily research appears to be a particular liability in
alongside more sociological this regard. Our chapter has explored many
conceptualizations which see identities as of the challenges facing pluralistic
institutionally-derived, externally-imposed, organizations and has identified some
and categorical in nature. According to the possible solutions to them. We hope that it
latter view, identities are certainly central and might serve as a resource for future
enduring, but they are in no real sense stakeholder research and help build bridges
distinctive or possessed by the organization. between this perspective and other theories of
We have provided some insights about how organization.
an organization may develop a distinctive
and robust identity of its own by embracing
and embodying its various institutionally- Neo-Institutionalism
given role identities (rather than escaping or Our chapter has no necessary implications for
eschewing them). Institutional pluralism is the neo-institutional research agenda. That
what seems to make this possible. Identity perspective, as we interpret it, has a core
scholars might further explore this proposed commitment to understanding higher-order
process and more effectively unpack the institutions and field-level processes of
abbreviated theoretical account we have institutionalization and institutional change.
developed here. It's central empirical concern has been with
explaining the legitimation and diffusion of
Stakeholder Theory various practices, structures and forms (and
As we have noted, stakeholder theorists also more recently changes therein). The ‘whole’
argue that organizations (specifically organizations which are our explicit focus
corporations) should be seen as pluralistic here do not even clearly exist when we view
entities with multiple purposes and the organizational world through a neo-
responsibilities (Donaldson & Preston, 1995; institutional lens. The perspective does not
Jones, Wicks & Freeman, 2002). They tend to support the idea that organizations are
similarly argue that corporations will realize (or can be) autonomous, integrated or self-
practical benefits if they respect the governing entities (i.e. ends in themselves).
legitimate interests of their multiple Rather, it leads us to view them more as the
constituencies and de al fairly with them means that powerful institutional actors use
(Donaldson & Dunfee, 1994; to achieve their purposes, or perhaps as the
 265
slates upon which larger cultural institutions Pragmatic and Humanistic
(and institutional entrepreneurs) leave their Implications
mark. While much recent work in this
tradition has focused on the same inter- While our chapter's primary implications are
institutional tensions and conflicts that we for organizational scholarship, we believe
have discussed here, it has primarily sought that our discussion of institutional pluralism
to understand these tensions' implications for may also have some practical and humanistic
fields, rather than for individual implications. We are obliged to discuss these.
organizations (e.g., Lounsbury, 2007; In writing this chapter, we have been much
Marquis & Lounsbury, forthcoming; influenced by the philosophy of American
Schneiberg, 2007; Schneiberg & Soule, 2005; pragmatism (James, 1907; Dewey, 1929;
Thomton, Jones & Kury, 2005; Hargrave & 1938). This influence is neither superficial
Van de Ven, 2006). nor incidental. William James, who first
We think that field-level and societal-level popularized this philosophic stance, was also
institutions are certainly an appropriate focus an early proponent of pluralist thought
for sociological research, and we have (James, 1909). Pragmatism pervades the
learned much from studies examining them. work of Selznick, of Mead, and of the
We also agree that demonstrating these sociological identity theorists whose ideas
institutions' effects upon organizations is a have also much influenced us (Selznick,
compelling way to document their existence 1992; Mead, 1934; Stryker, 1980).
and importance. Nonetheless, we think it is Pragmatist themes are also much apparent
essential to clearly distinguish the neo- (though less explicit) in March's work and
institutional research endeavor from the elsewhere in the canon of American
program of research that we inherited and organization theory dating to Barnard
have tried to further in this chapter. Scholars (Thompson, 1956; Ansell, 2002). Many
committed to understanding organizations as stakeholder theorists have been influenced by
ends in themselves will never discover this philosophy, as well (Wicks & Freeman,
answers to the questions that legitimately 1998).
preoccupy neo-institutionalists. But, we think One of pragmatism's central messages is
the obverse is equally true and perhaps much that theories should be judged (at least in
less well-understood. We hope that our part) according to their practical implications
chapter provides some evidence of the great for the people who may ultimately come to
potential symbiosis between neo- believe them (James, 1907; Peirce, 1878).
institutionalism and the ‘organization-centric’ Pragmatism highlights the continuities
theories of organizations that predated it and between thought and action, and between
that continue to persist alongside it. But, we academic and practical knowledge. It also
also hope that it demonstrates the continued emphasizes that the practical consequences of
need for separation, lest our respective academic ideas can be momentous. Taking
purposes and competencies become pragmatism seriously thus has the effect of
attenuated and confused (and lest further putting scholars and organizational
tensions between the two scholarly camps be participants on the same side of the fence (as
needlessly perpetuated and exacerbated). It is fellow humans trying to understand and live
for this reason that we have proposed the idea in an ambiguous and unfolding world). We
of an ‘institutional organizationalism’ which believe that this both ennobles and humbles
is distinct from the ‘organizational the theoretical enterprise. The ennoblement
institutionalism’ that is the primary focus of comes from the recognition that theories can
this volume. The means of the latter are the and do matter. Organizational scholars have
ends of the former (and vice versa). The one's the opportunity to participate in the ongoing
figure is the other's ground. construction of reality by creating metaphors
that escape the academia and ‘become true’
266
as people use them to make sense of In light of this philosophical background,
themselves and their ambiguous one way to read our paper is as an attempt to
organizational worlds (James, 1907). The put forth some new metaphors (and some
humility has the same essential source. Bad recovered metaphors) that might put people
metaphors can have frightening in better relation to their organizations and
consequences for people and institutions. perhaps positively affect those organizations,
These consequences can be particularly as well (if only on the margins). Institutional
strong when scholarly theories are boldly pluralism is itself a metaphor. It is not an
forwarded in scientific guise, or when innocent one. We have willfully used it to
theorists display a disregard for empirical name an apparent reality which could be (and
evidence and the lessons of history (Ferraro, has been) described much differently (e.g. as
Pfeffer & Sutton, 2005; Ghoshal & Moran, fragmentation or the postmodern condition).
1996). Theorists' preoccupation with abstract We find the pluralism metaphor compelling
analytical truths (or political agendas) can because it suggests the possibility of
also have the deeply ironic effect of making symbiosis and latent cooperation among
practically soluble problems into distinct identity groups, even in organizations
theoretically or ideologically irresolvable where conflict and dissensus are very real
ones (Selznick, 1992; Krygier, 2002). and perhaps much more clearly evident. It is
Pragmatism thus suggests that we theorize also appealing because it suggests the
cautiously lest we help create the very world possibility of an emergent organizational
we fear (or the one that we naively think we whole that is capable of accommodating,
want). It also suggests that social science encompassing, and governing its various
should be seen as a humanistic (i.e. moral) distinct parts. The idea of an organizational
enterprise (Zald, 1993; Selznick, 1992). self (or a human self) obviously points to a
Scholars are implicated in their theories and similar possibility (Selznick, 1957; Wiley,
share some responsibility for the ends which 1994). These notions are equally
they ultimately render (or fail to render). metaphorical.
Importantly, this philosophical position does We think that these (somewhat)
not imply that organizational scholars should integrative metaphors are scientifically
wake up in the morning thinking about how tenable ones, based on the available data and
to change the world (or fearing that they the academic arguments we have presented
inadvertently might). It also does not imply above. Organizations do seem to hang
that researchers should take their marching together (however imperfectly), and the
orders from corporations or management centripetal forces that integrate them are no
consultants. Administrative science (like less scientific than the centrifugal ones that
science in general) needs autonomy from its tend to fragment. But, we also think that
constituencies if it is to deliver anything of integrative metaphors are of substantial
actual value to them (Thompson, 1956; practical and humanistic value. This tends to
Selznick, 1992). But, autonomy is not to be tip the balance in their favor to the extent one
confused with total independence, and the takes pragmatism seriously. Any person who
legitimate need for it should not be used as a has spent time in a position of organizational
cover for irresponsibility. Pragmatism thus authority likely recognizes the need for some
implies that organizational theory needs to be notion of shared purpose, common good,
responsive to its different constituents, even and/or collective identity, however vague and
if it ultimately keeps its own counsel and robust those notions might be. These
decides its own purposes. Scholars need to be integrative and idealistic notions are not only
aware of the consequences their metaphors useful for elites who are looking to
may create, even if they develop those consolidate, legitimize, and perpetuate their
metaphors for purposes that are primarily own power (though history shows they are
(and justifiably) academic (Selznick, 2000). certainly valuable as means to those ends).
Rather, we
 267
think they are also essential resources for domination regardless of what we call it. But,
leaders who are actually trying to do justice, these possibilities seem all the more likely to
achieve diverse purposes, act responsibly, the extent that organizational theorists
and realize the common good within their abandon integrative theoretical metaphors
organizations (i.e. to achieve something altogether. At minimum, these idealistic
vaguely resembling substantive cooperation) notions provide a standard against which the
(Selznick, 1969; 1992; 1996; 2000; Krygier, more disturbing empirical realities of
2002). organizational life can be judged. But, they
Such ideals may be equally indispensable may also be necessary if those realities are to
to lower level participants who are striving to change for the better.
achieve similar ends on a smaller scale, or
trying to reform unjust organizations from
structurally disadvantaged positions
(Badaracco, 2002; Meyerson, 2003). ACKNOWLEDGMENTS
Cynicism about the motives of organizational
leaders (and about the legitimacy of We would like to thank Jerry Davis, Mary Ann
organizations in general) may be a very Glynn, Andrew Hoffman, Candy Jones, Michael
useful outlook for the person looking to incite Lounsbury, Christine Oliver, Mike Pratt, Nelson
Phillips, Marc Schneiberg, Andrew Spicer, Patricia
disruptive change and organizational reform. Thornton, Andrew Van De Ven and Ed Zajac for
But, this same skepticism may foreclose real their comments on earlier drafts of this chapter.
opportunities for cooperative change. It may
also ultimately turn inward, leading the
reflective revolutionary to examine his own
motives and to question his own ability to NOTES
build a more just and respectful
1 March (1999: 228) explains the difference
organizational order in the wake of the between the logics thusly: 'In a consequential logic, a
revolution (Stever, 2000). The yearning for a person is ‘in touch with reality’ and asks, What are my
new and better form of cultural hegemony is alternatives? What are the probable consequences of
not, after all, the sort of ideal that tends to those alternatives? What are the values to me of those
animate and sustain the romantic mind. probable consequences? Then the person selects the
(‘Meet the new boss. Same as the old boss’). alternative whose consequences he or she values the
most. In an obligatory logic, a person is ‘in touch with
Thus, of all the real barriers to cooperation
self’ and asks, What kind of situation is this? What
which clearly exist, we suspect that a lack of kind of person am I? What does a person such as I do
belief in the very possibility of the thing itself in a situation such as this?' Importantly, March
may be the most thoroughly devastating. We embraces a sociological conception of identity in this
do not think that organizational theorists theory. That is, he or she sees identities as
should let go of this theoretical possibility institutionally-derived.
thoughtlessly or carelessly. We also think 2 The first order/second order distinction that we
create here is owed to Frankfurt's (1971) famous
they should be very cautious about exposition of first-order and second-order human
propagating organizational metaphors that desires. He suggests that desires of the first order
might lead people to take hegemony for center on particular things or outcomes. Second-order
granted as inevitable. This chapter represents, desires, in contrast, concern the things that one 'wants
among many other things, a modest effort to to want' (or wants not to want). He suggests the
sustain belief (however minimal) in the capacity to develop second-order desires is essential to
the humanistic concept of a 'person.' The (perhaps
prospects for cooperative organization,
non-obvious) parallel to the current argument about
without disregarding the huge challenges it organizational legitimacy is that constituencies do not
involves or the estimable empirical evidence just want particular things from an organization - they
which has been amassed against it. Pluralism also want it to want particular things and to 'be' a
may ultimately devolve into fragmentation or particular type of organization. This requires that it
give way to possess certain types of
268
second-order virtues (i.e. desirable traits of 'charac- Albert, S & Whetten, D.A. 1985. Organizational
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organizations and other collective actors. We discuss Impact of Funding on Exhibitions,
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evidence of commitment in addition to symbolic Ansell, C.A. 1997. Symbolic Networks: The
conformity, we are more agnostic about whether they Realignment of the French Working Class,
are typically able to discern it. It is apparent that many 18871894. American Journal of Sociology,
self-aware organizations attempt to manipulatively
103(2): 359-390.
'fake' integrity and commitment in the same way that
Ansell, C.A. 2002. Pragmatism in Organizations.
they cynically fake conformity. Audiences may often
Working Paper: University of California
be taken in by such attempts. Our point here is only
Berkeley.
that there are two distinct things that must (at least) be
faked by the organization seeking legitimacy. It is also
Atkinson, P. 1985. Language, Structure and Rep-
important to note that these two imperatives are often roduction: An Introduction to the Sociology of
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4 We have painted a relatively positive picture of Badaracco, J.L. 2002. Leading Quietly. Boston,
organizational institutionalization here. This is consis- MA: Harvard Business Press.
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tional adaptations to pluralism. While Selznick also Executive. Cambridge, MA: Harvard
emphasizes institutionalization's positive aspects, he University Press.
similarly documents its pathologies and concludes that Baron, J.M. 2004. Employing identities in
the process should be seen as a 'fundamentally neutral' organizational ecology. Industrial and
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good, and bad things can certainly happen when an Bernstein, B. 1971. Class, Codes and Control
organization becomes valued as an end in itself. Some Volume 1: Theoretical Studies Towards a
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Lyndon Johnson is reported to have said that it is the game. Princeton University Press
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social mechanism creating the tent itself. Brunsson, N. 1989. The Organization of
6 Selznick was clearly aware of this fact himself: '... Hypocrisy: Talk, Decisions and Actions in
although organizational controversy may be directly Organizations. Chichester, NY: Wiley.
motivated by narrow personal and group aims, the
Bums, J.M. 1978. Leadership. New York: Harper
contending programs usually reflect ideological
Row.
differences in the larger arena. In this way, the internal
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struggle for power becomes a channel through which
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external environmental forces make themselves felt'
(1957: 20).
Harvard University Press
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 10
Microfoundations of Institutional
Theory
Walter W. Powell and Jeannette A. Colyvas

INTRODUCTION trend toward increased efforts at earned

income by nonprofit organizations. These
For almost two decades, scholars have applications illustrate the analytical utility of
stressed the need to make the microfounda- our approach. We conclude with a discussion
tions of institutional theory more explicit of research tools generated by this line of
(DiMaggio and Powell, 1991; Zucker, 1991). theorizing that can be used to fashion
Curiously, there has been limited progress in compelling, multi-level explanations.
this effort, although Barley, Glynn, and
Sahlin, in Chapters 8, 16 and 20 in this
volume, also remedy this deficit. We think WHY A MICRO-LEVEL THEORY OF
that much analytical purchase can be gained INSTITUTIONALIZATION?
by developing a micro-level component of
institutional analysis. Moreover, there are The bulk of institutional research has focused
useful building blocks from on the sectoral,. field, or global level. And
ethnomethodology to Goffman on interaction properly so, as the transfer of ideas, practices,
rituals to Weick on sensemaking and social and organizational forms spans the
psychological research on legitimation that boundaries of organizations, industries, and
can be drawn upon to contribute to this effort. nations. A core insight of institutional theory
We begin by making a case for the is just how taken-for-granted formal
benefits of examining micro-processes. We organization and rationalization has become
then selectively review the terrain, cobbllng (Drori, Meyer, and Hwang, 2006). In our
together useful, albeit disparate, tines of view these macro-lines of analysis could also
research and theory. The thrust of this chap- profit from a micro-motor. Such a motor
ter is generative and by no means intended as would involve theories that attend to
a comprehensive survey. From these diverse enaction, interpretation, translation, and
sources, we contend, a viable micro-analysis meaning. Institutions are sustained, altered,
of institutionalization can be developed. We and extinguished as they are enacted by
apply our ideas to several contemporary individuals in concrete social situations. We
issues, notably the rise of academic entrepre- need a richer understanding of how
neurship in universities in the D.S. and the individuals locate
 277
themselves in social relations and interpret making unleashed actors the drivers of insti-
their context. How do organizational partici- tutional change.
pants maintain or transform the institutional Institutions are reproduced through the
forces that guide daily practice? From an everyday activities of individuals. Members
institutional perspective, how are the of organizations engage in daily practices,
passions and interests implicated in human discover puzzles or anomalies in their work,
behavior? In our view, the development of problematize these questions and develop
micro-level explanations will give more answers to them by theorizing them. In turn,
depth to accounts of macro-level events and participants ascribe meaning to these theories
relationships. and, in so doing, develop and reproduce
Institutional forces shape individual inter- taken-for-granted understandings.
ests and desires, framing the possibilities for Institutional transformation is often rather
action and influencing whether behaviors subtle, not particularly abrupt, and apparent
result in persistence or change. only after a considerable period. Rather than
Macroinstitutional effects, through processes perspectives that either highlight habitual
of classification and categorization, create replication or savvy change agents, we stress
conventions that are the scripts for meaning that most micro-motives are fairly mundane,
making. This process is recursive and self- aimed at interpretation, alignment, and mud-
reinforcing. Institutional logics are instanti- dling through. And, as individuals and groups
ated in and carried by individuals through engage in such actions and resist others'
their actions, tools, and technologies. Some attempts as well, they may well transform
actions reinforce existing conventions, while logics and alter identities.
others reframe or alter them. Ideas can be We contend that institutional analysis
picked up in one setting and transposed to needs more attention to everyday processes
another, tools can be multi-purpose, and than momentous events, to less powerful
some settings are rife with multiple logics. members of organizations as opposed to only
Such situations afford considerable latitude leaders or champions, and to cultural and
for human agency and interpretation. cognitive aspects as well as political ones.
Nonetheless, the individuals that presently Research on external shocks that prompt
populate institutional analysis are portrayed change and on voices that catalyze
as either 'cultural dopes' (Garfinkel, 1967: transformations has been valuable in adding
68-75) or heroic 'change agents' (Strang and insight into how institutions are altered. But a
Sine, 2002: 503-507). The move to consider more explicit focus is needed on how the
institutional entrepreneurs was motivated by local affairs of existing members of a field
a desire to replace the oversocialized can both sustain and prompt shifts in
individuals who seemed slavishly devoted to practices and conventions. The ongoing
habit and fashion. But the celebration of activities of organizations can produce both
entrepreneurs has perhaps gone too far, as not continuity and change, as such pursuits vary
all change is led by entrepreneurs, and surely across time and place.
heroic actors and cultural dopes are a poor There is presently much interest in
representation of the gamut of human understanding institutional change, as
behavior. Indeed, we recoil somewhat at the attention has shifted from early concerns with
frequent use of 'actors' in social science persistence and convergence to growing
writings to characterize both individuals and concern with dynamics and contestation. We
organizations. As Meyer (Chapter 21 in this welcome this development, but worry that
volume) notes, such language typically too many analyses conflate macro-factors
implies purposive, muscular, rather free with structural forces and assume these
actors, unembedded in their surrounding factors only reinforce stability and
context. Institutional theory gains little by homogeneity, while associating microfactors
with entrepreneurship and agency. But
individuals also play a powerful role in
278
maintaining the social order, and theory, but it is important to attend to the dif-
organizations can serve as entrepreneurs. ferent directions of the causal arrows in these
Moreover, macrotrends, such as research traditions.
globalization, can be profoundly destabilizing There is, of course, an exceedingly broad
to local orders and individuals. It is a mistake literature in social psychology. Our goal is
for institutional analysts to blindly equate selective, that is, to cull useful work that
change with the microlevel and persistence complements the arguments that have char-
with the macro. We need to develop multi- acterized institutional theory and aid in
level explanations that account for recursive explaining the creation, transformation, and
influences. impact of institutions. To this end, we draw
Some attention has already been paid to on research that highlights constructivist
micro-translation, or an understanding of processes. To illustrate, consider the verbs
how macro-categories get inside the heads of typically used in the literatures we highlight.
individuals (Jepperson, 1991). Macro- With interactionist arguments, scholars
framings or values can be 'pulled down' to the commonly use the terms saving face or
everyday level of practice, as varied activities affirming. In ethnomethodology, negotiate
can be pursued under a common and improvise have primacy. With
interpretation or account, or diverse practices sensemaking, enact is the standard bearer.
can be pursued in the search of a common Research on legitimation processes finds
goal (Colyvas and Powell, 2006; Colyvas, associated with, orient towards, comply with,
2007a). Indeed, many micro-processes and accept. Note that we rarely find words
represent local instantiations of macro-level like choose, plan, or determine (see Weick,
trends. We need a parallel effort to link key Sutcliffe, and Obstfeld, 2005 for a lovely
micro-concepts, e.g. identity, sense making, discussion on this point). These verbs are
typifications, frames, and categories with more constructivist, constitutive and
macro-processes of institutionalization, and interpretive than calculative or purposive.
show how these processes ratchet upwards. The individuals in these theories behave, but
This linkage between levels holds promise to they seldom choose (see discussion in
better explain institutional dynamics. DiMaggio and Powell, 1991: 7-11).
Attention to the mediating role of language, Many of the writings that provided the ini-
interaction rituals, and categories will help tial microfoundations for institutional theory
explain how organizational routines and rules date from 1967 - Erving Goffman's
develop, stick, and fall into disuse. Interaction Ritual, Harold Garfinkel's Studies
in Ethnomethodology, and Berger and
BUILDING BLOCKS FOR Luckman's The Social Construction of
MICROFOUNDATIONS Reality were all published in that propitious
year. It is notable that we continue to draw on
As a rough approximation, we divide the lit- this work that is more than four decades old.
eratures we discuss below into two main In their canonical article, Meyer and Rowan
groupings. The first draws on arguments that (1977) observed that much ceremonial activ-
adopt a 'built-up' focus, in which micro-level ity, and accompanying categorical rules, gen-
rituals and negotiations aggregate over time. erates conflict and uncertainty in day-to-day
These local influences may bubble up and activities. They proposed that organizations
threaten or replace macro-level coherence. resolve these tensions through decoupling
The second line of analysis focuses on how and a logic of confidence. Drawing on
macro-orders are 'pulled down,' and become Goffman (1967: 5-45), they invoked his idea
imbricated in local or particular cases, situat- of 'maintaining face.' Crafting· a distinction
ing macro-effects inside organizations and between the public face and backstage
individuals. Both streams of research are vital reality, overlooking or avoiding anomalies,
to building microfoundations for institutional
 279
minimizing discordant signals, and decou- 'more to the efficacy than the frequency of its
pling formal procedures and structures from application' (p. 13). Skill at face-work is a
everyday work are all steps taken to maintain distinguishing feature that differentiates
the assumption that organizations are acting individuals. He was also very cognizant of
appropriately and that larger rationalized how interaction rituals connected to the
myths are sustained. This 'logic of larger social order. Goffman himself was a
confidence' is crucial to maintaining an highly skilled card player, and he drew a
illusion of consensus within schools, for distinction between 'the value of a hand
example. drawn at cards and the capacity of the person
DiMaggio and Powell's (1991) overview who plays it' (p. 32). Not only are the rules of
of the elements of a theory of practical action how cards are played highly governed, a
also drew on microfoundations, using an reputation for good or bad play is a face that
ensemble of ideas from Simon (1945), requires maintaining. Such micro-encounters
Garfinkel (1967), and Giddens (1984). at a card table represent sequences of
Responding to readings of their 1983 article coordinated understandings from which
that contended that mimetic and normative social interaction is accomplished.
isomorphism entailed 'mere' copying and For Goffman, speech, expressive
replication, DiMaggio and Powell empha- behavior, and demeanor embody intentions,
sized that practical consciousness involves but these individual instruments are
energy, effort, and reflection. Drawing on 'governed' by the normative order of society.
Simon (1945: 79-109), they recognized that In Asylums, Goffman (1961) discussed how
habitual action does not reflect passivity, but organizations instill tacit acceptance and
is a skilled means of directing attention. conformity through inducements. But in his
Garfinkel (1967) contributed the critical work on face-saving, he emphasized how
insight that everyday reasoning requires individuals use talk, with ritual care, to
individuals to negotiate rules and procedures. present an image of self-control and dignity.
flexibly and reflexively to assure themselves While standards and rules 'are impressed
and others around them that their behavior is upon individuals from without,' the particular
sensible. Giddens' (1984: 54) observation that rules an individual follows derive 'from
sustaining social interaction is the 'basic requirements established in the ritual
security system' of the self, and that control organization of social encounters' (Goffman,
of human anxiety is the 'most generalized 1967: 45).
motivational origin of human conduct' was
also influential. DiMaggio and Powell's ini-
tial outline of a theory of practical action was Ethnomethodology
brief, but it clearly attempted to build on
microfoundations. We seek to continue and While Goffman emphasized how facility at
deepen that discussion, and build on others everyday interactions sustains face, Harold
who have made contributions in recent years Garfinkel, one of Talcott Parsons' favorite
(Jennings and Greenwood, 2003; Lawrence students, developed a distinctive line of
and Suddaby, 2006; Weber and Glynn, 2006; inquiry that stressed the skills that emerge out
Lounsbury and Crumley, 2007;). of everyday encounters, which generate
sociability and reproduce the social order.
His ethnomethodological approach has
provided tantalizing insights for institutional
Interaction rituals theory, most clearly in Zucker's (1977) work,
where she argues that many taken-for-granted
Goffman (1967) was keenly aware that indi- understandings are 'built up' from the ground
vidual capability at 'face work' varied con- level by participants in interactions, and in
siderably, but that such variation pertained DiMaggio and Powell's (1991: 22-27)
280
sketch of a theory of practical action. how the penal code was used by public
Ethnomethodology never developed into an defenders with great facility. Lawyers took
expansive subfield, and given both its cult- into account a welter of 'facts' - the ecological
like approach and the controversies it characteristics of a community, the
provoked, perhaps it never had the chance.¹ biographies of criminals and victims, and
Nevertheless, Garfinkel's focus on practical past records of criminal activity. They trans-
reasoning and the role of 'accounts' in formed a criminal action into a shorthand
normalizing and legitimating the social order representation that was intelligible to attor-
offers considerable insight into the implicit neys and judges. Sudnow's brilliant analysis
and contested assumptions that make revealed how delicate teamwork between the
organizational life possible. Rather than find offices of public defender and public prose-
social order in cultural norms or social roles, cutor in the face of a demanding organiza-
ethnomethodologists examine the cognitive tional calendar jointly facilitated the
work that individuals do to assure both construction of 'normal crimes,' a proverbial
themselves and those around them that their characterization that certain kinds of illegal
behavior is reasonable. actions were typically committed by particu-
There are several compelling reasons to lar types of people. Once such categoriza-
revisit this line of work. Contemporary tions were made, plea bargaining ensued,
scholars are largely unaware of just how based on unstated recipes for reducing
much of this research focused on work and original charges to lesser defenses to avoid
organizations. Meticulous studies of record- the costs of trial.
keeping procedures in juvenile justice facili- In ethnomethodological studies, categories
ties (Cicourel, 1968), high mortality wards in and classifications become interpretive
hospitals (Sudnow, 1967), and psychiatric schema that members of organizations draw
clinics (Garfinkel and Bittner, 1967) reveal on. Over time, these schemas become a
how counting, reporting, and legal require- repository of organizational knowledge. As
ments are often highly improvised, as veteran particular schemas become routinized
staff draw on deep, tacit knowledge of how through repeated application and use, they
reports ought to be assembled. Other work develop a habitual, taken-for-granted
examined case files, folders, and dockets to character. Berger and Luckman (1967)
ascertain the classification schemes used in emphasized that once joint activities are
psychiatry or a public welfare agency, where habitualized and reciprocally interpreted,
documents could be treated either as 'plain patterns both harden and deepen as they are
facts' or the opportunity to construct an transmitted to others, particularly
account that provides grounds for accepting newcomers. When schemas become
the testimony of the document against the perceived as objective, exteriorized facts,
testimony of the welfare applicant their contingent origins are obscured.
(Zimmerman, 1969). Organizations do have rich and varied
Bittner's (1967) studies of policing on skid repertoires, however, and multiple schemas
row illuminate how officers performed com- are available. The possibility of mixing or
plicated and demanding work with relative combining practices in alternative or novel
ease, without any real personal or peer recog- ways to produce different patterns is ever
nition of their skills. Given that the destitute present.
and mentally ill were often the objects of Throughout this rich vein of research,
police work on skid row, perhaps the lack of ethnomethodologists demonstrate how
high regard is to be expected. But Bittner classifications and categorizations are
underscored how strongly a powerful sense invoked on the fly by skilled actors to keep
of craftsmanship among the police was ren- peace on the streets, in the courts, in hospital
dered routine, even as it went unacknowl- wards, and welfare agencies. Consider the
edged. Similarly, Sudnow (1965) analyzed contrast of this view with the conception of
organization
 281
found in many other lines of organization relation to one another and to the market
theory. Rather than struggling with or coping through their models and artifacts.³ This
with uncertainty, the practical reasoning view approach to 'making markets' resonates with
emphasizes how situations are rendered core themes of ethnomethodology in the view
comprehensible, and sees such efforts as an that phenomena only exist in the 'doing' and
ongoing, contingent accomplishment. In social relations have to be continuously
contrast, ever since Weber, most students of performed in order to persist.
organizations regard formal structures and For Callon (1998, 2006), a discourse is
procedures as 'ideally possible, but practi- performative if it contributes to the construc-
cally unattainable' (Bittner, 1965). Selznick tion of the reality that it describes. Callon
(1949), for example, attributed these limita- (2006) is careful to distinguish the idea of
tions to the recalcitrance of the tools of performativity from Goffman's imagery of
action; while Weber conceived of the typical the presentation of self and from Merton's
bureaucracy more as a target or an idealiza- (1948) notion of a self-fulfilling prophecy. A
tion. For the ethnomethodologists, however, self-fulfilling prophecy often has a
bureaucracy is neither a rarified nor lofty pathological form of influence or entails a
goal, but deeply embedded in common-sense misconception of the situation. In contrast,
routines of everyday life. Organization is a performativity is not arbitrary, rather there
formula to which all sorts of problems can be are contests associated with performance.
brought for solution (Bittner, 1965). Success or failure become clear at the end of
This focus on practical reasoning as a struggles, when opposition, controversy and
routine accomplishment emphasizes how cooperation are sorted out. The general claim
people in organizations both make and find a of this line of study is that such diverse
reasonable world.² Organizational life entails domains as science, technology, accounting,
constant doing and achieving. For Goffman marketing, engineering, and even friendship
and Garfinkel, social order is created on the are all arenas where activities, relationships,
ground floor, through situated local practices. theories, and tools are both created and
As practices are reproduced over time and enhanced by their performance.
across settings, macro-categories emerge The Scottish sociologist Donald
from these interactions and negotiations. MacKenzie has been highly influential in
developing and studying the idea of 'the per-
formativity of economics.' He has, with his
Performativity students, studied many of the major eco-
nomic innovations of the late 20th century,
Across the Atlantic, a companion line of viewing economists and their theories and
work known as actor-network theory has tools not only as describers and analysts, but
developed in France, focusing on scientific as participants and inventors. Mackenzie and
research and practical applications of science Millo's (2003) research on options trading,
outside the laboratory (Latour, 1987). The which 'with its cognitive complexity and
core assumption of these studies is that mature mathematical models has been a cen-
laboratory life often requires scientists to tral driver of the marketized, mathematicized
create material conditions in which theory risk-evaluation culture' of modern life, shows
and reality can be juxtaposed and in so doing that the famous Black, Scholes and Merton
create affordances that make science 'work' model did not describe an already existing
(Latour and Woolgar, 1979; Callon, 1986). world. When first introduced, the model's
Callon (1998) has recently expanded the assumptions were unrealistic and prices dif-
actor-network approach to the field of fered systematically from it. But with its
economics, and analyzed how market par- growing use and prevalence, option prices
ticipants think about economics and act in
282
began to exhibit a near-perfect fit to the as accumulated experience, to interpret and
values predicted by the model.4 Clearly, tech- produce organizational life. These strands of
nological and computational improvements social psychology attend less to emergence
played a role in the acceptance of options, as and performance, and more to interpretation,
did the elite status of the authors of the appropriateness, and meaning making.
model, but options pricing came to shape the
way participants thought and talked about
finance, and altered the understanding of
volatility and arbitrage. MacKenzie (2006) Sensemaking
does not consider a financial model to be a
camera capturing reality, but an engine that Karl Weick's research program on sensemak-
allows traders to explore and exploit eco- ing addresses how people enact order and
nomic phenomena. coordinate action. Individuals convert cir-
Abstracting from this important case, cumstances into action through the reciprocal
MacKenzie (2006) argues that performativity interpretation of who they are and how they
entails transformation: an aspect of econom- understand their environment (Weick, 1995).
ics must be used in a way that has effects on Identity, the enacted world, and accepted
the economic processes in question. The mental models are all key to this perspective.
model or tool, he argues, must make a Taken together, sensemaking is the locus of
difference, that is economic processes that how 'meanings materialize that inform and
incorporate this element of economic constrain identity into action' (Weick,
reasoning must differ from processes where it Sutcliffe, and Obstfeld, 2005: 409).
is not used. MacKenzie takes pains not to Weick and colleagues draw on many
portray modern economists as rational, strands of microsociology to fashion their
calculating agents but as human beings, approach. Garfinkel's (1967) insight that
limited in their cognitive capacity and rationality is constructed through common-
susceptible to social influence. Nor does he place interactions is emphasized; so is
fully embrace a view that businesses in the Goffman' s (1974) use of frames as providing
D.S. and around the world have become a structure to social context. Sensemaking
'financialized,' and attend solely to market- analyses share with ethnomethodology a
value maximization, even though his superb methodological stance of privileging cases
analysis of the legitimation of options pricing that reveal rather than represent.5 But there
provides considerable evidence for such an are notable distinctions as well. While the
argument. Instead, his focus on ethnomethodologists highlight the cognitive
performativity illuminates how human beings work of individuals in creating social order,
can 'achieve outcomes that go beyond their sensemaking attends to the contingent influ-
individual cognitive grasp' (MacKenzie, ences of norms and role structure. For Weick,
2006: 268). By stressing human cognitive conceptions of identity and logics of action
limits and the distributed nature of cognition are relational, constructed not only through
in contemporary organizations, this line of projections of self and others' perceptions,
research demonstrates how the 'social' and but also through scripted interactions in rela-
the 'technological' come together to constitute tion to what others are 'supposed to do.'
markets. Individuals are enmeshed in a structure of
We turn now to other micro research pro- relationships, taking cues from both situa-
grams that also focus on how everyday prac- tions and others, and these guideposts
tice in organizations produces meaning - provide substance for them to enact their
whether in the form of accepted routines or environments.
legitimated models. These other approaches, In his analysis of the Mann Gulch fire dis-
we contend, emphasize more that interaction aster in Montana, Weick (1993) demonstrates
often draws on the larger social order, as well how a breakdown in sensemaking explains
 283
what went wrong in a seemingly routine codes or specifications (March, 1994; Weick,
encounter for a highly trained crew. The dis- 1995). These distinctions are important
integration of the crew's routines in the face because while information can provide a
of unexpected conditions impeded the fire- remedy for uncertainty, it can also further
fighters' ability to draw on their stock of ambiguity, as evidenced by the Mann Gulch
experiences to generate a novel means of sur- fire when new information did not fit precon-
vival, or to comply with their leader who did. ceived categories. Weick also draws on
Weick attributes the tragic deaths of these Garfinkel to emphasize that equivocality is
skilled men to three features: a breakdown in present when numerous or disputed interpre-
role structure among members of the team, a tations exist. As with Garfinkel's jurors,
stalwart adherence to a less critical catego- individuals may justify multiple,
rization of the fire, and practical challenges incompatible accounts, often with the same
to their identities as firefighters. All of these evidence. Weick argues that uncertainty,
features are reflected in the difficulties that ambiguity, and equivocality may occasion
the firefighters faced to make sense of who different triggers to, and remedies for,
they were, the situation they encountered, sensemaking.
and the repertoire of actions they should take. A notable feature of sensemaking studies
Because the stock of experience of the fire- is a focus on situations where apparently
fighters did not match their anticipated, less normal events go badly awry.6 Sensemaking
critical categorization of the fire when they emphasizes interpretation and (mis)percep-
arrived on the scene, the situation was tion of the environment, especially where
rendered meaningless, as 'less and less of received wisdom is poorly aligned with
what they saw made sense' (Weick, 1993: current context. For example, Scott Snook's
635). Cues from other firefighters, e.g. stop- (2000) examination of the 1991 'friendly fire'
ping for dinner and taking pictures, rein- incident when US F-15 fighter pilots shot
forced a spurious categorization of the fire down their own Black Hawk helicopters in
and impeded the firemen's ability to activate peacetime over the Persian Gulf, demon-
a different course of action. When the leader strates how an organizational failure may
of the crew, confronted with looming disas- occur without anything breaking or anyone to
ter, lit a fire in the only escape route, lay blame. Snook attributes this tragedy to a
down in its ashes, and called on his crew to slow, gradual drift away from globally
drop their tools and join him, the team disin- synchronized logics of action, encoded in
tegrated. The firefighter's identities hindered written rules and procedures, to locally gen-
their ability to comprehend an order to drop erated task-based routines. Such 'practical
the very materials that defined who they were drift' is often manifested locally as adaptation
and comprehend the practicality of a solution because individuals organize around the
that would have saved their lives. Weick's immediate demands of work, and thus learn
analysis demonstrates that even very effec- and adjust to their own realities. Similar to
tively trained and organized teams can falter Mann Gulch, where the smokejumpers
when 'the sense of what is occurring and the ignored cues that the fire was more serious
means to rebuild that sense collapse together' than categorized, the F-15 fighter pilots were
(1993: 633). unable to identify that the helicopters were
From a sensemaking view, many features not the enemy. In both settings, the
of organizational life are uncertain, which individuals attended to cues that fit their
relates to ignorance or the inability to esti- expectations, missing numerous contrary
mate future consequences to present actions. signals. Futhermore, like the smokejumpers,
Organizational life is also wrought with the fighter pilots relied on each other and
ambiguity, which reflects the inability to their team for coordination, and their
attribute clear, mutually exclusive categories, responses reinforced their mistaken
interpretation.
284
Through an analysis of the complexities of sensemaking and interpretation as the differ-
command in military missions, Snook ence between discovery and invention.
demonstrates how meaning trumped deci- Interpretation, with its focus on identification
sion-making as context, identity, and the and understanding vis-à-vis a wider reality,
enacted environment constrained interpreta- relates to discovery, which implies that
tion and shaped action. The F-15 pilots had to something is evident and needs to be recog-
identify 'what was going on' before taking nized or approximated. Features of the world
any action, and their interpretation was con- are pre-given or ready-made. Sensemaking,
structed through who they were, prior expe- in its focus on process and generation, relates
rience, the pre-flight context, and social to invention, which emphasizes how images
interactions (Snook, 2000: 81). Sadly, their of a wider reality are created, maintained and
inaccurate reading led them to shoot down rendered objective. Much as action precedes
their comrades in broad daylight. sensemaking, sensemaking is a precursor to
Sensemaking provides important insights interpretation.
to the analysis of meaning, particularly the A sensemaking approach directs attention
idea that meaning making is not only about to the importance of language, routines, and
creation but also contingent expression. For communication for analyzing micro-
Weick, the key to identifying such instances processes. While emphasizing that various
rests on the view that sensemaking is inher- institutional materials are commonly 'pulled
ently retrospective and precedes action down' by individuals and translated within
because situations are only understood upon organizations, these processes may differ
completion.7 Meaning is shaped through across circumstances. Multiple modes of
attention to what has already occurred, and is meaning making occur at the interface of
therefore directed, not attached, to action. identity and the enacted environment, and
This contrast emphasizes the influence of how such understandings are forged and
what is current to perceptions of the past. enacted occurs through retrospection.
Thus, ' ... anything that affects remembering Sensemaking is thus a key micro-mechanism
will affect the sense that is made of remem- of institutionalization that allows considera-
bering' (Weick, 1995: 26). Furthermore, since tion of both the 'cognitive complexities' that
outcomes and subjective objects are implicit guide organizational behavior and recogni-
in interpretation, sensemaking entails a tion of the varied ways that institutionalized
process that simultaneously enacts identity practices operate at the micro-level (Jennings
and environment. Identity is central because and Greenwood, 2003).
individuals act based on who they are, not on
what choices they have, and this feature is Status expectations
constituted out of the process of interaction.
Mead's (1934) insight that each individual is Research on expectation· states provides a
a 'parliament of selves' and that 'social further point of discussion of how macro-
processes precede the individual mind' are categories guide micro-interactions (Berger,
critical. The environment is riot viewed as a Ridgeway, Fisek, and Norman, 1998; Correll
fixed and stable reality, but as a co- and Ridgeway, 2003; Zelditch, 2001, 2004).
construction of individuals' minds and their This line of research views legitimation as a
actions. Enactment represents the reciprocal process shaped by interpersonal status
interaction of the material and the cognitive hierarchies, in which individuals draw on
world. Thus, individuals and environments widely shared cultural beliefs concerning
are mutually constitutive. status and success. These referential beliefs
This feature extends the process of are evoked in situations as both guides for
sensemaking beyond interpretation. Weick interaction and as ready accounts, creating
(1995: 13-14) likens the distinction between strong expectations as to the types of
 285
individuals who are or should be influential level. This line of work emphasizes that it is
in specific circumstances. In this fashion, in the conduct of tasks that social objects and
broader understandings about who and what categories drawn from the larger society are
is appropriate guide local circumstances, and rendered legitimate. This perspective
these interactional processes further reinforce complements sensemaking by stressing how
cultural beliefs about what characteristics and external social statuses are manifested in
practices are perceived as appropriate. everyday activities.
Research on expectation states and legiti-
mation analyzes the emergence of status
within-task groups, observing that power and
prestige are often accorded based on social MICRO-PERSPECTIVES ON
stereotypes regarding gender, race, age, edu- INSTITUTIONAL CHANGE
cation and occupation. In turn, these charac-
terizations shape and legitimate the manner We turn to a discussion of two examples of
in which group members evaluate one recent transformations that have typically
another (Ridgeway and Berger, 1986; been analyzed in terms of broader social and
Ridgeway and Walker, 1995). Thus, assign- political currents. In both settings, exogenous
ments of status draw readily on the macro- forces loom large in current explanations.
stratification system, while the assignments When attention is directed to the organization
and rewards that ensue at the group level level, most reports celebrate risk-taking
reinforce the larger social order. entrepreneurs. In contrast, our aim is to
Put differently, micro-level consensus is demonstrate how much explanatory power
generated through a process in which values can be garnered by examining the microlevel
and beliefs from the larger society are pulled processes underpinning these changes. We
down into local circumstances, creating dif- underscore how the 'entrepreneurs' did not
ferential expectations about the performance even consider that they were taking risks, but
of individuals in task groups. These expecta- instead were responding to unanticipated
tions can become taken-for-granted features situations.
of organizations, and persist even if they are
unjust or unproductive, thus giving them an
'objective' quality. Universities and academic
Owen-Smith (2001) analyzed a neuro- entrepreneurship
science lab and the rankings of a community
of colleagues with respect to experimental In recent decades, U.S. universities and the
and analytic ability and productivity. He profession of academic science have under-
found that assessments of ability and accom- gone a profound transformation in the way
plishment are not neatly correlated. Instead, science is conducted. Where university and
position in the lab's prestige order was industry were once separate domains, public
heavily shaped by expectations that accrue and private science have become intermin-
with rank and discipline, and whether one gled, notably in the norms and practices
was dependent or autonomous in regards to related to career advancement and in the
funding. In this academic research setting, development and dissemination of knowl-
gender as a status measure was less conse- edge. Patenting and licensing academic
quential than stereotyped expectations based research findings, taking equity in start-ups,
on disciplinary affiliation. and encouraging academic entrepreneurship,
Research on expectation states offers have become core features of how U.S.
another lens through which to view how universities define success.
widely shared societal beliefs become incor- Most studies of this transformation stress
porated and reinforced at the work group either pecuniary interests or national policies
286
(Lach and Shankerman, 2003).8 Indeed, aca- long before the Bayh-Dole legislation or
demic institutions made more than $1.385 significant financial returns from university
billion in grass revenues in fiscal year 2004 patents. By examining archival records of
from technology licenses (AUTM, 2005). invention disclosures of biological scientists,
Before 1980, there were fewer than 25 Colyvas identifies how practices took shape
university technology transfer offices, and in advance of external policy developments,
today there are well over 200 (AUTM, 2005). how individual scientists pursued disparate
Clearly, some universities are profiting entrepreneurial actions, and how these
considerably from technology licensing, and actions were facilitated and anchored by
virtually every research university now has a organizational procedures. In the perform-
technology transfer office. Government ance of technology transfer, commercializing
policy has strongly encouraged such efforts. science was re-shaped and became
The Bayh-Dole Act in 1980 authorized institutionalized.
universities to take title to patents generated In the 1970s, commercialization efforts
by federally funded research. A Supreme emerged from scientists' labs when routines
Court decision in the same year, Diamond vs. for technology transfer were ambiguous and
Chakrabarty, authorized the patenting of life, unfamiliar. Unfamiliar projects included the
providing a catalyst to the emerging importation of the legal categories of
biotechnology industry. A few universities, inventor and invention, the problem of
namely University of Wisconsin, Stanford, establishing boundaries between business and
MIT, and UCSF are credited for shaping the science, and the necessity to establish
way in which technology transfer became procedures for distributing royalties. This
organized (Mowery, Nelson, Sampat and ambiguity created opportunities for
Ziedonis, 2004). Many organizational interpretation by both scientists and adminis-
accounts point to the founders and con- trators. Scientists, in the context of their
sultants to university tech transfer programs laboratories, generated multiple accounts of
as the key institutional entrepreneurs for the who was an inventor, what kinds of science
new university models (Mowery et al., 2004). constituted an invention, as well as divergent
One of these founders, Niels Reimers, views of how material benefits from
created the Stanford University Office of commercial involvement could legitimately
Technology Licensing, a highly successful be used.
operation on which other technology transfer For example, within a basic life science
offices have modeled their operations. department that eventually became a hotbed
Reimers went on to reorganize programs at of academic entrepreneurship in the 1990s,
MIT and UCSF, and consult to many other early efforts in the 1970s were fraught with
universities in Europe and Asia. The uncertainty. Three examples from this
'Stanford Model' is practically a household department are illustrative. One distinguished
term in the technology licensing community, scientist, concerned with his reputation,
emphasizing a marketing focus, service to allowed the university to license his basic
faculty, and a lauded 'incentive system' of a biological research tool only with hesitation
1/3 division of licensing royalties shared and declined any personal royalties, agreeing
equally among the department, school, and to participate only after securing agreement
scientists. to donate his proceeds. 'I can accept a view
A careful analysis of archival records and that it is more reasonable for any financial
interviews with participants at Stanford benefits ... to go to the university, rather than
University suggests an alternative account in be treated as a windfall profit to be enjoyed
which current practices evolved from con- by profit motivated businesses; I agreed to
flicting conceptions about commercializing cooperate ... for that reason ... ' (Colyvas,
science. Colyvas (2007a) analyzes scientists' 2007a: 465). Another noted
engagement with commercializing life
science inventions at Stanford in the 1970s,
 287
scientist, motivated by how industry develop- to benefit everyone equally. In the third
ment of his invention would disseminate his example, the scientist theorized cause and
technology and expand his research program, effect in response to his perception of a crisis
reasoned that royalties should benefit his over industry exploitation, control and
laboratory, the locus of the effort for the justice: 'I assure you that I will alert my
research. 'Many 'inventions' are really the colleagues throughout the world to guard
work of a group ... Although inventors need against what I consider exploitation'
to be identified in the technical sense to sat- (Colyvas, 2007a: 467).
isfy the requirements of the patent process, in The variation in responses reflects a
fact, the most important-advances often are profound tension between public and private
made by other members of the group ... ' science at the incipient stages of technology
(Colyvas, 2007a: 464). This scientist refused transfer. Attention to micro-processes,
to patent basic biological materials, stating however, demonstrates how much meanings
that patenting was neither necessary nor were generated through practical action as
appropriate for their dissemination, but he local, experiential aspects of the laboratory
believed that strong property rights for device and scientists' identities and emotions inter-
inventions were important. A third scientist, acted to construct an appropriate conception
angered at companies' lucrative exploitation of academic entrepreneurship. These scien-
of academic science, demanded remuneration tists were neither cultural dopes nor institu-
to the university: 'Although many of us are tional heroes. As much as they recognized
not in a position to exploit our discoveries, the unfamiliarity of their industry ties and
we do feel that universities ... should benefit questioned the legitimacy of their activities,
from profitable applications of our findings. I they were also aware of the opportunities and
had hoped that an industry so recently benefits of their actions. Involvement in
spawned by university research would be entrepreneurial science was not simply
enlightened in its recognition of who is repeated and habituated, however. As
responsible for its existence ... ' (Colyvas, practices were executed, they were also
2007a: 467) He also threatened corporate altered and justified anew, as the same indi-
partners that he would patent 'everything in viduals and their peers tried their hand at
sight' in order to beat industry at their own subsequent inventions. The organization of
game. the laboratory and the ethos embedded in it
These examples provide evidence of informed how technology transfer would be
significant variation in how scientists in one performed.
department at the same university practiced The organizational ambiguity attached to
commercialization differently and ascribed definitions of inventor and invention, and
meaning to what they did. In the first exam- procedures associated with commercializing
ple, the scientist utilized an enduring vocab- science such as royalty distribution, provided
ulary from the profession of science, stating multiple opportunities for generating
that his contribution to a discovery was only disparate meanings and practices. These
because he was 'standing on the shoulders of individual approaches resonated with the fac-
giants' and could not identify himself as an ulty members because they drew on their
inventor by profiting personally from a familiar identities and ideals as scientists in
patent. He invoked the legitimacy that is meaning-making processes. As the world of
accorded to the scientific enterprise, and the science came into contact with commerce,
expectations that flow from it. In the second the identity associated with a university
example, political and ideological references scientist expanded to include entrepreneur-
provided resources for justifying practices ship. As more high-status elite scientists par-
and generating claims of 'team effort' that the ticipated in such activities, commercial
laboratory was communal and organized involvement transitioned from unfamiliar
288
and unusual to plausible and appropriate, and forms, boilerplate letters of agreement, and
finally to a core component of a scientific marketing tools were developed and revised
career (Colyvas and Powell, 2007). By in order to anchor and support ongoing
engaging in the unfamiliar and making it efforts at clarification. As categories became
plausible in the context of academia, settled, roles were more defined and practices
scientists transformed what it meant to be a well rehearsed. Job titles, conflict-of-interest
scientist. Their involvement helped render guidelines, and organizational routines
the older model of ivory tower science quaint developed to sustain these activities.
and these new entrepreneurial activities Eventually, there was little need for
indicative of engagement (Colyvas and articulation or explicit expositions of the
Powell, 2007). premises and rationales that characterized
A parallel feature of the institutionaliza- scientists' early engagement in
tion of commercial science was the establish- entrepreneurship.
ment of routines and practices that created Language and meaning played an impor-
and normalized activities. Colyvas and tant harmonizing role at the organizational
Powell's (2006) analysis of 31 years of tech- level as the vocabularies utilized in this set-
nology transfer archives at Stanford ting transformed over time. In the early years,
University demonstrates the importance of commercializing science was pursued as an
the instantiation and codification of two core exception rather than the rule, justified for
institutional features - legitimacy and taken- the 'benefit and use of the public.' As
for-grantedness - into organizational rules university technology transfer gained
and procedures. They show how the develop- legitimacy and the once sharp boundaries
ment of conventions extended academic between university and industry blurred, a
science further into the industrial realm, and more local, institutional vocabulary took
how the integration of universities and form. Finally, during the later stages of
companies into a community of common institutionalization, the language of
interests became desirable and appropriate. entrepreneurship and academic mission
Once prohibited from consulting to compa- became integrated into a common identity of
nies that commercialized their technologies, public benefit, profession, and practical
academic scientists became emulated for action. The language of science and the
their multiple roles as founders, scientific mission of the university to benefit the public
advisory board members, and equity holders. endured, yet the conventions associated with
Conflict of interest policies and reporting them were redefined as the institu-
requirements occasioned these opportunities, tionalization process unfolded. We see
shaping and reinforcing the appropriate form similar processes of unexpected circum-
that entrepreneurship would take. Social and stances becoming routinized, and made
technical categories provided windows into sensible in our second case, to which we now
the core cognitive features of taken-for- turn.
grantedness. The criteria that distinguished
an 'inventor' from a co-author, or an
'invention' from a research publication were Earned income and nonprofit
transformed from points of elaborate organizations
discussion to well-understood, highly
scripted routines and guidelines. The kinds of Commercialization is a much discussed topic
responsibilities and expectations that would in the nonprofit world. More and more
be imposed on scientists in the nonprofits are pursuing commercial activities
commercialization process also underwent a to secure funds, and turning to earned income
similar process of elaboration and subsequent activities to boost their budgets. The fiscal
compression. Invention disclosure challenges faced by nonprofits are
 289
considerable and many external funding art - and museum directors and entrepreneur-
sources now demand and support more entre- ial administrators who are responsible for the
preneurial approaches (Powell, Gammal, and financial viability of the organization.
Simard, 2005). Not only do some funding Debates over the benefits or disadvantages of
sources stipulate earned income efforts, but earned income activities seldom attend to
there are a growing array of courses, pro- evidence drawn from day-to-day operations,
grams, and elite entrepreneurs that prosely- however. When we examine rare, successful
tize about importing entrepreneurship into the cases of revenue generation, we see a rather
nonprofit sector. Moreover, many nonprofits different account in which local action has
prefer to deliver goods-and services in a often emerged as necessity in response to
fashion that does not create dependency, as unexpected conditions. These practical
they view extensive reliance on donors as a responses triggered new steps that eventually
sign of vulnerability and weakness. There is led to organizational changes, and connected
also a widespread neo-liberal belief that with much ballyhooed larger macro-trends,
market discipline is healthy, and entrepre- but were not prompted by them. In such cases
neurial activities generate autonomy and the ethnomethodological insight that mixing
build capabilities (Dees, 1998). practices prompts surprise and novelty can be
Most of the literature on earned income applied to illuminate how new forms are
activities follows two themes. One argument generated.
stresses the need to augment the social non- A notable case of successful nonprofit
profit sector with practices from for-profit entrepreneurship is Minnesota Public Radio
businesses (Letts et al., 1997; Porter and (MPR), one of the nation's largest and now
Kramer, 1999), with attention focused on the richest public radio stations, known for
individuals and organizations involved in the award-winning documentaries, innovative
transfer and circulation of ideas across sec- programming, and extraordinary success at
tors.9 To these analysts, entrepreneurial ven- revenue generation.10 Between 1986 and
tures have become the 'hallmark' of a 2000, MPR's for-profit ventures generated
successful nonprofit. The second theme is $175 million in earned income for the non-
sung by a chorus of scholars and practitioners profit station, including a $90 million contri-
who worry that earned income initiatives are bution to its endowment (Phills and Chang,
particularly difficult for nonprofit organi- 2005). The origins of this success reveal how
zations and that responding to both financial strongly organizational behavior is often
and non-financial concerns is inevitably constructed 'on the fly', and necessity is the
fraught with tension (Foster and Bradach, mother of entrepreneurship.
2005). These discussions are healthy for In the late 1970s and early 1980s, MPR
theory and practice, as they not only high- developed a satirical show called A Prairie
light the tensions between making a profit Home Companion. They offered the show to
and staying true to one's mission, but also National Public Radio, but NPR declined,
recognize that basing decisions solely on saying it wasn't a show that would have
mission can threaten financial survival, while nationwide appeal. It appears that MPR was
putting business concerns ahead of organiza- peeved by National Public Radio's decision
tional mission can have deleterious long-term to decline the show, which fueled the desire
consequences (Minkoff and Powell, 2006). to make the show successful. By the early
The rival metaphors of mission and busi- 1980s, A Prairie Home Companion had gen-
ness often lead to internal strife within non- erated a fairly healthy audience, and in 1981
profit organizations. For, example, this Garrison Keillor, the show's popular host,
tension is manifest in an art museum between offered listeners a free poster of his mythical
curators - the.-traditional guardians of sponsor, Powdermilk Biscuits. The fictitious
sponsor was part of a regular ongoing gag on
290
the show. To everyone's surprise, more than fascination with assembling ham radio sets
50,000 listeners requested a copy of the and listening to distant stations.
poster. The station faced a $60,000 printing In December 1995, MPR asked a handful
bill. In such circumstances of surprise, sense- of employees to assist Rivertown Trading on
making efforts often spring into action. And a voluntary basis to fulfill backlogged
so MPR continued the tradition of the ficti- holiday orders. MPR employees were told
tious sponsor by turning it into a commercial that Rivertown would make donations to
product. To avert financial disaster, MPR their favorite charities or contribute to a
President William Kling recalled, 'We holiday party for those who volunteered.
decided to print on the back of a poster an Nine employees pitched in, working two to
offer for other products that you could buy, three hours each, earning $350 each for their
like a Powdermilk Biscuit t-shirt. The idea favorite charities. The expectation at MPR
worked. I think we netted off that poster, was that employees at the radio station and
which was really our first catalog, $15,000 or the catalog company should be from common
$20,000' (William K1ing, quoted in Phills backgrounds. Indeed, Kling, the general
and Chang, 2005: 65). 'It instantly became counsel and other key staff were executives
clear that there were things like that you at both companies. 'We didn't want to hire
could do' (K1ing, quoted in Khan, 1995). people who worked for Lands End or
To tap the popularity of A Prairie Home Williams Sonoma,' William Kling
Companion, MPR created the Rivertown commented, 'we wanted people who held the
Trading Company, a mail order catalog busi- values of the nonprofit.'¹² This decision also
ness that sold mugs, t-shirts, novelties, and led to a firestorm of protest and controversy.
eventually clothing, jewelry and items related Politicians in Minnesota, newspaper
to Keillor's radio show. The new entity grew reporters, and other public broadcasting offi-
rapidly and by 1986 was reorganized as a cials were highly critical that employees of
separate for-profit subsidiary of MPR to the nonprofit radio station also received com-
remove any legitimacy and tax issues related pensation for their work with for-profit
to a nonprofit organization owning a highly Rivertown Trading, and considerably higher
profitable business. By 1994, Rivertown wages to boot. Instead of seeing routines and
Trading distributed five catalogs, including organizational continuity, critics saw a pat-
Wireless, Signals, Seasons, Circa and tern of insider dealing, conflict of interest,
Classica. It also ran the US Golf and public funding for an entrepreneurial
Association's catalog. Moreover, the product effort, and raised concerns of unfair compen-
selection in its catalogs extended well beyond sation and lack of transparency. It is not our
its original focus on gifts associated with the· task here to assess the merits of these
Keillor show. criticisms. We note instead that Kling and
The origins of Minnesota Public Radio colleagues' response was to stress that the
also had a similar 'creation in the wild' flavor. interests of the radio station and the catalog
Back in the 1960s, the president of a small company were indistinguishable. Kling-
Benedictine college in Minnesota asked a emphasized that the $4 million in annual
young college graduate, William Kling, to support given by Rivertown to MPR over two
start a college radio station to honor the decades exceeded the budgets of the great
Benedictine tradition of providing artistic and majority of public radio stations in the U.S.,
cultural enrichment to their local and the $90 million endowment that the sale
communities. Kling viewed this opportunity of Rivertown produced, secured MPR's
in a simple manner: 'I was doing what I really future: 'We could have "done a lot of good
liked to do, building something that hadn't things with MPR, but suffice to say the $175
been done before.'¹¹ He likened building the million contribution made it possible to do
radio station to his childhood things we would not have been able to
 291
otherwise.' Rather than engage with or The story of MPR is notable for both
respond to critics, or assume the role of accomplishment and controversy. Few other
entrepreneurial champion, Kling focused on nonprofits have been so successful at revenue
the daily activities of a radio broadcaster: generation or as agile in securing a sizeable
more reporters, better signal coverage, more endowment to guarantee a sustainable future.
investigative journalism, and the ability to But rather than linking their efforts to broader
acquire struggling public radio stations in trends at social entrepreneurship, MPR's
other parts of the country. leadership has responded modestly to critics,
MPR is not the only nonprofit that has emphasizing how earned income activities
generated earned income through new or were initially-a response to an unexpected
alternative means in recent years. The chap- emergency. One might say that MPR learned
ters in Weisbrod (1998) chronicle an array of to perform as entrepreneurs, rather than
activities pursued by organizations as diverse 'strategize' about this performance. Moreover,
as the Girl Scouts, zoos and acquaria, and art actions that critics interpreted as inherently
museums. As government support has conflictual and questionable stemmed from
declined or stagnated, nonprofits have an organizational practice that executives
increasingly turned to revenue generation. should oversee the actions of both the station
But such efforts are most likely to be suc- and the company in order to ensure values-
cessful - financially, organizationally, and based continuity between them. This choice
politically - when they flow from existing clearly reflected a managerial desire to
operations. In the MPR context, success at routinize the efforts of both branches of the
the catalog business built upon Garrison organization, and to engage in sensemaking
Keillor's performances. While critics opined around for-profit activities in service of
that 'if Garrison Keillor ever gets laryngitis, nonprofit goals.
Bill Kling is out of business!',¹³ Kling These two cases of university and non-
commented, 'My fear is that there are too profit entrepreneurship illuminate how activ-
many nonprofits seeking the holy grail ... if it ities take form through micro-processes of
doesn't come naturally to you, you shouldn't development and institutionalization.
do it.'14 Archival records, interviews, and vestiges of
In response to growing public criticisms in organizational routines provide tools that
the late 1990s over the large sums generated reveal instances of practical reason and the
by the for-profit operation and the handsome attribution of meanings to such efforts. In the
financial rewards that Kling and colleagues same manner as studies address the adoption
reaped from the sale of the catalog business, and spread of organizational forms, these
Kling invoked a political justification for the examples underscore how practices and their
activity: that entrepreneurial efforts with attendant meanings and identities develop
Riverside Trading were enhanced by the and crystallize into a form that later becomes
'imprimatur from the Reagan administration adopted.
that it is UK to go out and think that way, The two cases we have used are
indeed we encourage you to think this way.'15 admittedly unusual in several respects. They
Interestingly, however, none of the dozens of both involve organizations that eventually
reports, newspaper columns, and magazine became highly successful at activities which
articles written about the situation in the were initially regarded as novel and unusual,
1980s or early 1990s employed a political even questionable. As the new practices and
mandate as a rationale. More than a decade identities became institutionalized, the
after the fact, the signature of the Reagan era organizations were held up for scrutiny and
was 'pulled down' to retrospectively explain debate, and then veneration and emulation
the entrepreneurial effort. (Colyvas and Powell, 2007). One advantage
of studying these hallmark cases is there is a
292
rich documentary trail that can be analyzed. through the creation of formal conflict of
Studies of how institutional practices are interest forms and procedures. Today, the
formed should recognize the tradeoffs that number of spin-off companies has become a
are entailed in the choice of cases. metric by which universities are assessed for
Nevertheless, we think that fine-grained their contribution to local economic
attention to enterprising organizations can be development. With earned income efforts by
instructive, as well as analysis of how nonprofits, donors look less at the programs
activities do or do not spread to other venues they fund and which audiences they reach,
and are interpreted at other sites. and more at the percentage of administrative
costs that are allocated to program develop-
ment. Administrative overhead has become a
key, but rather orthogonal, criteria for
RESEARCH METHODS FOR assessing the effectiveness of nonprofits.
STUDYING MICROFOUNDATIONS Such categories and metrics have become not
only tools of evaluation, but the accounts by
which organizational leaders justify their
In this last section, we discuss various tools activities.
that researchers can use to study the Following the insights of ethnomethodol-
emergence and sustainability of institutions. ogy, organizational record-keeping can
Instead of assuming that institutions provide a longitudinal conversation about
reproduce themselves, we examine efforts how daily activities are rendered intelligible,
that lead to institutional creation and mainte- affirming that organizational practices are
nance, and ways of capturing these processes. comprehensible to others. Close examination
Language and vocabulary are a first step. of organizational archives and correspon-
These are the protocols that people use to dence, as well as newer electronic forms sue
engage in dialogue and achieve mutual h as websites, blogs and e-mail, afford the
understanding and inter-subjective aware- opportunity to witness organizational
ness. The next step is to see what aspects of performance, and see social reproduction at
language become codified into formal the micro-level, as daily accounts culminate
measures of performance and accomplish- into ongoing conversations and larger stories
ment. These constructed definitions become about organizational purposes and goals. One
metrics by which people evaluate one could, for example, listen to older broadcasts
another. As these 'accounts' of performance of Prairie Home Companion to assess how
or activity take hold, they become reified, often references were made on the air to the
that is received and accepted as normal by burgeoning catalog business to discern how
their participants and adopted and emulated earned income efforts permeated
by others who were not a part of their initial programming.
creation. In this sense, local measures A sensemaking approach directs us to
become 'natural.' Once natural, they become follow organizational actions - the efforts of
public, as the measures redefine arid individuals as they engage in the routines of
reinterpret history, and evolve into models regular operations. This naturalistic focus on
that others aspire to, and are recognized as work as skill offers insights into how social
guideposts of accomplishment. meanings become attached to routine con-
Consider how start-up companies as uni- duct. Status expectations research alerts us to
versity spin-offs were once objects of contes- how standards of legitimacy in the broader
tation and debate, when the idea of society inform group practice. In contrast to
universities engaging in commercial ventures other approaches, this line of work alerts us
was nascent and questionable (Colyvas, to look for how social categories and expec-
2007a). Eventually, debate was resolved tations in the wider environment are utilized
 293
at the local level. Recall, for example, how in When Becker was having a difficult interac-
the early stages of academic entrepreneur- tion with a reservation clerk, he calmly said
ship, faculty used both the norms of science to the person, 'I am an irate,' and the operator
and statements about the proper organization responded by asking him, 'how did you know
of their labs to communicate and interpret that word?' and immediately sped up his
their experience with a novel activity. reservation. The creation, resilience, and
Sensemaking is most salient when surpris- transmission of categories offer a particularly
es happen or events are perceived to be disso- useful window into organizational life as they
nant with past experience (Weick, Sutcliffe, not only reflect daily practice but connect
and Obstfeld, 2005). In such instances, indiv- organizations to the wider society as they
iduals reach into their repertoire of experie- render the mundane generalizable. Categories
nce to make a situation fit the immediate also contain either latent or explicit rules for
circumstances and allow them to resume their action, as they invoke scripts that are
actions.16 Weick suggests a repertoire of associated with people or problems. Studying
vocabularies that direct attention and shape the formation of categories in organizations
action. 'Words approximate the territory' and is an excellent way to connect micro-level
reflect resources for individuals to convert processes with the larger social order.
ongoing cues into meaning by 'edit[ing] cont- Metaphors are another topic for examina-
inuity into discrete categories and observati- tion, as they provide a means of shaping the
ons into interpretations (Weick, 1995: 107). understanding of a new experience by defin-
Weick identifies both the content (as words) ing one domain in terms of another. Lakoff
and resources (as frames) that vocabularies and Johnson (1980: 142) suggest that
take. Individuals often draw on the metaphors '... sanction actions, justify infer-
vocabularies of professions and occupations ences, and help us set goals ...' In doing so,
to understand organizational actions, and metaphors offer meaning to daily activity,
cope with their consequences. At MPR, for often retrospectively by locating the past in
example, the organization consistently used present beliefs, values, and daily tasks. The
the language of radio broadcasting to explain ubiquity of metaphors renders them taken-
their commercial success in the catalog for-granted - in many respects invisible, yet
business. In this respect, their discourse was very salient in terms of generating and
performative, as it enacted and enhanced the transmitting meaning.
commercial enterprise. Since sensemaking is As one illustration, Colyvas (2007b)
primarily a retrospective process, individuals examined the language used to explain the
make sense of traditions by drawing on the recombinant DNA breakthrough, tracing the
language of predecessors and use narratives thematic content in newspaper articles and
to account for sequence and experience. campus documents regarding breakthroughs
Language and communication are central, as in genetic engineering in the 1970s. The
they provide filters and constraints on what vocabulary of the time drew on the
can be said, how expressions are categorized, metaphors of factories, hazards, and
and conclusions retained. contamination, which transcended both
Members of organizations expend consid- bacteria and university. She traced the appli-
erable effort at communication through cation and flow of common language in both
codes, categories, and metaphors. Categories public media and private, university
serve as boxes or bins that people, problems, correspondence, following the metaphors of
and tools get assigned to. Bowker and Star factory and production in formal announce-
(1999: 38) recount a lovely story from social- ments about the development of rDNA
ogist Howard Becker who learned that airline science. The factory image was first intro-
reservations staff have a category called an duced in the popular press as a way to
'irate' to characterize disgruntled customers.
294
describe this basic research tool and-explain engagement m entrepreneurship offers an
its linkage to curing disease. Concerns over example. Colyvas (2007a) coded practices
biohazards in the popular press, however, and premises separately for each invention
quickly amplified fears of contamination and over the first 12 years of the Stanford tech-
images of 'Frankenstein genes.' Eventually, nology licensing program. She identified core
the production metaphor triumphed, captur- areas in technology transfer where insti-
ing a theme of therapeutic and commercial tutions and resources intersected, notably in
promise. The same images quickly trans- the definitions of social and technical
posed into the university setting through categories and in how revenues from inven-
marketing discussions over patenting and tions were disbursed. Through analysis of
licensing the breakthrough.- Becoming a 'fac- correspondence archives, she discerned how
tory' or 'contaminating' the academy became conventions developed and transformed as
exemplars for contesting commercial efforts scientists were introduced to the emerging
at the university. field of biotechnology. Laboratory-level
Viewed more abstractly, metaphor played models of technology transfer that were once
a comparable role of reducing ambiguity and coherent became fragmented. The conver-
mitigating uncertainty in both science and gence and harmonization of entrepreneurial
university settings. The application and nor- logics was characterized by the re-attachment
mative tone of the same imagery, however, of practices from some labs to the meanings
differed as factory language extolled science generated by other labs. She found that the
and technology, but simultaneously dispar- modern interpretation of an incentive system
aged universities. By analyzing the two-way for successful entrepreneurship was the
flow of metaphors in science and society, outcome of the process of institutionalization,
Colyvas highlighted the ways in which rather than an input to it. Thus, actions shape
understandings are conveyed, developed, and meanings as much as meanings shapes
transmitted through metaphor, and how those practices (Mohr, 1998). This recursive
metaphors morph as they are transferred. process has a dynamic of variation and
Such work suggests that when metaphors change, much like the mutation of a virus that
become generalized in their use, they render transforms as it spreads or comes into contact
some features of social life 'objective,' but with others. The meaning behind patenting a
deflect attention to other aspects. As a result, scientific research finding is quite different
metaphors shape perceptions of situations, today from 30 years ago, and what was once
problems, and analogues for solving them. an exception for technological necessity or
One might regard institutionalization as currency for a career transition out of
making metaphor dead. If the surprise of academia has become a core component of an
metaphor is in its novel application, then academic identity in the life sciences.
language may be understood as a reef of Tradition and stories offer insight into the
'dead' metaphors - that is, no longer retrospective aspects of organization (Weick,
unfamiliar, but routine and taken-for - 1995). Tradition necessarily invokes the
granted. vocabularies of predecessors, reinforcing
The ongoing relationship between mean- patterns of action that have been reproduced
ing and action is another key area for inquiry. or believed to have existed across
These core features of social life are not generations. A notable feature of traditions is
proxies for one another, but distinctive insti- that they must become symbolic in order to
tutional elements to investigate. Attention to persist or be transmitted. Stories draw on
what individuals or organizations do, sepa- vocabularies of sequence and experience.
rately from what they mean by doing it, Patterns such as beginning, middle, end, or
should be central to the study of micro- situation, transformation, and situation often
processes. Our earlier analysis of scientists' provide the basis for
 295
constructing narratives, drawing analogies Tricia Martin, John Meyer, David Suarez and
and causal linkages, integrating what is Megan Tompkins for helpful comments on
present to what is absent, and what is known an earlier draft. Research support for Powell
to what is conjecture. When pressed about provided by the Center for Social Innovation
the entrepreneurial success of MPR, William at the Stanford Graduate School of Business,
Kling turned to childhood memories of ham and for Colyvas by the Columbia-Stanford
radios and the history of outreach of the Consortium on Biomedical Innovation.
Benedictine church, and not to a celebration
of business acumen.
This discussion was offered as an entry
into methods for studying processes of NOTES
micro-institutionalization. As a next step, an
analysis could distinguish between meanings
and practices in cross-case comparisons over 1 See, for example, the review symposium on
time, particularly in tracing institutional Garfinkel's Studies in Ethnomethodology in the
January 1968 American Sociological Review, notably
change as the product of micro-level efforts Coleman's (1968) blistering critique, or Coser's (1974)
at enactment, interpretation, and compliance. presidential address where he used the bully pulpit of
the annual ASA meetings to argue that eth-
nomethodology was a method in search of a theory.
SUMMARY 2 Garfinkel (1968) describes this accomplishment
aptly: 'how jurors know what they are doing when they
do the work of jurors.'
We have argued that institutional research 3 We do not take up the fascination of the actor
can benefit from complementary attention to network approach with artifacts and their politics.
the micro-order and the macro-level. We urge Simply stated, studies demonstrate that economic
more examination of the genesis of organiza- technologies - trading screens, stock tickers,
calculators, etc. do not simply represent the market's
tional practices and the resulting meanings ups and downs, but are very much involved in shaping
that are attached to these routines. Such market behavior (Knorr-Cetina and Bruegger, 2002;
attention will not only provide a fuller Buenza and Stark, 2004; Callon and Muniesa, 2005).
account of institutionalization processes, but 4 In 1970, there was no financial trading in
will also enable much clearer parsing of 'futures: but by 2004, financial derivative contracts
totaling $273 trillion were outstanding worldwide.
endogenous and exogenous influences. Our 5 Sensemaking's insight lies in the ways it
aim is to trace how efforts on the ground, so 'captures the realities of agency, flow, equivocality,
to speak, may prompt macro-level changes transience, reaccomplishment, unfolding, and emer-
and responses. A multi-level view will offer gence ... , that are often obscured by the language of
more purchase to the question of why institu- variables, nouns, quantities, and structures' (Weick,
Sutcliffe, and Obstfeld, 2005).
tional practices and structures take the form 6 In contrast to ethnomethodology, where
they do. Rather than focus only on the diffu- Garfinkel's (1967) clever studies of breaching trans-
sion or success of a form, we can better form mundane encounters into unfamiliar controver-
explain the nature of what becomes regarded sies, sensemaking studies tend to analyze how skillful
as appropriate or venerable. The results of routines can result in terrible tragedy.
7 Charles Perrow often makes a very Weickian
such inquiry will lead to more compelling remark, 'how do I know what I think until I say it?'
and integrative analyses. 8 See Sampat, 2006 and Rothaermel, Agung, and
Jiang, 2007 for excellent reviews of the debates
around university technology policies.
ACKNOWLEDGEMENTS 9 Pressures on nonprofits to become more 'busi-
ness-like' are certainly not new. Indeed, such urging
has been common throughout the' sector's history
We are grateful to Marisa Bueno, Gili Drori, (Hall, 2006). In the early twentieth century, religious
Mary Ann Glynn, Royston Greenwood, charities were criticized by progressive 'scientific'
296
charity providers whourged the rationalization of Wall Street trading room.' Industrial and
services for the poor (Lubove, 1965; Mohr and Corporate Change, 13: 369-400.
Duquenne, 1997). In the 1970s and 1980s, leading Callon, M. 1986. 'Some elements of a sociology
management consultancies persuaded many large of translation: Domestication of the scallops
nonprofit organizations to develop strategic plans in
and the fishermen of St. Brieuc Bay.' Pp. 196-
order to 'enhance' their operations (DiMaggio and
Powell, 1983; Mintzberg, 1994; McKenna, 2006). 233 in J. law (ed.), Power, Action and Belief"
10 The Center for Social Innovation at the Stanford A New Sociology of Knowledge? London:
Graduate School of Business and National Arts Routledge & Kegan Paul.
Strategies, a nonprofit consultancy for the arts, jointly Callon, M. (ed.) 1998. The Laws of the Markets.
developed the case on Minnesota Public Radio for Oxford: Blackwell.
classroom use. We have taught this case numerous Callon, M. 2006. 'What does it mean to say that
times in MBA classes and executive education economics is performative?' Working paper,
courses. James Phills and Ed Martenson were the pri- Ecole des Mines, Paris.
mary contributors to the case's development. We draw Callon, M. and F. Muniesa. 2005. 'Peripheral
on it for this extended example.
vision: Economic markets as calculative col-
11 Interview with William Kling by Ed Martenson
of National Arts Strategies, 2004. lective devices.' Organization Studies, 26 (8):
12 Interview with William Kling by Ed Martenson, 1229-1250.
ibid. Cicourel, A. 1968. The Social Organization of
13 Ron Russell, 'Public Radio's Darth Vader Juvenile Justice. New York: John Wiley.
invades L.A. by gobbling up a sleepy Pasadena col- Coleman, J.S. 1968. 'Review symposium of
lege station.' New Times Los Angeles, June 29, 2000. Studies in Ethnomethodology.' American
14 Interview with William Kling by Ed Martenson, Sociological Review, 33 (1): 126-130.
2004. Colyvas, J.A. 2007a. 'From divergent meanings
15 Interview with William Kling by Ed Martenson, to common practices: The early institutional-
ibid.
ization of technology transfer in the life sci-
16 The guidepoints to sensemaking are found in
'institutional constraints, organizational premises, ences at Stanford University.' Research
plans, expectations, acceptable justifications, and Policy, 36 (4): 456-476.
traditions inherited from predecessors' (Weick et al., Colyvas, Jeannette A. 2007b. 'Factories, Hazards,
2005: 414). Furthermore, these guidepoints do not and Contamination: Metaphors and
have to be accurate. What matters is that they are Recombinant DNA in University and
plausible from the point of view of enacted identities Biotechnology.' Minerva, 45 (2): 143-159.
and context (Weick, 1995: 55-56). Colyvas, J.A., and W.W. Powell. 2006. 'Roads to
institutionalization: The remaking of
boundaries between public and private sci-
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 11
Institutions and
Transnationalization
Marie-Laure Djelic and Sigrid Quack

INTRODUCTION globalization, on the other hand, equate this

evolution with anomie, instability and
At a first level, the notions of 'institutions' disorder. The withering of traditional polities
and 'globalization' could appear to exclude or and institutions is often described, from such
oppose each other. The notion of institution a critical stance, as one of the negative
suggests stability or at least an attempt at externalities of globalization.
stabilization. An institutionalist perspective The objective of this chapter is to over-
starts from the basic recognition that human come the apparent opposition between the
activities, including activities of an economic two notions of 'institutions' and 'globaliza-
nature, are embedded and framed within tion'. We suggest instead another perspective,
larger institutional schemes that are, on the where the two notions emerge as being
whole, quite stable (Weber 1978; Polanyi tightly intertwined. First, we want to argue
1944). A core dimension of the institution- that our reading of the phenomenon of
nalist project has been to understand how globalization will be significantly enhanced if
embeddedness matters, how institutions cons- we bring to bear upon that phenomenon an
train and structure action, create regularities institutionalist perspective. The globalization
and stability, limiting at the same time the of our world is, we propose, deeply about
range of options and opportunities. In institutions. It is about the rules of the game
contrast, the process of globalization is often in which economic and social activity are
associated with the breakdown of traditional embedded and about the profound
rules of the game and institutions, in transformation of those rules in a world
particular through the weakening of national where order-creating capacities are not
states and their order-creating capacities. The coinciding anymore with nation-state power.
champions of that process welcome this We argue that much of this institution
evolution. They see globalization as a process building is of a transnational rather than a
where 'markets' displace and replace global nature; it unfolds across blurring
'institutions' through time, bringing along boundaries between 'a variety of actors from
wealth and development, economic, social, if different nation-states without necessarily
not moral progress. The critics of
300
implying convergence and-homogenization at The label 'globalization' is frequently used to
the global level. Second, we also want to refer to the rapid expansion of operations and
argue that institutions and processes of interactions across and beyond national
institutionalization cannot be understood boundaries. However, we find it
today without taking transnationalization into unsatisfactory; 'globalization' has become
account. Most spheres of economic and such a catchword that its meaning is high1y
social life, in most comers of the world, are blurred. Transnationalization, we propose, is
not only constrained and framed by local and a more suitable and focused concept to make
national sets of institutions but they become sense of the world we live in. We agree with
enmeshed as well in transnational dynamics. Hannerz (1996: 6) that 'the term "transna-
We define institutions as those collective tional" offers a more adequate label for phe-
frames and systems that provide stability and nomena which can be of quite variable scale
meaning to social behaviour and social inter- and distribution, even when they do share the
action and take on a rule-like status in social characteristic of not being contained within
thought and action (Meyer and Rowan 1977; the state'. The term 'transnational' suggests
Douglas 1986: 46-48). Institutions stabilize entanglement and blurred boundaries to a
and survive through self-activating social degree that the term 'global' could not. In our
processes of reproduction (Jepperson 1991). contemporary world, it becomes increasingly
At the same time, we see institutions not only difficult to separate what takes place within
as sets of constraints but also as tools and national boundaries and what takes place
resources enabling action (Clemens and Cook across and beyond nations. The neat
1999). In our view, institutions have both a opposition between 'globalization' and
structural dimension, including formal and 'nations', often just beneath the surface in a
informal rules and systems and an ideational number of debates, does not really make
dimension, including normative and sense whether empirically or analytically.
cognitive schemes. The mix of those two Organizations, activities and individuals
dimensions can vary. The reach of institu- constantly span multiple levels, rendering
tions will also vary and it will be likely, in obsolete older tines of demarcation (Djelic
fact, to co-vary with the scope of social and Sahlin-Andersson 2006). At the same
action and interaction. In other words, if time, the term transnational does not imply,
action and interaction only play out at the as globalization often does, the disappearance
level of a local tribe, locally defined and of states. It suggests instead that states are
enforced sets of rules will be both necessary now only one type of actor among others and
and sufficient. If action and interaction that they have to profoundly evolve as a
expand beyond the boundaries of the tribe, consequence (Katzenstein, Keohane and
then there will probably be a need for Krasner 1998).
translocal institutional frames that may The term transnationalization is also a
displace, complement or transform local term better adapted to our times than the term
ones. While institutional resilience can be 'internationalization'. Transnationalization
quite strong, institutions can change and what suggests more than the mere projection of
this chapter does is explore some of the national states and national actors outside
dynamics of institutional change - those more their borders. It implies that many
particularly associated with the process of connections go beyond state-to-state and
transnationalization. firm-to-firm interactions.
We use the term 'transnationalization' to Transnationalization points to the progressive
describe a world - our world - where eco- structuring of spheres' of action and
nomic and social organization and coordina- interaction with an emergent identity, where
tion increasingly reach across national debates cannot be reduced to negotiations
borders. between national identities.
Transnationalization means, in other words,
 301
that the world 'in between' nation-states is not Organizational institutionalism
an anomic world with no order, power or and its agnostic stance on
institutions apart from those projected by transnationalization
strong states. In fact, the term suggests that
there is a need to consider The field of 'organizational institutionalism'
transnationalization from an institutional encompasses a wide range of conceptual and
perspective - to focus on those processes of empirical studies, demonstrating how
institutionalization and de-institutionalization organizations are shaped by, adapt to and
associated with the transnationalization of interact with institutionally legitimized rules
economic and social activity. and templates in their environment. In the
We explore, in this chapter, the interplay tradition of classical authors (Barnard 1938;
between institutions and transnationalization. Blau 1955; Gouldner 1954; Parsons 1956;
We start with a review of the literature and Selznick 1949; Weber 1978), organizations
get a sense of how different perspectives are conceived as adaptive social systems
have handled those notions and sometimes embedded in and responsive to wider societal
their interaction. Then, building on recent and institutional influences rather than just as
developments within the broad family of mere production systems geared towards effi-
institutionalism, we propose a reading of ciency. In pursuit of the neo-institutionalist
transnationalization through an institutional turn introduced by Meyer and Rowan (1977),
lens. In other words, we approach DiMaggio and Powell (1983) and Zucker
transnationalization as an institutionalization (1977), recent work gives priority to
process. Finally, here again building on cognitive and cultural over regulative mecha-
recent contributions, we bring the transna- nisms of institutionalization. The compre-
tional dimension into the study of hensive concept of institutions used in these
institutions. We do this in order to enhance analyses encompasses any kind of sustained,
our understanding of contemporary processes reproduced social practice that may be
of institutionalization and de- relevant to organizations, including taken-
institutionalization and hence to contribute to for-granted practices, norms and values.
debates on institutional change. Organizational institutionalism has mainly
focused on the study of institutionalization
processes in organizations or organizational
LITERATURE REVIEW fields and has highlighted isomorphic pres-
sures, leading to homogenization of organi-
We take in turn four different theoretical zational practices and forms. On the whole,
repertoires and explore what they have to tell organizational institutionalism has taken a
us, if anything, about the interplay between rather agnostic stance on transnationalization.
'institutions' and 'transnationalization'. Three Studies of organizational fields are often
of those repertoires are inevitable when we limited to the local or industry level; they
talk about institutions and institutionalization rarely encompass a national or even
organizational institutionalism, societal transnational dimension. Institutional
institutionalism and World System institu- processes that extend beyond the boundaries
tionalism. We choose to bring in the fourth of organizational or sectoral fields or run
repertoire - the International Relations through vertically layered institutional orders
Literature - because it is important for a have been largely neglected. This agnostic
discussion of transnationalization even stance of organizational institutionalism op
though it brings less to debates on insti- transnationalization becomes increasingly
tutionalization. problematic as the horizons of action and
302
meaning of the actors become transnational crystallized. This occurs together with the
and global interdependencies increase. stabilization of a consensus on the value of
This also applies to the recent revival of the behavioural patterns and of their
interest in institutional entrepreneurship and associated meanings and understandings
institutional change. Building on DiMaggio's among social actors. This consensus can
(1988) seminal article, various authors have translate into fragile preliminary structures
investigated how institutionally embedded and rules that can still be revised or
actors engage in shaping and changing their challenged at this semi-institutionalized
institutional frameworks. Oliver (1991) stage. The third and last stage of institution-
identified various strategies ranging from alization is one of 'sedimentation'. It is char-
passive conformity to proactive manipulation acterized by a wider spread of patterned
by which organizations act in a given behaviours and meanings and by the solidifi-
institutional environment. Greenwood, cation and perpetuation of structures. During
Suddaby and Hinings (2002) investigated the this last stage, institutions can acquire the
role of professional associations in the trans- quality of 'exteriority', i.e., they can become
formation of institutional fields. The large taken for granted and develop a reality of
majority of these studies, though, focus once their own.
more on institutional change at the local and From a process perspective, de-institu-
industry level (see, e.g., Dorado 2005; tionalization is another important element of
Fligstein 1997; Greenwood and Suddaby any institutional change. Institution building
2006; Maguire, Hardy and Lawrence 2004). in the transnational sphere may equally
Very few studies have analyzed institution require a fair degree of de-institutionalization
building at the global level (Maguire and of rules at local or national levels. Following
Hardy 2006). Oliver (1991, 1992), political, functional and
Organizational institutionalism, though, is social pressures can lead to de-
of relevance to the theme of this chapter institutionalization. Political pressures arise
because it provides key concepts that, when from intentional interest-guided actions of
further elaborated, can be fruitfully applied to individuals who question the legitimacy of
the study of institutionalization in the existing institutions. Functional pressures
transnational sphere. We suggest that this may lead to de-institutionalization when
applies particularly to process theories of stakeholders challenge the legitimacy of an
institutionalization and deinstitutionalization, institution because of its growing incompati-
concepts of diffusion, translation and editing, bility with technical and economic require-
and organizational field analysis. ments. Social pressure can lead to de-
Organizational institutionalism offers a institutionalization when differentiation and
micro-approach to institutional change that fragmentation of an organization's members
can be extended to macro-levels of analysis. and environment lead to an erosion of
Building on Berger and Luckmann (1967), institutionalized rules through a declining
institutionalization has been defined by normative consensus and cognitively shared
Tolbert and Zucker (1996) as a three-phase systems of meaning. Faced with such pres-
process. The first phase, called habitualiza- sures for institutional erosion, actors may
tion, comprises the development of patterned engage in various maintenance and repair
behaviours through recurrent and regular activities to stabilize institutions (Suchman
interactions to which shared meanings and 1995a; Lawrence, Chapter 6 and Lawrence
understandings become attached. The second and Suddaby 2006).
phase, called objectification, is the In combination, institutionalization and
subsequent process of generalization of these de-institutionalization provide powerful con-
particular meanings and understandings cepts for the analysis of institutional dynam-
beyond the specific context in which they ics. These concepts have been revised and
 303
refined by various authors (Barley and organizational institutionalism has
Tolbert 1997; Seo and Creed 2002; emphasized isomorphism, this does not mean
Greenwood and Hinings 1996; Greenwood et that diffusion always leads to increasing
al. 2002; Greenwood and Suddaby 2006; similarity. The results of diffusion processes
Suchman 1995b). They are now able to are indeed quite variable. Various reasons for
encompass pragmatic legitimacy based on this variability and divergence have been
self-interest, moral legitimacy based on proposed, e.g., transmission mistakes (Zucker
normative approval as well as cognitive 1977) and socio-cultural differences.
legitimacy based on comprehensibility and Westney (1987) showed that imitation always
taken-for-grantedness (Suchman 1995a). involves an element of innovation.
Lawrence et al. (2001) include power, disci- Czarniawska and Sevón (1996), Sahlin-
pline and dominance as other sources of Andersson (1996) and Sahlin-Andersson and
institutionalization that may lead to a variety Engwall (2002) analyze the way in which
of dynamics. The role of social movements in transfers of management practices between
de-stabilizing institutional fields and different local contexts consist of translation
transforming extant socio-economic practices and editing activities between different
has also been identified as important. It has cultural and social contexts, and show that
been, for example, at the centre of the study these translations may lead to rather
by Lounsbury et al. (2003) on the rise of a divergent outcomes. In her analysis of the
for-profit recycling industry in the United transfer of the US model of economic
States. Social movements also played a key organization to Europe, Djelic (1998) high-
role in the emergence of international lights how geopolitical dependencies,
standards like ISO (Walgenbach 2000). transnational elite networks and the strength
The common point of these process and type of resistance groups have led to
approaches is that they allow for contestation different adaptations of the model in
between various interested actors in the first Germany, France and Italy. The extension
two phases of the process and acknowledge and refinement of diffusion and transfer
the co-existence of different degrees of insti- studies along these lines promises substantial
tutionalization (Jepperson 1991; Dorado contributions to questions about the degree to
2005). This makes them attractive concepts which increasing cross-border and global
for the analysis of institutional phenomena in exchanges will give rise to homogenization,
the transnational sphere where struggles hybridization or continued variety of
between different parties and a fair degree of transnational institutional rules.
institutions in the making are to be expected. Finally, the concept of organizational field
So far, however, these processes have been can be elaborated in ways that allow the inte-
rarely studied in multinational organizations gration of a transnational dimension into
or in multi-jurisdictional and multi-layered institutional analysis. In the original
institutional settings (see Suchman 1995b for definition, organizational field refers to
an exception) which are likely to be 'organizations that in the aggregate constitute
characterized by parallel bottom-up and top- a recognized area of institutional life'
down processes of institutionalization and de- (DiMaggio and Powell 1991: 64f). While this
institutionalization. concept usually applied to the isomorphic
Another contribution of organizational diffusion of organizational forms at a local or
institutionalism is that if offers the tools to industry level, more recently it has been used
study cross-border diffusion of practices, to depict institutionalization processes that
templates and rules as sources of unfold around regulatory 'issues' (Hoffman
institutionalization and de- 1999) and 'transnational governance' (Djelic
institutionalization. Diffusion can be based and Sahlin-Andersson 2006). Several authors
on structural relationships or on cultural have called to give more attention to the
media and artifacts. While one stream of relative openness of fields (Greenwood
304
and Hinings 1996), their nestedness into where each national ensemble - institutions
wider institutional arrangements (Scott 2001) and organizations - functions in relative
and the unfolding of contradictory logics isolation from the others. Such a description
within such fields (Seo and Creed 2002). of social and economic reality may hold as a
Studies on the emergence of new fields point kind of ideal type for the past - and even
to the importance of social movements there with a varying degree of applicability in
(Lounsbury et al. 2003; Walgenbach 2000). different historical periods. Quack (2006a),
Building on these treatments, Djelic and for example, argues that transnational
Sah1in-Andersson (2006: 18f) suggest that influences significantly shaped German
'transnational governance fields' are a capitalism during its formative period. In the
pertinent unit of analysis to study multi-level contemporary period, the notion of relatively
institutional dynamics that unfold through closed business systems becomes even more
various overlapping network relations across obsolete because of the growing transnational
blurring territorial and jurisdictional interconnectedness of economic actors across
boundaries and are driven by institutional the world and the emergence and
forces that constitute a transnational meaning strengthening of various forms of institution-
system. alized rule systems at the transnational level
(Brunsson and Jacobsson 2000; Djelic and
Quack 2003; Djelic and Sahlin-Andersson
Societal institutionalism and 2006; Drori, Meyer and Hwang 2006).
the challenge of opening There have been a number of attempts to
national systems date to adapt the analytical framework of
societal institutionalism in a way that can
The label 'societal institutionalism' refers to help meet the theoretical challenges raised by
what is now a dense set of conceptual and economic internationalization and transna-
empirical studies focusing on the historical tionalization (for an overview, see Deeg and
emergence and contemporary structuring of Jackson 2007). These attempts reflect essen-
national economies. Societal institutionalism tially three main strategies. One path has
has related the structures and strategies of been to call into question the conception of
firms, the relationships between different institutions as fully determining economic
stakeholder groups, the roles of managers, organization and action. The idea, instead, is
the development and distribution of skills to highlight and look for the degrees of free-
between various layers of employees to the dom that economic actors can enjoy within a
distinct social and institutional settings in given institutional framework. The focus,
which firms operate. The institutions receiv- here, is on the existing and potential variety
ing most attention in societal institutionalism of strategies and behavioural patterns within
are the state, the financial, educational and a given society (Sorge 2000), on the multi-
training systems, the labour market regime plicity of institutional repertoires that co-exist
and norms and values governing trust and and linger on in the background of any
authority relationships (Maurice and Sorge apparently dominant institutional frame
2000; Hall and Soskice 2001; Whitley 1999). (Crouch 2005; Morgan and Quack 2005;
The main focus of societal institutionalism Schneiberg 2007), as well as on the tensions
has been the systemic nature of national con- that can arise from the conflicting interests of
figurations of institutions. And a key preoc- different societal groups, leading to contra-
cupation of that literature has been to show dictions within a particular societal system
how those stable systems in turn shape and and potentially to institutional change
define national economic organizations and (Almond and Rubery 2000; Quack, Morgan
their self-reproduction. The picture has gen- and Whitley 2000). In his studies of the
erally been one of multiple closed systems, German biotech sector, Casper has made
 305
explicit this critique of societal institutional- national level. The adaptation of the theory
ism, suggesting that here leads us well beyond the notion of iso-
lated and self-contained national business
'static descriptions of existing institutional system. We need to reconcile the idea of
environments must be combined with micro- different systems with the reality of
level accounts, tracing how firms, governments, homogenizing pressures - the outcome being
and other actors within the economy experiment
with, and at times re-configure, the institutional
in general one form or another of
tool-kits at their disposal' (Casper 2000). hybridization or creolization.
A third path, still barely explored, would
Such micro-level accounts can build upon be to look at the transnational arena as an
various theoretical approaches. Where Casper institutionalised or institutionalising space.
(2000) turns to micro-economic theories to Hollingsworth and Boyer (1997), for exam-
bridge the gap between dynamic interactions ple, argue that social systems of production
at the level of firms, regulators or policy need increasingly to be seen as nested within
makers and pre-existing institutional frames, a complex system of regional, national but
we suggest that sociological approaches that also international arrangements. Whitley
highlight the creative dimension of social (2003) argues that since 1945 the interna-
behaviour building on interactionism or tional business environment has undergone a
ethno-methodology are other possibilities transformation from a particularistic logic to
(Douglas 1986; Emirbayer and Mische 1998; an increasing formalization and standardiza-
Joas 1992). tion of the roles of the economic game. So
A second route for adapting societal insti- far, however, societal institutionalism has
tutionalism has been to explore what happens contributed little to our understanding of the
when actors or organizations become invol- processes leading to the emergence of new
ved in multiple institutional environments institutional arrangements in the transnational
with different and sometimes conflicting role sphere. The few budding attempts, recently,
systems. A particularly interesting laboratory at exploring this frontier have built in part
here appears to be the multinational company upon different theoretical repertoires.
and in recent years studies on its nature and Authors like Bronsson and Jacobsson (2000),
development have flourished (Harzing and Morgan (2001), Djelic and Bensedrine
Sorge 2005; Lane 2000; Morgan, Kristensen (2001) or Plehwe with Vescovi (2003) look
and Whitley 2001; Morgan, Whitley and at the actors, preconditions and mechanisms
Moen 2005). The internationalization of involved in the emergence and transforma-
companies creates a 'battle-field' where dif- tion of institutions in the 'transnational social
ferent constituencies enter in conflict and space' (Morgan 2001). Djelic and Quack
negotiate (Kristensen and Zeitlin 2001; (2007) argue that the concept of path-
Sharpe 2001). Transnational transfers of bu- dependency needs to be reconsidered in the
siness practices generally lead to hybridiza- context of open systems. Their analysis
tion of practices at the organizational level points to increasing co-evolutionary interac-
but also of managerial 'mental maps' (Lane tion between national path transformation
2000; Smith and Elger 2000). In time, as and transnational path creation.
Christel Lane (2001) argues in the case of
German pharmaceutical companies, this can
trigger a transformation of domestic institu-
tions (see also Lane 2003; Vitols 2005a, World system institutionalism,
2005b). Another important arena for contes- globalization - and their limits
tion between competing institutional influen-
ces are global production networks (Lane and
Probert 2006). When change in leading trans- The label 'world-system institutionalism'
national companies reaches a critical mass, refers to a now well-established tradition of
managers are encouraged or even required to cultural institutionalism. In that tradition,
press for institutional reforms at the
306
institutions are 'wider cultural and symbolic has also contributed to our knowledge about
patterns', increasingly with a 'global' or key carriers of global models and blueprints
transnational scope, that shape and to a large (Boli and Thomas 1999; Finnemore 1996).
extent determine organizations, structures or These studies, however, focus most1y on
actors and script behaviours and interactions how global cultural models and institutional
(Meyer and Rowan 1977; Scott, Meyer et al. blueprints are diffused, potentially shaping
1994; Jepperson 2000a, b). Cultural localized discourse and/or structures and
processes with a transnational scope explain activities. We learn less on the construction
to a significant extent changes in states, and negotiation of global cultural models or
organizations or individual behaviours institutions. We also lack an understanding of
(Meyer, Boli, Thomas and Ramirez 1997). actual processes and mechanisms of diffusion
World society is not only a society of and local reception - where transnational
empowered actors; it is a society permeated institutional blueprints meet with local
by and permeating actors with powerful cul- institutional traditions. Finally, there is room
tural values or institutional frames (Meyer et for more work - both empirically and
al. 1997). These frames are shaped and dif- conceptually - on carriers. There is an
fused as global models and blueprints along extremely rich and diverse pool of carriers
which states (and other actors) are bench- out there that has only recently started to be
marked and possibly transformed (Finnemore studied in and for itself (Boli and Thomas
1993). There is no global state but the 1999; Greenwood et al. 2002; Sahlin-
alternative to state power is not anarchy and Andersson and Engwall 2002; Djelic and
chaos. Meyer et al. (1997) convincingly Quack 2003; Djelic and Sahlin-Andersson
argue that the cultural and institutional web 2006). Carriers are often 10cated at the
characteristic of world society can be, at least interface of multiple sources of
in part, a functional equivalent to a embeddedness. In particular, they often cross
centralized, state-like global power. The and overcome the national/transnational
stateless but rational, organized and border and contribute to back and forth trans-
universalist character of world society may in lation and negotiation (Campbell 2004).
fact add to rather than detract from the speed Studies combining an analysis of the activi-
of diffusion and the global pervasiveness of ties and interests of carriers with an account
standardized models and blueprints of their institutional embeddedness (with
(Finnemore and Sikkink 1998). sometimes multiple and conflicting sources
This line of research and its elaborate of embeddedness) should help us capture
theory of world society are enlightening. power interplays and processes of interest
They bring cultural perspectives and expla- formation in highly institutionalized settings
nations into the analysis of states, organiza- with a transnational scope. They will also
tions and their transformation and provide allow us to understand how transnational cul-
evidence that actorhood is of the 'soft' kind - tural models or institutions are negotiated,
that is always itself embedded in cultural constructed, diffused and adapted through
frames - and in fact empowered by those time - leading us well beyond the notion of
cultural frames. This line of research shows institutional convergence.
that the real sources of power and authority
in our societies are cultural and diffuse rather
than structural and centralized. Studies within
this tradition show that states remain Learning about transnationalization
important regulators, but that they are from the international relations
themselves embedded in, shaped and literature
fashioned by a powerful world society and its
associated institutional and cultural templates The international relations literature is an
(Meyer et al. 1997; Jacobsson 2006). This interesting tradition to explore when we
research
 307
think about transnationalization and its Along with the idea of a retreat and
mechanisms. Traditionally, the perspective in transformation of states, there has been a
political science and in the international focus on the widespread expansion of various
relations literature has been of a highly state- forms of private authority (Cutler, Haufler
centreed internationalization process (Martin and Porter 1999; Hall and Biersteker 2002).
2005). If anything, the structure of the There is an interesting parallel with pre-
international sphere is given by and through modern (i.e., pre-nation-states) times when
negotiations between states and essentially private authority spanning local communities
reflects, at any given point in time, a was widespread; the lex mercatoria (or
particular balance of power. For some time merchant law) being a striking example
now, though, a number of scholars within the (Berman and Kaufman 1978; Lehmkuhl
international relations community have 2003). The modern concept of private
contributed to an evolution of those state- authority is wide and encompassing, referring
centreed perspectives in interesting to a multiplicity of rule-making and
directions. institution-building activities that emerge and
A first line of reaction has been to point to are structured outside states.
the progressive 'retreat of the state' in a glob- Some contributions within the inter-
alizing world (Strange 1996). Many contem- national relations literature pointed already in
porary regulatory reforms have been the 1980s to the importance here of
associated with privatization and the partial transnational social networks. Using the con-
dismantling of public services and welfare cept of 'social networks' in its descriptive and
states (e.g., Vogel 1996; Djelic 2006). In the first-level sense, Kees van der Pijl and the
process, states have in fact not withered Amsterdam school explored the sociology
away. Granted they may be changing, poten- and political economy of transnational class
tially quite significantly. As used by Majone formation (Van der Pijl 1984, 1998). They
(1996) and others, the concept of 'regulatory unearthed in the process important
states' points to a significant evolution of mechanisms of transnational governance that
states and the way they control and influence reproduced the class power of particular
activities and actors. Regulatory states are not groups and associated structures of domi-
less influential or powerful than more nance - both reaching progressively a
interventionist states but they are increasingly transnational scale and scope.
embedded in complex constellations of actors Haas (1989, 1992) also pointed to the
and structures (e.g., Higgott, Underhill and importance of social networks as key mecha-
Bieler 2000; O'Brien, Goetz, Scholte and nisms of governance crossing over state
Williams 2000). As such, their input and boundaries. Haas' concept of 'epistemic com-
identity is difficult to disentangle and sepa- munities' makes reference to communities of
rate from the inputs and identities of other expertise and practice that are increasingly
actors involved. transnational while individuals in those com-
Furthermore, it becomes less and less munities retain some form of local or national
acceptable to treat states as monoliths. State influence and authority (Haas 1992). This
institutions are complex patchworks and this mix can allow those groups to be powerful
complexity becomes all the more striking that mechanisms at the" interface between
the porosity of state institutions has increased transnational and national institutional
significantly, albeit 'differentially. In fact, spheres. The understanding of 'social
boundaries may now be tighter and more networks' here is a sophisticated one.
rigid between sectors of state administration Epistemic communities are 'faceless' and
than between particular state agencies and members generally have direct interactions
other actors in the same sector or field. only with small subsets of the community.
Those communities are nevertheless
powerfully connected. More than through
308
direct and regular contacts, the 'glue' is gener- TRANSNATIONALIZATION AS
ated by common cognitive and value INSTITUTIONAL RECOMBINATION
schemes, often associated with complex
socialization processes and generally A core insight of institutional theory is that
translated into 'expertise', shared interests and the patterning of social life is not produced
projects. It is interesting here to draw a solely by the aggregation of individual and
parallel between this concept and the idea of organizational behaviours but also by
'carriers' as emerging in 'world-system institutions that structure and shape the
institutionalism'. interests, strategies and behaviours of social
More recent contributions talk about actors. Authors like Ann Swidler (1986) or
regulatory networks, underscoring the wide Mary Douglas (1986), however, draw our
variety of public and private actors involved attention to the fact that this institutional
in rule making, institution building and patterning is not fully deterministic.
monitoring. As Schmidt puts it, 'though the Institutions (or culture in the terminology of
hangover of the traditional focus on the Swidler) provide 'tool kits' or repertoires
state's legal commands has been felt in the from which actors can to some extent choose
study of regulation, both European and in order to construct their 'strategies of
American scholars of policy networks have action'. The resulting variety in social
advanced perspectives on regulation rooted behaviours generates a pool of alternative
more firmly in institutional dynamics and mental maps and patterns of behaviour,
political behaviour' (Schmidt 2004: 276). The which, under specific conditions, can come to
idea of regulatory networks points to interact with each other and challenge
complex interconnections between a existing institutions.
multiplicity of individual and organizational
actors - interconnections that can be direct or
mediated. The idea also suggests
organizational, cognitive and normative Where do transnational institutions
frames or arenas in which those interactions come from?
take place and are structured. Finally, with a
focus on regulatory networks comes a In processes of institutional emergence,
question about their legitimacy and more decline or change, new configurations are
generally about the legitimacy of private rarely created from scratch. Rather, the
authority. With a broadening set of rule- genesis of institutions in contemporary
makers and institution-builders, the way of societies unfolds in general in a form that is
authorizing rules and institutional frames is closer to 'bricolage' than to ex-nihilo
likely to broaden as well. Coercive rules that generation (Offe 1995; Hall and Taylor 1996;
rest on the monopoly of states over legal Campbell 1997; March and Olsen 1998).
authority and physical violence or on citizens' Actors build upon, work around, recombine,
habitual obedience come to represent only reinvent and reinterpret logics and
one among several forms of authorization. institutional arrangements that function
Building upon the richness of insights elsewhere and with which they are familiar.
emerging from a confrontation of the differ- Within the context of nation-states, the
ent repertoires presented above, we sketch creation of new institutions is likely to be
out below a theoretical frame that allows us strongly influenced by the state, in the form
to read the contemporary interaction between of political actors or agencies (Clemens and
institutions and transnationalization. This Cook 1999). But even there, this should not
frame has two main dimensions - first, we blind us to the impact and significance of
reinterpret transnationalization as institu- other actors.
tional recombination and, secondly, we con- The relevance of the idea of 'bricolage'
sider the impact of transnationalization on (Douglas 1986) becomes only more signifi-
processes of institutionalization. cant when we look at processes of institu-
tional emergence and institution building
 309
at the transnational level. We suggest, in fact, Historical scenarios - transnational
that turning our attention to the transnational organizations or regional
level should go hand in hand with a refocus- federations
ing away from the idea of institutional
configurations to that of dynamic institutional Historically, a first and obvious scenario for
recombination. Moving from institutions to institution building in the transnational arena
institutionalization and thinking about the has been the formal setting up of a
latter as a set of sequential stages - habituali- transnational organization. This, naturally, is
zation, objectification and sedimentation an old scenario and, with a little bit of a
(Tolbert and Zucker 1996) - suggests that the stretch, the Roman Catholic Church could be
level of embeddedness and robustness of used as an illustration, and a successful one at
institutional rules will vary. Thinking about that. Without going that far back into history,
institutionalization as a process also implies a number of other examples come to mind.
to think in parallel about processes of de- The League of Nations was an important
institutionalization (Oliver 1992). It opens ancestor, although with little impact ulti-
the door, as well, to the possibility of social mately (Murray 1987; Knock 1995). In the
intervention and hence agency. Institutions years following 1945, the project of structur-
are not only constraining; they are also ing the transnational space around transna-
enabling. Institutions are not static systems; tional organizations regained strength after
they are malleable processes. nearly two decades of strong nationalism and
Institution building in the transnational protectionism. The United Nations and its
sphere involves multiple actors or groups of various divisions, the Organization for
actors with mental and action maps European Economic Cooperation (OEEC,
originating from quite different institutional later to become the OECD), the International
contexts. Very often those originating con- Labour Office (ILO), the International
texts have a societal or national character Monetary Fund (IMF) or the World Bank and
(Morgan 2001). Hence, the process of insti- the General Agreement on Tariffs and Trade
tution building at the transnational level (GATT, later to become the World Trade
cannot be conceived in total isolation and Organization) all proceeded from the same
abstraction from national institutional logic.
contexts. Multiple national actors extend These organizations all had a centralized
their national contextual rationalities into the core, in charge of setting the rules and build-
international sphere where they interact, ing institutions at the transnational level. And
confront and negotiate with each other. Those this centralized core directly reflected the
participants may become involved in interests of national member states - as con-
institution building in a newly emerging veyed by public or semi-public types of
transnational sphere (McNichol and actors such as representatives of particular
Bensedrine 2003; Engels 2006). Or they may national governments and polities. In that
be playing a part in reforming, renegotiating context, such transnational organizations
and transforming existing transnational were in fact little more than the tools of par-
institutional arrangements as motivations, ticular nation-states and governments, mir-
power relations and conditions change over roring at any point in time the existing
time (Lehmkuhl 2003; Botzem and Quack geopolitical balance of power. In time, how-
2006). Through time, repeated interactions ever, the technocratic elite in charge of
and the building up of a transnational frame, everyday monitoring and management could
a number of actors may be emerging that evolve its own identity that could then not be
have a transnational - in the sense of not fully reduced to any single national logic.
purely national - identity or sense of self. These types of transnational organizations
have been more or less successful in their
310
attempt at setting the rules of the game on a transnational organizations on the other. A
transnational scale. The more successful the supranational construction such as the
IMF, the World Bank and probably also the European Union is indeed characterized by
GATT or later the WTO - have been those the strength of enforcement mechanisms and
with some control over compliance and with thus by its potential clout and impact over
sufficient means to monitor that the rules member nations and states. One type of
they are building are indeed being enforcement mechanisms are direct controls
implemented. Control could stem from a associated positively with rewards and nega-
degree of dependence of member states on tively with sanctions. Another type of
transnational organizations as well as from enforcement mechanism is the reliance on
the capacity these organizations may have to voluntary compliance, where member states
associate rewards with compliance and sanc- are aware of the overall benefits they draw
tions with non-compliance. from belonging to the supranational con-
A second scenario for institution building struction and, conversely, realize the danger-
in the transnational space follows from the ous consequences of not respecting the terms
temptation to create a supranational market, of a contract they entered of their own will.
or even a supranational state or nation. With
a little bit of a stretch, once again, and some
degree of historical anachronism, since a
number of them were constituted before the Self-regulating communities:
emergence of the nation-state, empires are scenario of the future?
the materialization of such a temptation. In
our modern age, the most obvious There is, we propose, a third scenario for
illustrations of this second scenario are institution building in the transnational space
constructions such as the European Coal and to which we associate the label 'self-
Steel Community (ECSC), the European regulating transnational communities'. This
Economic Community (EEC) or the scenario has become progressively more
European Union (EU). There are signs that widespread in recent years. In this third
NAFTA may also be travelling that road. scenario, all actors concerned by a particular
Here again, the process of rule setting and type of transnational activity come together,
institution building stems from a political, often in non-structured and rather
top-down kind of initiative. Public or semi- unformalized settings, elaborate and agree
public actors, governments or their rep- upon collective rules of the game (Cutler et
resentatives are instrumental in that process al. 1999; Morgan and Engwall 1999). In
even though they may not always be as pre- contrast to the first two scenarios, public or
dominant as in the first scenario. The scope semi-public actors might be involved in rule
and reach of those centrally engineered con- setting but they are not the only ones. In fact,
structions goes well beyond, in general, the private actors might take the initiative and be
scope and reach of transnational organiza- quite instrumental for the elaboration of rules
tions. The new rules and institutions are and the building of institutions as well as for
enforceable, in the sense of their being monitoring compliance (McNichol and
formally and efficiently associated with Bensedrine 2003; Botzem and Quack 2006).
enforcement mechanisms that put member Another difference with the two previous
states under strong pressure to comply. In scenarios is that the logic at work is not
fact, the reality and strength of enforcement external control but rather self-discipline or
mechanisms, combined with the scope of the self-regulation. Instead of waiting for public
domain controlled, might be the key differen- actors to impose an institutional frame and
tiating features between this type of suprana- thus orient private action, the actors
tional constructions on the one hand and concerned and in particular nongovernmental
 311
and private actors, take the initiative and set structuring of commercial arbitration at the
their own rules. Within an arena or a field of transnational level by actors themselves and
transnational activity lacking initially in in particular by private actors - has existed
structuration, all concerned actors collaborate for a long time. One could also argue that
in building institutional arrangements that international cartels, particularly during the
will constrain their own actions, behaviours interwar period or even after in some
and interactions. The process is one of industries (Cutler et al. 1999; Glimstedt
voluntary and relatively informal negotiation; 2001; Lilja and Moen 2003), fit within this
the emerging structural arrangements-are type of scenario. While that scenario is not
relatively amorphous, fluid and multifocal in new, it has recently been going through a
nature. period of 'revival after long decades when
Self-disciplining transnational communi- national states had all but established a
ties of that sort tend to rely on two main cat- monopoly over the handling of transnational
egories of enforcement mechanisms. One is issues and spaces. Many nongovernmental
voluntary compliance; compliance this time organizations have been established that
not only of national states and governments engage in standard setting, accreditation and
but directly of all actors involved in the other forms of soft regulation. Large
process. Compliance is voluntary for the multinational firms, particularly in
main reason that these actors define the rules professional services, have become rule-
themselves and inflict upon themselves the setters and rule-developers of their own
institutional constraints that will bound their (Quack 2006b; Morgan 2006). Informal reg-
actions and interactions. A second enforce- ulatory networks such as the International
ment mechanism, socialization, can be iden- Competition Network (Djelic and Kleiner
tified - although probably more as a potential 2006) are increasingly exerting influence on
and an objective than as an already existing national regulators. We propose, in fact, that
and concrete reality. Indeed, socialization can there has been an historical evolution overall,
only emerge as an enforcement mechanism at since 1945, in terms of which scenario has
a later stage. Rules and institutions have to be been predominant. The early period, in the
constructed and agreed upon (the years following the war, was characterized by
habitualization or pre-institutionalization the multiplication of transnational
stage identified above), actors have to func- organizations. Then came supranational
tion within that frame for a while (objectifi- constructions, particularly in Western
cation), before the double process of Europe. This naturally, is still going on. At
socialization and self-reproduction through the same time, empirical evidence points for
socialization can really become operative the recent period increasingly in the direction
(sedimentation). The advantage of socializa- of a greater role and place for self-
tion as an enforcement mechanism is the disciplining transnational communities
decreasing need for direct controls and thus (Braithwaite and Drahos 2000; Brunsson and
for both external rewards and sanctions. Jacobsson 2000; Djelic and Quack 2003;
Actors socialized through a particular Djelic and Sahlin-Andersson 2006).
institutional frame or within a particular set
of rules become their own watchdogs.
Ultimately, this institutional frame will have
a tendency to become neutral and transparent Transnational recombination: mode
for those actors who function within the and nature of the process
space it structures.
This third scenario for institution building In each of these three different scenarii,
at a transnational level is not new. As argued transnational institution building can be
by Lehmkuhl (2003), for example, the analyzed as a process of reinterpretation,
312
recombination and bricolage from institu- modes we identify and the likelihood that
tional fragments with different contextual they will co-exist and interact in real-life
origins. We suggest that there are three contexts. In fact, while situations of negotia-
different modes in which the rubbing, contes- tion are rarely perfectly balanced, a situation
tation and recombination of different institu- of dominance is on the other hand rarely so
tional fragments can take place at the extreme as to leave no space for at least par-
transnational level. tial negotiation. In the context of what was
A first, obvious, mo de we label here described above as 'Americanization', for
'dominant'. In that mode, the building of example, what many empirical studies show
institutions at a transnational level simply is the concomitant partial alteration, transla-
reflects one dominant local or national tion and negotiation of the 'dominant' model
model. Rules and institutions originating when it comes into contact with previously
from one particular national space thus shape existing and established national institutional
in a rather direct way the transnational space. configurations (Djelic 1998; Zeitlin and
In a second stage, this local turned Herrigel 2000; Amdam, Petter, Kvalshaugen
transnational model is bound to have an and Larsen 2003).
impact on a number of other national Common to illustrations of both the
institutional configurations, as we will argue 'dominant' and 'negotiated' modes is the fact
below. This overall process generally reflects that the actors involved - whoever and what-
the objective and/or perceived strength of the ever they are - remain strongly embedded in
'dominant' nation, which itself depends upon and shaped by the institutional contexts of
a combination of economic, military and their home countries. These actors tend in
geopolitical factors, with some degree of fact to extend the actions and strategies used
ideological propping up. Undeniably, since in that context and shaped by it to the
1945, this role of 'dominant' nation has been transnational arena. This, however, is not
played by the United States and this necessarily always the case. The involvement
particular mode of recombination can be of actors in processes of transnational
referred to as a process of Americanization institution building can - particularly if
(Djelic 1998; Whitley 2003; Djelic and sustained and recurring over longer periods
Quack 2003; Djelic and Sahlin-Andersson of time -lead to a blurring of identities,
2006). particularly national ones (Morgan 2001).
A second mode emerges that we label the Once transnational arenas have been
'negotiated mode'. Institution building in the structured for a little while, once
transnational space can come about through transnational institutions and rules of the
the confrontation or 'rubbing against each game shape behaviours and interactions,
other' of multiple locals or nationals, leading some of the actors concerned come to be
to what can be described as a process of more directly affected by these transnational
negotiation. This dimension of negotiation is institutions than by the institutions of the
documented in a number of recent empirical country they may originate from. New actors
contributions (e.g., McNichol and Bensedrine may also sprout up and the only referent for
2003; Ventresca, Szyliowicz and Dacin 2003; these new actors will be the embryonic
Botzem and Quack 2006). At the same time, transnational institutional context in which
if we look at them more closely, empirical they were born (e.g., some transnational
situations often illustrate in fact the interplay nongovernmental organizations [NGOs],
between the 'negotiated' and the 'dominant' lobbying organizations created at the
mode. All participants to the negotiations are European level, see Salk, Nielsen and Marks
not created equal and some of them may 2001).
loom significantly larger than the others in Any further process of transnational
the process. This underscores the ideal institution building in that context cannot
typical nature of the different anymore fit under the categories of either the
'dominant' or the 'negotiated' mode. What
takes place
 313
then is what we label, for lack of a better in the previous section, have a high potential
word, an 'emergent' process. Multiple actors to challenge and undermine institutional sta-
with no clear identities and functioning bility and identical reproduction at the
themselves at the interface of multiple rule national level. Transnational institutional
systems, come in collision with each other. If frames in the making are likely to challenge,
we are to follow the metaphorical use of to confront and to change - even though
chaos theory in social sciences, the result in slowly and incrementally - national institu-
this case is bound to be unpredictable tional systems. They can do so through direct
(Thietart and Forgues 1995). We call this impact - what we call here 'trickle-down'
result an 'emergent' construction. effects or mechanisms. When transnational
The three modes identified here are clearly organizations or supranational constructions
ideal types. There is bound to be, in other (e.g. the WTO, the IMF, NGOs, multina-
words, interaction and interplay between tional firms or the European Union) exert
them in real life situations. At the same time, pressure directly at the national level on
we suggest that there has been a shift over member governments to redefine national
time in their relative importance as a mode of rules of the game, then we have what we call
transnational institution building or 'trickle-down' effects or mechanisms.
recombination. This shift parallels to quite a The impact can also be more indirect.
degree the evolution, in terms of scenario, Through cross-national interactions at sub-
that was identified above. In the immediate societal or meso-levels - sectors, industries,
post-World War II years, we have argued, the professions or even from region to region -
main scenario for transnational institution actors are being drawn into social spaces that
building was the setting up of transnational extend well beyond their national context of
organizations. During this period, the domi- origin. In that process, those actors are likely
nant mode - one national model, the to be confronted with and to have to function
American one, imposing itself on a transna- within sets of rules that may be quite differ-
tional scale - was all but overwhelming. The ent from those of their country of origin.
dominant mo de has not entirely disappeared Subsocietal actors become the vectors and
with the attempts at supranational construc- transmission belts through which those new
tion. But such projects, by their very nature, rules are brought into a given national space.
meant and required some degree of negotia- In certain circumstances, those subsocietal
tion between the several member nations that actors may be more than mere messengers.
were shaping them, generally on a world They may become real mediators and con-
regional basis. Finally, the move towards the tribute to pushing those new rules up towards
third scenario - transnational institution the national institutional level, fostering in
building by self-disciplining transnational the process a transformation of the national
communities - coincides quite closely with business system or of the national business
the slow assertion of an emergent mode. It rationality. This path or pattern we associate
seems furthermore to fit particularly the case with 'trickle-up' effects or mechanisms.
of transnational institution building across
world regions - in what gets dose to being a
'global' space. Trickle-down trajectories

The challenge, naturally, may come from

TRANSNATIONALIZATION AND ITS transnational organizations or supranational
IMPACT ON INSTITUTIONS constructions. Those organizations and con-
structions quite often turn out to be rule-
Ongoing processes of institutional recombi- making bodies and some of them have gained
nation at the transnational level, as described significant and direct influence over
314
national polities. This is clearly the case with Once transnational institutions or rules are
the European Union. In recent years, the there or in the making, the question moves to
impact of the European Union has been the the conditions in which they may come
object of an increasing number of studies indeed to trickle down to the national level,
(Leibfried and Pierson 1995; Fligstein and with a potentially significant impact upon
Mara-Drita 1996; Sandholtz and Stone Sweet incumbent national institutions. One
1998; Plehwe 2001). With respect to the important variable appears to be the degree of
economic realm, other transnational centrality of a particular country, through its
organizations such as the International private and public representatives, in the
Monetary Fund (IMF), the World Bank, the process of construction and stabilization of
European Bank for Reconstruction and transnational rules. It seems fair to
Development (EBRD) or the World Trade differentiate between at least three main
Organization (WTO) should be mentioned. groups of countries in that respect.
These organizations contribute to the diffu- The first group is a little peculiar; it is a
sion of particular rules of the game, which one-unit sample. The United States plays
are likely to collide with incumbent rules or quite a unique role even though it does not
practices in any given national space. always manage to impose the solution that
Less attention has been paid to the sce- will best serve its interests. An explanation to
nario where challenger rules emerge from a that special place and role lies in the unique
transnational space lacking formal structure position of geopolitical dominance that has
and being, as a consequence, less visible. characterized the US since 1945 (Djelic
What we have said above about self- 1998; Braithwaite and Drahos 2000).
disciplining transnational communities indi- Through its private and public representa-
cates that rule setting and rule making can tives, that country has often been guiding and
also take place in transnational fields or structuring the process of construction and
arenas lacking structuration in relative terms. stabilization of transnational rules in a more
Actors - all kinds of actors, from private or less direct and visible manner, at least
firms to consumers, lobbies, nongovernmen- since 1945. A second group is made up of a
tal organizations (NGOs) or state representa- few core (and rather rich) countries, which
tives - come together to negotiate and agree are proactive and quite involved in trying to
on rules of the game. Examples can be found shape the process. The third group finally is
in the regulation of financial markets the larger one and brings together those
(Morgan 2001; Ventresca et al. 2003), countries with a more passive connection to
accounting standards (Botzem and Quack the process.
2006), international commercial arbitration Empirical evidence seems to show that
(Dezalay and Garth 1996; Lehmkuhl 2003), compliance may be more regular, once the
or competitive conditions (Djelic and Kleiner rules have been agreed upon, within the
2006). Those rules of the game are institu- second group of countries, rich core coun-
tions, to the extent that they structure action tries. In the third group of countries, those
and economic activity. For the most part, that are more passive in the process of
those are cognitive and normative institutions transnational institution building, appropria-
(Meyer and Rowan 1977). The rules that tion seems to be more of an issue. The
emerge or are negotiated in that context are process is likely to be slower with a greater
essentially norms that are enacted, appropri- distance between the world of discourse and
ated and enforced by the actors themselves formal institutions and the world of action
(Bmnsson and Jacobsson 2000). The struc- and practice that will remain very much
tural apparatus - formal organization, legis- structured by traditional patterns (Meyer et
lation or coercive machinery - comes if at all al. 1997a; Meyer et al. 1997b). In the case of
in support of those norms. the United States, compliance appears, on
 315
the other hand, quite irregular and changing an obvious path for trickle-down mecha-
(McNichol and Bensedrine 2003; ENS 200 I; nisms. This situation naturally creates
Liberation 2002). The profound geopolitical conditions where the rules defined at the
imbalance in favour of the US increases the supranational level are likely indeed to have a
degrees of freedom of that country regarding rapid and significant impact at the national
compliance with transnational rules, even level.
when it has played a significant role in the
process of construction and elaboration of
those rules. Trickle-up trajectories
Other variables with an impact on trickle-
down trajectories are the nature of incumbent Threats and challenges to national institu-
rules and the degree of dependence of a tional systems may also come from below,
particular country on external players. We from subsocietal or subnational levels. Such
hypothesize that a country where local rules 'trickle-up' trajectories can be of two kinds.
are weak, either because they lack First, national actors crossing national
legitimacy, have proven inefficient or a borders may find that the rules of the game
hindrance, are altogether absent or still at a with which they are familiar come into
pre-institutionalization stage, creates more collision and sometimes even are in
space for rules constructed at a transnational contradiction with rules of the game
level to trickJe down. This can only be dominant elsewhere. Those national actors
reinforced in situations of dependence, where could be individuals, groups of individuals,
a country, for example, sees the granting of firms, associations or networks of firms. This
financial assistance it badly needs being type of scenario will be all the more
conditioned upon compliance to a set of widespread now that the internationalization
transnationally defined rules (Djelic 1998). of economic activities and of exchanges in
This is not, after reflection, in contradiction general is becoming increasingly dense and
with our precedent finding. Weak countries intense.
tend to belong to the group we have defined The opening up of national economies
above as 'passive'. Weakness and dependence may stimulate a second scenario that is
may compensate in part for passivity, which parallel but goes in the other direction.
might lead to more rapid formal compliance Foreign actors move into a given national
than expected. Quite often, however, a space with rules of the game that are quite
significant gap will remain between the different from those of local actors. A variant
world of discourse and formal institutions on of that scenario is when the champions of
the one hand and the world of practice on the challenger rules on the local or national scene
other (this finds confirmation in earlier work are themselves locals or nationals who are
by sociologists of global society, e.g., Meyer pushing for new rules of the game in order to
et al. 1997a; Boli and Thomas 1999; Meyer carve a space for themselves. What this is all
and Ramirez 2000). The former might indeed about is the attempt by new or emerging
be affected through a trickle-down trajectory actors, whether local outsiders or foreign
by transnational challenger rules. The latter entrants or even a combination of both, to
will tend to stay, at least for a while, redefine rules of the game in an industry or
embedded in local traditions and national impose 'new' ones in order to enter the field
institutional legacies. A special and quite and the game and to reshape it to their
different case of dependence should be added advantage (Djelic and Ainamo 1999; Lane
and mentioned here. Direct political 200 I; Kleiner 2003).
dependence of national countries on a Various empirical studies show how this
supranational construction, such as is the case encounter between incumbent and challenger
in the European Union context, is rules plays out at subsocietal levels,
316
whether at the level of the firm (Lane 2000; advantage in professional fields such as cor-
Tainio, Huolman and Pulkkinen 2001), at the porate law or management consulting as well
level of an industry (Lilja and Moen 2003), as in other activities related to banking or
an organizational field (Kleiner 2003) or at financing. This allows them to be more
the level of a profession (Quack 2006b; forceful and convincing in the promotion of
Quack 2007; McKenna, Djelic and Ainamo their own sets of rules of the game. Naturally,
2003). This interplay at the subsocietal level the strength and legitimacy of those outsiders
is not neutral for national institutions. Rules and challengers will be more or less filtered
of the game may change at the subsocietal and mitigated by the existence and
level well before this is institutionalized at embeddedness of local incumbent rules.
the national level. But transformations at the Local appropriation will likely be more
subsocietal level may also reverberate in time complex and contested in situations where
at the national institutional level. The incumbent rules already exist and are deeply
decision by the German government in 2001 embedded - when, in other words, local
to create a Kodex-Kommission in charge of institutional rules have already entered the
'modernising the rules and practices of phase of sedimentation.
German capitalism' is a clear case of such a Another condition seems important that is
process of post hoc 'regularisation' (Le not unrelated to those identified above. The
Monde, 7 November 2001). The object of this greater the shock or the more intense the
commission was to take stock of changes that collision, the more likely it will reverberate at
had already redefined the German economic the national level. The collision will be more
game and to institutionalize them at the intense if subsocietal actors firms, industries,
national level. This raises questions about the professions or even possibly regions - lack
conditions in which contestation and protective buffers or else are in a situation of
transformation of incumbent rules of the perceived and self-acknowledged crisis. The
game at the subsocietal level are likely lack of protection can be due to the
indeed to reflect and impact at the national immaturity of the local field. It can be
level. strategically engineered, either by political
One such condition seems to be the central authorities or by the actors themselves,
position and overall leverage of the subsoci- through deregulation for example or a
etal actors concerned by or involved in the lowering of trade or other protective barriers
collision of rules. Changes within core and (Djelic and Ainamo 1999). It will also be
strategic firms or industries are more likely, related, naturally, to the strength of the push
ultimately, to have some impact on national coming from outsiders and challenger rules.
level institutions. This appears to be particu- A perceived and self-acknowledged situation
larly true in smaller countries, as shown by of crisis will tend to correspond, on the other
the cases of Nokia in Finland (Tainio et al. hand, to a high degree of dissatisfaction with
2001) or of the forest industry in Norway and incumbent rules, either because these rules do
Finland (Lilja and Moen 2003). In smaller not seem to co-evolve with environmental
countries, core firms or industries have pro- conditions and/or because they narrow the
portionally more clout, strategic importance opportunities of local and incumbent actors
but also leverage, which could explain their in a changing world.
more direct impact. We argue that under these conditions - or
Other important conditions are the a subset thereof - transformations in rules of
strength and legitimacy of those outsiders the game that were initially happening at a
championing and pushing for challenger subsocietal level are likely to have an impact
rules. In that respect, Anglo-Saxon players and reverberate, after a while, at the national
benefit from something akin to a 'trademark' level.
 317
CONCLUSION a lack of protection of incumbent rules
because of the immaturity of or a crisis in the
In this chapter we have explored the interac- field.
tions between institutions and transnational- Our findings suggest that economic and
ization. An important layer of institutions social behaviours are increasingly shaped by
with transnational scope has emerged since the interactions between national and
World War II and plays an increasing role in transnational institutional orders; at the same
the governance of economic relations. We time, actors at both levels are engaged in
need new categories and analytical tools to processes of institutionalization and de-
accurately characterize these institutions and institutionalization that may -redefine the
their impact on institutional change at the carriers, forms and modes of this interaction.
societal level. Comparing, contrasting and Consequently, institutional theory and
building upon four existing theoretical research must consider the possibility that
approaches, we move towards a theoretical multiple layers of institutions and
model that accounts for interactions between institutionalization may be relevant for the
institutions and transnationalization. This subject under study, and that change
model consists of two related and comple- processes result from complex and combined
mentary arguments. processes of institutionalization, de-
Firstly, transnational institution building institutionalization, and re-
can be defined as a process of institutional institutionalization. For institutional research,
recombination that involves elements of this has conceptual, methodological and
different national and local institutional empirical implications that we would like to
arrangements. We have identified different elucidate, particularly as they relate to
scenarios and modes of institutional recom- organizational institutionalism, the subject at
bination at the transnational level out of the heart of this handbook.
which self-disciplining transnational com- At the conceptual level, our analysis
munities with emergent modes of institution suggests that institutional systems should be
building seem to have become more conceived as open systems that are linked to
widespread in recent years. Secondly, each other through cross-border interactions
processes of institutional recombination have between various actor groups. The bound-
a high potential to challenge and undermine aries of these systems are permeable, and the
institutional stability at the national level different rule systems are likely to diffuse in
through trickle-down and trickle-up effects. both directions. Social actors are embedded
Trickle-down processes can directly in locally and temporally specific
influence governments to redefine legal rules institutional rules of the game. At the same
of the game at the national level. Trickle-up time, they become increasingly able to
effects may infiltrate societal rule systems develop horizons of meaning and action that
from the bottom-up through cross-border reach beyond their local institutional settings.
interactions between economic actors, social Problems and conflicts between different
movements and other stakeholders at the institutional logics at the organizational,
organizational field, industry or sectoral societal and transnational level should
levels. Encounters between challenger and therefore be considered as a major source of
incumbent rules may lead to new forms of institutional change. So far, however, we
institutional recombination at these levels. know relatively little about the specific
They are likely to impact on national rules dynamics of change within and between
systems if there is a central and strong these different institutional layers. More ana-
position of the transformed institutional field lytical concepts that integrate structural fea-
with respect to the overall society, a high tures of these different layers with relational
legitimacy of outside challenger rules and/or and process approaches need to be developed
318
in order to discern the interactions between from the rest of the world (see Crouch 2005:
the different layers. This new analytical 158; Scott 2001).
framework must give more attention to inter- Secondly, methodologies should be reori-
actions between cognitive, normative and ented in order to develop appropriate
regulatory mechanisms of institutionalization research designs for analyzing the interac-
and de-institutionalization and to the specific tions between national and transnational
types of legitimacy that they draw on. institutions. Global diffusion pattern studies
Institutional rules of the game at the societal and comparative analyses of societal
(generally national) level are often backed by institutional systems do not cover the interac-
legal or regulatory instruments relating to the tions between different institutional layers as
legitimacy of a democratically elected such. Both neglect cross-border interactions
government, whereas institutionalization at and the mutual interdependence and co-
the transnational level relies more strongly on evolution of national and transnational
cognitive and cultural processes of imitation, institutions that may result from these
socialization and adaptation. Problems and interactions. The emergence of new analyti-
conflicts between different forms of cal models that assess the emergence of
legitimacy that require resolution can transnational regulatory or issue fields from a
therefore be expected. So far, organizational process perspective and combine these with a
institutionalism has concentrated on the comparative analysis of the institutional
organization and organizational field level. In orders from which the participants in these
future research, organizations and fields originate, and which in turn may be
organizational fields need to be concep- affected by the development of transnational
tualized as social orders that are interlinked rule setting, is a promising development.
to a variable degree with institutional rule Thirdly, organizational institutionalism
systems at a higher aggregation level. This researchers could make more valuable con-
may be the national level, but also the tributions by employing the available tools
transnational level. for analysis of global and transnational forms
Institutional research methodologies and of organization, ranging from multinational
empirical work must better reflect the multi- enterprises and financial and knowledge
layered nature of institutional orders using a intermediaries to more loosely connected
three-point strategy. First, the research design communities and networks and their involve-
should better consider the possibility of a ment in processes of institution building and
nested hierarchy of institutional contexts. institutional change. In this way, the results
Currently, the level of analysis (i.e., the of organization studies could promote a
organization or organizational field) is often better understanding of the role of organiza-
presented as a starting assumption that rarely tions as vehicles of transnationalization (see
is justified in the research paper. It would be also Drori et al. 2006) and enrich the interna-
useful to have research hypotheses explaining tional relations literature with in-depth
why a particular level or interaction between analyses of how processes of dominance,
levels was selected as the object of analysis. negotiation and emergence within interna-
Given the mutual interaction and diffusion tional organizations impact on the wider
between institutional orders, it would be also institutional environment. At the same time,
helpful to have hypotheses explaining the organizational studies could also help to
points of openness and closure to external improve the current understanding of
influences of an institutional layer to other processes related to local interpretation and
layers rather then assuming that the defined translation of global and transnational insti-
level of an institutional system (e.g., the tutional rules by analyzing them as nested
organizational field or national level) is layers of an institutional framework.
encapsulated
 319
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 SECTION III

Applications
 12
Traditions as Institutionalized
Practice: Implications for
Deinstitutionalization
M. Tina Dacin and Peter A. Dacin

Institutional theory provides a powerful lens The framework proposed that the dissipation
for explaining individual and collective or rejection of an institutionalized practice
action. Recently, increased efforts towards was a result of a set of political, functional,
understanding how institutions are created and social pressures. The dissipation or rejec-
have led to a systematic development of ideas tion then leads to deinstitutionalization,
on institutional entrepreneurship and which, in turn, leads to erosion and/or extinc-
attention to processes and mechanisms of tion. For Oliver, deinstitutionalization is 'the
institutional construction. Despite this process by which the legitimacy of an estab-
growing rise of interest in how institutions lished or institutionalized organizational
are created, we still know relatively little practice erodes or discontinues' (1992: 564).
about the process of deinstitutionalization. A number of studies examine processes of
Many questions remain concerning how decline and erosion, including erosion via
institutions wax and wane or diminish in replacement as in the case of classic French
potency over time and the processes that cuisine (Rao, Monin, & Durand, 2003); strat-
shape the erosion and extinction of institu- egy abandonment in radio formats (Greve,
tionalized practices. 1995), ideological and political obsolescence
While a few studies examine institutional of CEOs with finance backgrounds (Ocasio
decline within the framework or boundaries & Kim, 1999), impact of downsizing in dein-
of studying institutional change (Dacin, stitutionalizing permanent employment prac-
Goodstein, & Scott, 2002), efforts to unpack tices in Japan (Ahmadjian & Robinson,
the strategies and dynamics associated with 2001), and the shedding and shunning of the
extinction are lacking. Scott defines deinsti- conglomerate form (Davis, Diekmann, &
tutionalization as the 'process by which insti- Tinsley, 1994). An interesting observation
tutions weaken and disappear' (2001: 182). from these studies, however, is that institu-
Important theorizing on deinstitutionali- tionalized practices are rarely ever com-
zation was put forth by Oliver (1992). pletely extinguished. The practice continues
Oliver's framework was the first to pay albeit weaker in scope (extent of diffusion) or
explicit attention to the erosion and potency. These studies also suggest that vari-
extinction of institutionalized practices. ous features or elements of institutionalized
328
behaviors continue and serve as either a will also allow us to offer several
reminder of prior strategies and/or as raw contributions towards a fuller and richer
material for the construction of new ones. We understanding of deinstitutionalization. First,
take these findings as a starting point for our in order to understand the processes that
chapter to understand the nature of traditions contributed to the decline of tradition and
and how traditions erode and become institutionalized practices of Bonfire, we
extinguished. As we discuss below, we focus bring together literature from work on
on traditions because, while they share culture, social movements, and institutions.
commonalities with institutionalized practice, Second, we are able to extend Oliver's
they also have some unique qualities that (1992) framework in important ways by
make them relevant for understanding highlighting the roles played by custodians
deinstitutionalization. (Soares, 1997), collective memory
In order to understand the process by (Hawlbachs, 1950; Zerubavel, 1997), collec-
which traditions erode, we summarize a tive identity and ritual in preserving institu-
recent illustration of a single tradition in an tionalized practices as well as distinguish
organizational setting and its evolution over between core and ancillary institutional
time. We consider traditions to be institution- dimensions and the role they play in the ero-
alized practices or collections of such prac- sion of an institutionalized practice. We fur-
tices and subsequently focus on developing ther suggest that this erosion leaves behind an
implications for understanding the process of institutional 'remnant'¹ which forms the raw
deinstitutionalization. We do this through an material for the emergence of new insti-
application and extension of Oliver's frame- tutional practices or re-emergence of old
work of deinstitutionalization in the context institutional practices. As long as there exist
of examining the life history of a single tra- remnants, an institutionalized practice is
dition over time. Before presenting our case never extinguished or completely deinstitu-
study, we want to clarify what we mean by tionalized. Finally, we suggest several direc-
traditions and how they erode. Towards the tions for future work in this area with a
end of our chapter, we demonstrate how our particular focus on the strategic management
story reveals important insights for under- of traditions.
standing the erosion and extinction of institu- We begin by summarizing existing views
tionalized practices. on the nature of traditions and relate these
The tradition we examine in this chapter is views to institutionalized practices.
Texas A&M University's 'Aggie Bonfire,' a Following this, we briefly review Oliver's
tradition that existed for a period of 90 years. (1992) framework for deinstitutionalization
As we later explain, we chose this tradition and then apply this framework in the histori-
because it is a rich tradition that underwent a cally rich case of the Aggie Bonfire, a case
process of deinstitutionalization and fits well that demonstrates the evolution and erosion
within the context of Oliver's (1992) deinsti- of a single tradition over time. We then illus-
tutionalization framework. The case of the trate how the understanding we gain through
Aggie Bonfire is especially rich in helping us this case study allows us to offer both an
to unpack the nature of organizational tradi- application and extension of Oliver's (1992)
tions and implications for the study of change framework of deinstitutionalization.
in institutionalized practices. It has been
studied by scholars in management (Beyer &
Nino, 2000) as well as cultural geography THE NATURE OF TRADITIONS
(Smith, 2004) and described in rich detail by
journalist Irwin Tang (2000). Traditions are important across many con-
The insights we gain from our understand- texts. Think of military and religious tradi-
ing of the deinstitutionalization of Bonfire tions or the tradition of Christmas and
 329
Thanksgiving. There are scientific traditions of variation in traditions over time, he also
(see Kuhn, 1962, for example) and oral tradi- regards traditions as having an invariant core
tions as well as industry orthodoxies or tradi- and as being intergenerational. He also sug-
tional ways of doing business. Traditions gests that a practice has to survive at least
have been widely studied in sociology, three generations in order for it to be consid-
anthropology, cultural geography, political ered a tradition. In Shils's view, as traditions
science and marketing. evolve the accumulation or removal of new
A brief summary of more recent work on elements leave other aspects relatively
traditions can be found in Soares (1997). For unchanged. Take, for example, the tradition
Soares, there exist several themes or views of convocation. Convocation is a tradition
that define much of the work on the nature of with multiple elements, some core and some
traditions. Drawing on ideas by Freud and ancillary. Convocation involves a number of
Marx, traditions are conceived as restraints or elements such as having one's name called
the constraining hand from the past that out, receiving a diploma as well as the pro-
defines and limits current action. A second cession, granting of an honorary doctorate,
view of tradition" is tradition as taken for and various material and symbolic elements
granted or unreflective habit as found in the such as the adornment of a convocation gown
writings of Weber. However, Soares (1997: and the various colors observed in convoca-
10) notes that Weber's position on tradition tion hoods and caps. Some of these elements
has a tendency to equate tradition and cus- take on greater or lesser meaning (potency)
toms. Soares views the two constructs as and evolve into core elements in a particular
quite distinct in that while customs involve context based on region, profession, or past
unreflective habit, traditions, on the other practice. However, there are also some
hand, possess a collective memory and a set elements widely shared or core across all
of custodians aware of the past. convocations (scope).
A third view is provided by Shils (1981) Elements of a given tradition are passed
who has written the most extensive treatment down to successive generations. The invari-
on the subject of understanding tradition. For ant core of a tradition provides impetus and
Shils, the study of tradition was largely resources for future generations to accept and
ignored by mainstream sociology. Shils's enact a tradition. The transmitted material
view of traditions is to think of them as a can take the form of a combination of core
source of continuity with the past or as and ancillary elements in the form of 'rem-
cultural 'inheritance.' The notion is quite nants' - a limited amount of raw material that
broad and could mean anything that is passed can form the basis for reinventing existing
down or inherited to the present. For Shils, traditions or constructing new ones.³ This
traditions incorporate a variety of beliefs, core or essence can take the form of a
objects, memories, imagery, practices and number of elements, including but not limited
institutions (1981: 12). Shils introduces tra- to a name, an identity, location, activity or
dition as something that has exemplars or imagery. A sense of identity with the past
custodians, not so much because of its prior evolves and a sense of community or collec-
existence but possibly also because it has a tive identity with the present emerges (Shils,
'quality of pastness' that appeals to current 1981: 14). There are important normative
practitioners (1981: 13). Therefore, in order implications of traditions as they provide not
for traditions to be successfully transmitted only continuity between the past and present
and repeated, it is likely necessary that they but define what is deemed appropriate in the
also need to be authentic or genuine (Sapir, present. An irony of traditions, as studied
1949)² in order to be accepted or taken for from Shils's view, is that while traditions
granted as appropriate and legitimate. While place limits or constraints on what can be
Shils (1981) acknowledges the introduction changed or how things change, traditions
330
themselves are continuously evolving and given tradition linked by collective
changing. memories. Custodians value their inheritance
Hobsbawm (1983) provides a fourth view and 'feel a sense of custodianship for the
of understanding tradition by regarding them tradition's present and future prospects'
as invented. Hobsbawm builds on the idea of (Soares, 1997: 14). Soares views traditions as
continuity but provides a different rationale 'a resource warehouse for the living' (1997:
for the construction of traditions in that they 15) and is the most dynamic approach to
are created by elites that construct them to understanding the nature of traditions. In his
assert and reify their power. Hobsbawm also view, the past provides values and solutions
examines the process of how traditions are that can be mobilized to deal with today's
'invented' as well as how they change. problems.
Innovations and redesign of traditions come
about as a result of a change in practices
fueled by the interests of those in power. For
Hobsbawm, traditions are an invariant, TRADITIONS AS INSTITUTIONALIZED
repetitive set of symbolic activities rooted in PRACTICES
the past:

a set of practices, normally governed by overtly We conceive of traditions as a construct

or tacitly accepted rules and of a ritual or residing at the intersection of institutional
symbolic nature, which seek to inculcate certain theory, as well as scholarly work on culture
values and norms of behavior by repetition,
and social movements, in that they draw
which automatically implies continuity with the
past. (Hobsbawm, 1984: 1) upon values, the normative implications and
mobilization of such values and value-laden
Soares raises an important critique regarding structures, and are oftentimes much more
Hobsbawm's work, in that his definition stable and enduring than customs or
makes it difficult to distinguish the notion of conventions. In this chapter, our focus is
tradition from ritual. According to Soares, more on, as Soares put it, 'living social' tra-
Hobsbawm's contribution was to allow for a ditions and traditions that are organizational
clearer delineation between traditions and in nature.
customs in that traditions are more stable It is relatively easy from a review of the
structures, whereas customs evolve to fulfill more extensive treatments of tradition in the
more pragmatic needs (Soares, 1997: 11). literature (Hobsbawm & Ranger, 1984; Shils,
Soares (1997) builds on this earlier work 1981) to identify a number of characteristics
and provides a valuable extension for that define organizational traditions. They are
understanding the nature of tradition more infused with value and meaning and are
broadly. Soares provides the following oftentimes associated with myths or narra-
definition: tives about their creation or continued exis-
tence. They are repositories of collective
a living social tradition requires a distinct social memories and identities, building social
group with a common identity derived from an cohesion via symbols and/or ritual as well as
interpretation of its past, whose collective shared experiences or imagined communities
memories have some objective expression in the (Andersen, 1991). They involve resource
material environment, and whose activities are mobilization and utilization and are protected
guided by a spirit of continuity. (1997: 16) and enhanced by custodians. Traditions
imply continuity and thus are quite stable,
Especially relevant for our discussion is that enduring, and repetitive. Traditions can be
both Shils (1981) and Soares (1997) give broad or narrow in scope (global versus more
explicit attention to the role of custodians in local or regional traditions) in terms of their
preserving and enhancing traditions.4 diffusion and consumption, as well as vary in
Custodians are exemplars or practitioners of potency over
a
 331
time and place. Finally, traditions also have a consist of an interconnected pattern of mean-
temporal dimension (Zerubavel, 1997). ings, custodians, collective memories, and
Given this broad range of dimensions, some but not all ritualized activities.
characteristics and components, we believe it In this chapter we are interested in
is useful to think of traditions and consider expanding our understanding of how
their evolution in three important ways. First, institutionalized practices erode and
we regard traditions as institutionalized orga- extinguish. We believe that understanding the
nizational behaviors or practices. According evolution of traditions will further our
to Oliver (1992), 'institutionalized organiza- understanding of institutional change and
tional behaviors' are 'stable, repetitive and deinstitutionalization. We next examine how
enduring activities' ... 'infused with value,' traditions become extinguished.
repetitive and resistant to change.5 However,
we relax the assumption that institutionalized
practices are 'taken-for-granted' as this makes ENHANCING, ERODING AND
traditions more akin to customs or EXTINGUISHING TRADITIONS:
conventions. Given our earlier summary of THEORETICAL FOUNDATIONS
work on traditions, we concur that traditions
are much more than unreflective habit and in In this chapter we pay special attention to
fact are created and managed by mindful processes associated with change and its
custodians. outcome on the evolution of traditions as
Second, we agree that traditions change institutionalized practices. We contend that
frequently in that they adapt to suit the needs adaptation or change in institutionalized
of 'the living' or the needs of the present practices may result in either erosion or
(Hobsbawm, 1984; Shils, 1981; Soares, enhancement. As we demonstrate in our case
1997). Consequently, we also relax the study below, the tradition of the Aggie
assumption that institutionalized practices are Bonfire changed frequently but those changes
highly resistant to change. We address the served many purposes, including both the
issue of institutional stability and endurance erosion and enhancement of its potency over
by distinguishing between core and ancillary time.
elements of traditions. At the field level, One theoretical starting point for examin-
DiMaggio (1988) notes the presence of core ing outcomes that result from changes in tra-
and subsidiary institutions. Following Shils ditions is deinstitutionalization, or 'the
(1981), we think of traditions as collections process by which institutions weaken and
and/or containers of core and ancillary disappear' (Scott, 2001: 1982). Oliver (1992)
micro-institutions and cultural elements that applied deinstitutionalization to specific
may include symbols, material objects, activities or practices that appear institution-
myths, custodians, rituals, temporal qualities alized in organizations. Her framework for
as well as collective identities and memories. the deinstitutionalization of institutionalized
By making the distinction between core practices suggests that dissipation or rejection
and ancillary elements we are able to theorize of institutionalized practices is driven by
about core and enduring qualities of tra- political, functional, and/or social pressures
ditions versus those that are more malleable that lead to deinstitutionalization (Figure
yet in some ways relatively ancillary. This 12.1). If these pressures lead to a gradual
distinction allows us to consider both erosion deterioration in the acceptance and use of an
and persistence of institutionalized practices institutionalized practice, Oliver terms this
as well as consider changes in scope and process to be dissipation. The decline in
potency of institutionalized practices over freemasonry or volunteerism would be an
time. For us, the core elements of traditions example of dissipation of an institutionalized
practice (Putnam, 2000).
332

Both entropy pressures and inertial pres- withdraw the rewards associated with sus-
sures moderate the rate of dissipation. taining an institutionalized organizational
Entropy consists of pressures that accelerate activity, when social and economic criteria of
the process of deinstitutionalization while organizational success begin to conflict
inertia consists of pressures that impede it. significantly with one another, and/or when
On the other hand, if the validity of the insti- the organization experiences an increase in
tutionalized practice is directly challenged we its technical specificity or goal clarity.
could have rejection rather than dissipation of The third antecedent, social pressures, rep-
the practice. As a result of dissipation or resents a condition under which an
rejection the practice could become dein- organization is neither a proactive agent of
stitutionalized, which then leads to its erosion deinstitutionalization nor centrally intent on
or discontinuity. abandoning or rejecting particular institu-
With respect to the three antecedents, tional traditions. According to Oliver (1992),
Oliver (1992) suggests that political pressures social pressures include increasing normative
occur as a result of the utility or legitimacy of fragmentation within an organization as a
the practice being called into question. This byproduct of other organizational changes,
tends to occur under conditions of mounting disruptions to the organization's historical
performance crises, the growth in the continuity, changes in state laws for societal
criticality or representation of organizational expectations that prohibit or discourage the
members whose interest or beliefs conflict perpetuation of an institutional practice,
with the status quo, increased pressures on and/or lower structural changes to the organ-
the organization to adopt innovative ization or the environment within which the
practices, and/or the reduction in the organization resides that disaggregate collec-
dependence on the institutional constituents tive norms and values.
that have encouraged or enforced continuing In addition to the work in the
procedural conformity with their deinstitutionalization literature, the literature
expectations. on traditions provides additional insights into
The second antecedent, functional pres- various responses to these pressures that may
sure, exists when changes to the perceived occur. For example, as Oliver (1992) notes,
utility or technical instrumentality of a institutional practices can cease to have value
practice occur, or when there is redistribution or utility for either their custodians or
in organizational power. Oliver (1992) practitioners, as a result of political,
identifies this antecedent as having an effect functional or social pressures. When this
under a variety of conditions, including when occurs in the context of a tradition, Shils
institutional constituents in the environment (1981) suggests that
 333
custodians and practitioners may react by process of dissipation. In particular, there
loosening their acceptance of or adherence to exist several mechanisms through which dis-
the tradition. sipation can occur. These mechanisms
include assimilation, dilution, disembedding,
Traditions can deteriorate in the sense of losing competition and erasure.
their adherents because their possessors cease to Assimilation involves being absorbed into
present them or because those who once a new tradition. Shils (1981) describes how
received and reenacted and extended them now
prefer other lines of conduct or because new
Roman religion ceases to exist yet some of its
generations to which they were presented find elements have been synthesized or incor-
other traditions of belief or some relatively new porated into modern Christianity (p. 25).
beliefs more acceptable. (1981: 15) Dilution involves adding or importing new
elements into a given tradition or expansion
The literature on traditions suggests that a of the core elements till it is difficult, com-
second type of response to political, func- plex, or involves changes in value for custo-
tional and social pressures may be one of dians or practitioners (declining for some
overcorrection as custodians and practition- while increasing for others) of the tradition.
ers attempt to reframe or revise elements that Cherlin (2004) describes the weakening of
have become problematic or inconsistent social norms defining the idea and practice of
over time (Shils, 1981). Changes in tradi- marriage. Recent debates over the definition
tions, however, could also lead to increasing of marriage in North America point to the
complexity, making transmission of the tra- potential dilution of the meaning of the prac-
dition increasingly difficult and imperfect. tice but also shed light on the changing value
Another type of reaction to changes in regu- of this practice for various custodians or
lative, normative, and cognitive dimensions practitioners of the tradition.
of the tradition is one of significant decou- Disembedding involves disconnecting or
pling between the symbol and substance dismantling core elements from each other
and/or performance of traditions. In the con- insomuch as there is no longer a definable or
text of strategic responses to institutional 'interconnected' pattern of tradition or insti-
pressure, Oliver (1991) describes this tutionalized practice (Jepperson, 1991).
response as avoidance. Finally, reactions to Competition involves the presence of other
these pressures may also lead to the emer- traditions that vie for the attention and sup-
gence of countervailing social movements to port of key constituents. These competing
mobilize resources and momentum either alternatives present conflicting claims and are
against or for the tradition. An interesting and referred to by Shils (1981) as 'alien' in nature.
more recent example of this would be efforts The potential for institutional collisions as a
mobilizing worldwide support and advocacy result of competing traditions is exacerbated
for the promotion of slow food (Rao & when the potency of custodianship is weak,
Giorgi, 2006) or the decline of fois gras collective memory is scarce, and multiple
(DeSoucey, 2006). The popular press in identities prevent solidarity of practice.
Marketing is rife with attention on the rise of Erasure, while rare, involves removal or
'counter-culture' movements against tradition. replacement of core elements such as core
Integrating the tradition's literature into our rituals or collective memories. Examples
understanding of the enhancement, erosion would include attempts by media or
and extinction of institutionalized practices historians to revise history.
allows us to extend Oliver's (1992) By integrating several approaches and the-
framework to include some additional insight ories about institutionalized practices and
as to the various responses that may occur as traditions, we are able to extend Oliver's
a result of political, functional and social (1992) framework in several ways. This
pressures. We also believe that insights on allows us to clarify different responses to the
traditions help us to unpack the
334
various antecedent pressures for deinstitu- A&M, in contrast, had an agricultural and a
tionalization. From a strategic perspective, mechanical engineering focus.
doing this also provides some insights for Traditions play a central role at the
examining how these different responses, in University. In fact, Tang (2000: 7) notes that
turn, affect dissipation or rejection. Our 'Traditions, and the value of Tradition, dictate
extension also allows us to unpack the notion Texas A&M culture.’6 The University has
of dissipation, thus providing some insight as several traditions based around remembrance,
to the various underlying mechanisms symbols, team spirit, and building
through which dissipation of traditions and community, Corps of Cadets, and various
other institutionalized practices occur. class councils
Finally, the integration allows us to introduce (http://aggietraditions.tamu.edu/). Some of
the notion of an 'institutional remnant' that these traditions are relatively more recent
suggests that, even after a tradition or institu- while others have been in existence for over
tionalized practice appears to have eroded, 100 years. For example, Big Event, a large
there may be sufficient remnants of the student service project, was started in 1982
original tradition to lead to a new tradition, or while Muster, a remembrance to those who
a re-invention or even re-emergence of the have passed, began in 1883.
original tradition or institutionalized practice. From its inception, Texas A&M sought to
establish itself as a distinctive institution by
priding itself that it offered its students what
came to be known as the 'other' education. As
TEXAS A&M UNIVERSITY: a result of its military heritage or the need to
A CASE STUDY establish its distinctiveness from the
University of Texas at Austin, A&M prided
Texas A&M University is a public institution itself on its ability to provide opportunities
founded in 1876 in College Station, Texas. In for its students to build character and acquire
the early days, the University had an leadership skills. One of these opportunities
undefined mission and was 'all-male and all- was the Aggie Bonfire, regarded by many as
military' (Jacobs, 2002: 13). It wasn't until the largest student organized project in the
after 1891 that the University President United States.
declared military training as part of its central
mission (Jacobs, 2002). The students, known
as Aggies, are known for their spirit and THE TRADITION OF AGGIE BONFIRE
camaraderie.
It is currently one of the largest academic The case of the Aggie Bonfire is especially
institutions in the United States with a current rich in helping us to unpack the nature of
enrollment of over 46,000 students and an organizational traditions and implications for
endowment valued at over 4 billion US the study of change in institutionalized prac-
dollars (www.tamu.edu). As a consequence tices. The evolution of the Bonfire tradition is
of early state politics and fights over funding a story occurring over a period of 90 years
and mandate (Jacobs, 2002; Smith, 2004; from its emergence in 1909 to its significant
Tang, 2000), the University developed a deinstitutionalization in 2002. Our historical
culture that distrusted outsiders. Due to state description and analyses are based on an
politics and football, Texas A&M has extensive review of public documents and
developed a fierce rivalry with the University archival news sources7. We synthesized his-
of Texas at Austin over time. While the torical data and key insights into an extensive
University of Texas at Austin had a broader set of notes, timelines and tables in order to
mandate that included a broad, arts- and make sense of and validate the information
science-based curriculum, Texas collected.
 335
Many university campuses light bonfires members of the Bonfire hierarchy. A fresh-
but the Aggie Bonfire is distinctive because it man entering the university would grab the
was the largest and most complex student-run attention of someone more senior in the
project in the United States (Tang, 2000). It Bonfire organization by doing something
is said that the construction of the Bonfire risky or brazen during the rituals associated
structure involves more than 125,000 hours with Cut or Stack. Once noticed, this student
of student time with about 70,000 individuals would be selected to take on increasing
turning out to observe the final ritual of Bum responsibility in future years.
(Jacobs, 2002). Over the years, three rituals had become
Bonfire can be regarded as a ritualized tra- central to Bonfire - Cut, Stack, and Burn.
dition (Smith, 2004) consisting of myth and Each of these rituals contained its own set of
meaning systems, custodians, central and activities, thus each served as a meta-ritual.
peripheral rituals, as well as collective mem- Cut involved gathering the necessary logs
ories shared among custodians and key con- starting in early October. The ritual known as
stituents. At Texas A&M University, a Stack involved assembling the logs into what
tradition of Bonfire is inextricably linked to will become the Bonfire. Push was part of
football. The Aggie Bonfire grew to be more Stack and occurred for the two weeks prior to
than a mere fire. Of all the traditions at Texas Burn. The push is to finish with students
A&M University, the Bonfire was regarded working round the clock in shifts to ensure
as the most central and important (Tang, the Bonfire is built on time. The ritual of
2000). Bonfire's purpose was to maintain and Burn occurs on the night preceding the
instill loyalty as well as provide a symbol annual football game with the University of
representative of the rivalry with the Texas.
University of Texas at Austin. Bonfire was As mentioned, within each of the core
regarded as being representative of the 'Aggie rituals of Cut, Stack, and Burn, there were
Spirit' and for the first 50 or so years went several activities or ancillary elements
largely unquestioned. associated with the tradition. For example,
Bonfire fulfilled numerous needs of the 'groding' involved being thrown in mud at the
student body. It allowed students to forge construction site with food and/or feces while
friendships, vent aggression, and demonstrate others went unshaven or unwashed for weeks
courage. In other words, it provided a good as a means of demonstrating one's loyalty or
training ground for the other education that devotion to the tradition and to the Aggie
A&M deemed shaped its unique character. spirit (Smith, 2004: 42). On the night of
While numbers vary, it is estimated that more Burn, the Aggie Band, Yell Leaders, and Red
than 6000-8000 trees are cut each year to Pots paraded around the Bonfire, in turn. The
build Bonfire (Jacobs, 2002). Thousands of Red Pots, the last to circle Bonfire, would
spectators (students, former students and carry the torches that would set fire to the
members of the local community) turn out to structure. The fire, helped along by 700
watch the fire bum. There was no written gallons of diesel fuel soaked into the logs
construction plan or blueprint nor was there was visible for quite a distance.
any professional supervision. There was, In the remainder of this case study, we
however, an elaborate, hierarchical organiza- break down our examination of the evolution
tion that guided the practice of the Bonfire of the Aggie Bonfire over four distinct peri-
tradition each year. This structure was largely ods. By doing so, we are able to track the
patriarchal (consisting of men in leadership evolution of this tradition on a variety of
roles) and intergenerational. At the top of the important dimensions and relate our insights
Bonfire hierarchy were a group of senior directly to Oliver's (1992) framework for
students known as Red Pots. These Red Pots deinstitutionalization. We pay particular
would pass along knowledge to other attention to the essence, custodians, rituals,
336
myths/stories, symbols and physical artifacts, appeal for burning material expanded to
as well as changes in place and temporality. involve the state and the railroad companies
We also provide insight into the changing who helped to bring in wood and boxes from
nature of the organization in which the tradi- all over the state.
tion was embedded by summarizing the char- In 1933, following a complaint from a
acter of the organization, its key constituents, farmer that students had dismantled and car-
key success factors, and strategic arenas. ried off his log barn, an order was issued in
With respect to Oliver's framework, we will 1936 that 'no one would be allowed to collect
demonstrate how these dimensions relate to Bonfire materials or place them on Bonfire
the antecedent pressures, entropy and inertia other than authorized personnel' and that the
that comprise the framework. building of Bonfire would be under the direc-
tion of the Commandant. It was also in this
year that A&M received permission to
remove dead trees from a nearby field in
Period 1: the tradition emerges which an airport had been built. For the next
(1909-1942) six years Bonfire continued to take on many
forms under the direction of the
According to several sources (Dethloff, 1976; Commandant, but it remained primarily a
Jacobs, 2002; and especially Tang, 2000) the 'trash pile.'
Aggie Bonfire began in 1909 as a prank to In these early years, the Bonfire tradition
arouse interest and excitement in an was tightly coupled with the university's
upcoming Texas A&M - University of Texas goals and identity. In these early years, the
at Austin football game. The tradition arose University's focus of attention was largely
out of humble beginnings. The first Bonfire directed inward towards the preservation of
comprised a pile of scrap wood and trash its distinctive character and goals. Bonfire
boxes gathered from all over campus, and epitomized this distinctiveness and grew in
deposited in a central gathering place. At this importance within the University. The tradi-
time, A&M was a military college, so the tions at Texas A&M, and the tradition of
parade ground served as a symbolic center- Bonfire in particular, produced important
piece for events. outcomes. Bonfire provided an important
The participants were primarily students vehicle for the early custodians, the Corps of
and events around Bonfire were primarily a Cadets, to establish their power and legiti-
pep rally. In these early years, the bonfire macy on the campus and in the community.
was relatively small in nature (about 10-12 As keepers of the tradition, the Corps could
feet high) and bore resemblance to a pile of be regarded as the key custodians of this
trash. In 1915, the Aggies beat UT-Austin in important tradition. These custodians worked
a legendary game and a bonfire of trash and to promote and preserve the role of traditions
dry good boxes was spontaneously con- at the University. As noted by Jacobs's recent
structed and burned after the game but this history of the Corps at Texas A&M:
time in the streets of Bryan, a nearby town.
The intensity of the fire exploded the pave- The Cadets began to bond and, in turn, to foster
ment beneath the bonfire, but the community traditions - some born out of boredom and bulls
felt that it was really nothing and could easily sessions, but most derived from respect, loyalty,
and values that came with a conservative,
be remedied. This was the first time the com- military lifestyle. (Jacobs, 2002: 14)
munity had any involvement in Bonfire. This
was also the only time Bonfire was built after The power of the Corps of Cadets at the
the game and not held on the A&M campus. University is critical in understanding the
For the next 25 or so Bonfires, students evolution of Bonfire as well as other tradi-
and community members were asked to tions that define the campus and serve to dis-
supply boards and boxes. By the 1930s this tinguish it from other organizations. In fact,
 337
as recently as 1993 and according to the Blue by 1946. Local filling stations donated hun-
Ribbon .Committee on the Corps, they had a dreds of gallons of oil to saturate the logs and
prominent and central role on the University assist in their lighting. As the Commandant
campus: was now securely in charge, flow charts and
instructions as to who was in charge and the
The Corps of Cadets remains a vital and relevant chain of command became the norm. To
part of the overall University community today, prevent early lighting or vandalism by
both as the 'keeper' of many of the University's University of Texas students the
cherished traditions and as a repository and
champion of values that make Aggies and Texas
Commandant ordered eighteen 24-hour
A&M truly unique. (Adams, 2001: 264) guards posted, organized in several rings with
orders that no one be allowed into the
During this period, except for minor inci- innermost rings without clearance. By 1954
dents, Bonfire faced few if any pressures. In the Bonfire reached 73 feet tall.
fact, the community was willing to accept the In 1955 the first Bonfire-associated death
minor incidents and contributed by helping in occurred when a Cadet at a guard post
the gathering of items for Bonfire. During pushed another student out of the way of an
this period, the activities around Bonfire con- oncoming truck, was hit himself and later
tinued to evolve, the core elements began to died of his injuries. By this time, the number
take shape and the ancillary elements were of individuals involved in Bonfire was quite
focused on establishing the core elements. large and the military traditions around
The reactions in the various incidents all Bonfire were evolving, including the posting
served to further entrench the Corps and its of guards as well as the first 'war hero' who
Commandant as the custodians of Bonfire 'died in action.'
with the community and, by the end of the Soggy ground in 1956, as a result of
period, the State, reinforcing and legitimizing steady rain, saw the Bonfire stack collapse
this role. In essence, any pressures including after the center pole started leaning. But with
entropy were quickly countered through the military precision Bonfire was rebuilt with
Commandant's garnering more control over students hauling logs by hand for as much as
Bonfire and thus establishing a point of half a mile since trucks could not get through
responsibility so that it was no longer just a the mud.
'prank' by students, but became a legitimized As the entrenchment of the tradition grew,
organized practice that had become it was not unusual to allow Cadets to be
institutionalized. excused from a day of class in order to work
While recent ideas on institutional entre- on Bonfire. By 1958, time being taken away
preneurship have tended to focus on the pres- from academic work due to Bonfire was
ence of purposeful action in constructing becoming an issue. To counter this issue, in
institutions we observe that they can also 1958 the university decreed that Bonfire had
emerge from humble beginnings or out of to be built in three days (instead of the usual
serendipity. ten days) and students worked all day and
night non-stop, having food brought to them
at the work site. Over time this three-day
Period 2: entrenchment (1942-1963) time limit was relaxed to the point where it
became two months in recent years.
By 1942 it was clear that Bonfire had under- To summarize, this was a critical period in
gone a distinct transformation to a very Bonfire's evolution. Given the all-male nature
military-like activity which began a long his- of the University during this period, Bonfire
tory of building bigger and better Bonfires. took on 'additional meaning as symbol and
The addition of a center pole (a log stuck into proof of Aggie masculinity' (Smith, 2004).
the ground supporting other logs stacked During this period, the Corps
against it) allowed the height to reach 50 feet
338
also entrenched themselves as the keepers of feature of the University. In other words, the
this tradition and the Bonfire was a symbolic tradition was now being used as part of the
triumph of the University's core values and University's identity. The community
source of distinctiveness. Traditions at A&M increased its participation, but only at the
and their primary custodians, the Corps of periphery, and the Bonfire (i.e., the identity
Cadets, provided enormous strategic benefits of the University) became sacred ground for
for the University. The 'spirit of Aggieland' the Corps to defend as they would do in
was its 'longtime intangible' (Jacobs, 2002: battle. Through the protection of sacred
14). As this spirit grew the University was ground, the core elements for Bonfire began
able to make unique claims about the experi- to become more and more entrenched. As the
ences it offered to its student community, identity of the University began to also
while at the same time benefiting enormously include Bonfire in its definitions, the ele-
from the cohesion and collective identity its ments associated with Bonfire were also
traditions conveyed for other powerful becoming part of the University's identity.
constituents such as the Former Students and As in the previous period, there were very
local community. few pressures brought against Bonfire, but
Throughout this period, the Corps of when any arose, such as safety concerns, the
Cadets were the central custodians of the custodians of Bonfire took it on themselves
Bonfire and through this and other traditions to take care of the issues. When issues arose
the Corps worked hard to find ways to about how Bonfire might be affecting aca-
preserve and enhance their power and demic standards, the reaction by the
position on campus. They did so by making University was not to question the utility of
claims that they provided much-needed links Bonfire, but simply to shorten the timeframe
to the past as well as the provision of during which Bonfire was to be built. While
character and leadership development. While there might have been a very slight emergent
the Corps saw declining numbers during concern about the quality of academics in this
World War II, they saw a return to period, the reaction offered by the University
dominance' on the campus by the 1950s. The suggests that traditions were still very
Corps and the University began to gain important, as the solution (shortening the
increasing notoriety for their prowess in build by a week) probably did nothing to
building bigger Bonfires. In fact, by the mid - enhance academics, but it was a way to
1960s, Bonfire was regarded as a key distinc- acknowledge the concern about missing
tive feature of the University (Smith, 2004). classes by allowing students the time to
The University endorsed these traditions and attend classes. This provided further legiti-
student recruiting films and campus orienta- macy to Bonfire as it demonstrated that the
tion films often gave prominence to University, although not the custodian of
traditions, especially to Bonfire. Bonfire, wanted it to continue to exist, and
Even in the midst of safety concerns while the ancillary elements had to change to
raised by the Assistant to the Commandant, accommodate the change in timeframe, these
the 1960 Bonfire stood over 100 feet tall. In changes only reinforced the importance of
1963, the death of John F. Kennedy resulted the core elements. This is also seen when the
in the first cancelled Bonfire.8 students hauled the logs by hand - that is, the
Continuing from the first period, it was ancillary rituals changed but they were
clear that this period was the one in which the changed so that the core rituals of the Cut,
Corps were firmly entrenched as the cus- Stack and Bum could be maintained.
todians of Bonfire. Integrating Bonfire with As all this was happening, it was clear that
military myths and traditions only served to the myths and rituals of Bonfire were becom-
reinforce this and the University continued to ing more and more entrenched, not only with
legitimize the tradition to the point where the Bonfire tradition, but also at the level of
they proudly displayed this as a
distinguishing
 339
the University's identity. If there was any first year in which all Aggies were involved.
question whatsoever in the previous period, it Non-military Aggies were organized by a
was now absolutely clear in this period that non-military student. Female students were
Bonfire had become an institutionalized also encouraged to help by serving in the first
practice. Interestingly, while Bonfire started -aid tent. In 1970, a professor raised a
out as closely coupled to football games, proposal to Student Senate to abolish Bonfire
during this period one could see a decoupling on environmental grounds. The battle
from football games and a stronger coupling between pro-Bonfire and anti-Bonfire groups
of the traditions and the University; in continued for several years. Through this
essence, it was becoming a stand-alone time, it was clear that the majority of students
tradition that really did not need the football favored Bonfire and thanks to a media blitz
game but did become part of the University's related to the environment and supported by
identity.9 the administration, the students eventually
won out as the call for abolishment eventu-
ally was overwhelmed. In 1973, women were
Period 3: changes, challenges and banned from working on Bonfire and in 1974
inertia (1963-1999) the height was limited to 74 feet.
In 1976, women were back working on
The 1960s brought a lot of changes to the Bonfire, some serving on guard duty along-
University. Mandatory participation in the side the males. The first female coordinator
Corps of Cadets was eliminated in 1965. of Bonfire appeared in 1979. Her role was to
Around that time, women and minorities be in charge of the women making lunches
were also permitted to enroll in the for the men working on Bonfire as well as
University. The size of the student body and those working at the Bonfire concession
faculty also increased dramatically. While the stands. Although some female Cadets
Corps of Cadets continued to be the cus- attended tree-cutting classes that year, they
todians of the traditions, many students were not issued necessary credentials to take
enrolled in the University were now able to part in the cutting. After a female filed a dis-
participate in the traditions while others crimination lawsuit, an open debate occurred
rejected the importance and practices and policy was changed. The most vehement
associated with traditions. opponents to allowing women to participate
In 1967, the center pole was extended to were the senior male Cadets involved in the
105 feet and cranes were brought in to help organization of Bonfire. Following the policy
with the stacking. 1968 saw one civilian change, women were allowed to participate
allowed to serve in a leadership role in the in the Cut but they were set up in a separate
Bonfire organization but the civilian had to area and were under constant supervision.
wear a red helmet to distinguish him from the In 1981, faced with a shortage of volun-
other Cadets. In addition, there were some teers (only Cadets could be forced to work on
organizational structure changes that saw a Bonfire), a female member of 'Off-Campus
'Head Stack' assume the top position, and Aggies' and former Cadet was put in charge
eight juniors were assigned to do most of the of recruiting civilian women to work on
planning and logistical work. The move to Bonfire, including the Cut (this brought about
shared custodianship was an important much derision from senior Corps members).
concession by the Corps as enrollment in the Also in this year, the second Bonfire death
Corps program was no longer mandatory, and occurred when a student was thrown from
interest and support for Bonfire was sitting on the fender of a tractor and was
becoming increasingly divided. crushed by the tractor, leading to a change in
In 1969, the largest Bonfire ever (109 feet policy regarding riding on tractors and
tall) was built (Jacobs, 2002) and it was the flatbed trucks.
340
By 1983 Bonfire decreased to only 54 feet critics as they could not be against the idea of
tall. 1998 again saw some male-female replant (Tang, 2002).
problems as a female was dragged from There were very few major safety inci-
being too near the stack to outside the dents that happened during the remaining
perimeter. Although there was no policy years of this period. The most notable was
against females working the stack, the Cadets the leaning of the stack in 1994, again
enforced their own policy. Although a because of excessive rain. There was another
lawsuit ensued and the Cadets pleaded guilty, death when students were thrown from the
the judge did not find them guilty and took back of a flatbed truck that lost control at
the offenses off their records. There were highway speed and there were still sexist and
more male-female incidents in 1987 with a racial incidents related to Bonfire organizers
lively exchange on the issue in the school and workers.
newspaper, The Battalion (Tang, 2000: 142). It was clear that, towards the end of this
In 1988, after a visit from the President's period, there were many political, functional
Office's Sexual Harassment Committee, and social pressures being brought to bear on
women were let on the stack. There were also Bonfire, including a shift in both the custodi-
several other issues that began to emerge. In ans and key constituents. The first major
1987 police started patrolling the stack on the change had to do with the declining presence
eve of Bonfire for alcohol and issued many of the Corps on campus. Enrollment in the
citations and arrested six individuals. In 1988 Corps was no longer compulsory and women
the number of citations increased and there and minorities were given access to the
were nine arrests. University, resulting in the composition of
In 1988, an anti-Bonfire organization, the student body becoming increasingly
'Aggies Against Bonfire' was founded by a diverse. There was an increased focus on
student and at the same time Faculty Senate academics and the introduction of new schol-
formed a committee to explore alternatives to arly traditions such as a focus on graduate
Bonfire. The debate between those who education (Jacobs, 2002: 21). Changes in
pushed for alternatives and those who wanted curriculum and the University's desire to
to keep the tradition centered around alcohol become one of the nation's premier universi-
use and, over several years, the debate ties brought important changes to it. The
continued as well as media campaigns to University launched an initiative called
reduce the association of alcohol and Bonfire. Vision 2020 with its goal to become one of
Environmental issues also continued to be a the top 10 public universities by the year
focus and lawsuits were brought against 2020. The traditions were no longer effective
Bonfire on this ground. in binding together the student body and, to a
In response to criticism, 'replant' was ini- large extent, were consumed more by a
tiated in 1991. Replant saw hundreds of minority on campus and widely consumed by
Aggies planting 10,000 seedlings on land that another key constituent and emerging custo-
was previously cleared. Others participating dian, the Association of Former Students or
in this initiative included the Texas alumni of the University.
Environmental Action Coalition and the Thus, important changes in the
A&M Forestry Club. The Environmental University's internal and external
Issues Chair stated that the replant, not environment led to political and social
Bonfire, has 'come to represent our burning pressures that eventually changed the
desire to beat the hell out of TU.' These character, composition and structure of
responses were an important way of diverting Bonfire. However, critics of Bonfire and
attention away from a focus on Bonfire while Aggie traditions were always actively
at the same time serving to co-opt Bonfire managed by the custodians of the University.
For example, a strategy to manage critics
included an elaborate replant program
 341
to overcome increasing challenges from quality of student life, sacredness of tradi-
environmentalists. The challenges and con- tions such as Bonfire, etc.) as a basis for eval-
tests around the legitimacy of Bonfire and its uating the success of the institution.
value and appropriateness as a tradition Consequently, the perceived utility of institu-
began to surface on a more visible and global tionalized practices such as Bonfire was
scale, as opposed to the more limited slowly being subsumed by the perceived util-
challenges that previously occurred both in ity of other practices more closely associated
terms of visibility and frequency. These with achieving the goal of becoming a world-
included the increasing size and diversifica- class research institution.
tion of the student body, as well as changing There were also social pressures that were
goals and aspirations of the University more acting on the deinstitutionalization of
generally. Bonfire. The new goals of the institution as a
To summarize, during this period we can result of vision 2020 represented a disruption
clearly identify aspects of Bonfire that fit to the institution's historical continuity. As a
onto its various antecedents and constructs in result of these proposed institutional changes
our extended framework of deinstitutional- there was increasing fragmentation within the
ization. In terms of political pressures, we see institution. One way in which this frag-
a reduction in the dependence on the mentation manifested itself was through the
institutional constituents that have splitting of identities among stakeholders and
encouraged or enforced continuing the conflicts that took place within the, many
procedural conformity with their layers of these nested identities (Ashforth &
expectations. Over the years, the University Johnson, 2001).
started to depend more on different From the simple analysis above, it is clear
stakeholders. Initially, the focus was on the that several of the antecedent pressures for
students and former students. While there the deinstitutionalization of Bonfire were
was a continuous focus on the student body, already in play during this period previous to
the intensity of this focus began to diminish the time of the collapse. In addition to these
relative to the focus on the academic and antecedent pressures, we find several entropy
research goals of the University. Vision 2020 pressures that were also pushing for the dein-
and other initiatives clearly demonstrated the stitutionalization of Bonfire. These included
shift towards becoming a more research- groups opposed to Bonfire on the basis of the
intensive, world-class institution. environmental damage associated with the
Furthermore, there was a growth in the cutting of the trees used in Bonfire, as well as
criticality of organizational stakeholders institutional concerns about safety associated
whose beliefs may not have been consistent with the size and height of Bonfire.
with the status quo as a result of the shift Also affecting the deinstitutionalization of
from a local focus on students to more global Bonfire were inertial pressures associated
focus on institutional impact. As result of the with the long-standing institutional culture
buildup in these pressures, the legitimacy of that embodied a resistance to change and the
institutionalized practices such as Bonfire central role of traditions in maintaining the
was being called into question. culture.
With respect to functional pressures, While all of these pressures were mount-
Vision 2020 and its goal to make Texas ing, it became more and more clear as to
A&M University a world-class research what role the custodians of Bonfire had in
institution brought about a change in the counteracting the political, functional and
criteria for success. The benefits of the new social pressures as well as the entropy pres-
criteria, now primarily dependent on outside sures. Through their reactions, the custodians
constituents, were neither fully understood were able to manage the entropy pressures
nor widely shared by the student and tip the balance in favor of the status quo.
constituency, who previously relied on more
social criteria (i.e.,
342
When the Corps was the sole custodian of be a way to honor those who died (Tedesco,
Bonfire, these rituals and their associated 2000) while others noted that they would be
activities were carried out like a military willing to accept small changes as
operation. As the nature of participants concessions as long they could keep Bonfire.
evolved from the Corps of Cadets to incorpo- Some news stories pointed to the mysti-
rate of a greater number on non-Corps partic- cism of the accident and the students as
ipants, Bonfire took on a more casual and 'fallen heroes' who gave their lives for the
laissez-faire atmosphere. In fact, towards the tradition (Tang, 2000). The discourse turned
end of this period, while Bonfire continued to from tragedy to celebrating and
be an embodiment of the Aggie Spirit, the memorializing the dead.
processes and decision-making were more In the days following the Bonfire, the
like a party. This dilution of a core element University distanced itself from the event by
of Bonfire contributed to its eventual dissipa- claiming that Bonfire was a student-run
tion. Furthermore, the challenge faced by the event. However, under enormous pressures
University during this period was to find the University launched its own internal
ways to simultaneously continue the momen- investigation. Until this catastrophe the
tum towards strengthening its academic pro- University was 'unable' to publicly challenge
grams without compromising its traditions or penetrate the myth as well as the bound-
and school spirit (Jacobs, 2002: 200). The aries of the tradition. However, a catastrophe
presence of competing traditions served to invokes the need for action, sense-making
challenge the adherence to the tradition as and reflection.
well as the University's resolve to consider The collapse was investigated by a Special
them as a defining feature of the University. Commission requested by the University.
The Special Commission on the 1999 Texas
A&M Bonfire concluded that the collapse
was a function of a combination of physical
Period 4: erosion, the fall and and organizational factors. The physical
beyond (1999-present) factors included structural stress caused by
problems with log placement and inadequate
A tradition is in trouble: twelve Aggies are dead, containment and binding strength. However,
the campus is still in mourning, and experts are the Commission squarely put the blame for
questioning whether the Bonfire collapse was the physical deficiencies upon the
just a freak accident. Now A&M officials must
decide whether keeping an Aggie icon is worth
organizational factors that caused them. Cited
the risks. (Burka, 2000: 117) as key organizational problems were the
cultural bias, the absence of a plan, and the
In the early morning hours of November lack of proactive approaches towards the
18, 1999, the Bonfire stack collapsed with management of risk (Special Commission on
approximately 70 students aboard - 12 the 1999 Texas A&M Bonfire Final Report,
Aggies died and 27 more were injured (Tang, 2000).
2000). As students and other members of the The University President at the time, Ray
University and local community struggled to Bowen, made a number of key decisions six
make sense of this event, the Bonfire tragedy weeks after receiving the final Commission
drew national attention. There was a strong report. First, he placed the Bonfire on hold
call for action - How could this happen? Who for two years. This led to several reactions
was to blame? Why was there no oversight? and an outcry from current and former
Several narratives began to emerge, ranging students.
from calling the tradition into question to
providing support for the tradition and its Concerned that a hallowed tradition will turn
into a hollow gesture, a group of students is
continuation. In fact, according to a student circulating a petition urging Texas A&M
injured in the collapse, continuation of University administrators to reconsider the
Bonfire would limitations placed on future Aggie Bonfires.
(Garcia, 2000)
 343
Second, he set up a task force known as with an everlasting memorial flame and
Bonfire 2002 to assess the fate of Bonfire. Bonfire is still listed as a core tradition of the
Bowen claimed that future Bonfire was no University on its website. So, while several
longer the defining activity for the future of core and ancillary elements were removed
the University. the University successfully reinvented the
On March 5, 2001, the Committee for tradition.
Bonfire 2002 posted a document outlining The remnants in terms of collective mem-
some myths and facts about the future and ories drove the re-emergence of the tradition
past of the Bonfire tradition (source: Bonfire in a new place. The tradition migrated off
2002 Committee Homepage). The Committee campus and former students became even
proposed key changes that substantively more fervent custodians providing resources,
altered the nature of any future Bonfire held land, and cash to support its re-emergence.
on the Texas A&M campus. Leadership Groups such as the 'Bonfire Coalition' and
positions were now to be selected based on a 'KTBF - Keep the Fire Burning' emerged to
process outlined by the recommendations of revive, protect and preserve the tradition. As
a Student Leadership and Participation Task recently as 2004, Bonfire burned off-campus
Force committee. Future Bonfires, while and it was claimed that over 10,000
student constructed would now have to be individuals turned out to watch it burn
administered by and follow plans prepared by (Nauman, 2004). Thus, the tradition took on
licensed professional engineers. Previously, a life of its own and was no longer embedded
the Cut and Stack phase lasted over two in the context or place in which it was once
months. Now, the core ritual of Cut was created.
eliminated from all future Bonfires with a Our analysis of the previous period of
recommendation that logs would now be cut Bonfire through the lens of the extended
and delivered by a professional firm. deinstitutionalization framework clearly sug-
Further, the construction core ritual of gests that several antecedent and direct pres-
Stack was to be limited to a total of two sures for dissipation existed prior to the fall.
weeks. The site would now be fenced in and However, these pressures were being
monitored by video cameras (Brown, 2000). strategically kept in balance by the
Bonfire participants would now have to custodians through various types of reactions
undergo training certification in preparation that were aimed at preserving and further
with any roles associated with planning and entrenching the tradition of Bonfire.
construction. Interestingly, one of the notions The events of 1999 were horrific, yet they
the Committee sought to dispel was the myth did not serve to distract the custodians (those
that Bonfire as a tradition had remained who worked on the stack) from their goal of
invariant over time. The Committee provided maintaining the tradition. Their reactions
key facts about the extent to which there was were consistent with previous periods and
variation in ancillary elements such as the they fought hard to counterbalance the grow-
structure and length of time involved in ing political, functional and social pressures
construction. as well as the pressure for entropy. In
In 2002, Bowen announced that there essence, their actions were aimed at main-
would no longer be a Bonfire burned on the taining the dominance of inertia over entropy
Texas A&M campus. In order not to that they managed over the previous years of
challenge the essence of Bonfire, the Bonfire. However, in this case, it was clear
University proposed a new tradition, a that entropy gained the upper hand. As a
Bonfire Memorial and went to great lengths result of the crisis, the reactions of the
to promote and develop this project of re- University were able to overcome the
invention. The fallen would now be honored entropy. The University reacted in a number
of ways. They disembedded and dismantled
the core elements of the tradition by no
344
longer allowing for Cut (the logs being and temporality. Table 12.1 also provides
delivered), and the Bonfire was now to be insights into the changing nature of the
supervised and monitored, eliminating organization in which the tradition was
opportunities for 'groding' and other forms of embedded by summarizing the character of
hazing. The University recommended a the organization, its key constituents, key
further dilution of custodianship in that they success factors, and strategic arenas.
would now run and largely control the tradi-
tion. In sum, the University's decisions sig-
nificantly altered the value of the 'inherited
resource' for the custodians of the tradition FROM EROSION OF TRADITION
while not directly challenging the myth of TO UNDERSTANDING
Bonfire. Bonfire was now to be over- DEINSTITUTIONALIZATION
engineered, costly, over-monitored and unin-
teresting. It was now diluted to the point that As Shils notes, 'there is a great need in the
it ceased to have value for its custodians. world for a better understanding of the nature
In 2002, when Bowen announced that of tradition and for a better appreciation of its
Bonfire would no longer be held on campus, value' (1981: vii). We examine the potential
he erased the core element of place for the contributions of the findings of our case
rituals of Stack and Bum and this directly study for the study of traditions and illu-
affected dissipation and erosion of the tradi- minate a number of insights for understand-
tion. The crisis allowed the University to ing deinstitutionalization. We do this through
penetrate the boundaries of the tradition. mapping case insights onto our extended
Bonfire was no longer needed to tell the new framework based on Oliver's (1992) frame-
narrative about the University. This raises work for deinstitutionalization and propose
interesting future questions about the role of several extensions of her process model of
place and migration in the process of deinsti- deinstitutionalization.
tutionalization as well as the assimilation of Given Oliver's framework, we can clearly
an older element into a newly re-invented tra- identify aspects of Bonfire that map onto its
dition. Our observations regarding this period various antecedents and constructs. In terms
also raise a number of questions regarding of political pressures, we see a reduction in
the interplay of challenges and mechanisms the dependence on the institutional
for dissipation. All at once, a number of constituents that have encouraged or enforced
mechanisms (assimilation, dilution, continuing procedural conformity with their
disembedding, competition, and erasure) expectations. Over the years, the University
were simultaneously in play, making it started to depend more on different
increasingly difficult for the custodians to stakeholders. Initially, the focus was on the
counter forces for entropy impacting dissipa- students and former students. While there
tion. Thus, the custodians could not deal with was a continuous focus on the student body,
everything at once - if challenges or threats to the intensity of this focus began to diminish
core elements are sequenced or separated relative to the focus on the academic and
over time, then custodians have time to for- research goals of the University. Vision 2020
mulate strategies to combat entropy. and other initiatives clearly demonstrated the
We summarize our discussion above in shift towards becoming a more research-
Table 12.1. intensive, world-class institution.
Table 12.1 charts the evolution of Bonfire Furthermore, there was a growth in the
over the four periods described above and criticality of organizational stakeholders,
provides a summary of changes over time. It whose beliefs may not have been consistent
tracks the essence, custodians, rituals and with the status quo as a result of the shift
physical artifacts, as well as changes in place from a local focus on
 345

students to a more global focus on institu- evaluating the success of the institution.
tional impact. As a result of the buildup in Consequently, the perceived utility of institu-
these pressures, the legitimacy of institution- tionalized practices such as Bonfire was
alized practices such as Bonfire was being slowly being subsumed by the perceived util-
called into question. ity of other practices more closely associated
With respect to functional pressures, with achieving the goal of becoming a world-
Vision 2020 and its goal to make Texas class research institution.
A&M University a world-class research There were also social pressures that were
institution brought about a change in the acting on the deinstitutionalization of
criteria for success. The benefits of the new Bonfire. The new goals of the institution as a
criteria, now primarily dependent on outside result of Vision 2020 represented a disruption
constituents, were neither fully understood to the continuity of the institution's historical
nor widely shared by the student constituency identity. As a result of these proposed institu-
who previously relied on more social criteria tional changes and refocus on academic
(i.e., quality of student life, sacredness of excellence as a research institution, there was
traditions such as Bonfire, etc.) as a basis for increasing fragmentation among the
346
institution's stakeholders. This fragmentation practices are invented in the beginning so that
manifested itself through the splitting of the reliance on any one of these practices is
identities among stakeholders and the con- minimal. Another strategy is one in which the
flicts that took place within the many layers institutionalized practice is disembedded
of institutional identity. from either ancillary institutions that exist or
From the analysis above, several of the from other interconnected elements of the
antecedent pressures for the deinstitutional- organization. Buffering or decoupling refers
ization of Bonfire were already in play at the to the distancing of the organization and the
time of the collapse in addition to the pres- institutionalized practice either cognitively or
ence of several pressures for entropy pushing in its narratives by telling a different story
for the deinstitutionalization of Bonfire. about the meaning of the institutionalized
These included groups opposed to Bonfire on practice. Distancing could also occur in the
the basis of the environmental concerns as sense of abdicating responsibility for the
well as institutional concerns about safety tradition.
associated with the size and height of Beyond our initial extensions to the dein-
Bonfire. stitutionalization framework based on our
Also affecting the deinstitutionalization of integration of several literature streams, our
Bonfire were pressures to maintain status quo analysis of the Texas A&M Aggie Bonfire
associated with a culture that resisted change case suggests further important extensions.
and nurtured the central role of traditions in First, the analysis leads us to believe that it is
maintaining the culture. important to extend the framework to explic-
Our observations about Bonfire also help itly recognize the role of custodians of insti-
us to illustrate how the' elements we intro- tutionalized practices. In our examples based
duced into the extended deinstitutionalization on Bonfire, we demonstrate that custodians
framework provide additional insight and of institutionalized practices can serve as a
allow us to capture, other important dynamics critical counterforce to entropy. In essence,
that appear to be involved in custodians balance the pressures for entropy
deinstitutionalization. It was our belief, based and sustain institutionalized practices. The
on our integration of several streams of Corps of Cadets or 'Keepers of the Spirit'
research, that whether deinstitutionalization (Adams, 2001) did much to take a tradition
represents dissipation or outright rejection is borne out of humble beginnings and make it
a function of whether the core or ancillary the center-piece of the traditions at the
elements of an institution are affected by sev- University. As the tradition faced detractors,
eral mechanisms. In this chapter, we have the Corps sought to protect the tradition and
described those mechanisms and used the guard against potential dissipation. They did
case of Bonfire to consider the multiple this by limiting access to and knowledge
mechanisms by which dissipation occurs. about the construction of Bonfire. The infor-
Focusing on the mechanism of competition mal hierarchy of Bonfire kept participation in
has allowed us to better understand the nature the core rituals small and elite while partici-
of institutional collisions as competing pation in the performance aspects of the tra-
traditions lead to greater pressures to dition was much broader. The custodians also
demonstrate legitimacy as well as functional countered forces for entropy by providing
utility. innovative solutions to critics (such as the
These mechanisms or strategies include, response of 'replant' to environmental criti-
among others, dilution, disembedding, and cisms) versus going on strike as they did in
buffering or decoupling. By dilution, we Period 2 as well as calling on former custodi-
mean that the organization ensures there are ans and other key constituents for support as
new institutionalized practices added into the needed (former students, parents, members of
mix or that multiple institutionalized the University Administration).
 347
Second, through our analysis of Bonfire, of institutional remnants. Mohr (2006) refers
we suggest that the framework should explic- to these 'bits' of institutions as institutional
itly recognize the role of crises which allow litter. Remnants can be useful for construct-
for permeability in the boundary and provide ing new traditions, re-inventing old traditions
for windows of opportunity to extinguish lia- (Hobsbawm & Ranger, 1984; Shils, 1981) or
bilities and overcome inertial tendencies. for the re-emergence of institutionalized
Until the fall of the stack in 1999, changes to practices experiencing dormancy (Mohr,
the core elements of Bonfire were always 2006; Tucker, 2006; Zerubavel, 1995).
resisted; critics were managed and when the Remnants can take the form of stories, phys-
numbers and power of the Corps began to ical objects, rituals, temporal connections or
decline in the third period, concessions were linkages to place as well as take the form of
made to share custodianship so as to keep the sentiments and memories. We propose that to
core rituals, collective memories and other the extent remnants of institutionalized prac-
core elements intact. tices remain in place, they are also able to
Third, from our Bonfire analysis, we also prevent extinction. Therefore, it is rare for us
believe that whether deinstitutionalization to observe the complete extinction or eradi-
represents dissipation or outright rejection is cation of deep-rooted traditions or institu-
a function of whether the core or ancillary tionalized practices.
elements of an institution are affected by sev- Finally, in this chapter, we demonstrate
eral strategies that directly impact dissipa- that traditions do not always arise as a result
tion. From our analysis we observe that core of institutionalization projects or purposeful
elements of a tradition also evolve over time action. Rather, they can emerge from humble
but, once in place, they tend to be more or beginnings or arise out of serendipity.
less stable and enduring than peripheral or However, we also demonstrate that the
ancillary elements. Consequently, this sug- processes of re-invention, re-incarnation or
gests that there are both ancillary and core re-emergence may potentially require the
elements that may experience dissipation as a focused attention of custodians or institu-
result of political, functional and social pres- tional entrepreneurs (current and/or future).
sures. While our case study does not allow us In summary, the key extensions to Oliver's
to establish the relative effectiveness and out- (1992) framework introduced in this chapter
come of bringing political, functional and include the clarification of various reactions
social pressures to bear on the core and ancil- to the political, functional and social pres-
lary elements, it may be that the core are sures, the unpacking of dissipation, the mod-
more resistant to these pressures, requiring erating roles of custodians and crises on
crises as a way of breaking down the resist- entropy and inertia respectively, and the
ance, and that pressures on specific ancillary notion of institutional remnants. The
elements may lead to the erosion of those extended framework for deinstitutionalization
specific elements but may not erode, and in appears in Figure 12.2.
fact may serve to strengthen, the core
elements.
Fourth, the case of Bonfire clearly illus-
trates that a tradition or institutionalized DIRECTIONS FOR FUTURE RESEARCH
practice can be re-invented or reconstructed,
just as Bonfire migrated off-campus. So, it Oliver's (1992) framework for deinstitution-
was re-invented in its original location in the alization brought clarification to an important
form of a memorial flame and re-incarnated concept that has entered the everyday
in a new location. parlance of the institutional theorist through
By unveiling and focusing on the process numerous journal articles, book chapters and
of re-invention we highlight the importance everyday discussions. However, as
348

we note, institutionalized practices are com- there are other mechanisms worthy of
monly slow to become extinguished. inquiry. Two mechanisms that might be
Elements of these practices also often con- investigated further in future research include
tinue in residual forms that serve as displacement and migration. Displacement
reminders of prior strategies and/or as raw occurs when exogenous forces such as
material for the construction of new ones. changes in technology or the emergence of
Through our integration of various theoretical new knowledge or circumstances result in the
approaches, we believe our extended tradition being discarded or rejected (Shils,
framework explicates important aspects that 1981: 258). Migration, according to Shils
help us further understand the deinstitution- (1981), occurs when a tradition is transported
alization process in the context of a long- to a new context where it may have a new or
standing tradition. different meaning or become completely
We also believe that our extended frame- irrelevant. An example of this would be wine
work provides a basis for continuing the tasting in a culture where it is forbidden to
important discourse about deinstitutionaliza- consume alcohol. In this case, the adherence
tion that has emerged since Oliver's seminal to the tradition and associated rituals of wine
work on the topic almost fifteen years ago. tasting would be largely determined by the
Continuation of this discourse is important receptivity of the recipients. DiMaggio
because many aspects of the deinstitutional- (1988) also discusses institutional migration
ization process have yet to be understood. and local modifications that result from vari-
Following, we present several areas for ation in interests and power.
research that emerge out of the work pre- In addition to investigating mechanisms
sented in this chapter. We encourage that promote dissipation, it would also be
researchers to pursue any of these future worthwhile to consider various mechanisms
directions. that serve to prevent dissipation and eventual
One promising area for future research deinstitutionalization. This would provide
would be to examine other key mechanisms further insights into the strategic management
leading to dissipation. In this chapter we of institutionalized practices. In this chapter
focus on some of the key mechanisms we only highlighted a few such mechanisms
(assimilation, competition, dilution, disem- that became apparent to us through our case
bedding, and erasure) but it is likely that study of Bonfire
 349
but we encourage researchers to introduce constructing as well as eradicating institu-
other mechanisms of this type to the tionalized practices. In our case, the tradition
literature. of Bonfire took place in an intergenerational
Our analysis of Bonfire led us to identify a organization. By placing the Bonfire on hold
distinction between core and ancillary ele- for two years the University essentially pre-
ments (for example, rituals) of a tradition. vented the core elements of the tradition from
While this distinction provided important being experienced or shared by Freshmen
insights related to the erosion of institution- who entered the year of the Fall. Thus, these
alized practices such as traditions, we believe newcomers did not have shared experiences
that further investigation into a related area with which to create 'communitas' (Turner,
for future research is one that focuses on the 1969) or new collective memories, yet the
dimensionality of institutions and the extent institutional remnants of Bonfire led to its re-
to which erosion of one or more core ele- emergence as an off-campus event. Future
ments results in variable intensity of erosion research could examine whether patterns of
in terms of both scope and potency. Issues to enhancement and erasure are similar in other
examine when pursuing this research include contexts. For example, intergenerational
whether there are thresholds at which decline organizations such as the military or the field
is more rapid or slow, and whether there are of consulting might also attempt to construct
specific patterns or configurations of core or eradicate institutional practices.
and ancillary elements that once combined With respect to core and ancillary ele-
increase or decrease the propensity of ments associated with a tradition, a fruitful
decline. At a field level, DiMaggio distin- area for future research would be to investi-
guishes between core and subsidiary institu- gate the relative role of these elements in the
tions and states 'under many conditions, the deinstitutionalization process. We speculated
interests of these legitimated, partially that core and ancillary elements differ in their
autonomous, subsidiary institutions diverge relative resistance to erosion but, because we
from those of the governors of the core insti- present only a single case study, we could not
tutional form' (1988: 16). Adopting this to further investigate this insight. One way of
our work, the issue becomes one of under- pursuing this phenomenon would be to
standing how taking over or controlling consider whether there is a hierarchy of core
ancillary elements but not the core elements and ancillary elements. For example, with
allows one to launch delegitimating attacks respect to core elements, one could examine
on the core or demand changes in the core. whether there is a hierarchy or ordering of
We suggest that much more work needs to be core elements or whether the core elements
done to fully understand the nature, are themselves interconnected in some
dynamics, and interaction of core and ancil- meaningful way such that interactions among
lary elements. these elements serve to produce interactions,
The notion of an 'institutional remnant' is and crowd out or displace one another.
an important one in the extended framework. Following this line of thought, interesting
We argue that extinction is an ultimate yet questions include: whether one can remove
relatively rare event in deinstitutionalization one core element but still have the
and that the remnants of traditions often institutionalized practice survive; or the
become instrumental in the construction of extent to which core elements would have to
new institutional practices or the re-invention be removed to erode the institution.
or re-emergence of what may have been Finally, while our focus in the current
considered an eroded or extinct institutional chapter is on institutionalized practices, it
practice. In this light, an area for future would also be important to understand how
research would be to examine the role of
collective memories more fully in
350
institutions change. Institutional theorists 3 The remnants transmitted across generations
note the permanence or stability of institu- may be large enough so that no significant change
tions but it could be that our belief about in the tradition is perceived by its adherents.
4 While we draw upon and further develop the
invariance is merely an illusion that is idea of custodians from Soares (1997), DeJordy and
socially constructed. In other words, do we Jones (2006) have recently used the term 'institu-
make sense of institutional effects by fitting tional guardians' in their work on the changing
them into the expectations of what we 'want' meaning of marriage.
to experience, or do we consider them invari- 5 In several passages, Shils (1981) uses the
ant because once in place, both violations and terms traditions and institutions synonymously.
sanctions are rare, unobservable, or 6 The web page of the University provides great
detail about the nature of Texas A&M University
inconsequential? These are questions that traditions.
need to be addressed by scholars interested in 7 In particular, we draw upon the rich and
furthering their understanding of processes of thoughtful historical case study of Bonfire by
institutional emergence, change, and journalist Irwin Tang, 2000.
extinction. 8 In 1966, as an acknowledgement to the war in
Vietnam, thousands of gallons of Napalm were
poured on Bonfire to assist in its lighting.
9 Texas A&M had declining football
ACKNOWLEDGMENT performance for much of Period 2 and the early part
of Period 3.
We acknowledge the support of the Social
Sciences and Humanities Research Council
of Canada. Special thanks to N. Anand, Terry
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 13
New Forms as Settlements
Hayagreeva Rao and Martin Kenney

INTRODUCTION (DiMaggio, 1988: 18). In this perspective,

institutional projects can arise from organized
A challenge facing neo-institutionalism is to politics or social movements, and in the case
detail how pre-existing institutional condi- of the former they resemble the latter to the
tions and alternative institutional projects extent that resources and interests are not
influence the creation of new organizational fixed and the rules governing interaction are
forms. We build on the idea that varying contested (Fligstein, 2001). A few studies
degrees of contention underlie the construc- have shown when and how new organiza-
tion of new forms, and suggest that a settle- tional forms and industries are spawned by
ment or truce has to occur among contending social movements and entail varying degrees
parties for the new organizational form to of contention (Davis and McAdam, 2000;
gain a foothold. We develop a model of how Rao, Morill and Zald, 2000; McAdam and
asymmetries of power among the contestants Scott, 2005).
and incompatibility among their proposals Recently, organizational ecologists have
shape the nature of the settlement, and its suggested that an organizational form is a
durability. We discuss when asymmetries of taken-for-granted category with default con-
power among contestants are high or low, ditions that define membership such that vio-
and when ideological compatibility among lation of these conditions is penalized by
the proposals is high or low, and present a audiences (Hannan, Pólos, and Carroll,
matrix of possible settlements. We illustrate 2007). Thus, an organizational form is an
the framework by drawing on examples and externally enforced identity composed of
discuss implications for institutional theory diagnostic elements and the expected (and
and organizational ecology. thus, rewarded) values on these elements
The institutional perspective proposes that (Pólos, Hannan, and Carroll, 2002). These
new organizational forms arise when actors diagnostic elements cohere to form a code of
with sufficient resources see in them an conduct which is enforced by consumers,
opportunity to realize interests that they value critics and other audiences.
highly, but first they must legitimate the So a challenge is to reconcile the political
theory and values underpinning the form process by which organizational forms are
 353
constructed with their existence as socially of a code. We illustrate our classificatory
coded identities. Put another way, how does endeavor with four distinct cases that
conflict and contestation culminate in a code? illuminate the four alternative settlements
Therein, lies the motivation for our chapter. represented by our framework.
We propose that forms have to be first
constituted as settlements - that is agreements
have to be negotiated among parties before
new forms can be institutionalized as codes. NEW FORMS AS SETTLEMENTS
A settlement is a set of understandings and-
expectations about a form that are shared Stinchcombe (1968: 194) asserts that the
among internal and external audiences. entrepreneurial creation of new forms 'is pre-
Settlements become codes only when these eminently a political phenomenon' because
understandings and expectations become support has to be mobilized for the goals,
default conditions of membership, and are authority structure, technology, and clients
enforced by external and internal audiences. embodied in the new form. In some cases,
We visualize a process wherein coalitions resource spaces unoccupied by other forms
of institutional entrepreneurs champion may exist, or, at least, have the potential to be
proposals, that is intended projects that created, but the existence of such unfilled
concretize the strategic intent, vision, and resource spaces does not mean that the
goals of the promoters. When different resources are 'free floating' and thus easily
coalitions promote competing proposals, the available to potential entrepreneurs. Rather,
construction of a settlement becomes a entrepreneurs have to assemble resources,
political process in which asymmetries in the legitimate the new form, and integrate it with
power of the various coalitions become the prevalent institutional order. In other
critical. In particular, the size of the coalition, cases, resource spaces for a new form may
its ability to mobilize additional resources, not exist, and entrepreneurs have to construct
and its power to frame become decisive. We these spaces by defining opportunity, identi-
develop a model of how asymmetries of fying distinctive resources, and prying them
power among the contestants and incom- away from existing uses. Since entrepreneurs
patibility among their proposals shape the are trying to convince others to go along with
nature of the settlement, and argue that their view, the formation of new industries
settlements become institutionalized into and forms resembles social movements
codes of conduct with varying levels of (Fligstein, 2001).
durability and enforceability. We discuss Social movement theorists propose that
when asymmetries of power among contest- institutional entrepreneurs can mobilize
ants are high or low, and when ideological legitimacy, finances, and personnel through
compatibility among the proposals is high or the use of frames (McAdam, McCarthy, and
low, and present a matrix of possible Zald, 1996). Frames define the grievances
settlements. and interests of aggrieved constituencies,
We suggest that settlements have different diagnose causes, assign blame, provide solu-
levels of durability and enforceability as tions, and enable collective attribution
these two parameters vary. New forms do not processes to operate (Snow and Benford,
move from conflict to settlement to code in 1992: 150). Thus, frames are theories that
two distinct leaps - instead, the process is justify an organizational form - an
more incremental and gradual. In this sense, incarnation of goals, authority, technology,
conflict and code are two ends of a and clients, as indispensable, valid, and
continuum with the settlement as an appropriate. In 'much the same way that
intervening precondition for the emergence pictures are framed, questions and actions are
framed, and the context in which they are
viewed and discussed
354
determines what gets done ... Setting the independent businessperson and intrepid
context is a critical strategy for exercising entrepreneurs clash with the ideology of
power and influence' (Pfeffer, 1992: 202). In governmental non-interference in the
our case the framers are constructing a vision marketplace. In yet another of our cases, the
of the future. contradictory French cultural values devolv-
Institutional entrepreneurs create frames ing around tradition and progress provide the
by selecting items from a pre-existing cul- fuel for contestation in the world of
tural menu (Meyer and Rowan, 1977: 345; gastronomy. Rather than a clash of tectonic
DiMaggio and Powell, 1983). Swidler (1986: plates, we have long-running skirmishes
277) suggests that a culture is not a 'unified where the frames presented suffer from
system that pushes action in a consistent inconsistencies and difficulties. Which frame
direction. Rather it is more of a "tool kit" or a Q and its organizational embodiment should
repertoire from which actors select differing be chosen to define and organize an activity
pieces for constructing lines of action.' is a political question. Friedland and Alford
Douglas (1986) points out that bricolage is an (1991: 240-242), capturing the swirling
important method by which entrepreneurs nature of this creative process, propose that
construct new cognitive models and formal the creation of new organizational forms
structures. Thus, entrepreneurs can unfolds at three levels of analysis, with
recombine elements from existing repertoires 'individuals competing and negotiating,
through imitation, or consciously revise organizations in conflict and coordination,
existing models on the basis of their training and institutions in contradiction and
in other organizations. An undercurrent of interdependency ... ' We conceive of these
these studies is that there are a number of levels of analysis as 'nested,' where organiza-
alternative institutional projects that are tion and institution specify higher levels of
proposed in a given situation and projects constraint and opportunity for individual
win out by a political process and constitute action.
an institutional settlement (DiMaggio, 1991). When multiple frames and forms vie with
each other, why one form is chosen and why
other roads are not pursued hinges on larger
constellations of power and social structure
MULTIPLE FRAMES AND CONFLICT: (Brint and Karabel, 1991: 346). In cases
THE INSTITUTIONAL VIEW where the criteria for a good technical
solution are contested, political and institu-
Politics becomes obtrusive when an unfilled tional processes shape not only what organi-
resource space 'calls forth and permits a zations can do, but which organizational form
range of definitions of the situation' (Zald can exist (Powell, 1991: 186-187). Thus, the
and McCarthy, 1980: 6), and when rival scope of the form, that is the goals, authority
coalitions of issue entrepreneurs champion structure, technology and clients embodied in
incompatible frames. Even as entrepreneurs the form, are outcomes of contending
may draw on a generalized Western cultural attempts at control and competing quests to
account (Meyer, Boli, and Thomas, 1987) impose a preferred definition of the identity
and justify their actions on the basis of the of the constituencies that benefit from the
widely-accepted myths of progress and jus- form. Struggles to produce new meanings
tice, there is a wide scope for conflict over and new social structures are, therefore,
the practical implications of the Western cul- motors of social change in societies and these
tural account in the construction of new tussles unfold in an organizational field
organizational forms. In one of our four where the state and the professions play an
cases, fundamental 'American' values of the important role (DiMaggio and Powell, 1983).
 355
and nouvelle cuisine weakened as high-status
Organizational forms as codes: chefs in one category borrowed techniques
the ecological view from the rival category, and that attendant
penalties from critics also diminished as
As noted earlier, organizational ecologists borrowing became rampant.
define an organizational form as an exter-
nally enforced identity composed of diagnos-
tic elements and the expected (and thus The architecture of settlements
rewarded) values on these elements (Pólos,
Hannan, and Carroll, 2002; Hannan, Pólos, Thus, if institutional researchers place
and Carroll, 2007). Two features of this defi- importance on conflict as antecedent to the
nition are noteworthy. First, by requiring construction of organizational forms, and
organizational forms to be collective identi- organizational ecologists stress consensus
ties in the eyes of audience members, it lets which takes on a code-like character as the
the organizational form be defined in society precondition for organizational forms, how
independently of any specific instance of it. can these seemingly opposed viewpoints of
Second, audience members examine only institutionalists and ecologists be reconciled?
diagnostic elements, and ignore cultural ele- We take a first step and suggest that institu-
ments that are common across organizational tionalists and organizational ecologists focus
forms and so do not identify them as distinct on different sub-processes in the creation of
categories. Hence the existence of common organizational forms: the early sub-process of
organizational elements such as shared insti- conflict is followed by the second sub-
tutions does not disprove form distinctive- process, namely, the construction of settle-
ness, it just means that distinctiveness has to ments, and then the final phase of
be found elsewhere. codification.
The ecological view of organizational In short, we propose that organizational
forms as identities that need to conform to forms first have to be constructed as settle-
social codes not only emphasizes distinctive- ments, and then institutionalized as codes.
ness but also highlights consistency. Some New organizational forms do not move from
studies contend that organizations which seek conflict to settlement to code in two giant
to straddle multiple categories suffer from leaps - instead, the process is gradual and
inconsistent identities and code conflicts. incremental. One also ought not to think of
Carroll and Swaminathan (2000) showed that institutionalization as an on-off mechanism;
since craft brewers were deemed to be instead, it makes more sense to think of new
authentic when they were small and used forms as being institutionalized, and existing
traditional artisanal techniques, contract forms also being de-institutionalized (Oliver,
breweries that sourced beer from others but 1992). So institutionalization advances and
sought to portray themselves as craft beers recedes, and increases and decreases over
could not mobilize support from consumers, time. Conflict triggers the de-institutionaliza-
and so had lower founding rates than micro- tion of existing forms and is precursor to
brewers and brewpubs. Zuckerman and Kim institutionalization of new organizational
(2003) demonstrated that films classified as forms. The institutionalization of
major films fared well in the mainstream organizational forms is not an all-or-nothing
market but floundered in the art-house proposition; instead, organizational forms,
market, and Zuckerman, Kim, Ukanwa, and like other social patterns, can be more or less
von Rittman (2003) showed that movie actors institutionalized (Tolbert and Zucker, 1996;
who focused on a single genre were more Zucker, 1988).
likely to get work in the same genre. Our starting point is Nelson and Winter's
However, Rao, Monin and Durand (2005) (1982: 109-111) proposal that intra-
found that the boundaries between classical organizational routines become operative
356
only when there is a comprehensive truce or the monitoring defensive alertness-of-parties
settlement, or when there is a cessation of keen on preserving the status quo. As a
conflict among members of an organization. result, just like intra-organizational routines,
Following Rao (1998), we contend that organizational forms are 'confined to
boundaries of a new organizational form extremely narrow channels by the dikes of
become established and the new form vested interest. Adaptations that appear
becomes integrated into a community of "obvious" and "easy" to an external observer
organizations only when there is a truce may be foreclosed because they involve a
among the constituents of the organizational perceived threat to the ... political
field about which frame is used to organize equilibrium' (Nelson and Winter, 1982: 111).
activities. Like settlements among nations, These dikes are the construction, conscious
settlements among rival institutional entre- and, sometimes, unconscious of the
preneurs can also be unequal, with some able beneficiaries of the settlement.
to capture a privileged position for their The proposals championed by contestants
frame, which allows them a larger share of can be thought of as Simonian sub-assem-
any benefits derived from the settlement. blies that vary in terms of their ideological
Settlements increase the capacity for col- compatibility. The relationships among con-
lective action by reducing testants may be asymmetric if one or a few of
comprehensiveness; often some points of them has greater power due to their size, their
view are ignored or suppressed. The terms of ability to mobilize resources from
a settlement among rival institutional constituencies and allies, and framing skills.
entrepreneurs can never be completely Below, we outline the matrix of possibilities
explicit, thus the maintenance of settlements and concomitant examples in Table 13.1.
depends upon the disincentives for actors for Table 13.1 suggests that when all the par-
engaging in provocative actions and ties interested in solving a problem champion
 357
incompatible proposals and none of them is what was a patchwork in Cell 2 can transit
powerful enough, the resulting settlement is a into Cell 4 and vice- versa. Our goal is not to
negotiated outcome that is fragile and likely propose an irreversible stage model, but
to be breached (Cell 1). Indeed, one can even instead to think of settlement activity and, by
think of the settlement being de-institutional- implication, codification as advancing and
ized. A compelling example was the creation receding processes rather than binary, on-off
of small business industry corporations mechanisms.
(SBICs) in America. By contrast, when the The remainder of the chapter is devoted to
parties champion compatible proposals and giving an illustration of each of the four cells,
none of them is decisively powerful, then the and then discussing the framework. Below,
resulting settlement may be characterized as we outline how the construction of the SBIC
the pooling of these sub-assemblies (Cell 2). form was an example of a fragile settlement
The resulting patchwork of a settlement is that eventually dissolved because of the lack
also fragile because parties may be jostling to of power the contestants had over each other
appropriate benefits at the expense of other and the incompatibility of the goals that were
parties. Here again, settlements can be de- coalesced into the SBIC form.
institutionalized. We draw on Rao, Monin
and Durand (2003, 2005) to chronicle how
classical and nouvelle cuisine, which were QUADRANT 1: SOMETHING FOR
initially opposed to each other became com- EVERYONE: THE CASE OF SBICS
patible, and given that no one coalition was
dominant, chefs began to blend classical and The undeniable pain experienced by small
nouvelle cuisine. In Cell 3, the settlement is businesses during the Great Depression in
the outcome of imposition because there is conjunction with serious concerns about the
asymmetric distribution of power, and one of changing nature of the U.S. political
the parties can impose their proposal on the economy made the problem of how to pro-
others. We lean on Rao (1998) to analyze vide capital to small business into an impor-
how Consumers Union sought to promote the tant political issue. In the firmament of
model of non-profit watchdogs as radical American ideological heroes the 'small
critics that evaluated products and the work- businessperson' evokes images of Jefferson,
ing conditions that they were made under, Tocqueville, and Horatio Alger. Helping
and how it was hammered into place by small business was an ideal ideological
Consumer's Research and its supporters, who weapon for Democrats supporting govern-
promoted the idea of a watchdog as an ment intervention in the economy. They
impartial critic rather than as a radical advo- could propose legislation to support small
cate. Finally, in Cell 4, integration is the business, thereby posing dilemmas for con-
likely outcome since the proposals are com- servative Republicans opposed to govern-
patible, and even if one party has decisive ment economic intervention.
power, there is little cause for ideological dis- Federal support for small business is not a
agreement. We draw on Haveman and Rao simple case of an interest group appealing to
(1997) and Haveman, Rao and Parachuri politicians for relief, because small busi-
(2007) to discuss how alternative proposals nesses were not organized into a coherent
about how to organize thrifts were blended social group with a distinct identity, and
into a hybrid form - the Dayton/Guarantee therefore were never directly represented
stock plan during pre-Depression America (Kilgore, 1938; Ziegler, 1961). Conservative
due to the influence of the Progressive Republicans reflexively opposed govern-
movement. mental assistance to small business.
It is important to note that these cells are Ideologically, they were strong supporters of
not absorbing states. In principle, settlements 'free enterprise,' so they were constantly
can move across quadrants; so, for instance, exposed to the uncomfortable political
358
question of opposing an icon of free enter- who believed-that the small businesses
prise: small business. worthy of support were those capable of
The four key actors in the discussion growing to be large corporations. The prob-
about providing financial assistance to small lem was a shortage of venture capital (Liles,
business were: two industry groups, commer- 1977). Given this shortage, they reluctantly
cial bankers and investment bankers, and two favored government programs to subsidize
socio-political groups that we term the investors, but they fervently believed that
populists and the Schumpeterians. From the these investments would be profitable. They
political settlement between these four envisioned small technology-based firms
groups would come a nominally single forming the seeds for industries capable of
organizational form, the SBIC, that in creating the jobs of the future. For them, the
actuality consisted of three related but new Horatio Alger would be the technically
different manifestations. Each actor under- trained entrepreneur. The investor would be a
stood the problem differently, even to the specialized funder of new firms, the venture
point of defining the small businesses worthy capitalist.
of financial support differently and therefore During and immediately after World War
the favored mechanism for delivering support Two, a number of plans for providing finan-
differed. An additional actor, the independent cial support to small business were floated.
venture capital firm, emerged immediately There was also private sector experimenta-
after World War Two, was outside the initial tion in providing capital to small business. In
settlement, but was a factor in the 1946, the first venture capital firm, American
settlement's eventual collapse. Research and Development (ARD) was
Each group had different interests and formed in Boston as a closed-end investment
goals to further, and championed different fund and raised capital through a public stock
proposals. The commercial banks wanted to offering (Hsu and Kenney, 2005).
prevent the government or government - Simultaneously, three venture capital firms
funded entities from competing with them to funded by wealthy New York families were
provide short-term loans to businesses. They formed. Also, some banks established units
also coveted the right to own equity in to provide loans to small businesses, though
industrial corporations and undertake the they quickly retreated. The four small venture
investment banking functions that they had capital firms continued to operate, and
lost with the passage of the New Deal Glass- received much publicity, but had little overall
Steagall Act. The investment bankers wanted impact on small business or new firm
to ensure that businesses raised capital formation.
through them and to loosen SEC regulations The Republicans gained control of both
on stock market listing. Their main goal was Congress and the White House in 1953 and
to prevent the government from providing abolished the Depression Era Reconstruction
capital in such a way as to circumvent the Finance Corporation (RFC), which had been
need to list on public markets. The populists a favorite of Democratic legislators, and had
were strongly represented in Congress, a-mandate to fund small firms, among its
though, as a group, they were' not monolithic. many other duties (Bean, 1996; Ziegler,
Their goals were conceptually clear, i.e. 1961). To secure sufficient support for the
provide government support for small RFC closure and protect themselves from the
business, while their policy prescriptions political attack, the Small Business
were diverse and disconnected. They could Administration (SBA) was created. To
act forcefully: For example, in the 1930s they counter populist criticism of the SBA's per-
mandated that the Reconstruction Finance formance, the Administration commissioned
Corporation provide loans to small business, studies by the Hoover Commission in 1955
which it did grudgingly. and by the Council of Economic Advisors in
The Schumpeterians consisted of elite 1957, both of which found no significant
East Coast businesspersons and educators
 359
capital shortages for small business. Despite three organizational forms and financial sup-
these study results, the populists were able to port for an already existing form. There was a
frame an issue to the public, i.e. a lack of bank-based SBIC, an SBIC that raised capital
funding for small business requiring a on public markets and operated as a closed-
solution. end fund, a privately owned SBIC that
The populists in Congress continued to received low-interest federal matching loans,
pressure the Administration. In 1957 the and existing industrial development corpora-
House Small Business Committee requested tions could receive federal monies. The legis-
that the Federal Reserve, which was lation was an amalgam of proposals with
sympathetic to their position, conduct a study little direction and aml3i-guous goals. Was it
of the credit needs of small business. In April meant to provide loans to existing firms or
1958, the Federal Reserve Board study sug- support startups? Would it be a venture capi-
gested that funds were needed for financing tal program as the Schumpeterians hoped or a
new firms and the expansion of existing more general support program? There were
firms. This is a subtle shift, whereas the no guidelines, restrictions on the investment
populists wanted loans for small businesses, fields, or the requirements in terms of the
the report supported the Schumpeterians. The skills, capabilities, or rectitude of the license
political situation also changed. The applicants. In effect, any group of investors
economy was sinking into recession, and with $150,000 or more was able to borrow
with midterm elections approaching the low-cost, guaranteed Federal funds.
Republican majority was concerned, so the Though sanctioned by Congress, the
Administration decided to support legislation. SBICs had to construct legitimacy. With the
A final settlement to the long debate was at vague enabling legislation, the organizational
hand. forms would be defined in practice. As cre-
ations of Congress, only four months after
Something for everyone the SBIC Act was signed into law an industry
association, the National Association of
Six Senate bills were introduced to assist SBICs (NASBIC) was formed. Fortunately,
small businesses in obtaining financing. The there was a bull stock market from 1959
ABA, which had opposed the formation of through early 1962, and investors were
the SBA, favored using existing state and receptive to the initial public stock offerings
local development corporations as the fund- of the public SBICs. In July 1960, The New
ing vehicles for small businesses. The York Times described the situation aptly:
commercial banks wanted a waiver from the 'Wall Street, seldom swift to bestow its
Glass-Steagall Act so that they could invest affections, has found a new darling - the
in firms. The Investment Bankers small business investment company (Kraus,
Association did not take an official position, 1960: 1). There was a wave of new SBICs
but Edward T. McCormick, President of the attracted by the promise of easy capital gains.
American Stock Exchange, testified that he Legitimacy appeared to be guaranteed.
supported publicly-listed, closed-end invest- The positive appraisal of the SBICs' quest
ment trusts to provide venture capital. The for legitimacy changed in 1962, as a stock
four existing venture capital firms did not market downturn surprised the public SBICs.
testify, but the Schumpeterians, as repre- Unfortunately, as closed-end funds, investor
sented by the Committee for Economic disenchantment led to their valuations being
Development, supported the bill (Anglund, so depressed that they attracted corporate
2000: 64). On August 21, 1958 the Small raiders. The result was that they were either
Business Investment Act was ratified. acquired and liquidated or their managers
None of the contestants had a decisive turned in their SBIC licenses. The bank-
edge over the others in terms of size, ability affiliated SBICs, though professionally run,
to mobilize or to frame. So all the also were troubled. Many banks owning the
protagonists received their wishes. The Act
authorized
360
SBICs were disappointed because their bank small business. In a 1967 report they con-
connections did not provide many good cluded that the SBIC Program was replete
investment opportunities. The SBICs were with incompetence and even criminality and
difficult to administer because the skills suggested measures that, were they enacted,
necessary for finding and making a good loan would have ended the Program.
differed sharply from finding and developing The malfeasance, the resultant increased
a good investment (Hayes and Woods, 1963: federal regulatory oversight, criticism by
19). Many of the bank SBICs became venture capitalists outside the Program, and
inactive. continuing experimentation with other orga-
The private SBICs were most numerous. nizational forms for venture capital investing
And yet, they were plagued by inadequate threatened to destabilize the settlement.
capital, inexperienced management, and a NASBIC was aware of the schism emerging
lack of connections necessary for a high- between its members who were loan-oriented
quality deal flow. They invested in a wide and those that were venture capitalists. The
number of areas including real estate, distri- growing importance of the external venture
bution, wholesale grocery operations, and capitalists prompted NASBIC to open dis-
many others. By 1963 it was apparent that the cussions regarding representing them in
Program had attracted unscrupulous Washington. This initiative met with little
individuals. Investigations found that 'nine success, as the venture capitalists decided to
out of ten SBICs had violated agency create their own organization. The fragile
regulations and dozens of companies had settlement was now ready to collapse.
committed criminal acts,' thereby threatening In the early 1970s, even while the SBIC
the program's legitimacy (Bean, 2000). In Program continued to operate, a new organi-
1964, the SBA instituted a 90-day hiatus on zational form, the private limited partnership,
issuing new licenses as it decided to reorient which was first used for a venture capital
the program to stress 'venture capital organization in 1958, became the dominant
investing as opposed to real estate and organizational form for the external venture
secured lending' (SBIC Evaluation Service capitalists. In April 1973 the National
1964: 1). Venture Capital Association (NVCA) was
In 1966, Congress gave the SBA enforce- launched. In their membership solicitation
ment authority to investigate conflicts of letter they stated that members must be ven-
interest; to fix legal responsibility on the offi- ture capitalists 'investing private capital in
cers, directors, and agents of unlawfully young companies on a professional basis
operated SBICs; and to levy stiff penalties (SBIC/Venture Capital (1973: 3).' The criti-
and fines. The effort to end fraud made the cal proviso was that members must invest
SBIC Program increasingly bureaucratic and private capital. The bank and publicly-owned
constraining. The proliferating regulations SBICs not using Federal monies could join,
and reporting requirements prompted the while the private SBICs were unwelcome.
most successful SBIC operators, the ones The venture capitalists operating SBICs
practicing venture capital, to consider leaving abandoned their SBICs, formed limited part-
the Program (SBIC Evaluation Service, 1966: nerships, left NASBIC, and joined the newly
5). formed NVCA. The formation of the NVCA
In 1964, the Small Business and Venture marked the end of the settlement achieved by
Capital Associates (SBVCA) was formed the 1958 SBIC Act. The banks were the sole
with a board of directors representing the remaining significant venture capitalists for
Schumpeterian elite of the East Coast finan- whom the SBIC Program was significant
cial and private venture capital world. The because they continued to be blocked by the
SBVCA operated a center affiliated with the Glass-Steagall Act from freely investing in
Committee for Economic Development to firms.
study the role of venture capital in funding
 361
The NVCA proved to be a stable settle- French Revolution, chefs who once worked
ment, as it was organized to represent private in the houses of private patrons offered their
venture capitalists organized into the limited services to the public by establishing restau-
partnership, which was the result of a bout of rants in Paris and its environs (Ferguson,
organizational mimesis and soon jelled into 1998). Chefs and culinary journalists sought
the dominant organizational form for venture to systematize the principles of cooking in
capital investing. The SBIC Program and restaurants, and the most influential was
NASBIC continued representing the remain- Antonin Caréme (1784-1833). Stressing del-
ing private SBICs and the bank SBICs, both icacy, order, and economy, Caréme brought
of which were no longer significant players symmetry to the service of meals, and
in the venture capital market, and the public introduced a new awareness of freshness and
SBICs disappeared completely. sanitation into the French kitchen. Caréme's
ideas quickly diffused throughout the
kitchens of French restaurants (Ferguson,
QUADRANT 2: A PATCHWORK: 1998) and were strengthened by a new breed
DIFFERENT FLAVORS; FRENCH of chefs such as George Auguste Escoffier
GASTRONOMY (1847-1935) and his circle of collaborators.
In his Guide Culinaire (1903) that remains a
Below, we outline how French gastronomy central text in the training of professional
featured two opposing categories - classical cooks even to the present day, Eseoffier con-
and nouvelle cuisine, each of which had an ceived of classical cuisine as codified gram-
identifiable code of conduct and elements. mar of culinary practice: a product can be
Subsequently, we elaborate how the borrow- cooked in different ways, served with differ-
ing of techniques and ingredients breached ent sauces and accompanied with different
the boundaries of both categories, and created fillings. Escoffier's guide was issued in sev-
a patchwork. In doing so, we heavily lean on eral editions, and remained as the dominant
Rao, Monin, and Durand (2003, 2005). The orthodoxy until it was undermined by the
parties to the initial conflict and subsequent nouvelle cuisine movement.
settlement were chefs belonging to the In 1970 a group of young French chefs,
society of French chefs (Maitres Cuisiniers led by Paul Bocuse, Michel Guérard, the
de France). Ratings agencies such as the Troisgros brothers, and Alain Chapel,
Guide Michelin and Gault Millau also played invented a free-form style of cooking.
a part, as did crusading journalists. The Culinary journalists such as Christain Gault
setting was the haute cuisine restaurants and Remi Millau christened their style as
serving affluent customers. Since the differ- nouvelle cuisine, codified it, and postulated
ences between classical and nouvelle cuisine the Ten Commandments of nouvelle cuisine,
existed more in the press than the kitchen, and launched a culinary guide called Gault-
both proposals were compatible. Moreover, Millau. Gault, Millau and other culinary
neither classical nor nouvelle had a decisive journalists were theorists who depicted nou-
political edge, so the outcome was a patch- velle cuisine as a challenge to the codifica-
work of many flavors. tion of Escoffier and as an anti-school
The origins of classical cuisine are trace- valuing experimentation, autonomy, and
able to the French Revolution of 1789, which innovation. Chefs at the vanguard of the nou-
undermined the institutional logic of the velle cuisine movement, such as Bocuse,
ancien regime cuisine and the associated Troisgros, and Chapel, aimed for simplicity
identity of the chef. In the ancien regime, and transparency of presentation. Nouvelle
meals were public spectacles organized cuisine wanted the chefs to have a role in cre-
according to hierarchy, and the chef was the ating and inventing dishes rather than simply
property of a patron or noble. But, after the understanding the intentions of Escoffier.
362
In classical cuisine, the culinary rhetoric dishes on the menu as signature dishes –
reveals the emphasis on conservatism and which telegraphed their identity, and had to
preservation. Often, dishes have the names of be served regularly to ordinary customers.
places, noblemen, or mythological characters Signature dishes enabled external actors such
associated with dishes. Neirinck and Poulain as the Guide Michelin to classify chefs into a
(1988) studied Caréme's texts and found that category, but that did not mean that all chefs
nearly 213 dishes had names associated with assigned to a category equally conformed to
noblemen. Moreover, cooking consisted of the norms, rules, and dictates of the category.
the application of two specific rules and Some chefs faithfully adhered to the
associated techniques: conformation to the norms of the category by using the cooking
rules formulated by Caréme and Escoffier, techniques and ingredients associated with
and sublimation of the ingredients such that the category. Consider a chef whose signa-
the raw material is visually transformed. tures are all in one category and who does not
Fischler (1993: 238) summarized it as blend cooking techniques and, instead, only
follows: 'The art of the cook consisted in uses techniques affiliated with his or her
accommodating, in transforming, in chosen category. Jean-Paul Lacombe, of
metamorphosing the raw material, to put it Léon de Lyon, a two-star restaurant in Lyon,
from Nature to Culture.' exemplifies the canons of classical cuisine
By contrast, the culinary rhetoric of nou- with three signature dishes such as crayfish
velle cuisine emphasized innovation, and the mousse (mousse de brochet), panned tripe
appellations dished referred to poetry and (Gras double sauté), and chicken cooked
imagination rather than place names or the with red wine, 'the aneient way' (Coq au vin
names of nobles (Weiss, 2001: 233-234). rouge à l'ancienne), offered in 1981. These
Nouvelle cuisine relied on the rules of signature dishes pay homage to the middle-
transgression and acclimatization (Fischler, class kitchens of Lyon during the 19th
1993). Transgression consisted of using century and refer to classical cuisine
unconventional techniques; dishes mixing ingredients: crayfish and tripe. However, all
meat and fish, salads mixing vegetables and of them use classical cuisine techniques of
foie gras, or pot au feu featuring fish. cooking: panning, mousse, and stewing meat
Acclimatization was the import of exotic in wine. The chef, Jean-Paul Lacombe,
foreign cuisine techniques and ingredients, defines himself as an embodiment of
notably from Japan and the former colonies classical cuisine enshrined in the history of
of France (Beaugé, 1999). The ingredients of Lyon: 'I love Lyon, I like the region and its
nouvelle cuisine were fruits, vegetables, products; my cuisine is deeply inspired by
potatoes, aromatic herbs, exotic ingredients, this native area: it is a cuisine bourgeois, a
sea fish. In summary, 'the object of the culi- cuisine that smells good .... My strength? a
nary arts is no more the metamorphosis of the traditional cuisine based on typical products
food product, but the revelation of its from Lyon.'
essential truth' (Fischler, 1993: 238). Some chefs signal a hybrid identity - two
of their signature dishes can belong to classi-
cal (or nouvelle) genre, and the remaining
A patchwork of different flavors dish falls in the nouvelle (or classical) genre.
In all cases, the signature dishes adhere to the
Classical cuisine and nouvelle cuisine were rules of the genre, and so patrons can have a
not rigid orthodoxies but theories which choice of classical and nouvelle cuisine
could be appropriated by chefs (Ferguson, dishes faithfully executed according to the
1998). Indeed, culinary journalists such as conventions of the genre. An example is La
Hemi Gault and Christian Millau depicted Poularde ('The Fat Chicken') located in
Escoffier and classical cuisine as rigid, and Montrond-les-Bains, the oldest two-star
portrayed nouvelle as an oppositional cate- restaurant in France. In 1990, Gilles Etéocle
gory. All chefs had to nominate three of their offered the following dishes: cooled off
 363
marinated salmon with sesame (saumon et caramel de Macvin), snails cooked in
mariné tiédi aux graines de sesame), a pure butter served in a liquorice court bouillon
nouvelle cuisine dish based on account of the (embeurrée d' escargots dans unenage à la
spices and techniques used. This dish features réglisse), and boned out fat chicken cooked
a natural river fish and a spice not available in white wine and garnished with morels
in France, sesame, which was not (poularde en gigot de vin jaune et morilles).
traditionally used as a seasoning in marinated The first dish is a nouvelle cuisine dish, while
preparation before. Sesame was mainly used the others belong to the classical cuisine
as an imported product in bakery and pastry, genre. However, all borrow ingredients and
for dessert preparation, not in fish prepara- cooking techniques from each genre. The
tion. So the rules of transgression and first dish combines a highly classical cooking
acclimatization apply. Etéocle also has two technique: poaching (simply using boiling
classical cuisine dishes such as chicken fric- water) and a very classical ingredient: foie
assee with truffle (fricassée de poulette truf- gras, with a Macvin caramel, or sugared
fée) and big game (gibier). The two pure dessert with a liqueur based on a local marco
classical cuisine dishes use classical cuisine The combination of salt and sugar is a nou-
ingredients: truffles, big game, and rely on velle cuisine characteristic. The second dish
the classical cooking technique - fricassee. mixes earth and sea, a typical feature of nou-
But chefs can have all of their signature velle cuisine, in complete disrespect to tradi-
dishes in the classical or all nouvelle cate- tion and the natural order of classical cuisine,
gories, and yet borrow elements from a rival through an ingredient: (snails) and an appel-
cuisine, and blend them with their claimed lation - swimming. Finally, the third dish is
cuisine. An exemplar is Bernard Collon of pretty classical, but the carving technique,
'Auberge de Letraz' located on the border of 'gigot' (not adequately translated as 'boned
the Annecy Lake. Collon was awarded one out') is usually adequate for mutton (a leg of
star in 1975, but downgraded in 1996. Collon mutton) and is not proper1y used for chicken
defines himself as a classical cuisine chef, under the classical cuisine orthodoxy. Jean-
who uses fresh ingredients of nouvelle cui- Paul Jeunet stated: 'My role is to bring some-
sine. He characterized his identity as follows: thing, to transcend the product through the
'I do not like the caricatured classification techniques. I am a technician, first and above
between classical and nouvelle cuisine. I cat- all' (italics ours).
egorize myself in the "Classics," but ... I use As these descriptions indicate, French
fresh products ... you modernize.' In 1981, for chefs did not neatly fall into classical and
example, two of Collon's signature dishes nouvelle cuisine camps, but instead straddled
breached the boundaries of classical cuisine: them. Moreover, those whose cuisine was
duck aiguillettes with quince (aiguillettes de dominantly classical or nouvelle also
canard aux coings), and escalope of salmon experimented by borrowing techniques and
trout with sorrel (escalope de truite ingredients from the rival cuisine. Rao,
saumonée à l'oseille). Both dishes combine Monin and Durand (2003) formally modeled
classical cuisine ingredients (salmon trout the creation of a patchwork by analyzing the
and duck) with nouvelle cuisine ingredients extent to which chefs belonging to classical
(quince and sorrel) and nouvelle cuisine rules and nouvelle cuisine borrowed materials
of cooking (aiguillettes and escalope). from each other. They argued that when
Finally, chefs can follow a hybrid boundaries are strong due to external
approach and still borrow techniques from a sanctions, most actors don't borrow, and the
rival cuisine. Consider Jean-Paul Jeunet, the sprink1ing that do borrow do so most of the
chef of the Restaurant de Paris in the Jura time. As a result, the mean number of
province, who in 1992 chose the following as elements (µ) borrowed from the rival
his signature dishes: lightly poached foie gras category for each actor is likely to be low but
and a Macvin reduction (joie gras poché the variance (²) in the number of
364
elements borrowed is high. Conversely, when improve the protection of consumers through
boundaries are eroding, the mean number of the establishment of a new mechanism of
elements (µ) borrowed by an actor from the control - the Consumer Watchdog
rival category increases, but the variance (²) Organization (CWO). Chase, an accountant
in the number of elements borrowed declines. by profession, had written two polemics
What increases µ and decreases (²)? They entitled The Challenge of Waste (1922) and
argued that geographically high-status actors The Tragedy of Waste (1925) to warn
have more latitude to be original, and can consumers against products that were
borrow techniques from a rival category, and superfluous and detrimental. Schlink had
serve as influential role models for other worked for the National Bureau of Standards
chefs. Their study of French haute cuisine and the National Standards Association;
showed that borrowing by high-status actors together with Chase, in 1927, he published
increased the mean number of elements (µ) Your Money's Worth, in which manufacturers
borrowed by an actor from the rival category, were blamed for creating wasteful variety
but reduced the variance (²) in the number and advertisers were accused of deceitful
of elements. Thus, boundaries between a cat- claims.
egory weakened when members of a category Building on his experience with a con-
borrowed from the rival category, and the sumer's club established in a church in White
sources of erosion were from within and Plains, New York, Schlink created Consumer
without. They also showed that those who Research (CR), whose Bulletin would 'inves-
borrowed when the categorical differences tigate, test, and report reliably hundreds of
were strong received penalties in the form of commodities' (Silber, 1983: 18). The goal of
a downgrade by external evaluators. The CR - a non profit organization that distanced
penalties diminished as the fraction of chefs itself from any political party - was to protect
who borrow increased and borrowing became consumers by pushing manufacturers to
prevalent in the social system. Thus, chefs reduce wasteful variety and keep fair prices
redrew boundaries through borrowing which through standardization. Scientific analysis,
created a patchwork, and, in turn, critics and not emotions, had to guide consumption.
based their assessment on the patchwork. CR shielded itself from the opposition of
manufacturers and advertisers by building on
the ideas of 'service' to the customer and truth
QUADRANT 3: IMPOSITION: THE in advertising - concepts that firms were
CASE OF CONSUMER WATCHDOGS implementing to professionalize their trade
and as a competitive weapon - and by
The saga of non-profit consumer watchdogs emphasizing standardization and testing. CR
provides a telling example of how a settle- grew quickly: in 1927, it had 656 subscribers,
ment was imposed due to powerful external but by 1933, there were 42,000 subscribers.
actors. So in this case it is not the actors In 1935 the readership of the Consumers
making a settlement, but rather an imposition Research Bulletin reached a circulation of
of a settlement by external audiences. The 55,000. CR's growth was also fostered by the
parties were rival entrepreneurs championing Depression, which forced consumers to pay
different visions of a non-profit consumer more attention to price/quality ratios, and by
watchdog, other media, and Congress. We a wave of books that ran exposés of
rely heavily on Rao (1998) to provide this manufacturing and advertising practices.
case study. As CR grew, new activists joined, while
In the 1930s two issue entrepreneurs, some older activists - among them Chase -left
Stuart Chase and Frederick Schlink, the organization because of disagreements
attempted to with Schlink. These disagreements stemmed
from different perspectives on the scope of
 365
CR - Chase and other members wanted to industries. Professional journals such as
deal with social questions concerning wages Science and the Journal of Home Economics
and working conditions, while Schlink and declined space to CU because CU's claims
his supporters believed that these concerns could not be scientifically substantiated. In
could not be scientifically tested and there- 1937, a new watchdog organization began to
fore were outside the boundaries of CR's publish Consumer Bureau Reports, which
responsibilities towards consumers. In 1935, provided favorable ratings in return for free
Arthur Kallett, an ex-colleague of Schlink at samples from manufacturers. Both the simi-
the American Standards Association and then larity of the name of the bulletin and its
member of the board of CR, founded a new format could confuse the readers and weaken
organization called Consumer Union (CU), CU's reputation.
which aimed at protecting both consumers Further, CU was direct1y smeared as a
and workers. The founders of CU defined the Communist newspaper by the Hearst news-
consumer as a worker who was concerned papers, due to a series of CU exposés of
not only about wasteful variety and deceitful Hearst's Good Housekeeping Institute (so
advertising, but also about wages and much so, that the Federal Trade Commission
income. Living standards could be improved launched an investigation against the insti-
through standardization, product testing, and tute). A few years later, in 1938, a House
control of labor conditions. Labor concerns committee on subversive activities, chaired
also influenced purchasing choices; for by Congressman Dies, sought to investigate
example, CU urged members to boycott anti- whether CU was engaged in un-American
union manufacturers. Labor legislation that activities harmful to the national interest. J.
created a favorable environment for labor B. Matthews, an associate of Schlink at CR,
unions - for example, the Norris-La Guardia served as counsel for the Select Committee
Act in 1932 and the Wagner Act in 1935 - on Un-American Activities and suggested
stimulated CU's growth: by the end of 1936 it that Kallett's writings and the fact that a CU
had 20,700 members, and by 1937 it had ex-employee, Susan Jenkins, had admitted to
dose to 40,000 members. being an employee of a Communist
newspaper (the Daily Worker) were proof
that the organization was a Communist front.
Imposition by external actors The Hearst newspapers printed Matthews's
accusations in full.
CR and CU provided two different models Although there was no systematic investi-
for a consumer watchdog organization. While gation of the charges leveled at CU, the Dies
the concepts of rational decision making, Committee's allegations became a matter of
standardization, and scientific testing that concern to the founders and supporters. This
were initially promoted by CR spread to spate of attacks from multiple actors led CU's
governmental agencies and professional founders to disengage from their radical
societies, small, newly founded consumer agenda. Slowly, CU began to disengage from
groups were modeled after CU. These radical advocacy; thus, reports on labor
endorsements stimulated CU's founders to conditions were no longer included in CU's
increase circulation of the organization's bul- bulletin, which more conservatively focused
letin, Consumers Union Reports. However, on product testing and ratings. In parallel, CU
CU's radical agenda encountered resistance developed a relationship with scientific
from diverse institutional actors: in 1939 the societies in Boston and sought to inject sci-
postmaster general of New York banned the ence into its testing approach, and by 1944,
bulletin and sixty-two newspapers, including its circulation began to increase. CU had won
the New York Times, refused to sell advertis- the battle with CR but lost the battle for
ing space to CU because of its attacks on ideology. So much so that when Ralph Nader
366
wrote his critique of the auto industry, he first mutual plan's rigid rules by replacing
approached CU, only to be rebuffed as installment shares with optional-payment and
unscientific, and later went on to establish a paid-up shares, allowing early payment of
new kind of non-profit consumer watchdog - loans, and eliminating fees for membership,
one that looked at the legal rights of late payment, and early withdrawal. The
consumers. guarantee-stock plan introduced non-
withdrawable stock, which was paid in at
founding and which was used to insure other
members against losses. This joint-stock plan
linked owners to savers and borrowers in an
QUADRANT 4: INTEGRATION: THRIFTS internal market for risk and return; it
IN PRE-DEPRESSION CALIFORNIA contrasted sharply with the mutual and
Dayton plans, which were both cooperatives
whose members were all owners. The four
Early thrifts were incarnations of beliefs and hybrid plans were recombinations of two or
values concerning saving and home all three basic plans. For example, the
ownership and took on value far beyond the Dayton/guarantee-stock hybrid combined
technical requirements of the financial- features of the guarantee-stock and Dayton
intermediation task at hand and became insti- plans: this joint-stock plan created an internal
tutionalized systems of moral authority. We market for risk and return, separated
rely on Haveman and Rao (1997) and borrowers and savers, and allowed great
Haveman, Rao and Parachuri (2006) to flexibility for both.
describe how thrifts based on the model of The California thrift industry grew rapidly
cooperation among friends and enforced from its origins. In 1890, the first year
saving were replaced by thrifts based on detailed data are available, 116 thrifts oper-
bureaucratized cooperation among strangers ated. In 1894, 146 thrifts operated with
and voluntary saving. 34,000 members and 9,000 mortgage loans
There were three basic thrift forms or outstanding; by 1928, the number of thrifts
'plans,' as contemporary observers called had risen to 216, with 114,000 members and
them. Each plan represented a proposal about 92,000 mortgage loans outstanding. While
how to organize thrift. In order of the industry grew more dramatically in scale
appearance, these were the mutual plan rather than in sheer numbers, the distribution
(which had three variants - terminating, of organizational forms shifted dramatically.
serial, and permanent), the Dayton plan, and Until 1900, the industry was composed
the guarantee-stock plan. In addition to these almost solely of mutual-plan thrifts, although
three basic plans, four 'hybrid' plans emerged, there were rare instances of the Dayton,
which combined the features of two or three guarantee-stock, and mutual/guarantee-stock
basic plans: mutual/guarantee-stock, plans. After 1900, the number of mutuals fell
mutual/Dayton, mutual/Dayton/guarantee- and the number of Dayton and mutual/guar-
stock, and Dayton/guarantee-stock. These antee-stock thrifts rose. Then, after 1906, the
hybrid plans represented attempts to integrate number of Dayton/guarantee-stock thrifts
the 'mutual' plan with its other extreme - rose dramatically. In 1890, the mutual plan
guaranteed stock plan. constituted over 90 percent of all thrifts oper-
In the mutual plan, all members were on ating. By 1919, that number fell to 48
equal footing: all were part owners, saved percent, and by 1928, to 13 percent. By
and repaid home loans on the same schedule, contrast, the Dayton/guarantee-stock plan
and shared in the association's profits. rose from 1 percent of the industry in 1906 to
Mutual-plan thrifts had rigid schedules for 20 percent in 1919, and to 72 percent in
dues and loan payments; they enforced these 1928.
schedules with fines for late payment and How did the Dayton/guarantee-stock plan
early exit. The Dayton plan relaxed the suddenly replace the serial mutual plan as the
 367
dominant form? When the population in political power, and enacted regulations gave
California was transformed, by immigration legal standing to three elements of the
and internal migration, into a society of Dayton/guarantee-stock form of thrift –
strangers, these social bonds frayed. guarantee stock, optional-payment shares,
Immigration and internal migration together and paid-up shares.
accounted for 65 percent of California's pop- By 1913, the specific features of the
ulation increase between 1890 and 1900, and Dayton/guarantee stock form were authorized
87 percent of the population increase but this by itself was inadequate. The
between 1900 and 1910. Social ties could no meaning of thrift not only needed to be
longer enforce the ethic of forced saving and reconstituted, it also needed to be integrated
a system of collective borrowing from into the prevailing cultural order. This consti-
friends. Thus, demographic change made the tutive legitimation project required the cre-
mutual form of thrift ineffective. ation and spread of intermediary institutions,
N one of the other forms of thrift in exis- both theorists like the news media, which
tence at the turn of the century could replace constructed functional accounts of the gen-
the mutual form, because all violated, in eral Progressivist model of rational and effi-
some way, the original ideals of thrift cient bureaucracy, and naturalizing analogies
(Haveman and Rao, 1997: 1640-1641), and like the city-manager form of municipal gov-
all contravened the prevailing political cul- ernment, which made bureaucracy a 'natural'
ture. Two forms in particular merit mention, part of the social fabric. It was only the rise
as they were combined to create the hybrid of Progressive newspapers and the diffusion
Dayton/guarantee-stock form (Haveman, of the city-manager form of municipal gov-
Rao, and Parachuri, 2006). The pure Dayton ernment that made the Dayton/Guarantee
form was not viable when it first appeared in Stock plan natural and possible.
1899 because it eliminated structured effort, As Progressive newspapers proliferated
reduced mutuality, and had an identity that across the various counties of California, and
was similar to banks; the pure guarantee- as Progressive ideas embodied in the city
stock form was unacceptable when it first manager form of government became
appeared in 1898 because it eliminated mutu- entrenched in different parts of California,
ality. Moreover, neither form ever achieved thrift executives began to redefine thrift as
sufficient numbers to confer great legitimacy efficiency and the separation of powers
(Hannan and Freeman, 1987; Hannan, Pólos, between managers and owners as the best
and Carroll 2007). At the dawn of the twenti- way to organize enterprises. The Progressive
eth century, then, there was a problem in the zeitgeist which treated even the governance
thrift industry, but no acceptable solution. As of a city as analogous to a joint-stock
a result, the industry languished and the corporation tipped the balance in favor of the
number of thrifts fell from a peak of 157 in Dayton/Guarantee stock plan. Integration
1898 to a low of 85 in 1918. ensued through conversion of existing thrifts
and the birth of new enterprises. The
Dayton/Guarantee stock plan gained recruits
Integration: The Progressives through defections of existing thrifts based en
other plans, but mainly through the creation
It was the Progressive movement with its of new thrifts. Existing plans saw the shifting
emphasis on rationality and bureaucracy that winds of cultural change and tacked their
drove the integration of Dayton and sails to adjust to the new winds. The
Guaranteed stock plans. Progressivism arose Progressive zeitgeist was the banner under
in response to the political machines which the new entrepreneurs mobilized
dominating municipal government, and themselves. Since there was integration, the
sought to impose rationality and order. settlement was long-lasting - it
Progressives won
368
lasted until thrifts were besieged by competi- asymmetry of power among parties is high
tion from commercial banks due to deregula- and proposals are incompatible, the
tion in the Reagan era. settlements that ensue, as in Quadrant 3, are
imposed by an external force. Such
settlements last only as long as the external
DISCUSSION party retains its influence. If the external
party loses its grip, weaker parties gain the
Our conception of new forms as settlements leeway to defect. If the external party
strengthens the connection between neo- consolidates its power, the settlement can
institutional theory and organizational ecol- become durable, until the accumulation of
ogy. Neo-institutionalists postulate that unresolved issues results in a conflict after a
organizational forms are created through an long period of time. When one party is
inherently political process. Organizational powerful, but the proposals are compatible,
ecologists assert that organizational forms are then the settlement that ensues can be long-
socially coded identities. So the question is lasting and enforceable.
how conflict and contestation culminate in a Our chapter focused more on the constitu-
code. Our suggestion is that forms have to be tion of forms as settlements, and assumed
first constituted as settlements - that is that durability and enforceability were an
agreements have to be negotiated among par- outcome of the nature of the settlement.
ties before new forms can be institutionalized Future research needs to specify the condi-
as codes. A settlement is a set of understand- tions under which settlements gain institu-
ings and expectations about a form that are tional strength and sanctions, and become
shared among internal and external audi- codes of conduct that influence the fates of
ences. Settlements become codes only when individual organizations. Studies of settle-
these understandings and expectations ment collapse would be particular1y
become default conditions of membership, valuable, as they could provide insight into
and are enforced by external and internal the boundary conditions of how organizations
audiences. are products of their environments, and envi-
Our four examples underscore how new ronments are outcomes of organizational
forms have to be constituted as settlements if intervention.
they are to become durable and enforced as
social codes. When there is low asymmetry
in the power of the various parties and their
proposals are ideologically incompatible, ACKNOWLEDGMENT
then brittle settlements ensue as in Quadrant
1, and are short-lived and subject to schisms. We are thankful to Christine Oliver and
Here the possibility of codification of a single Heather Haveman for exceptionally helpful
organizational form is low. However, when comments and suggestions.
asymmetry of power among parties is low,
and the proposals are ideologically
compatible (despite rhetorical exaggeration
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 14
Social Movements and Failed
Institutionalization: Corporate
(Non)Response to the AIDS
Epidemic
Gerald F. Davis and Peter J.J. Anderson

A consequence of globalization is that the individual states to respond effectively. They

nation-state becomes too big to solve the require a collective response, from govern-
small problems and too small to solve the big ments and from transnational actors such as
ones, as Daniel Bell has remarked. The same corporations. Yet demands to address broad
might be said of the contemporary multina- social problems challenge conceptions of
tional corporation (MNC). As MNCs have what a corporation is for, and to whom it
grown in size and influence in recent owes a responsibility. How are we to under-
decades, they have faced growing demands to stand corporate responses to demands for
assume greater responsibility for solving greater responsibility in addressing global
social problems large and small. problems?
Corporations are expected to provide safe In this chapter, we argue that organiza-
products for their consumers, decent working tional institutionalism and social movement
conditions for their employees, and to police theory offer complementary insights to addr-
the ethical standards of their suppliers and ess what we might call 'collective corporate
even the countries where they operate. More social responsibility.' Collective corporate so-
recently, MNCs have been asked to address cial responsibility (CCSR) is the concept that
global problems that would have previously organizations in a sector or field are percei-
been seen as the responsibility of govern- ved to owe an obligation to certain constitu-
ments, such as the HIV/AIDS pandemic and encies. These obligations can vary across
the looming crisis of climate change. Such fields and over time. For example, businesses
problems outstrip the capacities of headquartered in Minneapolis are expected to
372
provide generous support to local non-profits, American businesses were offered a rela-
while businesses in Phoenix face no such tively low-cost vehicle sanctioned by the
expectation (Marquis, Glynn and Davis, United Nations to participate in the fight
2007). Pharmaceutical companies are against AIDS. In January 2001, Secretary
expected to provide access to their products General Kofi Annan urged American busi-
for those who cannot afford them, while nesses to join the Global Business Coalition
packaged food companies are not. And on HIV/AIDS (GBC), headed by former
thanks to the antisweatshop movement, American UN ambassador and investment
brand-name sneaker companies are now banker Richard Holbrooke. Annan framed his
expected to vouch for the labor practices of appeal to align with prevalent American
offshore suppliers who were previously conceptions of the corporation, highlighting
regarded as outside the realm of their the benefits to shareholders and other con-
responsibility (Davis, Whitman and Zald, stituencies. Yet roughly 95% of the largest
2007). CCSR attaches to organizations by American businesses declined, and those that
virtue of their membership in a field. Efforts did join were a somewhat idiosyncratic
to expand the definition of what group. Why did some join, and most decline?
organizations in a particular field are Our findings suggest that institutionaliza-
responsible for - by social movements and tion projects are analogous to efforts to build
others - can thus be regarded as a social movement (cf. Schneiberg and
institutionalization projects: they attempt to Lounsbury, this volume). Successful institu-
change the definition of what field members tional entrepreneurs induce a critical mass to
are and where their responsibilities lie. As adopt their definitions of appropriateness -
institutionalists point out, organizations adopt what kind of engine should an automobile
practices and structures in large part because have (Rao, 2002), what activities should an
these are regarded as appropriate and legiti- accounting firm do (Greenwood and
mate within their organizational field Suddaby, 2006), what are a company's obli-
(DiMaggio and Powell, 1983). Thus, gations to the local non-profit community
attempts to induce corporations to take on (Marquis et al., 2007), or to gay and lesbian
expanded responsibilities, by social employees (Scully and Creed, 2005), or to
movements and others, entail expanding citizens in need in other countries. Fomenting
field-level definitions of the appropriate. a social movement follows a similar
We focus on a particular episode that we dynamic, as institutional entrepreneurs (such
regard as a failed institutionalization project: as Kofi Annan) seek to change a critical mass
the effort to engage American multinationals of actors' conception of their obligations - in
in the collective global battle against the this case, what a multinational company can
HIV/AIDS pandemic. This is a particularly and should do about HIV/AIDS. Some actors
illuminating case for several reasons. The are prone to joining a movement based on
AIDS pandemic is the largest public health interests pharmaceutical companies, for
crisis in contemporary history, and the conse- instance, have a clear stake in efforts to
quences of inaction range from the highly address HIV/AIDS, and firms with
personal to problems of national security and substantial foreign sales receive a benefit in
economic development. Unlike emergent learning from their peers. Others have
crises such as climate change, the scope of already adopted a conception of their
the problem is manifest, and the death toll obligations consistent with the movement,
already numbers in the millions, particularly making them easier to recruit; in this case,
in sub-Saharan Africa. Many of the nations those companies that had benefits packages
facing the gravest problems are among the for domestic partners of gay and lesbian
poorest in the world, some nominally gov- employees were far more likely to join than
erned by 'failed states.' If ever there were a those that did not. But to
problem requiring coordinated outside help
from the corporate sector, this was it.
 373
achieve a critical mass, institutional and including mobile phones, computers, and the
movement entrepreneurs often need effective World Wide Web. The globalization of trade
recruitment networks. And while there was and finance has been accompanied by the
clear evidence of network-based recruitment growth of transnational movements and cor-
in this instance, it was not sufficient to spread porations that are dispersed across national
beyond the 'early adopters.' Within five years boundaries. And, thanks to ICTs, both move-
of Annan's plea, only about two dozen mem- ments and organizations are often character-
bers of the Fortune 500 had joined the GBC. ized by nimble and relatively ad hoc alliances
That is, joining the global fight against assembled for particular performances.
HIV/AIDS had not become institutionalized Multinational quasi-firms can be assembled
as part of the standard package of what for specific projects - a movie, a skyscraper,
MNCs do. a line of mobile phones - and broken up when
We next provide some background on the the project concludes. Similarly, protest
parallels between organizational institution- actions, such as those against the WTO,
alism and social movement theory, and recent typically comprise temporary alliances
efforts to integrate them. We then describe among separate sponsors. Social movements
the context of the corporate movement have become as global as corporations: six
against HIV/AIDS, and derive some million protesters marched on the same day
hypotheses about which companies are prone in February 2003 behind the banner 'The
to joining. We analyze data on a sample of World Says No to War' in dozens of cities on
the several hundred largest US firms for this six continents in anticipation of the American
decade, and conclude with some implications invasion of Iraq, with streaming video feeds
of our findings for organizational of the action available around the world via
institutionalism. the Web. Finally, organizations are often
both the objects of social movements - e.g.,
Nike (for its contractors' labor practices),
THEORETICAL BACKGROUND Nestle (for its sales of infant formula in
impoverished countries lacking clean water),
In recent years there has been a notable con- Shell (for its operations in repressive states);
vergence in the agendas of those that study the sites of social movements (such as efforts
organizations - particularly institutional the- to gain equal employment rights), and
orists - and those that study social move- participants in social movements (Davis,
ments. There are several reasons for this McAdam, Scott, and Zald, 2005).
convergence (Davis and Zald, 2005). First, Corporations participate in social movements
since both domains are concerned with the both covertly (e.g., as funders for 'social
sources of organized action, they are charac- movement organizations' intended to
terized by similar processes and mechanisms: advocate for the firm's agenda) and overtly
founding, structuring, recruiting, incentives, (e.g., through alliances, board affiliations,
leadership, and culture are all central and sponsorships).
concerns of both. While social movements The imagery of networks and contagion
often come to be represented by formal are common to research on both institutions
organizations, organizations have come to be and social movements (Strang and Soule,
less formal, more permeable, transient, and 1998). Networks provide a bridge between
network-like (Davis and McAdam, 2000). individual and collective action: actors adopt
Second, both movements and organizations innovations, in part because those they are
have been transformed by globalization and connected to have done so, and potential
the advent of information and communication activists 'adopt' movement membership
technologies (ICTs), largely via network ties. The nature of rele-
vant ties is quite variable. Networks created
374
by shared directors provide an infrastructure behind a cadre of top executives with a par-
for the spread of governance practices among ticular kind of orientation. Edelman (1992)
corporations (e.g., Davis and Greve, 1997), described a similar dynamic in the context of
organizational structures such as the multi- employment relations: in the wake of the
divisional form (e.g., Palmer, Jennings, and Civil Rights Acts of the 1960s, employers
Zhou, 1993), and even choices about which experimented with alternative structures to
stock market to list on (Rao, Davis, and signify compliance with government require-
Ward, 2000). Organizations are also linked ments for equal employment opportunity.
by professional networks, such as those cre- Those that proved sufficient to ward off legal
ated by human resource managers and their challenge subsequently spread widely
professional associations (Dobbin, Sutton, through mimicry. Again, a concomitant of
Meyer, and Scott, 1993). At a more informal the spread of equal employment offices was
level, organizations can be connected by net- the spread of equal employment officers -
works of social activists; for instance, professionals with a particular background
gay/lesbian/bisexual/transgender (GLB T) and training, sensitized to particular issues.
employee groups shared best practices and An implication of this discussion is that
tactics among their peers to advocate for networks are both a cause and a consequence
domestic partner health benefits at employers of contagion. Actors draw on existing net-
across America (Scully and Creed, 2005). works (through shared directors, common
Geographic proximity can create connections membership in professional or industry asso-
among organizations that are consequential ciations, geographic proximity, and so on) to
for corporate practice (e.g., Marquis, 2003). make judgments about the appropriateness of
And organizations can also be connected innovations, such as poison pills or GLBT
through more abstract ties, such as social partner benefits. But episodes of contagion
proximity (e.g., operating in the same can also end up creating networks of firms
industry). Any of these connections can pro- that regard each other as models or peers.
vide a substrate for contagion or cohesion for American antitrust law created opportunities
the purposes of collective action. for CEOs from a finance background; these
Institutional theorists have drawn on CEOs, in turn, promoted corporate strategies
contagion imagery to unpack episodes of of diversification. They acted, in effect, as
widespread organizational change. The agents of a particular worldview, implanted
prevalence of a practice or structure is typi- within organizations and oriented to the
cally taken as evidence for its legitimacy, and actions of their peers. Similarly, employment
thus a prod to further adoption. For example, laws created opportunities for human
Tolbert and Zucker examined the spread of resource managers. Once in place, these
municipal reform among American cities, managers became oriented toward peer
finding that later adopters evidently drew on groups ('benchmarks'), and act as advocates
the prevalence of the reform as a sign of its for new innovations in human resource man-
appropriateness. Fligstein (1990) described agement, such as maternity leave (Kelly and
how field-level changes in the rules of the Dobbin, 1999). It is as if, by hiring these pro-
game - antitrust regulations limiting certain fessionals, the organization had grown a new
types of horizontal and vertical mergers - sense organ that attuned it to particular types
prompted firms to experiment with alterna- of practice and structure.
tive strategies to achieve growth and stability, Social movements can have a parallel
enacted by CEOs with particular types of effect on corporate change. Zald, Morrill, and
functional background and training. Those Rao (2005) describe the various processes by
strategies that proved successful then spread which social movements can penetrate
widely through mimicry, first within their organizations. At the simplest level,
industry and later more broadly, leaving employees bring with them their social
 375
identities and priorities. Feminist executives collective fight against HIV/AIDS. The
may be advocates for women-friendly corpo- several hundred largest US corporations can
rate policies. Minority executives may shape be considered an organizational field, a group
hiring and promotion policies in ways of mutually-regarding actors that look to each
consistent with an agenda of equality. Scully other for evidence of appropriate action
and Creed (2005) document how networks of (Fligstein, 1990). They are connected more
gay and lesbian activists formed within and or less densely at multiple levels by director
across companies to advocate for gay- networks, professional networks, and activist
friendly corporate policies. Informal net- networks, among others. The extent that this
works allowed activists in different well-connected group adopts or fails to adopt
companies to compare notes on which tactics a practice is an apt indicator of its institution-
worked and which did not. Moreover, the alization. In this case, the practice in question
groups could use each other's experiences to is membership in a UN-sanctioned business
document the prevalence of particular organization aimed at halting the spread of
practices and thus advocate for them more HIV/AIDS. Prevalence of adoption of this
effectively. One of the most visible of these innovation stalled at about 5 percent, which
was the relatively widespread adoption of we take as a sign of failed institutionaliza-
domestic partner benefits among large US tion. We first describe the context of the
corporations (Briscoe and Safford, 2007). AIDS epidemic and then consider the factors
Notably, these networks among employee that militate for or against joining the fight.
groups were not neutral conduits for the
spread of information or norms among
organizations they were channels for
activism. And the prevalence of a practice
(such as domestic partner benefits) was not CONTEXT: CALL AND
simply a benchmark, but a tool for advocacy. (NON) RESPONSE
Activists could influence how information
about best practices was brought into the
organization and used to guide the In remarks made on the eve of World AIDS
organization's own policies (Briscoe and Day in 2004, UNAIDS Executive Director
Safford, 2007). Peter Piot characterized his news about
Thus, both institutional theory and social HIV/AIDS as both 'sobering' and 'ominous.'
movement theory draw on common images He explained that the number of people
and mechanisms for organizational change living with HIV globally had grown to nearly
(Davis et al., 2005). In this case, 40 million and that in 2004 alone, approxi-
organizations are connected at multiple levels mately 5 million people became infected with
by networks among directors that serve on HIV and 3 million people died from AIDS-
each others' boards, executives bound by related causes. He indicated that the virus is
common training, professionals connected perilously close to becoming a 'raging
through professional associations, and epidemic' in China, India and Russia and that
activists organized via social movements that its spread in these places bears alarming
cross organizational boundaries. Any of these similarities to the situation in Africa two
can potentially provide a channel for decades ago, where it took five years for HIV
recruitment to a social movement. But the prevalence rates to move from 0.5 percent to
process is not simply one of the dis- 1 percent but only seven more years for such
semination of neutral information: rates to jump from 1 percent to 20 percent. A
recruitment requires active engagement and 2004 report issued by the World Economic
advocacy. Forum (WEF) echoed Piot's warning while
We examine the implications of this adding warnings about the economic
discussion of networks and change in the consequences of the epidemic: 'The AIDS
context of a failed institutionalization project: epidemic is first and foremost a
the effort to recruit corporations to a
376
human tragedy, but its magnitude also America's business leaders to use their finan-
derives profound social and structural cial strength and influence to take increased
changes, leading to predictions of equally and decisive global action to address
profound economic damage ... If effective HIV/AIDS:
action is not taken to combat the spread of
this epidemic, HIV/AIDS could result in I come to you, the leaders of American business,
[total] economic collapse' (World Economic representatives of one of the greatest forces in
Forum, 2004: 3). Eberstadt (2002) suggested the world, but one which has yet to be fully
utilized in the campaign against AIDS/HIV. It is
the following projections: a mild HIV epi- high time we tapped your strengths to the full ...
demic would more than halve Russia and Business is used to acting decisively and
China's per person output growth between quickly. The same cannot be said of the
2000 and 2025, while an intermediate epi- community of sovereign states. We need your
demic would mean the predicted level of help - right now ... Together, I believe we can
output in Russia would be lower in 2025 than succeed - if only because the costs of failure are
2000, and in China barely higher. In India, a simply too appalling to contemplate. (Annan,
2001)
mild epidemic would reduce output growth
by about two-fifths and an intermediate out-
Annan asserted that multinational corpora-
break would reduce growth to zero.
tions are indispensable in the global fight
Despite the alarming costs that have
against HIV/AIDS. They have the resources
already been incurred in sub-Saharan Africa
and skills that many failed states lack. As
and those that could likely occur in three of
such, Annan's remarks were designed to
the world's largest countries, the American
remind the leaders of the American corporate
corporate sector's reaction has been modest,
sector that if they can flex their financial
to put it mildly. A 2004 WEF Executive
might around the world, they need to be pre-
Opinion Survey found that 50 percent of
pared to similarly take decisive action in
American business executives believe that
times of crises. He framed his call to action
HIV/AIDS will have some impact on their
in business-friendly terms, emphasizing the
business, yet only 7 percent of the executives
benefits to reputation, customer loyalty, and
surveyed indicated that their company has a
shareholder value. Moreover, he endorsed the
written HIV/AIDS-specific policy and a mere
Global Business Coalition on HIV/AIDS
6 percent expressed confidence that their
(GBC) as the preferred vehicle for collective
company's current response to HIV/AIDS
action. Joining the GBC took only $25,000
was sufficient (Taylor, DeYoung, and
('Less than a benefit table at the opera,' as
Boldrini, 2004). Executives acknowledge that
GBC's CEO Richard Holbrooke quipped),
HIV/AIDS is a significant global problem
and it provided tangible benefits and a visible
while simultaneously judging it not so
way to signal commitment to the fight against
pressing as to require immediate steps.
HIV/AIDS.
Analysts at the WEF's Global Health
A number of international business
Initiative suggest that this inactivity of the
coalitions have been formed for the purpose
American corporate sector reflects the fact
of creating a forum for collective action on
that firms lack appropriate information or
HIV/AIDS. The first was created in Thailand
incentives, and that they are unable to assess
in 1993. The Thailand Business Council on
the risks they face as well as the potential
AIDS (TBCA) was founded by two
costs and benefits from successful action
expatriate businessmen who noted that many
(World Economic Forum, 2004).
companies in and around Bangkok were quite
In an effort to prod American business
concerned about HIV/AIDS but that none
executives into action, UN Secretary-General
knew where to go for assistance in the
Kofi Annan appeared before the US Chamber
development and implementation of an
of Commerce in January 2001 and implored
HIV/AIDS policy. The founders put up their
own seed money to start the TBCA, with a
mission of channeling the creativity
 377
and dynamism of business executives to for- former US Ambassador to the United
mulate solutions to resource, technical and Nations, to take over as the President and
strategic planning problems in mounting CEO of the GBC and turn it into the primary
effective HIV/AIDS prevention and living vehicle for mobilizing the global business
with AIDS programs (Thailand Business community. At that time, the Global Business
Council on AIDS, 2000). The TBCA was Council was renamed the Global Business
established as a membership organization Coalition on HIV/AIDS to reflect the new
where each member firm pays a membership effort to become a more inclusive
fee commensurate with the size of that firm organization with a more extensive corporate
and their level of commitment to TBCA and membership base. Under the leadership of
AIDS prevention in general. Within two Holbrooke, the GBC's membership grew
years, the TBCA membership had grown to from 17 in 2002 to more than 170 companies
85 companies, among them many large in 2005.
multinational firms such as 3M, American The GBC describes itself as the preemi-
International Group, Bristol Myers Squibb, nent organization leading the business fight
Colgate Palmolive, General Motors, Kodak against HIV/AIDS and defines its role as
and Shell. Membership now stands at working with global leaders in government,
approximately 120 firms. business and civil society, to promote greater
Following the successful model of the partnerships in the global response to
TBCA, the Global Business Council on HIV HIV/AIDS and identify new, innovative
& AIDS (GBC) was established in 1997 as a opportunities for the business sector to join
small peer-to-peer international advocacy the growing global movement against
group with the purpose of promoting an HIV/AIDS (Global Business Coalition on
enlarged and enhanced business response to HIV/AIDS, 2004). The Coalition charges the
HIV/AIDS. The four founding members - same annual membership fee of $25,000 to
Glaxo Wellcome (UK), Industrias Villares each member and the only expectation is that
(Brazil), MTV International (US) and Tata members will participate in ways that best
Power (India) - formed the Council based on suit them. The primary involvement of most
a shared belief that the corporate sector was member companies is through industryrelated
not doing a fraction of what it could do to or issue-related project working groups (e.g.,
address HIV/AIDS despite the fact that it is a the Biotechnology Working Group and the
critical issue for every company precisely AIDS Orphans and Vulnerable Children
because it has no boundaries: it penetrates Working Group); provision of advice on
borders and threatens the world's emerging relevant international issues of importance to
economies (Global Business Coalition on business; and sharing of best practices,
HIV/AIDS, 2004). Levi-Strauss, Bristol particularly regarding companywide
Myers Squibb and Merck had all joined the HIV/AIDS policies. In addition, those
Council by 2000, but for the first four years member companies specifically interested in
of its existence, the number of members developing an internal corporate HIV/AIDS
remained low and the Council remained more policy utilize the GBC's exclusive Business
of a peer group than a full-fledged AIDS MethodologyTM (BAM). BAM is a
organization. The importance of the Council business-management model created for the
changed significantly during a 2001 United design and implementation of a customized
Nations Session on HIV/AIDS. During the company response to HIV/AIDS. Through an
session, the UN Security Council called on intensive process with GBC experts, BAM
the private sector to increase its engagement results in a strategic, goal-oriented action
of the epidemic. As part of that mandate, the plan, tailormade to an individual company's
Security Council asked Richard Holbrooke, characteristics and core competencies. The
variety of activities and services
378
notwithstanding, it is important to note that (or avoiding) movements and on social
some GBC members are involved only to the infrastructure, such as networks among
extent that they pay the annual membership potential joiners.
fee, thereby adding their company's reputa- Institutionalists, as we have seen, view
tion to the Coalition's work (Global Business joining a movement as akin to the diffusion
Coalition on HIV/AIDS, 2004). of an innovation. Like social movement
researchers, they see networks as a potential
substrate for contagion, as organizations
facing uncertainty follow the example set by
their alters (DiMaggio and Powell, 1991).
HYPOTHESES Institutionalists also point to a central place
for identity- that answering the question:
'What should I do in this situation?' often fol-
We analyze the factors distinguishing those lows from determining 'Who am I, and what
American firms that joined the Global does someone like me do?' (DiMaggio and
Business Coalition on HIV/AIDS from those Powell, 1991). In the hypotheses that follow,
that did not to understand the institutional we draw on each of these factors - incentives,
process behind corporate (non)response to networks, and identity -to draw out implica-
the pandemic. We are particularly interested tions of social movements and
in understanding the social mechanisms - the institutionalism for which firms are likely to
'cogs and wheels' that underlie corporate join the GBC.
responses to the AIDS epidemic (Hedstrom Organizations that are larger and have
and Swedberg, 1998). In doing so, we draw better performance face greater incentives to
on institutional and social movement theories join the fight against HIV/AIDS. First, large
broadly for a suite of possible mechanisms. organizations are more visible to the public
Organizational institutionalism and social and therefore more likely to be the target of
movement theory provide complementary demands or appeals (like that of Kofi Annan
ways of analyzing why firms would join the before the US Chamber of Commerce) that
GBC. For social movement researchers, emphasize their responsibility to take action.
movements and social movement organiza- Prior research suggests that large
tions such as the GBC are seen as special organizations are more likely to be the target
cases of collective action. Any form of col- of social movement efforts than small
lective action faces free rider problems - the organizations (Davis et al., 2005). Moreover,
benefits of successful collective action are large firms find it relatively less costly to
shared widely, while the costs are borne by allocate resources to GBC membership fees
the individuals that join in the effort. These and to develop and implement HIV/AIDS
tendencies toward inaction are even more policies. Second, theory on social movements
pronounced among organizations than among suggest that slack resources enable more
individuals: organizations are short-term prospective collective action - in short, the
focused, prone to inertia, and respond to rich can take the offense, while the poor must
problems that have already occurred rather typically respond defensively (Tilly, 1978:
than to 'predictable surprises' that may ch. 3). In this context, superior organizational
happen in the future (Cyert and March, 1963; performance can create potential slack
Bazerman and Watkins, 2004). The prognosis resources for experimentation and innovation
for corporate executives taking action on that are unavailable to those with poor
problems whose consequences will be felt on performance. Thus:
someone else's watch - such as the AIDS Hypothesis 1: The larger a firm and the
pandemic- is grim. Thus, movement better its performance, the more likely it is to
researchers focus on a combination of indi- join the GBC.
vidual and selective incentives for joining Firms with more global operations also
have greater incentives to engage against
 379
the HIV/AIDS epidemic. Domestic firms GBC appears congruent with resource
face rather limited exposure to the epidemic, dependence theory's prediction that firms will
as the prevalence of HIV in the US is rela- take action to safeguard their key exchange
tively low by world standards. Companies are relationships (Pfeffer & Salancik, 1978). In
expected to have increased exposure to addition, institutionalists point to the
HIV/AIDS, to the extent that they sell their importance of responding to external evalua-
products and services on a global scale. As tors, such as activists and governments in
such, firms that have high levels of foreign stricken countries, with symbolic displays of
sales are predicted to possess a more acute good faith (Meyer and Rowan, 1977).
understanding of the damage the disease has Although such displays may be de-coupled
wrought on both their employee and from the organization's actual operations,
customer bases, and thus greater incentives to they serve an important institutional function
join in efforts to address it. To that end, in establishing the firms' social fitness - and
levels of foreign sales should serve as a potentially warding off more intrusive
predictor for whether firms join the GBC. interventions.
Hypothesis 2: The greater a firm's sales Hypothesis 3: Pharmaceutical firms will
outside the US, the more likely it is to join the be more likely to join the GBC than firms in
GBC. other industries.
Certain key industries, such as the Not all such organizational changes are
pharmaceutical industry, have critical purely symbolic, of course. Organizations
business interests that draw them into the may establish offices or policies as displays
global effort to address HIV/AIDS. American of good faith, yet they may subsequently find
pharmaceutical companies are among the that the symbol becomes a reality. A firm's
leading producers of drugs that reduce the internal policies can create employee
amount of virus in a HIV-positive patient's constituencies that make the firm more
blood and help to delay the progress of attentive and responsive to certain social
disease. Yet American pharmaceutical circumstances. The research by Sutton et al.
companies have come under fire for what (1994) and Sutton and Dobbin (1996) shows
AIDS activists and AIDS sufferers that the establishment of personnel, benefits
(particularly the millions of African AIDS and Equal Employment Opportunity offices
victims living in dire poverty) decry as created constituencies within firms that
impossibly expensive drugs. The drug actively promoted practices advocated by
companies contend that it is simply not their professional networks. A specific
feasible for them to reduce drug prices example is offered by Kelly and Dobbin
because doing so would severely undermine (1999), who found that firms with benefits
the research and development efforts being offices were more likely subsequently to
undertaken to produce new and potentially create formal maternity leave policies. That
more effective drugs. Despite international is, the establishment of human resource
patent laws that prohibit such action, African offices - whatever the initial intention -
countries have sought less expensive generic connected firms into professional networks
drugs manufactured primarily in India. As a that conditioned their responses to subse-
result of the continued battle that quent innovations.
pharmaceutical firms have found themselves In a similar vein, HR policies related to
in, it is expected that they would make every domestic partner benefits may both result
effort to have a seat at the table of a powerful from and strengthen supportive constituen-
advocacy group such as the GBC. It is cies for taking corporate action against
conceivable to imagine that, without the pres- HIV/AIDS within the organization. Briscoe
ence of pharmaceutical firms, the GBC might and Safford (2007) document that domestic
support policies such as the global regulation partner benefits were a major target of
of drug prices. Therefore, membership in the
380
activism by GLBT employee groups in DATA AND METHOD
corporate America during the second half of
the 1990s and the first half of the 2000s. We chose as our sampling frame the 2003
Thus, 93 percent of firms with formal GLBT Fortune 500, that is, the largest 500 firms in
employee groups adopted domestic partner the US by revenues. We excluded commer-
benefits during this time, compared to 41 cial banks and firms that were not publicly
percent of firms without such groups. We traded because certain measures (revenues,
anticipate that firms in the vanguard of HR market capitalization, board membership) are
policies recognizing same-sex partnerships either not comparable or not available for
are likely to attract employees who are more these firms. Our final sample consisted of
attentive to the global HIV/AIDS epidemic 413 firms.
and more likely to press for a proactive Our dependent variable was membership
corporate response. in the Global Business Coalition by 2004.
Hypothesis 4: Firms with more Although there are a number of ways one
progressive HR policies for gay employees might operationalize corporate responses to
will be more likely to join the GBC. AIDS, membership in the GBC has several
Viewing a firm's GBC membership as advantages as an indicator: it is unambigu-
akin to the adoption of a particular corporate ous, non-trivial, and has the sanction of the
practice suggests an analogy with other forms United Nations. As of mid-2004, the GBC
of institutional diffusion. Davis and Greve had 150 members, of which 76 were US-
(1997), for instance, found that when a com- based firms and 23 were included in the
pany's directors served on the boards of other Fortune 500.
firms that had already adopted a poison pill, Our independent measures came from sev-
these directors were able to evaluate and even eral sources. Our measure of size (number of
promote adoption. Thus, as more of one's employees) and performance (the market-to-
contacts adopt, adoption may come to be book ratio, that is, [market capitalization at
seen as normatively appropriate. Such conta- fiscal year end]/[book value of shareholders'
gion processes are also characteristic of equity]) came from Compact Disclosure.
social activism: McAdam (1986) found that Foreign sales, calculated as the ratio of non-
college students were more likely to partici- US sales to total sales for 2002 (or for the
pate in high-risk activism- specifically, most recent available year), came from the
joining the 1964 Freedom Summer project - geographic segment file of Compustat. Firms
when they had friends that were also were classified as pharmaceutical companies
participating. McAdam found that a strong if their primary three-digit SIC code was 283.
ideological identification with the civil rights For progressive HR policies, we drew on the
movement could encourage action, but that Human Rights Campaign's WorkNet data-
the major factor distinguishing those that base (2004). Specifically, we used an indica-
joined Freedom Summer and those that sat it tor variable equaling one if the firm made
out was having a friend that had joined. domestic partner benefits available to gay
Similarly, we expect that firms which share a and lesbian employees and zero otherwise,
director with an existing member of the GBC according to HRC's WorkNet. (Domestic
will be more prone to this particular form of partner benefits are health insurance and
corporate activism: directors can spread the other benefits equivalent to those available to
'innovation' of GBC membership from board married heterosexual employees.)
to board. We constructed our board interlock
Hypothesis 5: Firms will be more likely to measure using board data for all firms traded
join the GBC to the extent that they share on Nasdaq and the New York Stock
directors with other firms that are members Exchange in 2000. This sample included
of the GBC. 47,349 directors serving on the boards of
 381
5,627 corporate boards. Board membership and some firms share directors with up to
data were carefully cleaned to identify over- seven other members (e.g., Xerox). We also
laps in which the same individual served on see that domestic partner benefits are more
two or more boards. All firms in this prevalent among large firms than one might
expanded group were coded for membership have anticipated. Correlations among the
in the GBC. Because several hundred non-US independent variables are generally modest,
firms are traded on these two markets, we with the notable exception of the correlation
included their data when calculating ties to between domestic partner benefits and ties to
GBC members. Our measure is a count of the GBC members, which is correlated at 0.25.
number of other NYSE- or Nasdaq-traded Table 14.2 shows the results of the logistic
firms with which a focal firm shared a direc- regression analysis. The results offer little
tor that were members of the GBC. Note that support for Hypothesis 1, as there was no
while only 23 Fortune 500 firms were mem- significant relation between size (measured
bers of the GBC, more than one-third of our as employees or, alternatively, as annual
Fortune 500 sample shared at least one sales) or performance (market/book) and
director with a GBC member (either US or firms' propensity to join the GBC. In
foreign). contrast, we find a significant positive
We analyzed the data using logistic relation between foreign sales and GBC
regression, with the dependent variable being membership, consistent with Hypothesis 2.
membership in the GBC, as of 2004. Ideally, On average, GBC member firms derived 37
we would include a time-series model of percent of their sales from outside the US,
membership, but because it is still a relatively compared with an average of less than 20
rare event, we would lack sufficient statistical percent for non-members. Pharmaceutical
power to draw any inferences. companies were far more likely to join the
GBC than other firms, consistent with
Hypothesis 3: the coefficient implies that
pharmaceutical companies are 6.7 times as
RESULTS likely to be members of the GBC as firms in
other industries. As predicted by Hypothesis
Descriptive statistics are reported in Table 4, firms with domestic partner benefits were
14.1. The means show that membership in almost five times as likely to be members of
the GBC is somewhat rare, in spite of the fact the GBC as firms without such policies.
that the GBC is perhaps the world's most Interestingly, similar effects were also
influential business coalition addressing the observed when we used a more diffuse
AIDS epidemic. Yet board-level ties to GBC measure of 'diversity-friendliness' in HR
members are relatively widespread: more policies, using the KLD Database's Diversity
than one-third of the firms in our sample Strengths measure instead of HRC's
share a director with a GBC member, WorkNet data on companies with domestic
382
US-based mid-level manager's championing
of the program.
Second, we found a strong and consistent
relation between being a member of the GBC
and board-level ties to other GBC members.
Figure 14.1 shows this graphically (including
ties to non-US firms traded on Nasdaq and
NYSE that are GBC members). Our finding
parallels McAdam's (1986) study of Freedom
Summer: while moral commitments may
shape responsiveness to calls for activism,
social connections to other activists may have
a more direct effect. We also note a
partner benefits. And lastly, we found that somewhat surprising connection: every
ties to other firms that were GBC members Fortune 500 firm with an African-American
had a strong effect. Specifically, each board CEO (American Express, Fannie Mae,
interlock with a GBC member increased a Merrill Lynch, and Time Warner) was a
firm's likelihood of being a member by 64 member of the GBC in 2004, as were almost
percent. all the firms whose board these CEOs served
Two of our findings stood out as on. (Fannie Mae's Franklin Raines served on
somewhat surprising from the perspective of the boards of Pepsico, Pfizer, and Time
the traditional literature on corporate social Warner; Time Warner's Richard Parsons
responsibility (e.g., Margolis and Walsh, served on the boards of Citigroup and Estee
2001). First, firms with progressive HR Lauder; in contrast, GM, whose board Merill
policies on diversity, both generally and Lynch's Stanley O'Neal served on, was not a
specific to gay and lesbian employees, were member, nor was IBM, where AmEx's
significantly more likely to be involved in the Kenneth Chenault served). Moreover, GM
GBC. There are at least two possible subsequently joined the GBC, while Fannie
interpretations of this finding: such firms Mae left the GBC after the departure of its
may have a culture more attuned to issues of African-American CEO. This intriguing
social responsibility, and thus find activism observation suggests a source of social
around the AIDS epidemic to be a natural responsiveness unexpected in the traditional
response, or they may have internal literature.
constituencies that argue in favor of external
responsiveness. Edelman (1992) and Kelly
and Dobbin (1999) find that firms creating
HR offices in response to the Civil Rights
Acts of the mid-1960s - sometimes as a DISCUSSION
cynical effort to ward off potential litigation -
end up building internal constituencies for We framed our discussion of American cor-
progressive HR policies, and later find porations joining the global fight against
themselves being in the forefront of adopting HIV/AIDS as an instance of failed institu-
policies such as paid maternity leave. By the tionalization. Speaking to an audience of
same token, it is possible that firms with pro- America's top business leaders, UNAIDS
gressive diversity policies developed internal Executive Director Peter Piot (2004)
constituencies attuned to the AIDS epidemic. declared, '[You] have a special role. [You]
Indeed, an interview we conducted with the are the only [ones] whose leadership can
officer in charge of one multinational firm's move the world - not just with funding - but
award-winning AIDS program in Africa with the influence it takes to keep AIDS high
revealed that the program originated in one on the international agenda.' He then posed
 383

to them the question that forms the founda- the fight against HIV/AIDS. Moreover,
tion of this research effort, 'We are clearly at membership was cheap, and thus set a rela-
a crossroads in the global fight, which path tively low threshold for 'corporate activism.'
will [you] take?' (Piot, 2004: 7-8). Piot's Yet the results suggest that incentives were
comments underscore the critical question not the deciding factor: bigger firms, and
that US business leaders find themselves those with better performance, were no more
facing: is it worth the investment of their prone to join the GBC than small firms with
companies to engage in the global fight poor performance. Evidently the cost of
against HIV/AIDS? (Nattrass, Neilson, Bery, membership was not a significant hurdle for
Mistry, and Sievers, 2004). In the event, the firms of this size. Pharmaceutical firms were
large majority answered: No. far more likely than others to join, but this
Our results indicate what factors distin- result is potentially ambiguous.
guished the handful of firms that did join the Pharmaceutical firms have economic incen-
GBC from those that did not. Membership in tives to claim a place at the table when it
the Global Business Coalition on HIV/AIDS comes to AIDS policies, and they also have
serves as a valuable measure of action, as the reasons to signal their good faith to outside
GBC has emerged over the past few years as evaluators by joining in efforts to combat the
the world's most influential business coalition disease (cf. Meyer and Rowan, 1977). But
addressing the epidemic, offering member they have less cynical reasons to join as well,
corporations a wide range of ways to become based on their identity as health providers.
involved and connecting them to many, if not With only archival data, it is impossible for
all, of the leading corporate and public sector us to disentangle these alternative
actors active in interpretations.
384
Similarly, firms with greater foreign sales organizations with partner benefits more
were more prone to join the GBC than receptive to the call to join. By virtue of
domestically-oriented companies. Again, this taking a progressive step regarding gay-
may be because such firms had greater selec- friendly HR policies, a firm is likely to attract
tive incentives to join (because membership employees who are generally more attentive
gave them access to tools for constructing to certain social causes, specifically AIDS-
their own policies for overseas facilities), or related issues, who might then act as internal
because such firms were more aware from advocates for the GBC.
first-hand experience of the impact of the In contrast, we find that network ties
epidemic. through boards of directors were a relatively
More intriguing are our results on network potent source of recruitment - with some
factors associated with membership. qualifications. This parallels the board-based
Research on social movements and on orga- contagion process of other practices and
nizational institutionalism both highlight the structures that came to be widespread (e.g.,
central place of social networks in processes the poison pill and the creation of investor
of change. Organizations look to their peers relations offices, both of which came to be
and competitors to determine what is appro- standard practice among corporations). But in
priate in a given context, and to answer the this case, adoption stalled at only about 5
question 'What does someone like me do in percent, as GBC membership failed to
this situation?' (DiMaggio and Powell, 1991). become institutionalized. An unexpected
Social movement participants can act as finding may help explain this. We discovered
evangelists, recruiting their friends and that every Fortune 500 firm with an African-
colleagues to participation. In this case, Kofi American CEO (of which there were four at
Annan and others were seeking to build a the time of our analysis, of whom only one
social movement among corporations, to remains) was a member of the GBC, and
change the definition of what a corporation's almost every board that these CEOs served
obligations are with respect to the global on was a member of the GBC. It seems clear
fight against the AIDS epidemic. that the actions of some firms - such as
We examined two types of networks that Fannie Mae, whose business consists prima-
might serve as a basis for legitimation and rily in securitizing American home mort-
recruitment to the GBC. First, organizations gages - did not result from a direct pecuniary
that have adopted domestic partner benefits interest in stemming the AIDS pandemic,
often share a connection through employee particularly given that they do essentially no
activist networks. About 45 percent of the business in the hardest-hit nations. Rather,
large US corporations in our sample offered their responsiveness to the call to action evi-
such benefits, and prior work suggests that dently resulted from other motivations. This
such firms are connected by informal is not trivial: four black CEOs collectively
interorganizational networks of employees; served on the boards of over one-third of the
indeed, such networks were in part the basis GBC's American members, and almost half
of advocacy for these benefits (Briscoe and the GBC's US members shared directors with
Safford, 2007; Scully and Creed, 2005). But the firms these four ran.
while firms with such benefits were more This finding indicates an alternative fram-
likely to join the GBC than those without, we ing of the question that we began with.
saw little evidence of contagion, as only a Rather than asking: 'Why did US corpora-
relatively tiny proportion of firms with tions join the global fight against AIDS?', we
domestic partner benefits joined the GBC. might instead ask 'Why did most US corpo-
This suggests that the inter-organizational rations fail to join the fight?' The early
network facilitating human resource policies adopters were largely distinguished by a
was not activated for recruitment to the GBC. small number of factors: either they had
Rather, the findings indicate that firm-level
features made
 385
direct business interests in the fight against equally interesting to examine whether there
AIDS (pharmaceutical companies, multina- is a substantive difference in the HIV/AIDS
tionals doing substantial business in Africa) programs of those Fortune 500 firms who
or they had board ties to the four large firms joined the GBC early, as compared to those
run by African-American CEOs at the time who joined later. The primary impediment in
(American Express, Fannie Mae, Merrill conducting such an analysis at this point is
Lynch, Time Warner). Although speculative, that there is little uniformity in the way that
this suggests that recruitment based on net- companies report their HIV/AIDS programs.
works (rather than incentives) spread only as Future research would do well to explore this
far as the reach of these four firms. Had the in more detail.
directors of these first-degree contacts acted
as evangelists, recruiting the other firms
whose boards they served on in turn, it is CONCLUSION
possible that GBC membership would have
reached a critical mass of prevalence suffi- We argued at the outset that organizational
cient to legitimate it as part of the standard institutionalism and social movement theory
package of what US corporations do. In offered complementary insights into explain-
short, it would have become institutionalized, ing failed institutionalization. Organizational
an appropriate response to corporate insititutionalists seek to understand how
America's collective corporate social respon- practices and structures come to be accepted
sibility toward world health. Instead, we and even taken for granted: why do all large
found that most corporations abstained, either American corporations have someone with a
due to inertia, a lack of incentives, or the title 'Chief Executive Officer;' almost all have
(accurate) perception that most of the damage investor relations offices and Chief Financial
would be felt on someone else's watch. Officers; and a large majority have poison
We recognize that there are limitations in pills and golden parachutes? This question
our approach that prevented us from captur- can be extended to issues of social
ing a company's full involvement in the fight responsibility: why do so many companies
against HIV/AIDS. For data analysis conven- headquartered in Minneapolis support local
ience, we used a gross dependent variable, non-profit arts organizations, while those in
namely 'GBC member' or 'not a GBC Columbus, Ohio support child welfare, and
member' to assess Fortune 500 firms' those in Orange County, California provide
involvement. Ideally, we would like to know little support to any non-profits (Marquis et
more about the specific details of each al., 2007)? The answer turns on field-level
Fortune 500 firms' HIV/AIDS programs and processes of definition and re-definition,
policies. Cursory analysis of the GBC mem- where the prevalence of a practice serves as
bers' respective HIV/AIDS programs seems an indicator of legitimacy and a spur to
to indicate quite a variance in regards to how further adoption. Successful
different companies are engaged in fighting institutionalization projects are those in
the global epidemic. One potential way to which a practice becomes sufficiently
analyze the differences in GBC members' widespread that it becomes acceptable and
HIV/AIDS programs would be to conduct even obvious. Social movement theory
research along the lines of Westphal, Gulati focuses on similar dynamics to explain the
and Shortell's (1997) analysis of firms' adop- prevalence of activism and social change. In
tion of TQM practices. Their work demon- the corporate sector, for instance, activists
strated that early and later adopters of TQM sought to make domestic partner benefits for
differed in how they employed TQM prac- GLBT employees acceptable and even
tices within their companies. It might be obligatory.
386
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 15
Institutions and Corporate
Governance
Peer C. Fiss

From its inception, the institutional field of research only in the late 1970s. Since
tradition of studying organizations has been then, traditional scholarship on corporate
informed by themes of control and governance has been largely dominated by a
coordination-themes that fall within the legal-economic view of the firm as a nexus of
domain of corporate governance, broadly contracts (e.g. Jensen and Meckling 1976;
defined as being concerned with the implicit Fama and Jensen 1983; Hart 1995). This
and explicit relationships between the approach has placed the principal-agency
corporation and its constituents, as well as problems at the center of most researchers'
the relationships between these constituent concerns, and the result has been a rather
groups (Bradley et al. 1999). With its insights narrow conception of corporate governance
into the nature of authority and control as concerning primarily the relationship
structures, institutional theory is uniquely between shareholders and managers (e.g.
positioned to provide important contributions Rubach and Sebora 1998; Shleifer and
to scholarship on corporate governance. Vishny, 1997:737). The main thrust of this
However, the reverse is also true: because of body of research has accordingly been to
its concerns with the control of the investigate the optimal contracts between
corporation, corporate governance presents a shareholders and managers (Fama and Jensen
particularly attractive field for institutional 1983; Eisenhardt 1989), and has resulted in a
theory and an opportunity to clarify and large body of research that addresses a
refine it. variety of incentive mechanisms to control
While questions about corporate control the behavior of managers, focusing mostly on
go back to the emergence of the publicly compensation, the composition of the board
owned corporations as a form of organization of directors, and the market for corporate
(Berle and Means, 1932), the literature on control as the three primary control issues
corporate governance presents a somewhat (see e.g. Blair 1995; Shleifer and Vishny
more recent phenomenon, establishing itself 1997; Walsh and Seward 1990; Zingales
as a distinct 1998 for reviews of this literature).
390
Although the contractarian view clearly to the study of corporate governance, and to
emerged as the dominant paradigm of corpo- examine a number of fruitful areas for further
rate governance research since the 1980s, inquiry, such as the study of contrasting
some recent research has begun to move national governance systems, corporate
away from this focus on the effectiveness of governance in emerging economies, and the
individual mechanisms and has started to effect of globalization.
take a more holistic view of the corporate
governance system as a configuration of
interdependent elements (e.g. Beatty and
Zajac 1994, Davis and Useem 2002). Such a
view also emphasizes that corporate gover-
nance systems themselves are embedded in AN INSTITUTIONAL APPROACH TO
larger institutional and legal frameworks, and CORPORATE GOVERNANCE
that effective practices are highly contingent
on the institutional environment in which
corporations and their stakeholders are em- To accomplish the task of outlining an
bedded (e.g. Davis and Useem 2002). Emer- institutional approach to corporate
ging from the foundational work of Coase governance, a few clarifications are in order.
(1937), the new institutional economics of The first of these concerns the role of power
North (1990; 2005) and Williamson (1981, in institutional accounts. Earlier forms of
1988) have offered frameworks regarding the institutional theory have been criticized for
role of institutions in corporate governance their relative inattention to themes of power
that are rooted in a boundedly rational actor and domination (e.g. Perrow 1985; Clegg
model of the corporation. For example, North 1989). Since power relations lie at the heart
(1990) argues that a national system of of corporate governance, such criticism is of
corporate governance may be seen as an importance and needs to be addressed. In
institutional matrix that provides both the response to it, I will follow prior work that
roles to the players and the goals to be pur- has viewed institutions as inherently about
sued by the corporation. Similarly, William- the role of power (Stinchcombe, 1968: 107),
son (2000) acknowledges the embeddedness and institutionalization as a process that is
of corporate governance arrangements in innately political, reflecting the relative
larger, society-wide systems of institutions power and interests of coalitions of actors
Given several comprehensive and insight- (DiMaggio, 1988). Such an approach places
ful reviews of the contractarian approach to issues of power and control squarely at the
corporate governance (see e.g. Eggertsson, center of its attention, considering
1990; Furubotn and Richter, 1997; Menard governance systems as reflecting underlying
and Shirley, 2005, but also Fligstein and cultural narratives or moral orders that define
Choo, 2005; Fligstein 2001; Davis 2005), in how social relations should be constructed
this chapter I will focus relatively more on and whose interests have priority (Wuthnow
the contributions of sociological institution- 1987). These moral orders thus form the
nalism to the study of corporate governance. foundation of governance systems and are
In doing so, I will examine corporate gover- expressed in the ways in which power and
nance using a socially informed view of influence work. The view presented here
actors and corporations as deeply enmeshed furthermore necessarily implies that we need
in systems of norms and relations that are to pay attention to both sides of the power
both culturally and socio-politically construc- relationship, and including both obedience to
ted. My goal in this chapter is thus to present power and resistance to it (e.g. Clegg 1989).
an alternative account of how corporate It thus points to the potential of institutional
governance may be studied using the tools of theory to offer a critique of existing power
sociological institu-tionalism, to survey how arrangements (Lawrence and Suddaby,
institutional theory has so far contributed 2005). In this sense, I will focus both on the
 391
enactment and acceptance of institutions as ideologies to be ‘all ideas which are espoused
well as on forms of resistance to institutions, by or for those who seek authority in
particularly in relation to the actual economic enterprises, and which seek to
enactment of institutional orders in explain and justify that authority’ (1956: 2).
governance (cf. Davis, 2005). By emphasizing the symbolic nature and
Second, an institutional view of corporate cultural embeddedness of corporate
governance needs to start with a clear governance models, the view advanced here
understanding of the nature of governance likewise builds on recent work on the role of
arrangements. As noted earlier, the standard institutional logics, defined as "the axial
view of corporate governance rooted in the principles of organization and action based
economic and legal traditions places the on cultural discourses and material practices
defense of the shareholders' interests at its prevalent in different institutional or societal
center (Shleifer and Vishny, 1997; Tirole sectors" (Thornton, 2004: 2). The logics that
2001). Its associated scholarship considers underlie corporate governance models thus
governance arrangements as emerging from refer to and emerge from the wider cultural
the distribution of property rights and based belief and rule systems that structure
on two fundamental assumptions. The first cognition and guide decision-making
holds that shareholders-as the "residual risk (Wuthnow, 1987; Lounsbury, 2007). As
bearers" of the corporation-are the only such, governance models are similar to
stakeholder group that is not compensated by conceptions of control (Fligstein 1990; 2001)
contract. Within financial economics, this in that they refer to local orders that provide
view of shareholders alone bearing the risk of actors with cognitive frames to interpret the
corporate failure is so widely spread as to be actions of others as well as their own.
taken as self-evident (O'Sullivan 2000). The The view of corporate governance models
second assumption is that holding managers presented here is much more dynamic and
accountable only to shareholders will result culturally constructed than that employed in
in the most efficient aggregate social welfare the contractual tradition. It also differs from
outcome. It follows from this assumption that the contractual approach by highlighting
the best governance system for all issues of power and contestation, and
stakeholders is to exclude all constituents particularly resistance to governance models.
except shareholders from the governance of Rather than being rigid structures,
the corporation (Hansmann and Kraakman governance models are symbolic orders that
2001: 441). require constant tending to be maintained.
In contrast, an institutional approach to Such an approach thus also speaks to a
corporate governance suggests that corporate common theme in the institutional literature,
governance arrangements always reflect namely questions of why and how
political processes (Cyert and March 1963; institutional change comes about where
Davis and Thompson 1994) and as such do existing institutional arrangements become
not naturally arise out of an order of property replaced with alternative orders.
rights. Instead, I believe that governance There are several reasons why governance
models are better understood as containing models and their underlying normative
implicit and explicitly normative theories or claims are more fragile and vulnerable to
logics about the distribution of power and the alternative theories than usually assumed.
"natural" order of interests in the corporation. First, as is true for all systems of institutional
In other words, governance models are order, the meaning embodied by governance
articulated systems of meaning that embody models is inherently unstable, as the very
the moral order as they explain and justify symbols that are their building blocks tend to
the proper allocation of power and resources. be open to different interpretations that may
This view of governance models goes back to empower different actors. Sewell (1992)
the work of Reinhard Bendix, who refers to one aspect of this as the
understood managerial ‘transposability of schemas’,
392
suggesting that culturally learned rules and Likewise, many of the current claims about
assumptions ‘can be applied to a wide and the superiority of the shareholder-oriented
not fully predictable range of cases outside model of the corporation point to the
the context in which they are initially performance gaps between this presumably
learned’ (1992, p. 17). This is particularly superior models and more traditional,
true when governance models and practices stakeholder-oriented models (e.g. Hansmann
are applied across institutional contexts. and Kraakman, 2001; Bradley et al, 1999).
Similarly, existing institutional settlements The view of governance models presented
are built on the remains of previously here also speaks to another central concern in
contending alternatives, many of which institutional theory, namely the relationship
remain available as differing models of between taken-for-grantedness and purposive
organizing. As a result, the hegemony of agency (Colyvas and Powell, 2006). Building
governance models is intrinsically unstable on the work of Comaroff and Comaroff
and constantly threatened, either by the (1991), it suggests a continuum of
memories of prior social orders (Schneiberg governance practices that ranges from the
2006), by alternative versions of what could salient and openly contested to the taken-for-
be (Comaroff and Comaroff, 1991), or by granted and therefore uncontested
contradictions within the current orders assumptions about the governance of
(Clemens, 1997). corporations. Taken-for-grantedness refers to
Furthermore, existing models have to be those aspects of the corporate governance
passed on, either through reproduction and world that" ... go without saying, because,
socialization or through conversion of new being axiomatic, they come without saying"
members. However, transmission is (Comaroff and Comaroff, 1991:23).
problematic, because many socialization However, due to the mutability of meanings
processes remain far from complete (Zucker systems and inherent contradictions, even
1977). As a result, social systems in general, highly legitimated governance models may
and systems of normative claims in become subject to challenges, and it may thus
particular, tend to suffer from "social be better to conceptualize the cultural field in
entropy" (Zucker 1988), with a gradual which they operate as a ‘fluid, often
erosion of the accepted beliefs and contested, and only partially integrated
assumptions on which the models themselves mosaic of narratives, images, and signifying
are based, opening the door for challengers practices’ (Comaroff & Comaroff 1991: 29).
such as the shareholder-oriented model that In this field, actors will frequently aim to
replaced the traditional managerial model of stake a claim for new and differing
governance (e.g. Fligstein, 1990; Lazonick governance against contenders, resulting in
and O'Sullivan; 2001; Dore, 2000). continuing contest and struggle. Such a view
Finally, governance models are vulnerable of governance has been advanced by some
to technical and economic changes that result authors in the accounting literature. For
in discrepancies between actual experience example, Covaleski, Dirsmith, and
and explanation offered by the normative Michelman (1993) argue that control-systems
narrative embodied in them (e.g. Goodrick et such as case-mix accounting present
al. 1997). Such techno-economic changes unfinished processes infused with power and
may open up performance gaps (Abrahamson are open to manipulation by various
1996), thereby creating opportunities for organizational actors (1993), thus echoing the
challengers to step in and offer alternative idea expressed by Thompson that the
explanations and ways of organizing. In this symbolic order is fragile and can never be
regard, Barley and Kunda (1992) have shown taken for granted; its maintenance is as
that the ebb and flow of managerial problematic as its change, making the
ideologies is related to broad cycles of ‘ideological work of repair and renovation’ a
economic expansion and contraction, leading never-ending project (Scott 1985: 23).
to alternating waves of rational and
normative rhetorics of control.
 393
The view I have advanced here does not ‘an adroit substitute for the overt use of
imply that governance regimes cannot take power, the very deployment of which might
on a relatively stable nature. Clearly, the actually signal weakness’ (Covaleski et al
symbolic orders that underlie corporate 1993: 76; also Pfeffer 1981). At the same
governance regimes can become reinforced time, agents that are the target of such
by formalised arrangements such as legal monitoring and control attempts frequently
regulations and political sanctions. But while try to influence the implementation of
such legal underpinnings can have a practices such as incentive plans or financial
stabilising effect, what emerges eventually is reporting. This highlights issues of spread,
a continuum of governance regimes ranging implementation, and manipulation of
from settled periods of relative stability to governance practices, i.e. changing either the
unsettled periods of challenge and change, reach or meaning of the practice within and
with cultural narratives about power and for the organization (Davis, 2005). In other
authority either sustaining existing orders or words, practice diffusion and implementation
providing the tools for constructing new ones frequently present the grounds on which
(Swidler, 1986). battles between various interest groups are
So far, I have argued for an institutional fought, and thus deserve special attention.
approach to corporate governance that takes
into account the normative nature of
culturally constructed governance models
and highlights the role of conflict and
resistance in corporate governance. Yet, such THE DIFFUSION OF GOVERNANCE
governance models are not merely higher- PRACTICES
order systems of meaning. Rather, much of
the action of institutions lies with their
everyday enactment and the ways in which The diffusion of corporate governance
abstract meaning systems become tangible in practices presents perhaps the most
everyday experience. A suggested by Scott developed field of applying institutional
(1985) and Fine & Sandstrom (1993), to theory to corporate governance. Much of this
understand the working of institutions it is research has focused on the antecedents of
essential to tie them closely to action and successful diffusion, focusing specifically on
everyday practice, and specific governance the compatibility of the diffusing practice and
practices in particular. the adopting organization. An institutional
A focus on practices is attractive to the view of governance practices as implicit
study of corporate governance because the theories raises the question of fit between
normative claims that inform governance practice and those theories held by adopters,
models are not always readily transformed as practices do not diffuse into an
into corresponding practice. The overt institutional vacuum, but rather into a
exercise of power reflecting self-interest is preexisting moral universe or "cultural field"
frequently avoided for fear it would mobilize (Comaroff and Comaroff 1991). One of the
opposition. As a result, powerful actors often first works to take this approach was Hirsch's
move to replace overt power with more (1986) study of the rhetoric of corporate
formalized and structural control practice takeovers, which argued that an early misfit
(Covaleski et al., 1993). Accordingly, the between the understandings surrounding
appropriate focus may frequently be not only takeovers and the dominant views held by the
overt espousal and diffusion of governance business community inhibited the spread of
ideologies, but also the practices through this practice. However, a normative framing
which such ideologies are enacted. Parti- of the practice in line with the values of
cularly formalized, highly institutionalized American business culture eventually
practices such financial incentive plans or facilitated the diffusion and legitimation of
monitoring arrangement present effecttive takeovers. Similarly, Davis and Greve (1997)
tools for influencing social situations and are found that the spread of poison pills and
394
golden parachutes – two anti-takeover Ahmadjian and Robinson (2001), in studding
defenses that became popular during the the spread of downsizing among Japanese
wave of hostile takeovers of the 1980s – firms, point to the importance of a "safety-in-
followed differing pathways that depended numbers" effect where growing prominence
on the normative claims embedded in these of a practice facilitated its spread as
practices. Poison pills diffused quickly and individual firms were less likely to be noticed
widely through shared directorships as their or criticized. Similarly, Venkatraman et al.
legitimacy was based on the defense of the (1994) examine the spread of joint ventures
corporation against outside raiders; a claim and the multidivisional form, finding that
that could be readily rationalized by outside isomorphic pressures to adopt were more
directors. In contrast, the diffusion of golden prevalent for joint ventures since this practice
parachutes proceeded much more slowly did not require a drastic re-arrangement of
through regional elite networks, which is the organizational structure. Palmer,
commensurate with a practice that was Jennings, and Zhou (1993) also point to the
surrounded by greater controversy as it importance of mimetic pressures in the
appeared to clearly privilege executives over spread of the multidivisional form, where
other constituents. Examining the spread of a prevalence of this governance arrangement
shareholder value orientation among German increased the likelihood of its adoption by
firms, Piss and Zajac (2004) and Sanders and other corporations. Suggesting a somewhat
Tuschke (2007) find evidence that modified version of mimetic pressures,
governance practices compatible with the Davis' (1991) study emphasizes the
mental models and educational background importance of ties to prior adopters in the
of top executives are also more likely to be spread of poison pills as an anti-takeover
implemented. Similarly, Palmer and Barber defense among the largest U.S. corporations
(2001) show the importance of elite during the 1980s, with mimicry operating
education for determining diversifying mainly through direct ties rather than the
acquisition activity, while Espeland and observation of competitors.
Hirsch (1990) point to the important role that Other studies have argued that more
accounting played in providing the attention needs to be paid to the coercive
conceptual underpinnings that facilitated and power of other organizations and legislative
legitimated the U.S. conglomerate mergers of bodies in promoting diffusion (e.g. Barron,
the 1960s. By offering a framework for Dobbin, and Jennings 1986; Scott 1987). In
making sense of the firm as a portfolio of an important contribution, Davis and
income streams, the rhetoric of accounting Thompson (1994) suggest that efficiency-
accelerated the spread of a variety of oriented governance approaches based on
practices culminating in the emergence of the agency theory are frequently inadequate for
hostile takeover and the market for corporate explaining the politics of corporate control,
control. These studies highlight the role of and particularly the emergence of shareholder
theorization in the diffusion process (Strang activism. Drawing on the literature on
and Meyer, 1993), where diffusing practices resource mobilization, Davis and Thompson
are framed such as to make them more develop a social movements perspective that
compatible with existing cognitive and social highlights the importance of governance
requirements, an insight that has also been actors' interests, social infrastructure, and
applied to the diffusion and mobilization in determining the likelihood for
institutionalization of corporate governance successful collective action within a given
codes in the international arena (Enrione, political opportunity structure. Similarly
Mazza, and Zerboni, 2006). drawing on a social movements perspective,
Other authors have pointed to the role of Rao and Sivakumar (1999) argue that
mimetic isomorphism in influences choices powerful investor rights activists compelled
of governance mechanisms. For example, organizations to adopt boundary spanning
structures that signaled the primacy of
shareholder rights.
 395
The insights of these studies support a research tends to treat diffusing practices as
"forced-selection" perspective (Abrahamson homogeneous entities that do not vary by
1991) where powerful organizations impose context and remain stable over time.
adoption of practices – be they technically However, such homogenizing assumptions
efficient or not-over the resistance of other seem questionable. If diffusing practices
actors. These insights are also reflected in come with explicit and implicit theories
Oliver's (1991) argument that features of the attached, then adoption should go along with
organizations context, such as the a considerable amount of interpretive work
multiplicity of its stakeholders and the that aims to integrate these theories into pre-
organization's dependence on them, are likely existing organizational frameworks and
to predict adoption or non-adoption of world-views. As Strang and Soule argue,
practices. For example, Palmer et al. (1987) such interpretive work "selects and
and Palmer et al. (1993) point to the transforms the diffusing practice," and while
importance of powerful owners in some practices may be more appropriate for
determining organizational structures, while interpretive work than others, "none come
Palmer et al. (1995) show that the spread of out of this process unmodified" (Strang and
predatory takeovers was consistent with an Soule 1998: 277).
embeddedness approach that highlights the Such considerations point our attention to
role of a firm's position in networks as well the study of variation in practices, an issue
as the positions of its managers and directors that has emerged as a central concern of
in the firm's ownership structure and the institutional theory (e.g. Lounsbury, 2007;
social network of the business elite. In a Lawrence and Suddaby, 2005). A number of
similar vein, Fiss and Zajac (2004) argue that studies have begun to examine how practices
the spread of a shareholder value orientation are modified, translated, and reinvented to fit
among German firms importantly reflected local needs (e.g. Boxenbaum and Battilana,
the power and interests of various ownership 2005; Czarniawska and Joerges, 1996; Djelic,
groups, thus also highlighting the role of 1998; Piss and Zajac, 2006; Lounsbury,
coercive influence in diffusion of governance 2001; Morris and Lancaster, 2005; Sahlin-
practices. The insights of these studies thus Andersson and Engwall, 2002). A common
point to a model of the diffusion process that theme emerging from these studies is that
sees the probability and speed of a diffusing while there are frequently unifying elements
practice as a function of the number, interest, that inform diffusing practices, their actual
and relative power of agents within a given enactment tends to take a variety of forms.
environment (Marquette 1981; Fligstein, An important reason for such variation lies
1985), thus including both organizations and with the fact that the internal dynamics of
outside stakeholders into the diffusion model organizations may frequently result in
where both the actors involved and their differential responses to external institutional
interests tend to be institutionally constructed pressures (Greenwood and Hinings, 1996).
(Aguilera and Jackson, 2003) For example, Zbaracki (1998) suggests that
implementation of total quality management
practices resulted in considerable variation as
managers appropriated the rhetoric of quality
VARIATION IN GOVERNANCE management, with TQM becoming
PRACTICES increasingly ambiguous and open to
appropriation. Likewise, Lounsbury's (2001)
study of staffing practices in college
While institutional theory has contributed recycling programs indicates that practice
considerably to our understanding of how variation differed depending on both
and why governance practices diffuse, less connections to external social movement
attention has been paid to the diffusing organizations and internal features such as
practices themselves. Much of the prior size, ownership nature, and social
comparison processes relating to
396
similar organizations. What emerges is controlled and monitored, most of agency
implementation as not only a technical but theory concerns itself with refining the
also a political and cultural process where incentive and monitoring mechanisms to
new practices become appropriated into achieve optimum efficiency, focusing
ongoing exchanges and conflicts. Such a particularly on individual performance
view, where practices are adapted to fit local outcomes. As was true for Taylor's scientific
needs, has also been suggested by more management, agency theory thus likewise
macro level studies of the international views the executive as inefficient and in need
diffusion of the arm's length contracting of being "enmeshed within a routinely-
standard (Eden at al. 2001) and corporate applicable calculative apparatus" (Miller and
governance codes (Aguilera and Cuervo- O'Leary, 1987: 253). The implications of this
Cazurra, 2004). As these studies indicate, a process of constructing the nature of the
focus on variation is central for a fine-grained governable person are considerable, as
understanding of corporate governance indicated by arguments about the negative
practices and moves beyond the acceptance effect of agency theory on ethical behavior
of surface conformity to explore the various (Ghoshal, 2005) as well as recent work on the
forms of meaning and transformation transformation of financial markets in
associated with specific practice (e.g. accordance with theoretical models about
Lounsbury, 2001; Zilber, 2006). their nature (MacKenzie 2006; MacKenzie
and Millo, 2003).
While the institutional view of governance
GOVERNANCE AND RESISTANCE advanced here differs considerably from that
advanced by agency theory, these agentic
The issue of resistance to governance models models nevertheless highlight the fact that
and practices has formed an important yet governance has to be accomplished since it
somewhat unrecognized undercurrent in the will frequently be resisted by those whose
literature on corporate governance. The compliance is to be achieved. In line with
concept of corporate governance itself Granovetter's (1985) caution against
implies the existence of both governable oversocialized models of actors, these
entities and even more importantly considerations point our attention again to the
governable persons (Miller and O'Leary, ways in which institutional processes are
1987). An important part of corporate frequently far from complete, leaving room
governance thus relates to the construction of for contestation and manipulation, the
managers and employees as not only necessary counter sides to the exercise of
corporate constituents with rights and power (Clegg 1989). The knowledgeable and
responsibilities but entities to be managed experienced practitioners that inhabit most
with efficiency. The roots of this organizations will frequently attempt to resist
development can be traced back to Taylor's the introduction of formal control practices
Principles of Scientific Management (1913), by manipulating the application of such new
which centered around the efficiency of the practices, transforming them into means for
individual worker and insisted that "each advancing their respective interests
worker be singled out, to be rewarded or (Dirsmith, Heian, and Covaleski (1997).
punished on the basis of his or her individual Acknowledging the impossibility of
performance" (Miller and O'Leary, 1987: perfect control, one stream of literature has
253). This theme finds its counterpart in focused on the role of decoupling as response
contemporary agency theory, which likewise to institutional pressures. In its classic
constructs the manager as primarily self- formulation, the concept of decoupling
interested, with conflicting goals to those of referred to a situation where "structure is
the principal and greater risk averseness disconnected from technical (work) activity,
(Jensen and Meckling, 1976; Eisenhardt, and activity is disconnected from its effects"
1989). Accordingly, after constructing the (Meyer and Rowan, 1978: 79). At the same
manager as an agent to be time, it is this very decoupling that
 397
maintains the legitimacy of the organization. GAAP based financial statements and the
Meyer and Rowan suggest that close mobilization of cost-benefit rhetoric to
supervision may frequently be counterpro- defend non-implementation. Similarly, Fiss
ductive, since it would reveal a lack of trust and Zajac (2006) show that a lack of
in the supervised organizations and would implementation if frequently accompanied by
expose the controlling agencies to uncertain- rhetoric aimed at assuring constituents of
ties arising at the technical core of these compliance with external demands.
organizations, uncertainties that neither the However, resistance to institutional
organizations nor their supervising agencies demands need not only take the form of
have the capacity to control. In order to incomplete implementation, surface
prevent these uncertainties from leaking into compliance, and impression management.
the larger governance system and making it Rather than taking the governance
ungovernable, controlling agencies thus fre- environment as exogenous, corporations can
quenttly rely on formal structure as an frequently act to actively influence this
indicator of legitimacy; surface compliance environment to make it more suitable to their
may suffice where deep control is impracti- needs. As suggested by Carruthers,
cal, or indeed, impossible. "organizations are not only granted
Expanding the classic notion of legitimacy; sometimes they go out and get it"
decoupling, a number of recent studies have (1995: 324). An example of this active
connected it to work on impression manage- construction of the institutional environment
ment in developing a symbolic management is given by Mezias (1990), who shows how
perspective that emphasizes how organiza- large corporations in the U.S. acted to
tions, by purposive action, may maintain or influence their financial reporting
increase their legitimacy. In contrast to the requirements. Similarly, Bealing et al. (1996)
work of Meyer and Rowan, legitimacy here point to second-order effects of
is not achieved through a logic of confidence institutionalization in governance affairs,
and cooperation, but rather by the calcula- where, particularly in a fragmented socio-
ting, manipulative, or even deceptive actions political environment, organizations do not
that aim to show compliance towards exter- simply adopt institutionalized structures, but
nal observers while concealing nonconformi- instead actively participate in building up a
ty (Elsbach and Sutton 1992; Oliver 1991). framework for social control relevant to their
Such a perspective has been successfully own constituents (such as the accounting
applied to study a lack of implementation profession for the SEC), thereby establishing
relating to corporate governance practices. the legitimacy of the interrelationship of the
For example, Westphal and Zajac (1994) find organization with its constituents. A
that symbolic adoption of long term incentive symbolic perspective on corporate
plans for management is frequently decou- governance thus points our attention to the
pled from actual implementation of such various ways in which corporations aim to
plans. This is particularly true in firms where elude institutional demands by hiding non-
powerful CEOs have the resources to resist compliance or aiming to affect the very
board efforts to change their incentive struc- definition of what constitutes acceptable
ture. Likewise, Carpenter and Feroz (1992, conduct.
2001) examine the adoption of gene-rally
accepted accounting principles among US
state governments and find that implementa-
tion of such accounting standards was prima- OWNERS, MANAGERS, EMPLOYEES,
rily driven by the desire to exhibit AND OTHERS
institutionalized practices to the public and
credit markets. At the same time, the authors
point to resistance to institutional pressures, The world of corporate governance is
such as the state of Delaware's shallow inhabited by a variety of groups with varying
implementtation of
398
identities and interests; yet much of the in the 1990s and show that the diffusion of
literature has focused on two of these groups, this normative model happened along
namely mangers and owners, and has ownership lines where power to adopt a
furthermore tended to focus on them in the different governance model could be
context of the publicly traded corporation. exercised. Several other authors have
The literature in finance tends to assume that employed a social movements perspective to
owners are fairly homogeneous in their examine the origins and effects of
interests, focusing primarily on the shareholder activism (Davis and Thompson,
maximization of shareholder value (e.g. 1994; Proffitt and Spicer, 2006). While these
Bagwell, 1991; for an overview of the studies present important developments in
literature on ownership, see Kang and building an institutional theory of ownership,
Sorensen, 1999). A more institutionally much remains to be done to further our
oriented approach points to the idea that both understanding here.
actors and their interests are not merely given Another important line of inquiry has
but instead constructed through their focused on the understanding who the top
embeddedness in larger social systems managers are, particularly how they are
(Aguilera and Jackson, 2003). In such a view, selected, what their educational and
owners are characterized by various interests functional background is, and what social
and identities that translate into differences in circles they inhabit. Such considerations are
governance orientations and models relevant as the background and social
(Fligstein 1990; Fiss and Zajac, 2004). embeddedness of top executives is likely to
Accordingly, owners tend to be much less be reflected in the views they hold regarding
homogeneous in their interests than the nature of the corporation and in whose
commonly assumed within the contractual interest it should be governed. (Hirsch, 1986;
view of the firm. Furthermore, owners may Espeland and Hirsch, 1990; Fligstein,
differ in their attitudes towards shareholder 1990,2001). A considerable amount of work
value maximization not only across different has focused on the formation and influence
ownership groups such as banks, family the business elite in the United States (e.g.
owners, and other corporations, but their Useem 1979; 1980; Domhoff, 1967). This
interests may differ even within such groups literature has examined both differences and
(e.g. Fiss and Zajac, 2004). Similarly, commonalities in values, interests, and
Aguilera and Jackson (2003) have advanced identities between managers and
an actor-centered institutional approach to shareholders, with particular interest in
corporate governance that emphasizes how whether there exists a ruling class of with
the interests of the main corporate common perceived interests. For example,
governance actors are both constructed and Useem and Karabel's (1986) study of the
represented. relationship between educational and social
In addition, research drawing on background and careers of U.S. managers
institutional arguments has shown the role of found that career mobility was enhanced by
owners in the spread of governance models. prestigious educational degrees, pointing to
In this regard, Ahmadjian and Robbins the importance of social capital for reaching
(2005) point to the importance of ownership the upper strata of management. Likewise,
in studying the spread of practices associated membership in the exclusive social clubs of
with U.S. shareholder value capitalism to the elite similarly forms an important source
Japan. Their findings indicate that foreign of social cohesion (Useem, 1980) and affects
investors were associated with an increased the spread of practices among corporations
restructuring of Japanese firms that were less (e.g. Palmer et al. 1995).
central in the Japanese political economy. Finally, an extensive stream of research
Similarly, Fiss and Zajac (2004) study the has examined the importance of executives in
spread of a shareholder value orientation their role of establishing connections between
among German firms firms through interlocking directorates.
 399
This literature has examined the effect of works councils as well as union influence, a
board interlocks regarding a variety of issues number of authors have drawn on
ranging from the exercise of corporate institutional arguments (e.g. Aguilera and
control (e.g. Mariolis, 1975; Mintz and Jackson, 2003; Gospel and Pendelton, 2004;
Schwartz 1981) to corporate political action Streeck and Thelen, 2003). In addition, some
(Mizruchi, 1989; 1992) to social cohesion authors have employed institutional theory to
(e.g. Useem, 1984; for an overview of these examine how control of employees is
literatures, see e.g. Mizruchi, 1996). exercised. For example, Barker (1993) shows
Other researchers have employed how value-based normative rules embedded
institutional theory to examine the selection in self-managing teams make for more
of top executives. Fligstein (1987; 1990) effective control of workers than more
shows how a financial conception of control traditional, bureaucratic authority structures,
emerging in the postwar United States and while Oakes, Townley and Cooper (1999)
the large-scale merger movement of the examine the pedagogical role of business
1960s resulted in increasing numbers of plans as language that redirects work and
CEOs with a background in finance, and changes the identity of managers and
firms with such CEOs were in turn more employees. However, given the current
likely to be the targets of takeover attempts dominance of the shareholder-centered
(Fligstein & Markowitz, 1993; Davis & system, the role of employees is likely to
Stout, 1992). Finance CEOs were also more remain peripheral at least in the Anglo-Saxon
likely to adopt the new shareholder value governance context, even though themes of
conception of control emerging in the 1980s hegemony versus resistance to the
(Fligstein, 2001; Fiss and Zajac, 2004). shareholder-centered governance model on
Ocasio (1999) has shown how the work of part of employees would warrant more
both cognitive and political factors in the attention.
formal and informal rules governing CEO Finally, some research in the institutional
succession, particularly the choice of insider theory tradition has expanded the focus to
versus outsider successors. Similarly, consider the role of outside constituencies in
Thornton and Ocasio (1999) and Thornton corporate governance. Several studies in this
(2004) demonstrate how the institutional regard have focused on the role of financial
logics guiding executive succession in the analysts, who occupy a central role as
higher education publishing industry shifted boundary-spanning and evaluating audiences
from an editorial to a market logic. for corporations. For example, Fogarty and
Regarding board composition, Luoma and Rogers (2005) examine the creation of
Goodstein (1999) have pointed to the analyst reports and find that this process
importance of institutional influences on the largely follows the logic of confidence
selection of corporate directors. These studies described by Meyer and Rowan (1977),
indicate that the selection of top management where strong expectations but little control
is importantly shaped by institutional forces characterize the production of reports, a
emerging both out of organizational and process that is furthermore strongly
societal processes. dependent on information controlled by
While owners and managers have received manages. Furthermore, Zuckerman examined
greater attention, the third governance the role of analysts as product critics and has
constituent group-employees-has been less shown that a mismatch between the cognitive
often examined from an institutional categories used by securities analysts has
perspective. In this regard, an institutional been shown to affect stock prices and de-
approach is not different from the corporate diversification activity (Zuckerman, 1999;
governance literature more generally (cf. 2000). These considerations also point to the
Blair and Roe, 1999) and the Anglo-Saxon role of other actors affecting the governance
corporate governance literature in particular. of corporations, such as suppliers, debtors,
Within the literatures on labor representation professional associations, the courts, and of
mechanisms such as course
400
government regulators and legislative notion that the economic systems of
arrangements (Fligstein and Choo, 2005). advanced nations are marked by a variable
Some of these have been examined using a degree of cohesion and complementarity
comparative perspective on corporate among their respective subsystems.
governance, to which I now turn. Beginning with a focus on diversity of
modern economies, these authors argue that
that variation emerges because corporations
and other social actors "develop distinctive
THE COMPARATIVE STUDY OF strategies and structures to capitalize on the
GOVERNANCE SYSTEMS institutions available for market or non-
market coordination in the economy" (Hall
The institutional approach to corporate and Soskice, 2001: 48). For example,
governance suggests that national corporate comparative research on Japanese business
governance systems are importantly affected models has suggested that the keiretsu
by cultural differences (Tricker, 1984; 1990). structure of corporate governance presents a
This points to the need to comparatively competitive advantage for large Japanese
evaluate the diversity of governance firms, since this structure leads to higher
arrangements. Such research on comparative rates of innovation, resulting in a competitive
corporate governance has for a long time advantage for this intuitional arrangement
been primarily the domain of taxonomists, (Gerlach 1992). While these arguments are
leading to a large body of mostly descriptive similar to those advanced by a competitive
research on differences in national corporate logic of differentiation, they differ in their
governance systems (see e.g. Boyd et al. emphasis of a systemic perspective that
1996, Bradley et al. 1999; Guillén 2000 for points to institutional complementarities.
reviews; see Roe 2003 for a political Building on the work of Aoki (1994), the
perspective). The main assumption of this VoC approach thus views national
field of research has been that each country's governance systems as part of a system of
system of corporate governance developed in interconnected institutions that reinforce each
response to its particular historical, cultural, other, creating stability but also resistance to
and technological influences. However, change. In this respect, the VoC approach
recently a number of scholars have aimed to identifies two ideal types of economies:
develop these arguments into more coherent liberal market economies (such as the United
frameworks that allow for a better States, Canada, the UK, and Australia) that
understanding of the mechanisms that primarily rely on markets to coordinate their
underlie national governance systems as well financial and industrial relations systems, and
as a systematic comparison of national coordinated market economies (such as
differences in governance arrangements. Two Germany, Japan, the Netherlands, or the
frameworks that have particularly garnered Scandinavian countries) that employ a variety
attention in recent years are the Varieties of of non-market institutions to coordinate these
Capitalism (VoC) approach (e.g. Hall and spheres (Hall and Soskice, 2001). Empirical
Soskice, 2001; Thelen, 2004), and the support for these arguments comes from a
business systems perspective (e.g. Whitley, variety of case studies on European
1999; Morgan, Whitley, and Moen, 2005). economies as well as comparative works (e.g.
Their arguments are relevant to the Thelen 2001,2004; Wood, 2001), and several
embeddedness approach suggested by recent works have applied the VoC
institutional theory and deserve special framework to the study of corporate
attention here. governance systems (e.g. Casper, 2001;
Building on a configurational approach, a Vitols 2001; Vitols et al, 1997; Ziegler,
central theme in the VoC approach is the 2000), suggesting that this
 401
approach can offer a framework for notion of an institutional logic to examine
understanding the connections between changes in the German model of corporate
corporate governance systems and the larger governance. Similarly combining a business
political economy. systems approach with other institutional
A related approach to the study of arguments, Djelic and Quack (2003) and
economies and governance is advanced by Djelic and Sahlin-Andersson (2006) show
Whitley (1992a, 1992b, 1999) and others, how national institutional systems are
who aim to explain the institutional increasingly nested within transnational,
structuring of business systems. By business higher-order institutional frames. Such
systems, these authors generally refer to the insights are highly relevant for the study of
‘distinctive patterns of economic corporate governance, and particularly
organization that vary in their degree and questions regarding the potential for
mode of authoritative coordination of convergence in governance systems (Tempel
economic activities, and in the organization and Walgenbach, 2007). Both the VoC
of, and interconnections between, owners, perspective and the business systems
managers, experts, and other employees’ approach tend to be focused around ideas of
(Whitley, 1999: 33). Accordingly, the nature complementarity and consistency. However,
of the relationships between these actors is of rather than exploring how such systems
central importance when contrasting business provide coherence to corporate governance,
systems. For example, business systems may an institutional approach also emphasizes the
be characterized by inter-firm relations based importance of conflict and inconsistency.
on arms-length contracting or repeated, Such considerations shift the focus to the
cooperative connections (e.g. Dore, 1986). importation of practices from one
Likewise, the providers of capital may view institutional context into another,
their investments as resources to be highlighting issues of enactment and
supervised directly or they may delegate this integration, and thus questioning the
task to trusted agents (e.g. Whitley, 1999). coherence view of national systems of
From the combination of these forms of corporate governance. Consistent with a
relationships emerges a variety of possible focus on practices, it would also be useful to
types of economic organization and shift the level of analysis further down to the
governance. However, interactions between firm level to examine diversity even within
various forms of relationships limit the "national" systems. Such systems are
feasibility of business systems, and Whitley frequently less than coherent but instead are
(1999) identifies six that range from the marked by considerable tensions between
fragmented via the state-organized to the different governance models and institutional
highly coordinated. logics, a process that will likely lead to
Work building on a business systems considerable change (O'Sullivan, 2000).
perspective offers an intriguing framework However, this change does not necessarily
for those who aim to study corporate gover- mean greater convergence in governance
nance through an institutional lens, particu- system, but rather increasing variety.
larly because its theoretical apparatus is not
limited to the study of advanced economies.
The business systems approach provides a
systematic foundation for examining corpora- EMERGING DIRECTIONS FOR
te governance practices, particularly when FUTURE RESEARCH
merged with insights from other theoretical
traditions (Tempel and Walgen-bach, 2007). As a field for applying institutional theory,
For example, Lane (2005) draws on a corporate governance is likely to continue
business systems approach informed by the expanding, and the institutional approach is
402
well poised to provide a coherent framework national level of corporate governance
for the study of governance systems and (Hollingsworth, Schmitter, and Streeck,
practices across various levels of analysis. As 1994; Casper, 2000).
I have argued here, a culturally and Future research should also draw further
politically informed institutional approach attention to the ways in which governance
offers a counter weight to the currently models hide power relations as they become
dominating contractarian framework for increasingly taken for granted and take on the
understanding governance arrangements. mantle of neutrality and inevitability. An
This is not to say that both approaches cannot important role in this regard lies with events
inform each other-in fact, some of the most that lift this mantle and provide a glance into
intriguing insights into governance the political nature of resource distributions,
arrangements are likely to come from such as the current wave of corporate
approaches drawing on several theories and scandals that has swept the United States.
disciplines (Piss, 2006). In the remaining, I Governance scandals in particular provide
want to sketch out some of the more opportunities when the seams come apart,
promising avenues for further research allowing for regimes to be criticized and
applying an institutional approach to the changed. As such, the study of such scandals,
corporate governance arena. the ways in which they are managed by
In line with my above arguments corporations and regulators, as well as how
regarding the role of power and the they are framed and used for mobilization by
normative nature of governance models, we various interest groups such as activist
need to expand our understanding of how investors are of particular interest to
governance models as shared cognitive institutional theory and provide fertile ground
understandings are propagated, find support, for future research. Such an approach might
and become rooted across differing eventually offer a more systematic
institutional contexts. This research project framework of the conditions that lead to of
would need to pay attention both to the ways relatively strongly institutionalized to less
in which governance models spread across strongly institutionalized models of corporate
national and international arenas and to the governance.
processes by which indigenous governance The study of emerging and transition
models become uprooted and contested. Prior economies presents another promising area
research in the contractarian literature has for understanding both change and
pointed towards convergence in international persistence of corporate governance systems
governance systems due to the effects of and practices (e.g. Allen, 2005; Millar et al.
globalization and the power of financial 2005). How are corporate governance models
markets (e.g. Coffee, 1999; Bradley et al., and practices propagated in such
1999; Hansmann and Kraakman, 2001). In environments and do they take hold or do
contrast, emerging institutional work has they remain externally imposed orders that
questioned the likelihood of convergence, meet with resistance from established interest
pointing instead to persistence in national groups? What is the role of symbolic and
systems alongside convergence processes surface compliance in this regard? Who are
(e.g. Aguilera and Jackson, 2003; Fiss and the actors that lead reform efforts and what
Zajac, 2004; Guillén, 2001; Jackson and strategies do they pursue? These are but some
Moerke, 2005). As argued by Tempel and of the questions that require answers once we
Walgenbach (2006), further research should expand the focus of inquiry beyond the
look to move beyond the convergence- currently dominating Anglo-Saxon
divergence debate and should begin to governance governance environment in
disaggregate the processes occurring at combination with Germany, Japan, and
various levels of aggregation, such as France as the economies that have received
company, sector/industry, and the most attention from researchers.
 403
Understanding the variety of governance underlying dimensions along which
arrangements and the role of employees, institutional contexts vary. Furthermore,
banks, family owners, company networks and there is an opportunity for institutional theory
the state in Asian, South American, or to bring all the corporate constituents back
Eastern European countries requires a holistic into the focus of governance research. Rather
approach to corporate governance, and the than focusing merely on executives and
institutional perspective is well-positioned to directors, such work could take seriously how
contribute such an approach governance is constructed at the intersection
Regarding the emerging themes of of various influence spheres, including those
translation and adaptation in institutional of inside and outside constituents and the
theory, we still know rather little about the attempts of corporate actors to actively
process by which the re-organization of a manage such constituent groups. Such an
model accomplished, pointing to the need for emphasis on the active construction and
a deeper understanding of how governance propagation of governance accounts would
practices combine and recombine. For enable institutional approaches to bring both
example, in how far are governance systems relevant and critically-reflective insight to the
holistic and interconnected or modular in current and future corporate governance
nature, and which features of these systems debates.
may be safely removed or added without
disturbing overall operation of the
governance system? Do hybridization and
loose coupling present viable trajectories ACKNOWLEDGMENT
(e.g. Deeg, 2005; Lane, 2005)? To analyze
such issues, it may be useful to examine other
fields that have studied processes of The author acknowledges the helpful comments of
syncretism and recombination, such as Norman Macintosh, Sigrid Quack, Paul Adler,
anthropology (e.g. Stewart 1999). By Christina Ahmadjian, Roy Suddaby and the other
editors of the Handbook of Organizational
drawing on insights developed there, we may Institutionalism, and seminar participants at the
be able develop a much deeper understanding University of Southern California and the Center for
of the cultural embeddedness of corporate Advanced Study in the Behavioral Sciences.
governance practices.
Finally, while researchers working within
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 SECTION IV

Interfaces
2.

16
Beyond Constraint: How
Institutions Enable Identities
Mary Ann Glynn

INTRODUCTION and governs organizational performance.

Finally, implications for future research are
In this chapter, I take a perspective on insti- offered.
tutional theory that moves beyond constraint. Identity is a construct that has long been
I look at how institutions enable organiza- central to institutional theorizing. A half-cen-
tional identity construction by supplying a set tury ago, Selznick (1957) postulated that
of possible legitimate identity elements with institutionalization - the infusion of value in
which to construct, give meaning to, and organizations - 'produces a distinct identity
legitimize identities and identity symbols. for the organization' (p. 40) and, moreover,
Institutionalism offers a process model of that 'maintaining this distinctive identity is
transformational mechanisms that explicates integral to institutional survival' (p. 63).
how macro-level, interorganizational influ- Institutional approaches that focus on the
ences situate and shape organizational identi- cognitive-normative context of organizations
ties. It can account for the regularity or (DiMaggio & Powell, 1991; Zucker, 1983)
patterning of identity markers (or symbols) have emphasized the importance of social
across organizations within an organizational identities (Scott, 1995: 44) as well as their
field. As well, it offers a dynamic framework vitality. And yet, in spite of this acknowl-
on organizational identity construction which edged relationship, the link between institu-
explains how organizations may adapt their tional theorizing and organizational identity
identities so as to align with sanctioned remains relatively unexplored. The gap is
norms and practices so as to secure surprising, for the two theories have much in
legitimacy. I explore how institutionalism common. Both institutionalism and identity
expands the current theorization of identity have meaning at their core; as well, both
by deepening our understanding of the theories offer accounts of the creation and
essence of identity, offering a reconcepu- role of meaning in the constitution and
talization of organizational identity as a form practices of organizations. How then can two
of institutional bricolage, and by explaning theories so similar in their focus be so
how the logic of identity motivates different in their trajectories?
414
In the current literature, there is little In this chapter, I initiate an exploration of
integration of the two perspectives; worse, the linkage between institutions and organi-
they are often depicted as almost antithetical. zational identity. Because the limiting effects
For instance, institutional theory appears to of institutional isomorphism are well recog-
privilege sameness and isomorphism, while nized, I seek to move beyond this model of
organizational identity theory advantages constraint to explore an alternative model of
distinctiveness and polymorphism; and, while how institutions enable organizational iden-
institutional theory focuses on the inter- tity. Essentially, I propose that institutional-
organizational level of organizational fields ism enables organizational identity formation
or industries, identity theory tends to be by supplying a set of possible legitimate
grounded in the organizational level identity elements with which to construct,
(Pedersen & Dobbin, 2006). give meaning to, and legitimize firm identi-
And yet, in spite of these obvious differ- ties and symbolization.
ences, there are subtle points of connection Even though institutional structures and
that offer opportune sites where institutional- environments tend to sanction some kinds of
ism can broaden theories of organizational meanings and elements over others, they are
identity. For instance, institutionalism offers nonetheless complex and multi-textured in
a process model of transformational mecha- meaning, thereby making some variation in
nisms that explicate how macro-level, inter- identities possible. Swidler (2001) illustrates
organizational influences situate and shape the wealth of meanings that are attached to,
organizational identities. Moreover, through and legitimated in, a single institution:
transformational processes of isomorphic marriage. Weber and Glynn (2006) extend
conformity and mimesis, institutionalism this reasoning to the employment contract,
offers an account for the regularity or pat- arguing that sensemaking occurs with
terning of identity markers (or symbols) institutions, not in spite of them. And
across organizations within an organizational Pedersen and Dobbin (1997: 432) apply this
field. And, institutionalism offers a dynamic argument to their discussion of institutions
framework on organizational identity and organizational culture; similarly, they see
construction which explains how organiza- institutions as having a dual role in the
tions may adapt their identities so as to align construction of organizational cultures, one
with sanctioned norms and practices in order that is both constraining and enabling:
to secure legitimacy.
Institutionalism can move the study of ... modern collective actors seek formal isomor-
identity beyond the organizational level of phism with other actors to classify themselves and
informal distinctiveness to enumerate themselves.
analysis to locate identity in broader frames Enumeration as integral to this process as was
of meaning that arise from industry, cultural classification the naming of the bright planet
and societal institutions. And, although iso- Venus to distinguish it from the star Polaris and of
morphic pressures can constrain the choices Halley's Comet to distinguish it from planets ... the
of elements that organizations use to con- method called for naming or numbering particular
isomorphic units to the end of identifying and
struct their identities, institutional forces also differentiating them for study ... Enumeration
enable the process of identity construction established the empirical cases from which gener-
itself. The institutional environment supplies alizations could be drawn. (434).
possible and legitimated meanings and
symbols that constitute the 'raw materials' Pedersen and Dobbin (2006) offer an inte-
which organizations appropriate to construct gration of the competing and contradictory
their identities. By grafting these institutional forces that are implicated by institutionalism
elements onto their identities, organizations and identity construction. In their view, con-
attempt to gamer legitimacy which enables formity occurs at the more macro-level of
resource flows favorable to their enterprises. social classification, resulting in broad simi-
larities and regularities in patterns of organi-
zational identities that, in the aggregate,
 415
constitute a classification system for domains of scholarship, inquiry into organi-
identities. This is apparent, for instance, in zational identity was launched with vigor
organizational naming patterns over time when Albert and Whetten published their
(within historical periods) and in dominant influential Research in Organizational
industry naming practices; First Federal Bank Behavior article in 1985. Their theorization
is preferred to (and legitimated) rather than of identity has been quite impactful,
Tony's Bank (Glynn & Abzug, 2002; Glynn receiving nearly 500 citations as of this
& Marquis, 2005). And yet, institutions are writing. My search on widely used databases
not perfectly replicated in organizational (e.g., ABI Inform; Google Scholar) did not
adoption and practices; variations -arise from yield any articles on organizational identity
the slippage that occurs as institutions adapt in major management or organizational
to local conditions or are interpreted in journals prior to this 1985 publication. The
particular contexts to reflect specific first article of significance to management
organizational meanings. Within the banking researchers appeared five years later in the
category, for instance, not only is First Academy of Management Journal: Dutton
Federal Bank legitimate, but also Bank of and Dukerich's (1990) influential (and award-
America, Citizens Bank and Sun Trust Bank. winning) case study of the NY Port Authority
Thus, variations arise even from a more (also with about 500 citations, as of this
standardized set of constitutive rules that writing).
define identities. Thus, as Pedersen and Research on organizational identity has
Dobbin (2006) might predict, there are broad demonstrated its significance for a number of
boundaries that circumscribe the appropriate key organizational symbols, processes, and
elements of identities within social categories behaviors. Organizational symbols and
(such as banking organizations), but structures have been shown to reflect
enumeration processes within categories that organizational identity globally (e.g., Glynn
serve to distinguish one bank from another. & Abzug, 2002) and stakeholder interests
Thus, organizations construct stylized more specifically (e.g., Pratt & Foreman,
identities from distinctive institutions in their 2000; Scott & Lane, 2000; Brickson, 2005),
business, social and cultural environments. to compartmentalize different or antithetical
In this chapter, I explore how institutions aspects of identity, by functional or
enable organizational identities. I start by professional differentiation (e.g., Glynn,
reviewing the relevant literature to discover 2000; Golden-Biddle & Rao, 1997; Pratt &
how organizational identity has been concep- Rafaeli, 1997; Pratt, Rockmann &
tualized and opportunities where institution- Kaufmann, 2006) or hierarchy (Corley &
alism might inform current theorization. Gioia, 2004), to motivate the choice of
Next, I elaborate some specific ways in organizational aspiration and emulation (e.g.,
which institutions enable identities; these LaBianca et al., 2001), and to be constructed
include a deepening of our understanding of as a storied account of organizational history
essential elements of identity, a reconceptu- and biography through language and rhetoric
alization of organizational identity as a form (e.g., Czarniawska & Wolff, 1998; Fiol,
of institutional bricolage, and a consideration 2001, 2002). As well, researchers have also
of how institutional logics encourage identity focused on individuals' identification with the
performance in organizations. organization, which is at least partly
construed by their perceptions of the
organizational identity, particularly in terms
THEORIZATIONS OF of its distinctiveness and prestige (e.g., Mael
ORGANIZATIONAL IDENTITY & Ashforth, 1992; Bhattacharya, Rao &
Glynn, 1995; Brickson, 2005; Bartel, 2001).
Although the construct of identity has had a
long intellectual history in several different
416
Through these twenty years of research, simply identity (checking to see that the latter
the original definition of organizational iden- focused on the level of the organization).
tity articulated by Albert and Whetten (1985) This yielded a total of 32 articles, of which
persists, reverberating through other studies roughly one-quarter are empirical.
and models. Albert and Whetten described As I read (and re-read) these articles, two
organizational identity as consisting of three distinctive approaches to identity clearly
claims: 'the criterion of claimed central emerged. One of these follows directly from
character the criterion of claimed the Albert and Whetten (1985) definition:
distinctiveness [and] the criterion of claimed identity as 'essentialist' and attribute-based,
temporal continuity' (Albert & Whetten, i.e., reflecting some underlying or 'true'
1985: 265). The dominant approach models organizational character. A second approach
organizational identity as a claim-making tends to focus on how identity functions as a
process that centers on three core attributes: strategic resource, being deployed to com-
the central, distinctive and enduring character petitive advantage and functioning as a guide
of the organization (Glynn, 2000). to firm decision-making and strategic choice.
Researchers have focused as much on the I categorized the articles on organizational
particular attributes themselves as the identity using these two dominant
processes that underlie them. Moreover, approaches: identity as attribute-based and
while the attribute-based perspective has identity as strategic orientation. And, because
commanded the focus of researchers, it does I was interested in linking organizational
not have consensual affirmation (e.g., Corley identity to institutional theory, I added a third
et al., 2006). Although the model itself is category: an institutional approach to organi-
rarely contested, its three core attributes are, zational identity. I categorized articles as
particularly in terms of their degree of cen- having an institutional approach when they
trality, distinctiveness and durability over invoked any institutional elements or expla-
time (e.g., Gioia, Schultz & Corley, 2000). nations (explicitly or implicitly) in account-
And yet, reflecting on these two decades of ing for organizational identity, such as
identity research, post-Albert and Whetten ideological fault lines that hybridize identity,
(1985), Corley and colleagues (2006) find status groupings and emulation/mimesis, or
some convergence around the nature of these roles for the professions and elites in identity
attributes. In addition, they note the persist- dynamics (e.g., a family-oriented firm, a reli-
ence and dominance of the Albert and gious organization).
Whetten (1985) formulation of organizational More generally, in categorizing work on
identity in the literature. organizational identity as institutional in
To get a more nuanced understanding of approach, I looked for any indications of
current models of organizational identity, and what Cerulo (1997: 387) describes as a
to examine what, if any, linkages to institu- sociological approach. This centers on the
tionalism are evident, I reviewed the relevant social construction of identity such that:
management and organizational literature 'every collective becomes a social artifact –
from 1985 on. I searched for articles whose an entity molded, refabricated, and mobilized
primary focus was organizational identity in accord with reigning cultural scripts and
using several electronic data bases (e.g., ABI centers of power.' Cerulo (1997) and others
inform, ProQuest, Google scholar, Business (e.g., Czarniawski & Wolff, 1998) have
Source Complete), as well as my own read- categorized this perspective as anti-
ing of the literature. I began with work pub- essentialist, in that it places less emphasis on
lished in 1985 and continued through 2006, the unique character or attributes of
identifying relevant publications using key- organizations and more on organizations'
word searches on 'organization identity' and constructions of their position in the social
its variants, e.g., organizational identity or order or institutional field.
 417
The results of my literature review, with Finally, there was some evidence of an insti-
lists of the relevant articles, publication dates tutional perspective on organizational iden-
and their primary approaches, are presented tity, but it was clearly in the minority; only
in Table 16.1. Of the 32 published articles I seven articles (22 percent) explicitly adopted
located on organizational identity, three- an institutional perspective while another five
quarters (24 articles or 75 percent) use an (16 percent) seemed to use institutional ideas
attribute-based perspective. One-third of the implicitly (indicated by # in the Table).
identity articles (11 articles or 34 percent) Thus, it seems that organizational identity
took a strategic perspective on identity; of researchers have emphasized an attribute-
these, nearly two-thirds (7 articles or 64 based construal of identity in terms of its
percent) also used an essentialist approach. core' 'essence,' i.e., the central, distinctive
418
and enduring elements that Albert and crafting identity (e.g., Lounsbury & Glynn,
Whetten (1985) proposed. This dominant 2001).
approach seems to be consistent with what The relatively less attention given to insti-
psychologists label a 'personal' identity, one tutional theory in the organizational identity
that tends to be more individualistic, unique, literature is ironic, because these two
and idiosyncratic rather than a 'social' identity perspectives are intertwined. Several
that classifies identities using socially institutionalists recognize this connection.
constructed systems of meaning. The empha- For instance, Pedersen and Dobbin (2006:
sis on the more individualistic aspects of 897) observe: 'Formation of identity through
organizational identity seems to have uniqueness and construction of legitimacy
emerged in spite of explicit theorizing about through uniformity are two sides of the same
the relevance of social identity theory to coin.' Scott (1995: 22) remarks that 'identity
organizations (e.g., Ashforth & Mael, 1989). theory' (at the individual level) emerged as a
With regard to the strategic approach, corrective to an over-socialized view,
researchers have theorized organizational modeling an active and reflective self that
identity as an 'imitable strategic resource' that creates, sustains, and changes social
lends competitive advantage (Fiol, 1991). structures; he writes 'Identities are viewed as
Scholars have shown empirically that organi- "shared social meanings that persons attribute
zational identity functions as a filter for inter- to themselves in a role" ... (they) are socially
preting and responding to strategic issues and produced by actors who locate themselves in
environmental changes (e.g., Dutton & social categories and interact with others in
Dukerich, 1991; Elsbach & Kramer, 1996; terms of these categories'; 'self-meanings' that
Gioia & Thomas, 1996; Gusftafson & Reger, are acquired in specific situations, and
1995; Fox-Wolfgramm, Boal & Hunt, 1998), symbolically defined and reflexively
shapes organizational units and professional managed. In the next section, I try to rebuild
groups' claims to strategic resources (Glynn, this connection by offering ideas on how
2000), affects strategic response to institu- institutional theory might inform research on
tional (regulatory) change (e.g., Fox- organizational identity.
Wolfgramm et al., 1998), and is the result of
strategic change, such as mergers (e.g.,
Corley & Gioia, 2005). The strategic INSTITUTIONS AND IDENTITY IN
approach seems to have found a basis in the ORGANIZATIONS
notion of identity 'claim': Ashforth and Mael
(1996) explicitly state that 'claim' relates It seems that the central question of identity -
organizational identity to strategy, and Porac, Who are we as an organization? - has been
Wade and Pollock's (1999) definition of iden- answered in the existing literature primarily
tity construction as 'an explicit claim that an in terms of an individuated and distinctive
organization is of a particular type.' constellation of attributes (see Table 16.1).
Only infrequently has organizational iden- The focus is on naming the central,
tity been theorized explicitly in terms of the distinctive and enduring attributes that define
institutional dynamics and environment the 'essence' of the organization.
which embed organizations. This work tends Organizational identity thus becomes a claim
to paint institutional forces in terms of broad of uniqueness and a point of strategic differ-
strokes (e.g., Glynn, 2000; Czarniawska & entiation from other organizational actors in a
Wolff, 1999) that emphasize isomorphic field or market. Cerulo (1987), in her review
pressures towards conformity and constraint of the literature on the sociology of identity,
(Fox-Wolfgramm et al., 1998; Glynn & cogently describes the essentialist approach:
Abzug, 2002). Less evident are the more
enabling aspects of institutionalism in 'natural' or 'essential' characteristics [are those]
qualities emerging from physiological traits,
 419
psychological predispositions, regional features, resistance to the institutional change; they
or the properties of structural locations. A proposed that 'Organizations whose identity
collective's members were believed to and image are inconsistent with institutional
internalize these qualities, suggesting a unified,
singular social experience, a single canvas
pressures for change will resist change
against which social actors constructed a sense attempts' (Proposition 1) and, in turn, that
of self (Cerulo, 1997: 386-387). 'Evidence of organizational success will be
used to reinforce and justify an organization's
An institutional answer to the identity identity' (Proposition 2).
question (posed above) would not be in terms In their studies of organizational names,
of an organization's essence but, rather, in Glynn, with Abzug (1998, 2002) and with
terms of an organization's membership in a Marquis (2004; 2006), showed how key
social category. Identity, according to markers of organizational identity (organiza-
institutionalists, is a set of claims to a social tional names) are embedded within institu-
category, such as an industry grouping, a tional fields. Additionally, they showed that
status ranking or an interest set. And so, an identity isomorphism legitimates - names that
organization might be identified as a Top 20 closely resemble the institutionalized
school, a Fortune 500 firm, or a hospital (and template tend to be more comprehensible
not a bank), for instance. Thus, institutional- (Glynn & Abzug, 1998, 2002) - but that
ists focus on claimed similarity (to other external changes in institutional environ-
category members) as the basis of identity ments can change legitimacy dynamics and,
and institutional alignment with the prevail- in turn, affect organizational survival (Glynn
ing constitutive rules that are used to define & Marquis, 2004). In an extension, Glynn
identity. and Marquis (2006) show that isomorphism
A number of organizational identity may not have universal appeal; rather, that
researchers offer some telling glimpses into individuals have differing preferences for
how institutions - and processes of institu- conformity and differ in the extent to which
tionalization - might surface more fully in the they see institutionally isomorphic names as
dynamics of identity construction, change, legitimate.
and performance. For instance, Czarniawska Structural accounts of organizational
and Wolff (1998) contrast the essentialist identity direct attention to the relational,
(psychologically-grounded) approach with positional and embedded influences that can
more sociological or structuralist approaches. stem from institutional environments. Here,
These authors conducted case studies of two identity is conceptualized as an actor's posi-
universities and concluded that identities (and tion or role within an established set of
their successes or failures) are shaped in categories that define an industry, social net-
institutional fields. Their work supports the work or labor market, rather than a set of
central tenet of institutional theory, that essential attributes. For instance, Zuckerman,
isomorphism legitimates but allows for Kim, Ukana, and von Rittmann (2003) define
limited cases of organizational deviance from identities in terms of a movie actor's abilities
institutionalized and legitimated templates. or skills to signal their membership in one
Fox-Wolfgramm et al. (1998) conducted a particular film genre (a simple or 'focused'
longitudinal case study of two banks, exam- identity) or several genres (a complex or
ining the organizational response to regula- 'robust' identity). Rao, Monin, and Durand
tory change in banking. They found that (2003) studied how identity movements,
organizational identity, which was linked to which they define as arising 'in opposition to
strategic posture (Defender or Prospector), the dominant cultural codes, [and] consist of
affected an organization's compliance or a "we-feeling" sustained through interactions
among movement participants' (p. 796),
drove changes in French cuisine over time by
420
generating identity-discrepant cues that led of institutional bricolage, where an identity is
chefs to abandon the old institutional logics cobbled together from existing elements or
and role identities and embrace the new. bits of meaning, symbols or values:
Thus, from the few studies that do attend Organizations appropriate bits of institutional
to how institutions surface in organizational understandings but combine (and recombine)
identity, we can see that they shift the focus them in institutionally sanctioned ways so as
and dynamics of theorizing identity. Viewing to introduce variations. Organizations
organizational identity through an institu- combine similar institutionally-based identity
tional lens directs attention to the social elements in different configurations so as to
meanings and structures that embed organi- make their identities distinct from each other
zational identities and induce conformity. within organizational fields but similar
This perspective offers a counterpoint to the enough within a field so as to make their
prevailing theories of identity that tend to membership claims (to the field) legitimate.
characterize it in terms of essential central, Thus, organizational identities function in
distinctive, and enduring attributes (e.g., ways that are similar to those of individuals
Albert & Whetten, 1985). A focus on in that they seek 'optimal distinctiveness'
institutional isomorphism is particularly (Brewer, 1993) within institutionally-
salient for non-instrumental or symbolic bounded social categories.
aspects of organizations (Oliver, 1991), espe- Third, institutions enable not only organi-
cially identity (Glynn & Abzug, 1998, 2002; zational claims of identity but also their
Glynn & Marquis, 2004). And, because it enactment or implementation. The institu-
complements the essentialist and strategic tional elements that organizations appropriate
approaches to organizational identity, it to construct their identities embed not only
offers the promise of a more comprehensive meanings but also performance scripts, i.e.,
approach to organizational identity. normative guidelines on organizational
For the remainder of this chapter, I focus appropriateness that inform action and insti-
on three distinct ways in which institutions tutional logics that rationalize action. Thus
can enable organizational identity. First, in action can be as much a part of identity
theorizing identity, institutionalism supplies a dynamics as meaning, symbolism and strate-
complementary explanation to essentialism gizing; this is an important way in which
that is not entirely organization-centric. institutions can extend current theorizations
Rather, institutional suggests that it is the of identity, which tend to focus more on
social embeddedness of the individual meaning and change rather than the action or
identity elements that accounts for why these performance imperatives of identity. I discuss
elements matter, when they matter, how they each of these three aspects whereby
might develop, evolve and change over time, institutions enable identity.
and how they complement (or conflict with)
each other. Thus, institutional theory can
deepen dominant theories of organizational
identity by illuminating the-processes by Institutionalizing the essence of
which organizations construct the essence of identity
their identity, i.e., their central, distinctive,
and enduring character (Albert & Whetten, Building from the identity framework that
1985). has dominated the literature (Albert &
Second, institutions (and associated Whetten, 1985), I examine how institutional
institutional meanings and symbols) provide theory might be useful in deepening the indi-
the raw material from which organizational vidual elements of organizational identity.
identities are constructed. And so, organiza- Albert and Whetten (1985) treat organiza-
tional identity construction becomes a form tional identity as a trinity, composed of three
 421
key criteria, that 'of central character, becomes a social artifact - an entity molded,
distinctiveness, and temporal continuity' with refabricated, and mobilized in accord with
'each necessary, and as a set sufficient' as an reigning cultural scripts and centers of power.
(387)
adequate statement of identity (p. 265). I
consider each of these three elements in turn.
In a study of identity claim-making during
the musicians' strike at the Atlanta Symphony
Identity as central
Orchestra, Glynn (2000) showed how the
The first of the three identity elements, that
core of organizational identity was contested
of claimed central character, describes the
by the two major professional groups in the
very 'essence' of an identity and is used by
orchestra: musicians and administrators. Each
leaders 'as a guide for what they should do
advanced claims- to a particular identity,
and how other institutions should relate to
each attached to identity a different core
them' (Albert & Whetten, 1985: 267,
ideology, i.e., aestheticism (in musical
emphases added). Thus, even the essentialism
performance) versus economics (in fiscal
of centrality, it seems, implies an inter-
responsibility). The study highlights how
organizational (and perhaps institutional)
identity can be a source of mobilization,
environment which enrobes the organization.
rather than just a product of it; this differs
A more explicit statement on central
from the dominant view which tends to
character is made by Brickson (2005) in her
model the organization's central character as
model of identity orientation. She describes
emerging from its founding, historical trajec-
this as a particular posture towards individu-
tory and a shared or collective view of the
alism, relationalism or collectivism; she con-
organization. Hybridization of identity, in
tends that this attribute will always be one of
complex organizations like a symphony,
the characteristics defined as central, distinc-
shows how a single organization may have a
tive and continuous as an identity element.
multiplicity of claims on its central character.
Note how this typology of identity orienta-
In many ways, then, even the core charac-
tions, with its 'isms,' has ideological roots
ter of organizational identities implies insti-
that position the actor (the self or the
tutional space and a set of social categories
organization) both in a social environment
that offer meaningful ways of describing
and in relation to others.
organizations (e.g., as a church or a business,
Even the core element of centrality seems
as Albert and Whetten suggest). These
to hinge the organizational identity to the
categories (or their typifications) are defined
inter-organizational or institutional environ-
by a set of symbolic boundaries that function
ment. Albert and Whetten (1985) suggest that
in the construction of valued identities
identity locates organizations in social or
(Lamont, 1992). Moreover, boundary
institutional space. Their fundamental notion
strength, i.e., only those boundaries firmly
of identity as an organizational claim hints at
grounded in widely shared meaning, prove
a collective's basic struggle to self-name,
sufficiently strong to generate hierarchy and
self-characterize and assert social prerogative
confer value to collective identities (Lamont,
and raise questions about the viability of
1992).
'essentialism' in identity construction (Cerulo,
Thus, institutionally-based categories can
1997); Cerulo (1997) writes of an anti-
describe cultural repertoires of meaning that
essentialist perspective, which implies
organizations can appropriate to address the
institutionalism:
question of 'who we are.' The response
Recent treatments of collective identity question
simultaneously characterizes their central
the essentialism of collective attributes and character but also classifies them as a
images. Anti-essentialist inquiries promote the member of one organizational field and not
social construction of identity ... every collective of others; category partitions (or boundaries)
distinguish them from other organizations or
social communities. Even as a claimed
422
central character may reflect core organiza- that is claimed is relative to a particular cate-
tional values or strengths (e.g., integrity, fair gory of organizations (e.g., Top 20 Business
trade, technology leader, customer-oriented, Week list). Other scholars have shown how
family friendly, etc.), it nonetheless identities have a reciprocal relationship with
implicates a set of institutional categories and the external image of the organization (e.g.,
boundaries from which this character draws Dutton, Dukerich & Harquail, 1994; Gioia,
meaning. In many ways, then, this seems to Schultz & Corley, 2000; Gioia & Corley,
have been an under-specified aspect of 2002), with identities shifting so as to
organizational identity that institutionalism enhance their reputation with important
might help to explain. stakeholders. Working at a different level of
analysis, organizational ecologists also attest
Identity as distinctive to how identities are 'conferred by an audi-
Identity distinctiveness and prestige surface ence' (Hsu & Hannan, 2005: 478) in an effort
in several studies conducted at the individual to gamer stakeholder acceptability.
level of analysis that examine organizational Implicit in identity distinctiveness is not
members' perceptions of, and identification only the enhancement of the reputation or
with, their organizations. Mael and Ashforth image of the organization, but also cues that
(1992) studied the antecedents of alumni's enable external audiences to perceive the
identification with their organization, a organization as legitimate and appropriate; if
religious college, and found that it was organizations are perceived to conform to
positively influenced by their perceptions of desirable identity categories, then stakehold-
organizational distinctiveness and prestige. ers tend to sanction that organization and
They concluded: resource flows are beneficial. The process of
identity distinctiveness is the flip side of
In general, symbolic management can be isomorphism (or conformity to institutional
directed towards increasing the salience of the forces), as Pedersen and Dobbin (1997: 432)
institution as an institution, complete with a have pointed out in their description of
unique and compelling mission and a reputation
for fulfilling that mission. (Mael & Ashforth,
enumeration.
1992: 14, emphasis in the original) Institutionalists ground the notion of iden-
tity distinctiveness within processes of
Similarly, Bhattacharya, Rao and Glynn isomorphism; distinctiveness (or enumera-
(1995), in a survey of art museum member- tion) occurs within identity categories, as
ship, found that fee-paying members' identi- organizations distinguish themselves from
fication is positively related to perceived other members of the class. However,
organizational prestige. Thus, as much as distinctiveness does not occur in an institu-
distinction serves to differentiate one organi- tional vacuum; isomorphism not only
zation from another, it also seems to function legitimates but it encourages differentiation
as a touchstone for individuals' identification and the distinctiveness which can follow.
with the organization and its identity; for Further, this institutional explanation of
both individuals and organizations, such identity distinctiveness can illuminate the
distinctiveness can enhance perceptions of relationship among the three core identity
the self. elements, suggesting a possible hierarchy of
Organizational identity researchers have distinctiveness embedded within claims of
examined how identities respond to status central character.
rankings, particularly those by external third
parties. Elsbach and Kramer (1996) show
how business schools can shift the bases of Identity as enduring
their distinctive character to preserve their Of the three identity elements articulated by
prestige and esteem in response to a drop in Albert and Whetten (1985), the claimed tem-
the Business Week rankings; the poral continuity or durability of identity has
distinctiveness
 423
perhaps been the most contested by other it does tend to set the limits on the scope and
researchers. Gioia, Schultz and Corley (2000) scale of this change. Pedersen and Dobbin
characterized organizational identity as (1997: 436) note that the notion of change
having 'adaptive instability,' changing in and differentiation itself has been institution-
response to others' images of the organiza- alized and so identity change tends to occur
tion. They argue that identity continuity within narrowly defined categorical bound-
implies flexibility (instability) with regard to aries: 'Presidents and kings actively distin-
a core central character, as external audiences guished their nation-states from others, but
can destabilize identity, causing the they did so in routine ways. The dimensions
organization to reconsider the framing or of identity were clearly institutionalized.'
constitution of its identity. Subsequent work The preceding section illuminated some of
by two of these authors (Corley & Gioia, the ways in which institutions are implicated
2004) examines identity change processes in current theories of organizational identity
during the strategic change of a corporate and particularly in each of its core identity
spin-off; they find that identity change does elements - central character, distinctiveness
occur and that the organizational leadership and temporal continuity. The construction of
has to manage that change. the organization's identity also implies the
Other challenges to the enduring nature of construction of a social actor through a
identity arise from Biggart's (1977) study of process of categorization (that form the basis
the US Postal Service and Fiol's (2002) study of claimed central character), enumeration
of a high technology company. Both of these (that forms the basis of distinctiveness), and
researchers demonstrate that previously isomorphic alignment that legitimates (that
valued aspects of the organization's identity forms the basis of continuity and change).
had to be discredited before employees could
buy into a new way of approaching their
business, thus requiring a changing identity.
Similarly, Reger et al. (1994) observed that a Organizational identity as a form of
fundamental organizational change, such as institutional bricolage
the implementation of a total quality initia-
tive, required a fundamental change in how Although organizations can construct identi-
the organization thought of itself. Rao, ties that reflect their central and distinctive
Monin and Durand (2003) demonstrated how attributes, they typically do so with compo-
identity movements that opposed the old nents available in their institutional environ-
institutional logics were essential to the con- ment, i.e., the industry, organizational field,
struction of new role identities. And Hatch societal culture and/or the nation-state. For
and Schultz (2002) proposed a model of instance, Glynn and Abzug (2002) found that
organizational identity dynamics that organizations changing their names made
specified processes by which organizational choices that aligned them with prevailing
identity emerges from the unending conver- institutional practices and templates; Fred's
sations that occur between members of an Bank was as unlikely a choice to name an
organizational culture and its many organization's identity as First Federal Pizza.
stakeholders. In narrating the identity of their new ven-
Researchers have challenged Albert and tures, Lounsbury and Glynn (2001) found
Whetten's (1985) identity element of tempo- that entrepreneurs employ elements from
ral continuity and have done so by mapping widespread identity stories as 'raw material'
changes that arise from the organization's when negotiating their emerging identities.
strategic, industry and institutional environ- More generally, people can be artful in their
ments. However, as much as institutional mobilization of different institutional logics
change may prompt organizational change, to serve their purpose (Westenholz, 2006).
424
Symbols that 'mark' an organization's core identity elements. Thus, the process of iden-
identity as central (or even unique) ironically tity construction becomes the process of
are often composed of common components institutional bricolage, where organizations
established within organization fields. Glynn incorporate cultural meanings, values, senti-
and Abzug (1998; 2002) demonstrated this in ments and rules into their identity claims.
their studies of the names that organizations Identities can thus be bricolaged or cob-
chose to adopt when they changed their bled together from shared cultural elements
name; they examined the explanatory power and symbols and it is in this way that they
of an institutional view (predicting symbolic can come to resemble each other. Although
isomorphism) and a strategic view there may be shared elements, they are
(predicting uniqueness). They found robust nonetheless combined in fairly unique and
effects for institutional predictions. distinctive ways. In this manner, then, organ-
Relatedly, in work on organizational cul- izations can accommodate both central and
tures, Martin, Feldman, Hatch and Sitkin distinctive elements by claiming uniqueness
(1983) make a similar point: 'Organizations but doing so with innovative combinations of
claim uniqueness, but at any point in time, institutionalized elements. Moreover,
organizations claim similar sorts of unique- although identities are constructed from
ness' (p. 901). These authors observed that shared cultural models, they are negotiated in
'Building blocks of conscious organizational the organization and in the organizational
culture often come from the environment, field (Westenholz, Pedersen & Dobbin,
with the result that distinctive organizational 2006). Moreover, the very process of brico-
cultures can be surprisingly similar to one lage, whereby different elements are con-
another at any point in time' (p. 901). A joined, carries implications for the both the
similar view is echoed in work describing the distinctive and enduring aspects of identities.
uniqueness paradox in organizational stories When organizations appropriate institutional
(e.g., Martin, Feldman, Hatch & Sitkin, elements from different - and especially
1983); organizations may claim a central and oppositional categories - they can erode the
unique narrative, but they tend to be similar boundaries that compartmentalize these ele-
(or isomorphic) to other organizations in the ments and thus blunt distinctiveness. Rao,
very claim that they make. Moniin and Durand (2005) describe such
Future research on organizational identity erosion in the context of nouvelle and classi-
might advance our understanding on the cal cuisines' boundaries becoming under-
wider models in the institutional field from mined by innovative appropriation. Glynn
which organizational identities are con- and Lounsbury (2005) similarly provide an
structed. It would be of interest to examine account of such blending processes for the
whether organizations draw their identity's symphony's repertoire in appropriate pieces
central, distinctive and enduring characters from both the traditional musical canon as
from more local environments (such as well as more contemporary art forms. Thus,
industry or geographic clusters), from more the process of identity construction comes to
distal or universal environments (such as resemble a process of institutional bricolage,
nation-states or global trends), or from some the elements and processes of which invite
combination of both. Some of these cultural closer scrutiny by future identity researchers.
models available are what Pedersen and
Dobbin (2006) describe: 'The appropriate
cultural artifacts of identity formation were
traditions (e.g., language, couture, cuisine) Identity not only as claims, but
and newly created symbols (e.g., flags, performance
anthems, constitutions).' As Swidler (1986)
reminds us, culture serves as a kind of Although the focus in the organizational
'toolkit' from which organizations can draw identity literature has been on claim-making,
 425
institutionalism alerts us to another dimen- am I in? What does a person like me do in a
sion of identity construction: identity-driven situation like this? Thus, passions are disci-
performance and action. Institutionalized plined not by incentives, but by identity.
identities and frames come with expectations Thus, the logic of identity offers a counter-
about how actors should perform an identity point to the logic of consequence that typi-
in specific situations (Eliasoph & cally dominates organizational thought.
Lichterman, 2003). When social identities Identity, then, can function as kind of
and frames are put to use in practical per- institutional logic (Friedland & Alford, 1991)
formance, their meaning and relevance is that governs organizational behavior and
reaffirmed as subjective experience. choice; although it can at times limit choices,
Institutions are thus 'embodied in personal it also enables and advances action because
experience by means of roles' (Berger & identities are performed. They function as a
Luckmann, 1966: 74). kind of institutional logic, a set of 'shared
The identity literature comes closest to rules and typifications that identify categories
this view in its articulation of strategic of social actors and their appropriate
identities, which are viewed as resources activities or relationships' (Barley & Tolbert,
leveraged for competitive advantage. 1997: 96). Action is implicated and, in the
Although identities can certainly guide performance of identity, institutions
strategic behavior, they may do more than themselves can be transformed. Thus,
that; they can ensure organizational survival. institutionalists alert us to a relatively
Selznick (1956: 63) expresses it directly: unexplored aspect of organizational identity:
'Institutional survival, properly understood, is its performance.
a matter of maintaining values and distinctive
identity.'
Organizational fields are characterized by
institutional logics, which Meyer, Boli and POTENTIAL CONTRIBUTIONS OF
Thomas (1987) define as cultural accounts; INSTITUTIONAL THEORY TO THE
logics endow the actors and actions in the STUDY OF ORGANIZATIONAL
field with meaning and legitimacy. Thomton IDENTITY
and Ocasio (1999: 804) offer a similar defini-
tion, but draw out more explicitly the produc- At first blush, theories of institutions and the-
tion of actions consistent with this logic; they ories of identity seemed to be almost anti-
define logics as 'the socially constructed, thetical. They operate at different levels of
historical pattern of material practices, analysis and seek different explanations for
assumptions, values, beliefs, and rules by organizational sameness and differentiation.
which individuals produce and reproduce Institutionalists look for similarities among
their material subsistence, organize time and organizations in a field; organizational iden-
space, and provide meaning to their social tity theorists look for similarities among
reality.' individuals in an organization. More gener-
In his compelling book and video, show- ally, as Pedersen and Dobbin (2006: 900)
casing Don Quixote as a model for leader- observed in their study of institutions and
ship, Jim March focuses on identity. As organizational cultures: 'institutionalists look
March tells it, Quixote balances passion with for interorganizational convergence,
discipline, which stems from Quixote's iden- isomorphism, and meaning construction
tity, his precise sense of himself. Not only is through interorganizational paradigm
Quixote aware of the consequences of his construct; organizational culture researchers
actions (which are governed by the logic of look for organizational divergence, polymor-
consequence), but is also very aware of the phism, and identity construction through
demands of his identity, his role in the world. collective sensemaking.' And yet, they are
He asks himself: Who am I? What situation fundamentally circular in their effects; two
426
sides of the same coin, as Pedersen and of these mechanisms: socio-normative and
Dobbin (2006) remind us. cognitive. And, although institutional mecha-
A useful approach to relating these two nisms have been typified as constraints that
perspectives is that of mechanism-based narrow possibilities for identity construction
theorizing; this approach relates variables at and choice, I have argued that institutions
one level of analysis to those at a different enable organizational identities in three basic
level of analysis. It suggests a bridge that ways: by formulating the essential identity
could be built between institutionalists' elements (centrality, distinctiveness and
emphasis on the inter-organizational environ- durability); by supplying the 'raw' cultural
ment and identity's emphasis on the intra- materials that organizations assemble in a
organizational environment. As Davis and process of institutional bricolage to achieve
Marquis (2005: 335) explain: 'If regressions 'optimal distinctiveness' (Brewer, 1993)
reveal the relationship (wind a watch and it within institutional fields; and by motivating
keeps running), mechanisms pry the back off performance in organizations in a way that is
the watch and show how.' governed by the institutional logics of
The framework of Hedstrom and identity. In all these processes, I have
Swedberg (1998) maps two mechanisms that acknowledged how institutions can induce
move across levels of analysis and are variations, as well as temper them.
relevant to institutions and identity: situa- More generally, I have tried to show how
tional mechanisms, that explain how vari- identity-making processes are shaped both by
ables at a macro-level affect those at more wider cultural accounts circulating in broader
micro-levels (e.g., effects of regulatory law fields of meaning (industry; nation-state) as
on employment practices; new market pres- well as more specific (and perhaps historical)
sures on industries such as education or accounts of organizational character that
health care; an organization's layoffs on reflect the essential aspects of the firm.
employee motivation) and transformational Despite the fact that organizations assemble
mechanisms that explain how micro-level similar institutionalized identity elements,
actions or variables alter macro-level patterns variations are possible because of the
at a higher level of analysis (e.g., diffusion of transposability (Sewell, 1992), mutuability
one's organizational HR practices to the field; (Clemens & Cook, 1999), and recombinatory
the activism of social movements that possibilities of institutional scripts (Powell,
changes civil law or organizational policies 1991).
on environmentalism). And, although I have Institutions serve up the resources for
focused on situational mechanisms where identity-work in organizations by supplying
institutions enable identities, surely transfor- cognitive templates for both the form (gram-
mational mechanisms alter fields by mar) and content (meanings; symbols) of
aggregating or leveraging potent organiza- organizational identities. Further, by
tional-level identities. sanctioning (or legitimating) some particular
Institutional theory implies three basic sets identity representations (or symbols) over
of situational mechanisms that operate' on others, an institutional perspective on identity
organizations: the normative (or value-laden) suggests that some identities may be more
expectations of institutional fields or potent than others in particular historical
industries; cognitive 'guidance systems' that periods.
supply abstract structures of meaning; and Thus, in demonstrating their social fitness,
regulatory or coercive forces that can limit organizational identities can resonate with
identity choices. (e.g., prescribing the use of audiences and develop cultural power, i.e.,
terms like 'Incorporated' in a name or 'the capacity of certain works to linger in the
trademarking unique organizational logos). In mind ... to enter the canon' (Griswold, 1987:
this chapter, I have focused on the first two 1105). Ironically, cultural power stems
 427
less from organizational individuation and on exogenous models of change (Barley &
distinctiveness and more from its institutional Tolbert, 1997; Farjoun, 2002). However,
situatedness, as Griswold (1987: 1105) when organizational identities are conceptu-
explains: 'A powerful work ... locates itself alized as part of a particular institutional field
within a set of conventions that it strains, or industry, attention is redirected towards
plays with, perhaps inverts, but does not modeling institutions as endogenous, the
totally ignore ... intrigues or disturbs its result of organizational appropriation of
recipients without utterly mystifying or frus- shared institutional elements and logic but
trating them.' In this way, then, institutions with a multiplicity of variations. And finally,
can enable not only identity construction but identity construction can afford a way of
also identity legitimacy and potency. Further, introducing agency into institutional accounts
when identities are potent, they persist. of change. By modeling how organizations
Persistence (over time) may arise not only actively craft identities from available
because of organizational strategy or inertia, cultural toolkits (Swidler, 1986), combining
but because institutional pressures sanction (or recombining) identity elements to achieve
certain types of identity symbols and both sameness (with appropriate cultural
practices as potent. Identities thus can strike scripts) and differentiation (from other
such a resonant chord that they endure in organizations), theorists introduce aspects of
their vibration, becoming almost organizational choice, and creative deviation
indestructible. that are institutionally informed but not
Issues of identity potency and resonance, necessarily mandated. Such a perspective
derived from institutional alignment, raise would take the institutionalism of identity
several intriguing questions for future beyond a model of constraint to one that
researchers to pursue. One question again enables and enriches identity construction in
challenges the enduring nature of identity, organizations.
but focuses less on shortening its lifespan and
more on lengthening it: Is there more
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1.

17
Institutionalism and the
Professions
Kevin T Leicht and Mary L. Fennell

The study of the professions, as they are undergoing changes in the markets, organiza-
defined in the developed world, has been tional forms, and technologies that provide
deeply intertwined with institutional theory fertile ground for the use and extension of
and topics central to institutional theory institutional theory. The institutional norms
(legitimation, symbolism, isomorphism, of several key professional sectors are
decoupling, power, agency, and organiza- changing drastically as well as the assump-
tional fields). The professions represent the tions about market structures and the nature
quintessential triumph of Durkheimian occu- of technological changes currently at the
pational communities over and above the forefront.
mass-society-based anonymity of impersonal For the purposes of this chapter, we define
markets and the grinding rigidity of bureau- professional work as occupational
cracies. But, as we'll see, the classic incumbents: (a) whose work is defined by the
autonomous, peer-oriented professional application of theoretical and scientific
practice is under pressure from institutional knowledge to tasks tied to core societal
constituents interested in lower costs, more values (health, justice, financial status, etc.),
accountability, and ethical transparency at the (b) where the terms and conditions of work
same historical moment that technological traditionally command considerable auton-
changes put pressure on traditional, omy and freedom from oversight, except by
institutionalized methods for delivering peer representatives of the professional
professional services. The combination of occupation, and (c) where claims to exclusive
new places, new people, new technologies, or nearly exclusive control over a task
and new clients has pushed professionals in domain are linked to the application of the
new and uncharted directions. knowledge imparted to professionals as part
In this chapter, we examine recent devel- of their training (Leicht and Fennell 2001:
opments in the study of professional work 25-30). This definition encompasses the
through the lens of institutional theory. The traditional classic professions (physicians,
delivery of professional services is lawyers, and university professors) but
432
also includes other abstract workers and 1977; Starr 1982), and management account-
symbolic analysts such as accountants, ing (Johnson and Kaplan 1987). More recent
pharmacists, engineers, and scientists. historical work on the professions has exam-
In the next two sections we look briefly at ined the export of western professional ideals
the more traditional literature on the profes- on economic and legal systems to Latin
sions, and then move on toward America (Garth and Dezalay 2002),
contemporary institutional theory and the emphasizing the impact of local political
ways in which it has addressed the struggles on the success or failure of such
professions and the organizational structures export attempts.
where professional work is done. Finally, we Early sociological efforts to consider both
develop an updated version of an institutional professional work and the structures within
analysis of the professions, focusing on which that work takes place are best exempli-
change within professions themselves, fied by models developed by Scott (1992)
change in the relative importance of and his colleagues. Scott discussed three
institutional and technical environments, and models for embedding professionals in
demands for greater transparency and organizations. Autonomous organizational
accountability following well-known ethical forms represent the ideal-typical practice set-
scandals that resulted in significant harm to ting where professionals retain authority to
clients and employees. Our analyses through- control and evaluate themselves as a group.
out will draw heavily (though not Heteronomous organizational forms subject
exclusively) from research on the health and professionals to more line-authority control,
medical professions, where the impact of as exemplified by healthcare managers in
institutional change has been substantial. today's managed care organizations. Conjoint
organizational forms produce separate
domains of power controlled by professionals
and administrators who recognize the shared
PRIOR LITERATURE ON benefits of their division-of-labor and
THE PROFESSIONS AND collaboration.
PROFESSIONAL PRACTICE The different dimensions of professional
work that are subject to change have been
Sociological theory on the professions moved discussed by Friedson (1986) and Hafferty
away from trait theories (theories that defined and Light (1995). Changes in the actual
professions based on a series of fixed content, or technical core, of professional
characteristics such as credentials, codes of work refer to specific decisions made and
ethics, and knowledge mastery) in the late procedures used during task performances. In
1960s and 1970s. The prevailing movement medicine the proliferation of practice
was toward models of professional organiza- protocols and research on medical effective-
tions and knowledge claims (Leicht and ness represent examples of attempts to limit
Fennell 2001). These new models of profes- control over the content of professional work.
sions and professional practice moved Changes in the terms of work refer to
beyond the conception of professional organ- characteristics of the professional work
ization as a rational, goal-oriented system contract (pay, hours worked, and reimburse-
designed around core tasks carried out and ment arrangements). The replacement of fee-
controlled by professionals themselves for-service delivery with salaried work
toward organizational and institutional claims conducted according to fixed schedules
regarding professionals and their activities. would be an example of changes in the terms
Other classic studies of 'professionalism' as a of work. Finally, changes in the conditions of
historical process have emphasized the work refer to changes in the organizational
political and social power of professional structures, staffing arrangements, and
groups in medicine (Larson
 433
resources made available for professional builds on the concepts of agency theory to
practice. The rising expectation that discuss ways that competing professions
academic scientists will produce patentable make countervailing claims to dominance
discoveries and large research grants to pay over specific task domains. Friedson's work
for their laboratory infrastructure would be (2001) follows in this tradition by claiming
an example of this change. Changes can that professions represent a 'third logic' for
occur in any of these domains independently, the institutionalized organization of service
but changes in the terms and conditions of delivery as a Durkheimian alternative to
work often have implications for the content markets and bureaucracies.
of work that is performed.
Others have focused on systems of profes-
sions and knowledge claims among
professional groups (cf. Abbott 1988, 1991). CONTEMPORARY INSTITUTIONAL
These researchers move away from studying THEORY AND THE PROFESSIONS
single professions in isolation toward studies
of professional groups who claim to control Institutional theory suggests that the regula-
the same (or very similar) task domains. tion of organizational behavior occurs
More important for our purposes, these through and is a consequence of taken-for-
researchers also focus on the entire system of granted beliefs, schemas, and values that
professional claims within specific societies originate in larger institutional contexts (cf.
and cultures. Systems of knowledge claims Powell and DiMaggio 1991; Scott 1987;
are studied when boundary and domain Meyer and Rowan 1977; Greenwood and
disputes develop among competing profes- Hinings 1996; Friedland and Alford 1991). In
sional groups. These competitions determine most institutional accounts these beliefs,
each group's relative prerogatives and pres- schemas, and values are not primarily
tige. Relatively prestigious occupations (e.g. responses to market pressures and efficiency
medical practice prior to the 1980s) rarely dynamics. Instead, these arrangements repre-
have their task domains challenged by sent active responses to dominant sets of
competing groups. But this perspective points norms, values and beliefs of key organiza-
out that there are far more cases where tional actors (elite business managers,
professional task domains are contested (see partners in professional practices, key regula-
our discussion below of the relationship tors, and powerful clients). Specific ways of
between pharmaceutical companies, organizing become archetypes that represent
scientists, and new technologies or our dis- coherent patterns of organizing in response to
cussion of conflicts of interest between man- underlying values and beliefs (cf. Greenwood
agerial consulting and accounting practice). and Hinings 1993).
Through watching these competitions in new Mechanisms for enforcing institutional
organizational and institutional arrangements, configurations are the key to the establish-
researchers can study how task domains are ment and maintenance of a strong correspon-
controlled and how challenges to the dence between institutionalized values and
conventional organization of professional beliefs and methods of organizing. In institu-
practice occur. tional theory these forces usually are
Light's (1993, 1995) theory of counter- classified under the headings of normative,
vailing powers is another variant of the focus coercive and mimetic pressures. Normative
on systems of professions, a conception that pressures result from the socialization of
is echoed by Friedson (2001). The dynamics institutional actors into a set of beliefs that
of change in the status of professions is define specific organizational arrangements
linked to a profession's location in a field of as the 'best and customary' way of organizing
institutional and cultural actors. This theory specific activities. Professional schools
434
and professional associations are classic and archetypes (such as discount brokerage
examples of groups that exert normative houses, mail-order pharmaceuticals, internet
pressure through their socialization (and con- social-networking sites). Organizations
tinued re-socialization) of occupational and/or the professionals within newly devel-
incumbents. Coercive pressures result from oping organizational fields can themselves
the actions of regulatory oversight agencies have significant influence on defining the
and major resource providers. These stake- institutional logics that will become
holders have the ability to enforce their will imprinted upon that sector. Suchman's work
on organizational actors by conferring or on the legal community in Northern
withdrawing legitimacy and resources. California's Silicon Valley provides an
Certifications, inspections, and claims to excellent example of how local law firms
speak for broader unorganized constituencies developed and 'set' legal patterns for linking
(in addition to the sheer ability to pay large venture capitalists with startup firms in the
fees, secure bank loans, and take legal action) high tech sector (2003; Suchman et al. 2001).
make coercive pressures in well-insti- Greenwood and Suddaby's (2006) study of
tutionalized organizational domains credible. new forms of multidisciplinary practice firms
Mimetic pressure is a consequence of the in Canadian professional business services
establishment of taken-for-granted methods provides another cogent example of
of organizing. Once specific organizational institutional change - entrepreneurship -
practices dominate a specific field, resorting initiated from the center of a mature
to those practices as the best solution to a organizational field.
problem is simply a matter of borrowing In the second conception, strategic
from what others do. responses to institutional processes, there are
More recently neo-institutional theorists a wide variety of responses to institutional
have been interested in examining change pressure, and simply following the norms
processes (ct. DiMaggio and Powell 1991; (acquiescence) is only one of those. In
Greenwood and Hinings 1993; Oliver 1991). Oliver's conception, organizational leaders
There are two broad strands of institutional can engage in compromise, avoidance, defi-
research and theory that attempt to under- ance, and manipulation of the institutional
stand change: (1) a tradition focusing on environment. These responses may vary
variations in embeddedness in specific insti- depending on how embedded the organiza-
tutional contexts that promote specific orga- tion is in the institutional environment in the
nizational archetypes (ct. Greenwood and first place and the overall availability of alter-
Hinings 1993, 1996), and (2) a somewhat less native templates and logics for organizing.
prominent tradition that talks about strategic In the next section we provide an exten-
responses to institutional processes (cf. sion of earlier institutional theory treatments
Oliver 1991). In the first conception, of the professions, by focusing on change
embeddedness in an institutional context from several directions, including both inter-
makes gradual change less likely and radical nal and external changes. Specifically, we
(or revolutionary) change more likely. assert that the professions have undergone
Embeddedness also reflects the structure of changes in their institutional environment
the institutional context - the extent that con- that reflect the following:
texts are permeable and the extent that insti-
tutional monitoring practices are tightly or (a) changes from inside the professions as practitio-
loosely coupled. Not all organizations oper- ners become more diversified demographically
ate in highly institutionalized environments and in terms of their professional interests and
specialization. Not only are the classic professi-
(e.g., restaurants, big-box retailers), and some ons now populated by an unprecedented ethnic,
environments are vulnerable to new racial and gender diversity of practitioners, but
practitioners with different organizing logics continued professional specialization and
 435
rising earnings inequality threaten to undermine professionals (see Leicht and Lyman 2006).¹
what little professional solidarity remains. The US trends on both fronts have been grad-
(b) changes in the relative salience of institutional ual, but the overall change has been dramatic.
and technical environments in altering the logics
of professional service delivery (cf. Scott, Ruef,
Women have gone from representing fewer
Mendel and Caronna, 2000; and D'Aunno, than two in every ten professional jobholders
2003). Historically there have always been to almost 50 percent, and much of this
tensions between concern for the overall increase has happened since 1980. The repre-
institutional and professional service ethos of sentation of non-whites in the professions has
professional activity and the technical increased as well, but from a lower baseline
environment (markets, technology, and and with a much more gradual rise. The
innovation) where professional practice takes
place. We argue that many professions in the
representation of non-whites among profes-
past 25 years have seen shifts toward the rising sionals currently hovers around 12 percent.
salience of the technical environment (markets By any standard, the slow but steady
and technologies) in relation to traditional demographic diversification of the profes-
institutional concerns of professional practice sions is a reality that is here to stay. These
delivery. We argue that one of the trends in demographic diversification are
environmental precursors of this shift was the most apparent among the professions closely
Keynesian crisis in macroeconomics in the mid-
1970s and the resulting questions this raised
associated with business services; accounting
about a future postindustrial society dominated and law. Women constitute a near majority of
by technical, professionalized experts. The other accounting practitioners (both CPAs and non-
contemporary change is in the technological CPAs), and women's representation among
interface used by professionals as they attempt US lawyers has dramatically increased as
to keep abreast of new developments in well. Women now constitute a majority of
information and nanotechnology. These students in US law schools and a substantial
developments, and the organizational responses
to them, are especially apparent in the healthcare
percentage of students in US accounting and
professions where new technologies raise business schools (although Hammond (2002)
questions about old organizational forms used to shows that accounting has not become more
deliver healthcare services. racially diverse). Perhaps not coincidentally,
(c) demands for greater transparency and accounta- accounting and law are precisely the
bility in light of well-publicized scandals professional groups where the reorganization
affecting service delivery. These scandals are a of working arrangements and the creation of
product of the new institutional environment for
professional service delivery that highlight the
the one-stop business service firm (similar to
fault-lines between traditional conceptions of the multidisciplinary practice firm examined
professional practice and new avenues for by Greenwood and Suddaby) is most evident.
exploiting information gaps and the speed of This is a significant (but certainly not the
transactions between geographically dispersed only) component of the increasingly
clients. fragmented institutional environment
professionals face.

CHANGES WITHIN PROFESSIONAL

GROUPS - DEMOGRAPHIC AND Growing earnings inequality among
INTEREST DIVERSITY professionals

There has always been (for the last 30 years

Growing demographic diversity at least) considerable diversity in the earnings
among professionals of professionals and the earnings gaps among
professionals have been wider than earnings
One of the more obvious trends of the past 30 gaps in the rest of the working population.
years is in the growing representation of Assessing the growth in earnings
women and minorities (non-whites) among
436
inequality among professionals is an underrepresented groups (see also Epstein
important (but far from the only) component 1993, 2004).
of assessing claims that the interests of pro-
fessionals are diversifying.
More interesting from the standpoint of
potential professional interests is that, since CHANGES IN THE RELATIVE SALIENCE
1970, inequality has been rising more OF INSTITUTIONAL AND TECHNICAL
drastically among professionals than among ENVIRONMENTS IN PROFESSIONAL
the general population (Leicht and Lyman SERVICE DELIVERY
2006). If professional practice (in part) repre-
sents the creation of common occupational
communities with strongly identified Cost and quality pressures from
common interests, it is a bit difficult to see clients
how drastically rising earnings inequality
could do anything but strain those normative The costs of many professional services (for
institutional ties. example, medical care and college tuition)
At minimum, these trends indicate a con- have risen at several times the inflation rate
siderable shift in the material and social basis since the early 1980s. This increase in fees,
for the production of common occupational and the growing affluence of some of the
communities in the professions. This more visible segments of most professional
common community is a key component of groups (e.g. partners in large urban law firms,
promoting and maintaining dominant organ- financial analysts for corporate banks, and
izing archetypes that stress autonomy, college presidents), has occurred at the same
equality, and a common set of ethics in the time as median income and earnings (in real
delivery of professional services. Whatever dollar terms) have stagnated, leaving the
else professional occupations represent, they average middle-class consumer of profes-
are no longer elite occupations full of people sional services at the mercy of the market.
from homogeneous social and economic Health insurers, in particular, have been
backgrounds. unable to control the sharp increase in med-
Demographic and material diversity is ical costs as new and expensive technologies
compounded further by the growth of come on-line that promise more effective
specialty groups within most professional treatment for an ever wider variety of
occupations. The role of the general, omnibus diseases. Scientific instruments necessary to
practitioner whose professional status and establish a university research laboratory in
prestige rested on their ability to apply any of the physical or biological sciences
professional knowledge to a wide variety of now routinely cost $500,000 to $1 million or
conditions is yielding to increasingly more and much of this equipment needs to be
specialized practice settings, where clients replaced every few years, some of it for
come to have specific and narrow sets of safety reasons.
needs addressed. The combination of demo- The rise in college tuition has been
graphic diversification, rising income accompanied by the rising expenses
inequality, and extreme specialization have associated with professional and graduate
led some researchers (e.g. Barbara Reskin) to education. In the US, young professionals
detect a growing gendered and racialized now leave university-based training hundreds
division of professional labor as glamorous, of thousands of dollars in debt, and the need
high-visibility specialties become the prerog- to pay off these debts often distorts and/or
ative of whites and men and less glamorous limits the specializations and areas of
generalist/public service specialties become professional practice they choose to pursue.
the domain of women and traditionally Complicating this entire process further is
the institutionalized price signaling that
 437
occurs in the most professional practice set- ethics on the one hand, versus a technical
tings. In this environment, price is often a environment stressing market efficiency,
proxy for quality and clients and others are at technological change, and organizational
a severe disadvantage when it comes to eval- innovation on the other (see Malhotra, Morris
uating the quality of professional services and Hinings 2006). In the last 25 years, the
they receive. Since the lowest price isn't rise of neo-liberal political and economic
always the best or expected quality, and the ideologies has threatened the expert claims of
client has no way of evaluating the opportu- professional groups and the logic of
nity costs of selecting different service professional organization as an alternative to
providers, those that set prices have relatively and-protector of client and public welfare.
free rein to charge what they will for profes- This historic change was triggered by the
sional services. crisis of Keynesian economics in the mid-
On top of this, there has been considerable 1970s and the implications this crisis
growth in inequalities among clients and presented for a post-industrial future
traditional purchasers of professional serv- dominated by technical and administrative
ices. Colleges and universities increasingly expertise (cf. Bell 1976). This change is
rely on affluent parents with deep pockets to reflected in the Western European context by
subsidize financial aid programs for students the rise of new public management ideas in
who can't pay full tuition. Private foundations professional civil service bureaucracies.
and corporations increasingly partner with The contemporary situation of the profes-
science laboratories at universities to lavishly sions can be contrasted with the early- to
fund research and support researchers. mid-1960s predictions regarding the spread
Healthcare delivery increasingly is geared of professional expertise and reliance on lib-
toward clients with health insurance plans eral-technocratic professionals in the new
who can afford to pay exorbitant fees for new post-industrial developed world (see, for
medical technologies, fees that take into example, Bell1976; Frank et al. 1995; Frank
account the inability of most patients to 1997). In this world of the future, professions
afford treatment. These plans (in the US) are and knowledge-based work roles develop in
paid for by employers who see their health response to the demands of post-industrial
insurance premiums rise at double-digit capitalism. The process of filling these jobs
percentage rates every year. Law firms and the larger societal adjustments that come
increasingly find their most affluent, with the demand for highly educated workers
corporate clients shopping around for the (educational expansion, credentialing, longer
cheapest (and most expedient) legal advice, stretches of time in school, and mass higher
cutting off steady, long-term income streams education) create a professional elite that
and placing a premium on 'rainmaking' (the applies their specialized knowledge to an
solicitation of high-priced legal work by ever-broader range of problems.
partners in law firms). The growing ideology of the efficacy of
professional expertise dovetailed nicely with
1950s and 1960s conceptions of Keynesian
The salience of markets as economics and the Great Society programs of
a key component of the the Johnson administration. Through the use
technical environment of demand management and other technical
macroeconomic tools, Keynesian economics
The traditionally-defined professions have turned decisions about the appropriate levels
always walked a tightrope between the insti- of inflation, unemployment, and poverty into
tutional logic of professional practice cen- technical decisions of technocrats and
tered on professional-client relationships, professionals whose actions would guide the
autonomy, collegiality, and professional US Federal Government
438
toward full employment, low inflation, and Task domains and exercise discretion over
prosperity for all (see Stein 1983). the performance of complex tasks for the
This view of a post-industrial world where benefit of clients and the larger society.
knowledge experts would manage the econ- Many of these challenges are clarified if we
omy in the name of full employment, low take the colloquialisms of the new neo-liberal
inflation and general prosperity, was chal- consensus and contrast those with traditional
lenged by two developments: (1) the crisis in conceptions of professional practice and the
Keynesian economics that resulted from the concept of expert labor:
stagflation and economic stagnation of the
1970s; and (2) the subsequent inability of 1. Consumers know best. Any attempt to interfere
skill-based models to explain rising income with, regulate, or affect consumer choice costs
and earnings inequality among professionals consumers money. This means that any
interference with service provision (such as
and between professionals and non-profes- licensing procedures, legally defined monopolies
sional groups. These developments led to a over task domains, competency tests, and other
broad-based questioning of the relationship devices for restricting professional service
between technological expertise and general provision) extracts costs that are rarely if ever
social welfare while also leading to serious justified. Consumers of services eventually will
questioning of the ability and desirability of reward competent, scrupulous providers and
attempting to manage the economy. punish incompetent, unscrupulous ones. Ali that
is necessary is to let the market do its work with
The sets of policy tools advocated by the dollars of the consuming public voting for
monetarist, new classical and (eventually) best practices.
supply-side economics differed considerably 2. Markets will determine what is right. The
from those who advocated expert-based market becomes the locus of human perfection
Keynesian macroeconomics. These policies (see Giddens 1994). No expert can make, guide
included: or direct choices in the ways that markets will.
No authority can make the wise choices that
(1) Deregulation of heavily regulated industries; markets can make. Let markets do their job and
(2) Promotion of greater economic competition by stay out of it.
lowering trade barriers; 3. No credentialing or licensing. These are simply
(3) Repeal of special subsidies and tax loopholes for attempts to collect monopoly rents. Consumers
specific industries; will naturally be led to choices that are best for
(4) Across-the-board tax cuts especially targeted them, and credentialing and licensing are just an
toward taxes on corporations and higher mar- attempt to extract windfall profits at the expense
ginal income tax rates. of consumers.
(5) Cuts in government domestic spending in an 4. No codes of ethics. Markets will naturally
attempt to remove disincentives to work, invest, reward those who behave in the best interests of
and save. those who purchase professional services.
Information about ethical and unethical practices
can be sorted out in the wash and those
Regardless of their distributional conse- practitioners who do what clients want them to
quences, the subsequent success of these do and who act in their best interests will win
polices at restoring-economic growth-led to out in the end.
the vindication and promotion of market- 5. Competition will lower fees and salaries.
based solutions to other vexing problems, Service delivery from a variety of professional
including the calls for accountability and groups, in a variety of settings, with a wide
range of organizational arrangements, will keep
lower costs in the provision of professional fees and salaries low and service delivery of the
services. best quality.
The present challenge of neo-liberalism as
an economic and political ideology has pro- In European contexts, the 1970s and
found implications for the professions as 1980s and the accompanying economic
coherent occupational entities that control recessions and deindustrialization led to a
widespread
 439
questioning of the salience of European PROFESSIONS AND THEIR
models of capitalism (cf. Esping-Anderson INTERFACE
1989; Rifkin 2004; Ironside and Seifert 2003; WITH TECHNOLOGY - THE NEW
Fourcade 2006). Because professional TECHNOLOGICAL IMPERATIVE IN
practice (and especially the delivery of health HEALTH/MEDICAL CARE
care and education) have much more exten-
sive ties to the public sector in most During the 1980s and 1990s, when a number
European countries, the main response to this of interesting statements and refinements of
general crisis in confidence (for professional institutional theory were appearing,
groups) was the rise of New Public DiMaggio and-Powell's important paper
Management (NPM). While New Public (1983) launched a number of studies, often
Management is a label applied to a diverse focused on classifying organizations by the
set of reforms, ideas, and ideologies (cf. characteristics of their technical and institu-
Manning 2000; Savoie 1995), the general tional environments. This work helped
thrust of NPM initiatives is to subject the remind the field of the importance of both
provision of public service by professionals types of environmental pressures, as well as
to market forces through disaggregation, leading various scholars to consider historical
competition, and incentivization (see changes in organizations as well as in their
Dunleavy, Margetts Bastow and Tinkler institutional and technical environments.
2005). Thus, early conceptualizations of technical
The specific manifestations of marketiza- and institutional environments by Scott and
tion and New Public Management vary from colleagues (1983, 1995, 2000) provided a
place to place and affect a wide array of pro- matrix for classifying organizations by the
fessional groups. Attempts to implement characteristics of their environments, and by
New Public Management concepts in the UK differentiating between powerful constraints
national health service, in particular, have presented by one or the other environmental
been controversial (see Ironside and Seifert type.
2003). As with the case of attempts to bring Scott's empirical focus was often health-
market incentives to professional practice in care organizations, as this particular industry
the United States, there are very few provides a history of both well-developed
examples of the successful implementation of institutional and market pressures. It is also a
New Public Management concepts in field in which the prominence of the medical
European professional health services (see profession (as well as increasing attempts by
especially Bottery 1996; Scott et al. 1997; other professional groups within healthcare to
Dunleavey et al. 2005; Christiansen and define their own arena of control) has
Laegreid 1999; Lynn 1998; Reschentheler provided a most fertile field for examinations
and Thompson 1996; Kaboolian 1998). The of larger societal and institutional changes in
criticisms of New Public Management in healthcare organizations and the
these contexts revolve around the disarticula- professionals linked to healthcare delivery
tion between public service and revenue (Light 1991; Hafferty & Light 1995; Leicht
maximization, and the inability to 'get prices and Fennell 2001).
right' in the provision of services and inter- Scott's conceptualization was followed by
mediate goods that are government-supported the work of Alexander and D'Aunno (1990),
natural monopolies. These changes in the who tracked the transformation of the
economic side of the technical environment institutional environment of health care
for professionals have been equaled or organizations from post WWII to the late
exceeded by changes in the technologies used 1980s. They suggested the norms of the
to deliver professional services, as we discuss medical/health industry were changing in
below. important ways, so that the pressures of the
440
technical environments of healthcare organi- an extremely rich vein of organizational
zations in the 1990s (both the growing relationships, new organizational forms, and
costliness of the technological imperative in technological pressures affecting healthcare
health care, as well as increasing pressures to professionals, university research laborato-
control costs through the mechanisms of ries, for-profit R&D laboratoriess, and mar-
manage care) were gaining in strength. keting organizations. The intertwined
Concomitantly, the traditional institutional markets and institutional forces linking these
norms surrounding the autonomy of medical diverse actors are ripe for an institutional
professionals and physician control over theory analysis.
decision-making were losing steam in the Bums' overview of current technological
face of managed care. More recently, Scott innovations in medical/healthcare treatment
and colleagues (2000) have examined in provides at least three examples of how the
detail the healthcare organizations, material- 'new technological imperative' is driving
resource environments, and institutional healthcare professionals and organizations
environments in one large metropolitan toward vastly different configurations in both
region of the US – the San Francisco Bay the healthcare value chain and eventually in
Area, from 1945 to 1995. This study also the patient treatment arena: (1) the prolifera-
took pains to examine environmental tion of merger and acquisition (M&A) and
pressures as they transformed over this strategic alliance (SA) development across
period, and did so by considering three multiple parts of the value chain, particularly
environmental levels of analysis: local, in the pharmaceuticals sector, and between
regional and national environments. biotechnology and pharmaceutical compa-
Most of the research on healthcare organi- nies; (2) changes in the methods used to
zations has focused primarily on the communicate with and persuade key stake-
providers of healthcare services (hospitals, holders and customers (particularly
physicians, nursing homes, etc.), or the physicians); and (3) the globalization of
payers for healthcare services (employers, manufacturing, marketing and distribution of
insurance companies, the federal govern- drugs.
ment). Sometimes, regulatory programs and
their designers have been examined
(Williamson 1985; Singh, Tucker and House Strategic alliances and mergers
1986; Streeck and Schmitter 1985). Until
recently, however, there have been few The pharmaceuticals sector is a particularly
analyses of that portion of the industry that appropriate example of a growing sector
has become increasingly more important to within health care where the characteristics
the material/resource/technical environment: of new technologies and products have led to
the producers of new healthcare technology. an increase is interorganizational con-
Bums has investigated supply chain relation- nections. All five technology producers in
ships in the healthcare industry (2005), health care (pharmaceuticals, biotechnology,
focusing on trading relationships between genomics-proteomics, medical device, and
healthcare providers and their upstream sup- information technology) share several very
pliers. Most recently Bums has provided a important characteristics: they are all
detailed overview of the pharmaceutical, increasingly interdependent, research-inten-
biotechnology, genomics-proteomics, med- sive, and technologically complex. They
ical device, and information technology differ, however, on a number of dimensions
sectors within the healthcare value chain related to time (development cycles, age of
(2005), as well as the business models and firms, age of the sector, expected product
corporate strategies of firms within these impact as short- or long-term), and space
sectors. In doing so, Bums has tapped into (local vs. global dominance).
 441
Pharmaceuticals as a sector are particularly of either an SA or a merger. From the view-
held captive to very high-risk product devel- point of big pharma, connection to innovative
opment models (two out of every hundred discoveries in biotech can be handled either
new drug projects make it to market), and internally (make your own, or more cost-
very long time lines for the 'bench to bed' effectively, buy your own biotech company),
program (an average of twelve years; or externally, through alliances with smaller
Northrup 2005). Investment costs are high for biotech companies. In either case, it is
the intellectual capital part of this process generally recognized in the pharmaceutical
(discovery through scientific review) and sector that most firms cannot handle all
marketing, but quite low for ingredient costs aspects of the product cycle, in both small
and processing charges. In fact, the returns and large molecule development. Further,
for successful products are then priced to alliances are also increasingly common
cover the costs of the many failed projects. between pharma firms and genomics-
Northrup (2005) describes the interplay proteomics companies in order to manage
between traditional pharmaceutical firms (the licensing agreements and intellectual
older actors in new drug/biologics/bio- property issues. Such alliances are commonly
products innovation) and more recently based on either a specific therapeutic area, or
developed biotechnology firms (most created for data mining activities (large-scale
since the completion of the Human Genome screening of libraries on a specific gene
Project). Pharmaceutical firms have sequence), or technology transfer (Sammut,
historically focused on chemistry-based, 2005).
small molecule products (often referred to as
new chemical entities, NCEs), whereas
biotech firms typically focus at first on Changes in communication with
proteins, peptides, or monoclonal antibodies, market targets
all of which are bigger than most NCEs, and
require some route of administration into the The traditional method of communicating
body other than taking a pill. Biotech firms with targeted markets for new pharmaceuti-
tend to evolve from university-based cals has always been the one-on-one selling
discoveries that become licensed to a new of the new product to physicians, either in
(and often small) biotech company, headed MD offices, over lunch, or at the conference
by the academic PI (see Stuart and Ding cocktail party/dinner. In their quest for more
2006). Financing comes from venture effective and most cost -efficient methods of
capitalists during the long drug development marketing, pharmaceutical firms have been
stage, perhaps finally involving an initial innovating with the use of information tech-
public offering (IPO) when the biotech firm nology. Although 'detail reps' are still a
goes public. Many successful new product commonly-used mechanism, firms such as
cycles later, the small biotech firm may reach Lilly have been experimenting with the use
the stage of a fully integrated pharmaceutical of a 'sales productivity process' (Northrup
company (FIPCO). More likely, however, is 2005), which employs more frequent elec-
the scenario in which the biotech firm links tronic/phone/video communication with
with other specialty firms to handle physicians who have been pre-identified as
preclinical development/testing, such as a the right target for the new drug (right spe-
contract research organization (CRO), a cialty, use of data on past prescribing behav-
contract manufacturing organization (CMO) ior, preferred communication channels, etc.).
and a contract sales company to handle E-detailing combines multiple channels of
marketing (CSO). Another route is for all communication with repeated contacts to get
three later stages to be cycled through a big information out on the new product, without
pharmaceutical firm, after the development taking time from the physician's busy office
schedule for the traditional one-on-one.
442
The use of patient-oriented sales of pre- efforts to build this industry have been seen
scription drugs through media advertisement in Germany, Canada, China, Korea, Taiwan
has increased in volume and advertising and Singapore. In addition, large US pharma-
sophistication. Advertisements stress the per- ceutical firms have expanded both their mar-
sonal benefits to the individual patient with keting reach and their manufacturing
cancer, acid reflux, insomnia, etc. with a networks into South America, Asia, and
dreamy backdrop, colorful costumes, or shots Central/Eastern Europe (Pfeffer 2005). Out-
of happy middle-aged active people, sourcing globally, once regulatory issues are
followed by rapid 'fine print' instructions to managed, allow big firms to enjoy reduced
contact your physician and a list of patient manufacturing costs and reduced marketing
conditions which would counter-indicate the costs; but the costs involved in startup of
appropriateness of the new drug. These infrastructure, regulatory and cultural
advertising strategies are no doubt riding on differences are usually beyond the means of
the perception of increasing numbers of well- smaller firms. We have also seen recent
educated, independent consumers who will efforts to outsource biomedical R&D
march into their doctor's offices with globally by US firms, in order to avoid some
demands to 'let me try this new drug.' US regulatory constraints. Singapore actively
Both of these changes in marketing strat- supports stem cell research, unlike the US,
egy, away from personal contact with physi- where limits are placed on usage of only
cians, and toward the use of either new IT- approved, pre-existing stem-cell families, and
based marketing, data-based marketing embryo research is limited due to bioethical
strategies, and consumer targeting, are concerns (Pfeffer 2005).
examples of how the role of the physician in There is another surprising and somewhat
the new drug market has changed. The insti- troublesome side-effect of globalization and
tutional environment of new healthcare the rising costs of employer-based health
products has shifted toward more compli- insurance plans in the US. Some have noted
cated multi-organizational relationships, just recently an increase in interest in the concept
as the traditional autonomy and dominance of of 'medical tourism' among smaller, self-
the physician in the healthcare sector has insured employers (Jonsson 2006). Medical
been replaced by a matrix of corporate actors. tourism (also known as 'global health care') is
The 'new technological imperative' is one in the practice of sending employees overseas to
which biotech firms, big pharmaceutical receive surgery and post-surgical follow-up
firms, a range of contract service firms, and as part of their health insurance coverage.
advertising strategies have further diminished Employees are encouraged to travel to India,
the physician's independent decision-making. Jarkarta or Bangkok for serious surgical
The comparison to the old imperative of interventions, such as hip replacements and
demands from physicians and patients fueling heart stents. The costs for overseas surgeries
the need for access to new technologies is like these can be up to 80 percent less than
striking. the same procedure in the US, and the
overseas surgery includes resort-style
convalescence. This is another example of
The globalization of drug how the technical environment (markets) of
manufacturing and marketing health care has globalized, while the
traditional, formerly institutionalized,
Although the biotechnology sector is far concepts of US health care as unmatched,
more mature in the US than elsewhere, this and US doctors as a key partner in the
sector is definitely growing in both Europe patient-provider relationship, have receded
and Asia. Major increases in state-supported dramatically.
 443
RECENTLY-PUBLICIZED SCANDALS But the case raised other disturbing ques-
AND FURTHER INSTITUTIONAL tions about the role of professional autonomy
CRISES OF ACCOUNTABILITY and the inability (or unwillingness) of other
professionals to police Shipman's activities.
The cumulative record of suspicious deaths
Some of the antecedents and consequences of was never scrutinized (even though UK
the changing institutional environment for medical record collection is centralized
professional groups are well-publicized through the health service). Suspicious col-
scandals in the delivery of professional serv- leagues were placated by Shipman's assur-
ices. Many of these most recent scandals ances that he knew what he was doing and
involve business services like accounting, that no scrutiny of the deaths of his patients
law, and finance (Enron; MCIWORLDCOM; was necessary. His colleagues assumed
Royal Ahold) but there are also scandals Shipman was being honest and open with
involving medicine and healthcare (the them when he was being anything but. The
Harold Shipman scandal in the UK; the organ healthcare system did not require postmortem
transplantation crisis in the University of investigation of patient deaths in a situation
California hospital system). Each of these where simple blood tests would have
scandals points to the promises and perils of revealed massive drug overdoses. And
deregulation, market incentives, and Shipman moved to no fewer than four
technological change in professional practice. locations when outside constituents became
suspicious, but he had no trouble securing
another job and continuing his bizarre and
grizzly practices. This case reflects a gross
Harold Shipman, Kaiser failure of oversight in a traditional, state-
Permanente, the University supported professional setting that has
of California-Irvine and crises changed the nature of medical practice in the
of medical confidence UK and in continental Europe as well (cf.
Weaver 2006).
The organ transplantation scandal that
Between 1976 and 1998, Harold Shipman (a broke in California in May-August, 2006
general practitioner in the UK Health (involving Kaiser Permanente and the UC-
Service) murdered at least 236 people all Irvine hospitals) is another example of the
over central England. Most of Shipman's vic- problems new organizational forms present
tims were elderly women, and almost all of when they are confronted with new technolo-
the victims were murdered through drug gies. In mid-2004, Kaiser sent a letter to all
overdoses (mostly morphine). Shipman was would-be kidney transplant patients and told
convicted of 15 of the murders on January them that they would no longer pay for
31, 2000 and sentenced to 15 life terms. He kidney transplants at outside hospitals.
committed suicide in prison in January, 2004. Instead, patients would have to come to a
The public inquiry that followed the reve- new transplant facility in San Francisco
lations of Shipman's behavior, the extent of where doctors affiliated with Kaiser would
his crimes, and the inability of the UK health perform the transplant.
service system to detect and respond to the What happened after this is a matter of
problems in its midst have led to a wide- dispute. Kaiser went from having no
spread overhaul of the checks and balances in transplant program to having the longest
the UK healthcare system. Postmortems are transplant waiting list in the nation. In the
now required in all patient deaths, and process, their patients drastically lowered
deceased patients cannot be cremated until a their chances of receiving new kidneys, many
proper and independent postmortem has been patients died waiting for organs, and Kaiser
conducted. failed to fill
444
out the necessary paperwork to obtain organs violations of professional ethics that were not
for their patients. According to the Los detected by the traditional system of institu-
Angeles Times, in 2005 Kaiser performed tional oversight. But the response to these
only 54 kidney transplants and at least 108 problems has been a call not for more
patients died waiting for organs. The national market-based accountability but for more
statistics for other transplant programs are regulation of professional activity in the
usually the opposite of this - twice as many name of traditional institutional norms
transplants in proportion to the number of involving patient interests and welfare. This,
patients who die waiting for organs. and the business, financing and accounting
National transplant regulators paid no scandals we discuss below, seems to suggest
attention to these troubling trends even that there are bumps on the road to the use of
though the data were available on the inter- market mechanisms and technical
net. The case was broken when the Los environments to bring discipline to
Angeles Times began an investigative report professional practice.
on transplant programs in California and
uncovered the discrepancies (Los Angeles
Times 2006). Kaiser closed their transplant Enron, MC/-WORLDCOM and
program in May 2006. Roya Ahold: bumps on the
California assemblymen recently called road to professional onmnibus
for more oversight and regulation of trans- business services
plant programs in light of the Kaiser
Permanente scandal and a related scandal in The accounting and financing scandals that
the University of California-Irvine Hospital rocked the American business community in
system. UCI closed its liver program in 2005 and 2006 (and the European business
November 2005 after the Los Angeles Times community through Royal Ahold, a Dutch
reported that 32 people had died awaiting food market supplier) point to many of the
transplants in 2004 and 2005 while the UC- institutional and technical problems with
Irvine hospital had turned down scores of deregulated financing systems and deregu-
donated organs. Unbeknownst to patients, lated financial markets. For our purposes,
UCI had not had a full-time liver transplant these cases also expose some of the more
surgeon for more than a year when it closed fundamental problems with the interface
the program. St. Vincent Hospital in Los between management consulting, accounting,
Angeles also halted its liver transplant pro- and law that will likely prevent the con-
gram in September 2005 after acknowledging solidation of these professional groups into
that its doctors had violated national new organizational forms.
transplant standards in 2003. Surgeons In each of these cases (and the case of
transplanted a donated liver into a patient Tyco International), the problems were
who ranked 52nd on the regional waiting list, highly similar, as were the abuses. Top exec-
bypassing dozens of people whose conditions utives of each company were paid through
were considered more dire. Staff members stock options. These options were supposed
subsequently falsified documents to cover up to tie the compensation of top officials to the
the action. Both of these actions have financial performance of the company, but
prompted California assemblymen to call for instead they provided a built-in incentive to
new transplant oversight in California and report ever-rising profits to Wall Street and
renewed ability for the state to fine hospitals the larger financial community so that stock
up to $100,000 for failure to meet basic prices would rise. None of this would be
national healthcare standards. problematic if the professional groups
In both the Shipman case and the hospital (lawyers and accountants) exercised their
transplant cases, there were systemic professional prerogatives to
 445
independently monitor the legal and financial CONCLUSIONS AND IMPLICATIONS
behavior of the firms involved. But, in each
case, there were significant conflicts of The study of professions and professional
interest that prevented this from happening. work is intimately tied to institutionalism and
The Enron case is a typical example. institutional theory, as our chapter illustrates.
Enron purchased consulting and The questions we raised have direct implica-
accounting services from Arthur Anderson, at tions for future research programs on institu-
the time one of the 'Big Five' accounting tional theory and professional work.
firms. Enron also retained external legal One of the more interesting implications
counsel that assumed that Arthur Andersen of the new institutional environment for pro-
was doing its job of monitoring the financial fessional practice is the virtual disappearance
transactions of the company so that the of individual clients from our discussion
certified profits of the company were here. Traditional professional practice norms
legitimate. Both Arthur Anderson and focused on forging links between profession-
Enron's legal firm received millions of als and clients. But the newly developing net-
dollars in fees, fees that rose with Enron's worked linkages we discuss seem to leave
reported profits. individual clients behind in the name of pur-
When these cases began to unravel, each suing profit and efficiency. Researchers will
revealed a tangled web of financial transac- want to study new organizational alliances,
tions that (a) systematically misrepresented forms and marketing strategies for the provi-
the financial health of the firm, misrepresen- sion of healthcare, both in the United States
tations that were certified by accounting and elsewhere, documenting the evolution
firms with substantial financial interests in and growth of new institutionalized norms
the consulting income they were deriving and practices. The interface between
from the firms they were auditing, (b) law pharmaceutical companies, physicians, hos-
firms that were more than content to look the pitals, biotechnology terms, advertisers, and
other way as long as legal fees were regularly governments, is spreading in a distinctively
paid and audits were certified as legitimate, North American environment where
and (c) CEOs and top managers who made deregulation of health care (even in light of
millions from falsified corporate profits and the transplantation scandals in California)
backdated stock options (see Froud et al. seems to be on an upswing. Researchers
2004 for an analysis of Enron as both an interested in the interface between
example of corporate failure through professional work and institutional theory
'financialization,' and as a firm embedded should also examine more closely the
within a political web of special interests and increased ability of insurers, big clients, and
powerful actors). others to purchase professional services in a
All of these situations have led to funda- global outsourced labor market where price
mental questioning of Generally Accepted competition will become increasingly salient.
Practices in accounting and the ability of The growing embeddedness of these
accountants and lawyers to remain networked connections between large institu-
independent from their clients. They have tional and corporate actors, to the exclusion
also struck a (for now) fatal blow to the of the best-interests of individual clients and
concept of clusters of accounting, legal, and consumers of professional services, suggests
management consulting services (omnibus that not all forms of embeddedness are
business services firms) given the likelihood desirable.
of fundamental conflicts of interest in a Another area of research will be the
deregulated financial environment. development of new collaborative alliances
between management consultants and
economists as would-be professional groups,
446
and the interface between consultants, Delivery: New Insights into Organization The-
accounting, and legal practice as business ory. San Francisco: Jossey-Bass, pp. 53-85.
services (see Gross and Keiser 2006). Bell, Daniel. 1976. The Coming of Post-
Management consultants and economists are Industrial Society. New York: Basic Books.
competing over the task domain to reorganize Bottery, Mike. 1996. "The challenge to profes-
professional practice in the name of effi- sionals from new public management:
ciency and cost effectiveness. Since Implications for the teaching profession."
management and economic consulting is the Oxford Review of Education, 22: 179-197.
least regulated of these occupational groups, Burns, Lawton R., 2002. The health care value
students of the professions will need to chain: Producers, purchases, and providers.
examine the evolving institutional and tech- San Francisco, CA: Jossey-Bass.
nical environment that consultants, account- Burns, Lawton R. (ed.) 2005. The Business of
ants, and lawyers face in the wake of the Healthcare Innovation. Cambridge University
well-publicized scandals discussed here (see Press.
Christiansen, T. and P. Laegreid. 1999. "New
also Fourcade 2006).
public management: design, resistance, or
These research problems, among others,
transformation? A study of how modern
suggest that the interface between the profes-
reforms are received in a civil service system."
sions and institutional theory will continue to
Public Productivity and Management Review,
attract substantial interest. The ability of
23: 169-193.
institutional theory to provide insight into Dunleavy, Patrick, H. Margetts, S. Bastow and J.
both the dark ethical scandals of the early Tinkler. 2005. "New public management is
21st century and the growing embeddedness dead - Long live digital-era governance."
of well-networked corporate actors at the Journal of Public Administration Research
expense of clients attests to the flexibility and and Theory, 16: 467-494.
strength of research on the professions Epstein, Cynthia F. 1993. Women in Law, 2nd
framed by institutional theory. edn. Chicago: University of Illinois Press.
Epstein, C.F. 2004. "Border crossings: The con-
straints of time norms in transgressions of
NOTE gender and professional roles." In C.F. Epstein
and Arne Kalleberg (eds.), Fighting for Time:
1 Data are from the Current Population Survey, Shifting Boundaries of Work and Social Life.
1970-2004, US Bureau of the Census, and reflect New York: Russell Sage.
changes among physicians, lawyers, accountants,
Esping-Anderson, Gosta. 1989. Three Worlds of
natural scientists, social scientists, and professors of
natural and social science. Welfare Capitalism. Oxford: Polity.
Fourcade, Marion. 2006. "The Construction of a
Global Profession: The Transnationalization
of Economics." American Journal of
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 18
Institutionalism and
Globalization Studies
Gili S. Drori

Predating any discussions of globalization, from their global context, and thus political
institutional presuppositions regarding units, once defined as nation-states, they are
embeddedness and diffusion were applied on subject to the global cultural process, such as
the world level in what was then called the discourses of developmentalism or actor-
compareative studies. As early as the 1970s, hood. Derived from this logic are several
when comparative studies were caught in an other institutional emphases, for example on
impasse between dependency and modern- the diffuse state of authority of the global
ization theories, a group of Stanford system, on the role of institutional mecha-
University scholars challenged the prevailing nisms in the cross-national diffusion of ideas
realist comparative traditions and made initial and practices, and on the rationalizing and
empirical studies that set the foundation for standardizing impact of international
almost four decades of prolific institutional organizations, the professions, and the uni-
and comparative research. Today, in the era versalized models they carry. These issues
of hyperglobalization and countless serve as the axes for world society theory's
commentaries on globalization, institutional voluminous research tradition, offering
theory of globalization - commonly referred abstract yet richly empirical work.
to as world society theory - has carved a From its initial steps (Meyer, Boli-Bennet
substantial niche in globalization studies. and Chase-Dunn, 1975; Meyer and Hannan,
The main theme of the institutionalist 1979) through its mature statements (Meyer,
traition in globalization studies is that the Boli and Thomas, 1987; Meyer et al., 1997;
world is the environment and that nation- Boli and Thomas, 1997), world society
states, as well as multinational corporations theory formulated a new and institutionalist
and inter-aional organizations, are the globalization theory while also adding to the
organizations embedded in it. The related richness of institutional thinking. In discus-
themes - of inter-connectedness, universal- sions of globalization, world society theory
ism, and embedding - invoke Donne's challenged the then-reigning perspectives in
imagery: with the phrase 'no nation-state is comparative sociology - dependency and
an island' (Meyer, Boli, Thomas and modernization theories - by adding institu-
Ramirez, 1997): nation-states are embedded tionalist and cultural tones to the highly
in world society, rather than disconnected instrumentalist discourse of the times and
highlighting the constitution of the global as
450
an additional 'level' to the international and DEBATING GLOBALIZATION
transnational. In its way, it also disputed the
common vision of nation-states as Globalization is a new concept for social
autonomous and calculating rational actors research: the term globalization has flour-
by drawing attention to the consolidating ished as a social science phrase only since the
supralevel of globalization and to the mid-1990s (Guillén, 2001), in spite of the
diffusion of ideas and practices from this long history of comparative work in sociol-
common core. To institutional thinking, ogy and the other social sciences. Yet it is the
world society theory added macro-level theoretical roots in such prior comparative
discussions situating even nation-states studies that are shaping the current scholarly
within a broader environment, elaborated the debates regarding globalization. And so the
phenome-nological tradition within institu- worldviews of dependency and moderniza-
tional thinking, and enhanced the empirical tion theorists, who fiercely debated the nature
grounding of institutional work with highly of world affairs and international processes
quantitative research. during most of the twentieth century, are now
The goals of this chapter are to describe 'reawakened' into globalization debates
the tenets of world society theory and to between world system and neoliberal
place these institutional insights in the con- theoreticians, respectively. In this section I
text of current debates about globalization, its describe the debates between these two
definition, and its trajectory. Following a theories of globalization and argue that in
review of the emergence of globalization spite of their fierce debate they share basic
studies and the breakthrough of world society assumptions and that it is these assumptions
theory in this field, I lay out the tenets of this that have been later challenged so effectively
theory, define its central concepts, and by institutional theory.
describe its empirical corpus. This review - These two theoretical traditions differ on
empirical and conceptual emphasizes world almost every idea (Table 18.1). First, they
society theory in particular, while situating differ in their perception of the global
this tradition within the context of other system. Looking at the trends of global
comparative institutional work and of other expansion, neoliberal theorists see a global
globalization studies in the broad field of system of production and trade. They see
International Relations. To clarify this overall development for the better, even if
distinction, two terms are used to refer to the advancement is not yet for all, and they con-
institutionalist comparative traditions: world sider 'growth through integration' to be both a
society theory refers to the post-1980s development strategy and a description of
studies, mostly by John W. Meyer and his globalization to date. World system theorists,
colleagues who mark the phenomenological on the other hand, see a global capitalist
side of institutional thinking, while the term system, with expanding inequalities between
comparative institutionalism refers to pre- classes of nations and regions. Second, while
1980s studies by this Stanford University both these realist theories define globaliza-
group (before the self-recognition of this tion as a period of global capitalist expan-
work as a theoretical tradition) and to the sion, they diverge in their assessments of the
studies by other institutionalists whose nature of capitalism and the trajectory of its
comparative work highlights operations and expansion. Whereas modernization theorists
networks more than the role of culture. To view global capitalist expansion as progress
conclude I open a discussion of the trajectory based on criteria of efficiency, achievement,
of this line of thought and research work. and justice, world system theorists view
global capitalist expansion as a compulsion
of profit -seeking forces that results in
expanding
 451

divides between rich nations and peoples and In these divergent views, today's neoliber-
poor nations and people. Third, they differ in als and world system theorists, although
their understanding of the motivation and commenting on the recent idea of globali-
interest that are driving the global system. zation, continue on old theoretical paths in
Whereas modernization theorists view glob- comparative studies. And so today's neolib-
alization as powered by rational, cost-benefit eral writers such as Wolf (2004) and
calculation of the parties involved, founded Diamond (1993) continue on the path set by
in the natural human desire for bettering the writings of Inkeles (1969), Rostow
living conditions, world system theorists (1971), Huntington (1968), and Parsons
view it as a process of marginalization of the (1964). On the side of critical thought, Sassen
world's underclass through the global divi- (1998), Chase-Dunn (1998), Sklair (2002),
sion of labor, production, and consumption. and Mittelman (1996) continue on the path
Last, they differ in their definition of the set in the writings of Frank (1969), Cardoso
actors involved in the global system. (1972), Wallerstein (1979, 2000) and draw
Whereas modernization theorists see a from the yet older roots of Lenin's work on
system of transaction relations among imperialism, which itself builds on Marx's
competing yet cooperating nation-states and and Engels's work on capitalism.
international organizations, world system By the 1970s, these two theories reached a
theorists see a system of exploitative and theoretical impasse: although the neoliberal
manipulative dominance by elites (in both the modernization theory and the Marxist world
global core and the periphery) and multi- system theory shared a structural and global
national corporations. And although it may perspective on social processes, the debates
seem as if the two theoretical camps delineate between them were stagnating. They repeat-
the 'pro and con' stands on globalization, edly bickered over the nature of global
there are surely many critics of globalization processes (progress or accumulation), the
from both theoretical stands most pointedly motivation for global change (benevolent or
Joseph Stiglitz (2003) and Saskia Sassen malicious), and the projections for future
(1998), who, among others, chose prospects (closing gaps versus widening
Globalization and its Discontents as the witty divides). The main concept for both these
title of their respective books. traditions was and still is a realist
452
perspective: in their understanding of the collective purpose' (Meyer et al., 1987: 24),
world system, they highlight a mechanistic is fundamental to describing the influence of
image of the relations among global players culture on behavior and structure. This insti-
and assume that the players are rational and tutionalist emphasis on rationalization turns
bounded social actors. And any failure of this the discourse of rationality on its head: it
global mechanistic system - such as war, regards action and its formal justifications (in
economic depression, or trade dependence - policy and other statements), which are often
was explained in terms of its function. Armed taken by realists to be prima facie evidence
with contradictory empirical findings, the of deliberated and rationally calculated
debates reached no resolution or even a intention, as scripts of purposive and
common ground for conversation since the instrumentalized intention that carry
presuppositions were so very different. The symbolic, ritualized, and ceremonial
root of the empirical and theoretical impasse importance.
was that both theories are functionalist and In this way, the institutionalist (later, the
thus share an ontological belief in the ration- world society theory) critique of the various
ality of the system. As a result, the contention realist comparative perspectives (later,
between modernization and world system globalization studies) is direct. And on all its
theories centered on the questions 'Whose points of critique and departure, comparative
rationality?' and 'Who does this rationality institutional work invokes widely accepted
serve?' rather than questions about the institutional principles. First, emerging from
rationality of actors. institutional insights about the constituted
nature of collective units, comparative
institutionalists challenged the realist view of
ENTER NEOINSTITUTIONALISM the units of the international system (such as
nation-states) as bounded and rational and
On issues common to comparative studies - that societies are aggregates of individual
from war (Hironaka, 2005) to the role of the interests, capacities, and actions. This realist
state (Meyer, 2000) to economic develop- view, they claim, overlooks the prescribed
ment (Schofer, Ramirez, and Meyer, 2000) - nature of such collective 'actors' that is
the point of departure of institutional thought influenced by the available and legitimate
is on the dual matters of culture and rational- models offered in and by its global
ization. First, institutionalists highlighted the environment. It also ignores the porous
failure of realist theories to recognize the boundaries of each such unit. Looking at
power of culture and norms in motivating these limitations of the realist view,
social change. As late as 1987, Thomas, institutionalists understand actors to be
Meyer, Ramirez and Boli (1987: 7) were still constituted, even if reified, entities and study
lamenting the view of culture as the residual actorhood and agency as a Western cultural
factor in international processes and advocat- model (for example, Frank and Meyer, 2002).
ing the reclaiming of culture by macrosociol- Second, drawing on the notion of institu-
ogy. For institutionalists, 'culture involves far tional isomorphism (DiMaggio and Powell,
more than general values and knowledge that 1983; Zucker, 1987), institutionalists
influence tastes and decisions; it defines the challenge the realist expectation that intrinsic
ontological value of actors and action' needs and unique histories result in distinc-
(Meyer et al., 1987: 22; emphasis in original tive trajectories and features. Rather, they
text). Second, rationalization, which is demonstrate that nation-states worldwide
defined as 'the structuring of everyday life share many dominant features - from the
within standardized impersonal rules that form of governmental structures and the
constitute social organization as a means to definition of citizenship to the content of
 453
schoolbooks or legal documents - and argue something of a moot issue in international
that the source of such similarity and con- and comparative studies: all theoretical
vergence toward it is the enveloping world perspectives addressed the international
society (for example, Jang, 2000). 'Common system and considered societies and states
definitions and theories of social organization within the context of that wider environment.
generate structural similarities in highly Yet world society theory pushed this point
disparate societies' (Meyer et al., 1987: 19). further by analyzing the global itself: the
Here, no "island" or "islanders" (to repeat the global was not only the context for the prac-
Donne metaphor) are spared the isomorphic tices of nation-states and other organizations,
global pressures that also infuse-t-he local but it was also an analytic unit in itself. In
and problematize its authenticity. this way, world society scholars came to
Third, based on institutional understand- redefine globalization.
ings of loose coupling (Weick, 1976; March
and Olsen, 1976), they challenge functional-
ists to explain the recurring disconnection REDEFINING GLOBALIZATION
between policy and action (for example,
Drori, Meyer, Ramirez and Schofer, 2003), In comparative institutional terms, globaliza-
which are otherwise explained by functional- tion is a dual process: global institutionali-
ists as failures. And fourth, whereas function- zation of world society and diffusion of
alists explain such failures as problems of world societal models to social units embed-
effective coordination of social relations (due ded in the global environment (Drori et al.,
to either incompetence or capitalist manipu- 2003; Drori, Meyer and Hwang, 2006).
lation), institutionalists draw on the notion of Globalization is therefore 'not on1y adapta-
ceremonial and ritualized conformity (Meyer tion and change of national institutions [to
and Rowan, 1977) to demonstrate the power global conditions and pressures]. It is also
of legitimacy and other symbolic resources about institution building in the transnational
(for example, Drori and Meyer, 2006). arena - a space traditionally and typically
Overall, insti-tutionalists challenged the pictured and described as anomic and
common realist assumptions - whether func- adversarial' (Djelic and Quack, 2003: 3).
tionalist and liberal or critical and neo- Figures 18.1 and 18.2 describe these two
Marxist – on their definition of the social complementary dimensions of globalization.
actor, expectation of diversity and diver- Figure 18.1 shows the diffusion of practices
gence, expectation of competence, and confi- and themes to embedded units, most obvi-
dence in the power of material rewards. They ously nation-states, and Figure 18.2 shows
also added a constructivist dimension to the the consolidation of global fields (in ways
study of the international system and later the that go beyond aggregation of trends in sub-
study of globalization. units), thus highlighting globally shared
This critique of realist approaches by com- practices and beliefs. Together, the two fig-
parative institutionalism matured over time, ures show that similar issues - such as envi-
drawing on elaborations in institutional ronmentalism, health, or rights - are
theory and on the consolidation of globaliza- institutionalized cross-nationally (as national
tion as a formal field of study. I later discuss ministries) and globally (as international
some points of connection between compar- organizations). Similar tales of this duality of
ative institutionalists in various academic globalization are empirically exemplified by
disciplines that have grown during this others: for example, universalized myths of
process of coevolution. On the face of it, the the social role of science as a mechanism of
institutional point about the embeddedness of development and a progressive force have
units in their wider environment - what is become anchored in a global web of
often called the open system model - was international science organizations since the
454

nineteenth century, while particular science- diffusion of models to various states and
related activities, from policy making to the organizations worldwide.
regulation of intellectual property rights, are The definition of globalization as a cross-
diffused cross-nationally as a result of these national diffusion process, often referred to
expectations and of the power of these inter- as internationalization, is now common, even
national organizations to promote them among realist researchers. The contribution
(Drori et al., 2003). In this way, globalization of world society theory is in the addition of
is a co-constitutive dual process: there are the global level, highlighting the
reinforcing relations between the cross- consolidation of an overarching (universal or
national and the global. On one part, legiti- global) system that extends in meaning and
macy for global themes is bolstered when a form beyond the international sphere. This
practice comes to be institutionalized cross- emerging global system layers the transna-
nationally, while on the other part the global tional (effacing national boundaries) and
field serving as an important source for the global (considerably universal) in the
 450
obvious international flows or exchanges of (Djelic and Quack, 2003: 7), stalactite-like,
everything from capital and labor to with rare episodes of dramatic shift,
commodities and diplomatic relations. In balancing between the lingering effects of
addition, now that more attention is given to civilizational inertia, on the one hand, and the
the global or supranational sphere, again even pressures of an ever-changing physical and
by realists (for example, Slaughter, 2004), the social world.
contribution of world society theory is in On all these dimensions - main sphere of
reorienting the discussion toward the globalization, central players in globalization,
rationalized, ritualized, and systemic nature and timing of globalization - world society
of action and behavior in the emerging social theory’s perspective on globalization is a
arena. This definition of globalization as a dramatic break from realist theories (see
dual process is therefore a clear departure Table 18.1). Looking at globalization, they
from realist definitions of globalization: see a world society with an organizational
globalization is more than worldwide and 'backbone' (polity), in which states, organiza-
intensifying transactions and interdependen- tions, and social groups are embedded, even
cies (for example, Keohane and Nye, 2000; if in various degrees. The pivotal axis of
Foreign Policy, 2005, 2006); rather, global- globalization is cultural, and it has dramatic
ization includes an additional conceptual shift impact on global change over and above
toward the universal and is thus a cultural economic and political effects. In the absence
process in addition to being an economic and of an authoritative global state or another
political process. In this way, the era of centralized arrangement (Meyer, 2000: 230),
globalization reflects not only a remarkable the system hangs together through
intensification of global exchanges and flows associational relations and diffuse authority.
and a dramatic thickening of international The main players are nation-states,
and transnational webs of relations, but also a international organizations (of various sorts),
change in the organizing logic from the and the professions (and the rationalized
particularistic (national, ethnic) to the models they carry). Change is driven by
universal (human, standardized, formal). This world society and by the empowered 'local':
special consideration given to the global is world society offers models (scripts or
more than a methodological point about a prescriptions) that serve as referents to
higher level of analysis. Drawing on the idea embedded units; heavily infused with the
coined by Peter Berger (1968), the principles of progress and justice, enactment
consolidating global dimension of of such models results in extensive
globalization acts as a 'sacred canopy,' or a isomorphism throughout the world system.
commonly accepted world culture (Drori, With this approach to globalization, world
2005; Boli, 2001, 2006). society theory offers an alternative image of
Globalization is highly dynamic. It dialec- global social change. The realist perspective
tically contains both institutional change and describes social or policy change as driven by
institution building: a process of 'building the mobilization of grassroots social groups,
and stabilization' (Djelic and Quack, 2003: energized by particular grievances or needs
6), a world of rules and order infused with and by the availability of resources (Figure
reinvention and reordering (Djelic and 18.3A; also see, Meyer et al., 1997: 150-151,
Sahlin-Andersson, 2006: 375-376), or a spi- for other graphic displays of these competing
raling process of institutionalization and models). Local social groups then pressure
globalization (Drori et al., 2003). In this way, the relevant decision-making organizations
it reconciles in the same complex and expan- (state, international nongovernmental
sive process both seemingly contradictory organization, or possibly a multinational
institutional notions of embeddedness and corporation), which codifies the demanded
constant change (or reinvention). Such world change in rules and later enforces compliance
change is 'incremental and consequential' to the new rules. Change is therefore linear:
change is an outcome of pressures
456
from demands for efficiency and progress or WORLD SOCIETY: BETWEEN POLITY
for capitalist accumulation, and turning AND CULTURE
points in the linear process reflect change in
the human technologies. This causal chain Rise of the global
operates locally (Putnam, 2001) and interna-
tionally (Keck and Sikkink, 1998). Borrowing the notion of an 'imagined com-
On the other hand, institutionalists munity' from Anderson's (1991) work on
describe both social change and local need as nationalism, institutionalists highlight the
prescribed by world society (Figure 18.3B). consolidation of a global imagined commu-
World society constructs and empowers local nity. Along with the recognition of a global
activity, frequently in decoupled form. As a economy, an international political system, a
result, the state is being 'squeezed' by both a global ecology, and world health dependen-
global society and a highly constructed but cies comes an awareness of a global society.
nevertheless active local society (see, Meyer, This awareness of the global is evident in the
1999). Any connection between need or con- increasing availability of world-level infor-
ditions, on the one hand, and action or policy, mation: Hwang (2006) demonstrates that
on the other hand, is epiphenomenal and thus information about the category of the 'world'
loosely coupled: not only are needs and (rather than 'nation' or 'region') is
conditions socially constructed according to increasingly available about many social
legitimate models or scripts, but the scripts issues across the board, with only a few
also assign rationality and agency to the var- exceptions regarding information that is still
ious actors. The outcome of global pressures considered highly parochial and under com-
toward rationalization and agency is a com- petition (namely, military might, employ-
plex, loosely arranged, decentralized, and yet ment, and politics). 'The emergence of world-
highly active world society. level data indicates the construction of
 457
problems and issues at the global level' international system with an image of the
(Hwang, 2006: 82). This statistical aggrega- world as both a transnational and a global
tion to the world level, which also helps to sphere. This universalized vision of society
clarify global social problems (Ritzer, has had an important impact on world organ-
2004a), expresses a vision of the world as the ization and has reshaped world cultural
relevant social unit. tenets: the current world polity is a reflection
The economy is the social category that is of world cultural trends as much as it is a
the 'big winner' in terms of aggregation to the codification of such norms into formal struc-
global level. Indeed, the world economy is tures of action and policy making.
the first issue on everyone's mind when
considering globalization, and most informa-
tion compiled at the global level concerns
global trade, production, and finances. World polity
Nevertheless, in this consolidating world
society, many other social issues are now This self-conscious and explicit awareness of
considered global features. Among them, the the world as the social horizon has worked to
dominant issues are those where systemic energize international and global organizing.
interdependence, now worldwide, can be Today's world polity, defined as the
argued; ecology, health, and human rights are backbone of globalization (Drori et al., 2003:
among the dominant issues, acquiring greater 44), has four main features: it is (a)
legitimacy as global and transnational social expansive, (b) heterogeneous, in both organi-
problems. Even beyond these ecosystemic zational forms and substantive issues, (c)
spheres, issues from social responsibility to dynamic, and (d) loosely organized and
citizenship that were once confined to the highly decentralized.
boundary of the nation or the state are now First, the world polity is rapidly expand-
extended worldwide and enjoy heightened ing, in numbers and in spread. Multinational
attention in policy making and social action. corporations (MNCs; Chandler and Mazlich,
The common thread of these themes is their 2005; Jones, 2005) and international organi-
universal appeal: their description is zations, both governmental (Diehl, 1997) and
composed of the language of interdepend- nongovernmental (Boli and Thomas, 1997,
ency and universality. 1999), are increasing in numbers. For
The drama of this reorientation toward the example, 'since 1850, 25,000 private, not-for-
world as the social horizon is highlighted in profit organizations with an international
reviews of this continuous historical change, focus have debuted on the world stage' (Boli
at least since the nineteenth century (for and Thomas, 1997: 174) and some 65,000
example, Frank, Hironaka, Meyer, Schofer MNCs existed as of the year 2000, almost
and Tuma, 1999; Schofer and Meyer, 2005; doubling in numbers during the last decade of
Inoue and Drori, 2006). Although the history the twentieth century (Roach, 2005). This
of modernity and of the world is intertwined expansion in formal organization has also
with the history of the nation-state and been experienced at the national and
although nationalism has dominated ideolo- subnational level (Drori, Meyer and Hwang,
gies since the middle of the nineteenth cen- 2006: 2-6). And, although most organization
tury, the nation-state itself is an institutional is concentrated in the Western and developed
form and nation-statehood is an organizing world (Beckfield, 2003; Roberts, 2005), it is
myth of the current world polity (Meyer, under the canopy of global extension and
1999). At the turn of the twenty-first century, universal purpose, thus signaling the
the vision of porous boundaries and network expansion of the relevant social unit to the
connections is now applied to the nation- global over and above increases in global
state, replacing the vision of the world as an production and global political integration.
458
Second, the rapid expansion of world such as labor and religion (Boli and Thomas,
polity pulls into it more and more social 1997: 184). Today, the substantive scope of
actors, resulting in a highly' heterogeneous global organization covers many issues, from
network of organizations. To begin with, it standardization (Loya and Boli, 1999) and
brings more types of organizations into its the environment (Frank, 1999; Frank et al.,
web. In addition to nation-states (which are 1999) to education (Ramirez and Ventresca,
the obvious actors in an international 1992; Schofer and Meyer, 2005) and law
system), world society today also includes (Boyle and Meyer, 1998), to name a mere
international governmental organizations few.
(Diehl, 1997) and international nongover- Third, world polity is dynamic and ever-
nmental organizations (Boli and Thomas changing, in scope and in content. Rates of
1997, 1999). As a result, the much debated organizing accelerated exponentially at three
concern with the demise of the nation-state in obvious historic turning points: the late nine-
the age of globalization (Meyer, 1999; teenth century (when Enlightenment Age
Arrighi, 2000) yielded the nation-state that is ideals merged with nationalism to form the
one organizational form in a global hetero- basis for twentieth-century processes), 1945
geneous network of organizations. Private (the end of World War 11), and 1990 (the
corporations (Chandler and Mazlich, 2005; collapse of the Soviet bloc). Any slowdown
Jones, 2005), professional groups or experts in the rate of founding of international non-
(SahlinAndersson and Engwal, 2002; Jang, governmental organizations was confined to
2006; Moon and Wotipka, 2006), and civil- the periods of the two world wars (Boli and
society movements (Hafner-Burton and Thomas, 1997: 175-176) and quickly
Tsutsui, 2005; Shanahan and Khagram, 2006) resumed, with fierce persistence, immedi-
are also added to this already diverse polity. ately following them. At these historic
In this context, the nation-state is less of a turning points there was also a marked
rational instrument and more of a scripted change in the issues that form the globally
rationalizing account. organized fields: although most global issues
Heterogeneity is also evident in substanti- sprang out of the nineteenth-century Western
ve terms. This growing network of internatio- agenda, many additional issues were raised to
nal and transnational governmental and non- global consciousness and formed networks of
governmental organizations is active on a global action while others have been stag-
wide range of issues and in numerous sectors. nating or even receding. For example, while
Although the dominant global organizational ecology and natural conservation were
field is economic, including trade, industry, 'almost invisible on the world agenda' in
and development (Chabbot, 1999), substan- 1875, by 1990 'a plethora of conferences,
tial organizing is also evident in the fields of treaties, and intergovernmental and interna-
medicine and healthcare (Inoue and Drori, tional nongovernmental organizations dotted
2006) and the sciences (Schofer, 1999). the global stage' (Frank et al., 1999: 83).
Together, these three fields alone account for Similarly, 'in the late nineteenth and early
over 44 percent of the total of international twentieth centuries, the discussion of popula-
nongovernmental organizations active in tion control was largely taboo in the public
1988 (Boli and Thomas, 1997: 183). With the domain,' yet by the late 1960s 'population had
reorientation of world society since the late become a routine matter of public interest'
nineteenth century toward universalized and (Barrett and Frank, 1999: 199-200).
individualistic themes, there has also been a Established issues have also changed their
dramatic structuration of the field of human orientation. For example, global concern with
rights (Tsutsui and Wotipka, 2004) and the health, which has been organized globally
rights of specific groups (for example, wo- since premodern times, has changed from
men; Berkovitch, 1999) and a marked stagna- being perceived as a form of charity work
tion in organizing around collective themes, through visions of it as a professional
 459
activity and as a tool for development to now whose numbers overwhelmed even the grow-
being perceived as a basic human right ing numbers of nation-states, intergovern-
(Inoue and Drori, 2006). Similarly, while mental organizations, and transnational firms.
eugenics dominated the global field of popu- This diffuse nature of authority is reflected in
lation control until World War II, 'the the looseness of conformity mechanisms,
detestable use of eugenics by Nazi Germany combining coercive and 'soft law' strategies
turned the global tide against this model' and to encourage compliance with international
reoriented the field to embrace neo- laws and global norms alike (note the three
Malthusian and individual choice frame- distinct theoretical stands about such 'soft'
works (Barrett and Frank, 1999: 207). compliance are propounded in Abbott and
Adding to the fast transition, the changes in Snidal, 2000; Barnett and Finnemore, 2004;
global fields have affected the embedded Djelic and Sahlin-Andersson, 2006). The
units. International organizations, in. both "softness" of compliance is dramatized by the
general and in specific fields, have influenced fact that the overwhelming majority of
the behavior of nation-states: in governance international organi-zations are transnational
(Drori, 2006), human rights (Hafner-Burton or global nongovernmental voluntary
and Tsutsui, 2005), science (Finnemore, associations (Boli and Thomas, 1999). In this
1993), and rules of war (Finnemore, 1996a). form, which is interpreted as 'global
The intervention of international organiza- corporatism' (Ottaway, 2001) or 'new global
tions as 'teachers of norms' (Finnemore, governance' (Pattberg, 2005), authority is
1996a) or as conveyors of 'normal' expecta- derived from the legitimacy of culture
tions (McNeely, 1995) has worked to models that are carried by global civil society
encourage national legislation, initiate local and its network of organizations. In
programs, and energize local social action summary, while the scope, even if not the
groups, even though loose coupling has power, of international organizations grew
caused frequent failure of implementation. over the twentieth century, the diffuse forms
Last, the world polity is organized in a of their authority, coupled with the
rather loose and decentralized manner, look- universalized language of their principles,
ing much like de Tocqueville's description of only worked to enhance their cultural
American associational society in the late authority further.
eighteenth century (Meyer, Drori and Hwang, Common explanations of this expansive,
2006). The most dominant feature of world heterogeneous, and loose global organizing
society is its diffuse authority, or governance, cite the pressures of globalization and related
structure: the world polity is stateless (absent competition. The conception of globalization
a world state) and thus decentralized. While as intensification of exchange and competi-
relying on the nation-state as an organizing tion (for example, Keohane and Nye, 2000)
principle and while sanctifying the related or as transference (Bertelson, 2000) explains
myth of sovereignty, the global system did the zeal to organize in functional terms.
not evolve to replicate this format to the Specific to not-for-profit organizing, the
global level: even the dominant governmental functional imperative is in the centralization
organization, the United Nations, has evolved of collective action and its related efficiency.
without the shoring of muscular power or Kenneth Abbot and Duncan Snidal (1998: 5)
decisive action; rather, it is carrying its global explicate this utility of international
missions in partnership with many organizations: '[International organizations]
nongovernmental, for-profit, and benevolent allow for the centralization of collective
partners. Adding to this statelessness is the activities through a concrete and stable
fact that the most dramatic expansion is in organizational structure and a supportive
global civil society or nongovernmental and administrative apparatus. These increase the
not-for-profit organizations, efficiency of collective activities and enhance
the organization's ability to affect
460
the understanding, environment, and interests conceptions and principles promoted by
of states.' So, whether focusing on economic INGOs' (Boli and Thomas, 1997: 187). In
viability or political coordination and thus this global structuration, the various fields of
whether realist (Keohane and Nye, 2000), international organization set examples of
neoconservative (Abbot and Snidal, 1998) or duality between structure (form or polity) and
neo-Marxist (Wallerstein, 2000; Sklair, culture (content). Global organization not
2002), the explanation rests on the only marks the field of global action, but
complexity of the increasingly global social rather also sketches the boundaries of world
system: demands exerted by globalization culture.
compel formal organizing. Yet these utilitar-
ian perspectives ignore the reality where rates
of organization outpace increases in common World culture
or related social demands (Drori et al., 2006:
9-11). They also overlook the extent of Formally defined as the 'definitions, prince-
organizing, whereas the drama of ples, and purposes [that] are cognitively con-
organization is experienced not only in polit- structed in similar ways throughout the
ical and economic spheres but also, if not world' (Boli and Thomas, 1997: 173), world
mainly, in social spheres, such as rights and culture encodes the models and institutions
education (see Boli and Thomas, 1997, that are made sacred. With international
1999). Last, utilitarian explanations fail to organizations of various types and forms as
take into account the institutional constraints its formal embodiment or framework, world
imposed by globalization, mainly the culture took shape: tracing the drama of
requirements for greater standardization and global structuration, 'post-War period has
rationalization imposed by the self-- witnessed rapidly expanding moral mobili-
organizing and self-reinforcing system of zation, that is, exponential increases in the
world society (Drori et al., 2006). recognition and rationalization of virtue and
Institutional explanations of the expansion virtuosity' (Boli, 2006: 113). This cultural
of the world polity, although naming global- praxis worked to enhance the vision of global
ization as the root cause, center on three par- parameters for human society and to further
ticular features of globalization: (a) the rise encourage organization on a global scale,
of the world as the relevant social unit; (b) which has escalated even more during the era
rationalization and standardization processes of hyperglobal-ization since the end of the
that are carried by the rising legitimacy of twentieth century.
science and expertise; and (c) the rising and The breadth and complexity of world
globalizing culture of actorhood and empow- polity traces the dimensions of world culture,
erment (Meyer et al., 2006; see Figure primarily expanding the issues directly pro-
18.3B). These three features, which are both nounced as global. As mentioned earlier, the
cultural and structural, combine to imprint range of issues that mobilized world action
various globally embedded social units with and were highlighted as important and valued
the now acceptable features of the modern world over - again, from human rights to
person and the modern organization. The environmentalism to inequality expanded
world polity marks the legitimate institutional rapidly and extend way beyond the trends of
themes and anchors them in formal global consumer culture (Ritzer, 2004b). Yet,
structures. Most importantly, it shapes the in spite of this variety in specific issues, the
structures and behavior of embedded primary cultural themes remain guided by
societies: 'The impetus for [local or national] progress and justice (Drori, 2005). These
action came from the transnational level. As twin pillars of Western, now global, culture
states entered the process, they responded not (Meyer et al., 1987) mark the sanctified
only to their own or societal interests but also themes of the still evolving global normative
to the global consensus.
 461
Although culture is an illusive concept, the urgency of social problems. These two
the recognition of the global moral order cultural features - rationalization and actor-
comes in celebrations (announcements and hood - imprint organizations, behaviors, and
titles) and certifications (awards and practices, resulting in a hyperactive world
licenses), which vary by degrees of formality society, increasingly proactive through
and rationalization (Boli, 2006). For organizations and guided by world culture.
example, using the practice of UN Several issues that are essential to global-
dedications as a 'metric' for the scope of ization studies are highlighted in the institu-
world norms (Drori, 2005), it is obvious that tionalist study of world culture. First, in
some issues are more valued than others. discussion of world culture, globalization
Specifically, issues linked with the principal debates about trends and trajectories (com-
themes of progress and justice are privileged monly between the dichotomy of conver-
as global norms: among the 127 issues gence and divergence) take the form of
highlighted by UN dedications, 100 (or 79 questioning global moral unity. Although the
percent) directly address issues of global reaches of world culture expand
development and rights (Drori, 2005: 182- rapidly, along with the rapid expansion of
183); issues relating to security, sovereignty, other dimensions of globalization, there are
and culture are relatively marginalized. Also, still obvious expressions of national culture,
observing the rates of structuration of fields cultural regionalization, and 'glocalization'
similarly exemplifies the obvious dominance (see, for example, Helacioglu, 2000;
of the themes of progress and justice: as Robertson, 1994). By fracturing global
shown in Figure 18.2, the sizes of the global cultural work, local culture serves as a prism
organizational fields of development and for the influence of international organiza-
human rights dwarf all others. tions (see, for example, Wiktorowicz, 2002),
The specific substantive issues exalted as it is also constituted by their influence and
worldwide are infused with two general work (see, for example, Drori et al., 2003,
logics: rationalization and actorhood (Meyer regarding the effects of global scientization
et al., 2006). Rationalization, or the system- trends on the constitution of rights).
atization and standardization of social life Second, in discussions of cultural colo-
(Jepperson, 2002: 257) with scientization as nialism, world society is described as rooted
its pronounced axis (Drori and Meyer, 2006), in European Enlightenment and nationalism,
establishes organizational sites and nodes. It and thus its development is described as
calls for coordination, supervision, planning, intertwined with modernity (Meyer et al.,
and study, all of which build on the mythol- 1987). Institutionalists describe the long his-
ogy of universality, thus undercutting tory as stretching over almost two centuries,
mythologies of national or local culture and before intensifying dramatically after World
further enhancing the spirit of a world soci- War II (Meyer, 2000; Djelic and Quack,
ety. Intertwined with the notion of an ordered 2003: 4), and thus distinguishing this cultural
world is the notion of the world as manage- change from the longer historic trail of
able, expressed in the theme of actorhood, or capitalism (Wallerstein, 1979). Current1y,
the sense of empowered agency attributed to globalization is laden with characteristically
social actors (individuals and organizations modernist themes from the nation-state and
alike; Meyer and Jepperson, 2000). The scientization to the individual, and in
decentralized or stateless nature of the particular, of course, the themes of progress
modern world polity reflects and supports and justice.
this sense of agency: the empowerment of Third, in discussions of the tension
individuals, associations, and firms is enabled between form and content and between cul-
by the sense of openness in the political tural norms and the actors that propagate
realm, in the unbounded market, and in them, this institutional emphasis on world
462
culture stabilizes the study of international EMPIRICAL TRADITION
organizations and of globalization by them. It
suggests that 'movements that anchor them- World society theory, much like the social
selves in the moral order are especially likely issues it comments on, is a distinctly global
to flourish' (Boli, 2006: 116) and thus perspective. Meyer's work is clearly influ-
explains the rise of particular fields of global enced by the early European sociology of
organization within the cultural trends of Émile Durkheim and Max Weber, yet it is
modern world society and the cultural (and also heavily infused with American empirical
ideological) themes of this era. In this sense, tradition. As a result, world society theory
international organizations are made up of has always emphasized the role of meaning
actors, including themselves (McNeely, and culture as explanatory factors in social
1998), while also serving as carriers of these processes while demonstrating trends and
themes and diffusing them to other embedded causes in quantitative empirical research with
units. Similarly, individuals are constituted sophisticated statistical tools.
by the professions that celebrate agency: Schofer and McEneaney (2003) and
individualism takes root where psychology Schneiberg and Clemens (2006) offer superb
(Frank, Myere and Miyahara, 1995) or where summaries of world society research agenda
human resource management (Luo, 2006) and research tools. In accordance with the
flourish. In this way, comparative institutio- dual definition of globalization as simultane-
nalism, in also marking the phenomenology- ously a process of the consolidation of the
cal pole of organizational institutionalism, global and of cross-nation diffusion, institu-
has departed from 'old' institutionalism in its tionalist research strategies for studying
focus on culture and on rationalization. If by globalization apply a two-pronged approach.
institutionalism people are embedded in habit And each of the specific directions of
and custom and thus consideration is given to research is associated with a series of
the tension between free- will and deter- research questions, studying the related insti-
minism, current discussions, especially in tutional conditions and mechanisms. Table
world society studies, regard people as ratio- 18.2 summarizes the mounting empirical
nalized actors, and thus consideration is research of this tradition.
given to the tension between structure and As is evident in Table 18.2, the body of
agency. empirical research from a comparative and
The emphasis on the culture of rationaliza- institutional point of view is rather prolific.
tion and actorhood is more than a semantic Institutional assumptions and their related
move: this dialectic change in discourse propositions have been applied to various
reflects the break with path-dependent theo- issues and fields (from science and rights to
ries (ecological determinism of some) and a environmentalism and management, to name
focus on traditional social science (rather just a few) and across sectors (from the
than strategic and managerial) perspectives. public to the private, from the for-profit to
It also means a straightforward focus on civil society). They have also been applied to
culture as a fundamental social factor, as the study of both institutionalization (at both
strongly expressed in world society-type the global and the national levels) and diffu-
explanations (for example, Drori, Jang and sion (across embedded units, most often
Meyer, 2006). This highly cultural perspec- nation-states). Empirical research in this tra-
tive, even in its most phenomenological wor- dition has relied on a variety of methods:
ks, is nevertheless anchored in a highly empi- while most studies rely on statistical methods
rical research tradition. As a result, the insti- (frequently, regression models or event his-
tutionalist study of world culture and world tory analyses; see Schofer and McEneaney,
polity is grounded in formidable empirical 2003, for a detailed review of strategies),
descriptions of these otherwise illusive socio- more and more studies add a component of
logical terms and complex global processes.
463
464

content analysis (for example, Drori, 2006; and Thomas, 1997, 1999), conferences
Hwang, 2006). This research tradition has (Berkovitz, 1999), and treaties (Frank, 1999)
been true to its aspiration as commentary to cross-national density of ministries (Jang,
about historical change by compiling rich 2000; Kim, Jang, and, Hwang, 2002), treaty
longitudinal data and relying on change and ratification (Wotipka and Ramirez, 2008),
causation methods. And while the studies and numerous other local practices. Although
cited in Table 18.2 refer strictly to compara- world society scholars have .built an impres-
tive research (it relies on a wide range of sive set of cross-national data across a variety
cases for the study of diffusion), numerous of social issues, these studied are still limited.
institutional studies document the process of Most important, although the availability of
diffusion into particular countries (for exam- historical indicators for globalization on its
ple, various chapters in Sahlin-Andersson dual levels is sure to improve with our
and Engwall, 2002) or on particular organi- growing interest in global studies, the compi-
zational sites (for example, various chapters lation of data poses a problem of reification.
in Djelic and Sahlin-Andersson, 2006). Specifically, cross-national analyses con-
This impressive empirical corpus is not tribute to the reification of nation-states:
without weakness, in regards to both data and while we debate the role and future of nation-
conceptual issues. The obvious weakness states in an increasingly global and
emerges from the availability of data: data transnational world, we rely on national data
about the global system as the unit of analy- to describe diffusion processes. Here, world
sis are available only once we conceive of society scholars share research challenges
this unit as relevant and thus are available with many other institutional scholars, across
only for the recent period and only for an disciplinary lines: Sharing the desire to
incomplete list of social issues (Hwang, remain faithful to constructivist and pheno-
2006). Similarly, data on nation-states are menological assumptions, while at the same
available only since the nation-state was con- time wishing to ground its theory in conven-
ceived as the 'imagined community,' and thus tional .empirical tradition of social .science
longitudinal empirical studies of cross- research.
national patterns have been possible only
since the nineteenth century. Seeing this
challenge, world society researchers have JUNCTURES, OR BEYOND SOCIOLOGY
come up with a range of original longitudinal
indicators for global social change: from Complicated further by the newness of the
global measures of international organiza- term globalization, the debates surrounding
tions and their discourses (for example, Boli globalization are complex 'since there are no
 465
definite or fixed lines of contestation' (Held conservative IR scholars who recognize the
and McGrew, 2000: 1). Guillén (2001), in magnitude of this phenomenon fail to address
reviewing mainly sociological literature, the axiomatic institutional claim that the
revealed the complex nature of current social construction of know ledge is
debates by outlining the cross-cutting intertwined with the social construction of
answers to the main questions in these reality (see Barnett and Finnemore, 2004: 29,
debates. In this sea of literature on globaliza- for a review). This unease with the highly
tion, institutional comparative work has constructivist tone of world society work is
engaged many of the established issues. clearly expressed in the substantial literature
Many scholars - from communitarians in IR studies of the role of international
(Etzioni, 2004) to IR institutionalists organizations in producing the obvious simi-
(Ruggie, 1998; Wendt, 1999) - employ the larity across nations: such work (Finnemore,
terms world society and world polity. 1996a; Barnett and Finnemore, 1999;
Similarly, many scholars analyze world Khagram, Riker, and Sikkink, 2001) explic-
norms: of humanitarian aid (Finnemore, itly distances itself from world society
1996a), national security (Katzenstein, 1996), arguments (Finnemore, 1996b).
and sovereignty (Krasner, 1999). Further, These debates expose the gulf between
commonalities extend to several other bodies world society theory and other theories in
of literature, along different conceptual and globalization studies. IR attempts to 'bring
substantive shared themes: the role of the society back in' by considering regimes
professions (Dezalay and Garth, 1996), even (Krasner, 1983) and epistemic communities
if the world society approach is less (Haas, 1992), which, although they shared
instrumentalist; the consolidation of world the challenge to the state-centric view with
order, among conservatives (Slaughter, world society theory, still could not accept
2004), cosmopolitanists (Held, 1995, 2003; the highly constructivist and cultural empha-
Beck, 2006), or communitarians (Etzioni, sis of institutionalism. Therefore, current IR
2004), even if the world society approach is studies of network relations among various
less deterministic; and the influence of global actors (for example, Ottaway, 2001;
inherent ordering logics, as in Foucault's Pattberg, 2005) still reject the rationalized
work on governmentality, even if the world and ritualized nature of such partnerships and
society approach attributes less influence to fail to see this new mode of global gov-
the power and interests of government. ernance as itself a period-specific mythology
Still, in general, even these common uses of management (Drori, 2006).
of such concepts as liberal embeddedness are
challenged by the constructivist view. In
other words, although the obvious presence INSTITUTIONALIST FOCUS ON THE
of globalization led many researchers to con- GLOBAL: A SUMMARY
sider the consolidation of international
regimes that govern world affairs (for exam- Institutional theory developed contempora-
ple, Ruggie, 1982; Krasner, 1983; Moravcsik, neously with the consolidation of globaliza-
2000), most IR scholars regard international tion as a field of inquiry and commentary.
regimes as governed by the power of a few Today, some thirty years after the
players and as arenas for international institutional breakthrough and twenty years
cooperation (Moravcsik, 2003), rather than into the 'era of globalization,' it is clear that
conceiving of them as constituted authorities. institutional thought influenced globalization
Even in recognizing the importance of discussions. Even more, it is clear that
knowledge and expertise to the authority of comparative and global studies have con-
international organizations, tributed to the advancement of institutional
466
thinking. In current scholarship, the follow- Sixth, the isomorphism and decoupling
ing institutional propositions have been argument: Ceremonial commitment to the
applied to interpret globalization processes. globally institutionalized models, structura-
First, the institutionalization argument: Over tion based on symbolic gesturing, and
time, cultural themes institutionalize at the gratuitous compliance with universalized
global level - evident in the expansion of standards result in loosely connected struc-
policies and practices and in the consolida- tures, action, and formal discourses. Surely
tion of particular models or scripts - to create not all particularistic factors dissolve in the
the global environment in which societies, face of external influences; rather, various
organizations, and individuals are embedded. studies show that national (for example,
Second, the diffusion argument: Once polity type), organizational (for example,
globally institutionalized, a model diffuses to size), and sector-specific (for example,
the various units in the relevant field. Global economic impact) features influence the
diffusion brings the script (in its various diffusion of practices. This influence creates
forms as a practice, a structure, and an idea) a varied landscape of conditions that often
to be enacted by entities embedded in this maps onto variations in embeddedness and is
environment. Global diffusion is supported captured in the notion of 'glocalization.'
by the ideas of universality of knowledge and Seventh, the cost of isomorphism argu-
the features of society. ment: Global isomorphism bears unique,
Third, the embeddedness argument: possibly costly or negative effects on stated
Nesting in, connections with, and openness goals of performance, thus explaining much
toward globalized and rationalized institu- of the failure in the implementation of poli-
tional models and their carriers result in cies in developing countries and the embrac-
'contagion.' Therefore, relations of various ing of management ideologies into corporate
forms and degrees of intensity affect the practices.
propensity to adopt a model and enact its Eighth and last, the unintended conse-
script. In explaining 'higher-order' effects on quences argument: Global isomorphism
globally embedded social units, some results in social changes that were unintended
describe the pressure of world society as the and unplanned in the formal performance
work of social movement (Bartley, 2003), goals. The unintended outcomes diffused and
while others explain this pressure as highly institutionalized worldwide in addition to, yet
diffuse and indirect (Meyer, 2000). in a loose connection with, the diffusion of
Fourth, the argument regarding the role of formal scripts of planned goals of perform-
carriers: Particular international and transna- ance. Drawing on Merton's (1936) canonized
tional players serve as carriers of the institu- work on the 'unanticipated consequences of
tionalized global models, using various purposive social action,' the institutional
strategies of influence and socialization that explanation of systemic failure hinges on the
result in isomorphism. primacy of institutional considerations in
Fifth, the institutional change argument: In action and thus on inherent structural condi-
the face of institutionalization (of models and tions, rather than on the bias of intensions or
their carriers), social actors change to the inefficiency of communications.
conform with or adapt to the new legitimate Together, these canonized arguments
script. This change is an integral part of the focus on the process of institutionalization,
process of institutionalization, further on its antecedents (or causes), on its features,
reinforcing a sense of a field. And although and on its consequences. The different
change has not been without conflict over emphases of the arguments describe histori-
meanings and over the form that practices to cal processes and today's conditions and
convey the meanings take, globalization has identify causal mechanisms, as well as com-
resulted in dramatic isomorphism and con- menting on the trajectories and impacts of
siderable convergence (Meyer et al., 1975). institutional forms.
 467
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 19
Organizational Institutionalism
and Sociology: A Reflection
C.R. Hinings and Pamela s. Tolbert

In 1991, DiMaggio and Powell observed: origins of contemporary institutional work on

organizations within this context. We also
Institutional theory presents a paradox. consider how more recent organizational
Institutional analysis is as old as Emile Durkheim's analyses in the tradition of institutional
exhortation to study 'social facts as things', yet
sufficiently novel to be preceded by new in much
theory have been driven by and reflect this
of the contemporary literature. (1991: 1) basic tension.
It is not surprising that current institution-
We argue that this paradox is, at least in alism embodies core theoretical issues within
part, the result of a long-standing tension in sociology: The roots of this approach to
sociology between more materialist, interest- organizational analysis are firmly planted in
driven explanations of behavior and ideation- the discipline. Tracing the intellectual
nal, normative explanations, a tension that genealogy of institutionalism, Scott's list of
has often driven oscillating waves of sociolo- contributing scholars (2001) includes
gical theorizing. It underlies many classical Spencer, Sumner, Cooley, Hughes, Marx,
debates (e.g., between Spencer and Durkhe- Durkheim, Weber, Parsons, Mead, Schutz,
im, Weber and Marx, and even Parsons and Berger, and Luckmann - a veritable pantheon
Mills), and the waves of theory associated of sociological theorists! Thus, it is almost
with it have produced a variety of 'neo-isms', inevitable that the issues addressed by
including neo-Marxist as well as neo-institu- institutionalists are, in many ways, those of
tionalist theories. This distinction in explana- central concern to general sociology.
tory approaches is linked to a more general Sociology focuses on understanding the
theoretical problematic for sociologists: how nature of both the material arrangements and
to provide a single, coherent account of both the normative systems that characterize
stable, persisting patterns of social behavior, collectivities, and the influence of these on
and the breakdown and elimination of what action; this is the same agenda that defines
were once deeply-entrenched patterns. In this and drives institutional analyses of organiza-
chapter, we examine the history of these dis- tions. Given the relationship between the
tinctive explanatory approaches in sociology, field of sociology as a whole and institutional
and locate the
474
studies of organizations, and the claim that for institutional theory, the first includes the
most eminent, historical sociologists are work of Herbert Spencer. Although Spencer's
forerunners of institutional theory, the time is work is rarely referenced (and probably read
ripe to revisit the origins and evolution of even more rarely) by modern day
institutional theory and to ask the question of sociologists,¹ he was generally considered to
how far the work of those forebears is truly be the preeminent sociologist of his time
represented in contemporary scholarship. (Turner and Beeghley 1981). To describe his
And this will inevitably lead to the questions, work as ambitious is to seriously understate
in what ways has institutionalism added to the case; Spencer's overarching goal was to
the earlier theoretical insights - and in what discover the fundamental set of principles
ways may the earlier insights have been lost that defined the functioning of physical,
in more contemporary studies? biological and social worlds. Although the
scope of this aim is amusingly quaint from a
contemporary standpoint, it's worth noting
THE FORERUNNERS that one of his 'laws of the cosmos,' that
increasing size in any social unit is
The starting point for this discussion has to accompanied by increasing differentiation,
be Dick Scott's (2001) Institutions and anticipated a staple finding from much later
Organizations as it provides a comprehensive empirical studies of organizations (Blau,
overview of the institutionalist approach to Heydebrand, and Stauffer, 1966; Hall, Clark,
organization theory. While Scott identifies Giordano et al., 1967; Pugh, Hickson,
seminal links between this approach and a Hinings, and Turner, 1969).
wide range of theorists, we focus more nar- In describing the nature of society,
rowly on a particular set of the progenitors he Spencer argued that social systems are made
discusses, ones we see as contributing most up of a series of subsystems, and that each
directly to the contemporary formulation of subsystem and its institutionalized structures
an institutional approach and to the ongoing serve distinctive functions for society as a
debates within it. Therefore, we will begin by whole. As Scott (2001: 9) points out, ideas
examining the work of four major theorists as about 'the functional division of social life
paired sets, Spencer and Durkheim, first, and into spheres or arenas - kinship, stratification,
then Marx and Weber. In our view, the point- politics, economics, religion, and so on,' have
counterpoint relations between these theorists been central to much sociological theorizing.
offer useful insights into unresolved As we discuss in more depth below, this
theoretical problems that are embedded in conception of 'institutions' - as core,
much of the development of current institu- distinguishing, societal-level patterns
tional theory. Within this context, we will (structures) that characterize one area of
consider the four pieces that DiMaggio and social life, and that are fundamentally
Powell (1991) label as the initial formula- interlocked with each other is much broader
tions of institutional theory, namely, Meyer than the conception often implied in more-
and Rowan (1977), DiMaggio and Powell contemporary work (although; unfortunately,
(1983), Zucker (1977) and Scott and Meyer the latter is no more likely to define the
(1983). concept of institution explicitly and clearly
than Spencer or other early theorists).
Importantly, as an adherent of utilitarian
Spencer and Durkheim philosophy, Spencer also made the case that
these structures arose naturally through a
Among the four streams of early sociological process of competition and exchange among
theorists that Scott considers as foundational individuals who, in the rational pursuit of
 475
their own self-interests, entered into contracts Durkheim's fundamental view of social
that facilitated such pursuit. Thus, society behavior expressed here not only runs
was conceived as the nexus of negotiated directly counter to Spencer's emphasis on
contracts. Although Spencer did not address individuals' conscious calculation of how
the issue directly, implicit in his utilitarian best to pursue independent interests, but
and evolutionary arguments is the notion that anticipates arguments later offered by Berger
when institutionalized arrangements fail to and Luckmann (1967) concerning the limited
permit the achievement of agents' objectives, ability of individuals to shape social arrange-
they are likely to be subject to re-evaluation ments (which they termed 'exteriority'), and
and purposeful change. the coercive power of these arrangements
Writing in the shadows of the French over' behavior. It is similarly consistent with
Revolution, Durkheim was also deeply con- Bourdieu's (1977) concept of habitus. The
cerned with the question of what forces held primacy that Durkheim assigned to non-
societies together. Ultimately, he reached calculative sources of behavior was
very different conclusions than Spencer, highlighted by a pointed rebuttal to Spencer,
although two distinct responses to this ques- in which he observed that entering into
tion are evident in his work (Collins, 1994: contractual relations necessarily requires a
188); the later response is most clearly pre-existing level of trust among society's
opposed to Spencer's arguments. The earlier members. Durkheim concluded that such
response, focusing on the division of labor in trust was produced through collective con-
society, particularly in industrialized soci- sciousness, the normative commitment and
eties, is somewhat more compatible with a sense of belonging to a social group (Collins
materialist, agency-driven view. In this and Makowsky, 2005: 95-96).²
instance, Durkheim argued that solidarity
reflects recognition of interdependencies
among members of society created by
specialization. Later work, focusing on what Marx and Weber
Durkheim referred to as 'social facts,' and
reflecting his increasing rejection of As in the comparison of Spencer and
Spencer's utilitarian view of society, gives Durkheim, arguments about the validity and
much more weight to purely ideational, usefulness of assumptions about the impor-
normative forces that serve as constraints on tance of conscious choice and self-interested
individuals' behavior. motivations in explaining social behavior
In Rules of the Sociological Method, his serve as a key point of distinction between
treatise on the distinctive domain of sociol- the sociological theorizing of Karl Marx and
ogy, Durkheim argues, Max Weber. Marx was, of course, a material-
ist in philosophy and at the heart of his analy-
When I fulfill my obligations as brother, sis were notions of conflict, power,
husband, or citizen, when I execute my oppression, exploitation and alienation
contracts, I perform duties which are defined, between classes. In contrast to Spencer's and
externally to myself and my acts, in law and in
custom. Even if they conform to my awn
Durkheim's preoccupation with explaining
sentiments and I feel their reality subjectively, the persistence of social order, Marx focused
such reality is still objective, far I did not create on forces that led to major transformations in
them; I merely inherited them through my societies.
education ... The systems of signs I use to Marx's core argument, that such transfor-
express my thought, the system of currency I mations were inherent in class relations, was
employ to pay my debts, the instruments of predicated on the assumption that individuals
credit I utilize in my commercial relations, the
practices followed in my profession, etc.,
who shared a common role in the economy a
function independently of my awn use of them. class - would ultimately and inevitably rec-
(1964: 1-2) ognize their shared interests and pursue those
476
interests through collective action. Since all in conjunction with the increasing degrada-
economies were constituted by, on one hand, tion of work, were considered key forces in
a class that profited from control of the enabling members of the labor class to recog-
primary means of production and, on the nize their true, shared material interests and
other hand, classes that lacked control of key to collectively act upon these.
productive resources and thus were subject to Thus, the key institutions in Marx's analy-
the exploitation of the first, class conflict was sis are social classes and their relations, and
inevitable. As technologies and other factors his analysis suggests that these institutions
changed in ways that provided an exploited will be stable as long as the dominant class is
class with opportunities to overthrow the able to sustain acceptance of general
existing system of relations, Marx argued, ideologies that support them. When condi-
their collective action would result in the dis- tions changed sufficiently, though, accept-
solution of the system and the creation of a ance of dominant ideologies was expected to
new set of social relations that was consistent break down under the weight of revealed
with the interests of the rising class. Thus, interests, and the institutions to be subject to
although Marx clearly rejected Spencer's challenge and collapse. The previous system
belief in the benignity and efficiency of of class relations would then be replaced by
market allocation processes, the two did new institutions (new classes, with new
share the general conception of social actors relations of dominance and subordination)
as driven by self-awareness of material that, presumably, were supported by new
interests. ideologies.³
However, while Marx's analysis was pred- Much of Weber's analyses can be seen as a
icated on the assumption that social action response to Marx's emphasis on material
primarily reflected rational efforts to maxi- interests, and particularly on class relations,
mize material, class-based interests, he did as the driving force in social action. Along
recognize that individuals sometimes failed with Spencer, Marx and Durkheim, Weber
to realize their true class interests - i.e., that was concerned with large-scale social
they were subject to false consciousness. This changes that he saw taking place, changes
concept entails an implicit acknowledgement that were reshaping the whole nature of
of the role of cultural forces, belief systems society. Although some have argued that his
and ideologies, in shaping action as well. analyses directly opposed those of Marx, by
True to materialist logic, though, Marx prioritizing ideas and cultural forces as deter-
located the origins of such forces in the eco- minants of social action (Parsons, 1937),
nomic interests and material capabilities of most contemporary theorists view his aims
the dominant class (Collins, 1994). Thus, more in terms of tempering, rather than
widely-held social beliefs and ideologies rejecting Marx's arguments (Turner and
were deemed to be shaped largely by the Beeghley, 1981; Collins, 1994; Swedberg,
dominant class, which had the resources to 1998): his approach to explaining social
influence the production and widespread phenomena emphasizes the interaction
dissemination of ideas that were consonant between material conditions and interests, on
with their interests (and of course, influence one hand, and subjective interpretations and
over state agencies to suppress production meanings on the other (Weber, 1949). Thus,
and dissemination of ideas that lacked such neither material nor ideational forces are
consonance). Moreover, he assumed that privileged in his explanations of social
changes in material conditions would provide phenomena; rather these forces must be
the basis for changes in epiphenomena, such understood as independent though inter-
as false consciousness. In capitalist systems, twined phenomena.
increased opportunities for interaction among It is, however, his work on cultural influ-
members of the working class, ences and belief systems that is most clearly
 477
reflected in at least early formulations of tradition of phenomenology, as articulated by
institutional analyses of organizations. As Schutz (1967) and Berger and Luckmann
Scott (2001: 13) puts it: (1967). As suggested in our discussion
above, such phenomenological explanations
'more contemporary analysts of institutions lay of social behavior have dose parallels to
claim to Weber as the guiding genius than to any those of Durkheim. For Durkheim, though,
other early theorist. Although Weber did not institutions - the forces that produced 'social
explicitly employ the concept of institution, his
work is permeated with a concern for
facts' or enduring patterns of behavior char-
understanding the ways in which cultural rules, acterizing collectivities - were primarily nor-
ranging in nature from customary mores to mative, operating through the social
legally defined constitutions or rule systems, solidarity that bound individuals together in a
define social structures and govern social society (Durkheim, 1947). For phenomenol-
behavior.' ogists, on the other hand, institutions were
defined more in cognitive terms, as shared
In particular, Weber's analysis of the meanings and understandings that arose from
nature of rational-legal authority and its social interaction and shaped behavior largely
critical role in the operation of contemporary by constraining individuals' cognitions and
organizations provided a key point of perceived choices of action. A phe-
departure for the foundational work in nomenological approach to institutions can
institutional studies offered by Zucker (1977) also be distinguished from Durkheim's by the
and Meyer and Rowan (1977). Arguing that concern of phenomenologists with expli-
different forms of organizations (e.g., cating the micro-interactional processes in
patrimonial administration, charismatic which institutions originate.
communes, bureaucracy) rest fundamentally
on different beliefs about the 'true' or 'proper'
nature of social relations, Weber sought to
delineate key features of rational-legal THE INITIAL FORMULATIONS
authority, a belief system underpinning the OF INSTITUTIONAL ANALYSES
bureaucratic form. Rational-legal authority OF ORGANIZATIONS
entails acceptance of social relations as
rightly governed by formal laws and In terms of contemporary institutional
regulations which, in turn, are presumed to be analyses, Powell and DiMaggio (1991) have
based on rational calculations of the most four articles that they call 'The Initial
effective means to attain given ends. In this Formulations,' namely, Meyer and Rowan
context, obedience is given to persons based (1977), Zucker (1977), DiMaggio and Powell
on the formal offices they hold, in part (1983) and Scott and Meyer (1983). These
because their attainment of office is expositions show continuity with the
understood to indicate possession of skills forerunners, but also a distinct break. The
and abilities that make them able to execute continuity involves theoretical notions of the
the tasks of the office. Weber contrasted this bases of social action; the break involves a
form with traditional authority, in which specific focus on organizations.
social arrangements are accepted as To appreciate, in part, the 'neo-' label that
preordained, whether by a deity or natural is often attached to this tradition, it is useful
law, and charismatic authority, in which to recall the dominant lines of sociological
accepted social arrangements reflect the theorizing and research on organizations up
dictates of an individual who is viewed as to the mid-1970s.4 In the U.S., research on
possessing supernatural or magical powers organizations as a distinct subfield of study
and abilities (Weber, 1947). by sociologists had its roots in efforts by
This conception of rational-legal authority Robert Merton and his students
as a cultural foundation for modern organiza-
tions was linked, particularly in Meyer and
Rowan's and Zucker's initial analyses of
organizational institutions, to work in the
478
(e.g., Merton, 1947a; Gouldner, 1954; Blau, and Rowan drew on Weber's analysis of
1955) to empirically examine key tenets of rational-legal authority in modern economies,
functionalist theory. Based on the notion that and wove this together with Berger and
organizations could be viewed as societies in Luckmann's (1967) ideas about
miniature, organizational research was seen institutionalization, processes leading to the
as permitting the kind of comparative study kind of socially-constructed reality depicted
needed to provide systematic validation for in the earlier quote from Durkheim. They
functionalist arguments (and thus represented argued that in modern societies, rules about
a very appealing alternative to conducting how organizations 'ought' to operate and the
costly and difficult cross-national studies). kinds of structures they 'should' have arisen
The logic of functionalist reasoning from a variety of sources. Among these,
encouraged examining and explaining Meyer and Rowan discuss the effects of com-
organizational structures in terms of benefits plex relational networks (interconnections
(particularly in terms of efficient functioning) among organizations that facilitate the spread
to organizations. Thus, by the mid-1970s, the of ideas and understandings), the collective
most prominent line of sociological research organization of the environment (the rise of
on organizations, which had come to be powerful states that can pass and enforce
dubbed as 'contingency theory,' reflected a mandates that affect organizations), and the
confluence of this theoretical agenda and the leadership of local organizations (non-gov-
more pragmatic concerns of a tradition ernment organizations that have power and/or
known as administrative theory (Gulick and legitimacy to promote prescribed
Urwick, 1937; Follett, 1942). Studies in this organizational arrangements). Organizations
tradition typically investigated the way in experience pressure to conform to these rules
which various contingencies, such as size and in order to maintain their own legitimacy;
technology, affected the relative efficiency thus, formal structure, Meyer and Rowan
and profitability of variations in structure, suggest, can be viewed as the result of
such as complexity, formalization, centraliza- conformity to such rules or 'myths.'
tion; that is, organizations were generally This emphasis on ideational and
assumed to adopt structural arrangements on normative sources of structure offered a very
the basis of calculations that were aimed at sharp contrast to the then-dominant approach
enhancing efficiency and effectiveness, and to explaining organizational structure. Note
that took into account various contingencies here that, in contrast to earlier sociological
facing the organization (e.g., Woodward, analyses that provided the underpinning for
1958; Hage and Aiken, 1967; Pugh et al., their arguments, their concept of 'institution'
1969; Klatzky, 1970; Blau and Schoenherr, entailed much more circumscribed social
1971; Pennings, 1973). As Meyer and Rowan phenomena - particular social rules and
summarize the literature at this point in time: definitions of the appropriate formal structure
of organizations.5
One of the central problems in organization theory
is to describe the conditions that give rise to
rationalized formal structure. In conventional
theories, rational formal structure is assumed to be
the most effective way to coordinate and control Zucker
the complex relationship networks involved in
modern technical or work activities. (1977: 342) Published in the same year, Zucker's analysis
(1977) provided an elaboration of the phe-
nomenological arguments contained in
Meyer and Rowan Meyer and Rowan, along with empirical
evidence for these from an experimental
In advancing an alternative view of the study. In contrast to the largely macro-level
sources of organizational structure, Meyer focus of the other foundational work, Zucker
 479
addressed the microfoundations of institu- dominant lines of organizational research at
tions in some detail and, as she herself says, the time. By the early 1980s, however, con-
such an approach 'focuses upon institutional- cerns about a perceived overemphasis on
ization as a process rather than as a state; normative imagery in this work and an
upon the cognitive processes involved in the implicit lack of agency had begun to build
creation and transmission of institutions' (Perrow, 1985; Oliver, 1991, 1992; Abbott,
(Zucker, 1977: 104; see also her post -script 1992; Hirsch and Lounsbury, 1997). These
to the re-printing of this study in Powell and issues were addressed, to some extent, in the
DiMaggio, 1991). Her experiments demon- other two foundational pieces, published in
strated that when subjects were directed to 1983 by DiMaggio and Powell, and by Scott
think of themselves as being in an organiza- and Meyer.
tional setting (rather than simply engaged in DiMaggio and Powell (1983) also start
informal interaction with other participants) from a Weberian view of rationalism as the
they were much more willing to accept the major force in industrializing and moderniz-
judgments of others; moreover, in organiza- ing societies, and echo Weber's idea of such
tional settings, such judgments were more rationalism becoming an 'iron cage.'
readily transmitted from one set of subjects to However, their purpose is to use this as a
a new set - across generations of participants. springboard for suggesting that the processes
Consistent with Weber's arguments about of rationalization and bureaucratization that
rational-legal authority, then, her research drove Weber's analysis are now standard in
indicated that individuals are inclined to view modern society. Like Meyer and Rowan and
the behavior of representatives of organiza- Zucker, they argue that the creation of insti-
tions as being relatively objective (presum- tutional templates serves to drive processes
ably, as reflecting rational decision criteria of isomorphism, thus resulting in a high level
rather than individual, idiosyncratic choices), of structural homogeneity among organiza-
and that this increases their propensity to tions. Their specification of different sources
transmit these behaviors to others as rules, of isomorphism - mimetic, normative and
'correct' ways of doing things. Her work thus coercive - elaborated and clarified distinc-
provided a crucial link between phe- tions pointed to in Meyer and Rowan's work.
nomenologists' arguments about the impact Perhaps more importantly, their notion of
of institutions on individual cognitions and organizational field helped to draw attention
behavior and Weberian arguments about the to the array of interacting organizations that
nature of authority and normative order in give rise to, shape and re-shape institutional-
modern societies. This, in turn, provided a ized definitions. They define a field as (1983:
key base for research by later institutionalists 148), 'those organizations that, in the
on the diffusion of particular structures and aggregate, constitute a recognized area of
practices across sets of organizations (Tolbert institutional life: key suppliers, resource and
and Zucker, 1983; Palmer, Jennings and product consumers, regulatory agencies and
Zhou, 1993; Zhou, 1993; Skinner and other organizations that-produce the services
Staiger, 2005). or products.'
The notion of field serves to highlight the
variety of actors that may engage in efforts to
affect institutional definitions, and implicitly
DiMaggio and Powell suggests a role for active agency, at least
during early phases of field structuration,
In part, the positive reception that greeted while still recognizing the constraining
Meyer and Rowan's and Zucker's papers effects of such definitions. They posit,
reflected recognition of the absence of more '(O)rganizational actors making rational
normative views of behavior found in decisions construct around themselves an
480
environment that constrains their ability to depends on the context in which an organiza-
change further in later years' (1983: 148). tion operates.
This conceptualization foreshadows Both of the analyses by DiMaggio and
DiMaggio's (1988) later work elaborating on Powell and Scott and Meyer thus partially
the role of institutional entrepreneurs in address the core question that Tolbert and
change processes. It also reflects research by Zucker (1996) later articulated as a key prob-
Tolbert and Zucker (1983), who examined lematic for the further development of an
how the political conflict and struggles institutional approach, reconciling what they
among elites and immigrants that contributed refer to as rational actor models of behavior
to the early formulation and adoption of civil with institutional models. They note:
service reform laws became an increasingly
irrelevant factor in predicting adoption of the We suggest that these two general models
reform over time. Thus, DiMaggio and should be treated not as oppositional but rather
Powell's analysis provides one avenue for as representing two ends of a continuum of
decision-making processes and behaviors. Thus,
integrating the agentic, interest-driven images a key problem for theory and research is to
of social behavior offered by Spencer and specify the conditions under which behavior is
Marx, with the more constrained, normative more likely to resemble one end of this
conceptions of Durkheim. Like Weber's continuum or the other. In short, what is needed
work, their arguments recognize the validity are theories of when rationality is likely to be
and necessity of both approaches for more or less bounded. (176)
adequate sociological explanations.
Although recent organizational analyses
cast in the institutional tradition have made
Scott and Meyer some progress in addressing this issue, a fully
satisfactory resolution still awaits. There are
Scott and Meyer (1983) elaborate a similar other issues that remain to be addressed as
notion to that of field, namely, societal well, as discussed below.
sector. They use this term in two ways. The
first usage denotes the set of organizations
that provide similar products and services
and serve the same function, along with ISSUES FOR INSTITUTIONAL THEORY
resource-providing and regulatory
organizations; this is clearly akin to Comparison of the work of the classic
DiMaggio and Powell's notion of a field. In a theoretical forerunners and the initial formu-
second use, though, sector is used to refer to lations of institutional theory suggests at least
the kinds of performance criteria that are three issues that merit much more attention
typically used in evaluating different sets of by contemporary institutional theory. These
organizations. In particular, they distinguish are:
between technical sectors, in which
performance evaluation is largely identified 1. Integrating conceptions of interest-driven behav-
ior (and hence, problems of power and conflict)
with market outcomes, and institutional with those of bounded rationality and norma-
sectors, in which performance evaluation is tively-'guided behavior;
closely linked to conformity with institutional 2. Setting organizational institutionalism in wider
rules and regulations and only indirectly tied historical and social contexts in order to
to market outcomes. This latter concept of understand more profound processes of social
sector represents a different way of change;
3. Taking an interpretive approach seriously.
integrating both agentic and normative
approaches to explaining organizations'
behavior, suggesting that the relevance of These issues are not, of course, orthogo-
more agentic or normative explanations nal; there is clearly overlap among them.
 481
Incorporating issues of power retreat from society, so it is possible to argue
and conflict that organizational institutionalism has been
in a theoretical retreat from issues of inter-
For both Weber and Marx, the idea of an ests, power, conflict, domination and
institution was inseparable from issues of exploitation. In part, this reflects both an
power and interest. For both, understanding unstated functionalist logic in an institution-
the emergence, functioning and change in alist approach (Kirkpatrick and Ackroyd,
institutions entailed understanding the ability 2005), and a general lack of concern with
of particular groups in society to ensure that these issues in North American organiza-
their interests were served by given arrange- tional theory and sociology in general
ments. For both, processes of legitimization (Hinings and Greenwood, 2002). With few
were seen as key to sustaining institutions. exceptions, there has been a little recognition
And for both, analyses of patterns of power, of class or collective interests and power in
domination, and conflict required in-depth institutional analyses. Although DiMaggio
understanding of the social and historical (1988) addresses the issues of interests and
context in which they occurred. power, his analysis reflects more of a concern
Weber argued that the dominance of for connecting institutional arguments with
bureaucracy as an institution in societies the notion of individual agency (more in line
characterized by rational-legal authority with Spencer's concerns) than for under-
reflected its substantial advantages over standing how particular groups attempt to
alternative forms of organization (1947: 337): dominate others. Greenwood and Hinings
'It is superior to any other form in precision, (1996) do have a notion of particular occupa-
in stability, in the stringency of its discipline, tional and functional groups having different
and in its reliability ... superior both in material interests and vying for the power to
intensive efficiency and in the scope of its impose their institutional arrangements on
operations, and is formally capable of appli- others. Lawrence et al (2001) propose that
cation to all kinds of administrative tasks.' He influence, force, discipline and domination
also clearly recognized the dark side of this are all mechanisms of institutional change
advantage, however, noting that an that are based on how power is used.
entrenched bureaucracy can serve any inter- However, in these approaches the empha-
ests, and that those whose interests are served sis is on the ways in which power is utilized
are likely to become increasingly remote to allow institutional change to occur. That is,
from the mass of the population. Weber's it is primarily conceptualized as a factor or
imagery of members of bureaucratic organi- condition that allows change at either the
zations as cogs in a machine acknowledges field or organizational level. And in spite of
that the institution can be a source of alien- the language that Lawrence et al. (2001) use,
ation, not only in the psychological sense but their concern is not with the ability of partic-
in the more Marxian sense: individuals are ular groups to frame institutional arrange-
separated from the products of their labor, ments in such a way that their interests are
and thus may enact behaviors that run furthered. What is needed is not only a more
directly counter to their material interests. elaborate exploration of the role of institu-
Marx's notion of false consciousness captures tional forms, organizations and processes as
the same sort of phenomenon. Although frameworks and mechanisms in serving some
contemporary institutional theory would interests rather than others and, potentially,
seem a natural point of departure for examin- bolstering the power of some social and
ing such behavior, work in this tradition has occupational groups rather than others, but
given surprisingly little attention to it. also an examination of the conditions under
As Friedland and Alford argued that the which disadvantaged groups will simply
social sciences have been in a theoretical accept or recognize and challenge
482
existing institutions. Interestingly, Selznick Thus, overall, sociological forerunners
(1949) dealt with some of these issues in his point organizational institutionalists in quite
work on Tennessee Valley Authority (TVA), different directions than have been taken so
but this aspect has not been taken up. far. The central issues that require explo-
One interesting development that could ration include the way in which institutional
form the basis for such an approach is the arrangements serve as instruments of domi-
idea of institutional logics (see Thomton and nation by particular groups and particular sets
Ocasio, Chapter 3 this volume). Marx of interests rather than others, and better
emphasized the basis of ideologies in specification of the conditions under which
interests and the consequent way in which they are likely to be subject to challenge by
such ideologies control social relations. competing interests. An important part of the
Thomton and Ocasio (1999: 804) defined Marxist, Weberian and critical theory argu-
institutional logics as 'the socially ments about institutions is the way in which
constructed, historical patterns of material forms move across institutional arenas pre-
practices, assumptions, values, beliefs, and cisely because of the way in which they sup-
rules by which individuals produce and port particular interests and allow elites to
reproduce their material subsistence, organize maintain power (cf. Prichard and Willmott,
time and space, and provide meaning to their 1997). As Hinings and Greenwood argued
social reality.' And as they point out in this (2002), organizational theorists have to be
volume, there is an inescapably material more concerned with the implications of
aspect to institutional logics. However, the organizational forms and processes for power
nature of logics as ideologies and the ways in and control, something that should resonate
which they are related to interests has not strongly for organizational institutionalists
been fully explored. because institutions are the durable, change-
There is, of course, a stream of sociologi- resistant social structures of society (Scott,
cal and management theory that takes institu- 2001: 49). As Giddens (1984: 24) puts it,
tional frameworks as embodiments of power, 'Institutions by definition are the more
control and domination, namely, critical enduring features of social life .... giving
theory (Habermas, 1970, 1971, 1974; "solidity" (to social systems) across time and
Alvesson and Willmott, 1992; Alvesson and space.'
Deetz, 1996). However, this stream of
theorizing has had little or no impact on Understanding the relation
organizational institutionalism. More recent between institutions and
efforts to join research on social movements social change
with institutional analyses also partially
addresses this issue, but the problem with As noted, the use of the concept of 'institu-
much of this work is that it implicitly takes tion' by contemporary organizational
for granted the ability of actors to rationally researchers has generally involved a much
assess the impact of existing arrangements on more specific and narrower referent than that
their own interests, and challenge those that of classic sociological -theory. Arising as an
fail to serve these interests (e.g., Schneiberg alternative approach to explaining formal
and Bartley, 2001; Ingram and Rao, 2004; organizational structure, the earliest exposi-
Rojas, 2006). Hence, they often rest on a tions of institutionalism associated this
more Spencerian view of social action, and concept with very specific elements of struc-
fail to effectively address the insights of ture among a set of organizations: e.g., affir-
Durkheim and more recent phenomenologists mative action offices, civil service rules,
concerning the power of normative orders in radio programming formats, 'poison pill'
constraining action. policies, and so forth. One result of this
 483
approach was the deflection of efforts to con- rich heritage of sociological theorizing from
ceptualize formal structure in terms of which it draws (cf. Hinings, 1988; Hinings
broadly defined dimensions, such as com- and Greenwood, 2002).
plexity, formalization, and centralization, Most of the theorists that Scott labels fore-
efforts that dominated much of organizational runners were concerned with the broad sweep
sociology from the 1950s through the 1970s. of institutions - how society was constituted
Indeed, the lack of success by sociologists in through its institutional framework, and how
corning up with agreed-upon con- that framework was changing. Their analyses
ceptualizations and operationalizations of dealt with creation and change in dominant
such broad dimensions (e.g., Kimberly, 1976) institutions, and understanding both the
may have contributed to researchers' historical causes and consequences of such
receptivity to an institutional approach. change for both society and individuals.
Another, and perhaps more consequential These issues particularly resonate in the work
outcome, however, has been a neglect of the of Marx, Durkheim and Weber.
sorts of broad patterns of social relations and Conceptually, a strong distinguishing feature
social change that were traditionally associ- of the work of Weber and Marx, especially,
ated with analyses of institutions (for notable was an emphasis on understanding
exceptions, see the work of John Meyer and institutions and institutional change within
his colleagues). That is, there has been a broad historical contexts. They recognized
distinct shift from efforts to understand 'big that they lived in times of large-scale social
institutions' to those that are focused on change and upheaval, and struggled to under-
(relatively) 'little institutions.' stand them. For them, all analysis was
The redefinition of the concept of institu- historically located in a particular socio-
tion to denote specific elements of structure economic milieu. While all three were highly
may have been driven in part by empiricist analytical (e.g., the use of ideal types, the
concerns. The broad conception of institution labor theory of value, the nature of anomie),
in sociological theory did not lend itself such constructs were only possible because
easily to operationalization or efforts to of both sweeping and detailed scholarship of
verify theoretical claims, as witnessed by the the historical trajectories and embedded
still-ongoing debates over how to define and nature of institutions.
measure 'class' (e.g., Erickson and It is not that contemporary institutionalists
Goldthorpe, 1992; Wright, 1997; Weeden are oblivious to the historical settings that
and Grusky, 2005). The redefinition may also frame the diffusion of specific practices (e.g.,
reflect that fact that many (most?) of the cur- see Tolbert and Zucker, 1983; Sine,
rent proponents of institutionalism work in Haveman, and Tolbert, 2005; Haveman, Rao,
business schools, a context that is apt to and Paruchuri, 2006), but that concern with
encourage a stronger focus on explaining the explaining organizational behavior, per se,
behavior of organizations per se and dis- has often led to a lack of concern with under-
courage a broader focus on general societal standing and explaining overarching shifts in
issues and processes of social change (Stem society - the increased formalism in all kinds
and Barley, 1996). One might argue, as this of organizations (though see Drori, Jang, and
volume as a whole does, that institutional Meyer, 2006), the rise of international gover-
theory has told us a great deal about nance organizations in the wake of globaliza-
organizational behavior. Indeed, the exis- tion, such as the International Monetary
tence of a 'Handbook of Organizational Fund, the World Bank, and International
Institutionalism' is testament to this. Labour Organization, that are not subject to
However, as a consequence of the narrow- the authority of any given nation state, the
ness of its conception of institutions, institu- increasing levels of stratification in many
tional theory has offered little in return to the societies resulting, in part, from changing
484
organizational employment policies, and so underpinned Durkheim's analysis - how
forth - and the implications of such shifts for normative orders arise, are maintained and
individuals and social order. change. That is, institutionalism needs to
Work focusing on the field level of analy- explore in more detail the conditions under
sis, which Scott (2006: 16) defines as 'a set of which individuals are likely to raise and
interdependent populations of organizations accept challenges to existing institutional
participating in the same cultural and social orders, or to reject such challenges. This
sub-system,' provides a potential purchase on problem also, clearly, relates to Marx's notion
this issue. This level has indeed become of false consciousness, and the question of
important in the last 10-15 years in how Klasse an sich may become Klasse feur
institutional theory, and is intermediate sich.
between organizations and wider social As noted, institutionalists have addressed
systems and forces. However, organizational these concerns to some extent, particularly by
institutionalists need to do more work that drawing on work by phenomenologists, such
locates fields in a societal (and perhaps as Schutz, Berger and Luckmann, and by
international) context. This is particularly more recent scholars, such as Bourdieu and
important if organizational theorists and Giddens. Giddens' notion of the 'duality of
sociologists of organizations believe, with structure,' suggesting that while structures
Weber, that organizations are the key institu- constrain social action they are also created
tional forms of society. We need to address and modified by knowledgeable actors, has
questions concerning the ways in which served as an important springboard for much
organizations both shape and are shaped by discussion of the processes of institutional
the larger historical contexts in which they change (1976, 1979). For the most part,
are located. however, analyses that have drawn on the
There are, of course, some exemplars that ideas of these scholars have remained
deal with understanding the relation between theoretical (see Sewell, 1992 for a
organizational and societal change, in partic- particularly cogent theoretical synthesis). The
ular, Zucker (1983), Fligstein (1990), Dobbin great majority of empirical studies conducted
(1994) and in a different way, Orru, Biggart, under the banner of institutionalism have
and Hamilton (1991). It's also worth noting involved large-scale, quantitative studies
that Friedland and Alford's cri de coeur con- examining the adoption or, less frequently,
cerning the retreat from society is not appli- the abandonment of particular organizational
cable in Europe, where the development of practices or arrangements. While these
institutional theory has been strongly located studies are often premised on theoretical
in differences between nation states and vari- assumptions about cognitive and interactive
eties of capitalism (Whitley, 1992; Morgan, processes that underpin these institutional
2001; Djelic and Sahlin Andersson, 2006). processes (DiMaggio, 1997; Oliver, 1991;
Much of organizational institutionalism, Tolbert and Zucker, 1996; Barley and
though, needs to find its way back to these Tolbert, 1997; Greenwood, Suddaby, and
issues of historical and societal significance. Hinings, 2002), the assumptions themselves
have seldom been subject to empirical
verification by researchers.6
Taking an interpretive approach One approach to this entails more inten-
seriously sive use of data gathered through observa-
tional, interview and analysis of historical
The final set of problems that we see as need- documents derived from first-hand partici-
ing more attention by organizational pants involved in change or potential change
institutionalists involves gaining a better processes. This is in line with Silverman's
understanding of the kinds of issues that
 485
(1970) older agenda for organizational soci- definitions of reality are constituted (Berger and
ology, centering on a critique of reified and Luckmann, 1966). Despite this connection
abstracted empiricism and arguing for its between institutions and language, most institu-
tional theory has been dominated by realist
replacement with an action frame of refer- investigations in which the examination of
ence. Silverman was particularly concerned organizational practices has been disconnected
with shifting attention to what organizational from the discursive practices that constitute
actors actually do through the process of them (Phillips et al., 2004: 636).
interpretation to construct meanings. In terms
of method, this approach promotes the use of One of the few examples of an empirical
case studies, focuses on actual behaviors, study using a discourse analytic approach to
privileges discourse and emphasizes study institutional phenomena is represented
metaphor. In a similar vein, Barley and in Zbaracki's (1998) thoughtful and provoca-
Tolbert have sought to lay out a research tive analysis of the adoption and implemen-
agenda, specifically within the framework of tation of total quality management practices
institutional theory, which addresses issues of by organizations.
action and institutional change, and which The essential point about an interpretative
emphasizes the identification and analysis of approach is that it takes the actor,
scripts centered on behavior as a key ele- subjectivity, meanings, and reflexivity
ment. Drawing on Giddens' concepts of seriously. In so doing it opens up the black
structuration, they make a plea for 'a system- box of institutionalization both in stability
atic exploration of the relative important of and change. And it does it from a theoretical
behavioral and interpretive phenomena in the and methodological standpoint that is less
institutional process, and on the basis of such than prevalent in organizational
exploration, the fashioning of a set of institutionalism. While we have many
methods that are sensitive to and systematic provocative suggestions as to factors that
about documenting both cultural and struc- enable actors to question and alter extant
tural dynamics' (Barley and Tolbert, 1997: institutions (see Sewell, 1992), we have little
113). One example of empirical work in this empirical knowledge of the conditions under
vein is Barley's (1986) classic study of the which those factors are most likely to come
adoption of new technology by radiology into play. Thus, many questions remain
departments, which analyzes changes pro- answered, including those such as: What is
duced in scripts, routines, and processes of required for a general reorientation of shared
structuration (see Scott's 2001 of this study). cognitions (e.g., under what conditions might
An alternative approach involves linking a widespread rejection of tenure systems in
discourse theory and concepts of framing academia occur)? What causes breakdowns
with institutional theory (Phillips, Lawrence, in institutionalization processes, once these
and Hardy, 2004; Chreim, 2006). As with the are set in motion (e.g., why did some
attempt to use structuration theory, the con- developed countries resist signing the Kyoto
cern here is with the processes of institution- protocols after many of their allies and
alization and actors as active agents partners had done so)? And why do
interpreting and establishing meanings in institutions that clearly disadvantage some
those processes. Phillips et al. (2004) develop groups continue to be accepted by members
a discursive model of institutionalization that of those groups (e.g., why did some freed
highlights the relationships among texts, dis- slaves in the antebellum U.S. become
course, institutions, and action. They argue slaveholders themselves)?

that language is fundamental to institution-

alization: institutionalization occurs as actors CONCLUDING COMMENTS
interact and come to accept shared definitions of
reality, and it is through linguistic processes that
We have attempted to revisit the origins of
institutional theory and thereby ask questions
486
concerning in what ways the earlier insights Salancik, Copay, and King, 1991; Sewell,
may have been lost in more contemporary 1992; Barley and Tolbert, 1997). But we
studies. have little insight into how individuals trans-
Contemporary institutional theory reflects late resource problems into a critical
the core understandings and assumptions that consciousness, or into what determines
provided touchstones for classic sociological whether such constraints will lead merely to
theorizing, as well as the analytic dilemmas minor adaptations or to complete rejection of
that characterize the combined works of its institutional patterns. Gaining a better
forerunners. By tracing its linkages to the understanding of such issues would, we
ideas and arguments of the preeminent social speculate, ultimately provide the foundation
theorists indicated by Scott, we have intended for a better understanding of the sorts of
to help explain both the attraction of this broad changes in societies and social orders
approach to organizational analysis for many that motivated the sociological analyses that
researchers, as well as the difficult and serve as the forerunners of contemporary
ongoing debates that have sometimes fueled institutionalism, and could also help
a general sense of uneasiness about its future. illuminate the way in which existing relations
We have argued that, in particular, current of power are likely to be subject to challenge.
institutionalism is characterized by a core Drawing a link between specific micro-level
tension that can be traced to the roots of soci- interactional processes and particular
ology, understanding social action as a prod- instances of broad social change is a
uct of interest-motivated, conscious choices treacherous business, one that has some
by actors or as a product of normatively- resemblance to exploring the butterfly effect
constrained, habitualized responses. In line (Bradbury, 1953), but a general understand-
with the observations of Tolbert and Zucker ing of micro-level phenomena would, we
(1996) and others, we do not see these as believe, allow a fuller understanding of how
antithetical models, but rather as poles on a individual processes and societal level
continuum: Under different conditions, outcomes may be generally linked.
actors' decisions and behaviors are likely to In addition, a central motif of the social
be closer to one or the other end of the spec- theorizing that institutional theory draws
trum. In our view, the key problematic facing upon was of the processes of social change.
sociologists (and anyone who seeks to extend While it is necessary to conceptualize institu-
an institutionalist perspective) is specifying tionalization as a state, there has been too
what these conditions are, and explaining the much emphasis on this rather than on institu-
connection between particular conditions and tionalization as a process, understanding how
individuals' receptivity to cognitive those processes occur over time, and what the
reorientation and norm-breaking action. central drivers of institutional change are.
As argued above, we believe that part of These kinds of questions were at the heart of
this effort will require more empirical the theorizing of Durkheim, Marx and Weber
analyses that use interpretive frameworks to (and are also exemplified in the work of
explore institutional phenomena. That is, we Meyer and his colleagues: They are much
need a much more thorough understanding of less evident in the work of contemporary
institutions as manifested in individual organizational institutionalists.
perceptions and decisions if we are to fully We believe that following up on these
grasp the duality of structures (using themes in our research agendas would allow
Giddens' term). It is commonly argued, for modern institutionalism to make a significant
example, that resource constraints that hinder contribution to the rich sociological heritage
the enactment of institutionally-based behav- on which it has drawn.
iors are often a critical factor in bringing
about institutional change (e.g., Leblebici,
 487
NOTES Andreski, Stanislav. 1973. Social Sciences as
Sorcery. New York: 51. Martin's Press.
1 This lack of attention is summed up by Barley, Stephen R. and Pamela S. Tolbert. 1997.
Parsons' plaintive query, posed in the opening of "Institutionalization and structura-tion: Studying
The Structure of Social Action, less than 40 years the links between action and institution."
after Spencer's death (1937: 1): 'Who now reads Organization Studies, 18: 93-118.
Spencer?' Recent theorists (e.g., Andreski, 1973; Berger, Peter L. and Thomas Luckmann. 1967. The
Turner and Beeghley, 1981) suggest that the general Social Construction of Reality: A Treatise on the
neglect of useful theoretical insights provided by Sociology of Knowledge. Garden City, NJ:
Spencer stems from antipathy toward his embrace Doubleday.
of now-discounted ideas, such as Social Darwinism.
Blau, ,Peter M. 1955. Dynamics of Bureaucracy.
2 Interestingly, some empirical evidence of
Durkheim's notion of collective consciousness can Chicago: University of Chicago.
be adduced from recent work by psychologists on Blau, Peter M., Wolf Heydebrand, and Robert E.
the formation and behavior of in-groups (Tajfel. and Stauffer. 1966. "The structure of small
Turner, 1979). In a provocative analysis, Zucker bureaucracies." American Sociological Review,
(1986) offers a reversal of Durkheim's arguments, 31, 179-91.
noting that institutions can contribute to the forma- Blau, Peter M. and Richard Schoenherr. 1971. The
tion of trust and -solidarity. Structure of Organizations. New York: Basic
3 very similar argument is advanced by Merton
Books.
(1947b), who focuses on the relative balance of
functions and dysfunctions associated with existing Boulding, Kenneth. 1953. The Organizational
structures as a source of social change. Merton does Revolution. New York: Harper.
not invoke notions of objectively-defined classes, Bourdieu, Pierre. 1977. Outline of a Theory of
however, and though he recognizes that it is Practice. Cambridge: Cambridge University
important to consider for whom (or for which Press.
groups) a given structure is functional or Bradbury, Ray. 1953. "A sound of thunder." Pp.
dysfunctional, how to factor that consideration into 203-215 in Golden Apples of the Sun. New
assessments of the likelihood of change is left
unanswered. York: Doubleday and Co.
4 For a slightly more expanded account of the Chreim, Samia. 2006. Managerial Frames and
origins of an institutional approach in institutional discourses of change: employee
organizational analyses, see Tolbert and Zucker, appropriation and resistance. Organization
1996. Studies, 27: 1261-1288.
5 A slightly different, but also relatively narrow
Clemens, Elizabeth S. and J.M. Cook. 1999.
notion of institution is found in Selznick's work on
leadership (1957: 16-17). One of the functions of a "Politics and institutionalism: Explaining
leader, Selznick argues, is to infuse an organization durability and change." Annual Review of
with social value that goes beyond the achievement Sociology, 25: 441-466.
of its technical goals; this contributes to its Collins, Randall. 1994. Four Sociological
adaptability and long-term survival. Thus, Traditions. London: Oxford University Press.
Selznick's use here identifies 'institution' with a type Collins, Randall and Michael Makowsky. 2005. The
of organization.
Discovery of Society. Boston: McGraw-Hill.
6 Some relevant empirical work that relates to
this has been provided over the last 20 years by psy- DiMaggio, Paul J. 1988. "Interest and agency in
chologists in research on processes of cognition for- institutional theory." Pp. 3-21 in L.G. Zucker
mation and change, but the use of such research by (ed.), Institutional Patterns and Organiza-tions:
sociologists or others drawing on institutional Culture and Environment. Cambridge, MA:
theory, even as evidential support for underlying Ballinger Press.
assumptions, is very rare (see DiMaggio, 1997; DiMaggio, Paul J. and Walter W. Powell. 1991.
Clemens and Cooke, 1999). Introduction. In W.W. Powell and P.J.
DiMaggio (eds.), The New Institutionalism in
Organizational Analysis. Chicago: University of
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3.

20
Coalface Institutionalism
Stephen R. Barley

Famous personages and also periods in the history human agency of any kind was largely
... may be reassessed, some being demoted and irrelevant, if not illusory. This left the neo-
others raised up or even rediscovered … Some are
found worthless, stale; others provide stimulating
institutionalists to reinforce the sociological
ideas and even technology which can be built on ... line in organization studies. In what are
their ideas and work are more 'relevant' - not widely acknowledged as seminal papers that
merely more useful or suggestive - than that of staked out neo-institutionalism's stance,
many contemporaries ... No matter that the Zucker (1977), Meyer and Rowan (1977),
ancestors might be turning uncomfortably in their
graves if they knew how their lives and works
and DiMaggio and Powell (1983) argued that
were reinterpreted and selectively used. (Strauss, organizations not only act, but that they often
1982:179) do so for cultural, interpretative, and
symbolic reasons and that these actions
matter for an organization 's fate. For
ethnographers of work and organizations,
INSTITUTIONALISM, SOCIAL many of whom still worked in the spirit of
CONSTRUCTION AND industrial sociology, the neoinstitutionalists
ETHNOMETHODOLOGY seemed like kin. Here, finally, were bona fide
organizational theorists who dared to stake
Neo-institutionalism appeared in the late their macro-theories on a micro-sociology.¹
1970s with the goal of challenging rational The institutionalists' micro-sociologies of
theories of organizing that had ruled organi- choice were phenomenological construc-
zation studies since the 1960s (Zucker 1977, tivism and ethnomethodology. Zucker made
Meyer and Rowan 1977, DiMaggio and the most use of both (Zucker 1977, 1987;
Powell 1983). It also arrived just in time to Tolbert and Zucker 1996). She combined
counterbalance newly emerging transaction Berger and Luckmann's (1967) concepts of
cost and ecological theories of organizational typification, reification, and objectivation
form (Williamson 1975, Hannan and Free- with Garfinkel's (1967) notion of accounts to
man 1977). Whereas transaction cost theory argue that institutions are best treated as
breathed new life into rational views of orga- taken-for-granted understandings:²
nizing by building on the calculus of a make
or buy decision, the ecologists professed that Institutionalized acts then, must be perceived as
both objective and exterior. Acts are objective
492
when they are potentially repeatable by other had little to say about organizations.³ They
actors without changing the common certainly spoke of institutions, but their
understanding of the act, while acts are exterior institutions were of a different order than
when the subjective understanding of acts is
reconstructed as intersubjective ... so that the
those that preoccupied institutionalists.
acts are seen as part of the external world (see Ethnomethodologists have usually focused
Berger and Luckmann, 1967 on 'reification' and on taken-for-granted understandings that are
'objectivation') ... When acts have ready-made widely shared by members of a culture or
accounts they are institutionalized; that is both subculture: for example, how to do gender
objective and exterior. (Zucker 1977: 728, italics (Garfinkel 1967), how to do power
in original) (Grimshaw 1981), how to do being a doctor
(Emerson 1970) or how to take turns in a
Although less expansively, Meyer and conversation (Sachs et al. 1974). In fact, for
Rowan (1977) made nearly identical use of ethnomethodologists, interpretive procedures
the same micro-sociologies. Crediting Berger were the ultimate institutions. By interpretive
and Luckmann (1977: 341), they wrote: procedures ethnomethodologists meant deep,
'Institutionalized rules are classifications built taken-for-granted rules necessary for engag-
into society as reciprocated typifications or ing in everyday interaction in precisely the
interpretations.' Later, citing Scott and same way that grammars are the deep rules
Lyman (1968: 349), they connected for everyday speech (Cicourel 1970, 1972,
institutions to the ethnomethodological 1981). Among the interpretive procedures
notion of accounts: 'The incorporation of that interested ethnomethodologists were: a
institutionalized elements provides an reciprocity of perspectives (the assumption
account of its activities that protects the that others see the same world I see),
organization from having its context indexicality (the assumption that to make
questioned.' sense of what is being said or done I need to
Published six years later, DiMaggio and take the immediate context into account) and
Powell's (1983) canonical article contained a retrospective-prospective sense of
no mention of either constructivism or eth- occurrence (the assumption that others will
nomethodology, except for passing reference eventually do or say something that will
to a paper by Aaron Cicourel (1970). But in clarify what they have done or said so far).
the introduction to their influential book, The Clearly, these taken-for-granteds are of a
New Institutionalism in Organizational Ana- different order than civil service reform
lysis, DiMaggio and Powell (1991: 19-22) (Tolbert and Zucker 1983), internal labor
highlighted both micro-sociologies. They markets (Dobbin et al. 1993), or changing
concluded: 'Ethnomethodology and forms of corporate control (Fligstein 1993).
phenomenology together provide the new The latter are components of social or politi-
institutionalism with a micro-sociology of cal systems that operate at much higher level
considerable power' (1991: 21). Since these of analysis than the phenomena typically of
original manifestos, however, institutionalists concern to ethnomethodologists.
have devoted little attention to Furthermore, ethnomethodology is prima-
ethnomethodology, to social construction, or rily a cognitive rather than a behavioral or
for that matter, to micro-sociology of any political sociology (Cicourel 1974). In
kind. As institutionalism spread, its micro- ethnomethodology, as in institutional theory,
social concerns disappeared into the sense-making trumps vested action.
background. Ethnomethdology's cognitive perspective, as
In retrospect, the disappearance is unsur- well as Berger and Luckmann's notions of
prising. Ethnomethodology was from the reification, objectivation, and sedimentation,
start an odd choice for linking organizations make it easier to view institutions as stable
to situated action and cognition. With a few constraints rather than as shifting resources.
notable exceptions (Bittner 1965; Silverman
1971; Cicourel 1967), ethnomethodologists
 493
In fact, as Heritage notes (1993), eth- society as a 'body of institutions' (Athens
nomethodologists have written more about 2005: 305). Hughes, in turn, equated sociol-
the replication of social order than about its ogy with the study of institutions. 'Sociology
change. Paul DiMaggio (1988: 10) acknowl- is that one of the social sciences,' he wrote,
edged a similar proclivity in institutional 'Which is especially and peculiarly, by intent
theory two decades ago: and not by accident, a science of social insti-
tutions' (1942: 15). Zucker (1977: 726)
If the focus of institutional theory on norms, recognized Hughes' relevance for the neo-
taken-for-granted assumptions, and cognitive institutionalists' agenda and opened her
and coordinative limitations represent influential paper by citing one of Hughes'
substantive reasons for the neglect (relative to
other theoretical traditions) of interests, part of
quip-like definitions: 'The only idea common
this neglect is implicit not in the logic of to all usages of the term 'institution' is that of
institutional arguments but in the rhetoric that some sort of establishment of relative
institutional theorists have used to advance permanence of a distinctly social sort'
them. The 'iron cage' is one such phrase, with its (Hughes 1936: 180). But, she subsequently
implicit portrayal of humans as powerless ... made little use the Chicagoans. Meyer and
Similar are assertions that institutionalized Rowan (1977) made even less: their paper
organizations 'take on a life of their own' ...
Presumably if an organization 'takes on a life of
contains no mention of Hughes and only
its. own' one need not attend to individual or passing references to Dalton (1950) and
group motives to understand behavior ... The Goffman (1967), who studied with Hughes at
most widespread rhetorical, as opposed to Chicago. DiMaggio and Powell (1983)
analytic, dismissals of agency ... occur in the referenced no Chicago School sociologists at
chronic use of passive constructions and, where all.
nouns are used as the subjects of active verbs, in Substantial acknowledgement of Hughes'
the selection of subjects so broad of reference as
to be substantively empty ... [T]he locutions ...
contribution to the study of institutions
[that institutionalists use] systematically de- awaited the publication of Richard Scott's
emphasize human agency. Institutional myths (1995) Institutions and Organizations. Early
'are highly institutionalized,' and some structural in his treatise, Scott (1995: 8) credited
elements are ... 'societally legitimated' Another Hughes with being an early institutionalist,
approach ... would be to ask, 'Who has noted that Hughes was particularly interested
institutionalized the myths (and why)?' and 'Who in the relationship between individuals and
has the power to "legitimate" a structural
element?'
institutions and credited the Chicagoans for
carrying institutionalism 'forward in an unin-
Ironically, institutionalism might have terrupted fashion' in occupational sociology
avoided these issues and others to which they (1995: 9). Scott scolded organizational
have subsequently been forced to attend had sociologists for not having done the same,
they looked to a different micro-sociology for but then said nothing more about the
inspiration: Chicago School sociology as Chicagoans' contributions. In fact, later in the
practiced by Everett C. Hughes and his book, when mapping levels of analysis to
students.4 bodies of theory and research on institutions
Scott (1995: 59), presented ethnomethodol-
ogy as the only institutional sociology that
INTERACTIONISM: THE ROAD operates at the level of the organization and
NOT TAKEN below.
Scott may have skipped the Chicago
Chicago School sociologists, especially sociologists, not only because they studied
Hughes, saw their agenda as the study of occupations, but also because he classified
institutions and institutionalized behavior.5 them as symbolic interactionists who saw
George Herbert Mead, whose work strongly meaning as 'internalized and subjective'
influenced Chicago sociology, had defined rather than as
494
objective and exterior (1995: 42).6 If by sym- using existing rules and social resources to con-
bolic interactionists Scott had Herbert struct a social identity with some consistency
Blumer (1962) and his students in mind, then across varying situations … A cognitive
conception of institutions stresses the central
his charge of subjectivism is warranted. As role played by the socially mediated
Athens (2005: 307-208) points out, Blumer construction of a common framework of
downplayed Mead's notion of meaning. (Scott 1995: 45)
institutionalized (exterior) meaning (what
Mead called, 'common maxims'), because he Hughes and his students spent half a cen-
apparently believed that the notion of an tury developing and refining an understand-
institution was less relevant for 'modern, ing of how actors negotiate understandings,
mass societies' than it had been in traditional rules, roles, and meaning, albeit from a
societies.7 However, the charge of decidedly sociological and institutional
subjectivism cannot be so easily leveled perspective.
against Hughes, Anselm Strauss (Strauss, I suspect, however, that institutionalists
Schatzman, Bucher et al. 1964; Strauss 1968, overlooked the Chicagoans for the same
1978a), Howard Becker (1952, 1953, 1963, reason that other sociologists have done so:
1982) and others who collaborated or studied Hughes and his students are widely thought
with Hughes. Hughes and Blumer were both to have developed no theory. The perception
students of Robert Park and Ernest Burgess of the Chicagoans as theory-less arises, in
(1921), both were influenced by Mead (1934) part, because Hughes and his students
and were later col1eagues on the faculty at eschewed top-down theory in favor of
Chicago, but Hughes' work differed amassing data to generate what Glaser and
significantly from Blumer's precisely because Strauss (1967) would eventually call
institutions were front and center in Hughes' 'grounded theory.' Fine (1991: 165) makes
image of society.8 Hughes wrote about real precisely this point when discussing how
estate boards, professional associations, interactionists have dealt with institutional
medical schools, and hospitals among other constraints. 'Any approach to social order,'
settings. Perhaps most importantly, he Fine wrote, 'Must recognize that although
studied the processes by which occupations actors themselves affect how they define
become professions: Processes which, for their world, others - corporate, collective,
Hughes, entailed the construction of precisely imaginary, or metaphoric - considerably
the sort of institutions that neo- influence their choices. Our ethnographies,
institutionalists study. grounded in institutional realities and individ-
Perhaps it is because the institutionalists ual recognitions of these realities,
overlooked the Chicagoans that they have demonstrate this, but our theory lags behind.'
generally turned to social psychology when In other words, institutions served Hughes
they need to link meaning to social structure and his students as an ever-present backdrop
and explain how institutional rules are inter- for their field studies. The concept of
preted and negotiated (rather than imposed or institutions is tightly woven into their
coerced): writings. However, they had little need for an
explicit theory of institutions because they
By contrast [to institutionalists], social psycho- did not have institutionalism's agenda of
logists are more likely to emphasize the interact- developing an alternative to rationalism.9
tive and negotiated nature of those choices.
Constitutive rules need not simply be externally
Nevertheless, to say that Chicago School
imposed on actors. Weick (1979), for example, sociologists built no explicit theory is not to
emphasizes that understandings and scripts say that they had no perspective at all. As
emerge out of actions as well as guide them and Rock (1979: 83) noted, the theoretical loose-
that collective symbols are as likely to be used to ness that scholars find troubling about the
justify past behaviors as to guide current ones. Chicagoans was less a matter of muddled
These newer versions of role and identity theory minds than a practiced guard against prema-
emphasize that individuals play an active part,
ture generalization. Hughes and his students
 495
aimed their investigations at bounded 'social but other than Hughes, few said directly what
worlds' (Shibutani 1955; Strauss 1978b). they meant by the term. The same is true of
Their guiding notion was that valid theoreti- the entire constellation of concepts (career,
cal concepts could only emerge by compar- role, identity, etc.) with which the interac-
ing the particulars of a variety of settings tionists routinely worked (Barley 1989).
(Glaser and Strauss 1967). If a construct was Scholars must, therefore, infer what the
to be relevant for a range of cases, its reach Chicagoans had in mind by examining the
had to be demonstrated empirically. As a context in which the terms appear. In general,
consequence, the picture of how the Hughes and his students used 'institution' in
Chicagoans understood institutions is scat- three ways. The first was to denote types or
tered across forty years of research. classes of organizations: hospitals, schools,
In recent years, scholars have begun to labor unions, firms, and so on. The second
acknowledge the relevance of interactionist was closer to how Mead (1934) and Merton
sociology for institutionalism (Basu, (1957) employed the term: broad sectors or
Dirsmith, and Gupta 1999; Fligstein 2001; domains of society such as the family, sci-
Lounsbury and Kaghan 2001; Hallett and ence, religion and economy. The third usage,
Ventresca 2006).10 My goal is go further and which is more frequent and more interesting,
explain in detail how Hughes and his students is harder to specify, although it underwrites
understood institutions and institutionaliza- the other two. To grasp this more diffuse
tion. As we shall see, their ideas are not only notion of institution, it is useful to turn to
consistent with neo-institutionalism, but their passages drawn from a number of texts.
perspective offers a micro-sociology that Hughes begins 'The Study of Institutions'
treats institutions as constraints while empha- by inventorying, in his down-home, discur-
sizing the role that human agency and vested sive way, concrete examples of institutions of
interests play in creating, maintaining and different 'orders.'
changing institutions. I begin by
documenting how the Chicagoans defined A large portion of the people in our society live
institutions and then explicate Anselm together in families ... Likewise, people go to work
in factories; they study, teach and play in schools
Strauss's notions of negotiated orders and ... If they are residents of Latin American villages,
social worlds, concepts that capture, they will engage once a year in a great fiesta: if
respectively, the institutionalists' image of they live in the rural Middle West, they might pos-
institutions as social processes and structures. sibly be annually mobilized by a county fair. In all
The discussion subsequently turns to two these instances people are mobilized to take their
places - important or minor, casual or regular, vol-
issues that currently concern institutionalists untary or involuntary – in a collective enterprise
and about which the interactionists had much carried an in a somewhat established and expected
to say: legitimation and the nature of way. The things I have named – and many others
institutional complexes. My agenda is to as well – have been called institutions. Some of the
suggest how researchers might proceed if other things, which have been called by the same
name, are of quite different orders. It is not my
they assume, as did the Chicagoans, that purpose to explore the limits of a concept. (Hughes
action always occurs within the constraints of 1942: 307, italics added)
an institutional matrix that humans wittingly
or unwittingly create, maintain, and alter. Hughes then goes on to say that students
of institutions should concern themselves
with two phenomena: action and social
forms, the first of which occurs 'within' the
INSTITUTION IN THE CHICAGO latter. Given this, he cautions that trying to
TRADITION decide whether something is or is not an
institution is a waste of time:
'Institution' and its various semantic derivati-
ves peppered the writings of the Chicagoans, I rest the case by saying that I conceive of the
study of institutions to be part of the study of
society in
496
action. The center of the field lies where the to 'common maxims,' Hughes pointed to
action takes place within forms which are conventions.
somewhat firmly established. The student of
institutions will, however, be interested also in Since a common feature of definitions' of
seeing how social forms become established, institutions is that they are clusters of
how they bend and yield under pressure, how conventions, the obvious things to put into a list
they give place to new, and what functions they are those phenomena that are beyond dispute
perform. He will, if his interest is in the structure conventional, the things that have a place in the
and functioning of society, be only incidentally more established public statements of how we
concerned to answer categorically the question do things (strongly tinged with the notion that
whether the newspaper, the beer parlor, the these are the right way to do things). But if we
Republican Party or property is an institution at dose our lists there, we miss the main and more
a given moment. (Hughes 1942: 307, italics fascinating part of the sociologist's work, which
added) is to understand how social values and collective
arrangements are made and unmade: how things
These passages contain four ideas key to arise and how they change. To make progress
the interactionists' concept of an institution. with our job, we need to give full and
First, institutions were 'social forms,' a term comparative attention to the notyets, the didn't
drawn directly from Simmel (1964).¹¹ For quite-make-its, the not quite respectable, the
Simmel, as for Hughes, a social form was a unremarked and the openly 'anti' goings-on in
our society. (1962/71: 52, italics added)
pattern both of and for social action. It was
exterior to those who participated in it and
This passage points to three additional
independent of the particulars of their
attributes of Hughes' notion of an institution.
behavior. Form is a structural concept in the
First, like the ethnomethodologists, Hughes
sense that genre, script, role, template, and
viewed institutions as taken-for-granted cul-
grammar are structures. For Simmel, forms
tural understandings and practices. But,
were the building blocks of society. Thus, it
unlike the ethnomethodologists, he implied
is fair to say that like Berger and Luckmann,
that taken-for-granteds could be articulated as
Hughes saw institutions as constructions that
'how we do things' and that they had moral
had become objectified and exteriorized,
force. In other words, institutions carry some
although perhaps less reified.
notion of 'ought.' As a result, Hughes
Second, when Hughes spoke of institu-
attributed behavioral status to institutions
tions of different 'orders,' he implied that
without denying that they also had a
institutions vary in their scope or range of
cognitive element. For interactionists the
application. Some institutions cover the
social, cognitive and behavioral were insepa-
actions of large portions of society (a form of
rable. Second, Hughes claimed that conven-
family or notions of property), while others
tions 'cluster,' they occur in complexes. That
are relatively local (a fiesta or a county fair).
institutions co-occur or intersect to form a
Third, institutions are 'collective enterprises,'
social fabric is an important and recurring
in the sense that they are jointly produced
image in interactionist sociology. Finally, as
through ongoing action and interaction.
did most Chicagoans, Hughes thought it
Finally, institutionalized actions and
important to study institutions in process. For
interactions are to some degree scripted;
the interactionists, institutions were not fixed:
people 'take their places' in the sense that
They morphed as people created, attempted
they play roles in a 'somewhat established or
to change, and sometimes eliminated them.
expected way.' Without such consistency,
By combining these various attributes, we
institutions could not exist.
can synthesize an approximate definition of
In a paper written twenty years later,
what Hughes meant by an institution.
Hughes (1962/171) was more explicit about
Institutions are social forms or templates
what constituted a social form. Much like
composed of clusters of conventions that
Mead, who claimed that behavior was insti-
script behavior to varying degrees in
tutionalized when people behaved according
 497
given contexts. Institutions are socially States developed the state mental hospital. We are
constructed and are subsequently maintained all familiar with this form of hospital ... Today they
are widely regarded as medieval, cruel, or totally
or changed by people who act and interact unsuitable for the treatment of the mentally ill. Yet
with each other. For the Chicagoans, then, an they were once regarded as suitable ... [they]
institution was an abstract and flexible siphoned off many of the poor, the indigent, and
heuristic applicable at a variety of levels of the unassimilated immigrants, and effectively hid
analysis. Thus, for example, Goffman (1983) them from public view and concern. They relieved
the cities and states of special welfare and protec-
could, in a single paper, employ the term to tion problems and saved whole families from the
talk about the social meaning of acquain- threat of downward mobility. Ali this they did with
tanceship as well as the form of a ser-vice a minimum of cost ... We would say that this insti-
encounter (practices that address customers' tutional form was appropriate simply because at
expectations that they be treated equitably, that time it reflected the needs, ideas, and character
of American life. Sociologically, it fit. Today it no
equally and with courtesy): longer fits. Now we are developing new institu-
tional forms and practices appropriate to the needs,
Take for example (in our own society) acquain- ideas, and character of American life today - and
tanceship, or, better still, 'knowership.' This is a not necessarily appropriate to the needs of the
critical institution from the perspective of how we mentally in. (Schatzman and Strauss 1966: 12,
deal with individuals in our immediate, or in our italics added)
telephonic, presence, a key factor in the organiza-
tion of social contacts. What is involved is the right
and obligation mutually to accept and openly to
This passage points to two additional
acknowledge individual identification on all initial attributes of institutions, as Chicagoans
occasions of incidentally produced proximity understood them. First, institutions are his-
(p.13) ... I have suggested in schematic terms torically situated and sociologists would do
elements of the structure of service transactions well to approach them with a long view.
that can be taken as institutionalized and official,
such that ordinarily when they are seen to apply in
Second, institutions are tied to ideologies
a particular service setting, those present feel that championed by specific segments of society
nothing marked or unacceptable or out of the that lend the institution legitimacy. As ide-
ordinary has occurred by way of substance or cer- ologies change, legitimacy will change and,
emony (1983: 15) hence, so will the institution.
In short, the Chicagoan's image of institu-
Although Goffman's renderings resembled tions encompasses much of neo-institutional-
an ethnomethodologist's take on institutions ism's more cognitive view. Like
(see especially Goffman, 1981), other institutionalists, the Chicagoans argued that
Chicagoans spoke of institutions at levels of institutions were typifications – taken-for-
analysis that have preoccupied the neo-insti- granted ways of acting, doing, seeing and
tutionalists. Consider, for example, Strauss thinking. As Fine put it:
and Schatzman's comments on forms of psy-
chiatric hospitals: Learning to act appropriately requires understand-
ing the 'type' of situation faced and knowing what
Socio-cultural changes in American life account behaviors fit Further, [situations] are perceived as
both for much of what is claimed that the mentally being controlled by and constitutive of
ill need and for the kinds of institutions and prac- organizations, groups, institutions, and societies ...
tices being fashioned for them. Institutions, like Our reading of situations involves creating
people, have historical and social loci ... For typifications of macro-structures that serve as the
example, Americans may be developing certain basis for addressing future interactions. (1991:
forms of institutional practice, not so much 165)
because they are designed for better psychiatric
treatment but because they … meet the Like institutionalists, Hughes and his stu-
requirements of some special public … Design for
psychiatric treatment may be a rationalization of
dents also understood that perceptions of
ideological sentiment ... for behind mental legitimacy were crucial to the emergence and
institutions are social and philosophical trends, maintenance of institutions and that legitima-
which give rise to ideas about appropriate tion was integrally tied to ideologies whose
institutional forms ... During the latter half of the
nineteenth century, the United
498
rhetorics offered justificatory accounts. idea that organizational-structures direct
Finally, although 'social form' connotes a work intentionally and rationally:
broader concept of social structure than that
which most institutionalists employ, it easily There is need for an explanation of [the rise of
encompasses the institutionalists' concern formal organizations] that is partially free from
with types of organizations and the assumption that, in practice, formal
structures actually coordinate and control work.
organizational structures. Indeed, interac- Such an explanation should account for the
tionists routinely used 'institution' to refer to elaboration of purposes, positions, policies, and
organizational forms (Schatzman and Strauss procedural rules that characterizes formal
1966; Strauss et al. 1964; Bucher and Stelling organizations, but must do so without supposing
1977; McCallion and Maines 2002). that these structural features are implemented in
At the same time, the Chicagoans' view of routine work activity (1977: 343, italics added)
institutions differed from the institutionalists'
in theoretically and empirically important Meyer and Rowan's agenda was to under-
ways. First, they saw institutions as cut the assumption that plans and structures
processes. Institutions not only constrained cause action, a myth that Bittner (1965) and
human action, human action, in turn, created, Silverman (1971) had already debunked from
maintained, and changed institutions. Said an ethnomethodological stance. However, to
differently, institutions were both a product say that action is not rationally linked to
of and resources for interaction and negotia- structures, purposes, positions, and policies,
tion in everyday life. Second, institutions is not equivalent to saying there is no
occurred in clusters and these clusters relationship at all.
defined the context for action in the social Early on, DiMaggio warned that dismiss-
worlds they covered. Institutions were, there- ing agency was neo-institutionalism's
fore, integral to the segmentation of society. Achilles' heel. Noting that the 'role of interest
To see how these ideas might benefit contem- and agency in institutional theory remains
porary institutionalists requires turning from somewhat obscure,' DiMaggio (1988: 3-5)
Hughes to Anselm Strauss's work on took institutionalists to task for emphasizing
negotiated order (Strauss 1978a) and social 'factors that make actors unlikely to recog-
worlds (Strauss 1978b, 1982, 1984).¹² The nize or to act on their interests' and 'circum-
former amounts to an action-oriented take on stances that cause actors who do recognize
institutions and institutionalization, while the and try to act on their interests to be unable to
latter provides a way of conceptualizing, do so effectively.' He went on to call atten-
investigating, and analyzing institutional tion to what he called the paradox of institu-
clusters. tionalization:

Institutionalization as an outcome places

organizational structures and practices beyond
the reach of interest and politics. By contrast,
institutionalization as a process is profoundly
NEGOTIATED ORDERS political and reflects the relative power of
organized interests and the actors who mobilize
around them. (DiMaggio, 1988: 13)
Despite Berger and Luckmann's interest in
human agency and Garfinkel's preoccupation DiMaggio argued that most institutional
with practice, the institutionalists who research had emphasized outcomes over
invoked them paid little attention to agency process. In response, he called for studies of
and practice. Sometimes, this seemed pur- institutional entrepreneurs: Men and women
poseful. For instance, Meyer and Rowan who intentionally or unintentionally create
(1977) apparently separated structure from institutions as a way of achieving their own
action as part of a gambit for challenging the interests or the interests of groups they
represent.
 499
Taking DiMaggio's call seriously, a institutions lay at the core of symbolic inter-
number of institutionalists have recently actionism's view of society:
begun to investigate how individuals, organi-
zations or professions wittingly or unwit- concerns with organization on one hand and
tingly created institutions by pursuing lines with acting units on the other hand set the
of action (Fligstein 2001; Seo and Creed essential difference between conventional views
of human society and the view of it implied in
2002; Venkatesh and Shin 2005; Greenwood symbolic interaction ... The difference is along
and Suddaby 2006; Battilana 2006; Leca two major lines. First, from the standpoint of
2006). Young scholars have also paid more symbolic interaction the organization of a
attention than earlier institutionalists to how human society is the framework inside of which
people cast meaning (Lawrence and Phillips social action takes place and is not rile-
2004; Munir and Phillips 2005; Grodal determinant of that action. Second, such
2007). Nevertheless, because the idea of an organization and changes in it are the product of
the activity of acting units and not of 'forces'
entrepreneur encourages studies of which leave such acting units out of account ...
'foundings,' tales of entrepreneurial agency Social organization enters into action only and to
usually end once an institution has been the extent to which it shapes situations in which
established. Although the actions of entrepre- people act, and the extent to which it supplies
neurs are surely a crucial part of the story of fixed sets of symbols which people use in
institutionalization, focusing on entrepre- interpreting their situations.' (1962: 189-90)
neurs skirts the idea that agency and action
are also important for maintaining and Structural duality was also implicit in how
modifying institutions.¹³ interactionists understood the core constructs
Some scholars, realizing that agency is around which they organized their research:
implicated at all phases of an institution's roles, rules, careers, status, identity, and so
lifespan, have attempted to reformulate insti- on. For Hughes and his students, these Janus-
tutionalization in light of Giddens' (1984) faced concepts oriented attention simultane-
concept of structuration (Barley and Tolbert ous1y in two directions (Barley 1989). On
1997; Lounsbury and Kaghan 2001; Sandfort one hand, they pointed to patterned forms of
2003; Battilana 2006).14 Structuration theory action and participation characteristic of life
portrays institutions simultaneously as con- in some social domain. In the case of a role,
straints on and products of social action. for instance, the relevant patterns were the
Giddens (1984) called this reciprocal causal- recurrent behaviors and types of interactions
ity the 'duality of structure.' Furthermore, that were more or less common to and
structuration implies that researchers can expected of all who fill a role. To be a police-
only document how individual and collective man entails wearing a specific kind of uni-
action creates, preserves or changes institu- form, carrying a gun, stopping speeding
tions by taking a longitudinal view. Having motorists, handing out parking tickets, keep-
made these points, however, Giddens says ing a watchful eye on public events, making
little about how to identify much less study court appearances, persuading loiterers to
structure's duality. The need to forge empiri- move along, directing traffic, issuing orders
cal tools led Barley (1986) to blend structura- to people from various walks of life, and
tion theory with Strauss's more pragmatic having those orders obeyed, however grudg-
notion of negotiated order and to study ingly (see Van Maanen 1973, 1975).
'structuring' by observing how scripted inter- Similarly, having a career also denotes a
actions evolved over time.15 structured and recognized form of participa-
The notion of structuring was long latent tion in a social world: A stream of identifi-
in interactionist scholarship. For instance, able positions, offices, statuses and situations
Blumer (1962: 189-90) argued that a that serve as landmarks for gauging a
reciprocal relationship between actions and person's movement through an organization,
occupation, family, avocation, or subculture
(Hughes 1937: 403; Becker 1963: 24; Braude
1975: 141; Faulkner 1974: 132; Goffman
500
1961: 127). In Hughes' terminology, this overlooked body of work (at least in organi-
constitutes the 'objective' (Berger and zation studies) on negotiated order. Strauss
Luckman would say, 'objectivated') aspect of believed that unraveling the link between
a role or a career: Its institutional or public action and structure was one of sociology's
face which requires some kind of overt primary tasks. Foreshadowing Giddens by
behavior. over a decade, he and Schatzman wrote:
On the other hand, for Chicagoans, role 'Institutions impose limitations upon prac-
and career also pointed to the incumbent's tices and ideas, but in turn are modified by
subjective experience. By subjective experi- them. The precise ways in which these are
ence interactionists meant the meanings that related is an important aspect of sociological
individuals attribute to their role or career. inquiry' (Schatzman and Strauss 1966: 13).
The subjective side of a role entails accounts Strauss's interest in negotiated order began
or definitions of both self and others that with a field study of a psychiatric hospital in
enable individuals to orient to situations.16 In the late 1950s where he and his colleagues
the case of policing, for instance, Van encountered competing ideologies of illness
Maanen (1978) described how interpretations and treatment (Strauss et al. 1963, 1964).
of self and others are crucial to how police Proponents of these ideologies espoused dif-
classify and, then, behave toward people they ferent visions of a psychiatric hospital's
encounter on patrol. A 'subjective career' mission and how such hospitals should be
similarly encompasses its incumbent's sense organized and administered. At roughly the
of becoming, which enables her to develop a same time, Rue Bucher (Bucher and
narrative of and align herself with the events Schatzman 1962; Bucher and Stelling 1977)
of her biography. Subjective careers are the documented analogous ideological disputes
tales people tell to themselves and others that raging in pathology: some pathologists saw
lend coherence to the strands of their life. their field as a science, while others believed
More importantly for present purposes, such it should be treated as a medical specialty. In
interpretations and enactments lay founda- their jurisdictional battles, these two camps
tions for change in role behaviors and career formed alliances with different groups of
trajectories that eventually modify a role's or physicians, championed different systems of
a career's institutional face. education, formed different professional
Unlike Linton (1936) and Parsons (1951), associations, and politicked for different roles
the Chicagoans did not conceive of roles as in the medical community. Strauss and his
predefined sets of rights and duties that could collaborators explicated and refined the idea
be donned and doffed. Instead they sub- of negotiated order throughout the 1960s
scribed to Mead's (1934) notion that roles (Bucher and Strauss 1961; Bucher and
emerge in an ongoing process of negotiation, Schatzman 1962; Schatzman and Bucher
a 'conversation of gestures,' during which 1964; Glaser and Strauss 1965, 1968;
individuals develop a repertoire of behaviors Schatzman and Strauss 1966; Bucher and
and attitudes tailored to specific interactional Stelling 1969). Their effort culminated with
partners. For interactionists, 'role making' the publication of Strauss's (1978a)
was as important as 'role taking.' Role Negotiations.
making (among other dynamics) allowed for Strauss insisted that all social orders are
variations that might eventually reformulate a negotiated: That is, all social systems are the
role's institutional face (McCall and sediments of a history of voting, decree, con-
Simmons 1978; Turner 1962, 1968, 1976, flict, agreement, compromise, bargaining,
1978) persuasion, coercion, and other forms of
Strauss further developed the interaction- interaction by which humans seek to achieve
ists' imagery of a reciprocal relationship their interests and legitimate their perspec-
between structure and action in his much tives. Strauss wrote that the negotiated order
 501
of an organization, such as a hospital or firm, kinds of training to professionals; changing their
was 'the sum total of the organization's rules attitudes toward professional partners, toward
and policies, along with whatever agree- their own work and toward themselves; altering
their ideologies; opening up new types of
ments, understandings, pacts, contracts, and careers; and so on. Negotiated agreements and
other working arrangements currently actions were very much a part of that
[obtain]. These include agreements at every consequential ferment. Said another way, the
level of organization, of every clique and negotiations were integral to the subsequent
coalition, and include covert as well as overt changes in the state of the mental health
agreements' (1978a: 6). An important corol- professions and their associated institutions.
lary is that negotiated orders are temporally (Strauss, 1978a: 122)
bound. Over time every negotiated order is
'reviewed, reevaluated, revised, revoked or In fact, in some-cases, top-down and
renewed' (1978a: 5). Strauss noted, however, grassroots forms of action may work in
that because structural conditions influence concerto
who can negotiate with whom, when, and Strauss proposed a three-level 'paradigm'
about what, negotiated orders ought not be (or model) for studying negotiated order
viewed as products of unconstrained agency (Strauss 1978a: 98-99). The paradigm's
(1978a: 5). The arrival of new participants, a purpose was to ensure that researchers would
shift in a law, or the development of new not forget to tie situated action to macrosocial
technologies could exogenously trigger contexts. At the lowest level – the level of
revisions of a current order. ongoing action – were negotiations whose
Strauss argued that negotiated orders not attributes might vary systematically by the
only have scope or range, they are also usu- type of actors involved, by their strategies
ally nested in the sense that concentric circles and tactics, and by other characteristics of
are nested. The negotiated order of an people's actions and interactions.
accounting firm, for example, operates within Negotiations might yield many types of out-
the negotiated order of accounting as a comes including organizations, conventions,
profession. The former cannot ignore the practices, rules, understandings or working
latter and still remain an accounting firm in agreements. Second, Strauss claimed that all
good standing. Some aspects of a negotiated negotiations occurred within a negotiation
order are, therefore, likely to be local, while context, a set of local conditions that shaped
others have wider scope. Those with the the actions and interactions that comprised
widest scope may be created from the top the negotiations. For Strauss, the analytically
down by people with either the authority to relevant aspects of negotiation contexts
direct others or a mandate to act on their included the number of actors involved,
behalf, as would be the case, respectively, whom they represented, their relative balance
with the imposition of a regal decree or an of power, whether negotiations occurred once
agreement forged through collective bargain- or were ongoing, whether sessions occurred
ing. Alternately, negotiated orders with a sequentially or simultaneously on multiple
wide scope may bubble up from below, as fronts, whether the negotiations were visible
Strauss described for institutions of mental or hidden, the number and complexity of the
health: issues involved, and the legitimacy of those
issues (Strauss 1978a: 100).
In what sense can it be said that [the negotiations Finally, Strauss claimed that negotiation
he observed in the hospital he studied] ... had a contexts were,' in turn, situated within a
determinable impact on the larger social setting structural context, a system of more encom-
[national or professional]? Obviously, no single passing institutions. The larger institutions
negotiation or even one hospital had much that were relevant for a set of negotiations
impact. Yet the many such 'experiments' taking would vary considerably across negotiation
place simultaneously or over a very few years
must have had considerable impact - in giving
contexts. For, instance, the institutions that
new constrain the negotiations of a corporate
executive would differ from those that
502
constrain how and for what high school prin- In sum, taken as a whole, it is fair to say
cipals negotiate. On this point Strauss that negotiated order theory is more accessi-
(1978a: 98) wrote, 'The structural context for ble, but less well-developed, than
covert negotiations engaged in by a corrupt structuration theory. Compared to Giddens'
judge includes features of the American judi- encyclopedic coverage of socio10gical
ciary system and of marketplaces, while the thought, Strauss's work on negotiations was
structural context of the negotiations that far less sweeping, but his language was
occur in a mental hospital includes the prop- decidedly less obscure.17 Yet, negotiated
erties of American medical care, the subspe- order theory trumps structuration theory in at
cialty of psychiatry, specialization among the least one important regard: it emphasizes the
caring professions, and the division of labor importance of observing situated behaviors in
in mental hospitals.' specific social and temporal contexts to
Curiously, Giddens and others have determine how institutions shape actions and
depicted structuration using three-layered how actions, in turn, form, sustain and
models analogous to Strauss's paradigm of change institutions. Thus, unlike structuration
negotiated order (see Giddens 1984: 12; theory, negotiated order theory tells
Barley 1986: 82; Barley and Tolbert 1997: researchers what to look for. The notion of a
97; Yates and Orlikowski 1992: 307). social world suggests where to look.
Negotiations, that occur in the here and now,
belong to what Giddens' (1984: 11), Barley
and Tobert (1997: 97) and Orlikowski (2000:
410) respectively called 'systems of SOCIAL WORLDS: ARENAS,
interaction,' 'the realm of action,' and the NETWORKS, MATRICES, WEBS
realm of 'ongoing situated human action.' AND FIELDS
Strauss's notion of a structural context paral-
lels what Giddens (1984: 31) called the Although Chicagoans had used the term
'structure of the institutional order' or what 'social world' for decades, aside from
Barley and Tolbert (1997) called the 'realm Shibutani (1955, 1962) few did so analyti-
of institutions.' Negotiation contexts mediate cally before Strauss (1978b, 1982, 1984) and
between negotiations and structural contexts, Becker (1978, 1982). In his first paper on
as do scripts in Barley's (1986) model of social worlds, Strauss (1978b: 119-121)
structuring or modalities in Giddens' model wrote: 'Since the early days of Chicago-style
of structuration (1984: 29). In fact, Barley interactionism, the term "social worlds" has
argued that scripts were exteriorized social been used sporadically, sometime descrip-
forms that comprise part of the negotiation tively, rarely conceptually ... We have not
context. Finally, in Strauss's paradigm, as in developed a general view of social worlds as
all structuration models, influence moves up a widespread, significant phenomenon, nor
and down levels. As Maines put it in his have we developed a program for studying
exegesis of negotiated order theory: them systematically.' By developing the con-
cept more systematically, Strauss hoped to
Strauss emphasizes that the lines of influence push interactionists to acknowledge that
can go both ways, in which the consequences of structural phenomena were as important as
negotiations can be measured (eventually) in interpretive phenomena in shaping the insti-
changes in structural contexts, and in which
structural contexts condition how people will act
tutional order.18 'Though the idea of social
... Negotiation contexts are created insofar as worlds may refer centrally to universes of
certain elements of [the structural context] are discourse,' he cautioned his fellow
incorporated into or become relevant to interactionists, 'we should be careful not to
negotiations, but negotiations may work their confine ourselves to looking merely at forms
way back through negotiation contexts 'up' to of communication, symbolization ... but also
structural contexts. (1982: 270).
 503
examine palpable matters like activities, contractors (Barley and Kunda 2004), or the
memberships, sites, technologies and orga- playing of games like Dungeons and Dragons
nizations typical of social worlds.' (1978b: and Little League Baseball (Fine 1983,
121). In subsequent papers, Strauss (1982, 1987).
1984) elaborated: Second, Strauss emphasized that social
worlds cleave around sites (places where
Social worlds refer to a set of common or joint activities routinely occur and where key
activities or concerns, bound together by a net- actors are found), technologies (tools, tech-
work of communication ... One can point to such niques and procedures for carrying out key
social worlds as those of opera, ballet, baseball,
surfing, art, stamp collecting, mountain clim-
activities) and most importantly, divisions of
bing, homosexuality, and medicine, although the labor.19 For example, the thespian world
concept also is probably useful in conceptualize- requires theaters where plays can be per-
ng and studying industries and the sciences. formed and audiences can be seated, work-
These social worlds vary considerably in size, shops for making props, dressing rooms for
types, number and varieties of central activities, actors to prepare their bodies, box offices for
organizational complexity, technological sophis- selling tickets, print shops for printing pro-
tication, ideological elaboration, geographical
dispersion, and so on ... One of the most impor-
grams, and so on. The thespian world also
tant features of social worlds is their inevitable must have lighting, sound systems, curtains,
differentiation into subworlds ... The conceptual wrenches and pulleys, printing presses, car-
imagery here is of groups emerging within social penter's tools, etc. Most importantly, to pull
worlds, evolving, developing, splintering, off plays there must be actors, directors,
disintegrating or pulling themselves together, or producers, stage hands, lighting engineers,
parts falling away and perhaps coalescing with printers, patrons, advertisers, janitors, ticket
segments of other groups to form new groups,
often in opposition to order ones - in short, of
agents, critics, electricians, manufacturers of
sub-worlds intersecting, in powerful contact cosmetics, costume designers, and seam-
with other subworlds both within the parent stresses among others.
social world and with those 'inside' other social These structural features (sites, technolo-
worlds (1982: 172). gies and divisions of labor) are usually the
nuclei around which 'subworlds' form.
To begin unpacking this fluid notion of Subworlds control and are responsible for
social worlds, notice first that Strauss (as providing materials and services that are cru-
well as Becker 1978) used the plural rather cial for accomplishing the world's overarch-
than the singular form of the noun. Plurality ing activity. Because of differentiation,
is crucial. Rather than see social worlds as representatives of subworlds are linked via
distinct units, interactionists viewed social webs of patterned interaction, communication
worlds as fuzzy sets composed of elements, and transaction that allow them to pull off the
which Strauss called subworlds. Subworlds world's primary activity. The existence of
are themselves social worlds that are con- social worlds, therefore, implies the existence
nected though their joint involvement in a of social networks, which are usefully
primary activity. It is this joint involvement understood as a social world's essential
that warrants speaking of the elements as a structure. However, social worlds cannot be
set. Illustrative activities that serve as the reduced to' networks. Doing so would focus
basis for social worlds include the production attention tightly on structures and flows to
of a form of art, such as a painting or play the exclusion of culture and action.
(Becker 1978, 1982), the manufacturing of Accordingly, and third, Strauss held that
computers (Kling and Gerson 1978a, 1978b; interpretive and political phenomena are
Kling and Sacchi 1982), the production of integral to the organization of .social worlds.
books (Coser, Kadushin, and Powell 1982; Ideologies, perspectives, theories, agendas,
Powell 1985), the making of musical scores points of view, interests, and languages
(Faulkner 1987), the manufacturing of wafer
fabrication equipment (Bechky 2003a,
2003b), the hiring and placing of technical
504
Differentiate the participants who are bound Strauss claimed that segmentation and inter-
together by networks and their joint contribu- section were central processes of the
tion to a central activity. Interpretive differ- structuring in social worlds. The former is
ences – which are rooted in the social world's equivalent to the organizational theorist's
division of labor – engender conflicts, ten- notion of differentiation; the latter fuses the
sions, alliances, movements, and disputes. organizational theorist's concept of
Thus, the interplay between networks and integration with the idea of overlapping
notions is central to any analysis of social jurisdictions. Ultimately the imagery of
worlds. The idea that social worlds have segmentation and intersection invokes a
interpretive and political as well as structural shifting institutional landscape. Examined
topographies is what links the analysis of over time, analysts should see social worlds
negotiated order to the study of social worlds. and subworlds form around new technologies
As Strauss et al. (1964) showed for or ideas, split, fuse, challenge each other's
psychiatric hospitals, differences in perspec- bids for expertise, forge alliances, and so on.
tives and interests motivate negotiations that Writing before the spread of
configure and reconfigure institutions. microcomputers, Kling and Gerson (1978a)
Political and interpretive phenomena are claimed that the world of computing cleaved
essential for understanding the dynamics of along four axes. The first axis was type of
social worlds because they manufacture and computing: specifically, scientific,
sustain the legitimacy of a social world's commercial, industrial, and academic
institutions and practices: computing. The second axis was the kind of
technology or equipment used. The third was
One can initially imagine something of the nature type of application: for example, financial,
of legitimation problems which arise in that kind of medical or government applications.
social matrix. Questions of 'authenticity' of per-
formance and product, of genuineness and purity,
Interestingly, the fourth dimension was
real and fake, but questions also of propriety and where actors positioned themselves relative
impropriety, even morality and immorality, and to IBM. Since the 1970s, the landscape of the
legality' and illegality arise in kaleidoscopic, rapid world of computing has changed. Personal
and intricate fashion - not merely in areas like 'the computers have replaced mainframes and
arts' with their perennial legitimacy arguments and
dilemmas, but in presumably less problematic,
minicomputers in most, but not all,
seemingly less ideologically-ridden areas like med- computing subworlds. COBOL and
icine, the sciences, industry and business. Imagery FORTRAN have died, and other languages
for what occurs in these rapidly changing social have taken their place. New areas of appli-
worlds and subworlds should be the very opposite cation have arisen, including gaming and
of what is called up by the term 'stable' society ...
legitimacy in these worlds pertains to issues like
animation. Applications that were once
what, how, when, where, and who can legitimately separated are now integrated: for instance,
or properly do certain things, with certain means financial and human resources databases (by
and materials, at appropriate places and times, and SAP, Oracle, etc.) or word processing and
in certain acceptable ways ... understanding of the presentation software (Microsoft(R) Office).
legitimation process associated with social worlds
will require a dose look at the arenas in which such
Perhaps most telling, positioning relative to
issues are fought out. (Strauss, 1982: 172-73) IBM is arguably far less important today than
positioning relative to Microsoft.
Struggles for legitimacy in social worlds Finally, for Strauss and other interaction-
were, for Strauss, the engine of action and a ists, social worlds constituted a unique unit of
source of intrigue. In other words, legitimacy analysis. Accomplishing a primary activity
was always the product of negotiations. usually involves actors from a variety of
Fourth, Strauss emphasized that social industries, social sectors, subcultures, occu-
worlds are always in process; the only ques- pations, firms, interest groups, organizations,
tion is the rate at which the process unfolds. and so on. Social worlds, therefore, enroll
 505
participants who cut across the units of variety of collectives (occupations, associa-
analysis that have traditionally preoccupied tions, subcultures, organizations, etc.), while
organizational theorists and other social sci- the institutionalists, being organizational the-
entists. For this reason, researchers who set orists, have written as if fields comprise pri-
their sights solely on organizations, industries marily organizations. While accurate, this
or occupations, are unlikely to find social difference is less important than it might first
worlds. Seeing social worlds requires greater appear to be. Although Strauss was not an
focal length. organizational theorist and was apparently as
By now it should be clear that the interac- unaware of what the neo-institutionalists
tionists' notion of social worlds bears an were doing as they were of him, he would
uncanny resemblance to what institutionalists have applauded their agenda. In his first
have called organizational fields. Indeed, it is paper on social worlds, Strauss explicitly
not unreasonable to argue that the inter- noted that research on social worlds of
actionists and institutionalists arrived at organizations was sorely lacking:
roughly the same analytic destination at more
or less the same time unbeknownst to each Organizations are commonly viewed as
other. Consider, for example, DiMaggio and relatively closed in their boundaries, and there
Powell's (1983) definition of an organization are few good analyses of interorganizational
relations. The social world perspective tells us
field in light of the foregoing discussion: that some organizations are relatively embedded
within a social world, while others stand at
By organizational field, we mean those intersections, indeed may have been
organizations that, in the aggregate, constitute a intentionally constructed that way. The
recognized area of institutional life: key understanding of organizational evolution,
suppliers, resource and product consumers, change, and functions requires an examination
regulatory agencies, and other organizations that of relations embedded in the same or
produce similar services or products. The virtue intersecting worlds ... Organizational theory
of this unit of analysis is that it directs our which ignores these considerations is likely to
attention not simply to competing firms ... or to sell us very short. (Strauss 1978b: 125)
networks of organizations that actually interact
... but to the totality of relevant actors. In doing
this, the field idea comprehends the importance
Second, the notion of a social world draws
of both connectedness and structural attention to interpretive phenomena that join
equivalence. The structure of an organizational as well as delineate and divide actors
field cannot be determined a priori but must be involved in the pursuit of a primary activity.
defined on the basis of empirical investigation. In contrast, field has a stronger overtone of
(1983: 148) structure, especially that of network structure.
Accordingly, students of social worlds are
DiMaggio and Powell tell us that an orga- more likely to view legitimation as a problem
nizational field 'constitute[s] a recognized of constructing, contesting and defending
area of institutional life,' which echoes interpretations rather than a problem of
Strauss's notion of a 'primary activity.' Also acquiring status or standing in the eyes of
like Strauss, DiMaggio and Powell note that others. Students of social worlds, therefore,
fields have divisions of labor that bind a have paid more attention to struggles for
field's actors into a network of relations. legitimacy than have institutionalists, who
Finally, DiMaggio and Powell portray field more commonly study sources of legitimacy.
as a unique unit of analysis in precisely the Finally, in social world analysis the vari-
same sense that Strauss saw a social world as ous strands of an institutional order - rhetoric,
a crosscutting unit. political action, organizations, laws,
Nevertheless, there seem to be three ideologies, and so on - implicate each other.
important differences between the concepts Thus, rather than treat institutions as well-
of social world and organizational field. First, bounded practices, interactionists typically
Strauss and other interactionists portrayed speak of institutions as forming the 'web,'
social worlds as populated by a
506
'matrix', or 'fabric' of a social world. These Strauss (1982) argued that actors use five
differences point to two topics about which strategies for building for what Hughes
interactionists still have much to offer institu- (1962/1971: 287-292) would have called a
tionalists: the social construction of mandate and license: (1) discovering, claim-
legitimacy, especially in the course of ongo- ing and promoting the worth of their agenda,
ing action, and the study of institutional belief or stance, (2) developing theories that
complexes. bolster their interests or perspectives with a
veneer of rational, moral and even scientific
respectability, (3) distancing themselves from
rivals and alternate ideas, (4) setting
WHAT INSTITUTIONALISTS CAN standards of practice or belief that can be
LEARN FROM INTERACTIONISTS employed in evaluative accounts, and (5)
establishing the boundaries of their juris-
Doing legitimacy diction. As actors struggle over legitimacy,
they employ a wide range of resources rang-
No concept is more central to institutional ing from court rulings, prophecies, scientific
theory than legitimacy. Yet, as Suchman theories, and high status allies to books,
(1995: 571) noted, 'Despite its centrality ... editorials, films, and even the occasional
the literature on organizational legitimacy payoff.
provides surprisingly fragile conceptual Institutionalists have spent much of the
moorings. Many researchers employ the term last decade rediscovering the role that inter-
... but few define it.'20 Furthermore, even pretations and negotiations play in the social
though institutionalists continually remind us construction of legitimacy. Some have drawn
that legitimation is a process, until recently inspiration from contemporary social move-
they have written more about sources of ment theory, which emphasizes the impor-
legitimacy, about whom or what bestows it, tance of competing frames or ways of making
than about how it is bestowed. Sources of sense out of situations, conditions, and events
legitimacy commonly mentioned in the (Rao 1998; Creed, Scully, and Austin 2002;
literature include public opinion, the Rao, Monin, and Durand 2003). Others have
educational system, laws, courts, and, of late, turned to rhetorical, narrative, and discourse
higher-status others. analysis (Hoffman 1999; Edelman, Fuller,
Although, the Chicagoans understood well and Mara-Drita 2001; Greenwood, Suddaby,
that socialization, reputation, power, position and Hinings 2002; Suddaby and Greenwood
and authority meant that some actors had 2005; Lawrence and Philips 2004; Munir and
greater (and perhaps final) say over what is Phillips 2005; Greenwood and Suddaby
legitimate, they trained their eyes less on 2006; Colyvas and Powell 2006). Regardless
sources and more on struggles for legitimacy. of their starting point, however, all have
Histories of how a modus operandi, a law, a explored how individuals, occupations,
practice, or even an organizational form ac- organizations, or coalitions deploy language,
quired legitimacy are ultimately tales of how symbols, assumptions, theories, or frames to
people deploy ideas, ideologies, frames, and develop and promote their agendas or views
arguments in negotiations, persuasions, and of the world. In these papers, interests,
political contests that unfold over time, often politics, and contestation are always front and
across multiple places and arenas. From this center, regardless of whether the institution
perspective meaning and' action are both cru- under construction be a new organizational
cial for constructing legitimacy. Legitimacy form (Lawrence and Philips 2004; Suddaby
hinges not only on the substance of ideas and and Greenwood 2005; Greenwood and
claims, but also on where, when, how, and Suddaby 2006), a redefinition of an institu-
why people wield ideas and lodge claims. tion's mission and boundaries (Colyvas and
 507
Powell 2006), the passage of a law (Creed et technicians (EMT's) vied over who should
al. 2002), the reinterpretation of a law deliver emergency medical services in local
(Edelman et al. 2001), the emergence of an communities.
occupation (Lounsbury and Kaghan 2001), or By 1970, volunteer rescue squads pro-
the promotion of a set practices that define vided emergency transportation in most
the role of a product in everyday life (Munir American communities. Towns and cities
and Phillips 2005). across the country had formed volunteer
Nevertheless, despite the common empha- squads during the 1950s and 1960s in
sis on interpretation, the new institutional response to a social movement and subse-
scholarship on legitimation differs from the quent legislation designed to reduce highway
interactionists' work in important ways. First, fatalities. Growing pressure to medicalize
the institutionalists almost always employ emergency services culminated, in 1973, with
textual rather than observational data. the Emergency Medical Services Act, which
Second, because the texts are drawn from required that all responders have formal
archives, they afford longitudinal analysis. training in emergency medicine. Although
Consequently, recent interpretive scholarship the Act took no stance on whether volunteers
on institutions covers longer periods of time or 'professionals' should deliver such
than even the most dedicated fieldworker services, by the 1990s private firms
could hope to cover. Taking the long view employing professional, fulltime EMTs had
allows institutionalists the necessary resolve begun to compete with volunteer squads.
for identifying what Hughes might have Jurisdictional dramas over the proper deliv-
called the stages and turning points in an ery of emergency medicine were being
institution's career. In fact, for institutions played out on a daily basis on the streets of
with broad range, analysis of texts may be the villages, towns, and cities. Although advo-
only way to study the protracted twists and cates of voluntary and professional services
turns of legitimation over the long duré. recorded their perspectives in documents
Yet, precisely because textual analysis amenable to textual analysis, no documents
opens up the panorama of history, it has dif- recorded the type of behavior that Nelsen
ficulty focusing on how struggles for legiti- observed while riding with paid and
macy played themselves out in daily life. To voluntary squads in two upstate New York
be sure, texts offer dues to how people inter- communities.
preted a phenomenon at some point in time, Nelsen and Barley (1997) recount, among
and they can point to the perspectives of dif- other tactics, how paid EMTs pushed volun-
ferent factions. Texts often have relatively teers aside on arriving at the scene of an acci-
little to say, however, about how people dent, how they belittled volunteers' skills
arrived at those interpretations or what the before patients, doctors, and nurses, and how
members of various factions did to each they rewrote paperwork to expunge evidence
other. Furthermore, texts are almost always that volunteers had ever been involved in
silent on what led to the creation of the doc- responding to an accident. In these and other
ument in the first place. To answer questions ways, paid EMTs actively fostered the per-
about legitimation in action, one must exam- ception that they were more competent than
ine behavior in situ and in real time. This is volunteers and that they were more deserving
where the Chicagoans excelled. For an of a mandate to provide emergency medical
appreciation of how interactionist studies services to the community. Without behav-
could enrich our understanding of the situ- ioral data, researchers examining the juris-
ated dynamics of legitimation, consider dictional dispute would have difficulty
Nelsen and Barley's (1997) account of how discovering that the battle to legitimate
paid and volunteer emergency medical professional emergency medical service
(EMS) was waged with more than ideology
508
and rhetoric. Worse, because hospital records become an ontological assumption, organiza-
often did not mention the volunteers who had tion studies would be left with a thin view of
been on the scene, researchers might con- institutional reality.
clude that no volunteers had been active. Chicago sociologists took a thicker view.
In short, grounded studies of action and They typically portrayed institutions as com-
interaction are crucial for developing ade- plexes of related practices, conventions and
quate accounts of the social construction of understandings. Social worlds are always
legitimacy, if for no other reason than that more than the sum of distinct institutions.
they inoculate us against assuming that Consider, for example, what makes a school.
struggles for legitimacy are largely battles of Surely a school needs teachers and students,
rhetoric. As institutional analysis takes its yet teachers and students are found in other
interpretive turn, it is well worth remem- settings, including the boot camps run by the
bering that writing, reading and rhetoric are U.S. Army and Al Qaeda. Tests and books
important for negotiating legitimacy, but are also necessary for schools as we know
words break no bones. them. Yet, libraries have books and employ-
ment offices give tests, neither of which we
would confuse as a school. Even teachers,
Institutional complexes students, books and tests are not sufficient for
making a school; one needs a host of other
An inventory of neo-institutional organiza- actors, laws, practices, and so on. All
tional studies will reveal that researchers institutional orders are similarly complex in
have often treated institutions as well- this regard.²¹
bounded entities and their construction as a To acknowledge precisely this sort of mul-
matter of diffusion. For instance, institution- tiplexity, interactionists routinely described
alists have studied the spread of formal social worlds as 'webs,' 'matrices,' or 'clusters'
evaluation and performance systems in of institutions (Kling and Sacchi 1982;
municipal governments (Tolbert and Zucker Strauss 1978: 172; Hughes 1962/1971: 52).
1983), personnel offices (Dobbin and Sutton The image of a 'web' or a 'matrix' draws
1998), maternal leave policies (Kelley and attention to two key aspects of social worlds
Dobbin 1999) and poison pills (Davis 1991). or organizational fields. First, institutions
Even the interpretive studies of legitimacy cluster in the sense that what distinguishes
discussed above treat institutions as discrete one social world from another is an inte-
phenomena. For instance, Suddaby and grated and unique set of institutionalized
Greenwood (2005) focused on the rise of forms, practices, and conventions. The idea is
multidisciplinary accounting firms. analogous to cliquing in social network
Lounsbury and Kaghan (2001) examined the analysis: members of a social world share
spread of recycling programs across universi- more institutions with fellow members than
ties. Lawrence and Philips (2004) explored they do with members of other worlds. In
how a particular set of whale watching prac- other words, the density of shared institutions
tices emerged in Victoria, Canada. Studying should be higher within than across social
well-specified forms and practices makes worlds. Second, institutions form webs (or
pragmatic, epistemological sense: A clear they cluster) in the sense that one institution
focus on an identifiable phenomenon allows is likely to implicate others. Analysts should,
researchers to target specific institutional therefore, beware of treating institutions as
processes. Focusing on discrete phenomena discrete phenomena for any purpose other
also makes for a more manageable story, than analytic convenience. In reality, a
especially within the constrained space of a change in one institutional parameter is likely
journal article. However, should the image of to occasion, and perhaps even require,
institutions as well-bounded phenomena change in others.
 509
Interactionists routinely pointed to the escalated during the 1980s when Microsoft
complexity of institutional connectedness. and other firms realized that they could sig-
For instance, in an important paper that tied nificantly reduce employment costs by firing
occupational commitment to an occupation's employees and hiring them back as inde-
institutional order, Geer (1968) noted that pendent contractors. Because the practice
teachers lacked the kind of occupational spread quickly, the Internal Revenue Service
commitment evinced by doctors, scientists (IRS) soon entered the picture and brought
and lawyers. Geer argued the institutions of suit against Microsoft for tax evasion.
teaching were responsible. Unlike a func- Although the suit did not slow the use of con-
tionalist, who might urge teachers to pursue tractors, it did reshape the way contractors
the traits of a profession (Etzioni 1969), or a were employed. On the advice of corporate
Marxist, who might advocate the politics of lawyers, firms began to acquire contractors
monopoly (Larson 1979), Geer recognized through staffing agencies rather than cut
that changing the commitment of teachers deals directly with individuals. Agencies pro-
would require altering the larger web of insti- tected the firms from the IRS, because they
tutions in which teaching was suspended: served as the contractor's employer of record.
As a result, foundings of staffing agencies
Several of the mechanisms of commitment in devoted to high tech contracting burgeoned
other occupations which we have discussed sug- in the 1990s. At this point, we have an
gest changes that might be brought about in the institutional story of the construction and
teaching profession if lifelong commitment on
the part of more teachers is desired. But, as we
diffusion of two institutions, a type of
have seen, commitment is a process so closely employment (contracting) and an organiza-
fitted to occupational structure that changes in it tional form (the high tech staffing agency),
would necessarily involve structural change in each of which, in turn, reflects a larger insti-
teaching as a profession, which would, in turn, tutional development, the rise of finance
affect the organization of the school system in capitalism.²² There are, however, more
ways that might prove disruptive to other strands to the institutional web that envelops
desirable goals. (Geer 1968: 233)
and defines the social world of contracting.
To reinforce the perception that contrac-
In other words, to change teachers' com-
tors were not employees, employers began to
mitment to the occupation would require
institute an array of practices for differentiat-
changing institutionalized relationships
ing contractors from permanent employees.
between schools, communities, families,
These practices spread through mimesis and
local governments, and school boards.
though the intervention of consultants,
Because the Chicagoans were primarily
accountants, and lawyers who advised firms
ethnographers, their thick descriptions tended
on how to protect themselves from the IRS.
to capture the web of institutions that
As a result firms began to force contractors to
enveloped the social worlds they studied. But
wear distinct badges, to assign them to less
the Chicagoans did not usually call attention
desirable space than employees enjoyed, to
to how these various institutions were con-
prohibit contractors from attending meetings
nected. Consequently, tracing the web of
in which topics unrelated to their project
institutions that is laced throughout out a
were discussed, to prohibit contractors from
Chicago-style ethnography usually requires
attending company sponsored social func-
readers to do their own analysis.
tions and so on. In short, a series of institu-
Nevertheless, in most ethnographies the
tionalized work practices spread throughout
material for recovering the web lies near
and across industries that hired contractors.
enough to hand.
As more and more contractors were forced
Consider, for example, Barley and
to go through staffing agencies, contractors
Kunda's (2004) recent ethnography of the
also devised practices that spread by word of
contract labor market for skilled technical
professionals. Contracting in high technology
510
mouth and that were promoted by magazines, perspective forged at the University of
books, and websites designed to help Chicago by Everett C. Hughes, Anselm
contractors better manage their careers. For Strauss, and their students, is potentially
example, contractors discovered that to min- more compatible with the institutionalists'
imize downtime (time between contracts) and agenda. The Chicagoans were themselves
to maximize earnings, they usually needed to institutionalists, and unlike most
change agencies to acquire their next ethnomethodologists and constructionists,
contract. To dissuade contractors from they were concerned with institutions at the
switching, agencies began to offer health care same levels of analysis that have intrigued
and 401k's.²³ But, because most agencies also the neo-institutionalists. In fact, as I have
hesitated to find contractors new jobs before attempted to show, using a different
the current contract ended, few contractors language, the Chicagoans anticipated and
remained with an agency long enough to developed many of the stances and
secure health care or pension funds. Thus, perspectives that neo-institutionalists have
large numbers of contractors saved little or had to reinvent as they struggled to
nothing for retirement and relied on their incorporate social action into their analyses.
fully employed spouse for heath insurance. My agenda in revisiting the Chicago School
As in the case of contracting, institutional- has been to point to how interactionism might
ization – whether defined as the construction help neoinstitutionalists resolve important
of meaning or the acceptance and diffusion of puzzles concerning action, legitimation and
practices – yields a web of conventions, the social construction of institutional fields.
procedures, laws, and organizations that The Chicagoans held that sociology's job
jointly shape an arena of social life into a is to study social organization in action,
social world or organizational field. The which they conceived of as the link between
emergence of webs of institutions and the institutions and the person. Institutions and
interplay between a web's various strands actors meet in the throws of everyday life. In
remains a fertile and largely unexplored this sense, as the British might say, everyday
opportunity for research that could enrich life is institutional theory's coalface; it is
institutional theory. Although interactionism where the rubber of theory hits the road of
points institutionalism in this direction, no reality. For over 30 years, the coalface has
interactionist has yet explicitly attempted to lain largely idle while institutionalists have
develop concepts for analyzing webs of insti- sought their fortunes in the cities of macro-
tutions. A particularly fruitful line of inquiry social theory. As a result, there is plenty of
would be to examine the various reasons for coal left to mine. What we need are more
why one institution tends to beget, alter, miners.
amplify, or specify other institutions.

NOTES

CONCLUSION 1 Since this chapter focuses entirely on neo-insti-

tutionalism in organizational theory, I often drop the
prefix, 'neo,' to make the text less clumsy.
I began this chapter by arguing that neo-insti- 2 As phenomenologists. Berger and Luckmann had
tutionalism is unique in organization studies, top pedigrees. Both studied at the New School of
because it represents the only macro-sociol- Social Research under the tutelage of Alfred Schultz,
ogy of organizations rooted in micro-social who was mentored by (but not formally a student of)
concepts. Although the early institutionalists Edmund Husserl
(www.soci.canterbury.ac.nz/resources/biograph/schult
turned to ethnomethodology and construc- z.shtml). Garfinkel (1967: 36) also drew heavily on
tionism for their micro-social grounding, the Schultz's thought, but was not a phenomenologist by
training or intent. Garfinkel was a student of Talcott
 511
Parsons at Harvard. He rejected Parsons' structural- 8 Furthermore, as Becker (1999: 7) revealed,
functionalism, claiming, among other things, that 'Hughes and Blumer ... had very low opinions of one
internalized social norms and values could not be another. Blumer thought Hughes had a second-rate
responsible for social structure. Garfinkel and other mind, and Hughes was openly contemptuous of
ethnomethodologists vigorously rejected logical pos- Blumer's inability or unwillingness to do research.'
itivism, yet remained decidedly realist in their hard- 9 Blumer, however, did have this agenda (see
nosed empiricism. Athens 2005).
3 In contrast, ethnomethodologists have had much 10 Although the work of Hughes and his students
to say about work and work practices (Emerson 1970; is often categorized as 'symbolic interactionism,' I
Suchman 1987; Cicourel 1987, 1990; Lynch 1985; avoid that term because it is more proper/y applied to
Garfinkel 1986; Button 1993; Heath and Luff 1992, Blumer's (1962) work. In this chapter I will use
1996). 'interactionist' and 'interactionism,' since Hughes and
4 This assumes, of coursse, that the early institu- his students certainly did examine social relations in
tionalists were actually interested in micro-social everyday life.
dynamics. Aside from Zucker, this was probably not 11 See Rock (1979) and Lewis and Smith (1980)
the case. Hallett and Ventresca (2006: 215) have sug- for extended discussions of Simmel's importance to
gested that Meyer and Rowan turned to micro-soci- the Chicagoans' concept of social structure.
ology primarily for its vocabulary of motive: 'Given 12 Although Strauss received his Ph.D at Chicago
the new institutionalist focus on macro environments,' in 1945, Strauss did not align himself with Hughes
they wrote, 'We can turn Meyer and Rowan's legacy until after he joined the faculty in 1952 (Strauss, 1968:
on its head to say that organizational sociology has 265).
been "decoupled" from its foundations in social 13 The term entrepreneur also raises ontological
interaction: Passing references to microsociology are a problems. Entrepreneurs are people who usually have
form of "myth and ceremony" that create academic some idea of what they are doing. As speakers of
"legitimacy" '. English commonly use the term, it is difficult to
5 Chicago School sociology covers at least two imagine how an entrepreneur could accidentally found
generations of scholars. The first included Robert a business. Yet, as Berger and Luckmann make clear,
Park, Ernest Burgess, Albion Small, and W. I. institutions sometimes (maybe, most of the time)
Thomas, who were most active in the first three emerge with anyone intending them.
decades of the 20th century. The second included 14 Although DiMaggio (1988) and DiMaggio and
Everett Hughes, Anselm Strauss and Herbert Blumer Powell (1983, 1991) also used the term structuration,
who wrote mostly from the 1930s through the 1960s. they did so primarily to speak of how people create
When I speak of the Chicago School in this chapter, institutions. Thus, their use of the term is closer to
unless otherwise noted, I am referring to the second Berger and Luckmann's idea of sedimentation.
group. 15 Barley (1986) spoke of structuring rather than
6 Ironically, Hughes and his colleagues paid more structuration to emphasize agency. Gerunds have the
attention to organizations than did the eth- utility of nouns while maintaining connotations of
nomethodologists. Boys in White (Becker, Geer, action. Barley used the concept of scripts to track
Hughes, and Strauss 1961) and Psychiatric Ideologies structuring over time. Although scripts surely have a
and Institutions (Strauss et al. 1964) were ethnogra- cognitive component, Barley emphasized the actions
phies of a medical school and a psychiatric hospital and interactions that instantiated scripts because the
respectively. Strauss conducted a famous set of studies latter could be observed. Besides, if people don't do
on how nurses, doctors and patients construct and things because of their thoughts, thoughts cannot be
manage awareness of dying on cancer wards (Glazer real in their consequences, at least for people who are
and Strauss 1965). Dalton (1950) wrote about not having the thought. With the exception of Johnson,
everyday life among managers in a firm. Roy studied Smith and Coding. (2000) most commentators assume
union organizing (1964, 1965). Van Maanen studied Barley (1986; Barley and Tolbert 1997) saw scripts as
police organizations (1973, 1975). Fine (1996) has cognitive rather than behavioral phenomena.
written about restaurants and Kunda (1992) about high Orlikowski and her colleagues (1992, 1996, 2000;
tech firms. In fact, the hallmark of these studies is the Orlikowski and Yates 1994) have pushed behavioral
weaving together of work and organization. By studies of structuration further than any other scholar
contrast, when ethnomethodologists studied life in with their research on the structuring of technology
organizations their focus was almost exclusively on and technical practice.
how people do their work (Lynch 1985, Garfinkel 16 It is worth noting that when interactionists
1986, Suchman 1987). speak of accounts, interpretations, definitions of the
7 Athens, who was Blumer's student at Berkeley, situation, and so on, they are surely referring to cog-
claims that Blumer mistook the higher rate of change nitions, but they almost always assume that these
of institutions in contemporary society for their cognitions are instantiated in behavior. Accounts occur
increasing irrelevance. in speech; speech is a behavior and, hence,
512
a way of doing something. Importantly, speech can be was no one institutionalized practice, convention or
heard and recorded by observers, but thoughts and understanding that allowed Agnes to pass as female.
cognitions can not. The interactionists were, above all Neither dress, nor stance, nor gait, nor even attitude
else, empiricists. was adequate for Agnes being seen as a woman.
17 Like most interactionists, Strauss shied away Rather Agnes had to display and was adept at dis-
from Latinate nouns and wrote in a discursive, collo- playing these and many other gendered traits and
quial style. Could this help explain why organizational behaviors in a highly integrated fashion. In other
theorists have paid so little attention to the words, the institution of gender is a multifaceted
interactionists? How can sociologists be erudite, when concept, no one strand of which is sufficient for
they are so breezy to read? As Mark Knophler put it, defining a person as male or female, however neces-
'sociologists invent words that mean industrial sary that facet may be.
disease.' 22 Finance capitalism matters because contracting
18 Ironically, sociologists from other traditions, is about turning the fixed cost of labor into a variable
including many institutionalists, require precisely the cost. Wall Street not only encourages firms to
opposite advice: interpretive phenomena are as maximize variable costs, but also rewards them for
important as structural phenomena. doing so. Shifting to contractors boosts a firm's stock
19 One might argue that with the rise of life on the price, at least temporarily, because contractors are not
screen (Turkle 1995) tangible sites for action are no included in the denominators of productivity ratios.
longer necessary for social worlds to form. Be this as Thus, shifting from employees to contractors not only
it may, it is quite interesting to note that even virtual makes a firm appear more flexible but more
worlds like Second Life and Warcraft are marked by productive than it is.
virtual places, virtual divisions of labor and virtual 23 A 401k is a pension plan that allows individuals
technologies. In fact sometimes the divisions of labor to shelter money from each paycheck for retirement
are real, as in the case of Warcraft where real people free of taxation until the individual has retired, begins
spend time creating virtual characters and accumu- to withdraw the funds and is presumably subject to a
lating virtual money which they sell to real people for lower tax rate.
real dollars so the buyers can participate in a virtual
division of labor.
20 Suchman went on to define legitimacy as 'a
generalized perception or assumption that the actions
of an entity are desirable, proper, or appropriate within REFERENCES
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observers to the organization as they see it; thus, Barley, Stephen R. 1986. 'Technology as an
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subjectively. An organization may diverge dra-
vations of CT scanners and the social order of
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4.

21
New Sociology of Knowledge:
Historical Legacy and
Contributions to Current Debates
in Institutional Research

Renate E. Meyer

INTRODUCTION sociology of knowledge has become one of

the classics in sociological thinking. In
When laying the foundations for neoinstitu- neoinstitutional theory, it is still among the
tional theory in 1977, both of the subsequent most frequently quoted references and gener-
classic articles (Meyer/Rowan 1977; Zucker ally assumed to be one of the approach's
1977) pointed to Peter L. Berger and Thomas main theoretical pillars. As with many
Luckmann's Social Construction of Reality, classics, however, the current citation is often
first published in 1966, as a central theoreti- made in passing and is more frequently a
cal foundation and inspiration for their tribute paid to their overall contribution to the
research program. In the equally influential field than as guidance in concrete theoretical,
'orange book,' DiMaggio and Powell (1991) conceptual or methodological questions. Pour
underline that Berger and Luckmann's decades after its first publication, the actual
phenomenological approach, together with impact of the sociology of knowledge seems
Harold Garfinkel's ethnomethodology to belagging behind its omnipresence in the
(another American scholar strongly influ- bibliographies of institutional analyses.
enced by Alfred Schütz; see also Psathas The Social Construction af Reality was
2004), provides 'the new institutionalism with originally published in the United States, but
a microsociology of considerable power.' Berger and Luckmann's biographical back-
Today, beyond doubt, Berger and grounds¹ and their ambition to reconcile Max
Luckmann's 'new' or social constructionist Weber’s verstehende sociology, Schütz'
520
phenomenological analysis of the Lebenswelt otherwise heterogeneous research agenda of
and American pragmatism give their socio- the German sociology of knowledge. In addi-
phenomenologically oriented approach pro- tion, organizational institutionalism's often
found academic roots on both sides of the quantitative research questions and designs
Atlantic and make it, as Dirk Tänzler puts it, are not easily compatible with a hermeneutic
the 'heiress and sister of philosophy.' Despite approach. And last but not least, the language
their prominent position among sociological divide - the German-speaking branches of the
classics, Berger and Luckmann have not sociology of knowledge are unfortunately
given rise to a specific school of thinking nor available mostly in only the German
has it been their intention to do so. Apart language prevents the proponents of both
from neoinstitutional theory, which was approaches from entering into a proper
elaborated mainly in Northern America, in dialogue.
German-speaking interpretive sociology, a In this chapter, I hope to make a
particular field of study has developed in this contribution to such a dialogue by bringing
tradition especially after Luckmann's return. together the literature from both currently
Similar to organizational institutionalism, this disparate streams. The theoretical inspiration
field is more a research community that that the socio10gy of knowledge has
shares basic assumptions and research provided is still alive in many of
interests than a formulated and coherent organizational institutionalism's basic
theory: Luckmann and several other assumptions and core concepts that have
researchers (e.g. Luckmann 2002 or 2006a; incorporated much more of the socio-
Knoblauch 1995; Knoblauchl Luckmann phenomenological legacy than might be
2004; Keller 2005a) have devoted a apparent at first sight. The most prominent
considerable part of their oeuvre to analyzing example is, of course, the overall focus on
the role of language and communication in knowledge and, thus, on the cognitive
the construction of reality, a 'turn' evidenced dimensions of institutions that has become
by the labelling communicative or discursive one of the 'trademarks' of neoinstitutional
construction of reality. The incorporation of theory, in comparison to other more
hermeneutics into the sociology of normative or regulative strands of
knowledge (the hermeneutic sociology of institutional thinking (see Scott 2001).
knowledge or social scientific hermeneutics Equally important are the understanding of
as it was previously called) is primarily tied what institutions are and how they operate,
to the work of Hans-Georg Soeffner (e.g. the relevance of legitimacy, the
1989, 2004), but has been taken up by several conceptualization of the process of
other scholars in the field (e.g. Schröer 1994; institutionalization, or the role of language
Hitzler/Honer 1997; and symbolism that owe much to this
Hitzler/Reichertz/Schröer 1999). heritage. In the following sections, I will
Although they have common roots, revive attention to these roots. However, I am
organizational institutionalism and the not tracing solely the historic legacy and
German branches of the new sociology of impact, but argue that by rediscovering and
knowledge pay very little attention to each renewing the tie with the phenomenological
other, aside from cursory cross-references sociology of knowledge, institutional theory
(e.g. Keller 2005a; Tänzler, Knoblauch, and could gain much inspiration for theoretical
Soeffner 2006a). While recent institutional and methodological challenges that have
research is exploring its common ground dominated the debate in the last decade and
with a number of different theoretical for new directions in institutional research.
approaches (e.g. Anthony Giddens'
structuration theory, Pierre Bourdieu's
concepts of habitus and field, or Michel MEANING, KNOWLEDGE AND THE
Foucault's discourse theory), the concern for CONCEPTUALIZATION OF INSTITUTIONS
organizations and organization theory has
been of only minor importance in the Many critics of the 'standard version' of
organizational institutionalism, especially
 521
from Scandinavian institutionalism (e.g. Especially with regard to the interactive con-
Czarniawska/Joerges 1996; Sahlin- struction of social meaning and knowledge
Andersson 1996; Brunsson 1998) or from (as opposed to the subjective constitution)
other interpretively inspired branches of and the socialization of individuals, Schütz,
institutional thinking (e.g. Zilber 2002, 2006; at that time already living in the D.S.,
Meyer 2003) have claimed that institutional explicitly drew on the work of American
theory devotes too much effort to analyzing pragmatists, mainly of George Herbert Mead,
the trajectories of macro-diffusion patterns Charles H. Cooley, William James, and
while underestimating the meaning the William I. Thomas.
spreading practices have in the originating as Schütz elaborated that individual work
well as adopting context and the with typifications of actions, situations and
modifications translations - they undergo in persons that are generated in interaction and
the course of their 'travels.' Several of the communication. They identify typical actors
Scandinavian scholars, for instance and identities, recognize typical actions and
Czarniawska and Joerges (1996) or Forssell assign typical meanings. To interpret and
and Jansson (1996), explicitly draw attention understand the situation they face,
to the work of Schütz, in particular to his individuals need to draw on the recipe
notions of typifications contained in the knowledge that is provided by their
social stocks of knowledge. Lebenswelten. This 'social stock of
One of the central assumptions derived knowledge' that the members of a society
from the Schützian legacy is that action is share to different degrees is built up
meaningful and that meaning is constituted ('sedimented') from the experiences of the
through rules that are sprecific to the social generations before them (Schütz/Luckmann
field. To recall, Schütz's objective was to 1973). Individuals are bom into a 'socio-
give Weber's interpretive sociology, which historical a priori', as Luckmann (e.g. 1983;
identifies the goal of sociology in the under- see also Soeffner 1989) calls it, that makes
standing of action from the subjective mean- available these institutionalized typifications,
ing of the actor, a phenomenological frames of interpretation, actor positions,
grounding (see especially Schütz 1967). In patterns of action, etc., and thus delineates
his appreciative, yet critical interpretation of the boundaries and the 'horizon' within which
Weber's work, Schütz highlighted that Weber people can meaningfully act - and beyond
had failed to specify the concept of meaning. which it is impossible to see or understand:
In particular, he asked how meaning is con- All interests and preferences, all rationalities,
stituted by an actor and pointed to the con- choices and decisions ever imaginable lie
cept's inherent temporality. He emphasized within these borders; all innovations, crises,
the difference between the meaning assigned shocks or whatever 'triggers' of change we
by the actors themselves and the meaning assume have to be interpreted within this
assigned by an observer, and raised the ques- horizon to be taken into consideration and
tion how understanding is at all possible have impact. Building on this hermeneutic
given the categorical non-accessibility of and phenomenological heritage of Schütz's
another person's consciousness. The micro- work, Czarniawska and Joerges postulate that
sociological approach Schütz proposed by 'we cannot translate what is wholly
drawing on Husserl's phenomenology unrecognizable' (1996: 28).
focused on how ordinary members of a Accordingly, the phenomenological
society constitute the everyday world they sociology of knowledge is not primarily con-
live in - the Lebenswelt - and on the cerned with questions of epistemology and
conditions and principles according to which methodology, nor with scientific knowledge,
intersubjectively shared meaning is the specialized knowledge of intellectuals, or
constructed and, thus, how mutual the history of ideas and ideologies, but with
understanding is made possible.
522
the processes and conditions by which a par- (Barley/Tolbert 1997: 96), and is still being
ticular spatially and historically embedded used as the main reference when it comes to
social field defines what counts as knowledge the definition of institutions or the process of
and truth - and what does not (Schütz 1962; institutionalization (e.g. Zilber 2002; Dobbin
Berger/Luckmann 1989). The central object 2004; Dorado 2005; Battilana 2006;
of the hermeneutic reconstruction is neither Weber/Glynn 2006). As I will discuss in the
to search for a latent macro-structure that following sections, it has lost none of its rel-
unfolds behind the back of the agents nor a evance in the decades since its publication:
singular individual perspective. Instead, it is Apart from helping to overcome the
the social stocks of knowledge that the acting conceptual ambiguity and to re-establish a
subjects draw on when constituting common understanding of what is meant by
subjective meaning, i.e. the socially approved institutions and institutional processes, a
typifications available in a concrete historical concern increasingly articulated by scholars,
socio-cultural Lebenswelt. Thus, while various facets of the classic conceptualization
departing from the Weberian assertion that can contribute to unsolved issues and current
the goal of sociology is to understand action debates in organizational institutionalism.
from the subjective meaning assigned to it,
the perspective is nonetheless not subjectivist
but a structure analytic approach that (a) Institutions and the construction
attempts to reconcile structuralist and of social actors and identities
interactionist positions (Soeffner/Hitzler
1994; Reichertz 1999; Soeffner 1989, 2004). The reciprocity of the typified, scripted
A focus on the cognition of actors and their action and the type of actor who is expected
stocks of knowledge does not - as is often to perform the script is central to the notion
brought up against the 'cognitive turn' in that institutions are constitutive for social
organizational institutionalism - necessarily actors and actorhood and for organizational
entail a de-emphasizing of social structure. institutionalism's claim against rational
Building on this tradition, Berger and choice models that actors' preferences and
Luckmann have elaborated how shared typi- interests are tied to and do not precede the
fications become institutions through tradi- institutional order they belong to. Instead of
tion, sedimentation, and legitimation. actors using institutions to foster their indi-
According to them, the reciprocity of typifi- vidual or collective interests, through institu-
cations and the typicality of both habitualized tionalization, not only patterns of scripted
actions, in the form of action scripts and of interactions are created, but also specific
social actors who are expected to engage in social categories of actors, whose social
these patterned actions, lie at the heart of all identities, worldviews and interests make
institutions - '(p)ut differently, any such sense only within the sedimented body of
typification is an institution' social knowledge that has given shape to
(Berger/Luckmann 1989: 54). This interac- them (Berger/Luckmann 1989). For instance,
tion-oriented and type-based definition is still Meyer/Boli/Thomas (1994: 18; see also
central for organizational institutionalism. It Meyer/Jepperson 2000 or J. Meyer, Chapter
is mirrored in the early notions of institutions 34 in this volume) explicitly stress the close,
as 'frameworks of programs or rules in fact tautological, link between script and
establishing identities and activity scripts for actor-type:
such identities' (Jepperson 1991: 146; see
also Meyer/Boli/Thomas 1994) or as 'shared Both social actors and the patterns of action they
rules and typifications that identify categories engage in are institutionally anchored. The
of social actors and their appropriate particular types of actors perceived by self and
others and the specific forms their activity takes
activities or relationships' reflect institutionalized rules of great generality
 523
and scope. It is in this sense that social reality - borrowing Schütz and the sociology of
including both social units and socially patterned knowledge have made from pragmatism:
action - is 'socially constructed' Being a social actor means to know what is
(Berger/Luckmann, 1966). Institutionalized
rules, located in the legal, social scientific,
expected as appropriate in certain situations.
customary, linguistic, epistemological, and other This, in turn, implies a definition of the
'cultural' foundations of society, render the situation that is compatible with those of
relation between actor and action more socially others involved and rests on the ability of the
tautological than causal. Actors enact as much as actors to take the perspective of the others
they act: What they do is inherent in the social (significant and generalized others) (see
definition of the actor itself.' Cooley 1964; Mead 1965; Thomas 1967; and
Schütz, e.g. 1962). The focus on the
The phenomenological heritage is most reciprocity of perspectives stresses the
visible in John Meyer's notion of modern necessity of overlapping relevance systems
social actors, but it also surfaces in the more and an intersubjectively shared Lebenswelt,
recent institutional interest in the multiple and, thus, of socialization and internalization.
social identities that are a characteristic of the Successful socialization is the basis for the
late-modern actor (see also Giddens 1991) fact-like character of social reality and the
and are seen to account for hybridization and degree to which institutions become taken-
endogenous institutional change (e.g. for-granted 'background programs'
Rao/Davis/Ward 2000; Rao/Monin/Durand (Berger/Kellner 1984). By framing world-
2003; Meyer/Hammerschmid 2006; Westen- views and perceptions, institutions guide
holz 2006). In pluralistic societies, multiple behavior prior to any visible sanctions. This
social identities go hand in hand with creates the image of institutions being taken
multiple reference groups (see below), or as for granted and enacted almost naturally.
James (1968: 42) notes, an individual has 'as Internalization mediates between objective
many different social selves as there are dis- and subjective reality and renders the objec-
tinct groups of persons about whose opinions tive world subjectively meaningful
he cares.' A very similar motif is found in (Berger/Luckmann 1989). It is also the
Luckmann's recent work: The increasing moment where individuals have to actively
functional differentiation of society and the acquire specific segments of the social
fragmentation of the Lebenswelt more and knowledge and sediment it in a unique way
more require the individual to master into their own subjective know1edge.
fragmented social identities from various Without paying enough attention to the
specialized institutionalized domains. As he complex and two-way relationship between
notes, '(l)iving in society always requires social and individual stocks of knowledge,
adoption. However, in later modernity the we run the danger of degrading individuals to
social structure favors a particularly high determined 'cultural dopes,' or, on the macro-
degree of adaptability, not only of a cognitive level, losing the stratified character of the
but also characterological nature' (Luckmann knowledge distribution of a society and the
2006b: 11). This, he observes, is happening related symbolic and structural power
paradoxically at the same point in history that dimensions out of sight.
the display of an autonomous and At least the fundamental institutional
individualized self has become an 'almost orientations are perceived as fact-like.
doctrinal obligation for the modern Nonetheless, institutions are also supple-
individual' (2006b: 8). mented by various mechanisms of social
control - positive or negative, material or
immaterial sanctions - to make up for the
(b) Institutional orders, social incompleteness of all socialization in frag-
control and power mented societies. Individual deviance does
In addition, the reciprocity of typifications of
action and actors points to the substantial
524
not unsettle an established institutional order. historically-empirically unlikely marginal case.
A more collective shift towards increasing Within the 'constitution analysis' of institutions,
reflexivity and attention to institutionalized domination can be bracketed, but not power.
(2002: 113, my translation).
patterns or the necessity to safeguard institu-
tions by actually employing the sanctions
For organizational institutionalism,
provided, however, might be a first indicator
DiMaggio (1988) noted almost two decades
of a commencing deinstitutionalization by
ago that there is no conceptual ignorance of
making the contingency of the institutional-
interests and power inherent in the theoretical
ized patterns apparent (e.g. Berger/Kellner
scaffolding of the approach. All institutional
1984). Although not elaborating the power
order is only a preliminary achievement and
and domination dimensions of institutions
the temporary result of contest. Power is
explicitly, Berger and Luckmann emphasize
inextricably woven into institutional stability
that '(i)nstitutions and symbolic universes are
and change and institutionalization is a
legitimated by living individuals, who have
profoundly political process. Although, in the
concrete social locations and concrete social
meantime, the challenge has been echoed by
interests' (1989: 128) and that the 'power in
several scholars who draw attention to
society includes the power to determine
interests, politics and power struggles not
decisive socialization processes and,
only within established institutional frames,
therefore the power to produce reality' (1989:
but particularly in the processes leading to
119; emphasis in original). Strikingly similar,
the definition of what models, frames, criteria
when discussing the need to continuously
of rationality, subject positions and interests
reproduce institutions, DiMaggio (1988: 13f.)
are appropriate (e.g. Dobbin 1994;
points out that '(a)n important aspect of
Clemens/Cook 1999; Hoffman 1999;
institutional work is the socialization of new
Fligstein 2001; Lounsbury/Ventresca 2002;
participants, which is undertaken most
Lounsbury 2003), an alleged power void has
conscientiously by members with the greatest
remained among the most frequently
stake in the existing institutional order.' The
expressed points of criticism against
social construction of reality is a power
institutional theory. I do not have the space to
struggle over the definition of the situation
enter into a detailed discussion, but I hope to
with some interpretations succeeding over
have shown that by taking seriously the
others. For Berger and Luckmann, it is,
question of what counts as knowledge and
finally, the bigger stick and not the better
what doesn't, as well as the processes and
argument that imposes the definition of real-
mechanisms by which this is defined in a
ity (1989: 109), which, spun further, points
society (Schütz 1962), institutional theory
back to the question of domination. In a later
has the potential to address all faces of power
work, Luckmann highlights again that
and domination. If they do not receive due
although social interaction requires, at least
attention, it is our current research foci that
to a certain degree, reciprocity of perspec-
distract us and not shortcomings of the
tives and of relevance systems, this by no
conceptual framework.
means entails symmetry of relationships but
rather refers to the mutual exchangeability of
perspectives that has to be presupposed even
when fighting. He emphasizes that
(c) Institutional and organizational fields
reciprocity is not based on equality. The
definition of what is an 'important' problem is Apart from the constitution of actors and
not essentially the concern of 'democratic attention to power and domination, the con-
rationality.' The solutions are not necessarily ceptualization of institutions in the tradition
devised by 'equitable' actors. Institutionalization of the phenomenological sociology of
as rational symmetric contract can be thought of knowledge could also help to come to terms
as a
 525
with the ambiguity in the use of the concept rationalizations or legitimations differ across
of 'field.' Reciprocity of perspectives requires time and/or space. They encompass not only
that institutionalized practices be directed to those actors who are expected to perform an
some reference group (e.g. Shibutani 1962) institution, but include all those who expect
or 'collective audience' (e.g. Suchman 1995) the institution to be performed, that is, all
that shares the stock of knowledge and is actors who share the frame of reference.
entitled to assess the appropriateness and Institutional fields make homogeneity or
endorse legitimacy, in short, 'whose heterogeneity of meaning and interpretations
presumed perspective is used by an actor as without institutionalized orders, forms and
the frame of reference in the organization of practices visible (see e.g. the research on
his perceptual field' (Shibutani 1962: 132; translation or editing processes,
italic in original). The definition of fields as Czarniawska/Joerges 1996, Sahlin-Andersson
connoting actors that partake in common 1996) as well as the distribution of
meaning systems and share cultural-cognitive knowledge, subject positions and power
or normative frameworks (e.g. Scott 1994: inherent in institutions. Moreover, assuming
207f.) is closely related to this understanding. that the borders of institutional fields are
Since one of the core characteristics of floating, the center(s) and peripheries of
institutions is their ability to bridge time and institutional orders could become observable
space, in this sense fields connect actors (I thank Kerstin Sahlin for this point) - not
beyond their temporal and spatial co- only temporally, spatially/geographically or
presence. The second part of Scott's seminal relating to life-spheres, but also in terms of
definition 'whose participants interact more the institutional order's strength or
frequently and fatefully with one another exclusiveness to define situations (see
than with actors outside of the field', below), i.e. the extent of taken-for-
however, draws attention to network grantedness, or - with regard to the inner
structures and interaction ties that do require composition - in terms of the various mani-
some kind of spatial and temporal co- festations of institutional orders (i.e. central
presence (see e.g. Giddens 1984 and his beliefs/institutions or peripheral beliefs/insti-
distinction between social and system tutions). Apart from pointing to new research
integration). directions, this could also contribute to a
In order to disentangle the multiple more systematic approach to our current
notions of field that currently inform institu- research on institutional change.
tional research, I believe it would be helpful Organizational fields focus on the degree to
to distinguish the two aspects analytically. In which a field of actors is characterized by a
current studies, the terms 'institutional field' single predominant or by multiple, poten-
and 'organizational field' are generally used tially competing institutional orders or logics.
synonymously. I suggest using 'institutional They draw attention to the heterogeneity of
field' to demarcate spheres of institutional- institutionalized patterns and interpretation
ized meaning and 'organizational field' in frames in interaction fields. In a similar
order to refer to network ties between con- sense, social movement literature identifies
stituents that directly and indirectly interact 'multiorganizational fields' as complex,
with each other. They are both equally structured fields in which individual and
relevant and, in most empirical studies, inter- collective actors in changing systems of
twined, but encompass different phenomena: alliances and conflict try to mobilize con-
Institutional fields focus on shared typifica- sensus for their claims (Klandermans 1992).
tions and mutual expectations and can Similarly, in the neoinstitutional tradition,
provide insights into how institutional orders Hoffman (1999) defines fields as 'centers of
expand or contract or into how institutional debates in which competing interests negoti-
logics, institutionalized practices and ate over issue interpretation.'
526
ACTION AND INSTITUTIONAL The interactive dimension of this reciprocal
ENTREPRENEURS orientation is encompassed in the project of
the agents but also in the actual course of the
The failure to adequately account for active interaction.
agents has for a long time been criticized as Schütz distinguishes between two differ-
one of organizational institutionalism's ent kinds of motives: The 'in-order-to motive'
weakest points, even by the theory's propo- is reflected in the action project and in the
nents (e.g. DiMaggio 1988; Beckert 1999; outcome that the agent imagines. The prima-
Mutch/Delbridge/Ventresca 2006). In the fol- ry subjective meaning assigned by an indivi-
lowing section, I will draw attention to two dual corresponds to this 'in-order-to motive.'
aspects where organizational institutionalism The 'because-of motives' reveal why agents
could greatly benefit from a re-engagement define the situation and design the action the
with the Schützian socio-phenomenology: the way they do. Thus, while the 'in-order-to mo-
general notion of action on the one hand and tive' is future-oriented and only fully compre-
the conceptualization of institutional hensible to the agent alone (due to the inacce-
entrepreneurs and institutional work on the ssibility of consciousness), the 'becau-se-of
other. motive' can only be reconstructed by analyz-
Building on Weber as well as the philo- ing the action context and individual's past,
sophical approaches of Hemi Bergson and i.e. the socio-historical a priori of the Lebens-
Edmund Husserl, Schütz (see especially welt and the individual biography. In this
1967) developed the phenomenology in the reconstruction, the actor has no privileged
direction of an action theory that centers access compared to an observer. The distinc-
upon the meaningfulness of action in general. tion between the two kinds of motives
He takes as a starting point the intentionality bridges the dichotomy between oversociali-
of consciousness (i.e. consciousness is alw- zed, determined 'cultural dopes' and under-
ays directed to some object) and the inherent socialized atomistic agents' free will: Indivi-
temporality of all constitution of meaning. duals, in their biographical uniqueness of
Action differs from passive experiences (i.e. different sedimented experiences and differ-
reflexes) and spontaneous activities (i.e. to rent layers of sedimentation that result from
perceive a stimulus from the environment), the temporality of all these experiences, are
insofar as it has a guiding project. For never free from the socio-historical a priori of
Schütz, action is any meaningful experience the established institutionalized order into
that is orientated towards a future state of which they are born, but equally never deter-
affairs (in this sense, not picking the phone mined. While the 'in-order-to motives' reflect
up is just as much an action as picking it up). the freedom to chose and decide, the 'becau-
In the action design, the individual imagines se-of motives' show the choices, decisions
the action to be completed in the future and interests that are historically and situati-
('modo futuri exacti'). Schütz points out, that onally available within the agent's horizon of
'we are conscious of an action only if we meaning and from their actor position.
contemplate it as already over and done with, Drawing more explicitly on Mead and the
in short, as an act. This is true even of proje- pragmatists, but also on the socio-phenome-
cts, for we project the intended action as an nology of Schütz, Emirbayer and Mische
act in the future perfect tense' (Schütz 1967: (1998), whose contribution - which they refer
64, emphasis in original). Social action, and, to as 'relational pragmatics' - received much
in particular, interaction, does not merely attention in the recent institutional theorizing
include this projection, but rather a reciprocal about agency (e.g. Battilana 2006; Mutch et
orientation towards another agent and is al. 2006). They distinguish between three
situated in concrete socio-historical contexts. temporal dimensions of agency - an
 527
iterational (informed by the past), a projec- my translation) highlights this intentionality
tive (oriented towards the future) and a prac- and meaningfulness inherent in all action:
tical-evaluative (situationally contextualized)
dimension - which, as they argue, dynami- Social reality presupposes intentional activities.
cally interact in each instance of action. They Social worlds are constructed, maintained, trans-
stress that they do not denote different types mitted, transformed and, occasionally, destroyed
through social action that is meaningful to those
of action, but only analytically different who engage in it Interactions are meaningful
elements, and that, depending on context and when they lead to results that were intended by
actor, one or the other dimension may be them. But they are equally meaningful in
predominant (Emirbayer/Mische 1998: 972). another, often painful sense, when the
According to them, situated actors assume consequences of the action differ from those
variable temporal 'agentic orientations' in originally intended. Action is meaningful,
relation to the different action contexts they whether the bridges and the marriages that were
built for eternity, last or don't (2006a: 20f.)
face and may switch between these orienta-
tions more or less reflexively. In contrast to
To insist that all action is intentional and
these agentic orientations, in the Schützian
meaningful entails that all actions - no matter
conceptualization, the inherent temporality
to what degree individuals rely on pregiven
that simultaneously encompasses future, past
routines - are projected and comprise 'in-pre-
and present is a definitional component of all
given order-to motives.' Thus, even when
social action and, thus, a constitutive charac-
enacting highly taken-for-granted insti-
teristic. In this conceptualization, the specific
tutionalized scripts, they assign subjective
orientation of an agent, no matter in what
meaning and project some finished act into
temporal direction, finds expression in the
the future (but see Jepperson 1991). Through
agent's project of action, i.e. their 'in-order-to
their actions, institutional patterns are main-
motives.' Therefore, projectivity may
tained or transformed, sometimes as intended
encompass the creative reconfiguration of
and sometimes institutions erode because
structure or may equally entail their mainly
they cease to make sense. However, this
routine incorporation into activities. In this
intentionality and projectedness does not
sense, it is an interesting question, why. cele-
mean that all action is strategic in the sense
brated modern actorhood is so frequently
of rational choice theory or that different
linked to future- and change-oriented action
alternatives are weighed against each other in
projects framed as 'entrepreneurial,' while
a utilitarian way according to individual
projects that reflect past-oriented traditional-
preferences.
ism are not highly appreciated (for a similar
Institutions, by definition, denote a certain
point see Hwang and Powell 2005).
durability. However, this emphasis on the
In the socio-phenomenological tradition,
stability provided by institutions has to be
meaning is an achievement of an individual's
seen in the context of the ever-present
consciousness and consciousness is inten-
fragility of all order. Berger and Luckmann
tional (Schütz 1967). Thereby, it is of little
(1989: 103) underscore that '(t)he
relevance whether the future state projected
legitimation of the institutional order is also
by the individual is actually realized or
faced with the ongoing necessity of keeping
whether something completely different
chaos at bay. All social reality is precarious.
occurs. Moreover, the subjective meaning
All societies are construction is the face of
may change several times as the course of the
chaos.' Hence, the existence of order - on the
(inter)action unfolds. In addition, the mean-
macro-level of society, the micro-level of
ing assigned retrospectively when the agent
interaction as well as on the individual level
is reflecting over the finished act is very
of identity construction - cannot be taken for
likely different from the primary meaning
granted but is an ongoing achievement of the
assigned to the project. Luckmann (2006a,
agents involved. Its reproduction and trans-
formation are equally fragile. The focus on
528
the precariousness of order is shared with the the Schützian concept of social action could
negotiated order approach to organizations contribute to such a foundation.
(e.g. Strauss 1978; Maines/Charlton 1985; As they are referring to specific types, the
Fine 1996) - an approach that builds on central questions in this context obviously are
pragmatism and symbolic interactionism as how we identify institutional entrepreneurs
well as the work of Everett C. Hughes, and institutional work and in what respect
another forefather of neoinstitutionalism (see they differ from other actors and their
e.g. Zucker 1977; Scott 2001), but is mostly actions. One option would be to tie the iden-
neglected in organizational research (for an tification to the outcome, i.e. to institutional
exception see e.g. Hallett/Ventresca 2006; change. However, this would be highly
Walgenbach/Meyer 2008). Strauss stresses problematic for several reasons: First, as
that social order is maintained in continuous Sahlin-Andersson and Engwall (2002) have
processes of negotiating reality. For him highlighted, the relationships between actor,
(1978: ix) 'rules and roles are always activities, interests and institutional change
breaking down - and when they do not, they are often much more indirect. They conclude
do not miraculously remain intact without that '(t)he institutional entrepreneur is only
some effort, including negotiation effort, to one type of actor that is important in the
maintain them.' processes of institutional change' (2002:
In organizational institutionalism, the 294). While change may emerge without
insight that not only the primary establish- much effort from those individuals who,
ment or the transformation of institutions often retrospectively, get filtered out as
involves signifying activities, but that also initiators, it might take just as much
the routine reproduction requires continuous resources and work to stabilize an institu-
efforts has led to renewed empirical and the- tional arrangement against opponents as it
oretical interest in 'institutional entrepreneurs' would to initiate new procedures. However,
- actors with sufficient resources who see to tie the identification of institutional entre-
new institutions as an opportunity to realize preneurs and work to the necessity of defeat-
interests that they value highly (DiMaggio ing resistance or the potential or even the
1988: 14; see also Dorado 2005; Battilana willingness to do so, would inevitably
2006; Greenwood/Suddaby 2006) – and directly lead into a 'multiple faces of power'
'institutional work' - 'the purposive action of debate (Bachrach/Baratz 1962; Lukes 1974;
individuals and organizations aimed at Clegg 1989) and the argument that any insti-
creating, maintaining and disrupting tutional explanation has to be especially sen-
institutions' (Lawrence/Suddaby 2006: 218; sitive to all variations of structural and
see also DiMaggio 1988; Fligstein 2001). symbolic power that is prevalently mani-
From these short definitions, it is evident that fested in the absence of any visible form of
the concepts are not intended to provide gen- resistance.
eral conceptualizations of actors and action, Drawing on the different kinds of motives
but to denote specific types. Hwang and Schütz distinguishes could offer a promising
Powell (2005) identify a discomforting infla- option to embed the institutional entrepreneur
tionary growth in the usage of the term within a more general conception of action
'entrepreneur' and a more general trend to and provide criteria for the identification of
label all sorts of activities as entrepreneurship the type. I believe that it would be in the
that they link to essentially modern, yet spirit of the research building on DiMaggio
under-analyzed, conceptions of empowered (1988) to use the term for agents whose
individuals. For institutional entrepreneurs to action projects and subjective meanings (i.e.
be an endogenous explanation of change, it is their 'in-order-to motives') are directed
necessary to give the concept a firm institu- towards the institutional framework (both
tional grounding. I suggest that drawing on future- and change-oriented as well as
 529
past- and stability-oriented). I interpret the look at the original conceptualization sup-
'purposive' in Lawrence and Suddaby's defi- ports the skepticism: First, in the new sociol-
nition as leading the same way.² Whether ogy of knowledge, the three moments of the
they succeed or fail, whether they sponsor dialectical process of reality construction are,
stability or change, is a different question, as as is well known, externalization, objectiva-
is, by the way, the methodological challenge tion (part of which are the sedimentation of
of coming to terms with the temporality of meaning in a social sign system and its insti-
the subjective meaning and the categorical tutionalization) and, finally, internalization.
non-accessibility of consciousness in con- The transmission to a third person who was
crete empirical research designs. To endoge- not involved in the creation - no further
neously account for their specific resources quantitative spread - is required to complete
and to explain how they come to have diver- the process of institutionalization. Secondly,
gent interests and define the situation in a the meaning of a form or practice is stressed
way that they see a window of opportunity on both the level of the individual actors who
requires the incorporation of the related have to make sense of the situations they face
'because-of motives', i.e. the socio-historical and the level of society as a whole by linking
Lebenswelt with its institutionalized knowl- institutionalization to some kind of societal
edge and the specific (inter)action context, problem.
into the analysis. The enactment of scripted action is tied to
certain types of actors, i.e. prevalence of a
certain already institutionalized practice is to
be expected among actors belonging to the
THE PROCESS OF same social categorization. Thus, the ques-
INSTITUTIONALIZATION REVISITED tion how far a practice can be expected to
spread in terms of actors who perform it or
Another prominent example of Berger and situations in which it is to be displayed is
Luckmann's influence on the body of organi- dependent on the typification. Some institu-
zational institutionalism is the notion of insti- tions are frequently performed by many
tutionalization as a process in which, through members of a society (e.g. institutions relat-
repetition, routinization and transmission, ing to meeting and departing, introducing,
ephemeral interactions become objectified etc.); some are enacted by most members but,
patterns, and meaning, originally constituted in general, only infrequently (e.g. institutions
by the individual consciousness, becomes relating to birth or death). Others do not
part of the socio-historical a priori. This imply at all that the practices in question
notion is explicit in the conceptualization of spread quantitatively (such as institutions
advancing institutionalization as sequence of relating to the succession of kings, presidents
the stages of habitualization, objectivation, or the Pope). Prevalence within a social
sedimentation (Zucker 1977; Tolbert/Zucker category does not entail a quantitatively wide
1996; Colyvas/Powell 2006) and implicitly spread of a form or practice if only a few
implicated in studies that regard the broad actors are classified as belonging to this cat-
diffusion or increasing density of some struc- egory, no matter how deeply taken for
ture or practice within a field as an indicator granted and widely shared the institution
for increasing legitimacy - the currently might be. Hence, neither is the absence of a
dominant model for empirically analyzing wide diffusion indicative of the concept's
institutionalization. Recently, scholars have lack of legitimacy, nor is the spread an indi-
started to question the comprehensiveness of cator for the size of the institutional field.
this model (e.g. Sahlin-Andersson 1996; Moreover, the observation of a practice or
Benford/Snow 2000; Campbell 2004; Meyer form spreading might denote its primary
2004; Lawrence/Suddaby 2006). A closer institutionalization or its translation for other
530
types of actors or situations, i.e. the expan- Organizational institutionalism has devoted
sion of the institutional field's boundaries. much attention to show how practices get
Without understanding the meanings of a institutionalized, maintained or even
concept it is impossible to figure out what we deinstitutionalized. Very little attention has
are actually observing. Presence or absence been dedicated to why they do. From a
of quantitative diffusion of forms of practices European's perspective, this might be a con-
is too ambiguous to be taken as a measure of sequence of the anxiety of many North
institutionalization. In addition, a wide spread American scholars to get into the vicinity of
in a quantitative sense is not equivalent to a functionalist explanations (for the relation-
high degree of institutionalization, as has ship between Schütz and Parsons see their
often been shown with regard to management correspondence edited by Grathoff 1978).
fashions. The sociology of knowledge, The sociology of knowledge ties the
particularly research on Deutungsmuster (e.g. existence of institutions or new institutional-
Oevermann 1973, 2001; Meuser/Sackmann izations to the social approval of a situation
1992), a concept that is closely related to as inherently problematic. In Berger and
Goffman's frames (1986), links the strength Luckmann's words (1989: 69f.), '(t)he trans-
of social expectations to the exclusivity with mission of the meaning of an institution is
which they encompass situations (see also based on the social recognition of that insti-
Goffman 1961, on total institutions) and, tution as a "permanent" solution of a
thus, their degree of latency (Lüders/Meuser "permanent" problem of this collectivity.'
1997) which may range from reflexive Institutions are challenged if they cease to be
availability to the complete taken-for- seen as solutions or if the situation is no
grantedness that characterizes the most longer regarded as problematic, or, the argu-
powerful typifications. Thus, culturally ment turned around, if institutions persist, we
powerful institutions are almost naturalized can assume that they continue to reply to a
and drawn dose to instincts (Douglas 1986; societal problem, which, however, is not nec-
see e.g. Schütze's [1991], interesting analysis essarily the original one (Soeffner in
of the historical transformations of 'motherly Reichertz 2004), nor does this say anything
love'). A high degree of latency makes it about a 'rationality' of this solution. Thus, not
impossible for individuals to ignore the merely the spread of institutions, but rather
institutionalized expectations, as they are the question of which societal problem the
compelling even for those who deliberately actors defined and attended to is of central
try to defect. They, too, have to actively concern. Societies only stabilize important
make reference, for example by feeling the forms of action, and, on the macrolevel, the
urge to account for their non-compliance societal relevance system can be inferred
(e.g. Elsbach 1994), by pretending to adhere from the repertoire of existing institutions
or by employing decoupling strategies (the 'institutional economy', Luckmann
(Meyer/Rowan 1977; Oliver 1991) or simply 2002). This emphasis on the dose linkage
by feeling guilty. From this perspective, between institution and context accounts
decoupling and symbolic window-dressing partly for the heterogeneity of institutions
activities, merely rhetorical adoptions of ,and for the observation that concepts and
practices, etc. are not necessarily antagonistic their theorizations cannot be transferred
to institutions (but see Tolbert/Zucker 1996). 'wholesale' from one social sphere to the
On the contrary, they might point to socially next. In Soeffner's words (2006, my
powerful expectations that can not be translation),
neglected. The severity with which the
disappointment of social expectations is (t)hey are all historical plants that owe their
sanctioned evidences the institution's appearance to the cultural landscapes and
relevance and centrality. regions in which they have grown. Their soil and
their nourishment are the particular problems of
 531
concrete societies, times and situations. They are jewellery, clothes or graves, or rituals are
the concrete answers to concrete problematic other forms in which social knowledge is
situations, that is, concerning their content and sedimented. Further, language is the prime
phenotype, they are bound to specific socio-
historical contexts and are inexchangeable -
instrument for the transmission of
unless they be transferred with political and/or knowledge, thus, for socialization and inter-
ideological power and continuous surveillance nalization. Moreover, the mobilization of
from one culture to the other, superseding this legitimacy is a mainly discursive process.
culture's representations of order or pushing Berger and Luckmann (1989: 64) stress that
them into the background. (2006: 64) 'the edifice of legitimation is built upon lan-
guage and uses language as its principal
Again, there are obvious similarities espe- instrumentality.' In a later publication,
cially to research conducted in the tradition Luckmann (2006: 22, my emphasis and
of the Scandinavian institutionalism on trans- translation) asserts that, although it would be
lations and editing processes, but also to too narrow to confine knowledge to discur-
studies on contesting institutional logics (e.g. sive knowledge and all human praxis to com-
Reay/Hinings 2005) or on framing processes municative interactions, 'the human social
(e.g. Benford/Snow 2000). In addition to this world is at least mainly constructed in com-
overlap of research questions, the sociology municative interaction.' Just like every other
of knowledge provides a rigorous repertoire form of social action, communicative actions
of hermeneutic procedures to be used in also get habitualized and institutionalized.
empirical analyses that follow strict rules of This requires looking beyond the actual con-
interpretation and documentation and warrant tent of communication and examining the
a 'monitored and controlled understanding' formats in which it is produced - the commu-
(Soeffner 2004; see also e.g. Soeffner 1989; nicative genres (Luckmann 2002, 2006a;
Flick/von Kardoff/Steinke 2004; for an Knoblauch 1995; Knoblauch/Luckmann
English-speaking example in organization 2004). Genres, such as jokes, greetings,
research see Lueger/Sandner/Meyer/ prayers, job interviews, emails, exams, par-
Hammerschmid 2005). This could contribute liamentary speeches, performance appraisal,
considerably to enhancing the appreciation or gossip are more or less obligatory interac-
for qualitative research methods in organiza- tion patterns that are available to actors as
tional institutionalism. part of the social knowledge stocks. The sta-
bilization of communication into genres
serves the same purpose as institutionaliza-
LANGUAGE, DISCOURSE AND tion in general. It 'frees the individual from
COMMUNICATIVE INSTITUTIONS the burden of "all those decisions"’
(Berger/Luckmann 1989: 53). Genres give
Language is a main focus in current research, orientation and help in coordinating and
both in organizational institutionalism and in structuring interaction by providing typical
the phenomenological sociology of knowl- expectations with respect to the
edge. Institutionalization, apart from the synchronization of actors and by standardiz-
transmission from one generation to the next, ing the interaction sequences. They are the
is bound to social knowledge that is intersub- 'communicative institutions' of a particular
jectively available through its sedimentation society, and, taken together, constitute a
in all sorts of symbol systems. Language society's 'communicative economy'
plays a crucial role in several respects: It is (Luckmann 2002).
the most important sign system and 'reservoir' In organizational institutionalism, lan-
of typifications and institutional knowledge, guage and symbolism have always had a
although by no means the only one. central role - too central in the eyes of some
Artefacts, such as factories or churches, critics (e.g. Perrow 1985). Here, a focus has
532
been on the availability of .accounts that of knowledge. The replacement of the com-
actors do not have to invent anew when municative construction of reality with a
trying to legitimate their proceeding, but that discursive is meant to underscore this
come 'ready-made' with the theorization of emphasis.
the concepts in question (e.g. Meyer/Rowan It is evident that especially the commu-
1977, Strang/Meyer 1993; Elsbach 1994; nicative and discursive strands of the sociol-
Lounsbury/Glynn 2001; Creed/Scully/Austin ogy of knowledge have amazing overlaps
2002; Meyer 2004; Suddaby/Greenwood with the current agenda of organizational
2005). Zucker (1977: 728) points out that institutionalism and could contribute consid-
when acts have ready-made accounts, they erably to future research. In the context of
are institutionalized. Scott and Lyman (1970: organizational studies, communicative genres
93), who had a strong impact on organiza- as social institutions have been analyzed, e.g.
tional institutionalism's understanding of by Yates and Orlikowski (1992), who,
accounts, explicate that they introduced the building on rhetorical theory and Giddens'
concept in order to bring together Schütz's structuration theory, come to a strikingly
emphasis on taken-for-granted social recipes similar definition of a genre as 'a typified
'everyone knows' and C. W. Mills' (1940) communicative action invoked in response to
'vocabularies of motive.' The repertories of a recurrent situation' (Yates/Orlikowski 1992:
such 'vocabularies of motive' are distributed 301). In organizational studies, interesting
within a field according to social position and new genres abound (e.g. emails, homepages,
identity, and, thus, are tailored for specific sustainability reports, hearings, accreditation
categories of actors to use in typical sit- reports). Like all institutions, genres attend to
uations. In the terminology of the fundamental and recurrent communicative
phenomenological sociology of knowledge, problems that are typical for a particular
they are ready-made because they are part of field. Since these problems and the socially
the socio-historical a priori (Luckmann approved way to attend to them are own to a
2006a). specific field, different communities use
More recently, a number of institutional- different communicative economies
ists have suggested drawing on discourse (Luckmann 2002) or genre repertoires
analysis (e.g. Phillips/Lawrence/Hardy 2004) (Orlikowski/Yates 1994), and like all
or rhetorical analysis (e.g. Suddaby/ institutionalized forms, genres can not travel
Greenwood 2005) to strengthen the micro- from one social context to the next without
foundation of institutional processes. In order translation or editing activities. Not only are
to overcome the micro-bias and to encompass genres closely related to institutionalized
the ongoing political processes related to the contexts, but often they are also constitutive
production, circulation, transformation and of them, that is, these contexts 'may actually
manifestation of knowledge at the meso- or be defined through the use of such genres'
macro-level, researchers in the tradition of (Knoblauch/Luckmann 2004: 306). Changes
the hermeneutic sociology of knowledge (e.g. in the communicative economy of a field are,
Keller 2005a, 2005b; Keller/Hirseland/ thus, indicative of transformations of
Schneider/Viehöver 2001, 2005) also direct institutional regimes or logics. Many of the
attention to discourses as analytic devices. analyses of the spread of new institutional
Keller (2005a) suggests integrating the work logics into other fields focus on language and
of Gusfield (1981), the social movement it would be interesting to read them in terms
research particularly in the tradition of of the involved genres, e.g. Oakes, Townley,
Gamson (e.g. Gamson/Modigliani 1989) and, and Cooper's (1998) analysis of how the use
further, Foucault's discourse theory into the of business plan in a public organization
phenomenologically oriented sociology facilitated the shift from a cultural to an
economic rationality. In addition,
 533
it could be interesting to see if the different revisiting its own conceptual background and
types of institutional work (Lawrence/ from a closer engagement with the socio-
Suddaby 2006) or legitimating efforts phenomenological tradition. For example, a
(Suchman 1995) rely on or constitute differ- closer adherence to the sociology of
ent genres, i.e. if the use of particular genres knowledge could help disentangle diffusion
can be seen as a cue for institutional entre- research and the analyses of institutionaliza-
preneurs at work, or to see how the global tion processes, overcome the power and
diffusion of rationalization according to the agency void, or refocus attention on one of
world polity approach (e.g. Meyer 2005) is organizational institutionalism's core
displayed in the communicative economies. strengths - stability that is accomplished amid
ever changing situations and constellations of
agents after more than a decade of
preoccupation with change and heterogene-
CONCLUSION ity. In addition, we are reminded of other
symbol systems besides language (e.g. arte-
Organizational institutionalism and the facts, design, buildings, architecture, etc.)
various branches of the German-speaking that transport institutional knowledge. For
sociology of knowledge share roots in the example the relevance of 'locales' for the
phenomenologically inspired Social evoking of institutional patterns is still
Construction of Reality. My intent in this underemphasized in institutional research.
chapter was to assume an institutional stand- Further, an engagement with the distribution
point and look over the fence to see what of knowledge on the level of the field relates
could be gained by reopening a dialogue. I sedimentation to discrimination and opens
have shown that neoinstitutional theory's the view on institutionalized knowl-
main concepts still bear a strong socio-phe- edge/power structures and domination.
nomenological imprint, even if this heritage Finally, particularly with regard to a potential
has somewhat become the status of tacit 'discursive turn,' the sociology of knowledge
assumptions. I have argued that in terms of with its focus on genres and knowledge
core conceptualizations, such as agency, regimes has a much more 'indigenously'
meaning, social and individual knowledge, or institutionally anchored agenda than institu-
Lebenswelt, for a phenomenologically tional theory presently seems to have.
inspired approach like organizational institu-
tionalism it is impossible to look back
beyond the work of Alfred Schütz. A firmer
grounding in his tradition could help to over- ACKNOWLEDGEMENTS
come the conceptual ambiguity that is cur-
rently being criticized by many of the For helpful discussions and conversations
theory's proponents. I have outlined that, and insightful comments on earlier drafts of
apart from the historical legacy, many of the this chapter I would like to thank Markus
current research questions overlap with the Hollerer, Peter Leisink, John Meyer, Kerstin
work done in the German-speaking sociology Sahlin, Roy Suddaby and Marc Ventresca.
of knowledge and have examined potential
contributions the socio-phenomenology can
make to current debates. I have shown that
several of the current challenges do not NOTES
require organizational institutionalism to
'import' concepts from other theoretical 1 Peter L. Berger and Thomas Luckmann both
traditions; important impulses and potential have Austrian roots as well as Alfred Schütz, who
new directions could be gained from had to leave Austria in 1938.
534
2 Similarly, coming from the social movement Cooley, C.H. 1964. Human Nature and the
research, Snow and Benford (2000: 624) Social Order. New York: Schocken.
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'(s)trategic efforts by SMOs to link their interests
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 22
Systems Theory, Societal
Contexts, and Organizational
Heterogeneity
Raimund Hasse and Georg Krücken

INTRODUCTION the role attributed to organizational agency.

Nevertheless, they both lead to an overem-
From the outset, attention to the phasis on homogeneity and convergence,
embeddedness of organizations in wider triggered by world societal forces or by those
societal contexts has been a trademark of the forces operating within an organizational
new institutionalism in organizational field. As organizational research has
analysis. Different strands of neo-institutional increasingly begun to question this overem-
analysis converge in continuing this phasis and to allow for more heterogeneity
Weberian approach to the study of and variety, more and more neo-institutional
organizations by focusing on the co-evolution scholars have looked for conceptual remedies
of organizations and their societal against this bias. The concept of the
environments. This general point of departure institutional entrepreneur seems to play a
is shared by both the macro-sociological and crucial role here, as it helps explain why
the inter-organizational perspectives on organizations which operate under the same
organizations. The former, which has been circumstances do not always become similar.
elaborated by John Meyer and his students, By focusing on the micro-level of individual
assumes that organizations are shaped by the actors, however, the basic feature of the new
broader social and cultural forces of a global institutionalism in organizational analysis,
society. The latter, which has become most i.e., the analysis of interrelations between
prominent in the concept of organizational organizations and their broader societal
fields, sees organizational behavior as environments, becomes less pronounced. We
intimately bound to other organizations in clearly see both the necessity of allowing for
their field. Both approaches differ with more heterogeneity and variety in neo-
regard to many aspects, most notably the institutional research and the conceptual
level of abstraction and problems revolving around analyses
540
highlighting the role of institutional entre- To point out precisely this characteristic of
preneurs. Therefore, we would like to present his theory, an American collection of some of
a macro-sociological alternative to the his articles appeared under the title The
currently debated micro-level approach to Differentiation of Society (1982). In addition,
heterogeneity and variety. and in contrast to Bourdieu and Giddens,
In contemporary European macro-socio- from his early writings up to his later work
logical theories, the argument that modern Luhmann has also been an organizational
society can only be perceived as being com- sociologist (Luhmann 1964, 2000).
posed of different, at times conflicting According to Luhmann, modern society can
spheres, and not as a homogeneous set of only be fully understood when taking into
principles is well established. Pierre account the expansion of formal
Bourdieu has distinguished between different organizations - in all societal systems over
societal fields (for example, economy, educa- time and on a global scale (see
tion, arts, mass media, and politics). Albeit Hasse/Krücken 2005b).²
these fields may both overlap and be We would like to develop our argument in
composed of diverse subfields, they are four steps. First, we will reconstruct both the
characterized by distinct norms, values, and macro-perspective and the field approach in
rationalities. Bourdieu's fields are conceptu- neo-institutionalism. According to our analy-
alized as arenas for competition whose 'rules sis, they both lead to a similar overemphasis
of the game' can be modified by powerful on homogeneity. Only in this context can the
actors. It is important to notice, however, that search for concepts allowing for heterogene-
success in one field cannot easily be trans- ity and variety be understood. As we will see
lated into other fields. In his much cited book at the end of part 1, the neo-institutional
Distinction: A Social Critique of the figure of the institutional entrepreneur could
Judgment of Taste (Bourdieu 1984), these be seen as a result of that search process.
limits to convertibility become obvious as Second, we will reconstruct Luhmann's per-
Bourdieu delineates cultural barriers to the spective on society with its strong emphasis
new rich, whose possession of economic on differences between societal systems. As
capital does not lead to a similarly developed we will argue, from this perspective modern
distinction of taste. Not unlike Bourdieu, society can only be reconstructed as a multi-
Anthony Giddens (1984) has distinguished dimensional project. This orientation could
between different social institutions based on counterbalance both the bias towards
their modularities of structuration. Specific convergence inherent in neo-institutional
combinations of rules and resources consti- analysis and the recent emphasis on institu-
tute political, economic, legal and other tional entrepreneurs. Third, and in order to
institutional domains on the societal macro- fully grasp the interrelatedness of societal
level. Though Bourdieu and Giddens could and organizational trajectories in Luhmann's
be of great help in developing a theoretical work, we will discuss the basic tenets of his
perspective for organizational institutional- contributions to organizational sociology. In
ism, in which differences, not homogeneity the fourth part, we will then demonstrate that
on the societal level are highlighted, we will Luhmann's macro-perspective can offer
focus on Niklas Luhmann's systems theory insights into societal differentiation, which
for this purpose.¹ Luhmann has placed a are also valuable for the concrete analysis of
much greater emphasis than the other authors organizations in society. With the help of two
on the fact that modern society is defined examples we will exemplify the similarities
through autonomous, functionally differenti- and differences between the macro-
ated societal systems (economics, science, sociological perspective in the new institu-
politics, religion etc.), which follow a very tionalism and Luhmann's systems theory. In
distinct logic (Luhmann 1995, 1997). the concluding section we will briefly discuss
the implications of our analysis.
 541
THE NEW INSTITUTIONALISM: within nation-states. Against this perspective,
HOMOGENIZING FORCES IN SOCIETY Meyer et al. (1997) argue that organizations
AND ORGANIZATIONAL FIELDS are considered to be shaped by their wider
socio-cultural environment.
Though Boli and Thomas (1997) have put
The macro-perspective: global more emphasis on the effects of organiza-
diffusion processes and the tions, they take a similar view. Their main
rationalization of society argument is that organizations of a specific
type - international ones of the third sector
The macro-sociological strand of the new (i.e., non-governmental and non-profit) serve
institutionalism has been elaborated mainly as agents of world culture. The norms and
by John Meyer over the last thirty years cognitive schemes of the latter, then, are
(Krücken/Drori 2007). He assumes that supposed to profoundly affect any modern
modern society is not a concrete and hard- state and organizations of all types. The legit-
wired structure composed of actors. It is imacy and power of international organiza-
rather a broader and imagined cultural tions, so the argument goes, stems from their
system, in which the main cultural patterns of status as institutions which are driven by uni-
Western society - like universalism, progress, versal ideals instead of utilitarian interests,³
and equality - are embedded. This cultural As in the case of Meyer et al. (1997), the
system is inherently globalizing. The driving authors identify a cause/effect-relationship
forces of societal development are, therefore, between states, organizations, and individuals
not actors and interests as typically assumed. on the one hand and a broader global culture
The causality is not 'bottom up', but rather and its organizational representatives on the
'top down'. Society as the embodiment of other. According to this perspective, the
broader cultural norms constitutes its actors. former is the outcome of the latter. In addi-
With its strong phenomenological and tion, even the most influential organizations
'culturalist' emphasis, the macro-perspective are seen as carriers of broader cultural norms,
in neo-institutional research is a strong enacting and enforcing them, but not as
antidote against all kinds of realist, independent actors in society.
individualistic and actor-centered social the- This macro-perspective on the relation
ories, currently prevailing in American soci- between society and organizations has led to
ology (Jepperson 2002; Krücken 2002). one of the most fascinating contemporary
According to Meyer, the cultural system research programs in sociology, which has
of society constitutes three types of modern been highly influential for the development
actors: nation-states, organizations, and of organizational institutionalism. Over the
individuals. Though organizations are of last thirty years Meyer's approach has proved
paramount importance in Meyer's macro- its originality and fruitfulness when address-
sociological institutionalism, from the per- ing the global diffusion of cultural and struc-
spective of organizational research it is tural features of Western society, which
striking that they mainly have the status of a cross-cut different regions and sectors of
dependent variable in this theory context. The world society. In this, the spread of formal
cultural shaping of organizations is mostly organizations, which are the central embodi-
emphasized in Meyer et al. (1997). Here, the ment of these features, figures most promi-
authors criticize dominant interpretations of nently (for a most recent and systematic
globalization in which (a) globalization account see Drori/Meyer/Hwang 2006). The
processes are interpreted as an aggregate neo-institutional approach of Meyer and his
effect of state activities, and (b) state students has also proved its innovative
activities are considered as an outcome of character by exploring new lines of theoreti-
individual and organizational action cal and empirical research. Closer links to
542
other research traditions have been looked single organization); and any organization
for, like, for example, social movements was considered to be embedded in a distinct
research (Khagram/Riker/Sikkink 2002; setting of organizations (Greenwood/
Tsutsui 2004). Furthermore, the more recent Hinnings 1996: 1026-7). DiMaggio and
focus on science in the ongoing rationaliza- Powell's well-known 'three pillars of
tion of society (Drori/Meyer/Ramirez/ isomorphism' (Scott 2001) thus can be used
Schofer 2003) and theoretical reflections on to classify the shaping of organizations by
the constitution of individual actorhood in other organizations: Coercion results from
modern society (Meyer/Jepperson 2000; regulatory agencies (predominantly state
Frank/Meyer 2002) have opened up whole organizations); normative isomorphism is
new lines of investigation and made similari- based upon professional associations,
ties to other ways of theorizing visible, which consulting firms and educational institutions;
have hardly been explored yet.4 Nevertheless, and mimicry stems from the ongoing
and this point is central for the argument we observation of peers, competitors and
will develop here, the macroapproach in neo- collaborators.
institutional research does not systematically DiMaggio/Powell's (1983) notion of orga-
account for heterogeneity and differences in nizational fields has expanded the scope of
society. Despite all theoretical developments organizational analysis profoundly. For the
and refinements the approach has undergone argument to be developed here it is most cru-
over the last thirty years, the underlying cial to note that the concept of organizational
assumptions on homogenizing forces in fields and its focus on isomorphism within
global society have remained stable und fields has, implicitly, offered an understand-
unchanged. Even critics who generally ing for persistent differences between fields.
sympathize with that approach point to the To the extent to which organizations are
inherent limitations of its overemphasis on shaped by other significant organizations
homogeneity and convergence (for a most (such as state organizations, regulatory agen-
comprehensive critique see cies, professional associations, consultants,
Schneiberg/Clemens 2006). competitors and collaborators), they are
exposed to rather specific influences. It thus
may be concluded that organizations differ
The meso-perspective: from inter according to their field membership which,
organizational relations to for example, results from their embeddedness
institutional entrepreneurship in national regimes (Orrii/Woolsey
Biggart/Hamilton, 1991; Dobbin 1994).
DiMaggio/Powell (1983) have offered a Assumptions regarding the differentiation
starting point, which is different from the of organized contexts also can be found in
macro-perspective discussed above. Their other contributions from the founding phase
contribution does not refer to an all- of the new institutionalism. Scott (1983)
encompassing world culture or to other kinds distinguished between two sectors - technical
of broader societal contexts. Instead, and institutional - and argued that a focal
DiMaggio/Powell considered organizations organization is embedded in either a techni-
as being deeply shaped by those other organ- cal or an institutional environment. This
izations which serve as 'significant others' in assumption soon was replaced by the insight
the sense of Berger/Luckmann (1967). that most organizations have to deal with
Conceptually, organizational and inter- both technical and institutional requirements
organizational parameters gained status as (Hasse/Krücken 2005a: 33-4). Additionally,
independent variables, and in this respect the it seemed that such a distinction was too rigid
perspective has been meso-sociological. The to account for differences within these two
basic units were organizational fields (not a sectors. Scott and Meyer (1991) thus
 543
developed a more differentiated concept of 'network') because this shift implies that a
societal sectors. Sectors were conceptualized focal organization appears to be an integral
as functional domains which are composed of part of its institutional setting.5
diverse organizations as well as correspon- Two basic questions emerge from this per-
ding non-organizational features such as spective: (1) What determines whether or not
meaning and belief systems or governance organizations can be successful in actively
structures and other 'rules of the game'. In a intervening into their context, and (2) what
similar vein, Scott (1991) has emphasized determines how organizations may use their
characteristic features of organizational potential for active intervention? In order to
fields. Not unlike DiMaggio/Powell (1983), deal with these questions, it should be noted
organizations appear to be deeply influenced that neo-institutionalists ever since have
by 'their' field - and to a much lesser extent described the constitution of fields and the
by an all-encompassing world culture. socialization of single organizations as an
To summarize, the field approach is char- open and ongoing process. In this respect,
acterized by the assumption that organiza- references were made to the social construc-
tional fields mediate between a single tivism of Berger and Luckmann (1967)
organization and broader societal contexts. (DiMaggio/Powell 1983; Meyer 1992). The
The implication of such a conceptualization legacy of this theory also has sensitized the
is that global impacts tend to be devaluated potential of organizations to active handling
because such impacts need to be enacted by of institutional constraints. Accordingly, the
field-specific institutions. Such an under- processing of environmental constraints is
standing of organizational fields fits nicely to open for variation, and this deeply affects the
observations of robust differences because reproduction of the institutional context.
isomorphism within fields corresponds with Fligstein (1996), for example, even has
diversity among organizational fields. It thus described organizational fields as political
can be argued that clusters of interacting arenas - arguing that there are striking
organizations can be considered as imbalances of power at work (see also
institutional barriers against homogenizing Greenwood et al. 2002). While some organi-
trends on a global scale. zations may experience their field context as
Based on the organizational fields- being out of control, others may be in a
approach some new institutionalists have position that allows for an institutional engi-
argued from the 1990s onwards that, to a cer- neering of fields.
tain extent, organizations can also actively The idea of organizations being actively
intervene in their contexts. This implies a involved in their context does not just imply
farewell to sharply distinguishing between imbalances of power. It also raises questions
environmental causes and corresponding about how organizations may utilize their
effects on a focal organization. Instead, the potential and to what extent they handle
notion of organizational fields highlights issues of power strategically. These questions
processes of mutual adaptation. As compared have led to a rediscovery of purposive agen-
with the top down-perspective of the macro- cies, being conceptualized as something
sociological approach, organizations are thus which is not covered by institutional factors
considered to be more actively involved in (Beckert 1999). The concept of agency, how-
the overall development of society. ever, is not taken from economic approaches
According to this perspective, organizations such as rational choice or principal/agency-
negotiate with other organizations and they theory. Instead, new institutionalists have
may also try to actively manipulate those incorporated insights from those theories of
organizations and other institutional factors. practice which have been developed in late
Analytically, the crucial shift is from 20th-century European sociology (Bourdieu
'environment' to 'context' (respectively 1977, 1990; Giddens 1984; Joas 1996).
544
Agency, then, includes the potential for 2005: 30). From the latter point of view, this
actively making choices and for reflexive discourse has attracted a great bulk of atten-
self-monitoring, but it is not assumed that tion, because it offers an explanation for the
decisions and actions are determined by fixed dynamic character of institutional contexts
preferences (cf. Feldman/Pentland 2003: 95- (Greenwood/Hinnings 1996). There is also
6; Child 1997). the potential to end quasi-paradigmatic
Institutions, from this perspective, may disputes with old institutionalists, with insti-
constrain or enable to act in accordance with tutional economics and with those social
given interests, and they may thus become theories which put more emphasis on volun-
objects of strategic modifications. However, tary action and rational decision making
it is not just organizations (and, of course, not (Blom-Hansen 1997; Abbell 1995). Finally,
heroic individuals) which can serve as there are profound non-academic considera-
'institutional entrepreneurs' (Thornton 1999; tions which support the emphasis on active
Greenwood et al. 2002). Instead, professions, entrepreneurship, because as compared to
standard setters (Hwang/Powell 2005) and macro-sociological top down-explanations
social movements (Rao/Monin/Durand 2003) the focus on institutional entrepreneurs offers
can get involved in the engineering of better perspectives for decision makers and
institutions. As a consequence, institutions consultants (Sahlin-Andersson/Engvall
can be considered as the outcome of a broad 2002). One may thus expect a high degree of
array of institutional entrepreneurship cultural legitimacy and support for develop-
(DiMaggio 1988) - either because actors are ing such a perspective - and, ironically, this is
supposed 'to escape the determining power of quite in line with basic insights of the macro-
institutions ... [or because of] ... multiple sociological approach in neoinstitutionalism
institutional referents that overlap and con- (see Hwang/Powell 2005: 182 for the same
flict' (Dorado 2005: 385). This requires that argument).
institutional forces have to be handled While such pragmatic reasons for bringing
actively (Barley/Tolbert 1997; actors back in have been discussed broadly, a
Friedland/Alford 1991). In any case, the issue more critical reflection of the theoretical
of institutional entrepreneurship has led to a impact of putting interests and entrepreneur-
rediscovery of agency (Emirbayer/ Mische ship at center stage has been neglected. In
1998). It has let researchers deal with the order to compensate for this one-sidedness it
entire range of cognitive, social and material needs to be taken into consideration that the
resources which are needed for successful outlined trend affects the aspiration to
interventions in the institutional setup (Rao explain what otherwise most often is taken
1998; Lounsbury 2001), and it has led to the for granted - i.e., rational action and our
identification of contingency factors which understanding thereof. In same cases, the
determine the opportunity structures to do so focus on institutional entrepreneurs has led to
(Seo/Creed 2002).6 a reversal of the traditional neo-institutional
Due to the theoretical significance of perspective because actors' preferences and
entrepreneurship it comes as no surprise that their choices are assumed to explain institu-
new institutionalists debate the issue contro- tional structures. The advantage of such a
versially. While some 'stress at the outset that perspective seems to be that one can more
an institutional perspective is more 'con- easily focus on issues of variation and
structivist' than 'agentic" (Hwang/Powell differentiation - the Achilles heel in both the
2005: 180), others argue that 'the discourse of macro-approach ('global society') and the
institutional entrepreneurship has helped to organizational meso-perspective ('institu-
usefully redirect neoinstitutional analyses tional isomorphism') in neo-institutional the-
towards the study of actors and their role in orizing. The disadvantage, however, is that
catalyzing institutional change' (Lounsbury the quest for less situational and for other
 545
than actor-based causes of persistent differ- unique in combining a grand historical per-
ences tends to be neglected. In particular, this spective with an in-depth analysis of domi-
applies to causes which might be inscribed in nant features of contemporary society.7 At its
the social structure of modern society - and core one can find a scheme that outlines the
which are experienced as external social evolution of human society from the begin-
realities. ning onwards. In this respect, there are some
We assume that the quest for such causes resemblances with Durkheim's remarks on
is less developed because the institutional simple forms of social life as the starting
context programmatically has been equated point (Durkheim 1933). When it comes to
either with a uniform and homogenizing Luhmann's reflection on more recent forms
world culture or with homogeneous institu- of societal evolution, one may also identify
tional configurations at the field level. Both similarities with another founding father of
world culture-explanations at the macro-level social theory: Max Weber. Not unlike Weber
and field-concepts of isomorphism at the (1958), Luhmann refers to a unique set of cir-
meso-level did not allow for an explanation cumstances in the Western world which trig-
of persistent differences, be they at the level gered the take off of modernity.
of society or within organizational fields. In In a broad socio-historical perspective,
order to emphasize differences and Luhmann has stressed that sophisticated
heterogeneity, for many neo-institutional forms of societal stratification emerged
researchers there appeared to be no alterna- before the advent of modernity, particularly
tive to referring to the micro-level and to in ancient high cultures as for example in
bring purposive actors and their interests and China, Egypt, Greece, and India (Luhmann
strategies back in. In what follows we will 1982, 1997). Here, the differentiation is
present an alternative explanation by strictly vertical, and societal order is struc-
referring to Luhmann's systems theory. It is tured in a clear-cut and hierarchical way.
based on a concept of social structure which Characteristic features of stratified societies
is more sensitive to differences and which can be illustrated with respect to the tradi-
considers such differences to be deeply tional caste system in India. First, there are
inscribed into the macro-structure of modern strict rules which affect every facet of social
society. Our brief account of the basic tenets life. Second, mobility via economic achieve-
is structured around issues of modern ment or via marriage is restricted. Third,
society's internally differentiated character, hierarchy is legitimized by religion. As a
and the role organizations play in that macro- consequence, status differences and positions
sociological approach (2.3). in the societal strata are experienced as des-
tiny, and no legitimate alternative form of
social order is taken into consideration.
Historically, the disappearance of vertical
LUHMANN'S SYSTEMS stratification as the main principle of societal
THEORY: MODERN SOCIETY, differentiation was triggered by challenging
DIFFERENTIATION, the status of religion as an authority that
AND ORGANIZATIONS determines social life in general. This process
began in Europe in the 16th century, when
Modern society as a differentiated politics began to claim autonomy from reli-
and multidimensional project gion. At the end of this process, a political
order was to be found, which no longer was
Luhmann's theory of social systems is one of subordinated to any other order. Since then,
the most comprehensive projects in social politics can be described as a distinct field
theory of the 20th century. The approach is which follows an inner logic that is independ-
ent of religious and other authorities.
546
Likewise, the birth of the modern sciences is distinct societal systems with characteristic
marked by their emancipation from religious rationalities that cannot be subordinated to
beliefs and wider social norms. In the logic of other systems. Furthermore, the
comparison with its ancestors which were historical appearance of other societal sys-
embedded in guilds and monasteries, science tems has been described. Among them are
defined itself as an enterprise which is based the nuclear family and the ideal of romantic
on the rigorous observation of facts. Since love, which both are no longer primarily
then, social conditions, such as political regu- based upon political or economic or any other
lation or religious dogma, may constrain or external reference. In a similar vein, the
support scientific research, but they do no emergence of an art system, of mass media
longer directly affect the direction of scien- and of sports has been described as a histori-
tific progress. Luhmann has thus stressed that cal process. The fundamental characteristic
the sciences have matured to an autonomous of any such system is that it is based on a
sphere of modern society, just as politics. A distinct logic, which implies that it develops
similar development could be observed with specific criteria for success. As a conse-
regard to the economy. In this respect, quence, what is politically feasible may not
Luhmann's contribution is in line with Max be true according to scientific standards; real
Weber (1968), Karl Polanyi (1944), Jürgen love cannot be affected by economic consid-
Habermas (1985/1989), Anthony Giddens erations, and arts are not necessarily in line
(1984), and many others. The common with religion.
ground of these sociologists is to assume that Analytically, Luhmann has argued that
economic relations, which traditionally used most societal systems, which came into being
to be embedded in wider social bonds, are with the turn towards the functional
increasingly characterized by the specific differentiation of society, are based on a
logic and rationality of the economic field. binary scheme of information processing
The economy may serve as the paradig- (i.e., 0 or 1, plus or minus, yes or no). Binary
matic case for the emergence and lock-in of codes are all-encompassing constructions as
specific rationalities. It neither can be derived they allow everything that happens in society
from wider frames of non-economic criteria to be processed by assigning one value or the
nor can it be reduced to the motives and other. As everything can be processed
preferences of individual actors. While this according to the binary coding of informa-
basic idea was already at the heart of Karl tion, societal systems actively scan their
Marx's analysis, Luhmann expands it to a environments for opportunities to apply their
more general statement on the horizontal codes. The technical advantage of such a
differentiation of society. That type of socie- mode of information processing is its reduc-
tal differentiation, which has substituted ver- tionism: Any information is either '0' or '1'.
tical stratification as the dominant mode of For example, the application of the binary
differentiation, is called 'functional differen- code 'true' or 'false' is assumed to be at the
tiation' as societal systems are considered to core of science. Science can thus be defined
fulfil functions that cannot be substituted by as that specific form of information process-
other systems.8 The economy as a societal or ing which strictly refers to whether or not
functional system regulates the production something is considered as true or false.
and distribution of scarce products and serv- Binary coding not only allows for the expan-
ices; science generates new knowledge; and sion of the system. It also safeguards against
the political system is unique in producing the claims of other systems. Monetary pay-
collectively binding decisions which affect ments, for example, are an important prereq-
the entire society. From this point of view, uisite for science. A direct interference with
both politics and science, for example, are the code of scientific truth and falsity, how-
ever, is labelled as a scandalous distortion.
 547
The same logic is to be found in other sys- are schemes which serve as providers of
tems as well. In the economy, monetary information about what to select and how to
transactions are related to each other. The present what has been selected; in sports
code is 'payment' versus 'non-payment', and there are plenty of regulations which limit
the economic system only can be activated to and specify competition. Combining the
the extent to which this code can be applied. selectivity and robustness of binary informa-
In a similar vein, the political system is about tion processing with the openness and
the power to make collectively binding deci- flexibility of programs has provided societal
sions, and the code is 'power' vs. 'lack of systems with a degree of complexity which
power'. The legal system strictly distin- historically was never experienced before.
guishes between 'legal' and 'illegal', regard- The consequence is unprecedented growth:
less of material effects and issues of social Today, there is more science than ever;
norms; mass media are about attracting the politics is more all-encompassing and regu-
attention of the public according to what is lates many facets of society; legal issues can
regarded as newsworthy or not; and sports be related to almost anything, economic
are based on the code 'winning vs. losing'. To activities have exploded, etc.
summarize, most systems on the macrolevel Societal dynamics, however, are not
of society represent a specific and highly limited to the dynamics of its individual
reductionist binary logic of information systems. Any societal system is dependent on
processing, and concerns relevant for other the contributions of other systems, and
systems or overall societal norms have to be modern society is characterized by an
transformed according to that very logic. extraordinary high degree of mutual depend-
Coded information processing provides ency. The economy, for example, is in
societal systems with an identity which permanent need of scientific knowledge in
distinguishes them from each other. This order to be innovative; it is dependent on
identity is not open for change. But these legal norms, in particular with respect to
systems are not only based on codes, but also property rights; it needs mass media in order
on programs that, by contrast, can and do to attract attention (via advertisement and
change. Programs provide societal systems product placement); and it is in need for
with information on how the code is to be political decision making and
applied. According to Luhmann, the dynamic implementation, for example in order to
character of societal systems is thus inscribed regulate competition or with respect to anti-
into the variation of their programs. In order trust norms. Without such outputs of other
to illustrate the dynamics of systems, one systems, the economy would be substantially
may again refer to science. There is the state less efficient. Vice versa, the same holds true
of the art of a research field, there are for other systems, all of which are dependent
modifications with respect to theories and on economic and other outputs. Due to the
accepted research methods, and there is vari- high degree of mutual dependency, a crisis in
ation of research agendas - all of which indi- any system may negatively affect other
cate how the scientific code is to be applied. systems. Societal evolution is thus described
Likewise, economic rationality can only be as a risky enterprise. As Luhmann has shown
applied to the extent to which scarcity, in particular in his work on risk and the envi-
demand and corresponding price signalling ronment (Luhmann 1989, 1993) as well as in
can be identified; in politics there are his Observations on Modernity (Luhmann
thematic issues, agendas, and political pro- 1998), the polycentric and highly interrelated
grams; the legal system is based on legal character of modern society is both a strength
norms as inscribed into constitutional law and a permanent source of vulnerability of
and into court decisions; in mass media there modern society.
Compared with the macro-sociological
perspective in neo-institutional theory, it is
548
obvious that Luhmann's perspective empha- and it stimulates the further spread of organ-
sizes the multidimensional and internally dif- izations which, again, allow for further
ferentiated character of modern society. The differentiation. This process of mutual self-
basic argument is that neither a hierarchical, enforcement begins with the institutionaliza-
stratified order nor a clearly identifiable tion of guilds and crafts, and it is later related
center remains after the advent of modernity. to religious organizations, scientific associa-
In the polycentric society as described by tions, business enterprises, political parties
Luhmann, no unifying system or common and so forth. Thel9th century is crucial for
coordinating principle exists. Neither religion the spread of the organizational form, when
nor politics, neither science nor the economy club membership of very diverse sorts gained
determine modern society as a whole. From status as an integral part of a modern life
this perspective, societal integration or style.9
homogenization on the basis of universal Today, most societal systems are repre-
norms and cultural principles cannot be sented by specific organizations, and, vice
achieved. Instead, modern society is shaped versa, most organizations are related to a
by very distinct societal logics and their societal system. For organizations, this
interrelatedness. Before we compare basic implies copying and reproducing those forms
tenets of both macro-approaches with the of rationality which are represented by the
help of two examples, we will focus on codes of the system in which they are embed-
Luhmann's organizational theory. ded. The business firm, for example, is char-
acterized by subordinating any of its diverse
activities under monetary aspects, i.e., issues
Bringing organizations back in of payments. Likewise, political parties and
their candidates strive for positions of
In Luhmann's grand theory of societal evolu- political power; scientific institutions and
tion organizations are of pivotal importance universities aim at the discovery of truths,
as societal macro-structures and organiza- sports clubs aim at being champions, pub-
tions co-evolve. Historically, organizations lishing houses and TV stations try to gain the
emerged in ancient high cultures which were attention of a mass audience, and so forth.
characterized by the prevalence of a hierar- Exceptionally, organizations may alter their
chical and stratified societal order. However, primary orientation. For example, a research
due to shortcomings in the social precondi- institute may transform itself into an
tions of these societies - literacy, money economic organization. Additionally, a few
economy, and technologies of accounting organizations may not be strictly related to
were still not given on a larger scale - the exactly one systemic logic (for example,
diffusion of organizations was rather private hospitals), and there are still organi-
restricted both geographically (close to the zations which cannot be related to any
leaders in the centers) and functionally societal system at all (for example, leisure
(public administration and larger military and clubs). Nevertheless, most organizations in
construction projects). While this con- society strictly accept one societal system
stellation remained rather stable for a long and its binary code as their main frame of
time, the transition from stratified to func- reference.
tionally differentiated societies witnessed the Organization research has found profound
spread of formal organizations. Luhmann has evidence for the fact that organizations tend
described this initial phase of modernity as a to grow. It has also been shown that growth
co-evolutionary process of functional differ- and increasing complexity are parameters
entiation and organization building. which stimulate organizational differentia-
According to this interpretation, functional tion. According to Luhmann's systems
differentiation requires formal organizations, theory, these processes strikingly reflect the
 549
functional differentiation of society. Many into research issues. Because something sim-
organizations, for example, have established ilar may be said with respect to all other
research departments, some of them have set types of organizations and with respect to
up offices that deal with legal issues, large references to any societal system, heteroge-
organizations often engage in political lobby- neous inter-organizational relations have the
ing, economic criteria have to be considered potential of mediating between different
by organizations of all kinds, and deviance social spheres and rationalities.
from legal norms can seriously threaten any
organization. Organizations thus differentiate
themselves into departments or offices that
concentrate on economic issues, legal norms, ACCOUNTING FOR
research, and so on. A major task for man- HETEROGENEITY: TWO EXAMPLES
agement then is to adjust such diverse ration-
alities to the identity of an organization, In the following section we will briefly dis-
which, as we pointed out before, is defined cuss the implications of Luhmann's systems
through the specific rationality of the societal theory for the analysis of two general topics,
system in which the organization is embed- which also figure prominently in neo-
ded. To some extent, systems theory would institutional research: the expansion and
thus support the basic idea of the new institu- transformation of the modern welfare state
tionalism that organizations are well advised (3.1) and recent trends towards academic
to copy the prevailing norms of their wider entrepreneurship (3.2). Both examples show
societal context. In contrast to the new insti- the fruitfulness of a theoretical perspective,
tutionalism, however, systems theory would which assumes that the sources of societal
stress that these norms are copied only to the and organizational heterogeneity are to be
extent that they support the realization of found at the macro-level of society. Against
ends which constitute the specific identity of the backdrop of the macro-approach in neo-
an organization as a business firm, as a institutional theory, we will argue that the
research institute, or as a political party, for trajectories of the welfare state do not
example. necessarily follow the enactment of broader
From the perspective of Luhmann's societal norms, but rather the distinct inner
macro-sociological approach, organizations logic and dynamics of the political system of
are not just crucial for the reproduction of the society and its organizations. In our second
differentiation of society into distinct societal example we will focus on an issue which
systems. They may also compensate for the involves different societal systems, hence
sharp differences in the logic of societal sys- triggering inter-organizational collaboration.
tems because organizations of any type are Instead of assuming homogenizing forces
able to interact with each other which lead to the evaporation of institutional
(Hasse/Krücken 2005b: 189-190). While boundaries, from the perspective of sociolog-
economic and scientific rationalities, for ical systems theory distinct logics of
example, cannot be synthesized at the macro- information processing and related identity
level of society, which is characterized by concepts prevail.
very different societal systems, economic and
scientific organizations quite frequently set
up inter-organizational relations. Depending The expansion and
on their absorptive capacity, economic transformation of the
organizations can deal with research issues, modern welfare state
they can collaborate with academic partners,
and they may translate and re-translate The modern welfare state seems to be a good
economic considerations example for pointing out similarities and
550
differences between the macro-approach in (Strang/Chang 1993; Meyer 2007). They
neo-institutional theory and sociological sys- have to adhere to broader societal norms of
tems theory. Both converge on highlighting justice and progress and enact related scripts
the relevance of the welfare state for the of social policy in order to be regarded as a
understanding of modern society. But while legitimate actor in society. Global standards
for Meyer the development is driven by the of social policy were codified by the UN
diffusion of general societal norms, Luhmann Declaration of Human Rights in 1948. Since
emphasizes the specific rationality of the then, international authorities such as the
political system as its driving-force. UNESCO, the International Labor
From the macro-perspective both Organization (ILO) and others address wel-
approaches take, welfare state dynamics fare issues to any modern nation-state
cannot be grasped by a comparative perspec- (Marshall 1981). Additionally, welfare state
tive, which emphasizes national differences issues are tackled by scientific experts and
and different types of modern welfare states. social movements both of which are organ-
From the comparative perspective, which has ized in international associations and net-
been most convincingly elaborated by works. It thus may be concluded that these
Esping-Anderson (1990), specific institu- institutions develop a standardized frame of
tional configurations and power relations on reference, and any state risks its social legiti-
the one hand and varying functional require- macy, if it tends to ignore these contextual
ments on the other hand are of central parameters. The driving-forces of the expan-
importance here. As a consequence, many sion of the welfare state are to be found at the
parameters have to be taken into account as level of societal macro-structures, i.e.,
potential determinants of welfare state broader societal norms which mainly diffuse
dynamics like the degree of industrialization, through international organizations. Different
family structures and demographic trends, degrees of exposure to the world culture and
economic growth and prosperity, as well as its internationally organized agents as well as
unionization and the strength of social differences of power between those
democrats. institutions which are not in accordance with
From both a neo-institutionalist and a sys- global cultural scripts may account for
tems theory perspective, it is striking that differences among nation-states.
comparative welfare state researchers mainly A similar perspective may be applied
refer to national differences and functional when it comes to the transformation of the
requirements. In contrast, both macro- welfare state which has been taking place
approaches focus on causes which can since the 1980s.10 Historical data give
neither be limited to individual nation-states evidence of a rather uniform expansion of
nor to functional requirements of societal welfare state-expenditures until the end of the
reproduction. 1970s (Flora 1986). Since then, however, the
Following the neo-institutional approach development seems to be more contingent.
by John W. Meyer and others one rather On the one hand, there are factors which
stresses the embeddedness of modern nation- forcefully support the extrapolation of this
states in a global society (McNeely 1995; trend. On the other hand, serious concern
Meyer et al. 1997). The emphasis is clearly about the sustainability of such a dynamic
on the significance of a global culture and its gained wide attention. As a consequence,
representation by international organizations, substantial changes have been observed - in
and the impact of other welfare states as some cases materializing as sudden quasi-
models or at least as significant others is cen- paradigmatic shifts (Sweden at the end of the
tral (Hasse 2003). From this point of view, 1980s), in others lasting decades (Germany
social policy has become an integral part of from the 1970s until the present time).
the agenda of modern nation-states Sometimes these changes were implemented
 551
as consensual projects (Finland in the 1990s); these institutions of the political system con-
sometimes they were highly controversial tributes to the expansion of the welfare-state.
(the United Kingdom at the beginning of the Other societal systems are only relevant to
1980s). From a neo-institutional point of the political system as an external resource
view, however, it does not suffice to observe for its continuous reproduction. It is thus not
these transformations at the nationstate level. surprising that systems theory puts a strong
Instead, the historical development of the emphasis on the societal risks of systems
welfare-state as well as more recent dynamics.
transformations have to be seen as a globally Following Luhmann's Political Theory in
orchestrated process, in which transnational the Welfare State (Luhmann 1990), the
organizations, world-wide diffusing role expansion of the welfare-state appears to be
models, experts and consultants are of pivotal an inevitable consequence of the evolution of
importance (Hasse 2003). The OECD, for the political system. The welfare-state pre-
example, issued a dramatic report in 1981 on dominantly aims at the inclusion of persons
the limits of welfare-state policies (OECD and groups. On the basis of political power
1981). Based on critical assessments like this, law and money are used as means of effectu-
substantial re-definitions took place: ating the welfare-state. Structurally, its
Administration as Service (OECD 1987) was expansion is pushed by the interplay of the
established as a new 'Leitbild'; issues of core institutions of the political system and
service delivery were tackled; private by referring to other societal systems: First,
alternatives to public bureaucracies were dense competition for scarce offices is
favoured; and reforms were driven by new assumed to result in political programs, in
best practices such as 'new public manage- which the societal environment is actively
ment' or 'non profits for hire'. This paradig- scanned for themes and organized interests,
matic change was accompanied by a which might offer opportunities to apply the
replacement of models (from Germany to principle of welfare-state politics. Mass
New Zealand), international organizations media is considered here as an important
(from ILO to IMF), and experts acting on mediator between organized interests on the
global scale (from Keynesian social engi- one hand and political parties and politicians
neers to more practically inclined political on the other hand. Second, administrative
consultants). agencies and their experts actively support
While neo-institutionalism conceptualizes the identification of needs due to their pro-
welfare-state developments as trans-national fessional knowledge and due to micro-
processes, in which global models and scripts political interests. Third, legal claims affect
diffuse through a variety of channels, systems the relation between the public administration
theory emphasizes the effects of the and the public. This fosters the trend towards
functional differentiation of society. As a an expansion of welfare politics, too. As a
consequence, its political system appears to consequence of this unprecedented growth,
be a distinct field which is based on a specific severe problems occur in other parts of
logic or rationality, i.e., the application of the society. In particular, Luhmann has
binary code 'power/not in power'. In this, the highlighted negative economic side-effects
political system sharply differs from those of (due to the extensive use of money, but also
other societal systems. In addition, the inter- due to attempts at actively regulating the
nal differentiation of the political system has economy), the risk of overloading the law
to be taken into account. Internally, the system (due to the extensive use of law
system is composed of (a) political decision resulting in shortcomings of application and
makers (governments and office holders), (b) implementation), and the expansion of state
administration and service deliverers, and (c) bureaucracies and professionals (as service
the public (as both voters and clients). Any of deliverers and as experts).
552
It should be noted that the starting point of the political system with information about
Luhmann's analysis of the welfare-state is how to apply its basic principles. Programs
quite similar to the neo-institutional perspec- may vary profoundly across time and space,
tive. Instead of highlighting national varia- and organizations, both within the political
tions, both approaches emphasize structural system and in its relevant environment (like
features of modern society, which affect very media organizations, business firms, and
different nation-states. However, two very courts) do not simply enact broader societal
basic differences may be identified. scripts. Instead, they play a very active and
First, Luhmann refers to very general contingent role in the variation of programs,
characteristics of the political system, its for example those concerning the welfare
internal logic and core institutions as driving state.
forces of welfare-state developments, which
are to be found in very different nation-states.
Neo-institutionalism, instead, emphasizes
trans-national, 'external' causes as triggering Academic entrepreneurship
these developments. Though national
differences are not of prime theoretical Academic entrepreneurship is embedded in a
concern for both approaches, they could be more general reappraisal of the role entrepre-
explained through either specific national neurial activities should play in society.
configurations of political institutions and Entrepreneurship has increasingly been seen
their relevant societal environment (systems as being beneficial with respect to broader
theory) or linkages of nation-states to trans- socio-economic impacts; in particular, start
national discourses and organizations (neo- ups companies which contribute to the trans-
institutionalism). fer of new knowledge are highly appreciated
Second, the trend towards the transforma- (Thornton 1999). Universities figure most
tion of the welfare-state, which has occurred prominently in this broader discourse on
in very different countries and which has entrepreneurship. All over the world, their
been briefly discussed above, has to be con- new economic responsibilities have become
ceptualized very differently. While neo- visible. Economic parameters such as start-up
institutionalists focus on the role agents of founding rates or the commodification of
diffusion such as trans-national organiza- new knowledge via patenting and licensing
tions, experts and consultants play, from the have become new evaluation criteria, and
point of view of systems theory one has to universities have begun to actively get
stress that the discourses and concepts of involved in these activities (OECD 2003).
these agents do not diffuse easily. Instead, Though direct links between academic
they have to be translated into the political researchers and industry have a long history
system, and this happens according to the in many fields, carried out in addition to the
logic and rationality of that very system, and main tasks of the individual researcher, it has
not according to broader societal norms and now become an institutional mission of the
scripts. Therefore, the focus is rather on university as an organization. Based on the
internal factors triggering change. Following assumption that a direct contribution to
the distinction between codes and programs, economic development has become a third
one should assume that aspects related to the academic mission of universities, on a par
former are a source of structural stability. with the traditional missions of teaching and
Societal differentiation, competitive features research, academic entrepreneurship seems to
of the political system, and the interplay of its be at the core of a new, globally diffusing
core institutions are not considered as objects model for universities (see, for example,
of change. However, there is a permanent Etzkowitz/Healey/Webster 1998; Krücken/
variation of programs as they provide Meier/Muller 2007).
 553
While the new institutionalism emphasizes Likewise, systems theory emphasizes that
the match between academic entrepreneur- the political dynamics fostering academic
ship on the one hand and wider social norms entrepreneurship have to be analyzed like
and expectations on the other, systems theory those of any other political field. These
puts more emphasis on aspects of societal dynamics are related to power issues and are
differentiation and the distinct logics of characterized by the pursuit of a specific
societal systems. The former perspective is rationality, which differentiates the political
well established in the context of this system from other parts of society. In addi-
handbook. Here one should mention neo- tion, one would not expect that innovation
institutional research on entrepreneurship politics and policies are breaking away from
(Hwang/Powell 2005), on inter- the traditional means of effectuating the wel-
organizational networks among academia and fare-state, i.e., law and money. Actively con-
industry (Powell/White/Koput/Owen-Smith tributing to academic entrepreneurship is thus
2005), and on universities and their a supplement of political programs, which
embeddedness in wider social norms and inform the political system and its
expectations (Meyer/Schofer 2007). organizations about where, when and how to
Therefore, we will only focus on how aca- apply the binary code of politics. Systems
demic entrepreneurship might be conceived theory would stress that politics and policies
from the point of view of systems theory. fostering academic entrepreneurship are
From that point of view one would assume exclusively determined by political consider-
that distinct systems - in particular: econom- ations. It assumes that negative side-effects
ics, politics, and science - with distinct logics with respect to science and the economy only
are involved, which cannot be transcended. affect political decision making to the extent
First, systems theory considers business that they make a political difference. For
firms as a specific kind of organization, example, the political promotion of start-ups
which is to be characterized by the fact that may have adverse economic implications.
normative expectations are directed towards Financial subsidies by the state may nega-
economic efficiency. Here, efficiency is a tively affect the development of a venture
means to achieve legitimacy, and any busi- capital market, and state-funded start-ups
ness firm which does not meet economic cri- find it harder to attain an economic reputa-
teria in the longer run had to be evaluated as tion, which is important in order to attract
a problematic case. This does not deny that funding from venture capitalists. In a similar
the initial economic difficulties of an aca- vein one may expect long-term negative
demic start-up can be accepted for some effects on science if short-term socio-eco-
time, or that start-ups may aim at new mar- nomic effects, which can be labelled as the
kets or at attracting new investors instead of outcome of political decision making and
achieving short-term profits. However, sys- thus be converted into political power,
tems theory assumes that start-up companies become the dominant goal of science politics
get into serious problems, if they are evalu- and policies.
ated as hybrid organizations which serve Finally, the same perspective can be
rather general and diffuse societal needs and applied to research organizations, which are
expectations, instead of aiming at economic assumed to process information along the
success in the longer run. Start ups from aca- binary code 'true' vs. 'false'. Issues of
demia may thus be characterized by a spe- academic entrepreneurship are framed with
cific economic program (i.e., the marketing regard to the code and programs of the
of new knowledge which is genuinely risky), science system, while material effects of
but they can be considered as being rather start-ups and positive socio-economic
conventionally related to the binary coding of impacts are considered to be less important.
economic activities through money. This implies two things: First, at the level of
554
the individual researcher one should assume Though such collaborations are important as
that the specific incentive structure of that they mediate between different systems and
very system makes him or her more prone to make their specific rationalities visible, they
conducting activities which can be mapped need to be conceptualized primarily as
by conventional indicators of successful opportunity structures that can be exploited
scientific action such as peer-reviewed publi- by any of its participants. While new
cations. Publications have no direct equiva- institutionalists might expect processes of
lent in other parts of society. On the other mutual adjustment and isomorphic tenden-
hand, broader societal norms and the criteria cies, which may alter organizations
of other systems - like the general and, in profoundly, systems theorists would rather
particular, political emphasis on entrepre- assume that the impact of such collaborations
neurial activities - have to pass this bottle- will lead to new avenues for exploring the
neck in order to become relevant among dominant rationalities of the organizations
scientists. Second, also at the organizational involved.
level one has to take a rather skeptical view
of the repercussions of the current trend
towards academic entrepreneurship. Most
studies on technology transfer offices at CONCLUSION
universities suggest only very moderate
effects on entrepreneurial activities, and fol- Sociological systems theory in the way it has
lowing Meyer/Rowan (1977) transfer offices been developed by Niklas Luhmann can play
could be seen as a prime example of the loose a crucial role in coming to terms with the het-
coupling between formal and activity erogeneity and variety at the macro-level of
structures of university organizations society. In this, it is a relevant antidote to the
(Krücken 2003). According to systems traditional neo-institutional emphasis on
analysis, however, referring to 'loose cou- homogenizing forces. Instead of recurring to
pling' does not suffice as it does not explain the role of purposive actors as in the concept
why most university organizations do not of institutional entrepreneurs, sociological
fully embrace academic entrepreneurship. systems theory stresses the conceptual links
Following that type of analysis, one would between organizational analysis and wider
rather assume that the degree of coupling is societal fields and their developments, and so
closely related to the identity of an organiza- refers to the very starting point of organiza-
tion, which itself is a function of the specific tional institutionalism. With the help of two
societal system in which it is embedded. examples we tried to exemplify the fruitful-
To summarize, from the point of view of ness of that approach. One could see, first,
systems analysis academic entrepreneurship that the neo-institutional emphasis on broader
has to be considered as creating an opportu- societal norms and their diffusion in the
nity for societal systems and their organiza- development of the welfare-state has to be
tions. Within different systems, academic complemented by a perspective, in which the
entrepreneurship might lead to variations at distinct logic of one societal system, i.e.,
the level of their programs. The hypothesis, politics, and the role of political organiza-
however, is that variations at the level of tions is highlighted. With our second exam-
programs can hardly affect the identity of any ple we enlarged the perspective by focusing
of the systems involved. For system theorists, on how one issue, academic entrepreneur-
the mutual adjustment of societal systems ship, is perceived and processed according to
through dense inter-organizational collabora- the distinct logics of different societal sys-
tion between scientific, political and tems and their organizations. This, again,
economic organizations cannot be equated complements the traditional neo-institutional
with the evaporation of systemic boundaries. emphasis on homogenizing forces in society.
 555
According to our analysis, though both Foucauldian and neo-institutional thinking relate to
approaches can hardly be integrated at a each other.
5 John Child made a similar point in order to argue
meta-theoretical level, they can be used as in favor of his strategic choice-analysis: 'The concept
guidelines for re-establishing a macro-per- of an organizational environment as a social network
spective on the interconnectedness of societal ... raises doubts about how externalized it really is
and organizational developments. While neo- from its constituent organizations' (Child 1997: 57). In
institutional theory is particularly good at order to emphasize this, Child rigorously identifies
'inner structuration' (related to organizational
analyzing diffusion processes, which tran- parameters) and 'outer structuration' (related to the
scend sectoral boundaries of society and organizational context) as objects of strategic choice
shape all units of analysis, systems theory (Child 1997 70-1)
instead focuses on differences between soci- 6 To some extent, the contemporary emphasis on
etal systems and their organizations, which agency and institutional entrepreneurship seems to be
a 'forward to the past'. There are striking resemblances
cannot be transcended. At the interface of to theoretical discussions many decades ago when old
these very different paradigms a fascinating institutionalists such as Philip Selznick (1949) and
agenda for future research on the societal Arthur Stinchcombe (1965) were highlighting issues
embeddedness of organizations might evolve. of power and conflict (Greenwood/Hinnings 1996:
As we tried to show, accounting for 103-4). In doing so, they joined a broad coalition of
researchers which criticized the prevailing Parsonian
heterogeneity does not necessarily lead to a approach as being far too static and sterile. Among
reappraisal of individual agency. By referring these critics was S.N. Eisenstadt (1964, 1965), who
to sociological systems theory, organizational considered elites and leadership roles as carriers of
institutionalism might do better as we can institutional entrepreneurship. Not unlike many
combine the more recent emphasis on contemporary researchers of entrepreneurship,
Eisenstadt also argued that reference to other
heterogeneity with the traditional strength of institutions and the ability to mobilize support were
organizational institutionalism which lies in preconditions for institutional change.
its focus on the co-evolution of organizations 7 We deliberately leave out the epistemological
and their societal environments. underpinnings of Luhmann's work, which are based on
more recent discussions in general systems theory,
neuroscience, and logics. For an attempt to link these
highly sophisticated arguments, which lead to a theory
NOTES of social systems' self-reference (Luhmann 1995) and
self-observation (Luhmann 1998), to organizational
1 But see Hasse/Krucken (2005a: 85-94) for a theory see Seidl/Becker (2005).
closer look at Bourdieu and Giddens from a neo-insti- 8 There is a certain tension in Luhmann's work
tutional point of view. between the early emphasis on societal functions as
2 It should be noted that Luhmann has also devel- the driving-force of differentiation processes and the
oped a specific micro-foundation of organizational later emphasis on processes of internal self-reproduc-
theory, which offers further perspectives for a com- tion. While the early period is marked by the influence
parison with the new institutionalism (see Hasse of Talcott Parsons, the later one is linked to the
2005). 'autopoietic turn' in general systems theory, i.e., the
3 See Meyer/Jepperson (2000) for further details assumption that the elements of a system are linked to
on status differences between individual and organi- other elements of the same system, but not to external
zational actors with respect to non-utilitarian ends. references. As we will focus on the distinct logics of
4 Here we think in particular of the work of Michel individual societal systems, through which they
Foucault. Though from very different angles and constitute themselves in difference to other societal
despite Foucault's rejection of the idea of a coherent systems, the functional aspects of Luhmann's work are
narrative of society, with regard to the role of science only to be seen against that backdrop.
and, in particular, to the constitution of individual 9 It should be noted that close linkages between
actorhood, both approaches display some remarkable organization building on the one hand and the
similarities (Krucken 2002: 248-53). As Foucault has development of specific forms of rationality have been
become one of the intellectual points of reference for observed by other social scientists as well. Michel
broader organizational theorizing, especially in the Foucault, for example, has emphasized the
European context, also the field of organizational significance of the 'birth of the clinic' (Foucault 1973)
research might benefit from exploring how for the development of the modern medical system;
556
Richard Whitley (1984) convincingly has shown that Berger, P.L./Luckmann, T, 1967: The social con-
the transformation of more or less sporadic 'amateur struction of reality. New York, NY
sciences' into the modern science system was based on Doubleday.
the re-organization of universities which specialized Blom-Hansen, J, 1997: 'A 'new institutional'
with respect to academic disciplines and corre-
perspective on policy networks', in Public
sponding scientific associations; the modern political
system has been considered to be based on the for- Administration, 75: 669-93.
mation of competitive political parties and the incor- Boli, J./Thomas, GM, 1997, 'World culture in the
poration of various interest groups (Evans 1999); and world polity A century of international non-
according to Max Weber (1968) modern capitalism governmental organization', in American
revolutionized the economy on the basis of the insti- Sociological Review, 62: 171-90.
tutionalization of the business firm which is different Bourdieu, P, 1977: Outline of a theory of
from a traditional economy based on households. For a practice. New York, NY Cambridge
more general account on the importance of the 19th University Press.
century for the spread of formal organizations in Bourdieu, P, 1984: Distinction: A social critique
society see also Turk (1995).
of the judgment of taste. New York, NY
10 As both neo-institutionalism and systems theory
focus on the long-term development of the welfare Cambridge University Press.
state, they rather emphasize its expansion. The more Bourdieu, P, 1990: The logic of practice.
recent experiences mentioned below, however, could Stanford, CA Stanford University Press.
be seen as strong indicators for the 'retreat of the state' Child, J, 1997: 'Strategic choice in the analysis of
(Strange 1996) and the expansion of economic action, structure, organizations and envi-
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institutionalism and systems theory one could argue Organization Studies, 18: 43-76.
that these experiences could only be fully understood DiMaggio, PJ, 1988: 'Interest and agency in
against the backdrop of a more macro-historical and institutional theory', in Zucker, L.G. (ed.),
macro-sociological account. In addition, current
Institutional patterns and organizations:
discourses and practices could be analyzed without
altering the main conceptual tools and premises of Culture and environment. Cambridge, MA
both approaches. From a neo-institutional point of Ballinger 3-21.
view, Lee/Strang (2006) analyze public-sector DiMaggio, PJ /Powell, WW, 1983: 'The iron cage
downsizing in 26 OECD countries as a global revisited Institutional isomorphism and
diffusion process. In a similar vein, one could argue collective rationality in organizational fields',
from the point of view of Luhmann's systems theory in American Sociological Review, 48: 147-60.
that we can currently witness variation in political Dobbin, FR, 1994 'Cultural models of organi-
programs, while the code of the political system, in zation: The social construction of rational
which the dominant rationality of the system is to be organizing principles', in Crane, D. (ed.), The
found, remains unchanged.
sociology of culture. Oxford Blackwell 117-
42.
Dorado, S, 2005: 'Institutional entrepreneurship,
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5.

23
Charting Progress at the Nexus
of Institutional Theory and
Economics
Peter W. Roberts

INTRODUCTION other hand, the strong form of institutional

theory views these actors as more reflexively
The aim of this volume is to chart the conforming to the various institutional
progress being made refining institutional influences and constraints that emanate from
theory (Powell & DiMaggio, 1991) and its the fields in which organizations are
contributions to organizational studies. This embedded.
progress includes developments at the core of This chapter is rooted in the premise that
institutional theory, as well as those at the there is some potential for a more seamless
intersections with other organizational integration of the two perspectives. In what
perspectives and theories. The specific aim of follows, I briefly summarize the main tenets
this chapter is to reflect on the progress made of organizational economics and institutional
- and still to be made - toward integrating theory, drawing primarily from the organiz-
insights from institutional theory with those ing framework offered by Roberts and
from organizational economics. There is no Greenwood (1997). This framework suggests
doubt that the very different origins and two broad ways that the institutional and eco-
orientations of these two approaches make nomic perspectives might be bridged: by
their integration a challenging endeavor. In examining how purposeful and otherwise
the words of Granovetter (1985), economists rational organizational actors react to the
tend to offer undersocialized accounts of post-conscious (i.e., sociopolitical) and pre-
organizational phenomena, whereas conscious (i.e., cognitive) institutional influ-
institutional theorists tend toward over- ences that they face when navigating
socialized explanations. More specifically, organizational fields. This allows us to point
economic theories emanate from assumptions to some productive integrative research
of organizational actors as rational located along the first bridge. On the other
calculating entities. On the hand, we find less published work that
 561
integrates Scott's (1995) cognitive pillar with decision-making process by influencing what
economic perspectives on organizations. I is or is not perceived by decision makers.
then offer several reasons for the more scant These influences correspond to Scott's
progress along this second bridge before (1'995) cognitive pillar, which focuses on the
concluding with several thoughts about the frameworks of meaning by which actors
prognosis for further integrative research. interpret and make sense of their world.
Unlike the bounded rationality emphasized
by transaction cost theorists, the cognitive
influences emphasized by institutional
TWO COMPETING APPROACHES theorists relate to 'the internalized symbolic
representations of the world' (Scott, 1995:
Organizational economics and institutional 40). On the other hand, Scott's (1995)
theory offer seemingly contradictory normative pillar highlights the sets of
accounts of organizational phenomena. expectations within particular organizational
'Economic approaches to the study of organ- contexts of what constitutes appropriate and
ization, transaction cost analysis included, thus legitimate behavior. Tangible forces in
generally focus on efficiency' (Williamson, an organization's environment directly or
1981: 549) and aspire to 'provide an answer indirectly tilt choices away from technical
to the most fundamental question in organi- considerations and toward the pursuit of
zational research: why do organizations legitimacy. In this respect, Meyer and Rowan
exist?' (Hesterley, Liebeskind, & Zenger, (1977: 343), objecting to the common por-
1990: 404) The field originally examined the trayal of organizational designs as the prod-
comparative efficiency of hierarchies, fran- uct of the technical demands placed on an
chises, multidivisionals, conglomerates, organization, argue that 'elements of formal
holding companies (Williamson, 1975), clans structure are manifestations of powerful
(Ouchi, 1980), and market-hierarchy hybrids institutional rules which function as highly
(Williamson, 1991). More recently, economic rationalized myths that are binding on partic-
logic has been employed to explain a broader ular organizations.'
array of organizational and strategic Admittedly, organizational economists
phenomena, including joint ventures (Yiu & have alluded to the significance of institu-
Makino, 2002) and franchising arrangements tions. At a general level, institutional
(Shane & Foo, 1999). In all cases, the basic economists contend that the orthodox micro-
rationale for any given organizational action economics paradigm is enhanced if the
or outcome is rooted in its efficiency choices made by 'economic man' are under-
compared to the set of available alternatives, stood as occurring within the context of insti-
including markets. tutions which act as constraints upon the
Historically, institutional theorists have choices made. Williamson (1992: 41) is
been more interested in explaining uniformity explicit about the role of the institutional
than heterogeneity (Dimaggio & Powell, environment, suggesting that 'the institutions
1983). This naturally leads them to focus on of governance ... are embedded in the insti-
the organizational field or even society at tutional environment.' However, the institu-
large as the primary unit of analysis. tional environment that he envisions consists
Organizations operate in environments where only of the 'set of fundamental political,
much is taken for granted. The taken-for- social and legal ground rules that establishes
granted elements, which are either infused the basis for production, exchange and
with excess value (Selznick, 1957) or distribution' (Williamson, 1993: 11). The
constructed in the process of social inter- institutional environment envisioned by
action (Berger & Luckmann, 1966), serve as institutional theorists includes its more
powerful schema or frames, shaping the sociological elements, such as patterns of
562
social relations (Burns & Wholey, 1993) and arrangements can persist over long time peri-
embeddedness interpretations (Meyer & ods. Beliefs that strong-form efficiency is not
Rowan, 1977). These perspectives - Scott's paramount, that organizational outcomes are
(1995) second and third pillars of institu- influenced by- actors' perceptions of
tional thinking - have not figured promi- available alternatives, and that these
nently in the work of organizational outcomes might be technically dysfunctional
economists. Yet, it is to these features that seem to open the door for potential
writers such as Granovetter (1985), Robins contributions from institutional theory to
(1987) and Hesterley et al. (1990) point when economic perspectives on organizations.
they assert the need to more fully consider At the same time, institutional theory long
the institutional aspects of organizations. focused on 'how non-choice behaviors can
This said, there have been movements in occur and persist, through the exercise of
the two theoretical camps toward recognizing habit, convention, convenience, or social
potential contributions from one another. obligation.' (Oliver, 1991: 151) In its
David and Han (2004: 54) recently concluded strongest form, the institutional approach
that transaction costs theory 'can be refined rejects the premise that organizational phe-
by specifying "scope conditions" '" given the nomena are the products of rational choice
mixed support transaction cost economics is based on technical considerations. Rather,
currently garnering, it is critical to understand emphasis is placed either on the taken-for-
the conditions under which the theory works granted nature of the decisions made or on
well and under which it does not.' Along the pressures to secure legitimacy that
these lines, organizational economists have operate on organizations, or both. Since the
challenged themselves to account for the mid-1990s, however, institutional theorists
many influences and constraints that operate have charged themselves with the task of
upon the calculating agents that they are injecting an appropriate amount of agency
modeling. Williamson (1987: 176) noted that into their accounts of organizational behav-
if pushed, 'few economists would insist on an ior. DiMaggio and Powell (1983) and Tolbert
unrelieved efficiency theory of economic and Zucker (1984) recognized early on that
organization.' Rather, organizational econom- institutional forces are not always primary,
ics should be based on what may be referred noting the tendency for the early adoption of
to as weak-form, rather than strong-form novel organizational practices to be driven by
selection. In a relative sense, it is the more technical as opposed to legitimacy consider-
(but not the most) efficient organizations that ations. Echoing Granovetter's (1985)
tend to fare well and therefore survive. There concerns about over-socialized theory,
is no reason to insist that survivors are Powell (1991: 194) suggested that 'much of
always the most efficient in any absolute the imagery of institutional theory portrays
sense. In his critique of transaction cost organizations too passively and depicts envi-
theory, Robins (1987: 74, emphasis added) ronments as overly constraining.'
similarly stressed that optimal exchange From these brief overviews, it seems clear
efficiency need not always result: 'the degree that some promise for more effective integra-
to which any individual organization will be tion is found in the common belief that there
pushed to find and adopt internal cost are (social) structural constraints on the
economies will reflect both the level of otherwise purposeful behavior of organiza-
competitive pressure to which it is subjected tional actors (Ingram & Clay, 2000). If one
and the available strategic alternatives.' begins with organizational economics, the
Along similar lines, Winter (1991) noted that task is to integrate the many institutional
competitive pressures operate on whole constraints on rationality into the accepted
organizations and that sub-optimal and even choice paradigms. If one begins with institu-
dysfunctional intra-organizational tional theory, the task is to find a way to
 563
inject some economic rationality into the researchers access to different dependent and
otherwise overly passive predictions that (in this case) independent variables.
emanate from institutional theory. However, the prospect of a more complete
and synthetic integration of the institutional
and economic perspectives requires that the
PROGRESS TOWARDS INTEGRATION theories themselves interact in order to
deliver a more nuanced account of important
Fulfilling this promise, we have been seeing organizational phenomena. But, as we saw in
a range of organizational research that may a recent exchange between Zuckerman
be cast (explicitly or implicitly) as an inte- (2004b) and Zajac and Westphal (2004a), it
gration of institutional and economic is quite a bit more challenging to achieve a
approaches. The most straightforward way satisfactory synthesis when theories and
for competing theoretical perspectives to explanations are intended to be integrative
come together is in empirical investigations rather than simply additive. All of these
that include sets of variables representing authors see the prospect for sociological
each. One example of this is found in Baker, theory to improve upon prevailing economic
Faulkner, and Fisher's (1998) analysis of the accounts of financial markets. Zuckerman's
expected duration of ties between advertising (2004a) analysis in the same volume argues
firms and the companies that hire them. The that incoherent stocks - as indicated by their
authors develop a set of hypotheses grounded positions in the network of coverage by
in competitive, power-based and institutional investment analysts - face interpretation
explanations of tie duration. After running problems which lead to greater volumes of
their analysis, they are able to conclude that trading and greater pricing volatility in
all three forces influence client-agency ties response to new information relevant to those
and that their importance clearly varies. From stocks. Zajac and Westphal (2004b) invoke
there, they are able to discuss how the latter institutional theory in general and decoupling
two theoretical perspectives help to elaborate in particular to explain the pattern of stock
a basic economic view of markets as market reactions to announced stock
straightforward competitive spaces. Similar repurchase plans, emphasizing those plans
types of analyses are found at the intersection that were never actually implemented.
of institutional and transaction cost theories. Notwithstanding the common interest in
Shane and Foo (1999) add a set of some theoretical integration, the above-
institutional variables to models predicting mentioned commentaries invoke questions
survival rates of new franchisors and con- about the need for a faithful representation of
clude that survival is better explained by each base theory (Zuckerman, 2004b) and
adding the institutional variables. D'Aunno, about how far certain basic economic
Succi, and Alexander (2000) argue and then assumptions can and should be stretched in
find that market (economic) and institutional order to achieve theoretical synthesis (Zajac
forces combine to influence radical changes & Westphal, 2004a). And note that this
in rural hospitals. Yiu and Makino (2002) particular debate was waged between an
conduct a similar analysis of the use of joint economic sociologist and two organizational
ventures and find that both transaction cost theorists. It would seem that it is easier to
and institutional theory variables return conclude that institutional variables add to
significant coefficients in their models. the explanatory power of economic models
These types of empirical efforts are than it is to determine how institutional
indicative of the type of integration suggested theory might alter the way economists should
by Gibbons (2005) when he notes that build their models.
exposure to different theoretical perspectives Before discussing the many challenges
allows that impede a more satisfying theoretical
564
integration of these two perspectives on organizational performance by actively
organizations, it is important to emphasize managing aspects of their institutional envi-
that some progress is being made. In propos- ronments. Invoking Suchman (1995), they
ing a nexus between institutional theory and are beginning to articulate how managers
organizational economics, Roberts and might gain, maintain and repair different
Greenwood (1997) proposed that these vari- types of legitimacy, which is itself a critical
ous institutionalisms be grouped into two organizational resource, especially in indus-
broad categories of influence: pre-conscious try settings wherein the dominant selection
and post-conscious. In this respect, they forces are not efficiency based.
follow Jepperson (1991: 147), who stressed These theoretical integrations actually fit
that 'one may take for granted some pattern nicely with an economic conception of
because one does not perceive it, or think rational, albeit constrained organizational
about it [i.e., pre-conscious]; alternatively, actors. When there are forces in the external
one may subject the pattern to substantial environment that make it costly or impossible
scrutiny, but still take it for granted ... as an to act efficiently, or if there are forces that
external objective constraint [i.e., post- favor objectives other than efficiency, then it
conscious].' Similarly, Aldrich and Fiol makes sense that the constrained economic
(1994) suggested that the institutional actors will make different choices. Failure to
environment delivers two distinct types of recognize these forces would produce
legitimacy: cognitive (i.e., pre-conscious) and accounts of organizational behavior that are
sociopolitical legitimacy (i.e., post- under-specified. The problem is that
conscious). institutional theory also claims that institu-
A review of the organizational research tional forces take hold in predicting behav-
published in the last fifteen years reveals an iors when actors are not expected to behave
important stream that integrates insights from purposefully or rationally. This said, we have
institutional theory into strategic approaches not seen many similar explanations of
that, while not explicitly economic, draw managerial choice in the context of pre-
heavily from economics. Consider Oliver's conscious institutional influences and
(1997) article that integrates institutional constraints.
theory and the resource-based view of the
firm. This begins to think about organiza-
tional heterogeneity as being driven in part
by the institutional forces that (differentially) PROSPECTS FOR FURTHER
condition resource accumulation processes. INTEGRATION
Deephouse (1999) similarly introduces
institutional factors into strategy research. The integration of organizational economics
Because legitimacy is something that should and institutional theory should be viewed
augment organizational performance, among the broader set of efforts aimed at
managers must weigh the costs and benefits integrating economics and sociology. In the
of being different against the gains associated last fifteen years, sociologists have published
with conforming to institutionalized industry a few articles in leading economics journals
practices. Also in this line of research is exploring the nexus of sociology and
Krishnan, Joshi, and Krishnan's (2004) economics. While offering some hope for the
attempt to integrate institutional theory and future, Baron and Hannan (1994: 1140)
the resource-based view in an explanation of observed that 'economists looking for sociol-
the pattern of merger activity. All of these ogists for insights regarding norms and insti-
articles elaborate the above-mentioned post- tutions report considerable disappointment'
conscious institutional influences by showing and that these same economists have a diffi-
how managers might augment cult time setting aside their long-standing
 565
preference for efficiency-driven accounts of comprehensive review of institutional eco-
these norms and institutions. Podolny (2003) nomics, Hodgson (1998) made reference to
urged economists to make greater use of just a handful of sociologists (including
visual imagery in their theorizing and illus- Wayne Baker, James Coleman, Anthony
trates his point by showing how network Giddens, Mark Granovetter and Harrison
sociologists have developed a more refined White), all noteworthy contributors to socio-
and realistic account of social capital than logical theory, but none considered central to
that currently being developed by econo- the development of the sociological variant
mists. Granovetter (2005) elaborated this of institutional theory.
point by describing how social networks A second reason might relate to the differ-
affect economic outcomes by influencing the ent approaches to (especially empirical)
flow and quality of information, the efficacy research between network, ecological and
of rewards and punishments, and the economic sociologists and their institutional
development of trust among exchange part- counterparts. The sociological variants repre-
ners. Both of these latter authors illustrate sented in the above articles tend to pursue
their main points with reference to several deductive theorizing to set up quantitative
specific empirical projects that are situated at analyses of the predictions that result. On the
the nexus of economics and network other hand, institutional theorists, especially
sociology. those working on Scott's (1995) cognitive
A review of these (admittedly few) articles pillar, tend to pursue more inductive qualita-
reveals several things. That they were pub- tive research agendas. For example, consider
lished at all indicates that there is at least a Zilber's (2006) analyzes the discourse sur-
latent interest within the economics profes- rounding the high technology sector in Israel
sion in how different sociological approaches to explore 'institutionalization as translation.'
might inform or elaborate economic analysis In a similar vein, Suddaby and Greenwood
(Baron & Hannan, 1994). However, that they (2005) analyze the 'discursive struggle' that
are all commentary articles suggests that ensued between proponents and opponents of
many of the potential impacts have not yet a new organizational form that sprang from
been explored or realized. Moreover, note an attempt to merge an accounting firm with
that none of the sociologists invited to a law firm. That these qualitative approaches
address the economics profession about pos- are not widely accepted in the economics
sible contributions from sociology are insti- profession (Hirsch, Michaels, & Friedman,
tutional theorists, but rather ecological, 1987) might speak to the under-
network, or economic sociologists. This latter representation of certain strands of
observation may be due to several reasons. institutional theory in these calls for greater
First, as suggested earlier, economic appreciation of the sociological contributions
approaches to organizations are subsumed to economic research. In this respect, note the
under the broader heading of institutional conclusion that Hodgson (1998) reached
economics (Roberts & Greenwood, 1997). As about the demise of the 'old institutionalism'
a result, the economics profession already has within economics:
a subfield that studies institutional influences
on economic behavior. Although the old institutionalism was partially disabled by a
potential contributions from the sociological combined result of the profound shifts in social
variant of institutional theory are broader science in the 1910-1940 period and of the rise
of a mathematical style of neoclassical
than those currently found within institutional economics ... With their use of formal
economics, the placement of the latter camp techniques, mathematical economists caught the
within economics might hinder the field's imagination of both theorists and policy makers.
ability to perceive them. As (possible) In comparison, institutionalism was regarded as
evidence of this, note that in a recent technically less rigorous, and thereby inferior.
(1998: 167)
566
This suggests-that the lack of (potential) appreciate qualitative analysis'), this leaves
appreciation for the more cognitive institu- the prospect of important organizational
tional approaches is rooted in some antago- issues being under-theorized. Even worse, it
nism toward the type of research that these may cause scholars working from the
latter scholars tend to pursue. different perspectives to offer fundamentally
The third possible reason for the relative different explanations for what may be
neglect of institutional theory is more subtle. exactly the same phenomena. Consider the
If one stops to consider the purported case when a researcher observes that the
contributions of ecological, network, and probability that an organizational actor 'does
economic sociology to mainstream economic x' increases with the number of prior actors
approaches, one might conclude that institu- who have 'done x' in the past. To an institu-
tional sociology can have an important indi- tional theorist, this seems like evidence of
rect influence. Within organizational cognitive legitimacy. The local prevalence of
ecology, legitimacy has emerged as an a given practice causes it to become
important complement to competitive effects institutionalized and therefore taken for
as a driver of organizational vital rates and granted.
therefore industrial evolution. This is clearly Now consider the more recent explanation
evident in the now standard density- of 'informational cascades' (Bikhchandani,
dependence predictions (Carroll & Hannan, Hirshleifer, & Welsh, 1992). According to
1999). Whereas organizational sociologists these economists, cascades are observed
have staged heated debates about exactly when, based on the observations of choices
how legitimacy should be framed and made by others, an actor makes the same
measured (Baum & Powell, 1995; Hannan & choice regardless of her own private informa-
Carroll, 1995), one sees a potential tion. On the surface, it seems like economists
contribution of institutional theory to are embracing the density-driven legitimacy
economics channeled through the latter's processes channeled through organizational
potential synthesis with organizational ecol- ecologists from institutional theory.
ogy (Geroski, 2001). Similar conclusions However, in these models of informational
may be made about the contributions of insti- cascades, there are no such legitimation
tutional theory through network and processes. Rather, this actor is actually
economic sociology. The former group tends behaving rationally and what the economists
to channel important institutional concepts are observing is called a 'rational herd'
such as norms (Portes, 1998), while the over- (Banerjee, 1992): Even when all actors col-
lap between economic sociology and institu- lectively have overwhelming information in
tional theory is well documented (Fligstein, favor of the 'correct' course of action, each
2001). That institutional theory informs these actor may still take the 'wrong' action. We
other sociological perspectives, which are in see within economics the recognition of
turn being called upon to refine economic something that is clearly a density-dependent
approaches, indicates potential for an indirect process. We also see the potential for the two
integration of institutional theory and groups of scholars to collaborate on a more
economic approaches to organizations. meaningful and nuanced account of this
All comments about potential observation. In the end, however, economists
notwithstanding, it would be safe to say that tweak the basic rational actor model and
economists have not yet embraced the main refuse to recognize the cognitive institutional
tenets of institutional theory as they develop influences that might be operating.
their accounts of market and organizational The resulting stalemate reflects back to the
phenomena. Be it due to a categorical over- basic tension inherent in any integration of
sight (i.e., 'we already study institutions') or a economics and institutional theory. The latter
lack of appreciation of the typical institu- group seeks to elaborate the externalized
tional mode of analysis (i.e., 'we do not
 567
social constraints that impinge on the agency evaluation and abandonment decisions on the
of actors (i.e., cognitive legitimacy), while part of the analysts, they are able to offer a
the former seeks to develop more nuanced more nuanced account of when otherwise
accounts of the inherent rationality of those rational actors are made passive in the face of
actors (i.e., rational herds).¹ The problem is institutional pressures, and when their
that both accounts cannot be simultaneously accumulating knowledge and information
correct. lf actors are reflexively adopting the allows them to adjust their behaviors more
more prevalent 'x' because it has become purposefully.³
taken for granted then they are not forming
and updating assessments based on the
balance of private and public information.
One way to make progress on this front is by WHERE IS THIS HEADING?
conducting detailed examinations of the
decision-making processes that are actually If one casts the integration issue as a simple
adopted by the focal actors. The problem debate between whether organizational actors
here is that we are taken back to the above- are rational or are passively shaped by
mentioned ambivalence among economists prevailing institutional forces, then there is
toward the outcomes of such qualitative or little hope for progress toward integration.
interpretive empirical exercises.² There is The good news here is that - as suggested in
simply no shared appreciation of the more several places in this chapter - several schol-
qualitative research approaches that would ars are moving past the simplest of polemics
help determine whether and how legitimation by modeling organizational actors as being
might be shaping the decision-making inside purposeful within institutional constraints.
the information cascades. Oliver (1991), Deephouse (1999) and
Scholars working toward an improved Suchman (1995) are developing accounts of
understanding of the organizational phenom- how managers seek to accrue legitimacy by
ena should not strive to lay down overlapping actively managing post-conscious
and inconsistent accounts of the same things. institutional constraints, while Rao et al.
Rather, they should strive to develop more (2001), Zuckerman (2004a) and Zajac and
synthetic and more reasonable accounts of Westphal (2004b) are incorporating different
these phenomena. One way to make progress institutional elements into prevailing
is to follow the advice of Zuckerman (2004a, economics accounts of how stock markets
2004b) and take seriously the idea that actors actually operate.
seek to, and in many cases do, behave ration- This said, further progress along these
ally and then call on sociological explana- lines may not be as smooth as some would
tions to explain behavior that sits beyond the like. Problems in developing a more produc-
bounds of that rationality. In this respect, tive synthesis will inevitably arise from
note what happens when organizational underlying tensions between the 'culture of
researchers adopt the more synthetic economics,' the 'culture of institutional
approach. Rao, Greve, and Davis (2001) con- theory' and the 'culture of the integrative
ducted an analysis of information cascades in domains.' What is ultimately required is an
the context of stock analysts' decisions to agnostic blending of the irrational and the
cover certain firms. While they find evidence rational elements of' organizational issues.
of mimetic behavior in the context of cover- However, whereas economists are becoming
age decisions, they are careful to understand more open to the prospects of constraints
the extent to which their results imply that operating on rationality (witness the rise of
'actors are cognitive dopes rather than behavioral economics), they are less
cognitive misers' (2001: 502). In the end, by interested in approaches that begin with the
examining the full range of adoption, notion that the majority of observed
568
organizational behavior sits outside the to conduct and interpret empirical research
purview of rational calculus. We require an that speaks to the emerging integrative
agnostic blending of a respect for social insights and explanations. Here, economists'
structural constraints on action with the preferences for deductive theorizing leading
notion that organizational actors strive to be, to archival studies that validate predictions
and indeed can be quite purposeful at times. will come up against institutional theorists'
In this respect, institutional theorists are too preferences for qualitative research that cap-
often skeptical of research that adopts the tures the salient nuances of prevailing institu-
latter orientation. All told, fundamental ten- tional environments. Without recourse to
sions between the core disciplines may retard common methodologies, the groups run the
the development of a productive synthesis risk of speaking and theorizing in more
within either mainstream economics or soci- similar terms while observing and drawing
ology journals. inferences from the organizational world in
This leaves journals devoted to organiza- incompatible ways. We have seen this in the
tions and strategy as outlets for integrative institutional theorists' discomfort with an
research. However - and especially in respect exclusive reliance on measuring cognitive
of work that addresses the preconscious legitimacy with counts of the number of
institutional influences - we require research organizations adopting a given organization
that embraces both goal-directed action and form or practice (Baum & Powell, 1995;
genuinely emergent organizational outcomes. Hannan & Carroll, 1995). These concerns
Whereas organizational research is amenable were countered by claims that more nuanced
to finding some balance between rational and approaches do not lend themselves to the
(seemingly) irrational bases of action, it has a generalizability that more positivist scholars
bias toward studying problems faced by seek (Hannan & Carroll, 1995). It is also
managers and a concomitant tendency to evident in similar concerns about using
speak to how individual actors might period dummy variables to account for vary-
'effectively manage' their institutional ing institutional influences. While the justifi-
constraints. This bias may push integration cation for the expected period effects may be
attempts away from effectively addressing strong and drawn from the kind of contextual
the pre-conscious influences that emanate knowledge favored by institutional theorists,
from the taken-for-granted elements in the the context-specific interpretation of these
institutional environment. Note in this respect period effects also tends to limit generaliz-
that organizational ecologists once had a hard ability while suppressing the richness inher-
time convincing managerial audiences (and ent in the underlying data.
therefore journals) that most organizational If one of the latent impediments to a more
change occurs through selection and not satisfying integration of institutional and
purposeful adaptation. They therefore economic theorizing relates to different pre-
published much of their early research in ferred modes of empirical analysis, then there
sociology journals. Institutional theorists who may be some hope for further advances. We
are working Scott's (1995) cognitive pillar are beginning to see developments on the
might have a similarly hard time getting these empirical front by ecological, network and
same audiences to accept the premise that economic sociologists who are conducting
managers 'tend to do x because they really empirical work in a manner that is quite
don't know any better.' acceptable to those trained in economics. By
Consider also that as the more economic- capturing institutional ideas in network
oriented, institutional and organizational models and methods, or institutional con-
scholars begin to find common theoretical structs with variables that are amenable to
ground, they will increasingly face pressures large-scale archival analysis (without
recourse to idiosyncratically explained, or
 569
history-specific period effects) these scholars simple fact that boundedly rational organiza-
are at least challenging economists to think tional actors do behave purposefully, and
differently about the organizational and they do act and make choices within institu-
market phenomena that they are wont to tional contexts, where much is taken for
study. This said, the concern among institu- granted and where external pressures do
tional theorists is that even these approaches render certain otherwise efficiency-enhancing
are not sufficiently nuanced to capture the options unattractive. The real question is not
relevant details of prevailing institutional whether these statements are true, but rather
environments. What we need are large-scale how these actors go about reconciling the··
archival techniques that also allow different inducements and constraints to
researchers to capture and model the nuance generate the outcomes that organizational
and detail of institutionally-relevant data. In scholars are then called upon to observe and
this respect, recent developments in text and explain. It would be sad (even ironic) if we
discourse analysis may offer potential for a were unable to tap the collective rationality
more effective empirical synthesis. Mohr of these two scholar1y communities because
(1998) summarized the many techniques of our failure to examine those things that we
available to those trying to discern and inter- inefficiently take for granted, or because we
pret patterns from text-based data or from fail to appreciate and overcome the powerful
verbal protocols. These approaches aim to be external forces that constrain the operation of
faithful to the richness of the sources from our respective scholarly communities.
which meaning structures are derived and to
offer interpretations of the observed struc-
tures that are themselves generalizable. As
such, they offer one means to bridge the
qualitative-archival divide that currently sep- ACKNOWLEDGMENTS
arates institutional and economic researchers.
An excellent example of this kind of work is The author would like to thank Royston
Hsu's (2006) analysis of evaluative schemas Greenwood and Christine Oliver for guidance
in the U.S. film industry. By analyzing text and feedback that led to improvements in this
extracted from a large number of movie chapter.
reviews published over many years, she is
able to offer insights about how variance in
the structure of these reviews (predictably)
influences observed market behaviors.
Assuming that more empirically-oriented NOTES
scholars are prepared to spend the time and
effort that is required to assemble such 1 Moreover, the prospective mediating group the
detailed datasets, and assuming that they are organizational ecologists - would be content with the
empirical generalizability of evolution and change as a
willing to maintain a proper balance between density-driven process.
preserving the nuance found in the 2 Blinder (Blinder, Canetti, Lebow and Rodd,
underlying institutional data while seeking 1998) is one economist who sought to gain some
theories, and explanations that are empirical traction in this manner. Growing frustrated
generalizable to other contexts, these by a growing number of competing and theoretical
explanations for price stickiness, he set out to survey
techniques offer the promise of more integra- those who actually set prices in order to determine
tive empirical research to complement any what they actually consider when setting prices.
emerging synthetic theories. 3 In a similar manner, Ahmadjian and Robinson
In closing, let me stress that the integrati- (2001) propose that rational and institutional influ-
on of economics and institutional theory must ences can operate on different aspects of the same
phenomenon. In an analysis of organizational down-
progress at a healthy pace. This is due to the sizing, they show that economic factors account for
570
whether downsizing occurs but that institutional Carroll, G. R., & Hannan, M. T 1999. The
theory is required to account for the pace at which it Demography of Corporations and Industries.
occurs.
Princeton: Princeton University Press.
D'Aunno, T, Succi, M., & Alexander, J. A. 2000.
The role of institutional and market forces in
divergent organizational change.
Administrative Science Quarterly, 45: 679-
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 24
Ecologists and Institutionalists:
Friends or Foes?
Heather A. Haveman and Robert J. David

In this chapter, we consider the web of rela- Our title poses a question about the nature
tions between institutional and ecological of the relationship between ecology and
analysis of organizations. These research tra- institutionalism. Depending on whom you
ditions are very similar in some ways, ask, you will get divergent answers to this
notably that foundational articles for both question. Some will say that ecologists and
were published in the same year (Meyer and institutionalists are happy bedfellows because
Rowan, 1977; Hannan and Freeman, 1977). they ask similar questions about the nature
Yet, in other ways, they are remarkably dif- and functioning of organizations and they
ferent, as evidenced by vociferous debates provide similar answers (e.g., Fligstein and
between ecologists and institutionalists (e.g., Dauter, 2007). Both sets of scholars attend to
Carroll and Hannan, 1989a vs. Zucker, 1989 many of the same concepts, notably
vs. Carroll and Hannan, 1989b; Hannan, legitimacy and organizational form, and seek
Carroll, Dundon, and Torres, 1995 vs. Baum to explain change and stability in organiza-
and Powell, 1995 vs. Hannan and Carroll, tional systems. Moreover, both sets of schol-
1995). Given their concurrent origins and the ars tend to conduct longitudinal analysis of
combination of similarity and difference in original data on collections of organizations -
their lived histories, it is not surprising that populations in the case of ecologists and
these two research traditions have been some fields in the case of institutionalists. Such
times contrasted and other times combined. basic similarities are not surprising, as both
In this chapter, we will review how and when ecology and institutionalism emerged as
ecological theory has been used in contrast to corrections to the rationalist approach preva-
or in combination with institutional lent in the 1960s and early 1970s, which
explanations, and suggest how they might be focused on the design and management of
fruitfully combined in future research. efficient organizations, and both directed
attention towards the external environment
574
and away from internal organizational func- who, when surrounded by ecologists, feels
tioning. like a stout-hearted institutionalist, and when
But when faced with the same question, surrounded by institutionalists, feels like a
other scholars will wonder whether ecologi- died-in-the-wool ecologist. Robert is an
cal analysis is inconsistent with institutional- organizational theorist who has delved into
ism (e.g., Zucker, 1989; Baum and Powell, both traditions, yet never feels quite like a
1995). Perhaps the most obvious divide stems 'pure' ecologist or a 'pure' institutionalist. We
from the fact that ecologists investigate are thus members of both communities, in
highly abstract models of population evolu- varying proportions, depending on time of
tion and organizational outcomes, while day, question at hand, and surroundings. But
institutionalists seek nuanced explanations at heart, we are members of a broader com-
that are sensitive to the specifics of time and munity - organizational sociologists. As such,
place. This yields, by necessity, a difference our goal is to understand formal organ-
in relationships between theory and data: izations, the building blocks of all modern
research in organizational ecology is driven societies and the most powerful actors in
by a desire to test and extend formal models those societies (Coleman, 1974; Perrow,
with general applicability, while research in 1991). We are happy to achieve this objective
the institutional tradition is driven by a desire with any implements that we can use skill-
to explain particular empirical phenomena. fully - including, but not limited to, institu-
This divergence in research activity stems tional and ecological tools.
from a profound difference in theoretical
perspective: organizational ecology focuses
on demography (numbers of organizations
and their vital rates), while institutional WHAT IS ORGANIZATIONAL
analysis focuses on culture (norms, values, ECOLOGY ANYWAY?
and expectations) and its manifestations
(rules, regulations, conceptions, frames, and Organizational ecologists wonder 'why are
schemas). there so many kinds of organizations?' and
To discover our own take on the vexing seek to understand the distribution of
question of whether ecologists and institu- organizations across different environments
tionalists are friends or foes, you must read (Hannan and Freeman, 1977: 936). To this
on. To convince you that our answer is end, ecologists have adapted and applied the-
correct, we proceed in stages. We first define ories and formal models of population biol-
the nature and scope of ecological analysis. ogy and human demography to explain the
After briefly reviewing the institutional evolution of organizational systems - that is,
perspective, we reflect in detail on how, and to explain rates of organizational founding,
how well, ecology and institutionalism get failure, growth, performance, and change.
along intellectually. Our assessment of Ecologists begin with the core assumption
convergence and divergence encompasses that understanding organizational diversity
research questions, assumptions, predictions, requires 'population thinking' (Hannan and
and methods; we pay particular attention to Freeman, 1989: 15). Populations are aggre-
those hard-to-define, harder-to-defend, yet gates of organizations that share a common
critical issues that are related to taste and dependence on material and cultural environ-
style. After answering the question posed in ments. Empirically, populations have been
our title, we conclude by suggesting how identified as sets of organizations that pro-
scholars in both traditions can benefit from a duce similar goods or services, use similar
closer relationship. resources, and have similar identities.
Some disclosure is in order before we Organizational diversity increases when new
begin. Heather is an organizational theorist populations emerge and expand in size;
 575
it declines when existing populations Ecologists have extended and refined the
decrease in size and become extinct. basic density-dependence model. One
In the paragraphs below, we briefly approach involves assessing the effect of
review the main assumptions underlying density across subpopulations defined along
ecological analysis and the main lines of such key dimensions of organizational form
research.¹ Our commentary involves four as goals, size, technology, and location. For
areas: density dependence, resource partition- example, a study of competitive interactions
ning, structural inertia, and organizational (those that harm one or both parties) and
identity. We discuss each in turn. mutualistic interactions (those that benefit
one or both parties) between commercial
(for-profit) and mutual (non-profit) telephone
Density dependence companies in Iowa disaggregated population
density according to technology and location
The basic model of organizations' vital rates relative to the focal organization (Barnett and
is density dependence, which proposes that Carroll, 1987). This analysis revealed that the
organizational founding and failure depend non-local density of both commercial and
on population density, meaning the number mutual telephone companies raised failure
of organizations in a population. When den- rates, as did the local density of commercial
sity is low, increasing density enhances the companies. These results indicate purely
legitimacy, or taken-for-grantedness, of the competitive interactions. Only the local
population; thus, at low levels of density, density of mutual companies contributed to
increases in density cause founding rates to mutualistic interactions. Density has been
rise and failure rates to fall. At higher levels disaggregated by subpopulation in studies of
of density, however, more organizations vie organizations as varied as breweries (Carroll
for resources, so competition becomes more and Swaminathan, 1992), health-care
intense. At the same time, increasing organizations (Wholey, Christianson, and
numbers of organizations provide only incre- Sanchez, 1992), and credit unions (Barron,
mental legitimacy benefits. Thus, as density West, and Hannan, 1994), demonstrating the
increases, competition begins to overwhelm broad applicability of this approach.
legitimation as the primary mechanism Another way to disaggregate density is to
driving vital rates. At high levels of density, allow for the fact that organizations in a pop-
therefore, further increases in density cause ulation often differ in degree rather than
founding rates to fall and failure rates to rise. kind. To reflect this, some ecologists have
Over the full range of density - from very low followed McPherson (1983) and assessed
to very high - this logic predicts non- similarities (and differences) between popu-
monotonic effects on vital rates, specifically lation members by how much their domains
an inverted-U-shaped relationship between overlap (or not) along some dimension. One
density and founding rates, and a U-shaped such study showed that Manhattan hotels
relationship between density and failure experienced more intense competition from
rates. The earliest empirical investigations of hotels that overlapped in terms of size, geo-
the density-dependence model were Hannan graphic location, and price (Baum and
and Freeman's (1987, 1988) studies of labour Mezias, 1992). Going even further, a study of
unions in the United States. They found that day-care centres in Toronto showed that
unions' founding and failure rates followed competition and mutualism varied with
the predicted non-monotonic patterns. Many overlap in the ages of children enrolled: a
studies of other organizational populations high degree of overlap between a focal day-
have yielded similar effects (e.g., Carroll and care centre and other centres raised failure
Hannan, 1989a; Hannan and Carroll, 1992). rates, while a high degree of non-overlap
576
lowered failure rates (Baum and Singh, (Carroll and Swaminathan, 1992, 2000),
1994). wineries (Swaminathan, 1995), and auto mo-
bile manufacturers (Dobrev, Kim and
Hannan, 2001).
Resource partitioning

A related stream of research focuses on com- Inertia

petition and mutualism between organiza-
tions that serve a wide range of clients with a Organizational ecology proceeds from the
diverse array of products ('generalists') and assumption that the core features of organi-
organizations that focus on a more limited zations change slowly, if at all, because of
clientele, offering them a narrower set of strong inertial pressures (Hannan and
products ('specialists'). The basic argument is Freeman, 1984). Eight constraints on adapta-
that when there are economies of scale and a tion are proposed, four internal and four
resource distribution with a single rich centre external (Hannan and Freeman, 1984). The
and poor peripheral regions, the resource internal constraints are investment in plant,
'space' (the combination of inputs and equipment, and specialized personnel; limits
demand for output) becomes partitioned, with on the internal information received by deci-
generalists occupying the centre and sion-makers; vested interests; and organiza-
specialists the periphery (Carroll, 1985; tional history, which justifies past action and
Carroll, Dobrev and Swaminathan, 2003). prevents consideration of alternatives. The
This happens because generalists compete external pressures for stability are legal and
with one another to control the resource-rich economic barriers to entry and exit; con-
centre by offering generic products with straints on the external information gathered
broad appeal. Specialists, meanwhile, avoid by decision-makers; legitimacy considera-
competing with generalists in the market tions; and the problem of collective rational-
centre, instead exploiting peripheral regions ity and the general equilibrium. All of these
by serving small groups of clients with idio- pressures favour organizations that perform
syncratic tastes. Because economies of scale reliably and can account rationally for their
favour large organizations, the generalist actions, which in turn requires that organiza-
subpopulation concentrates; a smaller tional structures be highly reproducible - that
number of larger generalists competes for the is, unchanging (Hannan and Freeman, 1984).
market centre. As this happens, generalists If inert organizations are favoured over
focus more tightly on the market centre and changeable ones, inert organizations will be
abandon more of the periphery to specialists. less likely to fail.
The upshot of this partitioning of the resource The structural inertia thesis does not imply
space between a core occupied by generalists that organizations never change; rather, it
and a periphery occupied by specialists is that implies that when organizations do change,
increasingly intense competition between resources are diverted from operating to reor-
generalists leads to not only higher failure ganizing, reducing effectiveness and increas-
rates for generalists, but also lower failure ing the likelihood of failing. Ecologists
rates and higher founding rates for distinguish between two consequences of
specialists. Like the density-dependence change: process effects, which stem from the
model and its offshoots, the resource- inevitable frictions generated by undertaking
partitioning model has been tested on a wide change and which are inherently deleterious,
array of organizations, including newspapers and content effects, which derive from the
(Carroll, 1985; Boone, Carroll and van altered fit between changed organizations and
Witteloostuijn, 2002), auditors (Boone, their environments, and which may be good
Broecheler and Carroll, 2000), breweries if fit to the environment is improved, or
 577
bad if fit is worsened (Barnett and Carroll, of organizations, including newspaper
1995). Notwithstanding the grim prognosis publishers (Carroll and Delacraix, 1982;
for organizational change, some of the more Freeman, Carroll and Hannan, 1983;
optimistic ecologists have investigated the Amburgey et al., 1993), labour unions
possibility that in some circumstances, (Freeman et al., 1983), and semiconductor
organizations can adapt and change can be manufacturers (Freeman et al., 1983). But
beneficial, such as when organizations these studies confounded the effects of age
diversify after large-scale shifts in external with those of size (Barron et al., 1994;
conditions (Haveman, 1992), or when organ- Hannan, 1998). Findings that failure rates
izations' constituencies support the content of decline with age may be spurious because
change and are willing to supply resources to there' is a positive correlation between size
effect change (Minkoff, 1999). Others have and age, and a negative effect of size on fail-
shown that ties to state and community ure. This was clear in an analysis of New
institutions, which provide resources and York credit unions: age on its own had a neg-
legitimacy, can buffer organizations from the ative effect on failure, but after including size
deleterious effects of change (Baum and in the analysis, the effect of age became pos-
Oliver, 1991). Despite these important limi- itive, while the effect of size was negative
tations on the inertia hypothesis, empirical (Barron et al., 1994). Similarly, size damp-
analysis generally shows that change harms ened failure rates for all but the largest life
organizations (Barnett and Carroll, 1995; insurance companies in New York, while age
Carroll and Hannan, 2000: 357-380). increased failure rates (Ranger-Moore, 1997).
Change may be harmful, but organizations The current consensus is that failure rates
do often change. Change exhibits momen- generally decline with size and increase with
tum: the more organizations have changed in age (Hannan, 1998). However, the effect of
the past, the more they are likely to change in age, after controlling for size, may be non-
the future because they have learned how to linear - increasing in the first few years after
change (Amburgey and Miner, 1992; founding, as fledgling organizations use up
Amburgey, Kelly and Barnett, 1993; Greve, their initial stores of resources, then decreas-
1998). Change is often driven by prior per- ing, as organizations learn how to operate
formance, assessed relative to goals, and by efficiently and develop solid reputations
changes made by rivals, which in the aggre- (Levinthal, 1991).
gate alter an organizational population's
demography (Greve, 1998). If the forces that
drive change (notably performance) also Organizational form as identity
drive fai1ure, analyses of change and failure
must account for endogeneity. Doing so The newest strand of ecological theory
reveals that even though change causes per- involves analyzing organizational forms as
formance to decline and the chance of failure identities or social codes, which are 'recog-
to rise, there is a big difference between well- nizable patterns that take on rule-like stand-
and poorly-performing organizations. Poorly- ing and get enforced by social agents' (Pólos,
performing organizations may benefit from Hannan and Carroll, 2002: 89; see also
change, but well-performing ones are usually Hannan, Pólos and Carroll, 2007). Such
harmed (Greve, 1999). socially-coded identities comprise both rules
Because older and larger organizations are of conduct and signals to internal and exter-
expected to be more inert and thus less likely nal observers. Rules of conduct provide
to fail, empirical research has often focused guidelines for members of a population by
on the effects of age and size on organiza- delimiting what they should and should not
tional failure. Failure rates have been found be and do, while signals generate a cognitive
to decline with age in studies of many kinds understanding about the population because
578
they define what observers understand the With regard to inertia, research on-young
members of an organizational population are high-technology firms in California showed
and what they do. that the content effects of change are most
Thinking about organizational form as hazardous when they involve shifts in iden-
identity has benefited the other strands of tity (Hannan, Baron, Hsu and Koçak, 2006).
ecological analysis. Consider resource parti- Growth in market capitalization slowed and
tioning first. An analysis of the identities and failure rates rose following changes in
competitive tactics of U.S. breweries showed human-resource blueprints - a core aspect of
how and why established firms (mass-pro- these firms' identities. In contrast, outside
ducer breweries) that are under siege by CEO succession depressed growth in market
insurgents (microbreweries and brewpubs) capitalization but did not affect failure rates.
have a limited ability to adopt the beneficial This study redirects attention from the inter-
features of their new rivals (Carroll and nal consequences of change - disruption of
Swaminathan, 2000). Quite simply, it is diffi- routines and structures - to the external con-
cult for organizations with established identi- sequences, in particular, to what happens
ties to present themselves as entirely different when organizations violate the expectations
kinds of organizations, even when their of external observers (here, investors). Thus,
identities are based on intangibles such as it paves the way for empirically assessing the
perceived authenticity. In a similar vein, a content effect of change, to complement pre-
study of American feature films showed that vious studies of the process effects of change
there is a fundamental tradeoff between (e.g., Amburgey et al., 1993; Greve, 1999).
appealing to a broad customer base (being a
generalist) and targeting a more focused base
(being a specialist): films pitched in multiple Summary
genres attracted larger audiences but were
less appealing than films pitched in a single The great strength of the ecological tradition
genre, because audiences found multi-genre is its high level of paradigmatic consensus
films difficult to make sense of (Hsu, 2006). (Pfeffer, 1993). Ecologists agree on what
For the density-dependence model, analy- outcomes to study (founding, failure, growth,
ses of identities among disk-array producers performance, and change), what explanatory
showed that, contrary to what happens when factors to consider (the number of organiza-
classic density-dependent competition and tions of various (sub)forms, as well as their
legitimation operate, increases in the density sizes, ages, locations, technologies, networks,
of disk-array producers did not legitimate the and identities), and what analytical strategies
disk-array-producer form (McKendrick and to employ (primarily quantitative analysis of
Carroll, 2001; McKendrick, Jaffee, Carroll original data sets covering entire populations
and Khessina, 2003). Most disk-array of organizations over extended periods of
producers had heterogeneous origins and time). Among theories of organizations,
continued to derive their primary identities ecology displays the highest degree of logical
from other fields. These heterogeneous rigour. Indeed, ecology has benefited from
origins and persistently derivative identities several logical tests: of resource partitioning
made it impossible for the disk-array- (Péli and Nooteboom, 1999), inertia (Péli,
producer form to cement its own distinctive Bruggeman, Masuch and Ó Nualláin, 1994;
identity. Following this logic, only increases Hannan, Pólos and Carroll, 2003), and
in the density of firms with focused identities, density dependence (Kamps and Péli, 1995).
not increases in total density, should result in These tests have revealed inconsistencies and
the establishment of a distinct organizational incoherencies in natural language statements
form. of ecological theory and so paved the way for
theoretical refinements.
 579
In sum, because organizational ecologists scope of organizational institutionalism (for a
have always built on and refined each other's more detailed review, see Greenwood
work, they have accumulated much knowl- [Introduction, this volume] or Scott
edge about organizational dynamics. [1995/2001]). Like ecological analysis, insti-
But the strength of the ecological research tutional analysis of organizations can be
programme reveals a weakness: precisely broken down by subject area. Three of the
because it is such a 'normal-science' activity, most important are legitimation and institu-
some find it too narrow to interest anyone tionalization, isomorphism and diffusion, and
except ecologists themselves (e.g., Hedström, strategic action. We discuss each in turn.
1992). As van Witteloostuijn (2000: v) put it,
organizational ecology has a 'relatively small
influence outside the inner circle of its own Legitimation and
parish'. Narrowness may overtake this institutionalization
paradigm because much work clarifies and
refines the basic theory without extending it Legitimacy is the central concept in institu-
in truly novel directions; as a consequence, tional analysis. Organizations are legitimate
ecologists' work rarely intersects with - or when they are comprehensible and taken for
draws the interest of - scholars in other granted as the natural way to achieve some
research traditions. The marginalization of collective goal (Berger and Luckmann,
organizational ecology is revealed in analyses 1967), when they are justified and explained
of submissions to the Organization and on the basis of prevailing values, role models,
Management Theory Division of the and cultural accounts (Meyer and Rowan,
Academy of Management Annual Meetings 1977; Douglas, 1986), when they are
of 2004 and 2005 (Thompson, 2004; Davis, sanctioned or mandated by authorized actors
2005). According to author-assigned key- (DiMaggio and Powell, 1983), and when
words, which could indicate either theory or those involved cannot even conceive of alter-
phenomenon, a relatively small number of natives (Zucker, 1983). Legitimacy can rest
papers labelled as 'ecological' were submit- on any of three foundations: regulative,
ted, far fewer than the number of papers which includes the laws and administrative
labelled as 'institutional'. Perhaps more guidelines that constitute the basic rules gov-
important, organizational ecology occupied a erning relationships within and between
relatively peripheral position in the network organizations; normative, meaning 'expert'
of references to other perspectives and sources of information and value judgments
phenomena, as it was used in combination about the nature of organizations; and cogni-
with few other perspectives and it was used tive, meaning shared perceptions of organ-
to explain relatively few phenomena. This ized social activity (Scott, 1995 [2001]).
situation is unfortunate, given ecology's Highly legitimate forms of organization are
many theoretical advances and empirical highly institutionalized - perceived as objec-
successes. tive and exterior facets of social life (Berger
and Luckmann, 1967). The greater the legiti-
macy attributed to an organizational form, the
less any member of that form will require
HOW DO WE UNDERSTAND active justification and the more it will be
INSTITUTIONAL ANALYSIS? taken for granted and accepted by observers.
Legitimacy improves access to resources and
Before comparing institutional analysis of acceptance from customers, and thus con-
organizations to ecology, we want to make tributes to organizations' ability to persist
sure we're all 'on the same page', so we offer (Meyer and Rowan, 1977). Empirical
our own brief assessment of the nature and research has supported these ideas for many
580
kinds of organizations, including hospitals (Haveman and Rao, 1997; Haveman, Rao
(Ruef and Scott, 1998), biotechnology start- and Paruchuri, 2007).
ups (Stuart, Hoang and Hybels, 1999), day-
care centres (Baum and Oliver, 1991), and
banks (Deephouse, 1996).
The flip side of institutionalization is dein- Isomorphism
stitutionalization: erosion of activities or
practices (Oliver, 1992). And the flip side of Institutionalists wonder why organizations
legitimation is delegitimation: reduced are so similar (DiMaggio and Powell, 1983).
acceptance of activities or practices. Some Accordingly, one of the most important ideas
scholars see the continuance of structures, in institutional analysis is that of isomor-
rules, and routines as inherently problematic, phism (literally, 'same shape'). As communi-
and see deinstitutionalization as an inevitable ties of organizations evolve, a variety of
process (e.g., Covaleski and Dirsmith, 1988; forces (interorganizational power relations,
Zucker, 1988) Deinstitutionalization can be the state and professions, and competition)
precipitated by political, functional, or social promote isomorphism within sets of organi-
forces (Oliver, 1992). Some forces for zations that either play similar roles or are
deinstitutionalization are internal to the focal tied directly to each other. There is a logical
organization, including increasing workforce connection between isomorphism and legiti-
diversity, declining performance, and execu- macy. The more prevalent an organizational
tive succession. For instance, poor per- structure, practice, or tactic, the more legiti-
formance triggered the abandonment of mate it is. Therefore, one indicator of legiti-
permanent-employment guarantees and macy is the spread of organizational features,
increased downsizing by Japan firms; more- which increases isomorphism within fields
over, the rate of abandonment increased with (Tolbert and Zucker, 1983). Moreover, the
the number of firms downsizing (Ahmadjian three bases of legitimacy map neatly onto the
and Robinson, 2001). Other forces for dein- three processes driving isomorphism: cogni-
stitutionalization are external, such as tech- tive legitimacy onto mimetic processes, reg-
nological innovation, shifts in the polity or ulative legitimacy onto coercive processes,
general culture, economic booms or busts, and normative legitimacy onto normative
and changes in regulation. For example, the processes (Scott, 2001).
decline of large conglomerates in the 1980s Interest in isomorphism has produced
was precipitated by shifts in attitudes and many, many studies of the diffusion of
beliefs about the nature of the firm (Davis, formal structures and practices across organi-
Diekmann, and Tinsley, 1994). The idea of zational fields, encompassing all three
the firm as a bounded social entity, analogous engines of diffusion. Coercive pressures
to a sovereign body which could not be accelerate diffusion; for instance, structures
dismembered, lost legitimacy in the face of mandated by the state diffuse more rapidly
evidence that conglomerates were inefficient; than structures encouraged but not mandated
as a result, many were taken over and broken (Tolbert and Zucker, 1983). Although state
up. Similarly, several forms of savings-and- regulations appear to be simple coercive
loan associations, each embodying a different forces, reality is often more complex, as
set of opinions, beliefs, and judgments, were many state regulations allow discretion in
extinguished by a combination of technical their interpretation and application (Dobbin
pressures (changes in human demography and Sutton, 1998). For example, in response
and employment patterns) and institutional to legal mandates against employment
pressures (changes in attitudes towards discrimination, firms experimented with
bureaucracies precipitated by the Progressive several ways to demonstrate compliance -
movement) creating both new rules and new units
(Edelman, 1992) - until court rulings showed
 581
one way - formal, merit-based rules govern- management (TQM) programmes as TQM
ing hiring and promotion - to be sufficient, adoption increased (Westphal, Gulati and
after which the sanctioned approach diffused Shortell, 1997).
widely (Dobbin, Sutton, Meyer and Scott,
1993).
Normative pressures often trump coercive Strategic action
pressures, because state regulations often
allow discretion in their interpretation and Organizations do not simply react to environ-
application (Edelman, 1992; Dobbin et al., mental demands; instead, they are often
1993). Take, for instance, the diffusion of proactive and control their environments.
human-resources practices among U.S. firms. Recognizing this, institutionalists place con-
Human-resources managers and labour formity on a continuum of responses that
lawyers used the ambiguity inherent in includes compromise, avoidance, defiance,
employment law to promote particular and manipulation (Oliver, 1991). Indeed,
solutions - those that would solidify their organizations can avail themselves of many
power - and discourage others (Dobbin and different tactics for gaining legitimacy (con-
Sutton, 1996; Sutton and Dobbin, 1998). form to, select, or manipulate the environ-
Thinking more broadly, the civil-rights ment), maintaining legitimacy (police
mandates of the 1960s created a normative internal activity, eschew obvious appeals for
environment that led employers to adopt legitimacy, and stockpile goodwill), and
several human-resources procedures, even in repairing legitimacy (offer normalizing
the absence of formal legal sanctions accounts, restructure, and (our favourite!)
(Edelman, 1990). don't panic) (Suchman, 1995). These ideas
Mimetic pressures are ubiquitous but pave the way for investigating when con-
subtle. In the early stages of diffusion, formity will or will not occur, and assessing
adopters of new structures and practices tend the effectiveness of various strategic
to be those facing technical problems of con- responses.
trol and co-ordination they hope will be Empirical work on strategic action often
solved by these innovations; later, however, investigates how rhetoric is used to legitimate
as the innovations become widespread, con- change. For example, tracing the evolution of
nections between technical rationality and corporate takeovers from 1950 through 1985
adoption are attenuated and the causal engine revealed that rhetoric created powerful new
shifts from technical rationality to blind imi- patterns of meaning, which in turn affected
tation, as innovations become taken for the status attributed to buyers and target firms
granted as the 'right' way to do things alike (Hirsch, 1986). As the practice of
(Tolbert and Zucker, 1983; Baron, Dobbin hostile. takeovers diffused, the language used
and Jennings, 1986). There is widespread to describe them became more positive and
evidence of mimetic diffusion: corporations more complex (borrowing from more genres;
were more likely to adopt the multidivisional evaluating bidders and targets). Moreover,
form when others in their industry had done takeovers came to be framed as violent when
so (Fligstein, 1985), savings and loans were the bidder was outside the corporate
more likely to expand into new service areas establishment, but dispassionately and
when large and profitable firms were active benignly when the bidder was an insider. In
there (Haveman, 1993), acquiring firms were the same vein, a study of attempts to repair
more likely to select investment banks used legitimacy after a public-relations crisis in
by large and profitable others (Haunschild the cattle-ranching industry demonstrated the
and Miner, 1997), and hospitals were more efficacy of verbal accounts (Elsbach, 1994).
likely to adopt standardized (as opposed to Similarly, a study of accounting firms
customized) total quality showed that the profession was 'framed' as
582
being under threat and that change was thus marginalized and have little power - like
natural, almost inevitable; thus, rhetoric por- women in the late nineteenth and early twen-
trayed the broadening of accounting firms' tieth centuries - can develop new kinds of
professional scope as a solution to evolving organizations; these ventures are most likely
client needs and heightened competition to succeed when they embody familiar struc-
(Greenwood, Suddaby and Hinings, 2002). tures and practices (Clemens, 1997).
Strategic actors in accounting deployed many
rhetorical strategies to legitimate mul- Summary
tidisciplinary partnerships: appealing to
myths of progressive rationality, suppressing The strength of the institutionalist perspective
contradictions, and emphasizing consistency is its sweeping reach. Consider the core con-
with professional values (Suddaby and cepts, institution and institutionalization.
Greenwood, 2005). Finally, institutional Scholars working in this tradition have
entrepreneurs in the HIV/AIDS-treatment claimed that institutionalization is both an
field framed new practices of consultation outcome, which suggests attention to
and information exchange among community stability, and a process, which suggests
organizations and pharmaceutical companies attention to change. They have identified the
in ways that integrated the interests of many carriers of institutions at multiple levels of
different stakeholders and that were analysis: the routines, rules, scripts, and
consistent with existing routines (Maguire, schemas that guide the perceptions and
Hardy and Lawrence, 2004). actions of individuals and small groups; local
Strategic action is especially obvious regional or demographic-group identities and
when people are trying to create new kinds of regimes; meso-level organizations,
organizations. Such institutional entrepre- occupations, and fields; and society-wide
neurship requires the skillful use of resources norms and codified patterns of meaning and
to overcome skepticism and persuade others interpretation. They have identified a wide
to believe entrepreneurs' representations of array of mechanisms through which
reality and thus to support their new ventures institutionalization occurs: habituation, blind
(DiMaggio, 1988; Fligstein, 1997). For or limitedly-rational imitation, normative
example, art historians and their patrons co- conformity, accreditation, social obligation,
operated in the nineteenth century to develop and coercion. In building theory, they have
art museums as a distinct cultural form by drawn not only on sociology, but also on
creating a framework that distinguished cognitive psychology, philosophy, and lin-
vulgar art from high art and by establishing guistics. Finally, they have employed a wide
non-profit enterprises to showcase and array of methodologies, ranging from ethno-
conserve their cultural capital (DiMaggio, graphies and qualitative historical studies to
1991). Product-testing organizations and laboratory experiments to statistical analyses
consumer leagues promoted consumer of survey and archival data. As a result of its
watchdog associations by tapping into the breadth and flexibility, institutionalist
growing customer service and truth-in- analysis has recently dominated submissions
advertising movements; these institutional to the Organization and Management Theory
entrepreneurs also linked their activities to Division of the Academy of Management
home-economics professors, who already Annual Meetings (Thompson, 2004; Davis,
enjoyed the legitimacy accorded to academia 2005). Institutional analysis was also central
(Rao, 1998). Such actions conferred norma- in the network of references to other perspec-
tive appropriateness to the new consumer- tives or to specific phenomena, indicating
watchdog form and shielded it from that institutionalism was used to explain a
opposition, thus allowing it to stabilize and wide range of phenomena and was used in
persist. Even individuals and groups that are combination with many other perspectives.
 583
But the strength provided by this broad differences, then - finally! - answering the
reach also generates a critical weakness. If question posed in our title.
institution and institutionalization mean
everything and explain everything - change
and stability; routines, values, and norms; Points of similarity
intra-organizational, organizational, and
interorganizational structures and behaviours; Ecological and institutional approaches have
cognitive, regulative, and normative as their most basic commonality their origins:
processes - then they mean nothing and both developed as corrections to rationalist
explain nothing. The institutional 'tent' and adaptationist theories that were in use in'
houses a loose collection of propositions, of the 1960s and early 1970s, which assumed
varying degrees of formality, some seem- that those in charge of organizations could
ingly incompatible and others only tenuously survey the environment and determine what
connected. For example, it is unclear when the organization should do, and that
coercive, mimetic, or normative forces organizations could easily change their
predominate, and to what extent these are strategies and structures, and thus improve
conceptually or empirically distinct phenom- their performance. Both organizational
ena (Mizruchi and Fein, 1999). Given these ecology and institutionalism broke with the
fundamental uncertainties, debates in the assumption that organizations could be
institutionalist tradition tend to be unpro- adapted to external conditions in a techni-
ductive feuds about intellectual origins and cally rational way. In the case of ecology,
definitions, rather than substantive arguments inertial forces prevent timely adaptation; in
about logic or evidence (e.g., Scott, 1995 the institutional perspective, conforming to
[2001] vs. Hirsch, 1997). Institutionalists institutional rules can prevent efficient
have not built systematically on one another's operation.
work to the same extent that ecologists have, Another deep commonality - albeit one
and the institutional perspective has not that is often mistaken for a basic difference is
accumulated empirical successes at the same a concern for the variety (or lack thereof) of
rate as ecology has. This lack of organizations. As we noted above, ecologists
accumulation of knowledge happened ask 'why are there so many kinds of
because institutionalists eschewed 'theories of organizations?' (Hannan and Freeman, 1977:
the mid range' logically interconnected sets 936), while institutionalists wonder why
of propositions, derived from assumptions organizations are so similar (DiMaggio and
about essential facts (axioms) and causal Powell, 1983: 148). The apparent contrast in
mechanisms (unobservables), that yield these questions is illusory, however, because
empirically testable hypotheses and deal with they point to the ends of a single continuum,
delimited aspects of social phenomena which runs from a setting in which each
(Merton, 1968: 39-72). organization is unique to one in which all
organizations are identical. To explain one
end of the continuum, one must explain the
other. The real questions are how much orga-
COMPARING ECOLOGICAL AND nizational variety there is and what factors
INSTITUTIONAL ANALYSIS contribute to more or less variety.
These core similarities have led resear-
We begin by laying out the things that make chers within the two traditions to focus on
ecology and institutionalism similar. We then similar constructs and to study similar phe-
discuss the things that make them different. nomena: legitimacy, organizational form, the
We conclude by weighing similarities and emergence and spread of new organizational
forms and features, organizational change
584
(or persistence), and organizational survival institutionalism. The most basic discord
or failure. Consider legitimacy: ecologists stems from their theoretical agendas.
and institutionalists alike believe that legiti- Ecologists value parsimony and generality,
macy is necessary for the emergence of new while institutionalists prefer richness and
organizational forms, and the proliferation contextual specificity. Therefore, ecologists
and persistence of existing organizational strive to identify broad regularities across
forms. For ecologists, legitimacy is cognitive populations. Institutionalists, in contrast,
in nature and accrues to an organizational attempt to offer highly contextualized and
form as it increases in numbers and thus nuanced depictions of organizations or fields.
becomes accepted as the natural way to effect This conflict is difficult to reconcile because
collective action (Hannan and Freeman, it reflects a difference of taste in theorizing,
1987, 1988). Institutionalists also recognize but it could be settled by careful empirical
the cognitive aspect of legitimacy, but attend analysis. The issue boils down to whether or
to its regulative and normative dimensions as not relationships between explanatory and
well (Scott, 2001). Both traditions also outcome variables vary over time and across
emphasize organizational survival as a contexts - clearly empirical questions. For
central outcome of interest; this stands in instance, does density dependence operate
contrast to other areas of organizational over a population's entire history or just
scholarship, such as strategic management, within particular periods defined by larger
that focus on profitability or market share. forces, such as technology, social mores, and
For ecologists, organizational survival is the state (e.g., Dobbin and Dowd, 2000)?
determined by tangible resource flows, Does the similarity (or difference) between a
whereas for institutionalists it is rooted in the focal population and related populations
subjective assessments of constituents. This affect density-dependent processes (e.g.,
overlapping interest in a core set of Ruef, 2000; Dobrev, 2001)? And does the
constructs and phenomenon, despite nature of the organizations under study or
differences in the ways they have been their context determine how inert they are
conceived and measured, forms the basis for and whether change harms or helps them
considerable conceptual, methodological, and (e.g., Dobrev, Kim and Carroll, 2003)?
empirical common ground. Ecologists' concern for parsimony and
Indeed, methodological similarity is obvi- generality has led them to follow a tight
ous, as both sets of scholars employ original normal-science trajectory, while institution-
data on collections of organizations - popula- alists' concern for richness and contextual
tions in the case of ecologists and fields in specificity has yielded a more emergent and
the case of institutionalists. This empirical diffuse research agenda. To put it more for-
strategy stands in stark contrast to much other mally, ecology is a collection of overlapping
sociological research, where reliance on theories of the mid-range, each of which
publicly-available data, especially survey builds on a small set of assumptions and
data, is the norm. Both research traditions al- causal mechanisms to derive empirically
so emphasize longitudinal analysis. This con- testable predictions about a delimited set of
trasts with the approach taken in other resear- organizational outcomes. Institutionalism, in
ch traditions, such as transaction-cost econo- contrast, is not really a single midrange
mics and resource-dependence theory, both theory, or even a collection of such theories -
of which tend to rely on cross-sectional data. despite the prevalence of the label
'institutional theory'. Instead, institutionalism
is a perspective - a congeries of ideas and
Points of difference empirical tests of those ideas that
demonstrate the power of rules and regula-
Despite these basic commonalities, there are tions; frames and schemas; and norms,
important differences between ecology and
 585
values, and expectations in explaining orga- use contextually sensitive measures of the
nizational genesis and functioning. three bases of legitimacy, none of which can
Institutionalists and ecologists also differ be reduced to simple counts: links between
remarkably in their ontological stance - their the focal organizations or fields and powerful
understanding of the essential nature of the supporting organizations or fields, such as the
empirical world. Basically, ecologists are state or professions; coverage of the focal
empirical realists who believe that the mate- organizations or fields in the news media,
rial world is primary and consciousness is either positive or negative; and-laws and reg-
secondary; thus, the material world, including ulations supporting or undermining various
organizations and their environments, exists forms of organization.
outside of and independent of our The last core difference between ecology
observations. In stark contrast, institutional- and institutionalism is that while both tradi-
ists are social constructionists (subjective tions feature quantitative analyses of longitu-
idealists) who believe that all phenomena are dinal data on collections of organizations,
mental constructions created through social institutionalism encompasses a greater vari-
interaction; thus, the material world is sub- ety of methods, including case studies of
jective and interior, rather than objective and single organizations (e.g., Ritti and Silver,
exterior. To put the difference in plainer 1986), qualitative historical analyses of fields
terms, ecologists believe that organizational (e.g., DiMaggio, 1991; Rao, 1998), and labo-
environments are 'real' phenomena, while ratory experiments of organizational mem-
institutionalists hold that they are created by bers (e.g., Zucker, 1977; Elsbach, 1994).
the shared perceptions and interactions of Ironically, the tradition most interested in
individuals, groups, and organizations.² organizational diversity - ecology - displays
Differences in goals and philosophy lead little diversity in its theoretical and method-
naturally to differences in constructs, predic- ological approaches, while the tradition inter-
tions, and methods. As noted above, even ested in isomorphism - institutionalism -
though the construct of legitimacy figures displays a great deal level of diversity.
prominently in both traditions, ecologists
have focused exclusively on its cognitive
dimension, while institutionalists have vari- The bottom line: answer the
ously studied its regulative, normative, and question already!
cognitive components. There are two related
issues here: what does legitimacy mean, and After surveying the nature of organizational
how should it be measured? According to ecology and institutional analysis of organi-
organizational ecologists, legitimacy is the zations, and considering their points of simi-
degree to which an organizational form is larity and difference, we conclude that
taken for granted. To capture legitimacy, ecologists and institutionalists have in the
researchers simply count the number of past been both friends and foes, but that they
organizations in the focal population. have good reason to be far friendlier in the
Institutionalists recoil from this simple future. Both sets of scholars reject the
approach (Zucker, 1989; Baum and Powell, assumption, pervasive in the late 1960s and
1995). They protest that legitimacy encom- early 1970s and still popular today, that
passes cognitive, normative, and regulative organizations are pliant tools that can easily
dimensions, which may or may not correlate be made to fit technical exigencies. Both sets
with one another (Scott, 2001). To institu- of scholars are centrally concerned with
tionalists, a count of organizations of a given explaining organizational variety, even
form says little about the subjective evalua- though they use different terms - ecologists
tions constituents make about that form. talk about heterogeneity, institutionalists
Institutionalists therefore argue that we must about homogeneity. Moreover, both sets of
586
scholars seek to explain organizational adap- We are also hopeful because we see an
tation, or lack thereof, to shifting circum- increasing number of well-executed studies
stances, even though they use different terms that combine ecological and institutional
- ecologists discuss inertia, institutionalists arguments to gain richer insights. For exam-
persistence. In addition, both sets of scholars ple, in a study of child-care centres, Baum
emphasize the role of legitimacy, although and Oliver (1991) tested the structural-inertia
they disagree about its basis purely cognitive hypothesis of organizational ecology by
for ecologists; cognitive, regulative, and taking into consideration sociopolitical legit-
normative for institutionalists. Moreover, imacy as understood by institutionalists.
both traditions generally focus on collections They found that linkages to powerful state
of organizations, rather than individual actors mitigated the high failure rates of
organizations or subunits, although they use young and small organizations. Haveman
different labels - ecologists talk of (1993) combined ideas about density
populations and communities while institu- dependence in organizations' vital rates with
tionalists discuss fields and sectors. Finally, the mimetic isomorphism hypothesis to pre-
both sets of scholars take a dynamic, rather dict diversification into new markets in the
than comparative-static, approach to savings-and-loan industry; she found that
organizational phenomena and use original increases in the number of successful organ-
longitudinal, rather than derivative cross- izations in a market drew in new entrants
sectional data. until competitive effects swamped legitimat-
We may be wide-eyed optimists, but we ing ones, at which point new entries began to
see differences between ecology and institu- decline. Dacin (1997) found that both sheer
tionalism eroding. Consider the basic unit of density and sociopolitical factors like rising
analysis for ecologists and institutionalists nationalism could be used in concert to
alike, organizational form. Ecologists origi- explain founding rates of Finnish news-
nally conceived of distinct forms of organiza- papers. Similarly, Wade, Swaminathan and
tions as having a unitary standing with Saxon (1998) showed how both density and
respect to the environment, and identified particularistic institutional conditions non-
them empirically through observable social uniform state-government regulation affected
discontinuities and conventional cognitive the geographic distribution of breweries'
maps (Hannan and Freeman, 1977). In other foundings and failures. Most recently, David
words, for ecologists, the difference between and Strang (2006) combined insights from
forms could be deduced from observation of ecology's resource-partitioning model with
their inputs and outputs. In contrast, institu- notions of mimetic behaviour from
tionalists typically classified organizations institutional analysis; they showed how
according to their distinctive logics - the among management-consulting firms, gener-
socially-constructed sets of beliefs and values alists and specialists exploited different types
upon which they are based. To identify a of demand and reacted differently to shifts in
form, researchers would need to understand collective understandings regarding popular
the cultural elements upon which the form management practices.
was built (e.g., DiMaggio, 1991; Rao, 1998).
This distinction between resource flows and
cultural underpinnings is disappearing, as
ecologists have recently come to conceive of PRESCRIPTIONS FOR FUTURE
organizational forms as identities or social RESEARCH
codes (Pólos, Hannan and Carroll, 2002;
Hannan, Pólos and Carroll, 2007), which is Our final task is to offer suggestions for
much closer to the conception of form used readers about how to engender a more pro-
by institutionalists. ductive exchange of ideas between the two
 587
research traditions. In particular, we suggest normative, and cognitive (Scott, 2001) or
how scholars in each tradition can learn from pragmatic, moral, and cognitive (Suchman,
the other to improve their research. 1995) - and the fact that ecologists have been
expansive in their use of this term - talking
not just about taken-for-grantedness but also
How to live peaceably and prosper about conformity to recognized principles or
accepted rules and standards (Aldrich and
Can institutionalists and ecologists stop snip- Fiol, 1994), and normative (value) judgments
ing and develop productive intellectual by observers (Pólos et al., 2002; Hannan et
exchanges? Although there is a substantial al., 2007). This bewildering list must be win-
middle ground between ecology and institu- nowed down. What kinds of legitimacy result
tionalism, important philosophical, theoreti- from which sources, and what effect does
cal, and empirical differences (and the each have? Do different kinds of legitimacy
occasional dust-up over them) have pre- work in tandem or opposition? Which kinds
vented much fruitful interaction. Indeed, are most potent, when, and for which
dashes between ecologists and institutional- outcomes? Not until these questions about
ists have been intense precisely because there legitimacy are answered, along with similar
are such great overlaps between the questions about other constructs central to
phenomena they study and dose similarities both ecology and institutionalism, can the
in the constructs they use to explain these research traditions fruitfully co-exist.
phenomena. If ecologists and institutionalists
were studying very different things using
very different ideas, the divergence in their
theoretical tastes - that is, basic preferences How can institutionalists learn
for parsimony versus richness - would not and benefit from the experiences
vex them so much. of ecologists?
Given this, how can accord be achieved?
The answer is simple: ecologists and institu- Our first prescription is for institutionalists to
tionalists must reach a level of consensus develop a set of related theories of the mid-
concerning the many constructs they share, range (that is, to focus on delimited and sub-
and agreement concerning the logical and stantively important topics), in order to
empirical relationships between them. Fuzzy accumulate knowledge (that is, to reject some
construct definitions open doors for fruitless ideas and affirm others). We are not alone in
debates: 'he-said-vs.-she-said' situations thinking this way. Institutionalists have
develop in which both parties talk past and already produced solidly cumulative
caricature each other, rather than talking to knowledge about U.S. employers' responses
and hearing each other. While some theoreti- to employee-rights -legislation in the D.S.
cal tension between the perspectives is (Edelman, 1990, 1992; Dobbin et al., 1993;
healthy, we are hopeful that we can escape a Dobbin and Sutton, 1996; Sutton and
situation in which ecologists seem like they Dobbin, 1998; Guthrie and Roth, 1999; Kelly
are from Mars and institutionalists from and Dobbin, 1999). This knowledge informs
Venus. An excellent place to start would be subsequent research on the effectiveness of
legitimacy. As explained above, ecologists organizational structures and practices in
and institutionalists define this construct dif- decreasing sex and race segregation (Reskin
ferently. The situation is exacerbated by the and McBrier, 2000; Kalev, Kelly, and
fact that institutionalists do not agree among Dobbin, 2006). Notwithstanding this valuable
themselves how to categorize the various example, much more could be done.
aspects of legitimacy - sociopolitical and One excellent candidate for more focused
constitutive (Haveman et al., 2007), and paradigmatic theorizing is institutional
regulative, entrepreneurship - currently a 'hot' topic, as
588
evidenced by our finding of 115 citations to about how to live peaceably and prosper,
DiMaggio's (1991) pioneering paper on the above.) Second, we must formulate more
topic, and 12 articles published in 2005 and coherent and more clearly falsifiable
2006 using this term in the title, abstract, or hypotheses about relationships between
keywords.³ Work on institutional constructs, and disdain loose propositions. In
entrepreneurship presents a much needed other words, we should act (just a little bit!)
theoretical and empirical 'boost' to the more like ecologists: in exchange for greater
generally woeful state of entrepreneurship generality and cumulative knowledge,
research more generally, which has long been sacrifice theoretical ambiguity and some
dominated by rationalist ideas, functionalist small degree of contextual specificity. Doing
logic, and cross-sectional research designs. so will have the benefit of allowing some
This means that institutionalists have a great institutionalist predictions to be disconfirmed
opportunity to make an intellectual by empirical analysis, while others are
contribution. How does institutional change confirmed, perhaps in contingent
create entrepreneurial opportunity (e.g., Sine formulations. Following this prescription will
and David, 2003)? How do entrepreneurs also allow us to take stock of the vast institu-
seize this opportunity to found new tionalist output and outline scope conditions -
organizations (e.g., Sine, Haveman and explicit statements of the circumstances
Tolbert, 2005)? How do entrepreneurs under which predictions do and do not hold,
modify or create institutions to advance their and the types of phenomena that are more
interests (e.g., Lawrence, 1999; Garud, Jain and less amenable to institutional analysis.
and Kumaraswamy, 2002)? Institutionalism
is uniquely placed to address such questions
in a focused, cumulative manner that can
expand our knowledge about an important How can ecologists learn from the
social and economic phenomenon. experience of institutionalists?
A second candidate for focused theorizing
is the diffusion of new organizational
features. This should be an easy pill to We offer two related prescriptions that will
swallow, as we have two first-rate models on refresh ecological research and return it to the
which to build. DiMaggio and Powell's centre of organizational theory. First and
(1983) article about institutional most fundamentally, we should develop
isomorphism explains both what kinds of richer conceptions of organizational contexts,
forces drive the diffusion of organizational ones that are more sensitive to time and
features to create isomorphism within place. In other words, we should take a page
institutional fields (mimetic, coercive, nonna- out of the institutionalist handbook, and sac-
tive) and the mechanisms by which diffusion rifice some parsimony and generality to
operates (cohesion and structural equiva- acquire conceptual richness. Theoretically,
lence). Strang and Tuma's (1993) article pro- this means returning to our roots in human
vides a detailed, integrated model of ecology, as pioneered by Park and Burgess
diffusion processes, one that bridges the gap (1921), and refined by Hawley (1950).
between natural-language theory and Empirically, it means expanding our set of
hypothesis testing. It should not be difficult explanatory variables. Most ecological
to turn the growth industry that is analysis has used the characteristics of the
institutionalist studies of diffusion into a true focal organization and the focal population to
knowledge-building project. explain organizations' vital rates. Little 'pure'
Even if you accept our suggestions, it will ecological work has considered
be difficult to make institutionalist research characteristics of the world outside the focal
more paradigmatic and cumulative. First, we population, including the state, social and
need to reach agreement on the meaning of political movements, socially-constructed
central constructs and stop using the vapid technological systems, and belief systems.
umbrella term 'institution.' (See also our ideas Those more macroscopic explanations have
 589
been the domain of institutional analysis. inherit legitimacy from other pre-existing
Indeed, in some ways ecological analysis, as entities can be answered by observation in
it has been practiced to date, can be seen as the field and by qualitative analysis (e.g.,
nested within institutional analysis. By this, textual analysis) of organizational archives;
we mean that processes that have been the these methods can shed new light on the
object of ecological analysis, such as density content of organizing. Finally, experimental
dependence, resource partitioning, structural methods like vignette studies can allow us to
inertia, and identity valuation, seem to oper- control, in a rigorous way, alternative
ate within contexts that are assumed to be explanations for several observed
invariant in time and space (Dobbin and relationships, such as density dependence in
Dowd, 2000). Expanding the reach of eco- founding and failure rates. The second use to
logical analysis to include forces exogenous make of a greater variety of empirical
to the population will connect ecology. to methods - direct observation in the field,
many other research traditions: sociology of laboratory experiments, historical/narrative
culture, political sociology, sociology of law, analysis, textual analysis - is to expand our
and sociology of work. There is precedent set of core research questions by gathering
here, as ecologists have long noted the new kinds of data on forces exogenous to
importance of political environments on pop- organizational populations (see our first pre-
ulation evolution (e.g., Carroll, Delacroix and scription for ecologists).
Goodstein, 1988).
Second, ecology would benefit from
greater methodological pluralism. Statistical FINAL WORDS
analyses of longitudinal archival data on
entire populations of organizations, aug- In closing, we wish to step back and take the
mented by computer simulations and logical perspective of nearby outsiders: strategy
analyses, have demonstrated the veracity of researchers, economists, cognitive and social
core ecological ideas. We are now in a posi- psychologists, and applied mathematicians.
tion to expand our horizons in two ways. To them, institutionalism and ecology look
First, we could cement our knowledge of remarkably similar. All of these fields are
core causal mechanisms by gathering new highly rationalist. When scholars steeped in
kinds of data. For example, questions about these traditions examine organizations, their
organizational identities can be answered by focus is generally on understanding and
gathering data on the opinions of observers, improving organizational performance. If
both internal and external, through surveys institutionalism and ecology arose as an anti-
and interviews. This is something that dote to rationalism within organizational
innovative ecological research is beginning to theory, then they might very well be seen as
do (e.g., Carroll and Swaminathan, 2000). allies within the broader context of organiza-
Questions about inertia can be given new life tional studies. Both institutionalists and
through direct observations of change efforts ecologists care deeply about theory,
in theoretically important cases organizations methodological rigour, and building an
that are either exemplary of their form, understanding of organizations that goes
outliers, or hybrids. Field methods like beyond a narrow focus on optimizing
participant observation can also help us performance. It is often those groups that are
develop more nuanced understandings of most similar to each other French and
how the members of new organizations English Canadians, Flemish and Walloon
develop structures, routines, and norms, thus Belgians, Protestant and Catholic Irish - that
clarifying the process of organizing. fight most intensely, even when more
Questions about how new organizations, important battles lie elsewhere. The
especially those using novel forms borrow or intellectual world of organizational studies
would benefit from a true peace - not a form
590
of mutually assured destruction - between on merger activity. Strategic Management
ecologists and institutionalists. Journal, 13: 335-48.
Barnett, William P, and Glenn R. Carroll. 1987.
Competition and mutualism among early
telephone companies. Administrative Science
ACKNOWLEDGEMENTS Quarterly, 32: 400-21.
Barnett, William P., and Glenn R. Carroll. 1995.
We thank Christine Oliver for her insightful Modelling internal organizational change.
comments and Royston Greenwood for shar- Annual Review of Sociology, 21: 217-36.
ing his draft chapter tracing the evolution of Baron, James N., Frank R. Dobbin, and P.
the institutional analysis of organizations. Devereaux Jennings. 1986. War and peace:
The evolution of modern personnel
administration in U.S. industry. American
Journal of Sociology, 92: 350-83.
NOTES
Barron, David N., Elizabeth West, and Michael
T. Hannan. 1994. A time to grow and a time
1 For more detailed reviews, see Carroll and
Hannan (2000) and Baum and Shipilov (2006). to die: Growth and mortality of credit unions i
Note that our analysis does not cover the study of n New York City, 1 914-1990. American
internal organizational demography and Journal of Sociology, 1 00: 381-421.
demographic change. Both reviews delve into this Baum, Joel A.C., and Stephen J. Mezias. 1992.
more microscopic line of work. Localized competition and organizational
2 Organizational theory is not alone in being failure. Administrative Science Quarterly, 37:
divided into material realists and social 580-604.
constructionists/idealists. Physics, for example, has Baum, Joel A.C., and Christine Oliver. 1991.
long been fraught by similar disagreements. Recall Institutional linkages and organizational
Einstein's famous quip, when he rejected the idea
mortality. Administrative Science Quarterly,
from quantum mechanics that reality was
indeterminate and subjective: 'God does not play 36: 187-218.
dice with the universe'. To put it crudely, the Baum, Joel A.C., and Walter W. Powell. 1995.
ontology of classical physics is material realism, Cultivating an institutional ecology of organ-
while that of quantum mechanics is subjective izations: Comment on Hannan, Carroll,
idealism. Dundon, and Torres. American Sociological
3 These statistics come from searches conducted Review, 60: 529-38.
on the Web of Science, February 2007. Baum, Joel AC., and Andrew V. Shipilov. 2006.
Ecological approaches to organizations.
Forthcoming in S. Clegg, C. Hardy, and W.
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 25
Networks and Institutions
Jason Owen-Smith and Walter W. Powell

INTRODUCTION sustains, and transforms social worlds. The

cognitive categories, conventions, rules,
Research on institutions and networks has expectations, and logics that give institutions
proceeded on largely separate trajectories their force also condition the formation of
over the past few decades. The former is relationships and thus the network structures
more associated with work in organizational that function as the skeletons of fields. But
and political sociology, and the latter serves networks are more than just the scaffolds and
as the wellspring of research in economic circulatory systems of organizational fields.
sociology. To be sure, a number of loose They are also the source of 'horizontal'
linkages exist between the subfields. For distinctions among categories of individuals,
example, many institutional studies presume organizations, and actions, as well as
that professional or inter-organizational 'vertical' status differentials. While
networks serve as conduits for the diffusion institutions shape structures and condition
of appropriate practices and ideas. Indeed, their effects, networks generate the categories
much institutional research conflates 'simple' and hierarchies that help define institutions
diffusion with 'deep' institutionalization. and contribute to their efficacy. Thus, any
Meanwhile, research on networks often con- effort to understand institutional processes
siders how categorical or status variations in must take networks into account, and vice
network structures shape social comparison versa.
and stratification processes. But these points Our argument draws on core concepts
of intellectual cross-fertilization have from institutional and network theory that are
remained undertheorized.¹ utilized across both lines of work. Despite
We think there is much to be gained from their portability, however, they have rarely
a more analytically driven dialogue between been theoretically integrated. Using institu-
these literatures. We argue that networks and tional theory, we highlight the undertheorized
institutions mutually shape one another. Over relational aspects of both fields and logics.
time, this co-evolutionary process creates, Starting in network theory, we
 597
emphasize the important institutional features This canonical article incorporated net-
of embeddedness and social capital. Our goal work ideas in several key ways, although
is to do more than review existing points of subsequent work has tended to overlook its
contact or stimulate joint discussion. We aim structural aspects. In part, this neglect may be
to provide a roadmap for future research that traced to a contrast that Meyer and Rowan
will directly address two critical animating emphasized between organizations where
questions. First, how do institutional survival depended on managing the contin-
practices and forms emerge from networks? gencies of boundary-spanning relations and
Second, how do institutionalized categories others that had to respond to ceremonial
and conventions shape the structure and demands which were present in their
effects of networks? environments. This continuum suggested that
We begin with a brief excursion through managing relational networks involved mat-
several canonical works in institutional ters of coordination and control, while more
analysis, highlighting the implicit, but institutionalized settings necessitated efforts
nonetheless strong, network underpinnings of at symbolic management. But Meyer and
these theoretical arguments. For symmetry, Rowan also emphasized that all organizations
we select several well-known empirical are embedded in both relational and
studies that directly measure network effects institutionalized contexts. They stressed that
to account for the transmission of institu- the complexity of relational networks gener-
tional practices and structures. Next we ated 'explosive organizing potential,' and this
revisit four foundational ideas - organiza- greatly increased both the spread and number
tional field, institutional logic, embeddedness of rationalized myths. Central to this process
or the non-contractual basis of contract, and of transmission and standardization were
social capital - which contain both network trade and professional associations and inter-
and institutional insights that are, we organizational coalitions.
contend, indissoluble. We then develop The generative potential of networks as
answers to our key questions about transmission channels is readily apparent in
emergence and constraint against this the Meyer and Rowan paper. Similarly,
background. DiMaggio and Powell (1983) argued that the
great rationalizers of the latter half of the
twentieth century were the professions and
the modern State. The growth and elaboration
NETWORKS ARE CARRIERS OF of professional networks spanning
INSTITUTIONAL EFFECTS organizations contributed, they argued, to the
rapid spread of various models of organizing.
In their classic paper, Meyer and Rowan Networks were also essential components of
(1977) observed that the formal structures of DiMaggio and Powell's conception of an
organizations 'dramatically reflect the myths organizational field, which emphasized both
of their institutional environments.' They connectedness (Lauman, Galaskiewicz, and
argued that organizations are driven to incor- Marsden, 1978) and structural equivalence
porate practices and procedures defined and (White, Boorman, and Breiger, 1976). The
buttressed by widely prevalent, rationalized institutional development of an organiza-
concepts in the larger society. These practices tional field hinged on: (1) increased interac-
were institutionalized through professional tion among participants; (2) the development
standards and prestige hierarchies, and of well-defined status orders and patterns of
reinforced by public opinion. Consequently, coalition; (3) heightened information sharing;
Meyer and Rowan contended that the build- and (4) mutual awareness and respon-
ing blocks of formal organization 'litter the siveness. The twin imprints of the relational
societal landscape.' sociologies of Harrison White and Pierre
598
Bourdieu clearly stamp this account of field health care eroded professional sovereignty,
evolution and institutional formation. opening the door for more market-based cri-
From DiMaggio and Powell's perspective, teria. The key point, however, is not that a
status orders shaped patterns of information new managerial logic replaced physicians or
exchange, creating a core and periphery bureaucrats, but that health care became a
structure that channeled the flow of news and complex, multi-level field in which both the
personnel within organizational fields. The number and novelty of inter-organizational
policies and structures of the most central connections between hospitals and other
organizations in a field were more likely to types of health care institutions expanded
be emulated by others. While many subse- dramatically. 'Managers appear to have been
quent researchers picked up on the mimetic the beneficiaries, not the agents' of deinstitu-
aspects of this phenomenon, the underlying tionalized professional power (Scott et al.,
structural elements received less attention 2000: 328).
(see discussion in Mizruchi and Fein, 1999). The forces that transformed the health care
Nevertheless, this account of field structura- field were varied and numerous, ranging
tion emphasized how shared meanings and from policy legislation to medical specializa-
typifications, as well as stable role structures, tion to the increasing complexity of service
emerged out of repeated interaction. delivery. These broad changes were typically
In one of the most comprehensive empiri- ushered in by new linkages, formed by
cal studies of institutional transformation, accreditation bodies, shifting organizational
Scott and colleagues (2000) analyzed the control structures, inter-organizational
profound changes that occurred in health care alliances and coalitions, as well as new affil-
delivery in the San Francisco Bay Area iations with purchasers, intermediaries, serv-
between 1945 and 1990. They demonstrate ice providers, and government. These
the effects differing forms of legitimacy have network realignments not only brought with
on hospital survival rates. In the period fol- them participants who changed the bound-
lowing World War II, physicians and their aries of the health care field, but the new
professional code of conduct dominated entrants were also carriers of novel ideas that
health care standards. Federal financing and profoundly altered the meaning of health
the regulation of health care arose in the late care. Scott et al. (2000) captured this change
1960s and greatly expanded in the 1970s and in relationships and meanings aptly in their
1980s. That growth was accompanied by discussion of the shift from the doctor-patient
increasingly salient technical forms of legiti- relationship to one of a health care provider-
macy. In recent decades, the health care consumer transaction. This upsurge in
industry became more intensely competitive. linkages and connections were critical to
For-profit entities entered the field in large accreditation, health care provision, and
numbers, and managerial legitimacy increas- fiscal solvency; but these new relationships
ingly shaped evaluative standards. Scott and also remade the taken-for-granted
colleagues' rich analysis documented that understandings of the medical field.
earlier professional and regulatory standards Each of these pillars of sociological insti-
were not extinguished by the new managerial tutionalism argues that social networks trans-
and market orientations; rather, each succes- mit ideas and practices in distinctive ways.
sive era displayed more heterogeneus forms Networks also reflect key micro-level inter-
of legitimacy. actions that influence institutional dynamics.
Consequently, as the health care field To illuminate the recursive nature of institu-
evolved, 'three logics - professional, public, tional and network influences, we turn to
corporate - were all present, active and several notable empirical studies that demon-
contending with one another' (Scott et al., strate the potent force of social networks.
2000: 316). Federal funding and oversight of Though the orientations of the authors differ
 599
and the objects of inquiry vary, we argue that his or her position in the contributions com-
these prominent papers carry a common mes- munity' (Galaskiewicz and Burt, 1991: 90).
sage that networks are shaped by social com- Galaskiewicz and Burt recognize the
parison processes in which institutionalized strong parallels between their account of the
categories are highly influential. Twin Cities nonprofits community and
DiMaggio and Powell's (1983) explanation
for how and why organizations, and the
structure of organizational fields, change
NETWORKS ARE STAMPED BY over time. Indeed, they explicitly note that
INSTITUTIONAL CATEGORIES 'an important component of DiMaggio and
Powell's argument is the network of contacts
Galaskiewicz and Burt (1991) analyze how among organizations or their agents'
corporate officers evaluated nonprofit organ- (Galaskiewicz and Burt, 1991: 88). Within
izations in the Minneapolis-St. Paul region this philanthropic community, the manner in
and decided whether to make significant which evaluative categories varied across
charitable contributions to them. In the Twin organizations could be predicted by how
Cities, the networks of high-profile corporate corporate contributions offices were stratified
philanthropists and leaders of the nonprofit within the status hierarchy of their
community were closely inter-connected. The profession.
authors tested to see whether the spread of Palmer, Jennings, and Zhou (1993) ana-
evaluative standards operated through the lyzed the influence of institutional, political,
mechanisms of cohesion or through structural and economic factors on the adoption of the
equivalence. The frame of reference in the multidivisional form (MDF) by large U.S.
former is the dyad, stemming from a history corporations in the 1960s. To assess how
of past experiences, while the latter is the institutional factors influenced the transition
larger social system. Dyadic influence to an MDF, they measured the professional
processes operate on a one-to-one basis, training and social network connections of
while structural equivalence effects draw on key organizational decision makers, focusing
perceptions of similarity rather than direct specifically on elite business school training
communication. Consequently, structural of corporate chief executive officers and
equivalence processes are driven by what interlocks among corporate boards of direc-
officers presume others in comparable posi- tors. They also assessed economic and polit-
tions are doing. ical considerations, including corporate
In a community that is closely knit and in strategy and performance, as well as the
regular contact, one might expect direct influence of managerial rivalries, both inside
interaction and cohesion to trump structural companies and in external coalitions.
equivalence. Instead, Galaskiewicz and Burt This impressive effort to test rival theoret-
find the opposite. In the Twin Cities, the ical arguments found ample support for both
importance of structural equivalence economic and institutional factors, but little
reflected common norms and standards mag- for an explicitly political view. Both corpo-
nified within a professional community while rate industrial diversity and geographic dis-
demonstrating how the field's informal persion stimulated the adoption of the
stratification orders conditioned individual multidivisional structure. Differentiated
acceptance of these norms. As the authors put companies (i.e., firms involved in multiple
it, when an opinion comes to be shared unrelated lines of activity) and those with
within ego's profession, 'ego is expected to facilities spread across the nation, encounter
follow rapidly to avoid the embarrassment of problems that a multidivisional structure pur-
being the last to espouse a belief that has ports to solve. Institutional variables also
become a recognized feature of occupying proved to be robust. Most notably for our
600
purposes, networks were critical factors in in other regions the practice never took hold.
the transition to a multidivisional form. In the status-bound corporate world of New
Corporations in which CEOs had graduate York City, for example, protecting the CEO
degrees from elite business schools were was seen as a duty of boards, but in the more
more likely to adopt the MDF than firms with rough-and-tumble entrepreneurial world of
executives who did not hold elite degrees. Silicon Valley, parachutes were eschewed.
Boards of directors with interlock ties to The mechanism at work here was social
firms that had already adopted an MDF comparison among local elites, who looked
structure also influenced adoption. Not sur- to their regional reference groups for a sign
prisingly, corporate board connections to of whether their CEO should be protected
non-MDF firms did not (Palmer et al., 1993: against unexpected job loss. This 'parochial'
120). Thus, institutional backgrounds and social comparison process resulted in a
social connections jointly condition corporate slower rate of diffusion than the more
strategies. national and cosmopolitan transmission of
Davis and Greve (1997) analyzed the dif- pills through director networks.
fusion of two practices that were adopted by Davis and Greve point out that these local
corporations in the 1980s as a defense against and national network channels were also
hostile takeovers. The 'poison pill' and the characterized by different normative stan-
'golden parachute' were embraced by dards. The poison pill was couched in a lan-
companies and their managers to raise the guage of fending off unscrupulous raiders.
costs of an unwanted takeover bid. Both of This defense was perceived as appropriate
these practices were initially controversial and legitimate by board members; and thus
but came to be adopted by the majority of championed by them in different corporate
U.S. corporations. Yet despite their simi- settings. Contact with directors in similar
larities, the 'pill' spread quickly and the industry sectors and in corporations of com-
'parachute' diffused more slowly. parable status became the venues for diffu-
Interestingly, the channels of social influence sion of a practice that came to be regarded as
varied too. Pills spread through cohesive ties accepted and necessary.
among members of corporate boards of Parachutes were much more difficult to
directors, while parachutes were adopted on legitimate. They were perceived by some to
the basis of geographic proximity. reflect naked managerial self-interest, while
Corporations adopted golden parachutes as others saw them as payoffs for weak man-
other firms in their local metropolitan area agers. Questions about the appropriateness of
did so. parachutes were answered locally, by looking
This intriguing analysis revealed a puzzle: to the behavior of central individuals and
the same individuals - members of corporate companies in the regional economy. In short,
boards - decided to adopt both practices, but the relevant networks for diffusion and the
the tools spread at different speeds through pace at which they communicated specific
divergent routes. Davis and Greve ask what practices were shaped by the broader institu-
factors accounted for these different patterns tional context in which they were situated.
of diffusion. Social networks provide one Davis and Greve's analysis affords keen
compelling answer. Pills spread from one insight into how network configurations are
corporation to another across the nation conditioned by institutional forces.
because the corporate director network has a Understanding why the same boards take sig-
national reach. Boards that shared directors nals about adopting pills from distant, but
were the conduits through which this mecha- connected rivals while turning to local com-
nism to deter hostile raiders spread. Golden munity members for signals about the legiti-
parachutes, in contrast, circulated locally. macy of parachutes requires not only
Their diffusion was rapid in some areas, but attention to networks, but to the meaning of
 601
practices, categorical distinctions and status a community of organizations that engage in
hierarchies. common activities and are subject to similar
We find strong common analytical under- reputational and regulatory pressures
pinnings in these different, notable accounts (DiMaggio and Powell, 1983; Scott et al.,
of institutional influences and network 2000). Through a more politically filtered
effects. Numerous scholars identify networks lens, a field is seen as a space of positions
as the channels through which institutional whose characteristics are jointly defined by
effects flow, and see networks of like-minded the configuration of their inter-relationships
individuals as central reference groups that and by the struggles of actors who seek to
promote widely emulated practices. The claim them (Bourdieu and Wacquant, 1992).
presence of these common elements in a These two definitions bracket contemporary
handful of important empirical studies lends institutional parlance, where 'field' carries
credence to our claim that networks and three distinct, but only partially decompos-
institutions mutually influence one another. able connotations. We highlight each sense of
To pursue this argument, we move from the term, and then argue that their indissol-
empirical studies to conceptual claims, and ubility results from the relational threads that
offer a brief exegesis of four core ideas that cross-cut them. Networks both structure and
are widely used in both network and institu- integrate fields.
tional analyses. We demonstrate that core The fields of institutional theory are
concepts in institutional and network theory recognizable arenas of social action, as such
are analytically richer and more useful when they are fields of endeavor. A more dynamic
they take each other into account. view suggests differentiated fields of play
where more or less attractive positions
convey opportunity, and constrict the
possibilities of various social groups. Finally,
fields are molded into their characteristic
FOUNDATIONAL CONCEPTS shapes by rules, conventions and
expectations that define appropriate activities
Organizational fields and legitimate positions. Thus, this view
emphasizes fields of force that regulate social
Fields are simultaneously master concepts action.
and fundamental empirical sites for institu- Relationships are moves in games and
tional analysis. Much recent (and some not so fundamental components of the fields on
recent) work has focused on genesis and which they are played. As such, concrete
change in such diverse fields as politics, the network structures map past struggles, and
arts, law, gastronomy, and the chemical shape possibilities for the future by
industry (Clemens, 1997; DiMaggio, 1991; differentially channeling resources to
Dezalay and Garth, 1996; Ferguson, 1998; contestants. Networks also push and pull
Hoffman, 2001; Rao, Monin, and Durand, players into finite sets of positions. Thus, the
2003). These rich narrative efforts, as well as positions and affiliations participants claim
more abstract treatments, rely heavily on are only partially under their control. The
relational language to describe the contours presence and absence of ties render a
and characteristics of fields. Perhaps more confusing struggle clear to observers and
importantly, organizational action within participants alike by allowing them to
fields is understood largely in terms of affili- classify and order both the players and their
ation, competition, and shared membership, moves into categories (forms, identities,
all features that emphasize how social rela- strategies) and hierarchies (status orders). A
tions shape institutions (Fourcade 2007). fundamental insight of network theory, often
Consider two related definitions of fields. neglected in institutional analyses, is that
In one view, an organizational field is relationships are both pipes that channel
resource flows as well as
602
prisms that help render action sensible 'defining the relationships among roles in
(Podolny,2001). terms of what the incumbent of one role owes
Networks are essential to fields in at least to the incumbents of other roles' (March and
two senses: they are both a circulatory system Olsen, 1984: 23). In contrast to classic
and a mechanism for sensemaking. Fields are Weberian notions of authority, it is the
shaped by networks, which condition the linkages among conventional recipes for
formation of relationships and help establish action that are central, defining characteris-
their consequences. But it is only against the tics of organizations. When spread across the
backdrops of particular fields that categorical distinctions provided by orga-
rationalities and strategies of action are sen- nizational roles, logics comprise formal
sible. The relational aspects of fields are the structures.
threads that weave together the term's dis- Clemens (1993, 1997) extends the idea of
parate meanings. logics by recognizing that the social world is
rife with alternative models for organizing
any particular endeavor. In her view,
Institutional logics organizational repertoires are templates that
structure concrete relationships within organ-
Logics constitute the rules and conventions izations and convey scripts for behavior that
of a particular organizational field. In broad link forms of organization to cultural
terms, an institutional logic is the constella- expectations (Clemens 1993: 758). In this
tion of beliefs and associated practices (the sense, logics offer a mechanism by which
schemas and scripts) that a field's participants institutions direct the formation and
hold in common. These packages of beliefs mobilization of networks, while providing a
and practices are organizing principles and means for expectations and regulations to
recipes for action. They have instrumental, exert force upon the participants in a field.
normative, and cognitive implications The analytic link she makes between
(Friedland and Alford, 1991; Whitley, 1992; institutional logic and organizational form is
Thornton, 2004). Logics provide rationales an important one that deserves further
for action. They are most influential when explication.
they are consistent and easily taken-for- Institutional logics, then, are inextricably
granted. But when multiple competing logics tied to concrete structures that define the
are in play in the same setting, they can authority relationships that characterize orga-
trigger conflict and/or generate new accounts nizational forms. Logics do more, however,
of activity. than forge collections of roles into formal
Three different approaches to the idea of organization. Friedland and Alford (1991)
logics rely on relational underpinnings, but offered a now widely held view of logics as
their structural features are rarely elaborated. central, distinguishing features of fields. In
Consider first the idea, drawn from work in their view, the content of a field's dominant
the Carnegie School tradition of organization logic renders networks much more than mere
theory, that organizational action is routine- affiliations. Without institutional logics, 'it
based, rule-governed, and triggered by con- will be impossible to explain what kinds of
ventions that match concrete situations and social relationships have what kind of effect
actions to the needs of particular positions on the behavior of organizations and individ-
(Cohen, March and Olsen, 1972; March and uals' (Friedland and Alford, 1991: 225).
Olsen, 1984). These logics of appropriateness Logics make networks meaningful features of
do more than simply set the grounds for social and economic worlds precisely by
concrete action in particular situations. When disciplining (though not determining) the
strung together across roles, they represent formation and implications of relationships.
the authority structure of an organization by The presence or absence of connections and
 603
the resources that flow through them as well multiple institutional arrangements and
as the meanings that participants and logics, only some of which are instrumental.
observers attribute to relationships depend Relationships matter precisely because their
upon prevailing logics. The same relationship meanings are variable and depend on the ori-
or affiliation may exist under the auspices of entations of participants to the various logics
multiple institutional logics, which provides and contexts them sensible.
leverage to elaborate the ways in which Return, for a moment, to Macaulay's
relationships carry the social into (1963: 61) discussion of contract and
instrumental exchanges. consider the oft-cited example of a
businessman who notes: 'You don't read
legalistic contract clauses to each other if you
Embeddedness: the non-contractual ever want to do business again. One doesn't
basis of contract run to the lawyers if he wants to stay in
Classic research in organizational theory business because one must behave decently.'
(Dalton, 1959; Gouldner, 1954) and a foun- There is certainly a story about trust,
dational work in economic sociology forbearance, and the shadow of the future
(Macaulay, 1963) demonstrated that even implicit in these statements. Much less
highly purposive economic exchanges are explored, however, is the idea that 'behaving
enmeshed in and freighted with social expec- decently' is defined against a particular social
tations. Organizational and economic actions and institutional backdrop.
result from a complex lamination of motiva- The idea that lawyers should be excluded
tions and meanings that participants draw is not because they are personal strangers but
from the various fields in which they partici- because they view the same relationship
pate. Macaulay's (1963) key finding that through a different institutional lens, which
businessmen often disregard the legal rights helps explain why they find the business-
and responsibilities inherent in contract in man's approach 'startling' (Macaulay, 1963).
favor of more social means of dealmaking As Macaulay noted, where businessmen see
and dispute resolution underscored how orders that can legitimately be cancelled,
social relations cemented economic transac- lawyers see the same exchanges as contracts
tions. His study offered a starting point for whose violation carries strongly negative
Granovetter (1985) who, drawing on consequences. Economic exchange has a
Polanyi's (1957) insight that market relation- noncontractual basis, but that bedrock is both
ships are embedded in both economic (con- relational and categorical. The meaning of a
tract) and non-economic (friendship, familial) relationship and the actions appropriate to it
institutions, illuminated how concrete social depend jointly on the parties to the tie and the
relationships shape economic activity. broader institutional and professional milieus
Granovetter's (1985: 500) argument that to which they belong. Put differently, rela-
social relationships are fundamental to eco- tionships are multiply embedded and the
nomic processes has been highly influential. social entanglements that make economic
Nevertheless, we concur, to a degree, with exchange possible are the joint outcome of
critics of the embeddedness perspective both networks and institutions. We make a
(Krippner, 2001; Lie, 1997) who argue that a similar claim about our final concept, social
purely relational view of market activity capital, which more closely situates individ-
loses some of the evocative features of ual activities in both fields and networks.
Polanyi's original, more institutional defini-
tion. Social ties are fundamental to economic
relations, certainly. What we find more Social capital
interesting is the insight that economic
relationships (as well as any other collective Like 'embeddedness,' the voluminous and
social activity) can be understood in terms of disparate uses of 'social capital' have
604
rendered the concept slippery. At a basic actors ... within the structure.' Note three fea-
level, capital is a resource that can grow with tures of this definition. First, there are multi-
investment and use. Social capital, then, is ple 'social capitals.' Second, social capital
capital derived from relationships external to does not equally facilitate all activities.
the individual (Lin, 2001). In other words, Third, the activities for which this capital is
social networks convey an array of resources an efficacious resource are located within the
to individuals at differential rates. Viewed structure that defined it. Put more succinctly,
instrumentally, that capital can be invested social capital is contextual: it derives from
with some expectation of returns. The and only pays dividends in certain situations.
networks that convey social capital can be Pierre Bourdieu offers a subtly different
either concrete, measurable relationships or definition of the concept. He emphasizes a
more diffuse affiliations based on group broader notion of social structure and a more
membership. explicit emphasis on resources, distinguish-
The latter sense of membership owes ing social capital from both cultural and
much to Durkheim and treats the collective human forms of capital: 'The aggregate of the
effervescence and shared identification of actual or potential resources which are linked
social groups as both a public and a private to possession of a durable network of more or
good that can be harvested for personal and less institutionalized relationships of mutual
collective benefit (Putnam, 2000). In acquaintance or recognition' (Bourdieu,
Alejandro Portes' terms (1998: 52), 'involve- 1985: 248). This definition is also a
ment and participation in groups can have complicated one, but note that it makes social
positive consequences for the individual and capital an outcome of both direct ties and
the community.' Other scholars take a nar- recognizable membership. Perhaps more
rower view, focusing more explicitly on con- importantly, Bourdieu's emphasis on institu-
crete relationships of exchange. Burt (2005: tionalized relationships returns us to the
4), for instance, notes 'One's position in the consideration of fields, a complementary
structure of ... exchanges can be an asset in concept in his theory of practical action.
its own right. That asset is social capital, in Here, capital (of whatever form) is derived
essence, a conception of location effects in from the arrangements that characterize par-
differentiated markets.' In this formulation, ticular fields, and it is within those fields that
social capital derives from the structure of the different varieties of capital can be mobilized
collective, but the returns are to the indi- to serve disparate ends.
vidual, based on differential positions within We argue that this close look at key con-
networks, rather than on the interplay of cepts from institutional theory and network
affiliation and identification emphasized in theory demonstrates that the approaches are
more categorical, membership-based indissoluble. Fields are fairly barren without
treatments. the interpretive lenses and resource channels
Two often-cited general definitions of created by networks. Logics render networks
social capital combine both these aspects in a and organizational structures sensible in par-
fashion that is instructive for our effort. Both ticular fields, but many, if not most, activities
situate social capital within a particular are amenable to multiple logics. Thus, the
context, while treating it as an imperfectly ability of logics to shape social action
fungible resource. Coleman (1990: S98) rec- depends intimately on the structures in which
ognizes that social capital is plural: 'Social activities take place and the partners with
capital is defined by its functions. It is not a whom they are undertaken. Expanding the
single entity, but a variety of different enti- reach of all four concepts to more fruitfully
ties, with two elements in common: they all capture such relationships will be particularly
consist of some aspect of social structures, important to the growing number of
and they facilitate certain actions of
 605
studies that examine the genesis and dynam- institutions, and the concrete relationships
ics of institutions and networks. In the fol- that are the basis of networks have a dual
lowing section, we abstract from our character. Like other well-known dualities -
foregoing discussion to sketch an analytic between persons and groups (Brieger, 1974),
framework that takes up this challenge. meanings and structures (Mohr, 1998),
organizations and environments
(Stinchcombe, 1965) - we take meaningful
CONTEXT OR CO-CONSTITUTION? social categories to be defined in large part
by relationships' participants from within and
We have documented a set of analytic con- across them (White et al., 1976). At the same
nections between networks and institutions. time, the likelihood and implications of
Canonical works in neo-institutional theory particular relationships stem from the
rely explicitly on network imagery and categories that collaborators occupy and
mechanisms, while exemplary empirical span. As a result, categories and relationships
pieces demonstrate that networks are central jointly bound and determine action in social
to explanations of institutional phenomena. systems.
Likewise, four master concepts - field, logic, Understanding how networks and institu-
embeddedness, and social capital - mix both tions co-evolve to shape social and economic
relational and categorical claims. We believe arrangements requires us to attend to the
these interdependencies can be understood in myriad ways that relationships and categories
two ways. The first, less radical view treats influence each other. We argue that one force
networks and institutions as mutually behind that shaping is organizations and
reinforcing, contextual features of social individuals who strive to navigate settings
systems. The second line of argument exam- where multiple institutional logics either co-
ines how networks and institutions co-consti- exist or collide.² If logics offer templates for
tute one another. Put differently, the first action and organizing while rendering
view sees institutions as the landscape and existing and potential relationships
networks as the social relations on that field. meaningful, then settings where multiple
The second view argues that fields influence logics overlap will be particularly fertile
which relations are possible, and how these ground for institutional entrepreneurship.
relations are forged can alter the landscape in Some of those in structural locations that
profound ways. We hold the second view. engage multiple logics - as in art and com-
Many institutionalists have recognized merce, patient care and administrative
that networks are important contexts for efficiency, or altruistic medical donations and
understanding institutional process income generation - can use their
(Jepperson, 1991; Davis, Diekmann, and circumstances to forge new opportunities or
Tinsley, 1994; Dobbin and Dowd, 2000). craft multivocal identities. In settings where
Contextual effects are key, but more numerous logics reflect conflicting or
important, we believe, is the idea that incompatible demands, ambiguous identities
networks and institutions are co-constitutive. and multiple networks offer room to maneu-
In other words, networks shape institutions ver. Still, the tensions that are generated by
but institutions sculpt networks and direct ambiguity, multiplicity, and contradiction can
their growth. Genesis and change, not just be daunting to individuals and organizations.
context, are at stake in the merger of Practical action draws on both relation-
structural and cultural approaches to complex ships and categories, and, in so doing, links
social systems. networks and institutions. Such efforts are
Our argument rests on the idea that most visible in settings characterized by con-
categorical distinctions are at the heart of flicting logics, multiple audiences, and
606
ambiguous categories. Participants in specific These questions do not exhaust the con-
fields draw on categories and associated nections between networks and institutions.
logics to make sense of their worlds and Nevertheless, we believe that initial answers
direct their relationships and affiliations. At to these queries will aid in developing a
the same time, relationships and affiliations theory of social and economic life that treats
offer participants disparate types and networks and institutions as flip sides of the
amounts of capital, depending on their insti- same analytic coin.
tutional context. Continuity and change in We begin by revisiting our work on the
categorization systems and network struc- evolution of inter-organizational collabora-
tures alike depend on discernable patterns in tion in human therapeutic and diagnostic
the formation of ties and affiliations. biotechnology. The commercial field of the
How, then, do we explore the generative life sciences provides us with fertile ground
relationship between networks and institu- to answer our first two questions. We first
tions? A thorough-going elaboration of a discuss how the same collaborative activities,
'network-institutional' research program is for instance joint R&D efforts, have very
beyond the scope of this chapter. We opt different implications for biotech firms
instead to reconsider some of our own work depending on the organizational form of
on the evolution of the human therapeutic partners. Here categorically different forms
and diagnostic biotechnology industry and on of organization bring different logics to the
the institutional changes that surround the same activities. As a result, the likelihood
commercialization of academic research. In and effects of any particular tie depends on
the former setting, multiple logics of discov- institutional features of the partner.
ery associated with different types of organi- R&D undertaken with pharmaceutical
zational partners encourage biotechnology firms, for instance, differs dramatically from
firms to create and maintain diverse network scientifically comparable research conducted
ties in order to innovate and develop novel with academic, university-based
products. These ties span multiple types of collaborators because pharmaceuticals and
organizations to form a field where relation- universities operate in different selection
ships and outcomes alike are stamped by the environments under different institutional
categorical features of partners. In the latter logics. Moreover, as the field developed
setting, logics associated with the biotech firms and partner organizations
commercial use of science are imported into become relational generalists. In addition to
the established field of public science, spark- learning to manage multiple types of activi-
ing both structural and institutional transfor- ties across stages of product development,
mations. We address a set of research biotech firms developed the capacities neces-
questions that emerge from treating skilled, sary to conducting the same kinds of endeav-
but constrained, performances as a mecha- ors with different types of partners. Their
nism linking relationships and categories. efforts to develop and maintain network port-
The key questions we consider are: folios that include diverse activities and part-
ners accounts for the characteristic structure
(1) How do the meaning and consequences of of the industry-wide network.
relationships depend on the character of the We next turn to analyses of innovation in
participants? two densely populated biotechnology
(2) How do the effects of macro-structures depend
on the types of participants that comprise them?
regions, Boston and the San Francisco Bay
(3) How do locally situated individuals pull down area, to address our second question. These
global categories and draw on external relation- two regional communities are highly produc-
ships in their daily activities? tive, but one (Boston) is anchored in a net-
(4) How does situated action escape its local work that grew from public sector origins.
context to alter global categories and external The other community (SF Bay) is centered
relationships?
 607
on a network that emerged from starting Bourdieu and Wacquant (1992) in viewing a
points in venture capital (VC) initiatives. The field as a center of debate in which compet-
different institutional anchors in these two ing interests negotiate over resources and the
regional networks result in divergent interpretation of key rules and conventions.
approaches to innovation. Both clusters are Their study focuses on the interaction of
highly successful and network structures are multiple overlapping networks through time
fundamental in both places, but the types of by examining how the formation, dissolution,
success and the ways in which networks and rewiring of network ties from 1988 to
matter vary with the organizational form and 1999 shaped the opportunity structure of the
associated logics of key participants. biomedical field. By linking an evolving
We dramatically shift levels of analysis network topology and field evolution, Powell
and go 'microscopic' to examine our next two et al. demonstrate that social change is not an
questions. We first consider the ways in invariant process that affects all participants
which broad logics (of appropriate skepti- equally. Rather, field-level transformations
cism), salient categories (such as academic are multi-dimensional phenomena.
discipline) and concrete relationships (of col- Organizations feel the reverberations of
laboration and mentorship) are pulled down change in different ways depending on their
into the daily life of a scientific laboratory. institutional status and location in the overall
The institutional and relational features of network. But the status orders and structures
academic science shape laboratory life, but of the field change over time.
they do so imperfectly because they also The analytical aim of the 2005 paper was
offer researchers avenues for resistance. to illuminate how patterns of network inter-
Finally, we turn to an analysis of decision action emerged, took root, and transformed
making in a high-profile technology licensing the field, with disparate ramifications for all
office to consider how local action can of the varied participants. The empirical set-
escape its immediate context to reshape ting was the field of biotechnology, which
broader categories and relationships. In this developed out of university laboratories in
instance, situated efforts to resolve con- the 1970s, saw the founding of dozens of sci-
tradictory logics at the boundary between ence-based companies in the 1980s, and
academe and the market drive licensing matured in the 1990s with the release of
officers to create complicated deals that can dozens of novel medicines. The field is
entangle participants from different market notable for both scientific and commercial
and technological categories, thus shifting the advances and a diverse cast of organizations
character of the field. ranging from universities, public research
organizations, venture capital firms, dedi-
cated biotech firms, and giant multinational
pharmaceutical corporations. Because the
THE RECURSIVE NATURE sources of scientific leadership were widely
OF NETWORKS AND INSTITUTIONS dispersed and developed rapidly, and the rel-
evant skills and resources needed to produce
In their study of the commercialization of the new medicines were broadly distributed, the
life sciences, Powell and colleagues (2005) participants in the biomedical field have
offer a co-evolutionary analysis of how fields found inter-organizational collaboration
and networks influence one another. Their essential (Powell, Koput, and Smith-Doerr,
starting point is the view that fields emerge 1996). By analyzing the evolving structure of
when social, technical, or economic changes inter-organizational networks, we demon-
exert pressures on existing relations, and strated how the larger field and its conven-
reconfigure models of action and social tions changed both the meaning of ties and
structures. In this respect, they follow the practice of collaboration.
608
In the early years of the industry, from multiple activities. For example, universities
1975 to the late 1980s, most biotech firms and public research organizations specialized
were small companies that relied heavily on in basic science and in early stages of drug
external support. No biotech firm had the development. Venture capital firms special-
necessary skills or resources to bring a new ized in financing, Biotechnology companies,
medicine to market in the early days, thus and especially large multinationals, tended to
they became involved in an elaborate lattice- have a hand in many more activities. More
like network of relationships with universi- recently, public research organizations such
ties, hospitals, and large multinational firms, as universities have greatly broadened their
The large corporations, despite well- range of endeavors in the biomedical field.
established internal capabilities, lacked The most dramatic finding of this research
access to the cutting edge of university sci- was that, over time, all participants in the
ence. Deficient in a knowledge base in the field had to learn to master a wider array of
new field of molecular biology, large firms relationships and move from specialist to
were drawn to the biotech start-ups that had generalist roles. That move makes the need to
more capability at basic and translational sci- navigate multiple potentially competing
ence. This diverse distribution of technologi- logics a key feature of the field.
cal and organizational resources was a key Second, as the field gained coherence and
factor driving early collaborative arrange- the pattern of reliance on networks solidified,
ments in the industry. A number of institu- various institutions emerged to facilitate and
tional factors undergirded this collaborative monitor inter-organizational collaboration.
division of labor. Offices were established on university cam-
The breakneck pace of technical advance puses to promote technology transfer, law
has rendered it difficult for any single organ- firms developed expertise in intellectual
ization to remain scientifically abreast on property issues, and various angel investors
multiple fronts, hence linkages to universities and venture capital firms provided financing,
at the forefront of basic science have been along with management oversight and refer-
necessary. The availability of funding also rals to a host of related businesses. As these
increased rapidly, as biomedicine became a relations thickened and a relational contract-
major force in modern global society. The ing infrastructure grew, the reputation of a
budget of the U.S. National Institutes of participant came to loom large in shaping
Health, a key funder of basic research, nearly identities (Powell, 1996).
doubled in the 1990s during the Clinton There are two aspects of this analysis that
years. Venture capital financing flowed into are highly relevant to our current discussion
biotech somewhat irregularly in the 1990s, of network and field evolution. One, notable
but over the course of the decade grew changes in the nature of the actions pursued
markedly. Biotech financing by venture cap- by the field's participants accompanied shifts
ital has always been somewhat counter-cycli- in the field's characteristic practices, logics,
cal. When there was great enthusiasm for the and norms. Two, both the cast of participants
internet and telecommunications start-ups, and the rules of the game changed as new
interest in biotech waned. But when the logics of affiliation emerged and spread. We
bloom fell off the internet rose, financing for briefly summarize these two co-evolving
biomedical ventures went on the upswing. trends, and refer the reader to the more exten-
Two factors stood out in shaping the early sive discussion in the 2005 paper.
structure of the field and the nature of its net- In the late 1980s, the most active partici-
works. One is that the different members of pants in the emerging biotechnology industry
the field had varying abilities and competen- were the dedicated biotech firms, pharma-
cies. Some of the participants were highly ceutical corporations, and key government
specialized, while others had a hand in agencies such as the National Institutes of
 609
Health. In these early years, biotech firms primary locus of activity shifted from com-
lacked the capability to bring novel medi- mercialization to research and development
cines to market, while large firms trailed in and finance.
understanding new developments in molecu- The industry expanded geographically as
lar biology (Gambardella, 1995; Powell and well, moving from its early origins in the Bay
Brantley, 1992; Henderson, Orsenigo and Area and Boston to San Diego and a handful
Pisano, 1999). Venture capital activity in of other key regions in the United States and
biotech was limited, and most small compa- Europe (Owen-Smith, Riccaboni, Pammolli,
nies supported their research and develop- and Powell 2002). Growth in the number of
ment activities by selling their lead products new firms, new partnerships, and new ideas
to large corporations, which subsequently was greatly enhanced by an increase in finan-
marketed the medicine and pocketed the cial linkages and government research fund-
lion's share of the revenues (Powell and ing. The combination of the growth of private
Brantley, 1996). equity markets and national funding for R&D
A handful of emerging dedicated biotech replaced the former reliance on large
firms with considerable intellectual property corporations for support.
and strong translational research ability were The older relationship with giant multina-
highly sought after as collaborators. This first tionals for commercialization activity was a
wave of biotechs founded in the 1970s and very restrictive one. A small handful of firms
early 1980s included Genentech, Centocor, had the ability to take a drug to late-stage
Amgen, Genzyme, Biogen and Chiron, and development and a small set of dominant
the most active large corporate partners were multinationals could manufacture and dis-
firms such as Eastman Kodak, Johnson and tribute the drug worldwide. This commer-
Johnson, and Hoffman La Roche. While the cialization arrangement was a downstream
commercial logic of young firms selling their activity, involving the sale of a new medical
lead products to major corporations domi- product. One might consider it the last dance
nated the landscape of the 1980s, a new set of in the product life cycle. In contrast, finance
relationships was quietly emerging. is an upstream activity, which fueled research
The National Institutes of Health began and development, licensing, and subsequent
forging R&D relationships with new entrants commercialization. Consequently, it enrolled
to the industry, and linking university scien- many more participants into the industry net-
tists and start-up firms. As the science under- work. With the addition of more participants,
girding biotechnology expanded by leaps and a wider array of organizational forms joined
bounds, the intellectual property associated the field. Diversely anchored, multi-con-
with the science became more codified and nected networks are much less likely to
legally secure. This, in turn, attracted greater unravel than are networks that are reliant on a
interest from venture capital. By the early few forms of organization.
1990s, biotech firms not only had highly Most notably, multiple logics were now at
prestigious science, evidenced by publica- play. Pharmaceuticals began to recognize that
tions in top-tier journals, but they also had they had to learn skills other than devel-
secure legal rights to their intellectual prop- opment and commercialization in order to
erty in the form of patents. The networks of compete with university researchers and ven-
affiliation began to change, in some respects ture capitalists for access to cutting edge
quite dramatically. By the mid 1990s, the ideas. The network structure of the field con-
most active participants in the field continued tinued to expand throughout the 1990s, as
to be dedicated biotech firms, but the large both the number of entrants and the number
pharmaceutical companies were pushed to of ties linking incumbents and new entrants
the sidelines by the entrance of venture expanded greatly. Indeed, in 1998 more than
capital firms and universities. Moreover, the 1100 new ties were forged. All of the
610
participants - from federal funding agencies combinatorial or multivocal took root and
to universities to biotech firms to pharmaceu- began to diffuse to the field's periphery.
ticals - had begun to engage in a wide array Neither money, market power, nor the sheer
of activities and were no longer specialists. force of novel ideas dominated the field.
We refer to the ability of participants to par- Rather organizations with diverse portfolios
ticipate effectively in multiple kinds of ties of well-connected collaborators became the
with diverse parties as multivocality, a domi- most cohesive, central participants in the
nant pattern that emerged whereby highly field and played the largest role in shaping its
central participants were involved in a evolution. The tight density of the expanding
diverse array of collaborations with an exten- network and the open scientific trajectory
sive set of partners of different types (Padgett combined to enhance the importance of the
and Ansell, 1993). various participants' reputations. The pattern
As the cast of participants grew, and as of cross-cutting collaboration meant partners
diversity in both organizational form and on one project were often rivals on another.
activity became more important, new logics As a result, networks were frequently
of affiliation took hold. In the early years, rewired. Thus participants had to learn how
there was a powerful influence of accumula- to exit relationships gracefully, so as not to
tive advantage. Those entrants who had the damage their future collaborative prospects.
most visibility attracted the most attention The coevolution of networks and categories
and the greatest sponsorship. In short, the in the field created a social structure in which
rich got richer in the Mertonian sense external sources of knowledge and resources
(Merton, 1968). As the field grew, homophily became widely differentiated and a prefer-
became more important, particularly in terms ence for diversity and affiliation with multi-
of geographic location as firms located near ply connected partners had powerful
one another connected. Particular regions of mobilizing consequences.
the country became known for their biotech
clusters. Through time, a logic of appropri-
ateness developed, in which assumptions
about what a biotechnology firm looked like INSTITUTIONAL EMBEDDEDNESS
became widely accepted. A new canonical SHAPES CATEGORIES AND
firm excelled in translational science and PRODUCTS
typically had ties to a research university, a
venture capital firm or two, and a large cor-
porate partner. A highly successful firm In more recent work we have moved from
would add affiliations with a noted research analyzing the evolution of the macro-network
hospital and perhaps a federal agency, such to a more fine-grained study of the two most
as one of the branches of the National active biotechnology clusters, the San
Institutes of Health. But note that each of Francisco Bay Area and the Cambridge/
these affiliations was for a specific type of Boston region. The attributes and successes
relationship, the venture capital tie for of these clusters are widely studied, and their
finance, the university tie for research, the efforts have been broadly emulated world-
link to the hospital for clinical trials, and the wide (Powell, Owen-Smith, and Colyvas,
partnership with a large corporation for com- 2007). But interestingly, despite their similar-
mercialization. ities in scale and reputation, each region
As the field evolved, the diversity of emerged through distinctive patterns of col-
participants began to reshape the range of laboration that appear to influence their char-
activities that the participants undertook. As acteristic processes of discovery and types of
key participants became relational general- innovation. We explored the relationship
ists, the logic of affiliation that we dub between the forms of affiliation and the types
 611
of innovative activity pursued in these Dana Farber Cancer Center, and Brigham and
regions (Owen-Smith and Powell, 2006). Women's Hospital among others. The Boston
In the conceptual terms used earlier, our area had many fewer venture capital firms in
analyses of innovation in Boston and Bay the 1970s and 1980s, and VCs arrive in the
Area biotechnology draw on two core ideas. Boston region much later (Powell, Koput,
First, our earlier work demonstrates that the Bowie, and Smith-Doerr, 2002). Neither
organizational form of the dominant players region housed a large multinational
in a network shapes the character of social pharmaceutical corporation during the period
capital in a community. Where universities stretching from 1970s through the 1990s.
dominate, a logic of discovery that favors Both clusters have structurally cohesive
openness and information diffusion prevails networks, but they differ in the demography
and membership alone suffices to increase of their organizational types.
rates of innovation. In contrast, when for- We have shown that the Boston network
profit organizations are key players in the grew from early origins in the public sector,
network and more 'closed,' proprietary logics and that public science formed the foundation
are at the fore, a central network position is or anchor for subsequent commercial applica-
essential (Owen-Smith and Powell, 2004). In tion (Owen-Smith and Powell, 2004; Porter,
addition to shifting the ways that organiza- Whittington and Powell, 2005). Because the
tions extract benefits from their networks, the Boston biotechnology community was linked
different logics associated with partners of by shared connections to public research
disparate form shape strategies for innova- organizations early in its evolution, this clus-
tion, the kinds of connections firms forge and ter manifested a more open technological tra-
the markets they seek to serve. jectory than a cluster that relied more heavily
Recall our description of the different on industrial R&D. By contrast, the Bay Area
types of organizations - including VC firms, was much influenced by the prospecting and
government agencies, large multinationals, matchmaking efforts of venture capitalists,
large public research organizations, and the multidisciplinary science of the UC San
dedicated biotech firms - that comprise this Francisco medical school, and the novel
field. These diverse organizational forms efforts at technology transfer at Stanford
were linked by multiple types of affiliations: (Colyvas 2007). The San Francisco Bay Area
R&D connections for shared research and evolved out of this more commercial and
development, finance ties reflecting entrepreneurial orientation. Interestingly,
investment, licensing relations that transfer both Boston and the San Francisco Bay Area
the rights to intellectual property across developed from dependence upon a non-
organizations, and commercialization biotech organizational form, and these
partnerships that include product diverse forms, whether they are public
development, clinical trials, manufacturing, science organizations or highly engaged
and sales and marketing. entrepreneurial financiers, helped catalyze
We find two notable differences between the development of the respective clusters.
the Bay Area and Boston regional networks. Do these different relational components
The Bay Area is larger organizationally and and logics influence the nature of research
geographically, with many more biotech and the kinds of medical products that
firms, several major universities, including emerged from the companies in these two
Stanford and the Universities of California regions? We explored this question in two
(UC) at Berkeley and at San Francisco ways, by examining the nature of patenting
(UCSF), and numerous venture capital firms. among the participants in the two regions and
The Boston network, while denser and some- through a paired comparison of two compa-
what smaller, has many more public research rable treatments for multiple sclerosis. In a
organizations, including MIT, Harvard 2006 study, we found a significant difference
University, Massachusetts General Hospital,
612
in the patenting activity of biotech firms in doubt reflect the commercialization strategy
Boston and the Bay Area, with Bay Area pursued in the Bay Area region. We find that
firms producing roughly 3,800 U.S. utility the Boston-based companies had a stronger
patents over the period 1988-1999, while focus on orphan drugs intended to treat rare
Boston area firms generated 1,376. Bay Area diseases for patients with relatively small
firms appear to be much more prolific paten- markets. In 1983, the Orphan Drug Act was
tors. The highly skewed distribution of created to speed the development of therapies
patents, however, suggests that the difference for rare diseases by offering tax breaks and
results from a small number of exceptionally regulatory assistance to organizations that
productive Bay Area companies (Owen- would develop medicines for small market
Smith and Powell, 2006). medical needs. Many Boston-based firms
More interestingly, however, are the con- have chosen to focus on orphan drugs, as one
siderable differences we observe in the cita- might expect of companies that are enmeshed
tions Boston and Bay Area firms make in in networks that are dominated by
their patents. These data suggest that Boston universities and hospitals. In contrast, Bay
biotechs more routinely engage in Area biotech firms have pursued medicines
exploratory innovative search, which typi- for larger markets in which the potential
cally yields a few very high impact patents at patient populations run into the millions, and
the expense of numerous innovations with for which there is likely to be stiff product
lower than average future effects (Fleming competition. This high-risk, high-reward
and Sorenson, 2001). In contrast, the domi- strategy shows the imprint of the venture
nant Bay Area patenting strategy appears to capital mind set.
be a more directed and incremental, We did a paired comparison of two drugs,
'exploitation' strategy that is what one might Betaseron developed by the Bay Area firm
expect of companies supported by investor Cetus, which was eventually acquired by
networks that demand demonstrated progress. Chiron, a Berkeley-based biotech firm, and
Companies that pursue exploitative strategies Avonex, developed by Boston-based Biogen
generally develop numerous related in tandem with Berlex Laboratories, an
improvements on established components of American subsidiary of the German pharma-
their research trajectories. Exploratory ceutical firm Schering-Plough. We compared
Boston area companies are much more reliant these similar drugs by looking at FDA label-
on citations to prior art generated by ing information and patenting citations to
universities and public research prior art. These two drugs are biologically
organizations, while Bay Area companies and chemically comparable. Both are thera-
rely more on citations to their own prior art. pies for the same disease, recurring and
Indeed, 71 percent of the patent citations by remitting multiple sclerosis. Betaseron relies
Boston companies are to prior art developed on a set of four patents, three initially
outside at biotech firms. assigned to Cetus and reassigned to Chiron
How might such differences in patenting following the merger of the two firms, as
be reflected in the kinds of products released well as one process patent, which was reas-
by the companies? We used the Food and signed to Berlex Labs. These four patents cite
Drug Administration (FOA) approval records a small group of prior art patents, and in turn,
to identify the 58 new drugs developed by a larger group of second generation citations.
Boston and Bay Area biotech firms. Fifty- In sum, Betaseron rests on a history of some
three of these medicines were approved 55 interlocking patents, almost all of which
between 1988 and 2004. All of the drugs that are based on intellectual property owned by
appeared on the market prior to 1988 were companies.
developed by just two Bay Area firms, Alza Avonex, developed by Biogen, is based on
and Genentech. These early approvals no a single compound patent, but it reached
 613
more broadly into the prior art, relying on lacks a medical school, Harvard, a world-
155 separate pieces of intellectual property. class institution rich in basic science with a
Not a single piece of the prior art on which notable medical school, and numerous lead-
Avonex depends is owned by Biogen, sug- ing research-oriented hospitals and health
gesting that Biogen developed its market- institutes. The upshot of this institutional mix
leading therapeutic drug without the benefit appears to be a corporate focus on expansive
of a thicket of intellectual property rights, science and new treatments for definable
and relied instead on a mix of public domain patient populations.
science and its partners' intellectual property. In contrast, the biotech community in the
Obviously, internal R&D was critical to the Bay Area had its earliest origins in the part-
development of both drugs, Biogen's much nership of Herbert Boyer, the UC San
heavier reliance on public science reflected Francisco scientist, and Robert Swanson, a
the local network characteristics of Boston. prominent venture capitalist, who joined
relied much more heavily on public science, together to create Genentech, one of the first
which characterized the local network in biotech companies, and long a bellwether of
Boston, more notably than is the case in the the industry. UCSF is an unusual institution
Bay Area. Indeed, among the holders of the that lacked disciplinary departments in the
patents for the prior art for Avonex are MIT full range of research programs. The organi-
and the Massachusetts General Hospital. zational model at UCSF was interdiscipli-
Citation network comparison for similar nary, with a cross-functional approach to
drugs offers an interesting natural experiment medicine and an emphasis on translating
that holds constant technical, clinical, and basic science into clinical applications
regulatory features of the innovation process. (Varmus and Wineberg, 1992). Genentech
Even when such factors are quite similar, the adopted and refined UCSF's interdisciplinary
patent citation networks underlying these two team model, adding the impatience and rest-
drugs differ in a manner that reflects the lessness of venture capital financiers with
larger institutional environment of the their focus on swinging for the fences. Thus,
regional innovation system. The Bay Area- the company has pursued new medical prod-
based drug relies more heavily on internal ucts for illnesses suffered by millions. This
R&D and on research efforts of other firms, contrast of Boston and the Bay Area, the
while the Boston-based therapy draws on a most prolific biotechnology clusters in the
broad cross-section of prior intellectual world, gives considerable insight into the
property owned by a wide range of different manner in which the institutional field shapes
types of organizations. the formation of networks. Our examinations
Our comparison demonstrates that the two of two important biotechnology regions
networks bears a strong institutional foot- demonstrate that logics of action area shaped
print. Bay Area firms were faster, more pro- by growing network structures that influence
lific in terms of new product development, the habits of mind and the type of products
and more likely to pursue novel medicines that companies develop.
for large markets. In contrast, Boston firms
were more deliberative in their commercial
strategies and more likely to focus on medi-
cines for identifiable patient populations in SEEING THE FIELD IN
need of relief from specific illnesses. We PERFORMANCE
conjecture that the organizational develop-
ment and innovation processes were signifi- Linking relationships and categories through
cantly influenced by the surrounding situated action requires us to understand how
institutional environments. Boston is home to individuals draw on and modify seemingly
MIT, a powerful basic science institution that stable, persistent networks and classifications
614
in daily practice. We draw on examples from findings. Such skilled performances, Owen-
Owen-Smith's (2001) ethnographic work in a Smith's field-work suggests, are differentially
multidisciplinary neuroscience laboratory to enabled by scientists' disciplinary affiliations.
explore how scientists draw on existing Disciplines have different statuses in the
categories and relationships to make sense of academic field and participants draw on
and maneuver within their fields. The broad expectations of disciplinary
particular logics associated with different competence in assessing scientific claims.
scientists, technicians, researchers, and Discipline is a means to position an individ-
students, and the varieties of capital ual and his or her claims in a general status
(resources) that can be derived from their hierarchy and a tool for making sense of their
positions and relationships have primacy in competencies. Bio-physicists, for instance,
shaping both identities and opportunities. are accorded different degrees and types of
In the H-lab³ - a large, multidisciplinary leeway in skeptical interactions than chemists
academic neuroscience group that conducts or ecologists, even if their claims do not rest
fundamental research on olfaction in the explicitly on the particular competencies
moth Manduca sexta - Owen-Smith found associated with their discipline. In practice,
that collective opportunities for skepticism comparable findings presented by scientists
were shaped by relative positions within the whose disciplines differ can meet with
laboratory as well as expectations based on disparate skeptical reactions.
the ascribed skill and disciplinary affiliations Relationships matter equally as much as
of participants. In the scientific field, disciplinary categories, however. New find-
skepticism is a core aspect of the logic by ings are also evaluated in light of the individ-
which novel claims are validated. uals whose research produced them.
In an arena where tacit knowledge made Collaboration is a clear example. The vast
direct replication problematic and the multi- majority of empirical articles in neuroscience
disciplinary insights needed to pursue the have multiple authors. In the life sciences,
research nevertheless resulted in widely dif- authorship apportions credit according to a
ferent competencies, public performances of well-understood formula.5 Co-authorship has
skepticism and resistance became key fea- long been understood as a means for scien-
tures of training and knowledge production. tists to invest established stores of profes-
Even though public episodes of skepticism sional credibility in findings and colleagues
were clearly improvisational, they occurred (Latour and Woolgar, 1976), but in categori-
against the backdrop of well-understood cally and hierarchically differentiated fields,
(though rarely articulated) norms of appro- such investments can be double-edged. Here,
priateness. Those standards were structured relationships serve as important conduits of
by the relationships (of mentorship, collabo- information and material resources, but they
ration, and sponsorship), categories (disci- are also key prisms for evaluating new claims
plines, methods, audiences), and hierarchies under conditions where direct monitoring and
(status) that characterize scientific fields. The replication are implausible or impossible.
stage for particular skeptical performances Consider a skeptical performance that
was thus neither flat nor neutral. Scientists' takes discipline, status, and relationships into
career trajectories and the fate of new knowl- account simultaneously (Owen-Smith 2001:
edge claims owed much to the skilled per- 445 fn). In addition to serving as a means to
formance and reception of skepticism. validate findings developed 'locally' in the
Fligstein (2001) identifies social skill with laboratory, collective skepticism was a means
the ability to induce cooperation from by which members of the laboratory deter-
others.4 This view of skill is apparent in indi- mined which 'external' claims could be
vidual scientist's abilities to convince skepti- trusted and whether findings that contradicted
cal peers of the quality and validity of their
 615
their own needed to be taken into account. In broader field (e.g. standards of presentation,
one instance, Owen-Smith observed a long means of apportioning credit via authorship),
discussion of a working paper from outside but relied on a mix of local and global stan-
the Il-lab that purported to contradict one of dards of appropriateness.
the group's primary findings. The paper gen- In instances like this one, local action and
erated heated discussions, including one situated performances bring categories, hier-
interchange between Beth (a technician in the archies, and relationships together in mean-
lab) and Jim, the group's principal investiga- ingful efforts to navigate a field. Global
tor. They discussed a paper authored by features of the field of neuroscience - a mul-
Blanca, a post-doc in a Scandinavian labora- tidisciplinary endeavor that plays out on a
tory, and Bill, that laboratory's principal status-differentiated pitch where collabora-
investigator (PI) and a former student in the tions are fundamental to claims-making and
H-Lab. In this interaction the categorical evaluation - are apparent in the local interac-
implications of Blanca's discipline (she is a tions of skilled scientists. Convincing one
chemist) and of her collaborative relationship another of the validity (or lack thereof) of
with Bill loomed large, as does Bill's relative particular claims required both careful
status in the field and the legacy of his time rhetorical effort and the ability to draw the
in the H-lab. broader field and its conversations into spe-
cific performances.
Beth: You might also want to ask her about
her method. Before she came here she
worked on really small beetles. That is a
really difficult animal. She is an expert PERFORMANCES CAN CHANGE
with these methods and she has techniques FIELDS
that we do not. Also, she is really good
with chemistry. She has a really strong Observations in the H-lab clarify some of the
background, stronger than anyone here. So ways that categories and relationships get
the answer to your implication that she imported into local performances. We also
hasn't thought through her controls is that suggest there are (perhaps fewer) instances
she probably has! where situated action can shift the categorical
Jim: There's no question about the chemistry, and relational features of fields. We offer a
but she is working in Bill's lab and we pair of examples drawn from Owen-Smith's
know that Bill is a little too flamboyant field work in a high-profile university
with his methods. technology licensing office (TLO) (Owen-
Smith 2005, 2007)6.
This snippet of conversation is part of a Like the H-lab, the TLO is a university-
larger, collective skeptical performance that affiliated workplace situated in a differenti-
drew on categorically based expectations ated, hierarchical field. Where work in the H-
(e.g. chemists are good at structuring experi- laboratory is focused on scientific attempts to
mental controls), ascribed levels of individual understand the neuroscience of olfaction, the
skill (e.g. working with a difficult model TLO's goal is to identify, manage and market
animal results in better technique), and past potentially valuable technologies for
relationships (e.g. evaluations of Bill's scien- 'society's use and benefit while generating
tific competency based on his time in the Il- unrestricted income for research and
lab), as well as present ones (e.g. Jim's education.' The TLO is a boundary-spanning
insistence that Blanca's discipline and skill be administrative unit, the efforts of which are
interpreted in light of her senior co-author). framed as a service to faculty researchers and
Such performances were disciplined by industrial partners. The office's staff
logics of action native to the comprises individuals who
616
typically hold bachelor's (and in some cases and licensing the invention.7 Marketing plans
master's) degrees in technical fields. typically begin by 'shopping' an invention to
Because this office spans the boundary potential licensees. Classifying a technology
between academe and industry, its work can in terms of existing markets and products
be understood in light of multiple logics. In triggers licensing officers' efforts to search
most instances, licensing associates can draw their 'mental rolodexes' for appropriate
on one or more 'appropriate' logics as they partners. Prior licensing relationships are
make decisions. Because the office opts not highly salient to that process.
to employ legal counsel, the staff has few Collective licensing discussions in the
normatively 'correct' approaches to problems TLO typically address difficult cases. More
encoded in their training. These features and straightforward deals are the province of
the prestige of this office make the TLO a individual staff members. The most common
fertile site for local action that can reshape form of difficulty arises as a result of the
broader arrangements. conflicting logics under which university
The TLO is one of the oldest and most technology transfer operations function.
accomplished offices of its kind. As a result Recall the TLO's mission, which combines a
the office, its staff, and (especially) its direc- focus on income generation from licensing
tor occupy prominent positions in the rela- and efforts to ensure broad public access to
tively new field of university technology technologies that are often developed with
transfer. Unlike academic life science, the federal R&D funds. This mission puts the
professional field of university technology TLO and other offices like it squarely at the
transfer is still developing. Where skeptical intersection of business logics that emphasize
evaluations in the H-lab draw explicitly on revenues and academic logics that emphasize
the broader landscape of scientific norms, open access and the public good. That
similar collective performances in the TLO tension is palpable in discussions about
are overwhelmingly local and only rarely whether federally funded, university-
reach beyond the university (Owen-Smith, developed technologies should be licensed
2007). The TLO's highly visible position in exclusively or non-exclusively. The former
the field, combined with its enviable record can be particularly lucrative (especially if
of success, results in its being widely emu- equity ownership in a start-up company is a
lated. Thus, the outcomes of actions taken in condition of the deal), but comes at the
the confines of the office often get transferred expense of access. While they sometimes
out into the broader arena where they alter generate extensive revenues, non-exclusive
the shape of relationships and help to create licenses often forgo a high financial upside to
or modify emerging categories of pro- keep a new technology accessible.
fessional action. The technologies with the greatest poten-
Much of the daily work of the TLO is tial value often have the broadest appeal. As
informed by routine meetings characterized a result, university technology managers
by improvisational efforts to make sense of, routinely find themselves adjudicating
evaluate, and respond to scientific findings between more academic and more commer-
couched as 'invention disclosures.' In the cial approaches to their deals. In the TLO,
TLO, those evaluations take the form of this dilemma is commonly solved by writing
efforts to determine what kind of technologi- 'field-of-use' (FOU) deals that grant exclusive
cal innovation is embedded in a scientific rights to different aspects or uses of a
discovery and what sort of market that inno- technology to disparate licensees. As the
vation might reach. Both of these decisions TLO's director noted in an interview (Owen-
are acts of classification, and once they are Smith, 2005: 83):
made, TLO staff members (singly and, often,
collectively) develop a plan for marketing Almost everything we do is field-of-use. The
positive side of that is that you can get more
than one
 617
license in different fields. But there is also a nega- therapy is difficult to distinguish. As a result,
tive side. If there is a problem with a patent, or a efforts to partition this technology to allow
relationship then you have compounded your
difficulties if you have licensed it to multiple
for exclusive licensing to a pharmaceutical or
entities. biotechnology company, and non-exclusive
licensing to manufacturers of laundry deter-
This brief description of a common response gents may be imperfect. Problems that result
to the one of the TLO's primary institutional from trying to forge this separation may have
contradictions implies both the local chal- the unintended effect of creating relationships
lenges and the global effects of widespread across industrial categories that otherwise
reliance on this strategy. First, locally, TLO might remain unconnected. Local evaluations
associates who are often ill-prepared to deal of scientific findings in the H-lab draw
with highly technical inventions must broader categorical and relational char-
partition early-stage technologies into multi- acteristics into situated performances. In
ple fields of use that can be separately and contrast, similar efforts in the TLO have
independently licensed. Such efforts at dis- some potential to alter the relationships and
tinction are often imperfect, and raise subse- categories of the larger field. Clearly, efforts
quent problems. More globally, when FOD in the H-lab could also remake its field by,
licenses convey rights to the same technology for instance, making fundamentally novel
to licensees in widely disparate industries, discoveries about the neuroscience of olfac-
one effect is to make the TLO (and the tion. We do not wish to argue performances
university that houses it) a network 'short-cut' on some stages can only draw upon their
between firms that might otherwise share no larger contexts while others can alter them.
(or at least few) connections or affiliations. Instead, we wish to suggest that a network-
In other words, local decisions in the TLO institutional theory sensitive to genesis and,
can yield changes in the relationships and particularly, change should have some way to
categories of larger fields by bridging account for when and why local action shifts
otherwise separate licensees. To the extent larger fields. We believe that attending to the
that imperfect efforts to define fields of use existing stability of a field and to the relative
are likely to create later problems, FOD deals positions of actors within them offers some
may be more likely to deeply entangle differ- useful starting points. It matters, for instance,
ent licensees. Consider the example of an that the H-lab is an important but not domi-
invention disclosed by a prominent nant player on a large and established field
biochemist. The technology - a compound while the TLO is (arguably) one of the
that interrupts the metabolic processes of a dominant players on a relatively young and
particular bacterium and kills it - has multiple growing field.
uses.
The bacterium in question produces a
sticky plaque that, if found in veins, has been CONCLUSION AND FUTURE
implicated in heart attacks. If the bacterium DIRECTIONS
inhabits a washing machine, however, the
plaque results in smelly clothes. The We argue that understanding the characteris-
compound, then, can be understood as a tics and effects of social and economic
component in laundry detergent or as a phar- systems requires simultaneous attention to
maceutical aimed at the cardiovascular the categorical and relational features of
market. Both are potentially profitable uses fields. Institutions and networks are inter-
but, technically speaking, it is difficult to twined in canonical theoretical and empirical
define separable fields of use because the works in sociology and organizational theory.
mode of action of the detergent and the Perhaps more importantly, master
618
concepts in institutional and network theory - and institutions will be particularly apparent
fields, logics, embeddedness, and social (and important) in situations where roles and
capital - are shot through with both identities are ambiguous, logics and institu-
institutional and relational terminology. tions are conflicting or multiple, and net-
Throughout our discussion, we return to the works span diverse audiences.
dual relationship between social relationships We revisited some of our empirical work
and social categories that we take to be at the on biotechnology, scientific collaboration and
heart of a unified, 'network-institutional' university technology transfer to examine a
approach to social and economic life. few specific implications of our approach.
Networks are essential to fields because Our discussion highlights four issues where
they are both the pipes through which we believe further research can forward a
resources circulate and the prisms that network-institutional theory. We summarize
observers use to make sense of action. Fields, those analytic questions and then suggest
though, are associated with particular logics some concrete methodological implications
of action and it is those logics that make net- for future studies of networks and
works efficacious by determining which sorts institutions.
of relationships participants can conceive. First, we contend that studies of evolution
More tellingly, the dominant logics in a field and change in social systems must take into
define which sorts of connections will have account the recursive nature of networks and
what types of effects for different kinds of institutions. Explaining the contemporary
partners. In this sense, the relational and character of biotechnology requires attention
structural embeddedness of economic action to the field's history and to the particular
depends not just on networks but also on the tensions that regulatory regimes and market
orientations of participants to the fields and competition create. More importantly, we
logics that render ties sensible and help suggest, such an explanation requires that we
determine the shape and effects of structures. attend to the process by which collaborative
Social ties and affiliations are not all of a relationships and network structures alike
piece. Similar activities and structures may come to have the implications and effects
have different implications depending on the they do because of their institutional context.
institutional character of participants. Even As a result, we argue that studies of social
the most purely structural definition of, for dynamics must integrate network and
instance, social capital must take institutional institutional concepts and constructs.
context into account. Institutions and net- Networks, then, must be understood in the
works jointly determine when various sorts context of institutional arrangements and the
of capital can be invested, by whom, and institutional embeddedness of networks
with what expectations of returns. shapes categories and products. Our exami-
We argue that networks and institutions nation of innovation in the San Francisco Bay
are co-constitutive. They set the conditions of Area and Boston biotechnology regions
possibility for each other. At base, we take reinforces the important role network
this co-evolutionary relationship to rest on a connections play in explaining outcomes. We
key duality between relationships (the build- add to that a recognition that the institutional
ing blocks of networks) and categories (the characteristics of a network alter both the
building blocks of institutions). The situated character of what participants produce and
and often improvised performances of highly the process of production. The features and
bounded, but nonetheless purposive, organi- evolution of social systems, as well as their
zational and individual agents breathes life substantive outcomes, are shaped by the joint
into this duality, and, over time, provides a pressures of networks and institutions.
motor for evolution and change. We expect
the link between practical action, networks,
 619
Both of these arguments rest on a belief which particular practices and innovations
that participants' strategies and rationalities diffuse or fail by making rules and practices
are shaped by their network-institutional themselves the unit of analysis.
context. We suggest that macro-organiza- Finally, our sketch of a network-institu-
tional efforts should attend more closely to tional approach to social organization carries
behavior. Whether that attention focuses on methodological implications. We note that
the practical and situated performances of studies at multiple levels of analysis - ranging
individuals or on re-integrating a behavioral from practices, to activities, organizations,
theory of organizations into network and dyads, collectives, structures and fields - are
institutional analyses depends primarily on necessary. More importantly, temporality and
levels of analysis and topics. We shift focus dynamics are at the center of our analyses.
from the dynamics of industry-wide networks Seeing the interplay of networks and institu-
to situated action in bounded organizational tions, we contend, requires more than cross-
settings to emphasize the links between sectional explanations of variation. Instead,
activities on the ground and broader efforts to track change in the categorical and
categorical and relational constraints. relational features of social worlds over time
We argued that attention should be paid to are needed. Finally, we include a call for
seeing fields in performances. Individuals comparison. Each of the studies we discuss
and organizations act in contexts structured attends either to locally fluid behaviors or to
by relationships, categories, and hierarchies. change over time in a single field. Variations
But such contexts cannot completely deter- in networks and institutions, which can all
mine action and sources of constraint can too easily be treated as ubiquitous and
offer unexpected opportunities to players invariant characteristics of social realms, may
whose positions and characteristics offer be more apparent when we adopt a lens that
them room to maneuver. If, as we contend, emphasizes comparative dynamics.
networks and institutions are yoked together
by situated action, then studies of local action
must take relevant relationships, categories, NOTES
and logics into account.
We do not wish to suggest, however, that 1 Obviously, there are several notable
the flow of influence is uni-directional. For exceptions, where more explicit conceptual
networks and institutions to be recursively connections are offered. See Mizruchi, Stearns and
Marquis, 2006; Strang and Meyer, 1994;
related through action, the endeavors of par- Zuckerman, 1999; Zuckerman, Kim, Unkawa, and
ticipants must have some possibility of influ- von Rittman, 2003; Powell, White, Koput, and
encing their larger social environment. More Owen-Smith, 2005.
effort should be put to uncovering the situa- 2 In this regard, see the chapters on the micro-
tions and conditions under which local per- level roots of institutional theory in this volume
formances shift the structural and (Powell & Colyvas, Chapter 10 and Barley, Chapter
institutional features of fields. Because the 20), as well as Barley and Tolbert (1997); Hallett
and Ventresca (2006).
macro-social world is obdurate, action in 3 In order to maintain confidentiality we refer to
some locales must be more likely to effect the H-Lab and its occupants using pseudonyms.
change than efforts in others. More attention 4 In this regard, see also Calion (1986) and
should be paid, then, to the relational and Latour (1987) whose formulations of actor-network
categorical sources of innovation in fields. theory emphasize the differential abilities of
Even within locations that are situated to individuals to enroll disparate allies and maintain
effect shifts in their wider contexts, not all the stability of diverse constellations of
relationships. This sense of skill was also at play in
actions or participants are equally likely to the H-lab where scientists whose 'golden hands'
have a broader influence. As a result, we routinely yielded particularly compelling
suggest that more studies should focus on the experimental data were accorded greater deference
conditions under than their less dexterous colleagues.
620
5 The first author is usually a junior scientist and belief: A new sociology of knowledge.
responsible for the bulk of the 'bench' work that London Routledge & Kegan Paul
supports a particular claim. The last author is Clemens, Elisabeth. 1993. 'Organizational
typically a senior scientist who 'owns' the lab in repertoires and institutional change: Women's
which the work occurred and may have played a groups and the transformation of American
significant role in designing experiments and politics, 1890-1920.' American Journal of
framing questions. Other authors are typically Sociology, 98(4) 755-98.
arrayed alphabetically or in a fashion that places the Clemens, Elisabeth. 1997. The people's lobby:
least important participant nearest the center of a Organizational innovation and the rise of
long list. While they are rarely explicitly articulated,
interest group politics in the United States,
such authorship rules represent another
1890-1925.
characteristic logic that lets participants evaluate
claims and scientists by attending to researchers'
Cohen, M. D, March, J. G, and Olsen, J. P 1972.
relative positions in author-lists and to the strength 'A garbage can model of organizational
of a finding's association with high-profile choice.' Administrative Science Quarterly,
scientists. 17(1) 1-25.
6 All names are pseudonyms. Coleman, James S. 1988. 'Social capital in the
7 A license is a deal that transfers the right to creation of human capital.' American Journal
use an invention or material that is protected by of Sociology Supplement, 94 S95-S120.
some form of intellectual property from the Colyvas, Jeannette A. 2007. 'From divergent
property's owner (in the case a university) to a meanings to common practices: The early
licensee (most often a firm) that hopes to develop it. institutionalization of technology transfer in
Licenses can convey exclusive rights, non-exclusive the life sciences at Stanford University.'
rights, or some limited form of exclusivity. Research Policy, 36 456-77.
Dalton, Melville. 1959. Men who manage. New
York John Wiley and Sons.
Davis, Gerald F. and Henrich R. Greve. 1997.
ACKNOWLEDGEMENTS 'Corporate elite networks and governance
changes in the 1980s.' American Journal of
We are grateful to Royston Greenwood for Sociology, 103 1-37.
comments on an earlier draft. Davis, Gerald F, Kristina Diekmann, and
Catherine H. Tinsley. 1994. 'The decline and
fall of the conglomerate firm in the 1980s The
deinstitutionalization of an organizational
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 26
Institutional-Level Learning:
Learning as a Source of
Institutional Change
Pamela Haunschild and David Chandler

INTRODUCTION It is not clear, however, that this

dichotomy of economic (early) versus insti-
Institutional theory tells us that as a new idea tutional (late) actors provides a sufficiently
or business practice diffuses through a popu- comprehensive spectrum of adoption behav-
lation, some firms adopt it early on for effi- iors by firms. Consider the example of Wal-
ciency reasons (they have considered the Mart, which has started to adopt social
merits of the idea and believe it to be benefi- responsibility practices, particularly in rela-
cial to their business), while others resist tion to environmental sustainability¹ (includ-
until later in the diffusion curve (they are ing the launch of its 'Sustainability 360' plan
either not aware of the idea or do not feel it is in February, 2007),² and is recognized as
applicable or advantageous to their situation). being relatively progressive in this respect by
When these later adopters do finally a broad section of the media.³ An institutional
succumb, they do so out of social pressures to theorist might argue that this adoption
conform and believe that the primary benefit behavior (which is occurring later, in the dif-
for adopting is the legitimacy gained by fusion cycle) happened because the idea of
acceding to societal norms (Galaskiewicz, environmental sustainability (going green)
1985; Parsons, 1956; Suchman, 1995). For had diffused throughout society to such an
these later adopting firms, institutional theory extent, and the firm was facing so much crit-
tells us that the prospective efficiency icism for its failure to adopt previously, that
benefits of the idea in question are not a it adopted in search of social legitimacy
concern - they have either not been (DiMaggio & Powell, 1983; Meyer &
considered, or are believed to be too slight to Rowan, 1977). This pattern of behavior, how-
be of significant value to the firm (Westphal, ever, would be out of character for a firm that
Gulati, & Shortell, 1997; Zajac & Westphal, focuses so strongly on minimizing operating
2004). costs and passing those cost savings on to
 625
customers in the form of 'Always Low This expanded perspective still recognizes
Prices,’4 and that has resisted conforming to the institutional pressures to adopt that Wal-
pressure on several previous occasions.5 Mart faces (like all firms, Wal-Mart is
An alternative explanation of Wal-Mart's susceptible to the increased prevalence of
decision to make a large-scale move into the calls for greater social responsibility and was
green area is that it is learning from the expe- likely disturbed by the criticism it was facing
rience of other firms who have already gone in this respect), but it also provides an
green, and is adapting its own behavior additional explanation of observed behavior
accordingly. Once the diffusion of an idea that is more consistent with the firm and its
has progressed beyond its initial stages, a corporate strategy. The concept of inferential
track record of success and failure of firms learning8 (Miner & Haunschild, 1995),
that previously adopted similar policies is placed in this context, implies that firms
established, and firms pressured to adopt at facing strong institutional pressures are not
later stages are sometimes able to cherry-pick stuck with adopting unprofitable practices -
the most appropriate (and potentially they have the potential to learn from the
profitable) policies that suit their situation successes and failures of earlier adopters to
and needs, while still conforming to maximize the efficiency benefits they receive
institutional norms that dictate some form of from adopting later in the diffusion curve.
response. We suggest that this is a possible Wal-Mart is responding to institutional
driver of the decision to adopt an idea or pressures, but is doing so in a way that
business practice by firms later in the provides anticipated economic benefit.
diffusion curve that is not theoretically inte- This complicated, cause-effect process of
grated within the institutional literature. change concerning firm adoption behavior
Thus, institutional theory would currently say blends two large bodies of work in organiza-
that Wal-Mart is simply responding to tion theory - institutional theory and the
societal pressure and legitimacy threats. Yet organizational/interorganizational learning
Wal-Mart could instead (or also) be learning theories. On the one hand, institutional
from the experiences of prior adopter firms theorists recognize that firms are susceptible
and adopting these policies later in the to coercive, normative, and mimetic isomor-
diffusion process, at least partially, for phic forces (DiMaggio & Powell, 1983;
anticipated efficiency benefits. For example, Scott, 2001) and that such social pressures to
Wal-Mart's decision to start selling organic conform are powerful predictors of firm
foods might have been stimulated by the behavior - usually seen as independent of, or
success of Whole Foods and other organic even in opposition to, economic benefit. On
retailers. At the same time, however, Wal- the other hand, however, a learning perspec-
Mart is showing consistency with the tive provides an explanation of firm behavior
institutional environment (going green) with that allows for firms to respond to social
statements about how the firm wants to pressures in ways that are economically
'democratize organic food, making products beneficial. We contend that it is only when
affordable for those who are reluctant to pay this learning perspective is added to the
premiums of 20 percent to 30 percent.'6 The institutional perspective that a more complex,
dual institutional/efficiency rationales holistic change process that spans the com-
inherent in Wal-Mart's activities are also plete range of potential firm behavior in the
reflected in statements by one senior level face of institutional forces can be appreci-
executive who admitted that he was initially ated. Our understanding of the various
unenthused about going green, because he conflicting interests, motivations, and learn-
thought such a move was all about 'saving the ing processes that interact to instigate change
whales and the trees.'7 He became more is enhanced by this blend of learning and
enthusiastic when he realized that these prac- institutional theories.
tices could increase Wal-Mart's efficiency
through lower costs.
626
To some extent, the thesis we present in learning as firms adapt to their evolving
this chapter builds on existing research sociocultural environment can contribute sig-
within institutional theory and concepts nificantly to institutional theory in explaining
already embedded in learning theories, such institutional change (Dacin, Goodstein, &
as the concept of mimetic learning - Scott, 2002). Yet, in spite of these potential
consciously or unconsciously learning from benefits, the intersection of these two theories
the routines, actions, and outcomes of others has received scant attention from scholars to
(Miner & Mezias, 1996). Mimetic learning is date. An attempt to identify where these two
quite similar to the concept of mimetic iso- literatures overlap, so that knowledge is
morphism (DiMaggio & Powell, 1983) and shared and replication is avoided (wherever
both concepts are usually measured as the possible), constitutes, we hope, a constructive
prevalence of adoption by other firms in a addition to the institutional theory literature.
given field (e.g., Greve, 1998; Haunschild & We start with a definition of the process
Miner, 1997). In other ways, however, we that constitutes the focus of this chapter, a
draw on unique work within the learning the- process we call Institutional-Level Learning.
ories in areas that institutional theory has yet Institutional-level learning occurs when
to explore fully, such as the process of infer- institutions9 change due to some learning
ential learning (Miner & Haunschild, 1995) experience. Such change might result from
and the emergence of unintended conse- three possible sources: (1) an institution
quences from everyday routine actions might evolve deliberately over time, adapting
(March, 1981). to field-level changes in experience affecting
Applied examples of the benefits of inte- values, beliefs, and attitudes; (2) an institu-
grating these two theories exist all around us. tion might be affected by a specific agent of
As with the Wal-Mart example outlined change (an institutional entrepreneur) that
above, it is relatively easy to think of cases learned from its own experience or the
where both theories collectively provide a experiences of others and initiated change; or
more effective explanation of the antecedent (3) an institution might undergo unintended
conditions, processes, or outcomes of organi- change as the result of boundedly rational
zational action. It is to be expected that these action, imperfect imitation, or ordinary
two theories interface across multiple aspects routines that led to unintended outcomes.
of organizations' day-to-day activities. After In terms of the structure of this chapter,
all, institutional theory is primarily an we begin by discussing definitions of
attempt to locate the organization within its organizational learning and identifying how
social and cultural context and analyze the they relate to institutional change. We then
extent to which social institutions (rules, provide a brief overview of how institutional
rituals, routines, beliefs, and so on) shape theory has begun to incorporate the concepts
organizations as they pursue the legitimacy of organizational agency and address the
necessary to ensure success and survival over notion of active change. Shedding further
the long term (DiMaggio & Powell, 1983; light on the relatively unexplored area of
Meyer & Rowan, 1977; Suchman, 1995), overlap between the two bodies of work, we
while learning theories seek to explain the then consider how organizational learning
shaping of organizations through the interac- theories can inform institutional theory by
tion and influence of various social and highlighting a number of important
cultural forces (Huber, 1991; Levitt & mechanisms by which institutional evolution
March, 1988). and change occur, but which the institutional
It is our contention, therefore, that under- literature has yet to incorporate. These
standing the processes and consequences of mechanisms
organizational and interorganizational
 627
include the following: institutional change information distribution; information inter-
resulting from the unintended outcomes of pretation; and organizational memory, defin-
everyday action; interfirm and inter-popula- ing learning in its broadest sense:
tion learning processes that flow along geo-
graphic and network lines; change produced learning need not be conscious or intentional ...
through imperfect mimesis; change produced Further, learning does not always increase the
by field-level underperformance and slow learner's effectiveness, or even potential
effectiveness ... Entities can incorrectly learn,
adaptation processes; institutional change and they can correctly learn that which is
resulting from unlearning caused by factors incurred. Finally, learning need not result in
like field-level personnel turnover; observable changes in behavior.... An entity
efficiency-based change due to inferential learns if, through its processing of information,
learning from earlier adopters; and the range of its potential behaviors is changed.
institutional change driven by heterogeneity [Emphasis in original.]
in regulation, firm responses to regulation,
and competition based on novelty or extreme Another classic definition of learning comes
values. from Levitt and March (1988: 320), who note
We believe that these mechanisms provide that organizations are 'seen as learning by
a research agenda for future work within encoding inferences from history into
institutional theory that begins to address routines that guide behavior.' The important
some of the unanswered questions generated characteristics of these definitions for us are
at the boundary of these two important the following: (1) routines are independent of
organization theories. individual actors and are history-dependent;
but (2) they change based on interpretations
of past experience (interpretations that are
not necessarily coherent); and (3) they
ORGANIZATIONAL LEARNING change as new experiences accumulate. Such
AND INSTITUTIONAL CHANGE experiences can be the individual actor's own
experience or the experiences of others that
We begin by discussing definitions of organi- the actor has observed. Thus, learning and
zational learning, its fundamental assump- change, whether deliberate or unintended, are
tions, and identifying how learning relates to unavoidably intertwined.
institutional change. These definitions and Much of the empirical work on learning is
assumptions form the foundation upon which focused on examining the impact of these
we analyze the intersection between institu- various types of experiences on organiza-
tional and learning theory. tional outcomes, generally in the form of
The literature on organizational learning is improvements. Early work tended to be based
large and does not fit well into any single on a learning curve perspective (Lieberman,
classification scheme. Several good reviews 1984), predicting and finding positive returns
of the literature exist (Argote, 1999; to gaining experience (Dutton, Thomas, &
Easterby-Smith, 1997; Piol & Lyles, 1985; Butler, 1984). Much of this early work was
Hedberg, 1981; Huber, 1991; Levitt & conducted in manufacturing settings, but
March, 1988; Shrivastava, 1983); thus, we recent work has moved to more complex
will not attempt to replicate such work here, empirical contexts like strategic decisions
except to indicate the definitions of key terms (Beckman & Haunschild, 2002; Hayward,
that inform our discussion of organizational 2002). Empirical research in the learning
learning in an institutional context. In terms literature has also moved away from a focus
of specific definitions, Huber (1991: 89) on the amount of experience to a more
breaks his review of organizational learning comprehensive view of different types of
into four constructs: knowledge acquisition; experiences; for example, experiences gained
in heterogeneous as opposed to
628
homogeneous settings (Miner, Haunschild, & both literatures, however, reflect movement
Schwab, 2003). There is also a growing body toward a meeting of the minds in terms of
of empirical work on the conditions that level of analysis as institutional theory begins
stimulate learning and change. In this vein, to reassess its focus on the organizational
Cyert and March's (1963) behavioral theory field and allow for the prospect of individual
of the firm provides the foundation for actor agency (change driven from below),
understanding aspiration levels (both indi- while learning theory begins to account for
vidual and social) as a determinant of change change that occurs at the population level
(Greve, 1998). (change driven from above). This (re-)emer-
A further contribution in understanding gence of a more macro-perspective within
the concept of learning on a more macro institutional theory,11 combined with the
level was made by Miner and Haunschild emergence of a more macro-perspective
(1995), who explicitly moved the definition within the learning theories, has resulted in
of learning to the population (or field) level greater overlap between the two areas and,
of analysis. They achieved this by defining thus, increased the potential for comparison.
learning at that level as occurring from For the purposes of this chapter, therefore,
changes in population level routines that are we intend to focus on those areas of
based either on the experiences of that popu- organizational learning that have something
lation or of another population whose experi- to say to institutional theory, especially insti-
ences can be observed. This higher-level tutional change, at the field (a.k.a.
view of learning makes the concept much population, interorganizational, community,
more accessible to institutional theorists in industry) level of analysis (Anderson, 1999;
terms of definition, level of analysis, and Haunschild & Miner, 1997; Miner &
accounting for how change occurs at the Anderson, 1999). Levitt and March (1988)
field-level. theorize about learning at this macro-level in
In two important respects in .relation to their discussions of vicarious learning among
our thesis, however, organizational learning organizations and ecologies of learning.
departs from the fundamental assumptions Miner and Haunschild (1995: 118) build on
that have informed much of the more recent this work by defining population-level
work within institutional theory - level of learning as a 'systematic change in the nature
analysis and change processes. and mix of organizational action routines in a
population of organizations, arising from
experience.'
Levels of analysis We contend that reconciling this distinc-
tion between levels of analyses in learning
Aside from Miner and Haunschild's (1995) and institutional theories, while attending to
expansion of the learning literature to the growing overlap between the two, is
consider population-level learning, much of important for advancing both theories, in
the work within the learning literature has general, and for advancing our understanding
been conducted at the individual (Simon, of institutional change, in particular. In addi-
1991), group (Hutehins, 1991), and tion to levels of analysis, another difference
organizational (Cyert & Mareh, 1963) levels between the two theories lies in their
of analysis (cf. Miner & Mezias, 1996). approach towards change.
Historically, this has been problematic in
terms of any attempt to integrate the body of
learning literature into contemporary
institutional theory, which is conceptualized Processes of change
almost exclusively at the level of the
organizational field (DiMaggio & Powell, In addition to differences in the key assump-
1983: 148).10 Recent developments in tions of institutional and learning theories
 629
concerning levels of analysis, both theories theory that have expanded its scope to
have also differed in their understanding of incorporate the idea of institutional change,
how change occurs. in general, and individual actor agency as the
A key part of the argument against the source of such change, in particular. In
ability of organizations to adapt to change via introducing this broader perspective,
learning (Cyert & March, 1963) can be found contemporary institutional theory has moved
in arguments made in support of population closer to the learning view of the world and,
ecology - that firms are inherently inertial in the process, established itself on a firmer
and find it difficult to adapt substantially to theoretical footing.
changes in their environment (Hannan &
Freeman, 1984). As firms survive longer,
their competitive advantage/routines become
entrenched and outdated, and any innovation INSTITUTIONAL THEORY
that occurs is more likely to be incremental AND CHANGE
and travel 'along existing technological
trajectories' (Sorensen & Stuart, 2000: 83). Institutional theory places socially con-
This inertia results in a focus on the structed beliefs, norms, and rules at the center
refinement of existing processes and, thus, of organizational routines and structures
contributes to their institutionalization by (Berger & Luckmann, 1967; Meyer &
making firms less able to instigate radical Rowan, 1977; Scott, 2001; Zucker, 1977). As
leaps in technology or other major changes in outlined by DiMaggio and Powell (1983),
firm strategies, structures, or processes. agents for the diffusion and dissemination of
These assumptions of inertia featured promi- these cultural beliefs, models, and schema
nently in early statements of neoinstitutional include the state and the professions. Such
theory where change, if it occurred at all, agents act to influence organizations via
happened in punctuated leaps (DiMaggio & coercive pressures through government regu-
Powell, 1983; DiMaggio & Powell, 1991: 9- lations, normative pressures through profes-
11), rather than incremental adaptation sional associations, and mimetic actions
(Kraatz & Zajac, 1996; Selznick, 1948, resulting from cultural-cognitive processes,
1957). The distinction in these positions such as taken-for-granted meanings and
speaks largely to the debate between old and schema. Over time, these pressures result in
new institutional theorists (DiMaggio & practices that diffuse through a population
Powell, 1991; Greenwood & Hinings, 1996; and converge around an institutional norm
Hirsch & Lounsbury, 1997; Scott, 1987; (Baron, Dobbin, & Jennings, 1986;
Selznick, 1996; Stinchcombe, 1997) and is Greenwood & Hinings, 1996; Strang &
still contested. In contrast, however, learning Meyer, 1994). Institutional theorists believe
theories have consistently assumed that that the reason for this convergence is that
change occurs in an incremental fashion as actions by firms that conform to institutional
actors learn from their own experience or the expectations help these firms maintain suffi-
experience of others and adapt accordingly cient legitimacy to prosper and survive in the
(Huber, 1991; March, 1991; March & Olsen, long term (Baum & Oliver, 1992;
1976; Miner & Haunschild, 1995). Galaskiewicz, 1985; Parsons, 1956; Pfeffer &
We believe that it is important to Salancik, 1978; Suchman, 1995). Institutional
appreciate these differences in fundamental theorists have found that the longer an
assumptions regarding change (in addition to organization waits during the diffusion
reconciling differences in terms of levels of process before adopting a business idea or
analysis) in any attempt to compare practice, the more likely the reason for
institutional and learning theories. As such, eventual adoption is a desire for conformity
we now turn to a review of recent and legitimacy by that firm (Tolbert &
developments in institutional Zucker, 1983; Westphal et al., 1997),
630
irrespective of the efficiency benefits (or between competing institutions (1967: 63,
even harm) that adoption might cause (Davis, 85). In particular, they talk of the conflict that
Diekmann, & Tinsley, 1994; Rao, Greve, & occurs between an individual's 'primary' and
Davis, 2001; Zajac & Westphal, 2004). 'secondary' internalization of competing,
Although early iterations of neoinstitu- objective institutions - an integral aspect of
tional theory stressed the constraining influ- socialization. Since Berger and Luckmann,
ence of institutions on individual actors many researchers have identified and
(DiMaggio & Powell, 1983; Meyer & empirically documented various instances of
Rowan, 1977; Zucker, 1977), however, more institutional change (Dacin et al., 2002). For
recent developments in the field allow for a example, researchers have investigated
greater interplay between constraints and change in areas of workplace routines and
proactive, strategic actions by actors who practices (Baron et al., 1986; Mezias, 1990),
instigate change. During this process, two forms and structures (D' Aunno, Succi, &
areas of thought have evolved within institu- Alexander, 2000; Davis et al., 1994;
tional theory around the notion of change: Greenwood & Hinings, 1993; Greenwood &
The first concerns the general concept that Suddaby, 2006; Kraatz & Zajac, 1996),
institutions can change, while the second industry standards (Ahmadjian & Robinson,
concerns the sources of that change and con- 2001; Leblebici, Salancik, Copay, & King,
ditions under which it occurs. In the follow- 1991), and institutional logics (Hirsch, 1986;
ing sections, we briefly review this work. Thornton & Ocasio, 1999).
This review is central to our task because Consistent with this idea of change,
learning theory's main contribution to insti- Friedland and Alford (1991: 232) contend
tutional theory is as an additional (and unex- that it is the potential conflict among compet-
plored) source of both endogenous and ing institutions that produces the 'multiple
exogenous change. We, therefore, first dis- logics' from which individuals and organiza-
cuss how institutional theory views change in tions select (see also Scott, 1991). And,
general, and then discuss the various exoge- closely combined with the notion that institu-
nous and endogenous sources of change. We tions change as a result of competition, is the
finish by noting how learning theories implicit idea that institutional environments
significantly expand our understanding in change when one institution replaces another
both these respects. (Greenwood & Suddaby, 2006; Hirsch, 1986;
Thornton & Ocasio, 1999). Once the concept
of institutional change is accepted, then the
Institutional change idea of deinstitutionalization - that in order to
be replaced, an existing institution has to
The process of institutionalization is a cycle - diminish in influence - is not far behind
institutions emerge, diffuse, change, die, and (Abrahamson & Fairchild, 1999; Barley &
are replaced by new institutions (Hinings, Kunda, 1992; Burns & Wholey, 1993; Davis
Greenwood, Reay, & Suddaby, 2004; Scott, et al., 1994; Leblebici et al., 1991; Oliver,
2001: Ch. 8). This idea was evident in the 1992).
foundations on which contemporary institu- The combined effects of this evolving area
tional theory was built, but it was seemingly of research is to overcome early interpreta-
ignored in early theoretical statements tions of neoinstitutional theory that spoke to
(DiMaggio & Powell, 1983; Meyer & the permanence of institutions once formed
Rowan, 1977). Berger and Luckmann (1967), (Scott, 2001: 109-110), as well as to highlight
for example, discuss the notion of the 'change the necessity for institutions to be
of institutions' (1967: 88) and consistently reinforced if they are to be
'deinstitutionalization' (1967: 81) as well as preserved - what Berger and Luckmann
consider at length the potential for conflict
 631
(1967: 54) term 'reciprocal typification.' It is Exogenous sources of change
these preserved and reinforced 'taken-for- There are three exogenous conditions that
granted routines' that Berger and Luckmann have been discussed broadly within the
(1967: 57) assert form such a central role in literature as necessary (in part or combina-
establishing and maintaining social order. tion) for change to occur: the influence of
Although there is consensus within the institutional and technical forces in the envi-
institutional literature today that change ronment; a state of incomplete institutional-
occurs due to competition among institutions ization (the absence of a dominant logic) and
(Dacin et al., 2002), there is less agreement other contextual factors; and an exogenous
on whether such change is adaptive due to shock that significantly alters the firm's
the flexibility of organizations/institutions environment.
(Kraatz & Zajac, 1996; Selznick, 1948; (a) Institutional/technical forces In institu-
Selznick, 1957) or, instead, punctuated due to tional theory, researchers have identified both
the inertia generated as a result of institu- institutional and technical forces as sources
tional isomorphism (DiMaggio & Powell, of change, but different forces have
1983; DiMaggio & Powell, 1991: 9-11; predominated in various iterations at different
Greenwood & Hinings, 1996). In addition, times. Neoinstitutionalism presents a view of
there is disagreement about whether the the organization that is active and conscious,
driving force behind change emerges from but also represents a rejection of the rational-
forces at the environmental (exogenous) or at and efficiency-based theories that grew in
the individual actor (endogenous) level prominence within organization theory
(Mezias, 1990). As noted above, the distinc- during the 1960s and early 1970s (Kraatz &
tion in these positions concerning the sources Zajac, 1996). DiMaggio and Powell (1991: 3)
of institutional change speaks largely to the state starkly that neoinstitutional theory
debate between old and new institutional represents an attempt 'to replace rational
theorists (DiMaggio & Powell, 1991; theories of technical contingency or strategic
Greenwood & Hinings, 1996; Hirsch & choice with alternative models that are more
Lounsbury, 1997; Scott, 1987; Selznick, consistent with the organizational reality that
1996; Stinchcombe, 1997) and remains a researchers have observed.' As such, early
point of contention within the field. iterations of neoinstitutional theory perceived
institutional forces as acting at the level of
the field, constraining organizational
behavior. Firms were deemed to adopt
Sources of institutional change specific business practices, especially those
acting later in the diffusion of an innovation,
While it is universally accepted that environ- in search of institutional and societal
ments, to varying degrees, influence organi- legitimation, rather than any technical
zations (Meyer & Scott, 1983; Scott & benefits the specific practice might generate
Meyer, 1994; Thompson, 1967), it is less for the firm (DiMaggio & Powell, 1983;
clear to what extent individual actors (i.e., Meyer & Rowan, 1977), which were either
organizations) are able to influence the not considered or deemed to be insignificant
institutional makeup of the environments in (Westphal et al., 1997; Zajac & Westphal,
which they operate. This debate between 2004).
exogenous and endogenous sources of insti- Since the early iterations of neoinstitu-
tutional change is one that has featured tional theory, however, many key researchers
strongly within the neoinstitutional literature have emerged to correct this stark contrast
since its origin (Meyer & Rowan, 1977; between the influence of institutional and
Zucker, 1977). technical environments (Meyer, Scott, &
Deal, 1983: 61-64; Powell, 1991: 183-186;
632
Scott, 1983: 159-160; Scott, 1991: 167-169). 2004; Leblebici et al., 1991) and bring
A shift in thinking that presented the two change to fields. The necessary conditions
states as extremes on a spectrum along which under which such change is expected to occur
different environments contain different include high levels of existing legitimacy
mixes of the two was the first step on this (Zimmerman & Zeitz, 2002), established
journey (Scott, 1991). Kraatz and Zajac authority (DiMaggio, 1988), and social
(1996: 832) then went further, showing that capital (Maguire et al., 2004). Common sense
organizations are able to adapt their tells us, however, that the more marginal the
structures to technical pressures in the envi- actor, the lower their level of legitimacy,
ronment and benefit from change, even to the formal authority, and social capital is likely
extent that such change challenges taken-for- to be, which would imply a relative
granted institutions within the organizational ineffectiveness as an agent of change. This
field. More recently, researchers have begun apparent contradiction has been identified by
to question more directly the artificial another stream of research that notes the key
dichotomy of economic and institutional conditions necessary for the emergence of
actors (Fiss & Kennedy, 2006; Lounsbury, institutional change and entrepreneurial
2007), suggesting that institutional theory has action by actors firmly embedded within
yet to develop a comprehensive under- mature organizational fields. Although a
standing of the complex motivations that number of studies in the late 1980s and early
drive firm adoption behavior. 1990s identified that central actors can act as
(b) Incomplete institutionalization and other instigators of institutional change (Baron et
contextual factors Institutional theorists have al., 1986; Davis, 1991; Fligstein, 1985;
also framed the environmental heterogeneity Palmer, Jennings, & Zhou, 1993), however, it
that results from incomplete is only recently that this issue has been
institutionalization in terms of competing, revisited and built upon (Greenwood &
complementary, and conflicting logics that Suddaby, 2006; Rao, Monin, & Durand,
create a second condition under which 2005). This confusion regarding the
change can occur. D'Aunno, Succi, and characteristics of those actors most likely to
Alexander (2000: 680), for example, demon- instigate change requires further empirical
strate that, in specific circumstances, diver- clarification if we are to have a better under-
gent organizational change follows 'varying standing of whether it is more central or more
market and institutional changes' within peripheral actors who are more likely to act
fragmented organizational fields. as 'institutional entrepreneurs' (DiMaggio,
In spite of this work, however, a tension in 1988: 14). Perhaps one possible solution is to
the literature remains regarding other general distinguish between an entrepreneur, who is
conditions that can facilitate change. While it more likely to be a peripheral player, and
is accepted within institutional theory that entrepreneurial action, which can be
change driven by institutional entrepreneurs performed by anyone (given the appropriate
is likely to occur in emerging (Maguire, conditions), including more established and
Hardy, & Lawrence, 2004) and fragmented central actors?¹³
(D'Aunno et al., 2000; Seo & Creed, 2002) (c) Environmental shocks Finally, a third
fields, hierarchical fields, where dominant source of potential change in an organiza-
actors have vested interests in maintaining tional field comes from dramatic shifts in
the status quo, are cited as less likely to expe- environmental conditions. If environments
rience such change. On this point, however, are dynamic, the possibility of radical change
the literature offers contradictory evidence. increases (Meyer & Scott, 1983; Scott &
One stream of empirical studies suggests that Meyer, 1994). 'Environmental jolts'
marginal actors are more likely to act as (Greenwood, Suddaby, & Hinings, 2002;
institutional entrepreneurs (Ingram & Rao, Meyer, 1982) come in many forms (such as
 633
shifts in technology, regulatory change, or creation of new institutions and reform exist-
sudden resource scarcity) and stimulate the ing institutions in ways that they deem to be
opportunity for change by opening the door appropriate and aligned with their interests.
for new entrants (Thornton, 2002; Thornton These agents have the resources and, hence,
& Ocasio, 1999), accepted norms (Hirsch, the power to shape the character of institu-
1986), organizational forms (Davis et al., tions and enact institutional change (Dacin et
1994; Greenwood & Suddaby, 2006), and al., 2002: 47).14 Scott (2001: 74-77) discusses
population-wide shifts in operating practices the concept of agency in terms of a firm's
(Baum & Oliver, 1992). ability to influence the institutional logics
In the process of identifying the various that constitute its environment. Following
exogenous sources of potential change out- DiMaggio's (1988) lead, this proactive
lined in this section, however, institutional perspective diffused throughout institutional
theorists also broadened their search to theory as institutions were seen as providers
include endogenous factors - first discussing of the framework within which actors are
strategic (Oliver, 1991) and then adaptive able to define and pursue their interests
(Kraatz & Zajac, 1996) elements of change (Leblebici et al., 1991; Oliver, 1991). Powell
that emerge at the level of the individual (1991), in particular, sought to identify
actor. variation in firm responses to institutional
forces, as well as the organizational
Endogenous sources of change heterogeneity and institutional change that
Building on the exogenous sources of change such varied responses generate.
outlined above, institutional theory has also Oliver (1991: 151) made a crucial contri-
begun to recognize the importance of indi- bution to this debate, noting five specific
vidual actors (organizations) as sources of strategic responses that are employed by
institutional change. DiMaggio (1988: 12), organizations in response to institutional
Powell (1991: 194-200), DiMaggio and pressures. Each response varies in the degree
Powell (1991: 22-27), and Leblebici et al. of 'active agency' employed by the firm:
(1991: 335-338) all noted that limiting acquiescing, compromising, avoiding, defy-
explanations of change within institutional ing, and manipulating. Several researchers
theory to exogenous sources alone limits the have since utilized this framework to look at
theory merely to explaining the diffusion and the implementation of these various strategies
reproduction of institutional practices. within fields (Covaleski & Dirsmith, 1988;
Endogenous explanations of interest, agency, Elsbach & Sutton, 1992; Westphal & Zajac,
and institutional entrepreneurship, however, 1994), thus expanding our knowledge of
help constitute institutionalism as a more agency within different empirical contexts
complete theory of organizations, releasing (Davis et al., 1994; Leblebici et al., 1991;
the 'full power of the institutional perspective' Zucker, 1991).
(Powell, 1991: 183). Such ideas have since Many of these researchers, however, were
become central to the contemporary focused on endogenous sources of institu-
institutional literature. tional change that are internal to the firm. As
(a) Interest, agency, and institutional noted earlier, our primary focus in this chap-
entrepreneurship DiMaggio (1988: 14) first ter is on change at the level of the field.
introduced the term 'institutional While such change may occur as a result of
entrepreneur' as part of his call for endogenous change by a subset of population
institutional theory to include a more members, it may also occur as a result of
complete explanation of individual interests endogenous processes at the level of the
and agency. Institutional entrepreneurs are field. There is some (though not a lot) of
agents who deploy the resources at their work that examines the role of endogenous
disposal to create, alter, and empower field-level processes instigating field-level
institutions. Such actors serve as agents of
legitimacy who support the
634
change (Hinings et al., 2004). Fligstein (Friedland & Alford, 1991; Scott, 1991) from
(1990), for example, notes the rise of the which individual actors select (Greenwood &
finance conception of control with the spread Suddaby, 2006; Hirsch, 1986; Suddaby &
of financially trained professionals among Greenwood, 2005; Thornton & Ocasio,
organizations. These professionals brought a 1999). Contemporary institutional theorists
set of values and beliefs to their work that, as believe, therefore, that firms are not always
they diffused within the population of large passive recipients of institutional forces, but
industrial firms in the U.S., transformed the have the strategic potential both to select
view of control from the notion of the firm as from, and also to influence and change, the
a single entity, to one of the firm as a bundle institutional logics that are prevalent in their
of assets to be bought and sold. Others have environment when it is in their best interests
also noted the importance of professionals, to do so (Oliver, 1991).
marginal players, and reform agents as This development, theoretically, brings us
sources of endogenous change in institutional full circle within institutional theory. By rec-
fields (Greenwood & Suddaby, 2006; Strang ognizing that, under the right circumstances,
& Sine, 2002). Empirically, Brint and actors have strategic alternatives that allow
Karabel (1991) and Miner, Haunschild and them to break the bonds of their institutional
Schwab (2003) identify specific, endogenous constraints, the paradox of embedded agency
field-level processes that induce change, dissolves (Seo & Creed, 2002); moreover, the
including the presence of an industry struc- sociological foundations of the theory again
ture that rewards winner take all models and become apparent. Yet, institutional theory
imperfect inter-firm copying of routines still has far to go in terms of a complete
(Miner et al., 2003). theoretical understanding of the endogenous
(b) the paradox of embedded agency An mechanisms of change. There are many more
analysis of endogenous sources of change, sources of change than agency or other delib-
however, brings into focus a central debate erate processes of institutional entrepreneur-
within institutional theory concerning the ship. We contend that the learning theories
paradox of embedded agency (DiMaggio & are a fruitful place for institutional theorists
Powell, 1991; Greenwood & Suddaby, 2006; to discover such sources and processes.
Leblebici et al., 1991; Seo & Creed, 2002).
Institutional theorists who advocate the
notion of agency as a source of institutional
change face an inherent paradox - if institu- INSTITUTIONAL LEVEL
tions and institutional logics form the social LEARNING: A NEW SOURCE
environment, which, in turn, shapes our per- OF CHANGE
ceived reality (Berger & Luckmann, 1967)
that is structured at the level of the organiza- Below we review six key areas of inquiry
tional field (Giddens, 1984), then how do within learning theory - areas that, we
entrepreneurs perceive the need to instigate believe, have received little attention within
change and put their plan into action? institutional theory, yet have strong implica-
This contradiction has come to be known tions for helping to understand and explain
within institutional theory as the paradox of the nature of institutional change. Our key
embedded agency, or, what Berger and argument is that agency and other deliberate
Luckmann (1967: 13) refer to as 'somewhat processes of institutional entrepreneurship
like trying to push a bus in which one is are not the only sources of change in institu-
riding.' Although perplexing if thought tional fields and that there is a vast and rele-
through to the extreme, this paradox is par- vant body of research in organizational
tially neutralized by adopting the perspective learning that can provide institutional theo-
of multiple, coexisting institutional logics rists with a much broader perspective on
 635
change. For example, the role of unplanned Within this overarching framework at the
change resulting from the enactment of pro- intersection of the learning and institutional
saic routines, local and boundedly rational literatures, therefore, we offer the following
action, and ad hoc decision-making processes six areas in which advances made within the
(March, 1981) can all result in shifts in learning literature can provide insight or
institutions and institutional fields. Very little value to the field of institutional theory.
attention has been given within the
institutional literature, however, to processes
of change resulting from these types of unin- The role of unintended
tended consequences. In the following sec- consequences
tions, we will discuss how these components
of learning theories can inform our under- As indicated above, a relatively under-
standing of institutional change. explored area of organization theory that is
Organization theorists have long recog- relevant to institutional change is the notion
nized the importance of environmental influ- of the unintended consequences of deliberate
ence on organizational structure and actions action. March (1981) notes how organiza-
(Meyer & Scott, 1983; Scott & Meyer, 1994). tional action - even prosaic, everyday actions,
It is also recognized that environments are routines, and processes that relate an
dynamic and unpredictable (Pfeffer & organization to its environment - have the
Salancik, 1978; Thompson, 1967). The potential to produce unintended conse-
ability of actors to respond to their quences in organizations and organizational
environments with action that both shape and populations. Within neoinstitutional theory,
are shaped by dominant institutions - is also the institution has traditionally been the final
gaining support within institutional theorists. arbiter of organizational action. The idea that
Given the dynamic and unpredictable nature institutional change might result from the
of environments, however, .it would be unplanned and unpredictable outcomes of
strange if actors were always able to retain deliberate action is not addressed in any
control over their actions as well as the depth in institutional theory. Nonetheless, we
subsequent consequences of those actions. see such action/consequence disjunctions
On the contrary, firms that act in response to every day.
a complex environment are often unable to March (1981), for example, notes how
react with unified goals, abilities, and rational organizations with normal mobility
intentions, let alone control the outcomes of among managers will be more concerned
their actions (March, 1981: 573). The with the measurement of performance than
consequences of these reactions, in other actual performance. This is especially true of
words, cannot always be planned. In his path- long-term performance. He further observes
breaking work in this area, March (1981) how this preference can lead to actions
presents the notion that the stable and devoted to refining and managing perform-
deliberate processes of firm action can lead to ance measurement systems, rather than a
unintended change. This idea is well focus on the underlying actual performance.
established in the learning literature, but has At the field-level, this might lead to
received little attention in the institutional something like the emergence of an approach
literature; although the work on actors' to executive compensation that is
interests and agency (DiMaggio, 1988) and measurement-oriented, yet divorced from
the more recent scholarship on change in actual performance. And, in fact, we see
general (Dacin et al., 2002) provide both a things like this in stock option plans where
solid foundation for such a discussion and the originally granted strike price (the price
indicate a positive shift of thinking in this at which executives are able to buy the
direction. option) gets reset after the price has declined.
The frequency with which
636
this was done in the late 1990s suggests the (e.g., concern over performance measurement
practice was institutionalized and had at the expense of actual performance) have
become a widely accepted business norm - the potential to produce change in institutions
albeit one that is now facing (e.g., the acceptance of stock option repricing
deinstitutionalization.17 as a 'normal' business activity).
As a second example of the unintended
consequences of everyday action, Denrell
(2003) notes that ordinary inter-firm learning The role of learning processes
processes will lead to an under-sampling of and field-level change
failure (as failed organizations and failed
individuals are excluded from the sample), A consideration of organizational learning
which then leads to the widespread accept- theory leads to additional potential mecha-
ance of practices that are not actually related nisms by which endogenous change may
to performance. For example, there seems to occur in organizational fields. Organizations
be a widespread acceptance of the idea that frequently show evidence of having learned
strong organizational cultures are superior to various routines, practices, and structures
weaker ones. Yet, this idea (which has taken from each other (Argote, Beckman, & Epple,
on a rule-like status in thought and practice) 1990; Rogers, 1995). Some of this learning
is likely the result of an under-sampling of occurs at the inter-firm level and some occurs
failure, since the performance of firms with at the inter-population level, where industries
strong cultures is likely to be higher than the or other collective bodies learn from the
performance of those with weaker cultures, experiences of similar others (Miner &
even though strong culture firms are also Haunschild, 1995). When such learning
more likely to fail during periods of market occurs, it reshapes the distribution of routines
change as their culture falls out of step with in the population of firms and, thus, reshapes
changes in the environment. the institutional context within which firms
operate. The processes through which this
The consequences of unintended inter-firm and inter-population learning
consequences for institutional theory occurs include social connections, geographic
What are the implications of these types of proximity, and other mechanisms of social
unintended consequences for institutional comparison, such as size similarity (Rogers,
theory? One implication is that institutions 1995; Strang & Soule, 1998). While
will not automatically reproduce themselves. reviewing all these mechanisms is beyond the
Institutional theory has fruitfully explored the scope of this chapter, they are all
idea of institutional reproduction (Hinings et conceptually related to the boundary between
al., 2004; Scott, 2001). Yet, if we allow for institutional and learning theories, and all
the prosaic role of unintended consequences provide potential explanations for
occurring in institutional fields, change will institutional-level learning.
develop as a matter of course and institutions There is much evidence, for example, that
will not automatically reproduce. Another firms will learn from the experiences of
implication of unintended consequences is others to whom they are connected through
that it is not just agency that produces change various networks - including interlocking
in organizational fields. That is, the directorships, common social club member-
deliberate actions and interests of individuals ships, and Business Roundtable connections
and organizations are not the only driver of (Beckman & Haunschild, 2002; Davis &
change in institutional norms, roles, or other Greve, 1997; Haunschild, 1993; Henisz &
practices. The unintended outcomes of Delios, 2002; Palmer et al., 1993; Westphal
everyday routines also generate change. The & Zajac, 1994). This implies that institutional
examples outlined above show how the change (especially endogenous change) can
unintended consequences of action occur along these interorganizational
 637
pathways with the extent of change depend- Suppose that an organization is able to deci-
ent on the level of interconnectedness among pher the core processes that de serve to be
the organizations in a particular field. imitated in the Toyota production system; its
Learning also tends to flow along geographic attempts to imitate these systems will still be
lines such that organizations in close affected by its own local context, the other
proximity tend to learn more from each other practices existing in its portfolio, the
than organizations that are more geographi- responses of competitors to the imitation of
cally distant (Bums & Wholey, 1993; Davis these practices, as well as a number of other
& Greve, 1997; Marquis, 2003). This means dynamic variables. These complications are
that institutional change is also more likely to all a potential source of imperfect imitation -
occur in geographic clusters by starting in co- where the practice is changed (for better or
located firms and then spreading to more worse, consciously or unconsciously) to fit
distant ones (Greve, 2002). the local context, competitor responses, and
so on. Organizational learning studies have
noted such issues and the factors that make
The consequences of learning processes them more or less likely (e.g., Miner &
for institutional theory Raghavan, 1999). Learning studies also
The implication of these learning processes observe that such imperfections increase the
for institutional theory is that institutional chances of divergent or heterogeneous
mechanisms and the spread of institutional- outcomes (in other words, they are a source
ized practices may be affected significantly of inconsistent change in the institutional
by specific contextual factors for which insti- environment) in the sense that there is now a
tutional theory has failed to fully account - greater variety of routines in the population.18
factors such as geographic co-location, net-
work ties, and learning/information flows
between organizations and populations of The role of search: exploration
organizations. versus exploitation
In early versions of neoinstitutional theory
where the idea of mimetic isomorphism was The role of search in learning theory is cen-
a central tenet (e.g., DiMaggio & Powell, tral to an understanding of population-level
1983), the assumption was that such imitation shifts in routines, practices, and structures.
processes are relatively straightforward, with One key distinction in learning theory that
one firm copying the practices of another. differentiates search from other firm strate-
Yet, learning theories have discussed the gies is contained within the roles of explo-
problematic aspects of imitating others in ration and exploitation (March, 1991; Miner,
some detail (Levinthal, 2000; Miner & 1994). Exploration involves search directed
Raghavan, 1999). Imagine, for example, the toward new knowledge and competencies,
problems inherent in an attempt to imitate a while exploitation involves search directed
Toyota production system (Levinthal, 2000). toward the better utilization of existing com-
It is not clear which of the many underlying petencies. It has been noted that organiza-
routines, practices, and structures employed tions will generally tend toward the
by Toyota are good targets for imitation. Is exploitation of existing competencies
the uniform dress of management important? (March, 1991; Starbuck, 1983), in part
What about the just-in-time supply of because exploitation generates clear feedback
materials? and tends to yield positive, short-term results
While institutional theory has advanced (Levinthal & March, 1993). At the field-
our knowledge of the isomorphic processes level, this means that exploration will tend to
that act as forces for field-wide convergence produce more dramatic and varied
over time, there is also the issue of imperfect
imitation (which results in divergent change).
638
change, while exploitation will tend to pro- died, some switched to a different structure
duce more incremental and localized change through the process of divestiture of under-
(March, 1991). Thus, any factors that lead a performing assets, but some firms continued
field toward a preponderance of exploration to underperform until a new wave of de-
are also likely to be associated with field- conglomeration activities occurred at a later
level change in institutions. For example, period. Thus, the institutionalization of an
emerging fields such as the treatment of organizational form resulted in underperfor-
HIV/AIDS patients in Canada (Maguire et mance, which then triggered learning
al., 2004) and government incentives for new processes, which led to institutional change -
entrants in the green technology sector (Sine, a shift from conglomeration to de-
Haveman, & Tolbert, 2005) can be con- conglomeration as an accepted form of doing
sidered fields where exploration-driven business (Davis et al., 1994).
search processes led to field-level fragmenta- Another factor that seems to lead to a pre-
tion that encouraged change (D'Aunno et al., ponderance of exploration (riskier change
2000). Other work has identified conditions resulting in greater leaps of innovation) is
in well-established, more coherent fields like slow adaptation (Denrell & March, 2001).
the accountancy profession, and represents Slow adaptation benefits an organization
examples of invested actors exploring beyond because it encourages the incorporation of
established institutions in an attempt to new and divergent ideas (March, 1991). Fast
instigate change in an established organi- learning, on the other hand, tends to drive out
zational form (Greenwood & Suddaby, alternatives, narrowing the body of knowl-
2006). edge within the organization, which limits the
Yet, if we look at the learning literature, available options and encourages more
there are additional factors likely to affect conservative exploitation in the system. The
institutional change, including problemistic implication is that systems of fast adaptation
search and slow adaptation. We know from will tend to exhibit more exploitative behav-
the learning literature that performance that ior, even in situations where the long-run
does not meet aspirations triggers search and implications of exploration are positive. Fads,
learning (Cyert & March, 1963; Greve, for example, which tend to be adopted
1998). We also know, however, that these quickly, are less likely to be altered in sub-
search processes for new knowledge and rou- stantial ways by the firms adopting them. A
tines are more likely to result in riskier slowly adopted field-level change, however,
approaches that, in turn, can pose greater such as the finance conception of control
danger to firms (March, 1991). This means (Fligstein, 1990), is a practice that might
that, at the field-level, a preponderance of engender more exploratory processes and,
underperforming organizations will likely consequently, result in greater change during
lead to an increased acceptance of risk and the adaptation process. This argument
changes that produce greater variance in out- presents an alternative explanation to
comes. For example, the institutional forces institutional persistence, but one that is
that lead to a preponderance of conglomerate related to timing (overly fast versus
firms adopting the M-form structure are well beneficially slow adaptation), rather than
documented in research by Fligstein (1985; taken-for-granted assumptions and
1991) and Palmer, Jennings and Zhou (1993). isomorphic processes. The important impli-
Yet, the use of such strategy/structure cation for this argument is that institutional
combinations comes with corresponding change is more likely to occur with slow,
issues and, in general, firms that adopt insti- rather than fast, field-level adaptation. Future
tutional structures can end up underperform- research could explore profitably these
ing in comparison to those that did not (Davis differential processes as a function of
et al., 1994). Some of these firms adaptation rate.
 639
The consequences of exploration/ The role of forgetting
exploitation for institutional theory (unlearning, disadoption and
It is well-established within institutional deinstitutionalization)
theory that new ideas and business practices
diffuse among firms within organizational As noted by DiMaggio (1988), we know rel-
fields at different times, for different reasons atively little about incomplete institutional-
(Baum & Rowley, 2002; Scott, 2001) and at ization, and even less about why
different rates (Argote, 1999; Tolbert & institutionalized forms and practices fall into
Zucker, 1983). Some practices diffuse disuse. Organizational learning theory, on the
quickly, whereas others do so more slowly. other hand, has addressed the issue of
In addition, some firms are early adopters, 'unlearning,' as well as the disadoption or
while some are later adopters. Institutional 'negative diffusion' (Rao et al., 2001: 509) of
theory has explored this latter distinction organizational forms and routines. This
(early versus late), but has yet to discuss the literature can contribute to institutional
implications of fast versus slow theory in its quest to provide insight into
adoption/adaptation. institutional change, in general, and deinsti-
In addition, institutional theory has largely tutionalization, in particular (Oliver, 1992).
limited its focus to adoption in response to In the learning curve tradition, there are
coercive, normative, or mimetic isomorphic studies showing that organizations forget.
forces (DiMaggio & Powell, 1983). The Various factors have been proposed to
adoption of a new practice due to the under- explain forgetting or the depreciation of
performance or failure (Strang & Sine, 2002: knowledge, including asset shortages and
507) of the existing dominant institutional personnel turnover (Argote, 1999; Argote et
practice (i.e., adoption due to efficiency rea- al., 1990). In addition, there appear to be
soning) has generally only been considered more permanent and transitory types of
as a factor driving early adoption (c.f. Fiss & memory in organizations, and the results of
Kennedy, 2006; Lounsbury, 2007). Later empirical studies tend to find that transitory
adopters are considered to adopt not as a memory is more subject to being forgotten
result of underperformance, but rather as a (Argote, 1999). It may also be the case that
response to uncertainty and a desire for con- more technologically sophisticated organiza-
formity as well as the social legitimacy that tions have less forgetting than less sophisti-
comes with adopting high1y institutionalized cated organizations, in part because the
practices (DiMaggio & Powell, 1983). Firms knowledge embedded in technology is more
at this stage often adopt reluctantly and with- stable than knowledge embedded in routines,
out customization because the practice has interactions, or other forms of human inter-
become taken-for-granted (Rao et al., 2001; actions and, thus, more resistant to change.
Westphal et al., 1997). In doing so, later This suggests that institutional fields in
adopting firms typically pay little heed to the technologically sophisticated areas (e.g.,
potential advantages or disadvantages of the aerospace) may have less forgetting and,
practice in relation to its best interests (Davis thus, will exhibit more institutional stability
et al., 1994; Zajac & Westphal, 2004). Thus, than fields in less technologically
considering the predictions of learning theo- sophisticated areas (e.g., restaurants).
ries with respect to adoption behavior, the Another implication from the learning
concepts of exploration and exploitation can literature is that field-level turnover of
provide a fuller picture of the various firm personnel is a source of forgetting and,
actions at various points in the therefore, change in institutions. Ingram and
adoption/adaptation process and, thus, afford Simons (2002), for example, found no
a more complete picture of institutional evidence of depreciation over time in the
change in various societal sectors. profitability of kibbutz agriculture, which
Argote (1999) suggests may be due to the
fairly stable
640
membership that is typical of these organiza- The roles of selective and
tions. The kibbutz is also relatively stable and inferential learning
institutionalized as an organizational form. In
contrast, consider the substantial amount of In opposition to established theory within the
change that has occurred in hospitals and institutional literature (Rao et al., 2001;
healthcare over the past half century, as well Westphal et al., 1997), the learning literature
as the field-level turnover of personnel that tells us that some times later adoption may
has accompanied this change (Scott, Ruef, not be due to conformity pressures, but may
Mendel, & Caronna, 2000). instead be caused by learning processes that
Another area of learning that might have occur at the field-level. These processes are
relevance for institutional theory is the work selective and inferential, rather than mimetic.
on cycles of adoption and abandonment of Sine, Haveman, and Tolbert (2005), for
practices (Abrahamson & Fairchild, 1999; example, discuss learning by firms that
Barley & Kunda, 1992; Burns & Wholey, observed the earliest market entrants into the
1993; Davis et al., 1994; Rao et al., 2001; unproven green technology sector (them-
Strang & Macy, 2001). Strang and Macy selves prompted by government incentives),
(2001) note that faddish cycles of adoption before deciding themselves to enter. By
and abandonment can occur in fields and that entering this sector later in the diffusion
the dynamics of fads are sustained, in part, curve, these firms were able to infer potential
because modestly successful firms tend to efficiency benefits for themselves, based on
copy the practices of very successful firms the combined experiences of earlier entrants.
that are more likely to have satisficed in their Such performance-based imitation is not
search for success (Abrahamson & Fairchild, done during a period of uncertainty (uncer-
1999; Strang & Macy, 2001). This view of tainty is reduced by the experiences of prior
the role played by satisficing in promoting firms), is not the implementation of a practice
fads and by constraining the institutionaliza- that is taken-for-granted within the industry
tion of practices provides a deeper under- (the sector is not yet sufficiently established
standing of the factors driving the for this to occur), but is a decision made, at
institutionalization process than currently least partially, for economic and rational
suggested by institutional theory. reasons. All of these criteria resist easily
categorizing the adopting firm as responding
The consequences of forgetting for to mimetic institutional forces but, instead,
institutional theory seem to fit into a learning model that is based
Work on organizational forgetting can con- on the experiences of others.19
tribute to institutional theory in expanding There is also research that discusses how
the mechanisms that drive deinstitutionaliz- entire fields learn from the experiences of
ing forces. Currently, deinstitutionalization is other fields. For example, Cho, Kim and
seen as occurring due to the actions of out- Rhee (1998) discuss how Korean firms
siders or institutional entrepreneurs. Instead, achieved success in semiconductors, despite
the characteristics of the technologies their late entry into this market, precisely
involved in the field (whether these because they learned from the experiences of
technologies are producing good or modest the United States and Japanese semiconduc-
returns), the roles played by unlearning tor industries. Similarly, the Microelectronics
(disadoption and/or forgetting) due to and Computer Consortium (MCC), the first
personnel turnover and other factors, and the major electronics research consortium in the
concept of satisficing can all play a role in U.S., is recognized as successful, in part,
instigating the diminishment of established because of its observation and imitation of
institutions, as well as the rise of new similar consortia in Japan (Aldrich & Sasaki,
institutions to replace them and renew the 1995; Miner & Haunschild, 1995).
dominant order.
 641
As noted earlier, social ties and structures and activities over time (Baron et
geographic proximity are two factors likely al., 1986; Greenwood & Hinings, 1996;
to affect endogenous institutional change. Strang & Meyer, 1994). In one of the key for-
These factors may also affect exogenous mulations of the theory, DiMaggio and
change when fields learn from the experience Powell (1983) discuss the very strong institu-
of other fields. Miner and Haunschild (1995), tional (as opposed to competitive) mecha-
for example, examined how the existence of nisms by which this convergence occurs:
strong inter-firm ties between small biotech coercive, mimetic, and normative isomor-
firms and large pharmaceutical firms in the phism. It is increasingly accepted within
U.S. facilitated the learning and integration institutional theory, however, that different
by the pharmaceuticals of the successful strategic responses by firms to the same insti-
organizational routines and technologies of tutional stimuli can result in greater, rather
the biotechs. Consequently, this is another than less, field-level heterogeneity (Oliver,
example of field-level change that was 1991; Powell, 1991).
facilitated by learning processes among Thus, it becomes important to distinguish
socially connected firms. The consideration under what conditions firms converge in the
of this type of change is of noteworthy value face of institutional pressures and when the
to institutional theory in its quest to explain opposite result occurs. The organizational
such instances of change. learning literature has begun to specify some
of these conditions, in part because learning
The consequences of selective and theories are at least somewhat concerned
inferential learning for institutional theory with sources of variance in routines,
The potential benefits of selective and infer- processes, and structures (Miner &
ential learning for institutional theory were Haunschild, 1995), whereas the preponder-
first highlighted by Miner and Haunschild ance of work within institutional theory has
(1995: 126). As illustrated above, these two focused more on sources of institutional
processes describe the means by which firms retention and replication. Learning theories
(or fields) either copy routines they believe have specified three key field-level condi-
have been successful elsewhere (selective tions/processes that will tend to divergence
copying) or use the experiences of other (and, thus, institutional change) rather than
organizations or fields as a natural experi- convergence: imperfect copying; regulatory
ment, drawing conclusions and adapting the pressures; and field-level competition.
processes to suit their specific circumstances
(inferential learning). If institutional theorists Imperfect copying
are able to build a body of research that The first key field-level process is mimetic
successfully integrates and uses these con- learning, in which the learning involves not
cepts, they will be filling a significant gap in simple copying but, instead, imperfect copy-
the institutional literature, which to date has ing or, at times, even doing something
no explanation for late adoption based on an entirely different. We noted earlier how
efficiency rationale. imperfect copying is a process by which
field-level change can occur. In addition to
imperfect copying, however, there is also
The role of heterogeneity work on other experience-based responses
versus homogeneity that might occur, including what has been
called non-mimetic learning. For example,
According to an institutional perspective of research shows that some conditions produce
organizations, firms facing similar institu- action that, while informed by the
tional environments experience isomorphic experiences of others, results in outcomes
forces that tend toward convergence in their that are unique to the focal firm (Greve &
642
Taylor, 2000). When imitation results in these occurs in instances where there is ben-
action that differs in this way, the result is efit to an actor in promoting novelty - in
likely to be field-level heterogeneity (Greve, other words, where it pays to be different.
2005; Miner et al., 2003) and, therefore, a Many arts-based organizations operate within
possible source of new institutions and such industries. Such an extreme incentive-
institutional change. based industry will encourage established
firms to innovate and also encourage new
Regulatory pressures entrants to the field, which generates both
The second key field-level change process field-level heterogeneity and change. The
specified in the learning literature is the result second condition is likely to occur when
of regulatory pressures, which were initially maximum performance is disproportionately
theorized by DiMaggio and Powell (1983) to rewarded - in other words, in a winner-takes-
lead to convergence. More recently, however, all environment. Such environments
such pressures have been shown also to encourage high-risk strategies that tend to
produce divergence when firms respond result in greater variance rather than higher
differentially (D'Aunno et al., 2000). average performance (March, 1991), which
Examples in the learning literature note the has a diversifying impact on the industry as a
changes that can result from differential whole.
learning in response to regulation either
learning from the experiences of other firms The consequences of heterogeneity/
(Sine et al., 2005), or learning from the homogeneity for institutional theory
experience of one's own firm (Haunschild & The implications of this body of work within
Rhee, 2004). In addition, whole industries the learning theories for institutional theory
can learn from the regulatory responses of are significant, especially for those
other industries. An example of this occurred researchers who have begun to consider how
when the medical industry learned from the variations in actor responses to the same
airline industry in relation to' regulatory pro- institutional environments can produce
cedures surrounding accidents, subsequently greater heterogeneous, rather than homoge-
installing similar regulation within hospitals neous, outcomes (Oliver, 1991). Integrating
(Miner et al., 2003). Thus, learning from these three key field-level learning processes
another population in response to regulation (imperfect copying, regulatory pressures, and
can also lead to change in the institutional competition) will add significant depth to
environment. discussions in this area of work that are only
just beginning within institutional theory.
Competition
The third key field-level condition occurs in
industries that are highly competitive. In con-
trast to DiMaggio and Powell's (1983: 149- CONCLUSION
150) argument that competitive forces are
one of two types of isomorphic tendencies We have argued that both institutional and
among firms and industries, learning theorists learning theorists have considered the impor-
have argued that, under specific conditions, tant issue of change in organizational fields,
competition can generate heterogeneous although largely in isolation from each other.
outcomes (Miner et al., 2003). Miner, The purpose of this chapter has been to try
Haunschild and Schwab (2003) identify two and open up a beneficial avenue of commu-
conditions under which such competitive nication between the two theories, believing
heterogeneity might occur competition based that understanding the processes and conse-
on novelty and competition based on extreme quences of organizational and interorganiza-
values. The first of tional learning can contribute significantly to
 643
institutional theory in its quest to explain theory contained within this chapter has
institutional change. Our goal has been to deepened our understanding of what is
identify where these two literatures overlap, possible and begun to hint at a research
so that knowledge is shared and replication is agenda for future work within institutional
avoided (wherever possible), in a way that theory that addresses some of the unanswered
constitutes, we hope, a constructive addition questions generated at the boundary of these
to the institutional literature. two important organization theories.
To this end, we have identified areas
where we feel learning processes and
mechanisms can work in conjunction with
our existing knowledge of institutions to ACKNOWLEDGEMENTS
inform our understanding of field-level
change. These processes and mechanisms Much of this chapter was drafted during the
include the idea that ordinary organizational first author's residency at the Rockefeller
processes can lead to unintended outcomes, Foundation's Bellagio Center during May
which can then lead to the disruption of 2006. We thank Roy Suddaby, Matt Kraatz,
existing institutions. The processes also and an anonymous reviewer for their very
include the effect of network ties, geographic helpful comments and suggestions for
location, and information flows as sources of improvements in our arguments.
institutional reproduction (one non-
reproduction). Furthermore, these
mechanisms investigate the idea that NOTES
processes of exploration engender dramatic
institutional change and that such processes 1 Is Wal-Mart going green? CEO vows to be
are more likely to occur under slow 'good steward for the environment' in announcing
adaptation and underperformance in relation goals,' MSNBC.com, October 25, 2005,
<www.msnbc.msn.com/id/9815727/>.
to specific institutional norms, roles, and 2 Kris Hudson, 'Wal-Mart Wants Suppliers,
models. They also include the idea that Workers to Join Green Effort,' Wall Street Journal,
forgetting may erode institutions, a situation February 2, 2007, pA14.
that is more likely in conditions such as high 3 Jonathan Birchall, 'Sun rises over Wal-Mart's
personnel turnover. Finally, these processes power policy,' Financial Times, January 22, 2007,
and mechanisms explore the idea that selec- p.8; Melanie Warner, 'Wal-Mart Eyes Organic
tive and inferential learning processes, both Foods,' New York Times, May 12, 2006,
<www.common dreams.org/headlines06/0512-
within and across fields, produce institutional 07.htm>.
change, as well as the view that heterogeneity 4 <www.walmart.com/>.
produced by imperfect copying, regulatory 5 For examples, see: 'Wal-Mart: The High Cost
pressures, and competition based on novelty of Low Price,' <www.walmartmovie.com!>; and
or extreme values can lead to institutional 'Wal-Mart Watch,' <walmartwatch.com/>.
change. 6 Melanie Warner, 'Wal-Mart Eyes Organic
This is an exciting time for institutional Foods,' New York Times, May 12, 2006,
www.commondreams.org/headlines06/0512-
theory. The relatively recent focus on change 07.htm>.
opens up huge possibilities for understanding 7 Ann Zjmmerman, 'Wal-Mart Sees Profit in
how institutions adapt and what the Green-Some Recycling Initiatives Are Helping
consequences of such adaptation might be. Retailer's Bottom Line,' Wall Street Journal, August
We believe that the learning theories can 21, 2006, p. B3.
supply at least some of the answers that 8 We outline this concept in greater detail later
institutional theorist seek. Yet, in spite of the on in this chapter.
9 We do not take a stand here concerning the
potential benefits, the intersection of these debate within institutional theory between compet-
two theories has received scant attention ing conceptualizations of institutions at the
from scholars to date. We hope that the organizational (Selznick, 1957) or field (DiMaggio
consideration of learning & Powell, 1983) levels. Instead, we perceive of an
institution in
644
its broadest and most inclusive sense, utilizing learning: Technology choice in the American
Jepperson's (1991: 145) definition where 'Institution cement industry. In J. Baum (ed.), Advances
represents a social order or pattern that has attained in Strategic Management. JAI Press Inc.
a certain state or property; institutionalization Argote, L., Beckman, S. L., & Epple, D. 1990.
denotes the process of such attainment.' The persistence and transfer of learning in
10 For a discussion of the multiple definitions of industrial settings. Management Science,
an organization's environment that have emerged 36(2): 140-54.
from the assumption of a field level of Argote, L. 1999. Organizational learning:
conceptualization within the institutional literature Creating, retaining & transferring knowledge.
over time, see Scott (1983: 161-162) and Scott
Boston, MA: Kluwer.
(1991: 172-174).
Barley, S. R. & Kunda, G. 1992. Design and de-
11 See the section titled 'Institutional Theory
and Change' later in this chapter.
votion: Surges of rational and normative ideo-
12 There are also learning theories at lower logies of control in managerial discourse. Ad-
levels of analyses, however, that can be used to ministrative Science Quarterly, 37(3): 363-99.
illuminate institutional processes and we will Baron, J. N., Dobbin, F., & Jennings, P. D. 1986.
incorporate these theories as appropriate. War and peace: The evolution of modern
13 See the discussion below for an indication of personnel administration in U.S. industry.
the role played by institutional entrepreneurs within American Journal of Sociology, 92: 350-83.
institutional theory as instigators of change. Baum, J. A. C. & Oliver, C. 1992. Institutional
14 For a comprehensive review see Leca, embeddedness and the dynamics of organi-
Battilana, & Boxenbaum (2006). zational populations. American Sociological
15 Institutional logics are described as societal - Review, 57(4): 540-59.
level 'beliefs, norms, routine practices' (Scott, 2001: Baum, J. A. C. & Rowley, T J 2002. Companion
134). to Organizations: An Introduction: Blackwell.
16 See the section titled 'Institutional Theory Beckman, C. M. & Haunschild, P. R. 2002. Net-
and Change' earlier in this chapter. work learning: The effects of partners' hetero-
17 James Surowiecki, 'The Dating Game: The geneity of experience on corporate acquisitio-
New Yorker, November 6, 2006, ns. Administrative Science Quarterly, 47(1):
<www.newyorker.com/archive/2006111/06/061106 92.
ta_talk_suro wiecki>. Berger, P. L. & Luckmann, T. 1967. The Social
18 The role of divergent versus convergent
Construction of Reality: A Treatise in the
forces for change is discussed in greater detail later
Sociology of Knowledge. Garden City, NV:
in this section.
19 Our initial example of Wal-Mart learning Anchor Books.
from examples provided by earlier adopters of Brint, S. & Karabel, J. 1991. Institutional origins
environmentally-friendly policies is also of this and transformations: The case of American
nature. community colleges. In W. W. Powell & P. J.
DiMaggio (eds.), The New Institutionalism in
Organizational Analysis. Chicago, IL: The
University of Chicago Press.
Burns, L. R. & Wholey, D. R. 1993. Adoption
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650

27
Social Movements and
Institutional Analysis
Marc Schneiberg and Michael Lounsbury

Calls for reintroducing agency, politics and attention to actors and what they do, produc-
contestation into institutional analysis are ing studies of 'institutional entrepreneurs'
now legion, spanning nearly two decades (Beckert 1999; Hwang & Powell 2005;
since DiMaggio's (1988) classic piece, and McGuire Hardy & Lawrence 2004; Hardy &
gaining new urgency as scholars struggle to McGuire, Chapter 7 this volume) and institu-
explain institutional emergence and change. tional work (Lawrence and Suddaby 2006).
Institutionalists face persistent difficulties in Within this milieu, scholars have also sought
these tasks. Working from arguments about to overcome 'excessive institutional
isomorphism, diffusion, or path dependence, determinism' by turning to social movement
they often invoke ad hoc explanations like theory and the study of collective
exogenous shocks in order to reconcile mobilization.
change and path creation with theories that Spanning sociology and political science,
stress the contextual sources of stability, social movement theory has produced a
continuity and conformity (Greenwood & wealth of concepts and research on change,
Hinings 1996; Clemens & Cook 1999; including studies of students organizing to
Campbell 2004; Streeck & Thelen 2005; register black voters in the 1960s (McAdam
Schneiberg 2005; Guillen 2006). To address 1988), the mobilization of farmers, workers
these difficulties, institutionalists have begun and women to make claims on the state
to revise both their conceptions of fields and (Clemens 1997), shareholder activism to
their views of action. From a structural contest managerial control over corporations
standpoint, some scholars increasingly view (Davis & Thompson 1994), the growth of
fields as comprising multiple logics, or by identity movements pursuing peace, gay/les-
indeterminacy, ambiguities or contradictions, bian rights and environmentalism (e.g.,
opening theoretical spaces for action (Scott, Larafia, Johnston, & Gusfield 1994), and the
Ruef, Mendel, & Caronna 2000; Stryker rise of transnational pressure groups (Keck &
1994, 2000; Seo & Creed 2002; Schneiberg Sikkink 1998). What these studies share is an
2002, 2007; Lounsbury 2007; Marquis & interest in contestation and collective mobi-
Lounsbury 2007). Focusing more on agency, lization processes - how groups coalesce to
other scholars have brought new make claims for or against certain practices
 651
or actors in order to create or resist new insti- of the same processes as critical for change,
tutional arrangements or transform existing including framing, theorization, transposi-
ones (McCarthy & Zald 1977). They also tion, and the recombination of logics. Yet
share an interest in tracing how contestation where institutional entrepreneurship research
and collective action rest on the capacity of often attributes substantial casual efficacy to
groups to mobilize resources and recruit individuals, studies linking movements and
members, their ability to engage in cultural institutionalism are more deeply rooted in
entrepreneurship or frame issues to increase structural perspectives. They thus place
acceptance of their claims, and the political greater emphasis on politics and collective
opportunity structures that constrain or mobilization as motors of change, and more
enable mobilization (McAdam, McCarthy, & systematically address the relations between
Zald 1996). This chapter focuses on how activity, collective organization and existing
engaging collective mobilization and social institutional contexts.
movement theory has inspired new work in Our central claim is that analyzing move-
institutional analysis. ments within neo-institutional theory is
The integration of movements into institu- essential for understanding when and how: (l)
tional analysis has begun to revise existing paths or fields become constituted around
imageries of institutional processes, actors, multiple, competing logics; and (2) multiple
and the structure of fields, generating new logics, contradictions and ambiguities fuel
leverage for explaining change and path field-level change and new path creation. In
creation. Regarding processes, it adds con- making this claim, we accept, rather than dis-
testation, collective action, framing and self- miss, contextual arguments about durability,
conscious mobilization for alternatives to path dependence, and stability that give insti-
conceptual repertoires of legitimation, diffu- tutionalism its analytical edge in explaining
sion, isomorphism and self-reproducing continuity, differences or 'higher order'
taken-for-granted practices (Jepperson 1991; effects on organizations (Schneiberg &
Colyvas & Powell 2006). Regarding actors, it Clemens 2006). Institutions often exhibit
counter-poses challengers and champions of increasing returns and positive feedbacks
alternatives to standard accounts of states, (Pierson 2000). Actors empowered by exist-
professions and other incumbents as key ing institutions use their advantages to elabo-
players. Regarding structure, it moves away rate institutions in ways that preserve their
from images of an isomorphic institutional power and preclude alternatives. Diffusion,
world of diffusion, path dependence and con- adoption and the resulting communities of
formity toward conceptions of fields as sites practice create isomorphic pressures that
of contestation, organized around multiple make conformity a condition for legitimacy,
and competing logics and forms (Kraatz & fueling further diffusion. Institutionalized
Block, Chapter 9 this volume). theories of order render alternatives unthink-
As will be clear, work that integrates able, irrational or inefficient. And the preva-
movements into neo-institutionalism parallels lence of taken-for-granted understandings
work on institutional entrepreneurship in key means that even opposition occurs in those
respects (Hardy & McGuire, Chapter 7 this terms, deepening the paths it contests.
volume). Both emphasize agency, deliberate In short, rather than simply assert an
or strategic action, and self-conscious agentic, actor-centered institutionalism, we
mobilization around alternatives. Both wres- begin with the structural insight that limits on
tle with problems or paradoxes of how actors alternatives and pressures for continuity or
embedded within institutions can change convergence often exercise considerable
those systems, how institutions limit or sup- force. Reflexive action, the capacity to articu-
port change, and how actors draw on the late alternatives, the salience of multiple
elements or contradictions of existing institu- logics, or their translation into change, cannot
tions to forge new ones. Both identify some
652
be assumed. To the contrary, these are often structure and institutional mediation (e.g.,
fragile achievements which ultimately rest on Amenta, Caruthers, & Zylan 1992; McAdam
the emergence and efficacy of social 1999; Davis & Thompson 1994), prompting
movements. new insights about opportunity structures, a
Using existing and ongoing research, this reinvigoration of multi-level approaches, and
chapter outlines analytical strategies for new strategies for analyzing movements,
addressing the rise and effects of movements existing institutions and change. Taking a
on institutional fields. We pay particular decidedly cultural cast, these strategies
attention to how those strategies revise exist- reformulate arguments about political oppor-
ing institutional accounts of change and path tunity structures as institutional opportunity
creation. In parts I and II, we consider move- structures, highlighting how movements and
ments as agents and infrastructures of change are endogenously shaped by
change, outlining two emerging approaches institutions.
to what movements do and how they affect Based on these discussions, we turn in part
fields. One treats movements as forces IV to suggest new directions for research on
against institutions; that is, as forces operat- how movements and institutional dynamics
ing outside established channels to assert new combine to produce change. One key direc-
visions and disrupt or directly contest tion is methodological: to develop clearer,
existing arrangements, evoking legitimacy more direct measures of movements and to
crises, sense-making and other institutional exploit the analytical leverage of multivariate
processes within fields. This approach revises approaches. This will help assess and sys-
two canons in institutional theory the two- tematize claims from qualitative and histori-
stage model of institutionalization and cal work about movement effects and the
histories of change as punctuated equi- relations between movements, institutional
librium. It also provides insights into how contexts and outcomes.
fields become constituted around multiple A second direction is to analyze move-
logics. ments as a political condition for diffusion
A second approach considers the rise and and other institutional processes. Insofar as
impact of movements within fields, examin- alternatives are contested or suppressed by
ing movements as institutional forces or vested interests, their diffusion will depend
infrastructures for institutional processes on collective action and the mobilization of
including theorization, recombination and power by champions of new practices and
diffusion. This approach reveals how diffu- forms. In cases like these, movements can
sion, translation and adoption are contested, moderate institutional processes, supporting
political processes that often depend on col- diffusion or translation in three ways: by
lective action. It also sheds light on how serving as field-wide or cross-field mech-
movements emerge from and exploit contra- anisms for mobilizing power, by working as
dictions or multiple logics within fields to political forces within organizations to
mobilize support, forge new paths or produce increase their receptivity to alternatives, or by
change. working between organizations to increase
In part III, we turn from movements as innovators' influence as exemplars. Taking
agents of change to analyses of how contexts this approach to how movements operate in
shape contestation and collective action. fields can help explain the diffusion of
Institutionalists have recognized that existing alternatives and more diverse sets of
institutions constrain and enable mobiliza- outcomes related to practice variation.
tion, create openings for challengers, and Finally, we consider the origins of move-
shape their capacities to produce change. ments and institutions, taking an historical
This has led neo-institutionalists to the move- approach and considering the relationship
ments literature on political opportunity between institutions and movements as an
 653
ongoing process in which combinations or model of institutionalization, the emergence
sequences of movements cumulatively pro- of new paths or fields is a 'bottom up' phe-
duce change. Movements might figure in the nomenon: (1) organizations or states adopt
production of unintended and incremental structures or policies in response to local
trajectories of change. That is, even when problems, politics or characteristics, which
they are defeated or their time has passed, then spark (2) processes of mimesis, theo-
movements may leave legacies, elements of rization and diffusion, eventually crystalliz-
institutional orders and bits and pieces of ing a broader community of practice around a
paths not taken, producing diffuse but impor- core set of principles or models (Tolbert &
tant effects, and creating possibilities for sub- Zucker 1983; Baron, Dobbin, & Jennings
sequent movements, institution-building and 1986; Galaskeiewz & Wasserman 1989;
transformation (Schneiberg 2007). Focusing Strang & Chang 1993). As solutions diffuse,
on these possibilities sheds further light on they become taken-for-granted as an accepted
how movements and their effects are endoge- norm, serving as baselines to which
nously produced, helping researchers avoid organizations must subsequently conform as
the trap of invoking movements, like exoge- a condition for legitimacy. In punctuated
nous shocks, as a deus ex machina. equilibrium models, change occurs as a
sequence of shock, disruption, deinstitution-
alization, and reinstitutionalization (Edelman
1990, 2006; Fligstein 1990, 2001; Sutton et
MOVEMENTS FROM OUTSIDE al. 1994; Sutton & Dobbin 1996). Shocks like
INSTITUTIONS: CHALLENGER/ new laws or court rulings subvert existing
DOMINANCE APPROACHES routines, vested interests and established
understandings, evoking uncertainty, sense-
One way to integrate movements into institu- making and a succession of players and
tional research preserves the analytical dis- models as new groups emerge to define the
tinction between movements, contestation situation and establish their solutions as new
and deliberate mobilization, on the one hand, bases of order.
and institutional processes like the Both models shed light on key
reproduction of taken-for-granted practices, institutional processes: (1) mutual
on the other, taking movements as an 'extra- monitoring, mimesis and the diffusion or
institutional' force that impacts change or transposition of practices across
new path creation. This approach hardly organizations; (2) theorization, codification
exhausts the possible relations between or the endorsement of best practices by
movements and institutions. But it captures professional associations; and (3) inter-
the potentially wide class of cases where ventions by states to ratify, redraw or reject
movements arise outside of or on the field boundaries and emerging solutions (e.g.,
peripheries of established fields, acting as Strang & Meyer 1993). Yet both tend to
outsider-challengers to assert new visions of neglect the origins of new ideas and practices
order, disrupt existing systems, or secure as well as the sources of disruption, leaving
policies or representation from established key players and processes unanalyzed.
authorities. Thinking in these terms also However, in many canonical cases featuring
extends the institutional framework to isomorphism, the instigating shocks or moti-
highlight key processes left exogenous by vations for adoption were the direct and
existing accounts of emergence and change, deliberate results of social movements -
opening up the black-box of 'pre-institutional' municipal reformers and progressives fight-
dynamics, and adding new imageries and ing corruption in city government, civil rights
mechanisms to our conceptual repertoire. activists demanding state intervention to end
Consider two canonical formulations in discrimination, and agrarian populists
neo-institutional analysis. In the two-stage contesting corporate consolidation.
654
Schneiberg and Soule's (2005) study of rate professions endorsed regulation, promulgated
regulation in insurance develops one model model laws, and built field-wide
of the role of movements in the insti- administrative organs. Taken together, these
tutionalization process, filling in gaps in the institutional processes shifted the balance of
canonical accounts. It conceptualizes institu- power within states, crystallizing insurance
tions as political settlements. And it analyzes around economic models and regulatory
path creation as a contested process grounded solutions that settled political struggles over
in sequences of mobilization, disruption and industry governance (see also Schneiberg
conventional institutional dynamics, tracing 1999,2002; Schneiberg & Bartley 2001).
how mobilization outside established Rao, Clemens and Hoffman also go
channels catalyzes path creation and change. beyond canonical accounts by foregrounding
Specifically, their study shows how rate movements, understanding paths as political
regulation by American states in the early settlements, or analyzing path creation as
twentieth century was provoked neither by sequences of movements, mobilization and
exogenous shocks, nor by scattered and institutional processes. Rao (1998) shows
unconnected politics or problem-solving how the consumer watchdog agencies and
behavior. Rather, it was sparked by anti-cor- product rating schemes that are now taken-
porate movements including the Grange and for-granted in the US were the product of
Farmers Alliance who worked to contest cor- consumer mobilization and contestation over
porate consolidation and assert alternative whether scientific testing and the power of
forms of economic order. This mobilization informed consumers should be blended with
was a response to the rise of 'trusts' and the role of labor, unionization and concerns
'combines' in various sectors. Grangers and about products. At first, consumer groups
other groups directly opposed 'corporate fought for two different logics of market
liberal' models of order based on for-profit reform, one that blended consumer advocacy
corporations, national markets and unregu- with unionism and one that focused more
lated industry. Instead, they pursued 'pro- narrowly on the consumer. But broader polit-
ducer republican' logics that envisioned ical dynamics eliminated the more compre-
American capitalism as a regionally decen- hensive radical change frame from the path,
tralized and cooperatively organized segregating 'consumer' and 'worker,' and
economy of independent producers, farmers ensuring the dominance of a consumer-only
and self-governing towns. Moreover, in impartial testing logic (see Carruthers &
targeting insurance, Grangers and other Babb 1996 for a similar analysis of monetary
groups secured anti-compact laws to break up systems).
the 'insurance trust,' organized consumer- Clemens (1993, 1997) more directly
owned mutual firms, and otherwise disrupted addresses how change flows from combina-
insurance markets, fueling legitimacy crises, tions of movements and institutional
public hearings, and new interventions within processes, tracing how interest group politics
key states. became a core feature of the American polity
These disruptions and interventions, in through successive waves of mobilization
turn, sparked politics and conventional insti- and transposition by three outsider/challenger
tutional processes within the insurance field. groups. Acting collectively to contest parties
They evoked inter-state diffusion in which and patronage, first unions, then farmers, and
key players monitored other states, theorized then women's groups built on previous efforts
rate regulation as a solution to the 'insurance to disrupt existing arrangements (strikes,
problem,' recombined elements to forge those boycotts, protests) by transposing fraternals,
solutions and adopted laws passed by other cooperatives, clubs and other kinds of
states. They also evoked supra-state or field- apolitical associations into mainstream
wide process in which courts and the politics. These sequences of
 655
actions fundamentally altered the terms of one which involved a clear cut victory of one
political representation and influence, logic of consumerism over other.
creating access and clout for previously dis- Second, these studies suggest an image of
enfranchised groups and institutionalizing the process of institutionalization as a sequ-
lobbying, legislative monitoring, and other ence or interaction between contestation and
now taken-for-granted modes of American mobilization around alternative visions of
politics. order, on the one hand, and more convention-
Hoffman's (1999) study of environmental- al institutional dynamics, on the other. In
ism likewise finds that movements and insti- insurance, challengers mobilized outside the
tutional dynamics play pivotal roles in field system to contest the 'insurance combine' and
creation and change. Here, conflicts over forcibly impose alternative forms and anti-
competing institutions and successive rounds trust policies on the industry. Regulators and
of environmental mobilization, scandal and reformers within the field responded, in tum,
legislative activity provoked new forms of by theorizing, endorsing and diffusing
discourse, theorization, and new patterns of regulatory policies which recombined multi-
interactions among firms, non-profits and ple forms into new packages. Multiple dyna-
governments. These dynamics, in turn, mics likewise figured in the case of American
helped produce an increasingly structured state building, where farmers, unions and
environmental field. women's groups progressively institutiona-
As a group, these studies substantially lized modern interest group politics in the US
revise canonical accounts of path creation via successive waves of mobilization,
and change. First, they support a view of contestation and translation
institutions as settlements of political strug- Third, these studies provide a more varied
gles over the character of fields fueled by the understanding of how movements fuel path
mobilization of challengers around compet- creation and change by mobilizing outside
ing projects and logics (Davis & Thompson established channels to contest extant sys-
1994; Fligstein 1996; 2001; McAdam & tems. At a minimum, by introducing multiple
Scott 2005; Armstrong 2005). Emphasizing logics and promoting awareness of problems,
contestation and collective action, this view challenger movements subvert the taken-for-
departs from 'cooler' imageries of paths as grantedness of existing arrangements, fueling
based mainly in diffusion, taken-for-granted legitimacy crises and institutional politics
practices, theorization and normative (Stryker 2000), and providing insiders with
endorsement by professions or states. Thus, cultural resources for criticism, reflexive
insurance rate regulation represented a polit- action or 'mindful deviation' (Garud &
ical solution of struggles between insurers, Karnoe 2001). Thus, as anti-corporate forces,
who pursued economic logics of corpora- consumers and women's groups took action
tions, markets and unregulated industry asso- and asserted new logics, they not only
ciations, and challenger groups, who sought evoked media attention and public debate,
anti-trust laws, regulation and mutual alter- creating openings for challengers and
natives to promote more regionally decen- reformers to delegitimate dominant institutio-
tralized and cooperatively organized nal systems. They also supplied experts,
economies. Conflicts over these visions reformers and other groups with models and
yielded structural innovations, but were not cultural resources for criticizing and revising
resolved until field members crafted pack- extant paths such as by combining or layering
ages that combined regulation with private them with new forms and elements.
association, and mutuals with for-profit cor- Moreover, challenger movements are
porations. The consumer advocacy field like- often carriers of new organizational forms,
wise reflected a settlement of struggles and and can work around or outside established
mobilization around competing logics, albeit channels to build parallel, alternative systems
of organizations (Rao, Morrill & Zald 2000;
Carroll
656
& Swaminathan 2000; Schneiberg 2002; Simple in its essentials, a conception that
Schneiberg, King & Smith 2008). These emphasizes sequences of outsider
efforts may not be disruptive in intent. Yet movements, mobilization and institutional
promoting alternative forms can foster new processes has supported increasingly
competitive dynamics and populate fields sophisticated analyses of path creation and
with instances of new logics. By translating change. As we show in part III, a 'movements
apolitical forms of association into state, from outside institutions' conception lends
agrarians, unions and women's groups altered itself readily to multilevel analyses of fields,
both the terms of competition in American and to consideration of how existing
politics and prevailing conceptions of institutions or political opportunity structures
appropriate political action. By promulgating shape challengers' capacities to mobilize and
mutual insurance, Grangers and other groups effect change. Yet this conception does not
both instantiated cooperativism and exhaust the ways that movements figure as
transformed the terms of economic competi- agents of path creation and change.
tion in a key sector, forcing insurance corpo-
rations to engage in new forms of rivalry
based on prevention, re-reengineering and
loss reduction. And by introducing the sci- MOVEMENTS WITHIN INSTITUTIONS:
ence-based, not-for-profit product testing COLLECTIVE MOBILIZATION AS
agency, the consumer movement transformed INSTITUTIONAL PROCESS
the terms of trade throughout the economy.
Furthermore, challenger movements can Groups seeking change often mobilize col-
mobilize masses, networks and political sup- lectively outside established institutions to
port to pressure states and other power cen- assert new logics and disrupt taken-for-
ters for new agencies, laws and policies that granted arrangements. Yet institutionalists
ban or mandate practices. As scholars have have recognized movements also arise within
shown, the uncertainties or prohibitions asso- institutions or fields, mobilizing insiders and
ciated with new laws, agencies, and mandates well as outsiders, using established networks
can profoundly destabilize existing systems, and resources to diffuse alternative practices,
fueling sustained institutional dynamics and drawing effectively on existing institu-
(Fligstein 1990; Edelman 1992; Dobbin & tional elements and models to craft new sys-
Dowd 1997; Hoffman 1999). Finally, tems (see Fligstein 1996, 2001). Indeed,
outsider groups like ACT UP and Earth First! while movements can drive change by
can and do use protests, boycotts and direct directly opposing existing schemes, generat-
actions to dramatize problems and directly ing legitimacy crises or otherwise disrupting
disrupt daily operations and routines (Elsbach institutions, they sometimes promote path
& Sutton 1992; Hoffman 1999). In all of creation and change incrementally by engag-
these ways, movements can fuel path creation ing in institutional processes (or becoming
and change as political-cultural forces for institutional forces). That is, movements can
contestation, confrontation and disruption. emerge and operate within established chan-
Instantiating new logics, they can evoke nels and power structures, drawing on exist-
controversy and debate within fields, ing institutions and taken-for-granted
conflicts and policy responses within organi- understandings to theorize, articulate and
zations, inter-organizational diffusion and combine new projects or practices with pre-
field-wide association, while supplying vailing models and arrangements. In so
insiders and reformer with templates, politi- doing, movements may themselves become
cal support and cultural resources for theo- vehicles or established channels for diffusion,
rization, transposition, recombination and the theorization, recombination and other
assembly of new institutions. institutional processes within fields.
 657
This broader conception of movements outside established channels, working inde-
risks a loss of analytical specificity and a pendently of and against the waste industry to
diminished focus on contesting power struc- organize thousands of local non-profit, drop-
tures, especially where movements become off recycling centers. Such efforts were part
synonymous with collective or quasi-collec- of a broader project to restructure capitalism.
tive action geared toward any type of change They were articulated within a holistic frame
(Scully & Segal 2002; Scully & Creed 2005). that theorized recycling as a way to rebuild
Yet analyzing movements as intra-institu- community, create local closed-loop
tional forces productively blurs distinctions production and consumption, and reduce
between 'extra-institutional' and 'institu- community dependence on conglomerates
tional,' 'mobilization' and 'self-reproducing' and capitalist commodity systems. Yet the
process, or 'contentious' versus 'conventional' commitment of industry and state agencies to
politics. It has led to new insights about a resource recovery logic which emphasized
parallels between institutional phenomena landfill, waste-to-energy programs and large-
and collective action processes studied by scale incineration left the recycling
movement scholars (Campbell 2005; Strang movement isolated and its centers without
& lung 2005; Davis & Zald 2005; Wade, outlets for materials.
Swaminathan, & Saxon 1998). It has led to In fact, a viable infrastructure for
new understandings of the relations between recycling did not emerge until activists,
movements and institutions, including how working through the National Recycling
institutional reproduction and diffusion Coalition, entered mainstream policy
depend on mobilization, political resources negotiations, forged ties with solid waste
and contestation (Thelen 2004; Hargrave & handlers, and retheorized recycling as a for-
Van de Ven 2006). It supports research that profit service that built on curbside programs
goes beyond analyzing movements as 'extra- and complemented landfills and incineration.
institutional' producers of multiple logics to Coupled with grass-roots mobilization again-
consider also how movements and st new incinerators, and negotiations with
contestation are products of - and mobilize - state agencies to buy recycled materials, the-
contradictions and multiple models within orizing recyclables as commodities transfor-
fields (Strkyer 2000; Seo & Creed 2002; med cultural beliefs and discourse about
Morrill 2006). And it has let institutionalists waste in the industry, creating institutional
interested in movements supplement images conditions for diffusing recycling practices
of change as disruption, conflict and (see also Strang & Meyer 1993; Strang &
settlement with analyses of how movements Soule 1998; King, Coruwall, & Dahlin 2005).
also work in an incremental and embedded In addition, environmental movements
fashion, producing trajectories of path also served as institutional forces by operat-
creation or change as reconfiguration, ing inside organizations (see Zald & Berger
recombination or layering (Clemens & Cook 1978 for an early statement on movements
1999; Streeck & Thelen 2005; Schneiberg within organizations). The Student
2007). Environmental Action Coalition promoted
Lounsbury and colleagues' studies of recy- recycling within universities by codifying
cling address how movements can enter into arguments, building inter-collegiate networks
and operate within fields as institutional and disseminating standardized arguments
forces, emphasizing their role as agents of and facts about similar programs elsewhere.
theorization, classification, and the diffusion And the College and University Recycling
of codified arguments, frames or theoretical Coordinators provided universities and
resources (Lounsbury 2001, 2005: colleges with standards and classification
Lounsbury, Ventresca, & Hirsch 2003). schemes for measuring the progress, costs
Initially, eco-activists pursued recycling and benefits of programs, which helped
658
deepen discourse and theorization of recy- these early efforts supported the mobilization
cling as a rational economic activity. Thus, as of two competing critical masses of ADR
Greenwood, Suddaby and Hinings (2002) activists - one around a 'community media-
document for professional associations, tion' model, the other around the 'multi-door
social movements can create cultural and courthouse.'
theoretical foundations for new activities, Both groups devoted considerable energy
forms and fields (see also Moore 1996, and into theorizing and disseminating their
Frickel & Gross 2005 for examples of move- approach, holding conferences, publishing
ments among scientific professionals). They manifestos in prominent law journals and
can operate within existing power structures seeking support from foundation or other
as agents of theorization, classification and established centers. Both also worked hard to
diffusion, and can themselves become infra- articulate and recombine their models with
structures for those processes within fields. prevailing models and institutions, including
Indeed, as recycling became institutionalized, the 'Great Society' vision of federally funded
the movement itself blurred into professional community social programs and the
associationalism. Activists became recycling increasingly ascendant new federalism.
employees; employees used the National Moreover, once advocates could articulate
Recycling Coalition to form a professional ADR with the divorce revolution and no-fault
association; and the association forged new divorce as a non-adversarial solution to
identities, statuses and procedures for custody and interpersonal problems, they
recycling managers within the new field. gained a lever for professionalizing media-
Research by Morrill, Creed, Scully and tion and diffusing its practices. They used
colleagues, and Moore on the institutional- conferences, new organizations, instructional
ization of alternative dispute resolution, videos, newsletters, and the like to further
domestic partner benefits, and public science codify and disseminate ADR, effectively lay-
likewise document how movements operate ering ADR into the legal system as an
as forces within mainstream institutions, de- increasingly taken-for-granted complement to
emphasizing confrontational tactics in favor conventional legal arrangements.
of their role as mobilizers of multiple logics Creed, Scully and colleagues' studies of
and as agents or vehicles for recombination, gay rights/GLBT activists shed additional
assembly, translation and diffusion. In light on how movements working within
Morrill's (2006) study of alternative dispute existing institutions can help establish new
resolution (ADR), mobilization for practices by exploiting contradiction and
alternatives and contestation themselves multiple logics, importing or redeploying
rested fundamentally on the presence and logics across settings, and articulating or
recombination of multiple logics of practice recombining new elements with prevailing
in the socio-legal field. In this case, institu- models, myths or concerns (Creed & Scully
tional processes of bricolage, hybridization 2000; Creed, Scully, & Austin 2002; Scully
and innovation preceded broader mobiliza- & Segal 2002; Scully & Creed 2005; see also
tion. Lawyers, social workers, community Raeburn 2004). Decisive here were activists'
activists and judges working at the interstices use of contradiction and recombination to
or overlaps between fields during the 1960s disturb taken-for-granted assumptions, high-
drew in an ad hoc fashion on therapeutic light injustice, and legitimate claims for
techniques, community mediation, and other reform. For example, activists strategically
forms of non-adversarial negotiating and deployed identity in face-to-face encounters
group discussion to help process minor dis- with co-workers and supervisors. They used
putes in small claims, family and other casual mentions of partners' gendered names
courts. As the 'litigation crisis' deepened, when sharing experiences of mundane activ-
ities and enacted non-stereotypical behavior
 659
to challenge stigma. They also employed nar- by anti-war and environmental groups for
ratives of discrimination or inequality to their connections to the military and chemical
highlight hypocrisies, evoking understand- industry, but they also began to criticize
ings that everyday routines produce injustice, themselves and their peers for these
and activating listeners' identities as non- connections.
prejudiced persons. At first, activists tried to link science and
In addition, activists used their knowledge politics and mobilize for change within estab-
and status as insiders and loyal corporate cit- lished science associations. But mixing parti-
izens to couch reforms like domestic partner sanship and 'pure science' produced public
benefits as good business practice or expres- discord within the scientific community and
sions of firms' espoused commitments to directly challenged its legitimacy as an
diversity. Furthermore, like those fighting for impartial, objective producer of facts. This
the federal Employment Non-Discrimination led scientist-activists to create a hybrid form -
Act, activists within firms imported higher the public science organization - that
order logics or frames, articulating domestic resolved this tension by recombining science
partner benefits and other gay-friendly poli- and politics in novel ways. Through
cies with broader civil rights frames, values dedicated organizations like the Union for
of fairness and equality, corporate social Concerned Scientists and Scientists' Institute
responsibility, and concerns with competi- for Public Information, scientists could
tiveness in an increasingly diverse world. In a provide nuclear safety information, challenge
sense, GLBT movements worked for change non-scientists' uses of science, and address
by simultaneously coming out and fitting in; the public interest without risking their
that is, by carefully articulating and credibility as scientists by acting in openly
combining difference, assertions of GLBT partisan ways. Moreover, hybrid
identity and new practices with 'normal' organizations separate from professional and
everyday life, insider identities as dutiful cor- political associations provided activists with
porate citizens, and ongoing organizational a vehicle for public science that directed
concerns. Here too, diffusion of new prac- attention away from the inner workings of the
tices like domestic partner benefits was a scientific community, letting scientists
political process, resting on mobilization, mobilize politically without calling their
contestation, framing and the recombination legitimacy as scientists into question or
of prevailing models and cultural elements in sparking conflict within professional
and across firms. communities.
As Moore shows, the institutionalization All of these studies highlight rich opportu-
of public science organizations in American nities for exploring the role of movements
politics also rested critically on multiple within existing institutions and organizations.
logics, mobilization by insiders, and the role In general, social life is rife with collective
of movements as bricoleur-agents of mobilization, and whether these efforts are
recombination and redeployment (Moore made by challengers working as outsiders to
1996; Moore & Hala 2002). During the redefine existing arrangements, insiders
1960s and 1970s, university scientists faced seeking change from within, or elites striving
increasingly severe contradictions between to keep existing structures intact (Fligstein
the logic of public service or social utility, on 1990, 1996), a focus on movements expands
the one hand, and the logics of objectivity, our understanding of institutional dynamics.
non-partisanship and detachment as Moreover, mobilization can occur at the level
scientists, on the other. In fact, extant ways of of the field as with anti-corporate forces or
joining science and politics - serving the ecological activists promoting communitarian
public interest by serving the state - had alternatives to corporate capitalism and with
become distinct liabilities. University scientists forging new associations to link
scientists not only faced attacks expertise to politics.
660
Or it can occur within and between organiza- only begun to theorize how multiple logics
tions as recycling advocates pressed for more within fields can motivate contestation and
substantive forms of recycling or as gay and collective action (Stryker 2000; Seo & Creed
lesbian groups pushed for recognition and 2002; Morrill 2006), they have also consid-
benefits. A focus on movements, therefore, ered how existing institutional contexts shape
sheds new light on path creation and change, mobilization and movements' capacities for
particularly when it attends to the multi-level producing change. Indeed, addressing
character of the institutional context. relations between movements, institutional
To be sure, the distinction between move- contexts and outcomes lays the foundation
ments operating outside and inside fields for more sophisticated analyses of power and
raises questions for future work about their agency. It lets scholars go beyond simple
different enabling conditions, trajectories or power elite or interest group arguments about
effects. Insiders will more likely pursue dif- agency and change to consider how extant
ferent tactics and forms of contestation than institutions block access, provide challengers
outsider groups. They will likely obilize col- with lever and openings, and otherwise
lectively in different ways, frame problems condition actors' ability to translate numbers,
and solutions differently, and differentially resources or organization into change.
negotiate or exploit structures, networks and Moreover, in exploring relations between
institutional frames provided by established movements, contexts and outcomes,
fields. And they may be more likely to err on institutionalists have made good use of
the conservative side. Conversely, outsiders research on political opportunity structure
pursuing disruptive activities face legitimacy (McAdam 1999; Tarrow 1998; McAdam,
dilemmas that may pressure them to mobilize Tarrow, & Tilly 2002) and related arguments
as insiders, articulate their projects with about institutional mediation (Amenta,
existing institutional logics, or form separate, Carruthers, & Zylan 1992; Amenta & Zylan
decoupled organizations for disruptive and 1991) and institutional contingency
conventional action (Elsbach & Sutton 1992; (Thornton & Occasio 1999; Bartley &
Lipsky 1968). And, as we suggest in part IV, Schneiberg 2002; Schneiberg Clemens 2006;
we can also profitably consider how outsider Lounsbury 2007), supporting a deepening
and insider movements occur in waves or integration of movements research and neo-
sequences, producing historical trajectories of institutional analysts.
change. Fortunately, future work on both Work at this interface has identified vari-
kinds of movements can exploit existing ous features institutional and political fields
research on how institutional contexts more that condition movement dynamics or suc-
generally shape mobilization and movement cess. These include the legacies of prior
efficacy. policies, the receptivity of institutional
authorities toward challengers' claims, the
concentration of resources within a field, and
the prevalence of certain cultural models.
Work on contexts has also shown how the
INSTITUTIONAL FIELDS AS CONTEXTS multi-level character of fields provides open-
FOR MOVEMENTS ings for challengers, and how movements
evoke counter-movements within fields.
Davis and colleagues' studies of
While the work just described provides rich shareholder movements nicely document
depictions of movements as agents of institu- how success may hinge on the institutional
tional creation and change, analysts of 'out- context (Davis & Thompson 1994; Davis &
sider' and 'insider' movements have also paid Greve 1997; Davis & McAdam 2000; Vogus
careful attention to the institutional context of & Davis 2005). During the 1980s,
social movements. They have not shareholder activists mobilized to promote
new conceptions of the
 661
corporation, transform the markets for corpo- culture shapes mobilization and change.
rate control, and break the hold of vested Some of the studies discussed above high-
managerial interests over large US firms. To light how institutionalized models or logics
this end, shareholder groups formed new represent cultural resources for mobilization,
organizations, launched takeover actions framing and change. So does research by
against individual firms, used existing gover- Lounsbury and Hironaka, Schofer and Frank.
nance machinery to oust entrenched man- Shifts in the recycling field from a radical,
agers, and sought legislative and regulatory holistic logic to a technocratic logic facili-
changes, relying on their considerable mate- tated the creation of recycling advocacy
rial resources and connections. Yet activists' groups in urban regions in response to contest
ability to translate resources into change was waste management through incineration
institutionally and organizationally mediated. (Lounsbury 2005). More broadly, the diffu-
The concentration of assets held by sion of environmentalism as a global blue-
institutional investors provided shareholder print for the nation state has enhanced the
activists with critical leverage in firm-level capacity of domestic environmental activists
conflicts with management over the control to organize and slow environmental degrada-
of corporations. The SEC's review of proxy, tion (Frank, Hironaka, & Schofer 2000;
rules weakened managers' ability to control Hironaka & Schofer 2002; Schofer &
votes and signaled a favorable regulatory Hironaka 2005). As these studies suggest,
stance toward shareholders and corporate formal mechanisms (e.g., environmental
reform. State governments that were heavily impact assessments) and the prevalence of
dependent on franchise fees for incorporation global environmentalism as a valued cultural
were reluctant to alienate shareholder groups model have legitimated environmental move-
by passing anti-takeover statutes that would ments, fueling organization, while creating
deprive shareholders of a key weapon. And rhetorical and procedural opportunities for
prosperity made it harder for vested interests activists to point out failures and pursue legal
to use fears of economic ruin to mobilize actions.
political support for anti-takeover legislation. Research on movements and institutional
Soule and her colleagues likewise trace contexts has also documented how the multi-
how the ability of the women's movement to level or federated character of institutions
secure equal rights amendments from sometimes creates opportunities for
American states rested on political and insti- movements. The multi-level nature of fields
tutional opportunity structures (Soule & is central to institutionalist imageries of
Olzak 2004; Soule & King 2006). context (Scott 2001; Schneiberg & Clemens
Mobilization for equal rights amendments 2006), and bears directly on movements'
was more likely to result in ratification in capacities to produce change. As Davis and
states with a high level of electoral colleagues' analyses of shareholder activism
competitiveness, extensive histories of prior show, challengers sometimes have to
civil rights legislation, and favorable mobilize simultaneously at multiple levels
(Democratic) allies in power. It was also within fields to assert new models and effect
more effective in public opinion climates change (Davis & Thompson 1994; Davis et
characterized by the prevalence of new con- al. 1994; Davis & Greve 1997; Vogus &
ceptions of women's roles in private and Davis 2005). Shareholder group were mainly
public spheres. interested in promoting new conceptions of
Findings that public opinion climates the corporation and contesting entrenched
enhance prospects for movements are partic- management at the firm ('lower order') level.
ularly noteworthy here, as they move beyond But they quickly found that they had to take
traditional realist formulations about political the fight to the state and federal level.
opportunity structure to consider how Influencing these
662
'higher order' units were essential for chal- programs while schools without movements
lengers' ability to make change, since state tended to adopt a more minimalist approach
and federal laws set the terms for mobiliza- that was staffed by part-time custodial staff
tion and access at the firm-level, defining (Lounsbury 2001). Moreover, ecological
rules for proxy systems, takeovers and activists were better able to gain footholds for
whether shareholders could act collectively. securing programs at larger college and
By blocking anti-takeover legislation, secur- universities with more resources, selective
ing new proxy rules, and so on, shareholder colleges with histories of activism, and
activism at state and federal levels created universities with environmental majors that
critical opportunities for mobilization against could serve as local allies or institutional
and within corporations. conduits for field-level pressures.
The fractured and multi-level structure of Finally, researchers attending to context
institutions also enabled anti-corporate have also found that outcomes are shaped by
groups to get insurance rate regulation on the whether or not initial movements catalyze
states' agenda in the early twentieth century counter-movements within fields. Vogus and
(Schneiberg & Soule 2005; Schneiberg & Davis' (2005) study of anti-takeover legisla-
Bartley 2001; Schneiberg 1999). Challengers tion takes one step in this direction by ana-
seeking decentralized, producer republican lyzing how managerial and local elites
models of economic development were counter-organized in response to shareholder
largely closed out of policy making and had activism to obtain legislation that protected
little leverage for their regulatory ambitions corporate managers from raiders and hostile
in New York, Connecticut and other centers takeovers. Soule and colleagues' analyses go
of the 'insurance combine.' But the more one step further. In analyzing states' adoption
peripheral, agrarian states proved more open of the Equal Rights Amendment, they simul-
to populist pressures, enabling agrarian and taneously include variables for the presence
independent producers to assert statist or strength of women's movement groups
regulatory measures in the insurance field, (NOW and AAUW) and anti-ERA organiza-
disrupt markets, and organize mutuals. tions (Soule & Olzak 2004; Soule & King
Insurers tried to close off access entirely by 2005). Similarly, in modeling the passage of
suing in state and federal courts to void anti-hate crime laws, they include counts of
states' rights to regulate insurance prices. Yet, pro-gay community organizations and
that strategy backfired when advocates of community centers, on the one hand, and
regulation found an unexpected ally in the measures of conservative group lobbying and
US Supreme Court, which opened the door the presence of a Family Policy Council, on
for further intervention in states by ruling that the other (Soule 2004). Ingram and Rao
insurance was 'affected with a public interest' (2004) also think in terms of movements and
and thus subject to the states' authority. counter-movements, but elaborate a different
Indeed, the multi-level character of fields research strategy, analyzing the passage and
creates possibilities for movements to couple then the repeal of legislation banning chain
field-level and intra-organizational mobiliza- stores as indicies of populist mobilization and
tion, with the characteristics of organizations chain store counter-mobilization over the rise
serving as opportunity structures that shape of new market forms. In this way also, the
the capacities of movements within organiza- capacities of movements to promote change
tions to produce change. For example, uni- or new path creation rests not just on size,
versities and colleges that had previously resources or movement strength, but also on
experienced recycling activism on campus the structure and dynamics of the political
hired full-time ecologically-committed coor- and institutional context.
dinators and created full-blown recycling
 663
SOCIAL MOVEMENTS AND There are substantial methodological chal-
NEO-INSTITUTIONAL THEORY: lenges involved in documenting movement
FUTURE DIRECTIONS effects on path creation and institutional
change, challenges that literally multiply as
We conclude our review by discussing new researchers address the moderating influence
frontiers for analyzing combinations of insti- of existing institutional contexts. At a mini-
tutional process and social movements as mum, documenting movement effects
sources of path creation and change. Future depends on credibly measuring the develop-
work, we suggest, can and should attend ment, strength and activities of challenger
more carefully to key methodological issues movements. Existing research linking move-
of measurement and modeling. It can also ments, organizations and institutions has
fruitfully consider how movements produce made real progress here, using the presence
change as political forces or conditions for of movement organization or chapters, counts
diffusion, while simultaneously addressing of movement organizations, and the number
how movements are endogenously produced of movement members to document
and always institutionally conditioned. Such movement emergence and strength (e.g.,
an approach captures the substantial benefits Lounsbury 2001; Schneiberg 2002; Soule &
of introducing contestation and collective King 2006). It also suggests that future work
action into institutional analysis. But it does can more directly tap such effects by measur-
so while avoiding the traps of either invoking ing protests and other movement activity, or
movements as extra-institutional forces or by using newspaper coverage, public hear-
simply using movements to assert agency and ings or other measures of controversy to
abandon institutional context entirely. Such assess whether movements have been able to
an approach, in other words, engages, rather force issues or new conceptions on the public
than avoids, the paradoxes of embeddedness agenda or call existing arrangements into
and analytical impasses involved in question.
explaining path creation and change (Seo & Documenting movement effects also rests
Creed 2002; Schneiberg 2007). We begin critically on using movement research and
with a discussion of methodological issues, multivariate approaches to isolate and disen-
and then emphasize two major substantive tangle the effects of movement strength or
categories for future research - the outcomes activity, mobilizing structures, framing, and
of movements and the origins of institutions institutional or political opportunity struc-
and movements. tures (for exemplars, see Vogus & Davis
2005 and Soule & King 2006). Absent multi-
variate designs or careful comparative analy-
Measuring and modeling sis, inferences about movement effects on
movements change remain vulnerable to counterclaims
about spurious relations.
Much of the work on movements from a neo- Furthermore, designing research that
institutional perspective has relied on quali- attends explicitly to multiple factors is partic-
tative and historical methods, playing to ularly important for addressing how existing
those methods' strengths in theory construc- institutions and opportunity structures
tion and producing a rich body of theory and enhance or undermine movements' capacities
thick descriptions. Supplementing qualitative for influence, disruption, and new path
work with multivariate quantitative research creation. Research on institutions or political
can not only help systematize theory con- opportunity structures sometimes analyzes
struction in important ways, it can also help those factors additively. But whether made
clarify causal relations, isolate effects, and by movement scholars or neo-
strengthen inferences about movement emer- institutionalists, arguments about political
gence and outcomes. opportunity
664
and institutional mediation are fundamentally state power, and can hinder, halt or even
arguments about interaction effects reverse the diffusion of new forms.
(Thornton & Occasio 1999; Bartley & Under these conditions, diffusion is a con-
Schneiberg 2002; Schneiberg & Clemens tested process, and the success of the initial
2006). They are arguments that political or movement for alternatives depends on
institutional configurations amplify or blunt whether or not challengers can muster politi-
the effects of movement numbers, resources cal support to place and keep alternatives on
or activities on policies, paths and change. the agenda (Soule & King 2005; King,
And they can be implemented empirically in Cornwall, & Dahlin 2005). Under these con-
relatively straightforward ways (Amenta & ditions, the diffusion of novel practices
Zylan 1991; Amenta et al. 1992; Schneiberg depends on challengers' abilities to mobilize
2002; Soule & Olzak 2004; Soule 2004). sufficient power (resources, numbers, organ-
ization) to secure authorizing legislation,
defend alternatives politically, and so on. For
example, the diffusion of mutuals and coop-
Mobilization outcomes: eratives in the US economy was most exten-
movements, politics and sive where anti-corporate forces could secure
(heterogeneous) diffusion decisive political victories against corpora-
tions, including anti-trust laws and populist
A second, more substantive direction for railroad regulation (Schneiberg 2002, 2007).
future research revisits the relationship Under these conditions, movements matter
between collective mobilization and diffu- not just as a conduit, theorizer or assembler
sion, and considers how movements operate of frames and new forms, but also, and more
as political forces in promoting the spread of critically, as an accumulator of political
alternatives. Thinking in these terms keeps power and thus an essential political condi-
politics and power at the forefront of a recon- tion for diffusion.
stituted institutional analysis, while high- Considering movements as political condi-
lighting how diffusion is often a contested tions for diffusion revises conventional views
political process (Schneiberg & Soule 2005; of the relationship between movements,
Piss & Zajac 2005; Hirsch & Lounsbury institutions and outcomes. Arguments about
1997). Researchers have demonstrated that political opportunity structure trace how
social movements can shape the composition existing institutional structures condition the
of fields and fuel path creation by promoting effects of movements and mobilization on
new kinds of forms such as craft breweries policies and change. Here, politics and power
(Carroll & Swaminathan 2000), nouvelle are institutionally contingent (Amenta et al.
cuisine (Rao, Monin, & Durand 2003), 1992; Thornton & Occasio 1999; Thornton
mutual, cooperative and state enterprises 2002; Bartley & Schneiberg 2002). As
(Schneiberg 2002, 2007), and community- institutional systems become more open to
based, non-profit recycling centers challengers or provide them with elite allies,
(Lounsbury, Ventresca, & Hirsch 2003; see movements' abilities to translate conventional
also Clemens 1997; Rao, Morrill, & Zald resources into desired outcomes will
2000). Yet as also noted, mobilization can increase. Favorable institutional contexts
spark counter-mobilization by powerful amplify the effect of movement numbers,
vested interests threatened by novel practices, organizations or resources on change
pitting industrial brewers against craft outcomes.
producers, managers and unions against Conceptualizing movements as political
shareholders, or corporations against cooper- forces for diffusion inverts this logic, sug-
atives and state enterprises. Such counter- gesting that institutional dynamics of diffu-
attacks are typically political, often involve sion are politically contingent. Whether or
not actors can adopt, borrow or translate
 665
novel forms depends on the capacities of or subsets of organizations susceptible to
challenger movements to amass political alternatives that are endorsed or adopted by
resources, defend novel forms against peers. Here, movements operating as political
counter-attacks, and create favorable political forces within organizations can fuel a dif-
contexts for the spread of alternatives ferential flow of a novel practices across
(Schneiberg, King & Smith 2008). Here, organizations.
institutional effects depend on movement Furthermore, as movements become more
power. Generally speaking, the likelihood of powerful, they can fuel variation in the con-
an organization adopting a new practice tent of practices that diffuse within fields. In
increases as professional communities the recycling case, activist groups on cam-
endorse the practice and the number of prior puses pushed colleges and universities to go
adopters increase. Professional endorsement beyond minimal approaches to recycling
and increased prevalence of practices staffed by part-time custodial staff to adopt
increases their legitimacy. But, where novel programs with full-time ecologically-com-
forms are subject to contestation, diffusion mitted coordinators (Lounsbury 2001).
will require the mobilization of numbers, Similarly, in the insurance case, increasing
resources or organization to defend and pro- the political strength of anti-corporate forces
tect these alternatives. Absent such mobiliza- drove some states beyond limited, anti-dis-
tion, endorsement or prior adoption will have crimination forms of price regulation to full
little or no effect on subsequent adoption. Yet rate control measures that gave regulators
as champions of alternatives mobilize and authority to order comprehensive changes in
shift the balance of power, endorsement and rates (Schneiberg & Bartley 2001).
prior adoptions will have increasingly power- Fortunately, well-developed tools are
ful effects on subsequent adoption, transla- available for analyzing movements as politi-
tion or other institutional processes. cal conditions for diffusion, provided meas-
Overall, our knowledge of how move- ures of movement strength or presence are
ments create favorable political contexts for available. To analyze how movements create
the diffusion and translation of alternatives is possibilities for diffusion by shifting the bal-
relatively undeveloped. However, future ance of power at the field-level, models of
research can draw on both a multi-level per- adoption can employ interaction effects to
spective and existing strategies for modeling examine whether the political strength of
diffusion. In principle, movements can sup- movements at the field-level moderates the
port diffusion as a political force at either the effects on organizational adoption of prior
field-level or within organizations. adoption by peers or endorsement by expert-
Movements can raise the overall receptivity professionals. To analyze these dynamics at
of organizations to new practices by amass- the organizational level, a similar strategy
ing numbers and resources to contest field- could be used, provided measures are
wide authorities, report success stories in available of the presence, strength or efficacy
media, enhance the visibility of new prac- of movements within organizations.
tices, or demonstrate the possibility of dis- Researchers could again use interaction
ruption and change. As movements mobilize effects to see if the strength of movements in
effectively at this level, they create political organizations increases the effects of preva-
space for alternatives and multiple logics lence or endorsement on the likelihood of
across entire fields, increasing the risk of those organizations adopting novel practices.
adoption of novel practices in the aggregate. Alternatively, one can use heterogeneous
Alternatively, movements can shift the diffusion models (Strang & Soule 1998) to
balance of power and enhance receptivity by see whether increasing movement strength
mobilizing 'locally' within individual organ- within organizations renders them more
izations and making particular organizations susceptible to the influence of peers
666
or professions. As Soule's (2006) study of over time, via sequences or successive stages
university divestment shows, student protests of translation, layering, theorization and
on campuses against investing in South assembly that elaborate and innovate on pre-
Africa did not directly promote divestment. vious, partial accomplishments (Streeck &
But by increasing awareness among adminis- Thelen 2005). And central to field and path
trators of university and surrounding com- creation is some sort of collective mobiliza-
munities, demonstrations were a nagging tion or movement, not just a single burst of
reminder that rendered colleges and universi- organization, but also waves or cycles of
ties more vulnerable to legitimacy pressures, mobilization and organizational formation.
making them more likely to divest as their The parallels between institutionalist
peers jumped on the bandwagon. imageries of path creation as waves of layer-
Finally, future research can use existing ing, on the one hand, and movement research
analytical strategies, including competing on cycles of mobilization and protest, on the
hazards models, to analyze how growing other, suggest that linking the two can pro-
movement strength might promote the diffu- vide new insights for future research on path
sion of increasingly varied, comprehensive or creation and change, while adding new his-
radical alternatives (Lounsbury 2001; torical dimensions to neo-institutional schol-
Schneiberg & Bartley 2001). In this way, too, arship. Movement scholars have done
institutionalists can address how movements important work in highlighting the sequenc-
as political forces shape not just the overall ing of social movements and cycles of protest
flow of practices across fields, but also the (e.g., Tarrow 1998), tracing, among other
differential flow of alternatives and practice things, how contentious politics that involve
variants within them. tactics such as protest are transformed into
more conventional forms of political action
such as lobbying (Meyer & Tarrow 1998;
The origins of institutions: history, Kriesi, Koopmans, Duyvendak, & Giugni
sequence and layering 1995). Minkoff (e.g., 1993, 1997) adds orga-
nizational dimensions to the analysis of
An important and neglected question in neo- sequences, showing how the proliferation of
institutionalism is where institutions such as radical organizations created legitimacy and
fields, practices or paths come from and how favorable political opportunities for subse-
they are forged or elaborated over time. As quent organization by advocacy and practi-
sociologists have emphasized, there is never tioner groups, institutionalizing civil rights
a clean slate. Rather, new fields and arenas of more deeply within American politics.
social life are typically constructed from the For their part, institutionalists have just
rubble, or flotsam and jetsam, of previous begun to think in these terms. But prelimi-
institutions or paths not taken (Stark 1996; nary efforts to analyze path and field creation
Schneiberg 2007) or from variations pro- as waves of mobilization, structuration and
duced within extant fields (Lounsbury & layering have established a new direction for
Crumley 2007). After all, as Meyer and future research. Lounsbury, Ventresca and
Rowan (1977: 345) observe in their classic Hirsch (2003) took one step in this direction,
piece, 'the building blocks for organizations showing how efforts by early and more radi-
come to be littered around the social land- cal 'outsider' environmental movements in
scape; it takes only a little entrepreneurial the 1960s and 1970s to restructure capitalism
energy to assemble them into a structure.' via not-for-profit, community-based recy-
Moreover, new systems are often not created cling centers unintentionally laid foundations
in one fell swoop, through one wave of diffu- for subsequent mobilization by insider groups
sion or comprehensives settlements. Rather, in the 1980s to create a for-profit recycling
paths may emerge through multiple waves, industry. Most non-profit recycling
 667
centers proved economically non-viable, but that exposed corruption and promulgated
they nonetheless trained a generation of reform principles, and promoted city-man-
Americans in the habits of saving, cleaning, ager forms of municipal government that
and sorting their trash, a critical cultural exemplified those principles, providing tan-
infrastructure for the creation of markets gible analogies for reformers within the thrift
based on curb-side pick up. industry. Both institutions promoted the con-
Schneiberg (2007; Schneiberg, King & stitutive legitimacy of bureaucracy, prompt-
Smith 2008) takes this avenue of research a ing saving and loans associations to adopt
step further in analyzing the development of organizational forms more consistent with
mutual, cooperative and publicly owned 'modernist' moral sentiments.
enterprise in the US economy. For the most Nor are these processes confined to eco-
part, populists and the radical anti-corporate nomic industries or organizational dynamics.
movements of the late nineteenth and early As Armstrong (2002, 2005) illustrates, the
twentieth centuries faced decisive defeats in legacy of initial movements may also include
their efforts to forge alternatives to corporate the establishment of new identities, cultural
capitalism. But even though they collapsed, tools such as frames and logics, and 'creative
these movements nevertheless left behind contexts' that enable subsequent groups to
organizational, cultural and institutional continue struggles, mobilize and realize new
legacies - bit and pieces of the paths they had gains in their efforts. The rise of the New
pursued, including theories of order, regula- Left in the 1960s enabled the creation of new
tory fragments, local movement chapters, and kinds of lesbian/gay organizational identities
alternative systems of enterprise in key in San Francisco in the early 1970s. The
industries. These legacies of previous development of gay identity politics, in turn,
mobilization, in turn, served as legitimating proved crucial in structuring subsequent
structures, platforms and infrastructures for lesbian/gay organizations as well as enabling
subsequent collective mobilization in the changes within mainstream organizations
same or related industries during the such as the establishment of domestic partner
Progressive era, and then in the early New benefits (Creed & Scully 2000; Scully &
Deal. Indeed, successive waves of reformers Creed 2005). While this work traces the
and anti-corporate forces built or transposed sequencing and layering from 'outsider' to
theories, moral sentiments and cooperative 'insider' movements, it would be interesting
forms out from insurance and other early to also understand how 'insider' movements
sites of alternative enterprise into the dairy facilitate 'outsider' mobilizations.
and grain industries, the electrical utility Overall, the approach to movements and
industry and banking, elaborating what institutions that we advocate celebrates the
amounts to a secondary path of industrial heterogeneity of actors, multiple logics and
order in the US economy. practice variation. A focus on such multiplic-
Haveman, Rao and Paruchuri's (2007) ity revises the isomorphic imagery of the
study of Progressivism and savings and loans canonical two-stage diffusion and punctuated
associations likewise highlights the distal and equilibrium models (e.g., Tolbert & Zucker
often unintended effects of movements on 1983). Such a perspective concentrates less
organizational fields. Progressive activists on the contagion of unitary practices or a sin-
quite deliberately and directly sought to gular rationality, but rather on multiple forms
reform a variety of economic institutions, of rationality that inform the decision making
from the railroads to savings and loan associ- of actors in fields (Bourdieu 1984), and pro-
ations. Yet they also fostered Progressive vide foundations for ongoing struggle and
models of rationality, bureaucratization and contestation. This conceptualization of insti-
expert management within the thrift industry tutionalization and fields as multiple, frag-
indirectly, via two intermediary institutions. mented and contested (Schneiberg & Soule
Activists formed Progressive newspapers
668
2005; Washington & Ventresca 2004; Beckert, J. 1999. Agency, entrepreneurs, and
Lounsbury 2007) is a crucial ontological institutional change. The role of strategic
starting point for a new wave and generation choice and institutionalized practices in
of institutional scholars. And when combined organizations. Organization Studies, 20 777-
with a renewed attention to movements, it 799.
Bourdieu, P 1984. Distinction a social critique of
directs analytical attention to how historical
the judgment of taste. Cambridge Harvard
legacies of prior social action become University Press.
embedded in existing fields, providing bases Campbell, John. 2004. Institutional change and
for sequences of mobilization, and the con- globalization. Princeton: Princeton University
struction of new paths from the elements or Press.
ruins of old or forgotten orders. The early Campbell, John. 2005. Where do we stand;
work in this direction has proven fruitful and Common mechanisms in organizations and
promises to propel institutional analysis for social movements research. Pp. 41-68 in G.F.
many years to come. Davis, D. McAdam, WR. Scott & M.N. Zald
(eds.), 2005. Social movements and organi-
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Carroll, G .R. & Swaminathan, A. 2000. Why the
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 28
Examining 'Institutionalization':
A Critical Theoretic Perspective*
David J. Cooper, Mahmoud Ezzamel and Hugh Willmott

INTRODUCTION theory has taken on board and accommodated

critiques which, alternatively, have called for
Various forms of critical theory have been a rebalancing of the emphasis given to the
suggested to illuminate social practices. conditioning constraints of 'structure' or the
Versions of such theories has been promoted innovative capabilities of 'agency' (Reed,
for the analysis of management, organiza- 1997). This chapter steps back from this
tions and work (e.g. Burrell, 1988; Burrell, process of critique and incorporation to
1994; Alvesson and Willmott, 2004) and this provide a 'critical theoretic' illumination of
chapter considers how such analyses, with institutional theory to facilitate reflection on
their emphasis on power, domination and its distinctiveness and limits.
emancipation, can be used to examine a cen- We begin by noting how, in their different
tral focus of institutional theory, namely ways, varieties of institutional theory and
institutionalization. Limitations and anom- critical theory share an attentiveness to instit-
alies in institutional theory have stimulated utionalization, conceived as processes that
its development from 'old', through 'new', to order and constrain but also enable forms of
'neo' variants of analysis¹ (DiMaggio and interaction and organization. In institutional
Powell, 1991). At each stage, institutional theory, dominant 'logics' that are irreducible

____________________
*An earlier version of this paper was presented to the Organization Theory Research Group at the
Tanaka Business School, Imperial College, London. We would like to thank participants at this meeting for
their helpful and supportive discussion of the paper and especially the comments received from Marc
Ventresca and André Spicer. We are especially indebted to Nelson Phillips and Jaco Lok for their
invaluable suggestions for focusing and clarifying central arguments of the paper. Albert James assisted
with the references. David Cooper and Mahmoud Ezzamel thank the Social Sciences and Humanities
Research Council for financial support, and David Cooper thanks the Certified General Accountants of
Alberta for their financial support.
674
to rational choices or a to a series of environ- commitments and consequences. The differ-
mental contingencies, are held to account for ences are both theoretical and practical. As
why, for example, within. a population of Lounsbury (2003: 16) notes, differences of
organizations there is an homogeneity of orientation to 'the problem of order as well as
form and practice. For critical theorists, conflicting social imageries of the rela-
processes of institutionalization account for tionship between culture and power lead
how patterns of domination and oppression - institutional and critical analysts of organiza-
for example, racism or sexism but also more tions to ask different kinds of questions'. This
subtle, normalized forms of subjugation such observation helps to account for why, in the
as bullying and pressurizing at work become voluminous literature of institutional theory,
naturalized in workplaces and elsewhere yet, there are so few references to key critical
in principle, are open to transformation. What thinkers, such as Marx, Habermas and
they share, nonetheless, is a rejection of Foucault.4 Advocates of institutional theory
analysis founded upon methodological position and develop their work in relation to
individualism (e.g. rational choice theory)² rational choice theory, contingency theory
that ignores how 'choices' are embedded in, and resource dependency theory.
and organized through, processes that are Consideration of the possible relevance of
infused with value. So, for example, in critical theory concepts of 'totality', 'contra-
principle, institutional theory problematizes diction' and 'praxis' (Benson, 1977) is highly
analyses that do not appreciate how the very unusual (e.g. Seo and Creed, 2002).
idea of 'choice', for example, articulates a Tellingly, what is perhaps the most pene-
particular, institutionalized way of making trating critique of institutional theory
sense of the world. Critical analyses extend (Hasselbladh and Kallinikos, 2000) has been
and radicalize this understanding as ignored in the plethora of institutional papers
institutionalization is examined as a means of that have appeared since its publication.5
domination and oppression. We will argue that institutional theory is
We conceive of the differences - of embedded in a distinctive tradition of social
emphasis and bearing - between institutional scientific enquiry that is preoccupied with the
and critical theories in terms of their con- possibility of developing more objective
trasting value-orientations.³ Crucially, we knowledge of what it conceives the social
reject any suggestion that institution theory is world to be (that is, a product of processes of
value-free whereas critical theory is value- institutionalization). A concern to enhance
laden or normative. Instead, both are norma- prediction - for example, by researching how
tive, although in different ways. In broad strategic responses 'are predictable largely in
terms, institutional theory is conservative terms of the nature of institutional pressures'
insofar as it inclines to naturalize the status (Oliver, 1991: 174) in order to secure
quo and shies away from (critical) theories improved control of the social world - pro-
that, in contrast, problematize the status quo vides a taken for granted, but rarely interro-
as oppressive. A key difference is that the gated, impetus for institutional theory. Other
normativity of institutional theory is occluded possible traditions of social science -
by its pretensions to positivist objectivity hermeneutic or critical (see Bernstein, 1976)-
whereas the normativity of critical theory is are rarely contemplated or debated. In con-
comparatively explicit. trast, critical theoretic analysis conceives of
A guiding thread running through the social scientific knowledge production in
chapter is the (institutional) idea that critical relation to its capacity to de-naturalize the
theory and institutional theory are embedded present, and thereby to open up questions of
in differing 'general views of life and the whether the conditions and consequences of
Universe' that articulate different projects present circumstances are oppressive or
which are inherently political in their emancipatory (and to whom).
 675
From these introductory remarks, it can be more specifically, to reflect critically upon
appreciated that it is a challenging task to the role and relevance of notions of 'power'
relate institutional theory to critical theory. and 'agency' invoked by neo-institutionalists
Critical theory (and indeed institutional to address its alleged anomalies and
theory) covers a vast and expanding terrain of limitations. We have two reasons for our
intellectual endeavour (see Appendix) and selection of Michel Foucault. The first is that
consideration of its connection(s) with insti- during the past decade and more his thinking
tutional theory can be approached from has been exceptionally influential in social
numerous angles. A review might, for science as well as critical theory.7 The second
example, consider how key elements in is that his writings on power and subjectifica-
institutional theory relate to, deviate from, or tion 'are suggestive of an alternative under-
run in parallel to a more narrowly (e.g. standing in which oppressive dimensions and
confined to Critical Theory, Marxism, and so effects are the focus of analysis.
on), or to a more expansive (e.g. extending to Subjectification is conceived by Foucault
poststructuralist theory) notion of critical as the 'different modes by which ... human
theory. Alternatively, a review of their beings are made into subjects' (Foucault,
relationship might concentrate on those 1983: 208). Foucault's focus upon subjectifi-
contributions to institutional theory that have cation has an (unexplored) resonance with
selectively deployed elements of critical processes of institutionalization, not least
theory to refine or augment their analysis; because, as Hasselbladh and Kallinkos (2000:
and such a review could be extended to 701) put it, 'institutionalization is sustained
discuss how other elements of critical theory and given meaning and direction through its
may be incorporated in the development of capacity to constitute distinctive forms of
institutional theory. If, however, the value- actorhood'. A condition of institu-
orientations of institutional theory and tionalization, in other words, is subjects'
critical theory are believed to diverge identification with the forms and practices
significantly, as we have suggested, then it is that it reproduces. For example, in modern
an unrewarding challenge to imagine how societies, the institution of actorhood - that is
either theory can be subsumed within the the attribution of agency to subjects - is pre-
other without diluting or compromising their dominantly constituted and institutionalized
distinctive intent and associated in ways that Weber (1978) has characterized
contributions to knowledge.6 Our favoured as 'instrumental'. Actors' identifications with
approach, therefore, develops an appreciation the institutions of work, family, religion, etc.
of, and respect for, their differences; and it become progressively less traditional, affec-
explores how a variant of critical theory may tive or value-rational. Crucially, this does not
be engaged to shed some new light upon the mean that we are any less habituated to, or
particularity and limits of institutional theory any less institutionalized or subjectified as
but without the restrictive and subjugating agents within zweckrational modes of
requirement of having to limit an assessment action.8 Indeed, the commonsense appeal of
or demonstration of its relevance and value as rational choice explanations of action is, from
a source of remedies for problems an institutionalist perspective, indicative of
preoccupying institutional theorists. the dominance of what, in a Foucauldian
Accordingly, in this chapter, in-depth analysis, might be identified as a particular
attention is given to one key contribution to mode of subjectification. This mo de is
critical theory - the work of Michel Foucault. disciplined by a specific conception of
We mobilize his thinking to give some indi- competent agency that privileges and nat-
cation of what it could mean to think criti- uralizes the exercise of conscious, sovereign
cally about the value-orientation and calculation to achieve desired ends with
contribution of institutional theory; and, appropriate means (see also Friedland and
676
Alford, 1991). This chapter explores these legitimation for institutional theorists. Our
issues in more detail. specific focus is on questions of how 'agency'
The next section provides a discussion of and 'power' are addressed and incorporated
how a particular understanding of institutions within institutional theory.
has become naturalized in institutional theory
and introduces our focus on issues of power
and agency. This is followed by a brief Conceptualizing institutionalization
overview of critical theory before we attend
directly to Foucault's contribution to concep- In his landmark text on institutional theory,
tualizing power, knowledge, and subjectifi- Scott (1995/2001) identifies Parsons' defini-
cation. Applying Foucault's ideas, we then tion of institutionalization as a synthesis of
consider some recent efforts to revise institu- the arguments of earlier major theorists (e.g.
tional theory. A further section discusses a Veblen, Commons, Durkheim, Weber): 'A
number of issues arising from our exploration system of action is said to be institutionalized
of the relationship between institutional to the extent that actors in an ongoing
theory and critical theory before we draw relation oriented their action to a common set
together our main arguments. of normative standards and value patterns'
(Scott, 1995/2001: 15, emphasis in original).
For Parsons, compliance to institutional
norms 'is a need disposition in the actor's
INSTITUTIONAL THEORY AND personality structure' (1951: 37, cited by
INSTITUTIONALIZATION Scott, 1995/2001: 12), where compliance is
motivated by the moral authority that institu-
Before ... institutionalisms themselves become tional norms exert over the individual. Actors
institutionalized - reified as distinct 'theoretical feel compelled to comply because refusal or
strategies', codified in textbooks, and taken as failure to do so results in feelings of anomie
given by practitioners - we had better take stock.
(Jepperson, 1991: 143-144)
and, at the extreme, mortification.
Critics of this (functionalist) conception of
Jepperson cautions against a forgetfulness of institutionalization have argued persuasively
the particularity of institutional theory - in that it attributes 'needs' to actors which are
the sense that it is a construction based upon seemingly either unconditioned by processes
specific, institutionalized assumptions. of institutionalization or unequivocally well
Within this particularity, there is considerable disposed to them. A widely canvassed
diversity and debate (DiMaggio and Powell, remedy for this limitation is to emphasize the
1991) and recurrent attempts to reconcile role of interests, instrumental action and/or
internal differences (e.g. Hirsch and rational choice (Alexander, 1983; Silverman,
Lounsbury, 1997). Institutional theory's par- 1970). In this remedy we encounter an
ticularity has been frequently surveyed and example of a flip-flopping between
typified (e.g. Scott; 1991; DiMaggio and (functional) structuralist and action-theoretic
Powell, 1991) but, for the most part, has not accounts of social action. The dynamic of the
been critically addressed. In this section, we flip-flop depends upon each pole being
examine this particularity through a series of simultaneously recognized and denied as one
reflections upon institutional theory's 'take' or other side of the dualisims privileged, and
on institutionalization. We consider the con- subsequently found to be unbalanced by
tributions of a number of leading proponents advocates of the alternative pole. So, for
of institutional theory and pay particular example, Parsons' systems-theoretic
attention to Berger and Luckmann's discus- conceptualization of institutionalization is
sion of institutionalization as this has pro- censured for assuming a model of human
vided a key source of inspiration and action in which compliance with moral
authority is governed by the
 677
'need' to internalize its order(s) rather than, the process of institutionalization, paying
say, a calculation by agents that involves the particular attention to how 'agency' and
strategic development of, or identification 'power' are formulated in their thinking:
with, particular norm's and values.
It is notable that mention of agency is Externalization - the production, in social
largely excluded from Meyer and Rowan's interaction, of symbolic structures whose
(1977/1991) classic paper where their meaning comes to be shared by participants [in
particular social worlds, e.g. the world of
rejection of methodological individualism is institutional theory]; Objectification - the
clearly signalled in the definition of process by which this production 'comes to
institutionalization: confront him as a facticity outside of himself’ as
something 'out there', as a reality experienced in
Institutionalized rules are classifications built common with others [e.g. the 'institutionalisms'
into society as reciprocated typifications or to which Jepperson (1991: 144) refers]. And
interpretations (Berger and Luckmann, 1966: only then comes Internalization - the process by
54). Such rules may be simply taken for granted which the objectivated world is 'retrojected into
or maybe supported by public opinion or the consciousness in the course of socialization.
force of law ... Institutionalization involves the (Scott, 1995/2001: 40, emphases omitted and
process by which social processes, obligations, added, citing Berger and Luckmann, 1966: 60-
or actualities come to take on rule-like status in 61)
social thought and action. (Meyer and Rowan,
1977/1991: 42) The emphasis on 'facticity', 'out there', 'out-
side of himself' serves to counteract Parsons'
Writing from the structuralist pole of the functionalist accent on the moment of inter-
dualism (see above), Meyer and Rowan omit nalization. On the other hand, Berger and
reference to actors' orientations and also Luckmann account for institutionalization in
exclude consideration of power in respect of terms of 'the important psychological gain'
the conditions of institutionalization as well (echoes of Parsons) that institutionalization
as its consequences, possibly because they delivers as it narrows choices and 'thereby
equate the conceptualization of power with a opens up a foreground for deliberation and
notion of one individual or group possessing innovation' (1966: 71). There is little or no
the power to secure their interests despite the consideration of how, for example, the very
resistance of others. sense of agency emerges through processes
The development of neo-institutional of institutionalization; or how, in Foucault's
theory has involved a rehabilitation of a terms, human beings become subjectified as
notion of agency (and power and interests) so they/we are made into subjects through par-
as to account for processes of change that, in ticipation in such processes. Relatedly, there
part at least, are attributed to the interven- is no appreciation of the ambivalence of the
tions of powerful agents (e.g. institutional 'gain' secured by habitualization (see
entrepreneurs and social movements, see Willmott, 1986). As a consequence, when
especially DiMaggio, 1988). In order to fur- considering the 'controlling character' (Berger
ther develop and deepen our reflections on and Luckmann, 1966: 72) of institu-
institutionalization, we turn to Berger and tionalization, Berger and Luckmann under-
Luckmann's The Social Construction of stand it as something that is 'inherent', and
Reality which has provided the theoretical not mediated by relations of power.
underpinning and legitimacy for much insti- In conceiving of institutionalization as
tutional theory (Gulrajani and Lok, 2005). occurring 'whenever there is a reciprocal
typification of habitualized actions by types
of actors' (1966: 72), Berger and Luckmann
Institutionalization in 'The social assume an unforced reciprocity in processes
construction of reality' of habitualization which is based upon the
'psychological gain' enjoyed by all parties:
We begin by considering Scott's reading of 'the most important gain is that each will be
Berger and Luckmann's three moments in able to predict the other's actions' (1966: 74).
678
Institutionalization is thus represented as have endeavoured to rehabilitate agency (and
universal and politically neutral. It is con- power) to counteract the determining force
ceived as universal in the sense that it has no attributed to institutional pressures by new
historical specificity: all forms of institution- institutionalists. Doubting that change can be
alization are deemed to be equivalent. And it adequately explained by functionalist fine-
is politically neutral, if not amorally tuning or endogenous shocks, neo-institu-
conservative, in the sense that the (political) tionalists have flip-flopped in the direction of
conditions and consequences of institutional- other catalysts - such as (powerful) institu-
ization are excluded from its characterization. tional entrepreneurs or members of a social
As Berger (1988: 223) has commented, those movement - as agents of change.
who read radicalism into his constructionism
laboured under a 'profound misun-
derstanding'. Berger and Luckmann's Agency and institutionalization
understanding of social constructionism can
be applied as readily to slave plantations, for Inspired by DiMaggio's (1988) critique of
example, as it can to movements for the new institutional theory, neo-institutionalist
abolition of slavery without, in either case, analysis is propelled by a taken-for-granted,
making reference to the oppressive or eman- and thus unexamined, assumption that
cipatory character of such institutions. There 'agency' must play some (important) part in
is barely a gesture9 towards the possible processes of de/institutionalization and, more
involvement of more or less powerful actors specifically, is a source of diversity or cre-
in establishing and imposing typifications ativity that is productive of innovation and
that, over time, become habitualized and change. A recurrent shortcoming of such
reciprocated or, at least, complied with. Nor, appeals to agency concerns their tendency to
building on critical theorizing, is there overlook how 'agency' does not exist exter-
acknowledgment of the powerful, normaliz- nally to, but is itself a powerful product of,
ing effects that all forms of institutionaliza- processes of institutionalization. This is evi-
tion - whether imposed or embraced - exert. dent when 'agency' (and 'interests' and
The reliance upon Berger and Luckmann 'power') are invoked by neo-institutionalists
for theoretical inspiration and legitimation to account for processes of institutionaliza-
combined with, at best, a loose coupling of tion and de-institutionalization without suffi-
power and processes of institutionalization in cient attention being paid to the frameworks
their thinking, helps to account for why that render their reality plausible and/or sup-
'power', let alone domination or oppression, port their adoption as explanatory variables.
is so weakly theorized in new institutional Even if, as DiMaggio contends, 'interest
theory (see Perrow, 1985) and appears as an and group conflict' is important for explain-
'add-on' in neo-institutional analysis. As ing 'the processes by which institutions
DiMaggio (1988: 3) comments, in something emerge, are reproduced, and erode', it should
of an understatement, the presence and not be conceived as external to institutional-
significance of agency and power in ization. Unless a basic premise of institu-
institutional theory is 'somewhat obscure'. tional theory is to be abandoned or at least
They are obscured as a consequence of new severely compromised, then 'interests' must
institutional theory's consensualist, conser- be conceived as identified, whether by agents
vative assumptions that are endorsed, if not or their observers, through processes that are
inspired, by Berger and Luckmann's institutionalized. The very claim that
conceptualization of institutionalization. 'behaviour is driven by, and understandable
Consensualist analysis encounters a problem in terms of, the interests of human actors', for
when it comes to accounting for change, at example, is not self-evident but, rather, an
which point neo-institutional theorists articulation of a particular institution that
 679
asserts and legitimizes the credibility of such <http://plato,stanford.edu/entries/critical-
claims. To put it another way, the claim is an theory>).¹¹ The de-naturalizing intent of
articulation of (hegemouic) power that oper- critical theories is generally motivated by a
ates to define the world in a distinctive way value-oriented conviction that the principal
(Friedland and Alford, 1991),10 to naturalize import of knowledge resides in problematiz-
and legitimate that which is institutionalized. ing conventional wisdoms and de-
legitimizing established institutions so as to
foster and facilitate emancipatory change
CRITICAL THEORY AND (e.g. the contribution of feminist knowledge
NATURALIZATION OF THE PRESENT to identifying and challenging patriarchal
practices) .
Calling a theory 'critical' is, of course, a Consider, for example, how reference is
provocation as it implies that other theories routinely or implicitly made to the 'real
are 'uncritical'. Yet all theory develops in world' without any acknowledgement of how
relation to some other theory against which, the 'reality' of this world is apprehended or,
more or less overtly, it defines itself and better, constituted, from a particular, histori-
takes critical issue. We noted earlier how cally and culturally located, point of view. In
variants of institutional theory have business textbooks and journal articles as
established their claims by being critical of well as in the classroom, the 'real world'
forms of un-institutional (e.g. rational choice which is evoked is frequently, and more or
and contingency) theory. To draw an less explicitly, the one presumed by a point
authoritative or stable distinction between of view attributed to senior management - a
theories that are 'critical' and others that are view that tends to take for granted the neces-
'uncritical' is untenable, not least because the sity of the status quo, the legitimacy of exec-
sense and significance of their meanings utives and academics privileged place within
shifts over time (the Appendix examines this it and the heroism of all engaged in
issue in relation to critical theory; the other reproducing the system. This ignores a criti-
contributions to this volume speak to the cal understanding of the present world as
variety of meanings of institutional theory). divisive and destructive, where the relentless
The signifier 'critical theory' is not expansion of capitalism is made possible, in
restricted here to the Critical Theory of the part, by its routine legitimation in social
Frankfurt School such as Adorno, Marcuse, science and business school education¹² (in
and Habermas (Held, 1980) but, rather, is which institutional theory plays its part).
invoked to signal forms of thinking that And yet, some residual, albeit barely
provide a radical challenge to, as contrasted acknowledged, awareness of the selectivity,
with, an incremental refinement of, estab- limitations and self-serving rationalization
lished conventions of thought and practice, involved in bodies of knowledge, such as
with respect to their anticipated emancipatory those constructed in business schools, is to be
impetus or potential. Thus, a chief target of expected. Those engaged in reproducing and
critical theory is patterns of activity which, in consuming bodies of knowledge that
different ways, naturalize the present - from naturalize the present 'rarely experience their
Marx's critique of political economy to oppressive character', yet they 'can feel that
Derridean deconstructionism. What critical burden-some weight if they dare step outside
theories share is a (value-based) concern to the presuppositions of understanding and the
develop thinking with a practical intent that sanctioned forms of inference and
may be broadly characterized as 'aimed at presentation of "evidence'" (Barnett, 1997:
decreasing domination and increasing 17). Taking this 'step outside' is the invitation
freedom' (Stanford Encyclopaedia extended by our exploration of institutional
theory from
680
an alternative, critical theoretic standpoint. side of modernity. We focus largely on his
Our intent is to develop a picture of institu- writing on power and subjectification, an
tional theory less as an appealing and pros- emphasis that Foucault (1983) himself retro-
perous research programme, and more as an spectively identifies as central. In contrast to
exemplar of Kuhnian 'normal science' that institutional theory, which points (ironically)
has contentedly settled down in the suburbia to the mythical quality of rationality without
of social theory (cf. Pollner, 1991). In subjecting it to critique, 'Foucault questions
Kuhnian terms, we identify institutional the rationality of post-Enlightenment society
theory as a 'puzzle-solving' activity within a by focusing on the ways in which many of
given (i.e., institutionalized) framework the enlightened practices of modernity pro-
where any appetite for interrogating the gressively delimit rather than increase the
underlying tenets of the framework tends to freedom of individuals and, thereby, per-
be marginalized or suppressed (Kuhn, 1970: petuate social relations of inequality and
especially p. 35). It is precisely this appetite oppression' (McNay, 1994: 2). McNay's
that critical thinking stimulates and feeds as it observation on Foucault's scepticism about
problematizes what it understands to have 'post-Enlightenment society' and his atten-
become naturalized, excluded or glossed. As tiveness to the 'freedom of individuals' as
we indicated earlier, our attentiveness to crit- well as 'relations of inequality and oppres-
ical thinking is highly selective, being sion' is indicative of a difference between his
restricted to a Foucauldian reading and cri- position and that of many other critical theo-
tique of institutional theory. Accordingly, we rists (e.g. Frankfurt Schoo1); it also signals
elaborate our understanding of Foucault's what distinguishes his thinking on the signif-
critical thinking in the following section icance of institutionalization. We consider
before applying it to examine a number of each of these in turn.
key contributions to institutional theory. Many advocates of critical analysis (as
well as positivists) assume the possibility of
establishing foundational knowledge, either
FOUCAULT, POWER/KNOWLEDGE by applying scientific methodology (e.g.
AND CRITICAL THEORY Bhaskar) or through counterfactual argumen-
tation (e.g. Habermas).14 And, of course, this
My role - and that is too emphatic a word - is to gets Foucauldians into trouble, as well as
show people that they are much freer than they others who lean in a non-foundationalism
feel, that people accept as truth, as evidence, direction, such as liberals like Rorty, with
some themes which have been built up at a
certain moment during history, and that this so-
those wedded to some particularism which
called evidence can be criticized and destroyed. they privilege as universalism - whether this
To change something in the minds of people - is spiritual or secular, or whether it is leftist
that's the role of an intellectual. (Foucauit, 1988: or rightist, in inspiration. Non-
10) foundationalists regard the kinds of truth
claims asserted by foundationalists not only
The directness of this quote suggests that as elusive but, when taken seriously, as
many critics of Foucault - who assert that his potentially very dangerous. Notably, they are
approach is totalizing in its denial of subjec- seen to harbour a misplaced assuredness
tivity or mat he is relativist or nihilist - are about truths which, at best, prop up the
difficult to sustain. This is not to deny that repressive/cynical tolerance of liberal
his writings are multifaceted and susceptible pluralism and, at worst, engender dogmatism
to diverse readings.¹³ Amongst the themes and court the dangers of totalitarianism. The
that recur in his writings are those on the rejoinder to the assessment that, lacking any
nature of rationality, the relationship between normative basis for critique, non-
truth and power and an examination of the foundationalism harbours relativism and
dark nihilism is that, ultimately, the
 681
authority of foundationalist critique relies idea of rationality is identified as a normative
upon self-referentiality with regard to (partic- imperative with which modern organizations
ular) assumptions and assertions about its and their members conform to 'increase their
authority that can be supported only by refer- legitimacy and survival prospects' (Meyer
ence to the very assumptions upon which it and Rowan, 1977/1991: 41). Rowever, in
relies. Acknowledging the limitations and institutional theory, this problematizing of
hazards of all forms of thinking, critical rationality is not connected to (ethical) issues
thinking included, is, despite the lack of cer- (e.g. of freedom). Rather, the study of ration-
tainty, considered by anti-foundationalists to ality is linked to questions of the (scientific)
be more defensible and/or to be of greater adequacy of forms of explanation. In Meyer
social value than to claim or assume that and Rowan's case, their analysis concludes
there is some independent or non-self- with three testable hypotheses. Likewise,
referential basis for producing knowledge. DiMaggio and Powell (1983: 154) assess 'the
Non-foundationalism is a stance that takes ultimate value' of their work in terms of its
us away from the quest for transcendental or 'predictive utility' and present a series of
normative criteria that aspire to provide the hypotheses for empirical testing. In each
definitive identification of what, for example, case, the theory-laden nature of empirical
is (essentially) oppressive or emancipatory. findings collection/construction is unac-
Turning away from this alluring but treacher- knowledged. A perspective that is latently
ous fantasy, we are obliged to face up to our normative (the value of predictive science) is
reliance upon whatever 'standards of ration- presented as descriptive or positive.
ality and justice are available to us within the In Foucault's study of rationality, the focus
specific contexts in which we find ourselves' is on its ethical significance, not its status as
(Sawicki, 1994: 352). Such standards are not a variable in the development of an empiri-
regarded as hopelessly flawed or useless in cal-analytic science of prediction and control.
relation to some higher ideal. Rather, their His focus is on what, loosely, may be termed
(limited) value and their (inherent) 'danger- the institutionalization and reproduction of
ousness' is recognized (Foucault, 1984: 343). 'inequality and oppression' (McNay, 1994: 2)
As Dreyfus and Rabinow (1986: 118) assess that takes the form of routine and ambivalent
Foucault's stance, it 'has never been to subjectification as well as more overt and
denounce power per se nor to propound truth unequivocal subjection. There is no
but to use his analysis to shed light on the (scientistic) assumption or pretence that some
specific dangers that each specific type of objective measure of 'inequality and
power/know ledge produces'. What, for oppression' can be devised and applied.
Foucault is uniquely dangerous about moder- Instead, all truth claims, including those of
nity is that 'everything becomes a target for institutional theory, are understood to be
normalization' (Riley, 1988: 103). Such nor- embedded in, and subject to, evaluation by
malization, we argue, includes the study of relations of power-knowledge; and it is
institutionalization. within the specificity of these relations that
Turning now to the question of Foucault's their meaning and significance is fashioned.
distinctive position on the nature and signifi- Taking this stance, it would be inconsistent to
cance of rationality and institutionalization, discredit as 'bogus or incorrect forms of
we first note that, for institutional theorists, power-knowledge that ascribe truth to the
human action is infused by value in the form findings of an empirical-analytical concep-
of 'social entanglements and commitments' tion of science preoccupied with hypothesis
(Selznick, 1992: 232), the implication being testing. Instead, Foucault's approach com-
that rationality is a myth, at least to the extent mends critical reflection upon the particular
that this infusion is unacknowledged (e.g. in (institutionalized) basis upon which seem-
rational choice theory). The ingly authoritative, universal claims are
(institutionalized)
682
founded; and it advocates close attentiveness power that underpins the assessment that
to the (political) effects of believing such 'Perhaps no writer of the last half century has
knowledge to be true. done more to illuminate the nature of power
than Michel Foucault' (Wolin, 1988: 179).
For Foucault, there are two related kinds
Power: juridical and disciplinary of normalizing power: 'disciplinary power'
and 'bio-power'. 'Bio-power' is at work in the
A significant area in which Foucault has subjugation of human bodies; and the control
opened up epistemological space is in the of populations by making clear what is
study of power where he challenges the nat- 'normal' and what is not. Normalizing effects
uralization of a view of power that conceives are articulated through discursive formations
of it as possessed by unitary, 'sovereign' such as psychiatry, medicine, management
political (individual or collective) agents and social work. 'Disciplinary power' renders
(Foucault, 1977, 1979a, 1979b, 1980). So specific individuals or groups of people
doing, Foucault does not deny, or seek to orderly and regimented through the
invalidate, the force of what he characterizes development and use of technologies of
as the 'juridical’ conception of power (see assessment and surveillance - technologies
Foucault, 1979a: especially p. 7 and 1994: that became widely disseminated through
especially p. 42 et seq). After all, he makes organizations and institutions. Disciplinary
no assumption that power has an essence power is conceived to operate 'through a
which conventional wisdom fails to mirror; multiplicity of organisms, forces, energies,
instead, he problematizes its exclusivity by materials, desires, thoughts, etc.' (Foucault,
posing an alternative to the established, 1994: 35). Such power, Foucault contends,
juridical view.16 That is, additionally, he 'must be analysed as something which
invites us to conceive of power as productive circulates ... It is never localized here or
of extensive, subjectifying processes of nor- there, never in anybody's hands, never
malization - which he associates with the appropriated as a commodity or piece of
development of modern organizations and wealth. Power is employed and exercised
which he also understands to be 'embodied in through a netlike organization' (Foucault,
the background of everyday practices' 1994: 36). Moreover, disciplinary power is
(Dreyfus, 2004). Foucault's interest is not not exclusively negative or zero-sum; it is
primarily directed at the expression of power productive, not just repressive; it is diffuse
in its most central and institutionalized forms and relational. It is also subjectifying,
such as state apparatuses or class relations. inasmuch that it constitutes subjects as
Rather, he is concemed to examine how individuals:
power relations of inequality and oppression
are created and maintained in more subtle power produces; it produces reality; it produces
and diffuse ways through ostensibly humane domains of objects and rituals of truth. The
and freely adopted social practices. These individual and the knowledge that may be
gained of him belong to this production.
subtle practices can be deeply institutional- (Foucault, 1984: 204-5, emphasis added).
ized and taken for granted. In modern organ-
izations, such as factories, offices and state Amongst these 'domains of objects' is the
agencies, a juridical form of power exercised sense of agency attributed to, and demon-
from above is seen to depend upon, promote strated by, subjects. This could imply that
and even be displaced by a 'disciplinary' Foucault's concept of subjectification is
form of power that objectifies and institu- equivalent to the more established, sociolog-
tionalizes social reality through processes of ical idea of socialization. But this is to jump
normalization and subjectification. It is this to an unsupportable conclusion, as Dreyfus
shift in the conceptualization and analysis of (2004) observes,
 683
Socialization into norms is the universal way the system' or simply refusing to act in a respon-
understanding of being or power governs the sive, disciplined manner. As Foucault (1978:
actions of the members of any society ... how- 95) puts it, 'where there is power, there is
ever, norms are progressively brought to bear on
'all aspects of life' ... normalization works
resistance'. Exercises of power are therefore
directly through new sorts of invisible, endemically vulnerable to both overt and
continuous practices of control Foucault calls covert resistance that challenges, and may
micro-practices ... disciplinary power works ultimately displace, its 'truth'. The effects of
meticulously by ordering every detail. So, while juridical as well as disciplinary power are
for Foucault all forms of power are bottom up indeterminate as they are contingent upon its
and the understanding of power as monarchical dispersed targets - the 'individual or
misses this important fact, nonetheless bio-
power is bottom-up in a new and dangerously
collective subjects who are faced with a field
totali-zing way, so that understanding power on of possibilities in which several ways of
the model of the power of the ruler covers up an behaving, several reactions and diverse com-
important change in how our practices are portments may be realized' (Ezzamel, 1994:
working. 221).
We have noted how both 'old' and 'neo'
Crucially, knowledge and power do not exist versions of institutional theory incorporate
independently of each other: elements of a juridical, top-down conception
of power as they invoke notions of agency
there is no power relation without the correlative and interests to account for processes of
constitution of a field of knowledge, nor any de/institutionalization. There is, however, no
knowledge that does not presuppose or constit-
ute at the same time power relations ... it is not
equivalent to 'disciplinary power' in institu-
the activity of the subject of knowledge that pro- tional theory. This is not entirely surprising
duces a corpus of knowledge, useful or resistant as a focus upon subjectification is far
to power, but power/knowledge, the processes removed from the normal science value-ori-
and struggles that traverse it and of which it is entation of institutional theory which focuses
made up, that determines the forms and possible upon 'enduring elements of social life', such
domains of knowledge. (Foucault, 1977: 27-28) as 'logics' (Lawrence and Suddaby, 2006:
215) rather than the particularity of their sub-
Foucault draws us towards analysis that jectifying effects17 (but see Lok, 2007 and
strives to appreciate the terms, and more Khan, Munir and Willmott, 2007 for exam-
especially, the effects, of particular discourses ples of how Foucauldian thinking may be
with regard to how they articulate and sustain introduced into the examination of processes,
a 'regime of truth' such that a particular e.g. institutional entrepreneurship typically
'object of discourse', or social objectivity, is studied by institutional theorists).
successfully institutionalized. Foucault's
attentiveness to power/knowledge explores
how it is productive of subjects who are
normalized through the operation of 'micro- Power and subjetification
practices' that regulate numerous aspects of
their/our everyday lives. Technologies of
power (that include management practices To recap, what institutional theorists charac-
such as accounting and information systems) terize as 'institutionalization' can alternatively
not only aspire to identify, monitor and be understood from a more critical,
control numerous aspects of life, but, Foucauldian standpoint as 'normalization',
crucially, provide a seductive regime of truth where human beings become bound to the
for governing subjects who come to comply identities to which they/we are subjected.
with its disciplinary logic. Foucault is distinctly attentive to the discipli-
Yet, for Foucault, the effect of power's nary processes through which subjects are
operation is by no means totalizing as it oper- constituted as an effect of participation in
ates upon recalcitrant material (humans) - as, social institutions, as contrasted to the
for example, when the 'objects' of discipli-
nary technologies respond by 'gaming the
684
(juridical) establishment and enactments of (Simons, 1995: 82). For Foucault, institutions
sovereignty by one group over another. are not benign; nor are they mere objects of
Notably, when discussing how the human analysis; they are mobile complexes of
sciences have developed alongside juridical and disciplinary power. Disciplinary
power/knowledge technologies invested in mechanisms have power effects as they sort,
disciplinary institutions (the prison, the fac- rank, homogenize, differentiate,
tory, the school, etc.), Foucault (1979b: 305) individualize, and produce the rules that are
links power with the subject, and draws at once both inclusive and exclusive of
attention to specific forms (modalities) of populations of individuals. Foucault is
power: attentive to the productive and insidious
effects of power, and to the resistance that
a certain policy of the body, a certain way of discloses the limits of power.
rendering the group of men docile and useful. To recap key elements of our argument,
This policy required the involvement of definite we have identified institutional theory's con-
relations of knowledge in relations of power; it
called for a technique of overlapping subjection
ceptualization of institutionalization as
and objectification; it brought with it new preoccupied with explanation rather than
procedures of individualization ... Knowable emancipation, and as methodologically col-
man (soul, individuality, consciousness, lectivist and tendentially consensualist with a
conduct, whatever it is called) is the object- tendency to revert to methodological individ-
effect of this analytic investment, of this ualism, where change is attributed to wilful
domination-observation. agency that is in possession of some kind of
power. A key difference between Foucault's
In everyday activities and routines, normaliz- approach to the study of power and that of
ing power constitutes subjects as agents to institutional theorists is the central concern to
whom sovereignty is attributed as a 'natural highlight the operation of unacknowledged
entity', and to which interests are also processes of domination and oppression in
ascribed. Such discourse produces a sense of the guise of normalization and subjectifica-
self as a centred, autonomous decision-maker tion. In Foucauldian analysis, power, con-
as well as self-affirming beliefs about the ceived as disciplinary as well as juridical, is
location of power - either as a possession of not treated as a 'bolt on'; and agency/structure
subjects (agency) or as an enabling/disabling dualism is problematized by understanding it
constraint on agency (structure). In his later as a naturalized product of a particular
works. Foucault turned his attention more power/knowledge complex that frames so
directly to strategies of resistance and the much 'normal' social scientific discourse.
production of alternative discourses whose With a few exceptions (e.g. Knights,
aim is to challenge dominant discourses of 1992; Townley, 1993; Ezzamel and Willmott,
power, including technologies of self 1998), the important Foucauldian insights
(Foucault, 1988), at a particular juncture in discussed above have hardly received any
time and space (see also McWhorter, 1999). attention in the mainstream organization liter-
Power is conceptualized as a network of ature. By way of illustrating the contribution
relations, rather than as juridical or sover- that Foucault's work-can offer to organization
eign. The effects of its operation are con- studies we briefly discuss the work of
ceived as ambivalent and unpredictable but Knights and Townley, and refer to less wel1-
also potentially 'dangerous' as they are known, critical literature.
appealing, yet can have unintended, malig- Knights (1992: 515) draws on Foucault's
nant as well as beneficial consequences. work to disrupt 'knowledges that are built on
These effects include the ambivalent capaci- representations deeming to reflect reality'.
ties of agency in which subjects become Examining the study of strategy from a
absorbed: 'all subjectifying power endows Foucauldian standpoint, Knights notes how
subjects with some capacities required to be positivistic studies of strategy objectify
agents, even when it is oppressive'
 685
businesses and their practices, whilst being costing produced 'governable persons'.
'oblivious to how their representations actu- Hoskin and Macve (1988) and Carmona et al.
ally constitute the subjectivity of manage- (2002) similarly use historical methods to
ment, as practitioners draw upon these show how the inter-connection between
studies in their exercise of power' (Knights, power and knowledge produced modern
1992: 523) such that particular features of conceptions of management. Field research
strategic discourse could be self-fulfilling in as diverse as Knights and Collinson (1987),
their effects. Knights (1992: 529) emphasizes Preston, Cooper and Coombs (1992) and
the constitutive power of discourse by Ezzamel, Lilley and Willmott (2004) illus-
arguing that 'strategic discourse and practice trate the insights derived by examining
represent a set of power-knowledge relations disciplinary processes of subjectification and
that constitutes the subjectivity of managers the construction of specific conceptions of
and employees'. organization and management. Finally, the
Townley (1993) draws on Foucault to empirical studies of Haigh (2006), Preston,
present human resource management (HRM) Cooper, Scarbrough and Chilton (1995) and
as 'the construction and production of knowl- Kosmala MacLullich (2003) indicate how the
edge', and as a way of 'rendering organiza- analysis of normalization can be applied to
tions and their participants calculable arenas, investment, ethical and audit practices.
offering, through a variety of technologies, Space limitations do not permit us to
the means by which activities and individuals engage with these illustrations in more detail,
become knowable and governable' (1993: nor to comment on the extent to which we
526, original emphasis). She shows how the endorse their readings of Foucault. Rather,
disciplinary technologies of HRM govern their work is cited here as examples of how
populations of employees, in particular the Foucault's work can be usefully extended to
distribution of individuals into work space, areas of organization studies as an alternative
their spatial enclosure, their partitioning from way of seeing, rather than as a replacement or
each other, their ordering into hierarchical corrective, to other research approaches. In
positions, as well as the use of temporal the following section, we examine in some
(timetable) examination, and confessional detail some of the recent attempts made in
technologies to construct the subjectivity of the organizational literature to refine institu-
employees and to render them calculable, tional theory and comment on the extent to
analyzable and governable. Townley (1995) which such attempts are commensurate with
extends this analysis to examine the discipli- our reading of Foucault's work.
nary effects of technologies of accounting
and performance measurement. Her work has
been developed by Covaleski, Dirsmith,
Heian and Samuel (1998) in their Foucaudian THE LIMITS OF REFINING
examination of HRM practices in accounting INSTITUTIONAL THEORY
firms, by Ezzamel and Willmott (1998) in
their examination of teamwork in manufac-
turing, and by Grey (1994) in his analysis of We now apply our reflections on institutional
the disciplinary effects of conceiving one's theory, critical thinking and Foucauldian
work as a 'career'. analysis - to_ consider the interventions by
There has also been considerable research advocates of institutional theory who have
using Foucaudian concerns about the disci- pointed to, and proposed ways of overcom-
plinary power of management practices such ing, its limitations. Initially, we elaborate and
as accounting. Notably, Miller and O'Leary support our claim that neo-institutionalist
(1987) conduct an historical analysis to show analysis relies upon deinstitutionalized con-
how scientific management and standard ceptions of agency and related, juridical
686
understanding of power. We then examine 'argue that organizational stability is achieved
some examples of how critical thinking, through the exercise of power, control, or the
including Foucauldian ideas, has been intro- negotiations of interdependencies for
duced into institutional analysis. purposes of achieving a predictable or stable
inflow of vital resources and reducing
environmental uncertainty' (1991: 149,
Incorporating agency, interest and emphasis added). In this turn to agency,
power? DiMaggio, Oliver, Meyer exemplified in the work of both DiMaggio
and Jepperson and Oliver, power is conceived as a posses-
sion of agents which, when operationalized,
Amongst the more influential reformers of is seen "to render behaviour more predictable
institutional theory are DiMaggio (1988) and and thereby attenuate uncertainy. This orien-
Oliver (1991; 1992). DiMaggio (1988: 3) tation differs markedly from Foucault's nor-
calls for incorporating 'the role of interest and malizing conception of power as a network of
agency' as a corrective to an analysis relations whose outcome is indeterminate. In
'predicated on the assumption, often implicit, commenting upon this turn to the role of
that persons and organizations hold, and act 'agency' in the exercise of power, we focus
on, universal interests in survival and in the upon two related issues. First, the compati-
reduction of uncertainty'. Oliver (1991) bility of its methodologically individualistic
follows this lead as she commends resource conceptualization of action with the founda-
dependency theory in order to pay 'attention tional assumptions of institutional theory;
to the role of organizational self-interests and and, secondly, the focus upon a juridical con-
active agency in organizational responses to ception of power to the exclusion of other
institutional pressures and expectations' concepts of power, such as those articulated
(1991: 45). The intent of these interventions by Foucault.
is to acknowledge and understand how As Friedland and Alford (1991) incisively
'institutionalization is a product of the point out, DiMaggio's proposal to correct the
political efforts of actors to accomplish their 'defocalization of interest and agency' (1991:
ends' (DiMaggio, 1988: 13), with a view to 3) assumes a 'materialist-idealist dualism'.
extending the capability and reach of This dualism is evident, for example, in the
institutional theory in relation to its study of view 'that actors have objective interests,
'strategic responses to the institutional envi- which can be understood independently of
ronment' (Oliver, 1991: 151). the actors' understandings' (1991: 244) and to
Revisions to institutional theory that which, presumably, social scientists have
attribute change to the agency of actors privileged knowledge and access. In such
depart, as DiMaggio (1988: 11) notes, from formulations, agency appears to exist
the understanding that institutional and inter- externally to, and to operate in some measure
est-based frameworks are incommensurable outside of, processes of institutionalization.
or 'antagonistic' - a position which, for both Thus, DiMaggio asserts that 'there is much
him and Oliver, is seen to impede 'the devel- about the processes by which institutions
opment of a more comprehensive theoretical emerge, are reproduced, and erode, that
apparatus' (1988). Such revisions are intro- cannot be explained without reference to
duced as a remedy for what is regarded as the interest and agency' (1988: 3). In DiMaggio's
restrictive capacity of institutional theory 'to rehabilitation of agency within institutional
develop predictive and persuasive accounts theory, actors are susceptible to the influence
of the origins, reproduction, and erosion of of institutions only when their real interests
institutionalized processes' (1988, emphasis are adequately catered for, or are recognized
added). In a similar vein, Oliver approvingly by them.18 Oliver (1991) is less explicit about
quotes resource dependency theorists who her conception of agency,
 687
although in drawing upon resource depend- power, is also evident in more recent work,
ency theory, she relies on a juridical concep- where change is seen as a problem that is
tion of power: she does not conceive of the 'solved' by identifying the agents who 'must'
organization, the environment, or, indeed, the possess power to change things - institutional
perspective that differentiates them, as artic- entrepreneurs or social movements. These
ulations of power in the manner suggested by 'powerful' agents are said to establish some-
Foucault. The power attributed to organiza- thing that does not simply reproduce what
tions appears to develop and be exercised already exists (Suddaby and Greenwood,
independently of the institutional framework 2005), but whose ethical or political
and processes through which organizational properties are irrelevant to such analysis.
practices are enacted. These are the taken- This approach exemplifies a mode of
for-granted 'context' against which power is knowledge production which aspires to
exercised by actors pursuing their interests. capture, order, and reorder such 'objects'.
In short, a basic limitation of both Such (power-) knowledge enhances the
DiMaggio's and Oliver's theoretical positions position of comparative sovereignty of a
is their 'institution-free conception of interest certain class of actors (e.g. managers,
and power' (Friedland and Alford, 1991: technocrats) in identifying 'better' (from their
244). The materialist-idealist dualism perspective) strategic responses to
effectively 'defocalizes' (using DiMaggio's institutional pressures. A Foucauldian
terminology), processes of institutionaliza- response to this endeavour is not necessarily
tion with respect to both what the signifier to deny the potential benefits of prediction
'interests' (and 'agency' and 'power') is and managerialism, per se, but rather to
intended to describe (its referent) and to what emphasise that belief in the possibility of pre-
it signifies (see Hirschman, 1986, cited in dicting the outcome of power is conditional
Friedland and Alford). Put bluntly, there is a upon the exclusion of a conceptualization of
lurch to methodological individualism where power as a network of relations, or problema-
institutional entrepreneurs somehow evade or tizing the ethical rights of managers.
'escape the rules, routines, and norms of Turning to the work of Meyer and
institutional fields' (Levy and Egan, 2003: Jepperson (2000), they valuably remind us
811). that the meaning and significance of terms
In pointing to this example of structure- such as agency and interests is neither self-
agency flip-flopping in neo-institutional evident nor intransitive. Rather, such terms
theory, we stress that DiMaggio's and are articulations of a cultural system in which
Oliver's proposed refinements seek to avoid 'the modern actor [is constructed] as an
deficiencies attributed to (new) institutional authorized agent for various interests via an
theory, but suggest that their analysis resem- ongoing relocation into society of agency
bles a version of action theory rather than one originally located in transcendental authority'
that is institutionalist. Their conceptualization (2000: 100). Meyer and Jepperson effectively
of power, self-interest and politics highlights admonish those who appeal to agency or
our earlier observations about the interests - for example, in order to explain
conservative value-orientation of institutional processes of institutionalization - when the
theory. For, despite Oliver's characterization appeal to agency fails to recognize how any
of interests as 'political' (1991: 147), she conception of agency relies on a set of
treats politics as synonymous with bar- 'preconscious understandings' (DiMaggio,
gaining, where the substance or issues being 1988: 3) that modern actors come to acquire
bargained over are regarded as an ethically and broadly share. This critique is subtly
irrelevant feature of institutionalization. articulated when Meyer and Jepperson
Reliance on a juridical view of power, to deconstruct the taken for grantedness of
the exclusion of bio-power and disciplinary agency and 'agenticness' in so much social
and organization theory:

Most social theory has recognized one way or

another that core social entities have been more
688
elaborately constructed over time. The agentic that agency, for example, is external to, and
aspect and its underlying spiritual devolution is operates in some measure outside of,
less well recognized. Modern individuals, processes of institutionalization. But Meyer
organizations, and nation-states, in becoming
legitimated agents for their underlying interests,
and Jepperson have virtually nothing to say
incorporate the highly standardizing about power or hegemony, and in this sense
responsibility to enact imagined moral and their contribution is radically conservative in
natural principles. The proper, modern agentic the tradition of Berger and Luckmann (1966).
individual, for instance, manages a life, carrying
a responsibility not only to reflect self-interest
but also the wider rationalized rules conferring
agency ... Modern agentic actors involve them-
selves in all sorts of efforts elaborating their
From agency to contradiction?
agentic capabilities. (2000: 107, emphasis Seo and Creed
added)
Seo and Creed (2002) take up and amplify
Here we have a strong and time1y reassertion Meyer and Rowan's observation (1977/1991)
of the distinctive, central idea of institutional that gaining legitimacy by conforming to
theory that the key to understanding human prevailing logics within the institutional field
behaviour is the manner and process of its can be damaging for efficiency and social
institutionalization. They recall that the reproduction, notwithstanding possibilities
'proper, modern, agentic individual' is a for a loose coupling between logics and
product of a particular institution that consti- action. They formulate this insight as contra-
tutes and legitimizes their/our sense of dictions in a way that builds upon Friedland
agency and associated responsibility for the and Alford's (1991) thesis that contemporary
enactment of 'imagined moral and natural Western societies are organized on, and
principles' (2000), including the seeming through, diverse and contradictory logics, sue
naturalness of self-interest and the preoccu- h as those of capitalist enterprise, family
pation with its preservation and pursuit. values, democratic principles, etc. They
Given that Meyer and Jepperson question argue that it is disjunctures within and
the way in which agency has been attended to between these logics that prompt agents to
in institutional theory, it is disappointing that, act in ways that produce change.
despite their observations on modern Seo and Creed's (2002) work engages
actorhood - which they helpfully associate directly with critical theory which, as they
with 'European efforts' and particularly with note, 'raises concerns about the possibi1ities
Foucault's emphasis on how specific features of dominance and alienation in the processes
of actorhood are generated by specific insti- of institutionalization that are seldom dis-
tutional structures (2000: 102, note 3) - they cussed in the managerialist treatments of
pay no attention to Foucault's thinking on institutional phenomena' (2002: 241). They
power and know ledge. One way to interpret also observe that institutional theory, in con-
this silence is to understand their analysis as trast, 'treats rules, logics of-action, and insti-
a sophisticated restatement of an established tutionalized patterns of behaviour ... as
conservative conception of institutional something neutrally embedded within
theory. What, in neo-institutionalist analysis, people's cognitions and/or as external givens
appears to escape the operation of institution- of the broader society' (2002). This
alization is understood by Meyer and assessment echoes' our earlier reflections on
Jepperson to be a product of 'deeply held, the divergent value-orientations of critical
unexamined logics' that currently form the and institutional theory, and our comments
framework 'within which reasoning takes on the latter's consensualist and conservative
place' (Horn, 1983: cited by Suddaby and leanings.
Greenwood, 2005: 37).
Meyer and Jepperson's (2000) argument is
a potent rejoinder to those who contend
 689
To explore the operation and significance formation and identification involving
of contradictions for analyzing change, Seo processes characterized by Foucault as
and Creed commend a dialectical version of subjectification.
critical theory (Benson, 1977). But they
simultaneously cling to a neo-institutionalist,
juridical conception of agency and power. Foucault at last? Lawrence, Winn
Processes of institutionalization are under- and Jennings
stood to involve 'political struggle involving
various participants who have divergent The distinctive way in which Foucault con-
interests and unequal power' (2002: 229, nects the exercise of disciplinary power to the
emphasis added). A juridical attribution of process of subjectification is central to
power is assumed that excludes consideration Lawrence et al.'s (2001) examination of 'the
of its hegemonic and net-like operation. set of power relations that support the process
Echoing DiMaggio (1988), they contend that [of institutionalization]' (2001: 629). As they
change is instigated by agents when their put it, 'the power of discipline ... provide(s)
'ideas and interests are not adequately served the basis for agency in the form of identity'
by the existing social arrangements' (2002: (2001: 636). Identity is understood to precede
229). Such ideas and interests are presented agency, and is not theorized as something
as 'givens' that are self-evidently in a relation that is chosen by (autonomous) agents.
of more or less tension with 'given' social Contrasting disciplinary power with
arrangements. There is no consideration of 'influence', which is conceived as being con-
how the identification of interests, or of the cerned with 'shaping a subject's actions'
'needs' that are 'unmet' (2002: 229), or the (2001: 636), processes of institutionalization
assessment of existing arrangements is medi- governed by disciplinary power are under-
ated by (contradictory) processes of institu- stood to 'shap(e) the actual formation of the
tionalization. subject' (2001: 636) and to be involved in 'the
Seo and Creed's contribution to the refine- constitution of their targets' subjectivity'
ment of institutional theory usefully points (2001: 636). While this is useful, precisely
towards contradictory, rather than simply what is involved in such 'constitution'
competing, forms of institutionalization. receives no attention beyond a cursory and
Perversely, their use of critical theory to pro- descriptive reference to Foucault's observa-
vide an explanation of change directly con- tions concerning the role of hierarchical
tradicts what they initially identify as 'one of observation, normalizing judgement and
the most central assertions in institutional examination in 'maintaining power relations'
theory - that actors and their interests are (2001: 636) through the shaping of subjects'
institutionally constructed' (2002: 222-3, formation. Their relevance of these observa-
emphasis added). Seo and Creed's 'dialectical tions for developing an alternative view of
perspective' aspires to show how contra- the nature and significance of
dictions in and between institutional institutionalization is unexplored. Instead,
arrangements induce the realization of trans- Foucault's 'disciplinary power' is taken up to
formative agency such that agents' latent analyze the temporal dimension of
interests are expressed through processes of institutionalization processes. More
institutional change. While this is a com- specifically, ideas drawn from Foucault's
mendable attempt to address the paradox of Discipline and Punish (1977) are deployed to
embedded agency, Seo and Creed fall back populate one cell within a 2 x 2 typology of
on essentialist, or at least de-institutionalized, power-centred mechanisms of
notions of 'need' and 'interests' in their institutionalization, which is distinguished by
conception of agency that are somehow its generation of comparatively slow and
transcendent of their institutional(ized) stable processes of institutionalization (see
fig. 2, p. 630 and Propositions 3a and 3b).
690
Lawrence et al. (2001) claim that modes employ each of the four types of institutional
of power target either 'subjects' or 'objects' mechanisms' (2001: 641). In short, it is busi-
when, arguably, it is always subjects that are ness as usual for institutional theory.
targeted and subjectified by discipline, even
when their subjectivity is disregarded (as in
the case of the power-knowledge effects of
actuarial tables or standard costs). From a CONCLUDING REMARKS
Foucauldian perspective, actors rarely have
'no choice' (2001: 631), as Lawrence et al.
contend. Disciplinary power is not distin- Our reflections on 'Examining Institutional-
guished from juridical power by the attribu- ization' are premised on the understanding
tion of choice to those who are subjectified that accounts of the world generated by insti-
by it. It may be the case, as Simon (1988) tutional theory and critical theory are contin-
contends, that 'Where power once sought to gent upon the value-orientations in which
manipulate the choice of rational actors, it they are embedded. We have pointed to some
now seeks to predict behaviour and situate limits of institutional theory, not with a view
subjects according to the risks they pose' to correcting or enhancing it but, rather, to
(1988: 772, cited by Lawrence et al., 2001: show how it articulates a particular, value-
637). But, as we argued earlier, this does not oriented form of power/knowledge; and,
exclude consideration of the ways in which relatedly, to suggest that it does not have a
subjects become knowledgeable about such monopoly of truth over the nature and signif-
changes and seek to resist them. icance of institutionalization.
Frustratingly, what we encounter in We have argued that institutional theory
Lawrence et al.'s application of Foucault's understands institutionalization as a universal
thinking is an example of how, in the lan- and politically neutral process, albeit one
guage of institutional theory, rhetoric is where juridical conceptions of 'agency',
deployed [by academic entrepreneurs] to 'power' and 'interests' are increasingly
accommodate and align some new ideas [in invoked to account for the emergence or
this case, Foucauldian ideas] to an estab- demise of institutions. Even though institu-
lished, taken-for-granted mode of compre- tional analysis conceives of organizations as
hensibility (see Suchman, 1995; Suddaby and value-imbued human constructions, rather
Greenwood, 2005) that strips Foucauldian than as impersonal, rational entities, its focus
critical theory of some of its most is on how institutions constrain and facilitate
provocative and original insights. Their organizational forms and practices, and not
domestication of critical thinking is brought upon how institutions, dominate and oppress
home in the concluding section of their as they subjectify human beings. It is guided
article where it is conjectured that by a conception of knowledge production in
contemporary processes of rationalization which there is a (positivist) emphasis upon
'involve a movement away from prediction and control, as manifest in a pre-
institutionalization through influence and occupation with the identification and meas-
force and towards discipline and domination' urement of variables, including the power
(Lawrence et al., 2001: 641) without attributed to agents, that are deemed to pro-
connecting this development to processes of vide a more complete explanation of how
subjectification.19 Moreover, the implications organizational forms converge and change.
of this shift for researching institutionaliza- Institutional theory, we contend, is institu-
tion are framed not in terms of the effects of tionalized within a tradition of normal sci-
a putative shift to discipline and domination ence which assumes an incrementalist and
on subjects but, rather, in a neo-positivist imperialist conception of theory develop-
concern with the question of the 'resources or ment, inspired by the belief that it should be
abilities ... needed on the part of agents to possible to devise one, single, universally
 691
valid theory that successfully incorporates it uncritically deploys dominant 'cultural
and integrates every possible relevant understandings' to present a benign and
element. totalizing understanding of institutionaliza-
The particular value-orientation that pro- tion in which, for example, the institutional-
pels and legitimizes critical theory, in con- ization of agency is unaddressed. We have
trast, produces knowledge that aims to also noted how recent discussion of institu-
'denaturalize the present', and thereby prompt tionalization has centred on the question of
and facilitate processes of emancipation.20 how the theory might be enhanced by
Consistent with this impulse, we have remedying a perceived neglect of inter alia
engaged critical theory to problematize the 'agency', 'power', 'interests', 'inequality',
institutionalization of institutional analysis 'meaning' (e.g. Beckert, 1999; Whittington,
rather than to revise or replace its distinctive 1992; Zilber, 2002; Lounsbury and
power/knowledge framing of institutional- Ventresca, 2003; Phillips, 2003) where it is
ization. Specifically, we have suggested the assumed that any shortcoming identified in
relevance of Foucault's discussions of disci- institutional theory can be corrected by
plinary forms of power and processes of sub- applying a restitutive patch in a way that will
jectification for thinking critically about how not transgress or compromise its particular-
to study institutionalization. ity. But these interventions have not reflected
In applying a critical, Foucauldian, read- on how the particularity of institutional
ing to the central tenets and some key texts of theory has permitted or spawned such limita-
institutional theory our position is that there tions. A consistently institutionalist perspec-
is nothing inherently unacceptable about tive, in contrast, could be expected to
defining and accounting for institutionaliza- conceive of 'agents', and whatever is attrib-
tion in a particular way or, indeed, in many uted to them (e.g. 'interests' and 'power') as
different ways. Nor is there anything insup- embedded manifestations of processes of
portable in the ambition to develop more institutionalization, and as existing externally
robust, normal science explanations of insti- to such processes. What Meyer, Boli and
tutionalization so long as the contingency of Thomas (1987: 13, quoted in Scott,
the definition is fully acknowledged and sub- 1995/2001: 42) have observed of 'most social
sequently recalled. Our point is that what is theory' would seem to be no less applicable
presented, and what is counted, as 'plausible' to neo-institutionalist analysis:
or 'adequate' is not a reflection of the corre-
spondence of a particular approach with what Most social theory takes actors (from individuals
it aspires to refer to or 'capture' but, rather, its to states) and their actions as real, a priori,
resonance with available, and perhaps elements ... [in contrast] we see the 'existence'
and characteristics of actors as socially
dominant, discourses to which it is heard to constructed and highly problematic, and action
contribute in an affirming or disruptive as the enactment of broad institutional scripts
manner. To articulate this argument in terms rather than a matter of internally generated and
more familiar to institutional theorists: autonomous choice, motivation and purpose.

actors employ rhetorical devices to connect ele- Meyer et al.'s (1987) commentary invites the
ments of the existing or proposed [meaning] to development of a more institutionally
broader cultural understandings in order to sup- grounded analysis of agency (and subjectifi-
port or challenge the comprehensibility of a
[definition]. (Suddaby and Greenwood, 2005:
cation) that has not been taken up by
41, emphasis added) institutional theorists. Foucault's thinking
resonates, as Meyer and Jepperson (2000,
We have emphasized how institutional theory note 3) note, with the institutionalist
advances an important alternative to understanding that actors' 'characteristics' are
methodologically individualist analysis but 'socially constructed and highly problematic'.
we have also argued that, in this process, But there is nothing equivalent,
692
in institutional theory, to the Foucauldian of more critical thinking. In one of their more
view that everyday processes of institutional- radically phenomenological moments,²¹
ization exemplify a disciplinary form of Berger and Luckmann (1966: 82) caution that
power that is productive yet also dangerous 'great care is required in any statements one
in respect of its subjectifying effects. In insti- makes about the "logic" of institutions'. Why
tutional theory, disciplinary power is either do they urge this vigilance? Because 'the
unrecognized or domesticated (Lawrence et logic [of institutions] does not reside in the
al., 2001). Agency is displaced by a focus institutions and their external functionalities,
upon 'broad institutional scripts' (new but in the way these are treated in reflection
institutional theory) or it is treated as the about them' (1966). What is conceived, or
locus of a previously missing variable, in the passes, for the logic of institutions is
form of power that is believed to enhance its inescapably an articulation of a particular
explanatory capability. This· is illustrative of (value-oriented) discourse - such as institu-
how 'old', 'new' and 'neo' institutional tional or critical theory - not a reflection of
analysis tends to flip-flop between 'structure' the social practices that are represented
and 'agency'. through these discourses. The dimming of
When faced with anomalies within institu- this insight - that 'reflective consciousness
tional theory, such as the paradox of embed- superimposes the quality of logic on the
ded agency, some institutional theorists have institutional order' (1966) - results in, or
turned to critical theories - for example, in makes possible, the dominance, if not
order to support efforts to pay greater atten- monopolization, of the representation of
tion to issues of inequality and conflict institutions and institutional theory by a form
(Hirsch and Lounsbury, 1997; Lounsbury and of analysis that is positivistic and conserva-
Ventresca, 2002, 2003). However, the belief tive in tenor. This dominance is reflected in
that elements of critical theory might be the absence of engagement with, or selective
incorporated to develop a less partial account appropriation of, critical theory by institu-
of aspects of institutionalization labours, in tional theorists.
our view, under a misapprehension. Critical In institutional theory, a posture of schol-
theory does not offer an 'additive adjustment' arly inquisitiveness towards whatever illumi-
to other theories (Kuhn, 1970: 53). lnstead, it nation critical theory might bring has been
advances alternative, more radical, ways of exceptional. Institutional theorists have
representing the nature, and especially the seemed reluctant to pay critical theory con-
significance, of processes of centrated attention - perhaps because of an
institutionalization. That institutional intuition that it could throw up some destabi-
theorists have largely ignored, or otherwise lizing anomalies or 'inconvenient facts', and
dismissed critical theory, including the thus ignite a process of theoretical reflection .
thinking of Foucault (e.g. Hirsch and and reassessment which wou1d be counter-
Lounsbury, 1997: 412; Lounsbury and productive to the business-as-usual, 'puzzle-
Ventresca, 2003: 464), does not, for us, imply solving' modality of much institutional
that an opportunity to refine institutional theorizing (Kuhn, 1970: 35). Institutional
theory has been missed. Rather, it reflects theory is perhaps, as Jepperson (1991) hints,
and affirms our thesis that institutional theory something of a prisoner of its own, distinc-
and critical theory offer alternative, value- tive institutional(izing) logic(s); and, in this
oriented ways of representing the social respect, its analyses run the risk of:
world, including the nature and significance
of institutionalization. becoming ideologies of the institutions they
That said, a more fully institutionalist study. Foucault has pointed to the double
understanding of knowledge, including relation between truth and power, between forms
of knowledge and power relations ... (Foucault,
'agency', can prompt a shift in the direction 1980). When social scientists import the
dominant
 693
institutional logics into their analyses of They each challenge the authority of individ-
individuals and organizations in unexamined ualist, rational choice forms of analysis. But
ways, they unreflectively elaborate the symbolic the forced integration or selective appropria-
order and social practices of the institutions they
study. These elaborations subsequently become
tion of elements of critical theory to patch up
factors in the reproduction of these institutions. weaknesses in institutional theory risks
(Friedland and Alford, 1991: 260) devaluation of their distinctive value-orienta-
tions and associated contributions to knowl-
That there is limited critical reflection within edge. Respecting and preserving these
institutional theory, as Jepperson (1991) and differences serves to enrich our understand-
Friedland and Alford (1991) point out, may ing and, more specifically, impedes any ten-
not be a problem for institutional theory. To dency for a particular conception of
the contrary, we interpret this restriction as institutionalization to become totalizing (Lok
contributing to institutional theory's appeal and Willmott, 2006). It is when critical
and influence as it suppresses consideration reflection upon the totalizing tendencies of
of the ethics, institutonalized as a value- institutional theory is absent that it presents
orientation, of knowledge production. For us, an obstacle to the development of other,
the boundedness of critical reflection is a critical forms of analysis as it paints them as
problem of institutional theory. If critical 'politically charged' or 'biased' in a way that
reflection were more energetically engaged, simply normalizes the 'bias', or value-
it would threaten the very taken-for- orientation, of institution theory. A challenge
grantedness of institutional theory with for advocates of critical analysis is to show
respect to the 'theoretical strategies' why, instead of seizing upon 'agency' or
(Jepperson, 1991: 143) that give it distinc- 'power' as overlooked variables for devising
tiveness and ensure its future reproduction. better predictions of institutionalization,
Critical theory illuminates how institutional closer acquaintance with critical theory can
theory ignores power; how neo-institutional offer an alternative for anyone interested in
theory incorporates it in an inconsistent way; studying how power and agency are
and shows that neither variant is in a position institutionalized in forms of normalization
to appreciate the subjectifying effects of and subjectification.
institutionalization.²² By de-naturalizing the
analysis of institutions and processes of
social ordering constructed by institutional
theory, critical theory opens up the possibility APPENDIX
of alternative forms of institutional analysis,
including a Foucauldian attentiveness to Critical theory is a capacious and slippery
subjectification. label invoked to characterize diverse forms of
In addressing the question of what value analysis. Just as institutional theory is, on
critical thinking has for students of institu- occasions, identified with one of its leading
tionalization, our answer has been that it is or favoured (e.g. normative, rational choice,
less germane as a resource for supplying sociological, economic or historical) variants,
ideas or fixes for shortcomings detected in critical theory is sometimes directly
institutional theory. Rather, a way of devel- associated with, or even assumed to be
oping some critical distance from which to identical to, either Marxism (in its various
appreciate the particularity and limits of forms) or Critical Theory (distinguished by
institutional theory. Appreciating the dif- its capitals) of the Frankfurt School (e.g.
ferences between institutional theory and Marcuse, Habermas, etc.). All versions of
critical theory avoids strained, contradictory critical theory draw on a range of disciplines
and confusing efforts to incorporate elements – economics and philosophy, as well as
of critical theory into institutional theory. sociology and psychoanalysis, to advance
694
critical thinking within a broad framework of processes. Whatever knowledge is, it cannot be
humanistic Marxism (see Alvesson and justified through metaphors which commit us to
Willmott, 1996, especially ch. 3). Refusing thinking that it is an accurate representation of
the external world. [It is] what Vattimo calls 'the
the restrictiveness of this intellectual terrain, myth of transparency ' ... it is language and the
which contemporary Critical Theorists have social negotiation of meaning themselves that
also sought to extend or revise, a growing need to be illuminated to display their
number and range of theories are identified as constructive properties and processes. (Johnson
'critical'. and Duberley, 2000: 96-7)
So, in the contemporary context, it is
implausible to equate critical theory with A 'crisis of representation' has developed as a
Critical Theory although an important conti- consequence of the view that the referent
nuity with the Frankfurt School is its inter- eludes any transparent or stable representa-
disciplinary orientation and emancipatory tion by the signifier because, it is argued, the
intent. A common, recent, thread is a critique latter can articulate only a particular, histori-
of death in a variety of forms, e.g. of realism, cally and culturally embedded and frequently
of narratology, of the author. Our chapter contested, signified. Consider the signifier
may also be read as a critique of the death 'critical theory'. This term (or text) is
threat posed to critical theory in organization deployed to point to a referent (what critical
studies by' the suffocating expansion of theory is) but the contested nature of critical
(uncritical) institutional theory. The range of theory makes it impossible to fully stabilize
critical theory resonates strongly with critical what is signified by this signifier. To the
work that is emerging within the field of extent that some degree of stability is
management under the umbrella of Critical accomplished, it is achieved hegemonically
Management Studies. For proceedings of the by effectively excluding or silencing other
CMS conferences held bi-annually since possible signifieds, and not as a consequence
1999, see of providing a fully transparent or compre-
<www.mngt.waikato.ac.nz/ejrot/cmsconferen hensive characterization of its referent.
ce/default.htm> and Derrida coined the phrase 'metaphysics of
<www.mngt.waikato.ac.nz/ejrot/>; see also presence' to characterize the fantasy of trans-
Adler, Forbes and Willmott, 2007. parency (see also Rorty, 1979). This example
Developments in the fields of philosophy also serves to indicate the centrality of power
(Wittgenstein), linguistics and semiotics (hegemony) in the reproduction and transfor-
(Saussure) and literary criticism (de Man) mation of human realities, including the real-
have become highly influential in the con- ities produced by scientists (Kuhn, 1970:
temporary formation of critical theory in the 206). The resolution, or 'sedimentation', of
social sciences, especially through the writ- such contests is understood, by Foucault
ings of Foucault, Derrida and, increasingly, (1980) for example, as an articulation of
Bourdieu, Lacan and Zizek. What these criti- power-knowledge, and not as a product of
cal thinkers challenge and unpack, in differ- consensus or epistemological privilege, as
ent ways, is the capacity of language to implied, for example, by Berger and
provide a faithful representation of that Luckmann (1966) and Tolbert and Zucker
which it aspires to reference (Rorty, 1979). (1999). Post-realist thinking has fuelled the
This 'linguistic turn' does not necessarily development of critical theory across the
involve a reductionist equation of social social sciences and humanities in ways that
reality with language, as some of its lazy have considerably extended its scope, diver-
detractors are inclined to claim. Rather, the sity and influence.
post-realist position is that, Analyses identified as 'functionalist' and
'positivist' have been amongst the primary
what we take to be knowledge is constructed in intellectual targets of critical theories as these
and through language. Knowledge has no secure approaches are inclined to assume the
vantage point outside such socio-linguistic
 695
functional value of the status quo and/or the NOTES
ahistorical status of social facts (see Alvesson
and Willmott, 1996). But, of course, the aspi- 1 There are many versions of institutional theory.
ration to critique the naturalization of the We focus here on the dominant, sociologically
informed, versions in the Anglo-American literature.
present, whether in social science or every- As might be expected, there are regional variations,
day life, does not exempt elements and ver- and institutional theories that are more historical and
sions of critical theory from critical scrutiny. economic in emphasis (e.g. Menard and Shirley,
In such ways, ostensibly 'critical standards' 2005).
within a discipline can 'generate a relatively 2 Methodological individualism 'amounts to the
claim that social phenomena must be explained by
closed world' (Barnett, 1997: 18) as critical showing how they result from individual actions,
theory becomes over-protective of its internal which in turn must be explained through reference to
sacred cows. It is the limiting, oppressive the intentional states that motivate the individual
qualities of such closures in all approaches actors.' (Stanford Encyclopedia of Philosophy,
(including its own) that, in different ways, <http://plato.stanford.edu/entries/methodological-
individualism> accessed 03/01/07)
critical theories aspire to bring to conscious- 3 The term 'value-orientation' is closely associated
ness and open up to scrutiny. with the work of Weber and is a shorthand translation
Critiques of naturalization of the present of Weltanshaungen, a term which Brubaker (1984)
are not, of course, limited to problematizing regards as virtually 'untranslatable'! Value-orientations
how language(s) are engaged to bolster and are not judgements but, rather, are 'general views of
life and the Universe' that are both theoretical and
refine what is normal. For critical theories practical as 'they endow the world with meaning and at
assess processes of emancipation to be frus- the same time define paths of action' (Brubaker, 1984:
trated, nationally and globally, by socially 62, citing Weber, 1949: 57). Since 'methodological
unnecessary limitations on radically demo- individualism (see note 2) is also associated with
cratic forms of decision-making and associ- Weber's position, we stress that it is possible to agree
with philosophical elements of Weber's thinking
ated self-determination within both public without subscribing to his methodology.
and private (e.g. workplace) spheres. 4 Aside from the question of their compatibility,
Variants of critical theory challenge the the lack of inquisitiveness is perhaps attributable to
fetishized, and seemingly uncontrollable, dark mutterings about the leftist leanings of some of
order of global capitalism that generates the original institutional. theorists. In the repressive
intolerance of many business schools, scholars have
extremely asymmetrical distributions of taken refuge in an orientation to the study of
resources and life-chances. Critical theory institutionalization in which critical thought is
does not pretend to provide value-neutral domesticated if not fully cleansed. Amongst that band
reports of processes of globalization, for of highly influential, 'old' institutionalists, Selznick is
example. Rather, rejecting the notion of known for his youthful association with 'the
Trotskyists, the 'socialists, the anarchists and Zionist
value-free science as a myth that sustains the socialists' (Lipset, 1996: 4). Jonathan Murphy alerted
status quo, critical theories challenge the us to the link between leading institutional theorists
relentless pursuit of growth for being socially and leftist politics.
divisive and ecologically unsustainable. Such 5 Likewise, critical students of organization have
critical thinking understands that resources - rarely engaged with institutional theory. As an indica-
tor of this neglect or indifference, the coverage of
in the form of knowledge as well as raw institutional theory by two critical textbooks is either
materials and technologies - exist that could almost non-existent (Thomson and McHugh, 2002) or
bring about a radical redirection of priorities. largely descriptive (Clegg, 1990).
Critical theory, as conceived here, is engaged 6 That selective appropriations and translations of
in the critique of ideas and institutions - elements of critical theory into institutional theory
(and vice-versa) have occurred is not at issue (e.g.
patriarchy, racism, and science, as well as Oakes, Townley and Cooper, 1998; Lawrence, Winn,
capitalism that are assessed to legitimize and Jennings, 2001; Seo and Creed, 2002). Such
resistance to a progressive transformation of hybridization is inherently perilous and potentially
social relations as well as to the advancement confusing, especially where some variant of critical
of ideas and institutions more relevant to theory is shoehorned into the framework
facilitating radical change than to preserving
the status quo.
696
of institutional theory. In this regard, we agree with to correct other interpretations that stand accused of
Lounsbury (2003: 216), though for rather different producing mere 'social constructions' which take on
reasons, that 'analytical approaches of interest to 'identities created as much by their users as their
critical theorists [are] not easily translatable into the authors' (Mizruchi and Fein, 1999: 653). In
repertoire of institutional analysis'. Foucauldian analysis, the author is de-centred in the
7 Foucault's work was cited more frequently in sense that s/he is not ascribed the sovereign power to
scholarly social scientific journals during 1995-2000 adjudicate the meaning of the text. We recognize that
than any other author, and indeed received twice the this undermines both literalism and the sovereignty
number of citations as the second most cited author typically attributed to authors and, for this reason, it
(see Posner, 2001). tends to attract kneejerk accusations of 'relativism' and
8 Against this thesis, it might be argued that 'nihilism'. However, reducing a text to a single,
instrumental rationality provides for more assessment authoritative reading - as dictated by the author or by
of, and thus reflection upon, the means of attaining anyone else - would seem to be an absurd, Sisyphean
ends as well as the possibility of distancing oneself task (Camus, 1955).
from (responsibility for) calculating their selection. 14 Bhaskar's warrant is a (retroductive) mode of
However, within Weber's conception of instrumental science that is concerned to disclose the causal
rationality, such forms of reflection and distancing are mechanisms which generate empirical phenomena,
themselves instrumentally rational. whereas Habermas's warrant is a counterfactual ideal
9 Only as an aside (that is not integrated within speech situation that, he argues, is inherent in the
their notion of institutionalization), do Berger and structure of communication, and which provides a
Luckmann make any reference to institutionalization foundation for objective knowledge.
as an articulation of power; and, even then, it is 15 By 'non-foundationalist' we mean 'rejecting the
restricted to a discussion of a situation in which forms asymmetric image of basic (immediately justified,
of institutionalization compete with each other (1966: foundational) beliefs that support nonbasic beliefs.
126-7). Specifically, they note that the construction of Non-foundationalists prefer the image of a web of
reality which proves victorious in such contests is mutually supporting beliefs, which are mediated
likely to be advocated 'by those who wielded the through a particular community.
bigger weapons rather than those who had the better 16 This allows for the possibility of productively
arguments' (1966: 127). But this very brief studying power in a variety of ways. Other critical
commentary on how conflicts between rival forms of approaches, such as Braverman's (1974) labour
institutionalization are resolved is absent from their process analysis, adopt a sovereign or juridical con-
(consensualist) conception of institutionalization. ception of power and shed insight into the way
10 Along with much else in Friedland and Alford's workers' knowledge is appropriated by management in
(1991) instructive contribution, this observation has the pursuit of profit.
not been taken up in institutional theory. Instead 17 Institutional theory does not readily conceive of
Friedland and Alford's has been selectively appropri- these 'logics' as forms of power since power is
ated for its use of 'logics' and 'contradiction'. We are associated with agency, whereas logics are associated
grateful to Jaco Lock for this insight. with legitimacy.
11 The aspiration to critique the naturalization of 18 It is also evident in his assessment of the con-
the present, whether in social science or everyday life, tribution of institutional theory which is characterized
does not exempt elements and versions of critical as one that 'rests in the identification of causal
theory from critical scrutiny. Critical thinking may mechanisms leading to organizational change and
also be developed, selectively appropriated and stability on the basis of precarious understandings that
translated to bolster and refine what is 'normal' (cf organizational actors share, independent of their
Kuhn, 1970) - for example, through an assessment and interests' (DiMaggio, 1988: 3). For critiques of the use
effective domestication of elements that are potentially of 'interests' in institutional theory, see Campbell,
threatening to established thinking, as is illustrated by 2006; Enrione, Mazza and Zerboni, 2006; Fligstein,
the recent flirtation by neo-institutonalists with critical 2006.
discourse analysis (Phillips, Lawrence and Hardy, 19 In Lawrence et al.'s typology, power as 'domi-
2004); semiotics and actor network theory (Lawrence nation' is reserved, oddly enough, for 'forms of power
and Suddaby,2005) and rhetoric (Suddaby and that support institutionalization processes through
Greenwood, 2006). systems of organized, routine practices that do not
12 See Baritz (1960) and Brief (2000). require agency or choice' (2001: 637) - a restriction
13 Indeed, from our Foucauldian standpoint, it that eliminates virtually every form or exercise of non-
would be perverse to claim that we provide an 'accu- juridical power. In comparison to 'influence', 'force'
rate interpretation' either of Foucault's work or of the and 'discipline', 'domination' is (conveniently)
diverse contributions to institutional analysis discussed conceived by Lawrence et al. to be a marginal and
in this chapter; or, relatedly, that we aspire exceptional form of power.
 697
20 In the spirit of self awareness and reflection, it Benson, K. (1977), 'Organizations: A dialectical
is appropriate to acknowledge that Foucault's version view', Administrative Science Quarterly, 22,
of critical theory leaves open the nature and processes 1:1-21.
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us, since it leaves such determinations to local
S.C. Ainlay (eds.), Making Sense of Modern
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debates about their relevance for studying accounting the Sociology of Knowledge. New York:
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21 The phenomenological tradition, in which
and Political Theory. Philadelphia: University
Berger and Luckmann's thinking is partially located,
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of Pennsylvania Press.
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351.
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

29
Taking Social Construction
Seriously: Extending the
Discursive Approach in
Institutional Theory
Nelson Phillips and Namrata Malhotra

Institutionalization occurs whenever there is a institutional theory (e.g., Tolbert & Zucker,
reciprocal typification of habitualized actions by 1983) as researchers worked to understand
types of actors. Put differently, any such the effects of cognitive institutions on indi-
typification is an institution.
(Berger e Luckmann, 1967)
viduals and organizations.
In many ways, it is this cognitive focus
Early work in institutional theory¹ focused that provides the distinctiveness of institu-
explicitly on the socially constructed nature tional theory. According to DiMaggio and
of institutions, arguing that they arise out of Powell (1991), new institutional theory is
the meaningful interactions of actors and characterized by 'a scepticism toward
shape behaviour by conditioning cognition. rational-actor models of organization' (1991:
Meyer and Rowan (1977: 341), for example, 12) which are replaced by 'an alternative
argue that '[i]nstitutionalization involves the theory of individual action, which stresses the
processes by which social processes, obliga- unreflective, routine, taken-for-granted nature
tions, or actualities, come to take on a of most human behaviour and views interests
rulelike status in social thought and action'. and actors as themselves constituted by
In this definition, institutions are cognitive institutions' (1991: 14). By moving beyond
structures and institutionalization is the arguments regarding rational action in
process whereby institutions are constructed contexts characterized by various forms of
in social interaction through the production resource dependency, institutional theory
of what Berger and Luckmann (1967: 54) call provides explanations of patterns of behav-
'shared typifications'. This view of insti- iour that make little sense from other per-
tutions drove much of the early work in new spectives. Furthermore, and perhaps more
 703
importantly, institutional theory goes well action that we can differentiate between truly
beyond the remit of these theories in examin- institutional forms of isomorphism and the
ing the sources of the interests and identities multitude of other pressures that can lead to
that determine the preferences which frame increasing similarities in form or action but
rational action in the first place. which do so in very different ways. Simply
Yet the emphasis of this early work, and calling something an institution because it
the source of much of the distinctiveness of results in conformity does little to explain
institutional theory, has been diluted despite how it actually does so and even less to
the retention of a general interest in what explain what it actually is. It is only by being
Douglas (1986: 11) calls the 'social basis of very clear about the nature of institutions,
cognition'. Rather than clearly focusing on and by ensuring that what we study fits that
cognitive institutions and continuing to definition, that we can hope to develop
develop this unique contribution, the concep- deeper understandings of what are
tualization of an institution has blurred and, legitimately institutional processes.
as a result, significant analytical power has Second, this lack of clarity about the
been lost. In fact, from the perspective of nature of institutions leads to a lack of
much of recent institutionalism, institutions attention to explaining the actual process of
are seemingly most recognizable by their institutional production. As Zucker (1991:
effects and a number of mechanisms that 105-106) observes:
produce isomorphism have been lumped
together to form the focus of institutional Without a solid cognitive, micro-level
analysis. However, such an all-encompassing foundation we risk treating institutionalization as
approach neglects critical theoretical and a black box at the organizational level, focusing
on content at the exclusion of developing a
philosophical distinctions among the differ- systematic explanatory theory of process,
ent mechanisms that lead to isomorphism. conflating institutionalization with resource
For example, an organizational form that is dependency, and neglecting institutional
widely adopted in order to gain access to a variation and persistence. Although important
government grant is seen as equally the result insights can be gained by examining the content
of an institution as an organizational form of institutions, there is an ever present danger of
that is adopted due to its taken-for-granted- making the neo-institutionalist enterprise a
taxonomic rather than explanatory theory-
ness in a field. Yet, the first case is simply a building science. Institution theory is always in
rational and conscious decision by managers danger of forgetting that labeling a process or
to allow their organizations access to structure does not explain it.
resources that they value. Clearly not the sort
of taken-for-grantedness originally associated By adopting a view of institutions that looks
with institutions. all too much like the taxonomy that Zucker
From our perspective here, defining an feared, we have left ourselves with no way to
institution based on its effects is problematic explain how they come to be. The fact that
for two reasons. First, in failing to clearly very different kinds of things are treated as
focus on cognitive institutions, institutional different forms or elements of institutions
theory has conflated what have traditionally leaves us without any common understanding
been considered institutional processes with of the process of institutional production and,
resource dependency and the coercive consequently, the nature of institutions. In
application of power. The fact that other words, a 'taxonomic' approach has
isomorphism occurs in an organizational field Gome to dominate institutional theory while
does not necessarily mean that taken-for- there has been little attention paid to develop-
granted cognitive structures are the cause. It ing an explanation for the process of produc-
is only by examining the actual micro- tion of institutions in the first place.
processes through which organizations In this chapter, we argue that there is a
become more alike in form and significant opportunity for institutional
theory to clarify the nature of institutions and
to develop
704
the sort of 'solid cognitive, micro-level institutions are socially constructed leads
foundation' for institutional theory that necessarily to the observation that all institu-
Zucker envisages. More specifically, we tions are fundamentally cognitive. If we
build on one strand of work in institutional accept, as Meyer and Rowan (1977) argue,
theory that has begun to further develop an that institutions take on a rulelike status in
approach to understanding the process of thought, then no matter what the mechanism
social construction that underlies institutional of their genesis, they are social facts and are
production and the ramifications of this for fundamentally cognitive. Institutional theory
the cognitive nature of institutions: the work therefore becomes a perspective focused on
done to date developing a discursive developing a deep understanding of the
approach to institutionalization (e.g., Phillips, genesis, maintenance, change and effects of
Lawrence, & Hardy, 2604). cognitive institutions.
This work has begun to inform our under- Third, building on the previous point, we
standing of institutionalization by providing a go on to argue that we need to de-
theoretical and methodological approach institutionalize the tripartite understanding of
explaining the process of social construction regulative, normative and cultural-cognitive
through which institutions are constituted. As institutions and move to a much clearer
Phillips et al. (2004: 648) argue: separation between mechanisms that lead to
isomorphism and the institutions that may or
Understanding institutional phenomena requires may not be produced by these mechanisms.
a broader, more comprehensive theory that Rather than the current lack of clarity, we
encompasses stability and change in institutions, need a more nuanced theory that
institutional fields, and institutional effects.
Including a much more developed discursive
differentiates between mechanisms or
conceptualization of social construction is one pressures for institutionalization and the
important step toward understanding and actual process of institutionalization itself. In
exploring these issues. other words, we need to differentiate between
simple isomorphism, which can be caused by
We draw on this existing work and examine a variety of mechanisms and the institutional
the potential of discourse analysis in the processes that drive isomorphism by
study of institutional processes and, more structuring cognition and that have been the
generally, the distinctive role of discourse core focus of institutional theory.
analysis in conceptualizing social construc- Finally, we point to the opportunities for
tion in institutional theory. research into the production of institutions
In further developing a discursive perspec- from a discursive point of view. While dis-
tive, we contribute to discussions of course analysis is a theoretical framework
institutional theory in four ways. First, as we explaining processes of social construction, it
said above, discourse analysis provides a is also a method for exploring these processes
useful way of conceptualizing the process that can be applied usefully to the study of
through which institutions are socially institutions and institutionalization.
constructed. If institutional theory is going to Discourse analysis therefore provides well-
take social construction seriously, we need a developed approaches to empirically
much more developed idea of how the investigating the actual processes of
process of social construction occurs. production that underlie institutions. In doing
Discourse analysis provides the building so, discourse analysis can help move
block-s for a theory of the production of institutional theory from its current focus on
institutions and a method for researching the effects of institutions in organizational
instances of institutionalization. fields to a focus on the micro-level processes
Second, we explore some of the ramifica- that lead to the formation of cognitive
tions of returning to a strong form of social institutions.
construction in institutional theory. In partic-
ular, we argue that accepting the notion that
 705
We will present our arguments in three Social Construction and New
steps. We begin by discussing the social Institutional Theory
constructivist roots of new institutional
theory and further explain why we believe As far back as the late nineteenth century,
the tripartite view of institutions that has institutional economists began challenging
developed in institutional theory is problem- economic assumptions about rational indi-
atic. We will then discuss how discourse vidual behaviour. Veblen (1909: 245), for
analysis provides a theoretical and method- example, argued that behaviour is governed
ological frame for understanding the by habit and convention where an individ-
processes of social construction that underpin ual's conduct is directed by his or her habitual
institutionalization. We draw on discourse 'relations to other members of his or her
analysis to provide an alternative perspective group. He defined institutions as 'settled
on the nature of institutions and the micro- habits of thought common to the generality of
institutional processes upon which they man' (1909: 239). In doing so he foreshadows
depend. Finally, we conclude with a dis- the development of the cognitive view of
cussion of some of the implications of this institutions that came to characterize new
view of institutions for empirical research in institutionalism many years later. This defini-
institutional theory and outline some of the tion is particularly striking as we can already
outstanding issues and problems that remain see a strong cognitive understanding of insti-
unresolved. tutions at such an early stage of development
of institutional thought.
Even Menger ((1871]1981), who stoutly
defended the utility of overarching simplify-
INSTITUTIONS AND THE SOCIAL ing assumptions in economics, acknowledged
NATURE OF COGNITION the importance of broader institutional forces
and, in fact, argued that institutions
In the first part of this section, we explore the themselves were social phenomena in need of
social constructivist thread running through theoretical explanation (Scott, 2001: 2).
new and neo-institutionalism. We revisit the Commons (1924), in emphasizing that a
roots of institutional theory and follow the transaction was the appropriate unit of analy-
development of the cognitive view of sis alluded to the rules of conduct governing
institutions in institutional analysis. Our point a transaction. By rules of conduct he meant
in the first part of this section is to show that something very much like a social institution
various kinds of social constructionism have characterized by a degree of adherence to
played a central role in institutional theory collective norms of reasonable behaviour
from its earliest development and that this (Van de Ven, 1993).
constructionism points directly to the While modern institutional theorists may
cognitive nature of institutions. We will then find significant aspects of this work quite
discuss the recent development of the sympathetic to their views, organizational
tripartite conception of institutions as institutionalism was predominantly built on
regulative, normative and cultural-cognitive more sociological foundations. The earliest
that has come to dominate institutional forms of institutionalism in sociology started
analysis and argue that there is an with a more functionalist flavour than
opportunity for institutional theory to characterizes institutional theory today, but
progress more quickly in understanding with a clear cognitive orientation. Sumner
institutions by returning to its roots in social (1906), for example, defined an institution
constructivism and refocusing on cognitive simply as a concept or idea. Scott (2001)
institutions. summarizes Sumner's conceptualization of
institutions as evolving from individual
706
activities to folkways, to mores, and to full- cited definition, define an institution as 'a
fledged institutions, although he also recog- reciprocal typification of habituated actions
nized that institutions can also be enacted as by types of actors'. In other words,
products of rational invention and intention. institutions arise when groups of people
Similarly, Davis (1949) defined an institution come to understand some activity in a certain
as a set of interwoven folkways, mores, and way and that understanding becomes shared
laws built around one or more functions. In across a group. From their perspective, insti-
both cases the cognitive nature of institutions tutions are cognitive constructions and the
is clear although underpinned by a function- process of institutionalization is a process of
alist understanding of social processes. social construction.
But there was also important early work While there were many early discussions
from a less functionalist perspective, clearly of institutions in the literature, systematic
emphasizing the cognitive and socially con- attempts to connect organizations and
structed nature of institutions. Cooley ([1902] institutions only appeared much later.
1956: 313-314), for example, observed that Selznick (1948) was the first major
institutions are developed through contributor to the institutional theory of
interactions and exist 'as a habit of mind and organizations. Selznick (1957) described
of action, largely unconscious because institutionalization as a process that happens
largely common to all the group ... the to an organization over time, reflecting its
individual is always cause as well as effect of own distinctive history, the people who have
the institution'. Hughes (1936: 180) further been in it and the vested interests they have
emphasized the social production of created, and the way it has adapted to its
institutions when he defined them as an environment. From his perspective, to insti-
'establishment of relative permanence of a tutionalize is to 'infuse with value beyond the
distinct1y social sort'. Mead (1934) drew technical requirements of the task at hand'
attention to the role of symbolic systems (Selznick, 1957: 16).
arguing that meaning is created in interaction This early approach to institutional analy-
through gestures, particularly vocal gestures ses of organizations was followed by the
in the form of language; an argument that is emergence of new institutional approaches to
particularly interesting to us here as it organizational sociology. Scott (2001: 39)
foreshadows a discursive approach to the points out that attention to cognitive frames
analysis of social construction. Schutz and cultural frameworks rather than to nor-
[1932](1967) similarly examined ways in mative systems was a critical defining feature
which common meanings are constructed of this new form of institutional theory in
through interaction by individuals and sociology. The most significant difference
become taken-for-granted assumptions. between the old and the new institutionalisms
Berger and Luckmann (1967) proposed lies in the conception of the cognitive bases
the most influential conceptualization of of institutionalized behaviour. According to
institutions as cognitive structures. Their app- the old institutionalists, organizations became
roach focused on the creation o-r shared institutionalized when they were 'infused
knowledge and belief systems through with value' as ends in themselves (Selznick,
meaningful interaction. They saw their work 1957). Individuals' preferences were shaped
as being about developing a sociology of by values and norms emphasizing normative-
knowledge that would explain how objectif- evaluative judgements. New institutionalism
ied social knowledge arose through meaning- departed from a focus on a moral framing in
ful and subjective interaction. In doing so, terms of norms and values and drew attention
they brought cognitive frameworks for conc- to the taken-for-granted scripts, rules, and
eptualizing institutions centre-stage. Berger classifications as the basis of institutions
and Luckmann (1967: 58), in their commonly (DiMaggio & Powell, 1991).
 707
The works of Meyer and Rowan (1977) Zucker (1977) provides a complementary
and Zucker (1977) grounded new institu- characterization of institutions as primarily
tional theory firmly in the sociological realm cognitive. In her study of the role of institu-
and conspicuously in the work of Berger and tionalization in cultural persistence, Zucker
Luckmann (1967). Meyer and Rowan (1977) argues that 'internalization, self-reward, or
provide a macro-perspective on other intervening processes need not be pres-
institutionalized organizations, arguing that ent to ensure cultural persistence because
formal structures of organizations reflect the social knowledge, once institutionalized,
myths of their institutional environments exists as a fact, as part of objective reality,
instead of the demands of their work activi- and can be transmitted directly on that basis'
ties. They draw on Berger and Luckmann's (1991: 83). Most importantly, the study
(1967) notion of institutionalized rules as comes closest to developing Berger and
classifications built into society as recipro- Luckmann's (1967) work in that it deals with
cated typifications or understandings when the process of institutionalization especially
they argue that 'formal structures are not only highlighting the social constructivist nature
creatures of their relational networks in the of the process: '[i]t is a process by which
social organization ... the elements of individual actors transmit what is socially
rationalized formal structure are deeply defined as real and simultaneously at any
ingrained in, and reflect, widespread under- point in that process the meaning of an act
standings of social reality (Meyer & Rowan, can be defined as more or less taken-for-
1977: 54). granted part of this social reality' (Zucker,
In describing institutionalization as a 1977: 85). In other words, institutionalized
process by which social processes, obliga- acts are perceived as objective as they can be
tions, or actualities take on a rulelike status in repeated by other actors with a common
social thought and action, they implied that understanding of the act. Further, institute-
the rules become taken-for-granted. From onalized acts are exterior when 'subjective
their conceptualization of institutionalization understanding of acts is reconstructed as
one could deduce that they perceived the intersubjective understanding so that the acts
nature of institutions to be primarily are seen as part of the external world' (1977:
cognitive. They state, 'such elements of 85). Most critically, institutionalized acts do
formal structure are manifestations of not require monitoring and enforcement.
powerful institutional rules which function as Following Meyer and Rowan (1977) and
highly rationalized myths that are binding on Zucker (1977), several significant contribu-
particular organizations (Meyer & Rowan, tions to institutional theory developed a
1977: 343). In other words, these shared macro-level perspective on institutionaliza-
understandings result in certain organizations tion (e.g., DiMaggio & Powell, 1983; Meyer
having to perform certain activities regardless & Scott, 1983). However, there seemed to be
of their rationale because of the taken-for- litt1e attention to clarifying and developing,
granted nature of those understandings. The theoretically and empirically, an understand-
fact that we understand an organization to be ing of the nature of institutions and the
of a particular kind means that a set of taken- process by which they come to be. Rather the
for-granted rules must be followed. But it is line of enquiry changed from institutions and
not that some outside actor is enforcing these how they are constructed to the effects of
rules. Rather it is the fact that they are institutionalization. DiMaggio and Powell
broadly accepted makes them unavoidable. (1983), for example, addressed the question
Meyer and Rowan (1977) therefore provide of why there is such striking homogeneity of
one of the strongest statements in terms of organizational forms and practices, the phe-
the cognitive nature of institutions. nomenon of isomorphism. They elucidated
708
three key mechanisms by which institutional The 1980s saw an impressive expansion of
effects are diffused through a field of organi- the realm of institutional theory both
zations resulting in structural isomorphism: theoretically and empirically. However, there
coercive, mimetic and normative. appeared to be continued ambiguity about the
Tolbert and Zucker (1983) investigated nature of an institution and the processes
the diffusion of civil service employment through which it is constituted. The ambigu-
practices across US local governments, ity is particularly striking in Baron and
arriving at a two-stage model of diffusion Bielby (1986), where the term institution is
encompassing early adopters and late conceptualized in fundamentally different
adopters. Early adoptions were motivated by ways. The study depicts mimetic, coercive
functional imperatives but as an increasing and normative mechanisms underpinning the
number of organizations adopted the spread of modern personnel administration in
innovation, the authors surmised that it the US during and after World War II. In one
became progressively institutionalized. They sense, it uses the term institution as con-
concluded that social legitimacy was a driver stituting cultural prescriptions but in another
for late adopters. usage it describes it as depicting regulatory
Fligstein (1987) also examined diffusion agencies. The first usage resonates closely
of the rise of finance personnel to the posi- with Meyer and Rowan (1977) and Zucker
tion of president in large US corporations (1977) but the description of institutions as a
between 1919 and 1979. He posited a framework of regulatory policies leans more
mimetic explanation of diffusion. An anti- toward the sort of perspective developed in
trust legislation pushed firms toward unre- institutional economics (e.g., North, 1990).
lated diversification creating the conditions This example illustrates that in spite of
for the rise in finance officers but as these significant advances in institutional research,
actors established themselves in one set of a foundational concept - the institution -
firms, their counterparts in other firms were remains unclear. And, to make matters worse,
able to use that as a basis for gaining power these contradictory conceptualizations of the
(Fligstein, 1987). nature of institutions remained unresolved
Several studies in the 1980s pursued over the next decade and, in fact, became
cross-category comparisons, for example, exacerbated.
between commercial and not-for-profit To summarize, impressive theoretical and
organizations suggesting that the former were empirical advances have been made in
less sensitive to institutional influences (e.g., institutional theory over the past three
Baron & Bielby, 1986; Eisenhardt, 1988; decades. At the same time, much of this work
Fennell & Alexander, 1987; Pfeffer & Davis- has sidestepped the issue of what an
Blake, 1987; Tolbert, 1985). Further studies institution actually is and how it comes to be.
made cross-national comparisons analyzing Although the cognitive nature of institutions
the effect of cultural institutional effects (e.g., is ostensibly the foundation of institutional
Carroll, Goodstein, Gyenes, 1988; Hamilton theory, established clearly in the early works
& Biggart, 1988; Lincoln, Hanada, & of Meyer and Rowan (1977) and Zucker
McBride, 1986). All of these studies covered (1977), we see that very aspect gets muddied
a variety of different agents of diffusion through the 1980s and 1990s. A conspicuous
including government agencies, professional absence of citations to Meyer and Rowan
networks, senior executives; a wide array of (1977), Zucker (1977) and Berger and
practices including personnel procedures, Luckmann (1967) in much of the work
boundary-spanning strategies and accounting reflects this lack of clarity. The process of
practices; and a diverse range of settings institutionalization and the role of social
including municipalities, hospitals, universi- construction in that process the very basis for
ties and corporations. understanding that institutions are
fundamentally cognitive - are
 709
often neglected. Partly this has occurred approach associated with John Meyer and his
because of the overwhelming attention in students posits the importance of myths and
macro-level institutional research on institu- ceremony', it 'does not ask how these models
tional effects rather than the process itself. arise' (DiMaggio & Powell, 1983: 157). They
But to a great extent Scott's (1995) three then go on to suggest that their mechanisms
pillars framework for defining institutions may provide some explanations for how and
has compounded the ambiguity. We expand why cognitive institutions arise.
on this in greater detail in the next section. The work of DiMaggio and Powell
(1983), and the irresolvable ambiguity of
their framework, was taken up and developed
Challenging the Three Pillars by Scott (1995, 2001) in his highly influential
book Institutions and Organizations. Scott's
As we discussed above, several influential book has played a significant role in shaping
contributions to institutional theory soon fol- the broad conception of institution that has
lowed the foundational works of Meyer and come to dominate in institutional theory and
Rowan (1977) and Zucker (1977). In one of has also had an important influence more
the most often cited articles, DiMaggio and broadly across related fields such as interna-
Powell (1983) identified the now ubiquitous tional management. We believe, however,
three mechanisms of institutional isomorphic that this conceptualization may in fact have
change. However, while this framework is been a distraction from actually understand-
very valuable in identifying sources of pres- ing the process of institutional production
sure for organizational isomorphism, the that is essential to completely comprehend
mechanisms they propose shed little light on the nature of institutions as it has had the
the actual process of institutionalization - a effect of taking institutionalization for
prerequisite for understanding institutions nor granted.
on the nature of institutions. In his book, Scott develops a typology of
Furthermore, there is an underlying ten- what constitutes an institution comprising
sion in their framework. They begin by three component elements or pillars: the
clearly indicating that they are interested in regulatory, normative and cultural-cognitive
something other than simple rational actor pillars. He draws on DiMaggio and Powell's
explanations for isomorphism: (1983) typology to describe the mechanisms
of control - coercive, normative and mimetic
Today, however, structural change in underpinning the regulatory, normative and
organizations seems less and less driven by cultural-cognitive pillars respectively. The
competition or by the need for efficiency. regulatory pillar emphasizes explicit
Instead, we will contend, bureaucratization and
other forms of organizational change occur as
regulatory processes involving 'the capacity
the result of processes that make organizations to establish rules, inspect others' conformity
more similar without necessarily making them to them, and as necessary, manipulate
more efficient. (DiMaggio & Powell, 1983: 147) sanctions - rewards and punishments - in an
attempt to influence future behaviour' (Scott,
Yet at the same time, they mix together 2001: 52). He goes on to explain that '[f]orce,
acting in a taken-for-granted way in the face fear, and expedience are central ingredients
of the cognitive institutions of Meyer and of the regulatory pillar' (Scott, 2001: 53).
Rowan (1977) and acting purposefully and Powerful actors may impose their will on
rationally in the face of coercion or norma- others, based on the threat of sanctions or by
tive pressures. Furthermore, they indicate offering inducements. In summary, the basis
that, in fact, the sorts of cognitive institutions for compliance underlying a regulatory pillar
that Meyer and Rowan (1977) are interested is expedience, the mechanism is coercive,
in may be a result of these other mechanisms. and the basis of legitimacy is socially
They argue that while the 'institutional sanctioned.
710
The normative pillar emphasizes 'norma- development of a unified theory of institu-
tive rules that introduce a prescriptive, evalu- tions as it is difficult to see how to bridge the
ative and obligatory dimension into social ontological differences between the underly-
life' (Scott, 2001: 55). Norms specify how ing perspectives on which the pillars rest.
things should be done and provide legitimate Second, the dynamics arising out of the
ways of pursuing valued ends. The basis of three pillars are very different. The regulative
compliance is social obligation, the mecha- and normative aspects of institutions are 'the
nism is normative and the basis of legitimacy products of human design, and the outcomes
is moral. Sometimes regulative and norma- of purposive action by instrumentally
tive pillars can be mutually reinforcing, espe- oriented individuals' (DiMaggio & Powell,
cially when coercive power is legitimated by 1991). Consequently, there is an opportunity
a normative framework that both supports for deviance and contestation as agents work
and constrains the exercise of power (Scott, to resist pressures that they recognize and
1987). Scott (1995) points to the normative which they believe to not be in their interests
conception of institutions embraced by early (Hirsch, 1997). Questions of power and
sociologists such as Durkheim, Parsons, and politics are central to these pillars as actors
Selznick, who focused on types of institu- work purposively and consciously to advance
tions such as kinship groups, social classes, their own interests. Furthermore, the
and religious systems that are usually under- literature that is most useful in understanding
pinned by common beliefs and values. these dynamics lies largely in work on
The cultural-cognitive pillar is what Scott power, resource dependency, and other
(1995) considers central to the thinking of related work.
scholars such as Berger, Meyer, and Zucker. The cognitive aspect of institutions, on the
The basis of compliance underlying the other hand, is very different from the other
cultural-cognitive pillar is taken-for-granted- two pillars (DiMaggio & Powell, 1991;
ness based on shared understandings, the Hirsch, 1997; Hoffman, 1997, 1999). Hirsch
mechanism is mimetic, and the basis of legit- (1997) argues that the basic assumptions and
imacy is something that is comprehensible, mechanisms underpinning the regulative and
recognizable and socially supported (Scott, normative pillars are, in fact, rejected in a
2001). Compliance occurs because other cognitive framework. In the first two pillars
types of behaviour are inconceivable - it stability and compliance is assured through
becomes the 'way we do things around here'. values and norms that provide individuals
The socially mediated construction of a and corporate actors consciously understood
common framework of meaning is central to legal, social or moral rules and guidelines for
the cultural-cognitive pillar. behaviour (Hirsch, 1997). On the other hand,
Scott's typology of the three pillars pro- - within a cognitive frame conformity is
vides a comprehensive all-inclusive frame- driven unreflectively. As Hirsch puts it, the
work combining the different perspectives on cognitive pillar works with 'no questions
institutions emanating from different theoret- asked and without deviation' (Hirsch, 1997:
ical disciplines. While such a typology serves 1710). The underlying questions that arise
that purpose of integrating different perspec- around this pillar and the sorts of theoretical
tives, conceptualizing institutions as com- perspectives useful in answering these
prising these three disparate elements raises a questions are fundamentally different from
number of problems. First, the processes by the other two pillars.
which these three pillars come to be are dif- Third, if an institution is enduring and sta-
ferent. Scott (1995) himself points out that ble then it does not need regulatory sanctions
the three pillars are based on very different or other social controls to support it - it is si-
philosophical assumptions about the nature of mply taken-for-granted. In a discussion of va-
social reality. This is problematic for the rious avenues for institutional reproduction,
 711
Powell (1991) alludes to the exercise of is functioning. Much of the empirical work in
power in ensuring persistence of certain institutional theory has failed to do this leav-
practices but acknowledges that practices can ing us without any clear indication of what
take on a life of their own and not require any actually happened.
active elite support. Zucker (1991: 86) In sum, we are not arguing for a separate
succinctly argues that 'direct social control institutional theory of cognitive institutions
through norms or sanctions (incentives or or claiming that one type of institution is
negative) is not necessary ... applying better than another. Rather we are posing a
sanctions to institutionalized acts may have question central to the theoretical foundation
the effect of deinstitutionalizing them ... the of neo-institutional theory - what is an
act of sanctioning may indicate that there are institution and how does it come to be?
other possible, attractive alternatives'. Berger Furthermore, we are highlighting the
and Luckmann, similarly, contrast inst- problems with the three pillars approach in
itutions with other forms of social control: helping address this question.
We believe we need to delve into the
To say that a segment of human activity has process of institutional production at the
been institutionalized is already to say that this macro-organizational level that provides
segment of human activity has been subsumed insight into how an institution comes to be.
under social control. Additional control
mechanisms are required only in so far as the
And, we will argue in the next section that a
processes of institutionalization are less than discursive perspective on institutions and
completely successful. (1967: 73) institutionalization provides a practical foun-
dation for developing a more effective theory
This is a powerful argument suggesting that of institutions. Using a discursive perspective
institutions are best thought of as we are able to illuminate the social construc-
fundamentally cognitive and that these other tivist nature of the process of institutionaliza-
two pillars not be combined in a theory of tion and this leads us to the understanding
institutions. When something has become that when compliance comes naturally and
institutionalized no outside sanctions or automatically without the active intervention
controls are required. These other forces can of sanctions or norms an institution comes to
create social order, but they are of a very dif- be. Hence, institutions are fundamentally
ferent sort than cognitive institutions. cognitive. In other words, a discursive
Furthermore, this raises an interesting the- approach is a useful theoretical and method-
oretical question: are the regulative and nor- ological approach for understanding micro-
mative pillars, important pressures in the processes of institutionalization at the macro-
process of institutionalization rather than organizational level and clarifies the
elements of an institution? It would seem that cognitive nature of institutions.
most of us, for example, obey traffic laws
unthinkingly rather than because we are
concerned about the potential punishment.
Traffic laws have become a cognitive USING DISCOURSE ANALYSIS TO
institution for most of us most of the time. UNDERSTAND AND STUDY
However, the appearance of a new law often INSTITUTIONS
1eads to changes in behaviour because of the
potential punishment that is associated with
the new law. But soon it too becomes taken- In this section, we will explore some of the
for-granted over time. It is important to note implications of a discursive perspective for
that there is no way to differentiate between institutional theory. We will begin by
the two motivations for behaviour except by explaining what discourse analysis is and
examining the behaviour itself. We need to explaining its usefulness as a theoretical and
study intentions at an individual level to methodological framework for studying
understand which sort of mechanism
712
processes of social construction. We will then strong claims about the way in which social
discuss the existing literature which links reality is constructed through the production,
discourse analysis and institutional theory, transmission, and reception of texts.
focusing in particular on a discursive model Discourse analysis is therefore both a method
of institutionalization drawing on Phillips et and a methodology in that it makes explicit
al. (2004) We will argue that a discursive claims about the nature of the social world
view of institutions leads to a very different and provides a set of tools for studying it
view than the prevailing idea of three pillars (Phillips & Hardy, 2002).
of institutions as argued by Scott (2001). It is important to point out that discourses
Finally, we will discuss some of the can never be found in their entirety.
ramifications for theory and empirical inves- Discourse analysts are therefore limited to
tigation in institutional theory of adopting examining selections of the texts that embody
this approach. a particular discourse. Derived from
linguistics, 'text' is used to refer to various
forms of meaningful interaction. In other
Discourse Analysis and Social words, texts are texts because they can be
Construction interpreted. Texts may take a variety of
forms, including written texts, spoken words,
Discourse analysis, at its most fundamental, pictures, symbols, artefacts, etc. At the same
is an attempt to answer the question of where time, discourse analysts do not simply focus
meaning comes from (see Alvesson & on individual texts; rather, in analyzing
Karreman, 2000; Grant, Hardy, Oswick, & discourse researchers must refer to bodies of
Putnam, 2004; Phillips & Hardy, 2002 for texts since it is the interrelations between
extended discussions of discourse analysis). texts, changes in texts, new textual forms,
Understanding what discourse analysis is and new systems of distributing texts that
about begins with an understanding of what constitute a discourse over time. Similarly,
discourse is. Discourse, in general terms, discourse analysis requires researchers to
refers to an interrelated set of texts and the make reference to the social context in which
associated practices of production, dissemi- texts are found and the discourses of which
nation, and reception that bring an object into they are a part are produced. It is this
being. For example, at one point in history connection between discourses and the social
the concept of endangered species did not yet reality that they constitute that makes
exist and by extension there were no 'endan- discourse analysis a powerful method for
gered species' as we understand them today. studying social phenomena.
Through a long process, the concept of Texts can thus be considered to be a dis-
endangered species came to be meaningful cursive 'unit' and a material manifestation of
and accepted. Furthermore, the concept discourse. Texts are not meaningful individu-
became applied to certain species of animals ally: it is only through their interconnection
and endangered species came into being. This with other texts, the different discourses upon
process, from a discourse analysis per- which they draw, and the nature of their
spective, occurs in and through discourse. production, dissemination and consumption
Discourse analysis, by extension, is the that they are made meaningful. Discourse
study of discourse and the social reality that analysis explores how texts are made mean-
it constitutes. In our case here, the study of ingful through these processes, and also how
the discourses that are implicated in the they contribute to the constitution of social
social production of institutions. But in addi- reality by making meaning.
tion to simply a method of studying social What is important here from a social con-
construction, discourse analysis includes struction point of view is that these processes
 713
do not occur in single texts. No single text is very existence of an institution and the
sufficiently powerful to bring an object into process of institutionalization. It is this aspect
being. Social construction occurs when suffi- that resonates strongly with discourse
cient numbers of texts are produced and analysis. It is important to emphasize that
structured in discourses. These texts draw on discourse analysis is not just a methodologi-
one another and in doing so increasingly give cal approach but also a theoretical approach
the social reality represented in the texts a with underlying theoretical assumptions that
taken-for-granted facticity. Any one text is relate specifically to the social construction
insufficient to result in the construction of of reality (e.g., Chia, 2000; Gergen, 1999;
some new object. It is only when complex Phillips & Hardy, 2002; Grant & Hardy,
bodies of text occur that this process can 2004) making it a potentially powerful and
move forward. useful lens in the context of institutional
theory. Institutions as social constructions,
produced through meaningful interaction, are
Discourse and Institutional central to institutional theory (e.g., Meyer &
Theory Rowan, 1977). From a discursive perspec-
tive, institutions are not just social construc-
There has been growing interest among tions but social constructions constituted
scholars of institutional theory in the discur- through discourse (Phillips et al., 2004).
sive perspective and its potential to further In their article Phillips et al. (2004)
explicate and expand core aspects of this propose a model linking action and discourse
influential theoretical stream. There are at that begins to explain the process of
least two triggers that have sparked this inter- institutionalization (see Figure 29.1). Institut-
est: first, the publication of Phillips, ionalization does not occur through the
Lawrence and Hardy's (2004) article arguing simple imitation of an action by immediate
for a rapprochement between institutional observers, but through the creation of suppor-
theory and its social constructivist roots and, ting texts that range from conversational
second, when there has been an important descriptions among co-workers and collea-
shift in institutional theory from the language gues to more elaborate and widely distributed
of conformity and isomorphism to a strong texts such as manuals, books, and magazine
interest in change and deviation (e.g., articles. Actions do not become institution-
Greenwood & Hinings, 1996). nalized by themselves but only when they
In their article, Phillips et al. (2004) begin become understood in a particular way. This
by arguing that the processes underlying is particularly true in the organizational realm
institutionalization are not well understood. where many actions are not directly observa-
They go on to argue that institutionalization ble but must rather be learned about through
occurs as actors interact and come to accept accounts in various texts (think of Total
shared definitions of reality, and that it is Quality Management and its institutional-
through linguistic processes that definitions ization as a common organizational practice).
of reality are constituted (Berger & Accordingly, the upward, diagonal arrows
Luckmann, 1967). From their perspective, an illustrate how the actions of individual actors
institution is a reciprocal typification of affect the discursive realm through the
habitualized action by types of actors and production of texts, some of which leave
institutionalization is the 'social process by meaningful traces that become embedded in
which individuals come to accept a shared new or existing discourses. Not all, or even
definition of social reality' that enacts an most, actions lead to the production of texts.
institution (Scott, 1987: 496). Thus, the social But some do and some of these go on to
construction of reality underpins the influence the discourse in important ways.
714

In turn, discourses provide the socially This question becomes crucial especially
constituted, self-regulating mechanisms that in regard to how new institutions are created
enact institutions and shape the actions that and existing ones changed. Discourse is both
lead to the production of more texts. The a source of stability and of change (Clegg,
bodies of texts that accumulate lead to the Courpasson, & Phillips, 2006). Embedded in
production of 'shared typifications' and the notion of discourse is the potential for
institutions are produced through processes stabilizing social relations and as well as
of social construction. Thus, the discursive acting as a source of social change. As much
realm acts as the background against which as discursive practices reaffirm and re-enact
current actions occur - enabling some actions, social structure, they also provide an arena
constraining others (as illustrated by the for contradictions and conflicts (Clegg et al.,
downward, vertical arrows in Figure 29.1). 2006: 303). A discursive framework,
This then is the discursive explanation of therefore, provides an appropriate theoretical
how particular sorts of actions become and empirical ground to examine processes
institutionalized. of institutional change.
In terms of the second point, the The issue of institutional change raises
development of a discursive perspective has another question: Are cognitive based institu-
been also encouraged by an increasing tions and their creation different from coer-
interest in institutional change. In the past cive and normatively based institutions? The
couple of decades institutional theory has regulative, normative and cognitive pillars of
predominantly provided insights into institutions have become taken-for-granted in
processes that explain institutional stability institutional theory but the relationship
rather than change and the emphasis has been between these aspects continues to be
on how institutional pressures (regulative, ambiguous. Scott (2001: 51) posits 'one pos-
normative, cultural-cognitive) force sible approach would be to view all of these
organizations to converge on a standard set of facets as contributing, in interdependent and
practices. Due to an overwhelming concern mutually reinforcing ways, to a powerful
with convergence, there has been little social framework' but suggests that distin-
attention toward unpacking processes of how guishing among these elements may be more
institutions are socially constructed. useful. However, the focus is on effects of
 715
these different types of institutional pillars organizational field or on the impact of an
rather than how they get created. Hoffman institutional change, a discourse perspective
(1997: 36) suggests that the three pillars form refocuses attention on the process of institu-
a continuum 'from the conscious to the tionalization itself. This is not to say that
unconscious, from the legally enforced to the existing and future studies on the effects of
taken-for-granted'. This raises the question: institutions are any less valuable. Rather it is
Does the process of social construction simply to say that a new area of research
underlie that continuum? In a recent review becomes available looking at the process of
of developments in institutional theory even institutionalization, how it unfolds in differ-
Scott acknowledges that the three pillars are ent circumstances, and the roles of various
found together but it is the cultural-cognitive actors in the process.
pillar that provides the 'deeper foundations of From the perspective of a discursive
institutional forms ... the infrastructure on theory of institutions, the process through
which not only beliefs, but norms and rules which institutions come into being is empiri-
rest' (2004: 5). This further raises the cally accessible. Researchers can follow the
question: Is the ambiguity surrounding the production of texts looking for the appear-
relationship between the three types of ance of key concepts and understandings and
institutions due to the lack of an appropriate can therefore trace the production of institu-
theoretical and empirical lens to unpack it? tions as well as the processes through which
institutions change or are de-institutionalized
(Oliver, 1992). The focus on the appearance
of influential texts and the meanings that
Extending the Discourse Perspective these texts create as they accrete over time
on Institutions provides a clear empirical approach to the
processes of social construction that underlie
So far, we have introduced discourse analysis institutional dynamics. Researchers can also
and explored how it can be used as a frame- trace the impact of the activities of particular
work to explain the social construction of actors by tracing the texts that they produce
institutions. But what are the ramifications of and the impacts of these texts.
this for institutional theory? And what are the
next steps in the development of the
discursive perspective in institutional theory? Reframing the symbolic versus practice
We will turn our attention to these questions debate
now. In particular, we will discuss three areas A discursive theory of institutionalization
with important ramifications for institutional also has important ramifications for the sym-
theory: changing the focus of empirical bolic versus practice debate in institutional
research, reframing the symbolic versus the theory. Where some theorists have argued
practice debate, and bringing society back in. that institutions arise out of practices (e.g.,
Barley & Tolbert, 1997), others have argued
strongly for a more symbolic foundation for
institutions (e.g., Zilber, 2002). Interestingly,
Changing the focus of empirical the discursive perspective takes us back to
research the early formulations of Berger and Luc-
First, a discursive perspective on institutions kmann (1967) in focusing on both symbols
and institutionalization leads to an important and practices. Just as Berger and Luckmann
change in the focus of empirical studies in proposed that an institution is a practice made
institutional theory. Rather than a focus on meaningful through interaction, so too does
the outcomes of institutional processes in the discursive perspective focus our attention
terms of increasing similarity across an on both the practice and how it is made
716
meaningful in discourse. It requires both to needs to be done in this area, we believe
make up an institution. An institution without there is real potential for illuminating the
action makes no more sense than one without complex processes and relationships that sur-
meaning. round institutional logics.
From this perspective then, we are search-
ing for a combination of the development of
patterned practices and the textual work done CONCLUSIONS
to make the practices meaningful. This
process may be more or less intentional with In this chapter, we have argued that discourse
actors working to ensure that their preferred analysis can contribute an important new
meanings prevail but often these activities perspective to institutional theory. This is
will be overshadowed by factors endogenous unsurprising given that the two streams of
and exogenous to the discourse. Unravelling literature arise from a single source - the
this complex process becomes the task of the linguistic turn in social science (Alvesson &
institutional theorist interested in how institu- Karreman, 2000) - and that discourse analysis
tions come to be and why they are the way seeks to understand the nature of the
they are. processes of social construction that lie at the
heart of institutionalization. Interestingly, the
interest in social construction that charac-
Bringing society back in terized the earliest forms of new institutional
Finally, taking social construction seriously theory in the work of Meyer and Rowan
in institutional theory leads to important (1977) has reappeared in several recent arti-
questions regarding the relation between dis- cles from different but related perspectives
course at a field level and broader societal highly sympathetic to social construction
discourses. In discourse theory, the question such as Phillips et al. (2004), Suddaby and
of the relation between levels of discourse Greenwood (2005) and Zilber (2006). The
(and to some degree the question of whether increasing interest in a more balanced
'levels' is even the right metaphor) remain a perspective on change and stability as well as
source of serious contention (e.g., Alvesson structure and agency has necessarily led to
& Karreman, 2000). At the same time, it is this increasing interest in the micro-
clear that there are broader societal level dis- foundations of institutional processes.
courses that frame the sorts of discourses In adding to the emerging discursive per-
which occur in organizational fields and the spective in neo-institutional theory, we make
discourse approach we are arguing for here three main contributions. First, we explore
provides tools and a frame for considering some of the ramifications of adopting a dis-
and exploring this interaction. cursive perspective on the process of institu-
This question of levels of discourse has tionalization. While the process itself has
obvious parallels to discussions of institu- already been presented in some detail, the
tional logics in institutional theory (e.g., theoretical ramifications of this perspective
Lounsbury, 2002). The interaction between have not been fully explored. Our argument
well-established societal discourse and dis- here is that a .discursive perspective high-
course at the level of the organizational field lights the cognitive nature of institutions and
parallels the interaction of societal level exposes the unresolved tensions around the
logics and the logics of fields. It therefore nature of an institution. We argue that they
seems possible that a discourse perspective are fundamentally cognitive and that they do
may shed some light on what is currently a not involve external sanctions. We concur
rather murky theoretical construct and on with Jepperson (1991) that institutions are
how various levels of logics combine and self-reinforcing and external sanctions are not
reinforce each other. While much more work part of institutional mechanisms.
 717
This leads to our second contribution. If theory, discourse analysis is also a research
institutions are fundamentally cognitive, then method (e.g., Phillips & Hardy, 2002) with
the three pillars framework of Scott (2001), important ramifications for empirical
which has become so dominant in research in institutional theory. We believe
institutional analysis, has been more limiting there are three important areas that have par-
than helpful in developing our understanding ticular potential. First, discourse analysis
of the nature of institutions. By combining all provides an approach to exploring the micro-
of the mechanisms which can lead to isomor- dynamics of the production of institutions. In
phism into the definition of an institution, particular, the initial production of a proto-
Scott has produced a framework which has institution and then its subsequent diffusion
something for everyone, but it raises critical throughout an organizational field.
theoretical and philosophical problems. In Second, as we have argued above, there
mixing such different constructs, institutional are two alternate explanations of
theory is left without any way of developing institutionalization: a behavioural one (Barl-
a unified theory of institutionalization. The ey & Tolbert, 1997) and a textual one (Phill-
fact that coercive and normative mechanisms ips et al., 2004). Given the textually mediated
are externally managed by other actors makes context of organizational fields, we argue that
them very different from the taken-for- discursive approaches are critical to
grantedness of cognitive mechanisms. Where understanding the development of institutions
coercive and normative mechanisms result in but that a sensitivity to both behaviour and
strategic action and often resistance, discourse is required for a full understanding.
cognitive mechanisms function by Finally, discourse analysis has an impor-
conditioning thinking. Douglas (1986: 10) tant role to play in the ongoing exploration of
makes this argument very clearly when she the interactions between different organiza-
says that ' [e]pistemological resources may be tional fields and between broader societal
able to explain what cannot be explained by institutions and local fields. The methods
the theory of rational behaviour'. In other provided by discourse analysis allow
words, theories of rational behaviour explain researchers to begin to explore the intertextu-
the responses of actors to coercive and ality that characterizes these processes and
normative mechanism; cognitive mechanisms untangle some of the complexities of these
explain something very different and this is cultural systems.
the proper domain of institutional theory. In closing, we hope that the themes we
Third, in reconnecting neo-institutional have explored in this chapter explain some of
theory with social construction we emphasize our enthusiasm for the subject. We believe
the broad interest in culture and language that that neo-institutional theory is at a crossroads
has played such an important part in new and and risks in some ways trying to be every-
neo-institutional theory. Even a cursory thing to everyone. While a multiplicity of
examination of the literature reveals a prepo- approaches and views is a sign of robust
derance of empirical studies and theoretical health, it can also wear away at the infra-
discussion focused on taken-for-grantedness structure that provided the impetus for dis-
and the dynamics of the underlying cognitive cussion in the first place. In some ways,
processes. The connection with discourse perhaps we have overshot - in trying to move
analysis provides new opportunities for away from a theory that was unnecessarily
studying institutions and institutionalization. narrow we have developed one that is
This leads to the final point of this impractically broad. We believe that institu-
chapter. While much of our discussion has tional theory needs to return to its roots in
been about the theoretical and philosophical social constructionism and the well-spring of
ramifications of discourse analysis for creative thought that this produced. While
institutional this will necessitate a narrowing of our
718
understanding of what an institution is, it will Commons, J.R. 1924. The Legal Foundations of
also provide a renewed ability to understand Capita/ism: New York: Macmillan.
how they work. Zucker's call to focus on the Cooley, C. H. [1902] 1956. Social Organization.
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the macro-level has been ignored for too Davis, K. 1949. Human Society. New York:
long! Macmillan.
DiMaggio, P.J., and Powell, W.W. 1983. The
iron cage revisited: Institutional isomorphism
and collective rationality in organizational
fields. American Sociological Review, 48:
NOTES 147-160.
DiMaggio, P., and Powell, W. 1991. The iron
1 We use the term institutional theory in this cage revisited: Institutional isomorphism and
chapter to refer to the stream of literature running collective rationality in organizational fields.
from new institutional theory down through more In W.W. Powell and P.J. DiMaggio (eds.),
recent developments in neo institutional theory. The New Institutionalism in Organizational
When we wish to differentiate between new and Analysis: 63-82. Chicago: The University of
neo institutionalism we will identify them Chicago Press.
explicitly. References to other forms of Douglas, M. 1986. How Institutions Think.
institutionalism will be made explicitly (e.g., old Syracuse, NY: Syracuse University Press.
institutionalism or institutional economics).
Durkheim, E. 1949. Division of Labor in Society.
Glencoe, IL: Free Press.
Eisenhardt, K.M. 1988. Agency-theory
and institutional theory explanations: The case
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 30
Institutional Leadership: Past,
Present, and Future
Marvin Washington, Kimberly Boal and John Davis

INTRODUCTION in Administration. Many scholars have

credited this work with ushering in
Since the early writings of DiMaggio and discussions of institutions as ‘organizations
Powell (1983), Meyer and Rowan (1977) and infused with value’. However, not only did
Zucker (1977), many insights have been Selznick describe how organizations become
gained under the broad umbrella of institutions, he also described the character-
institutional analysis. Constructs such as istics of leaders of these organizations. Proje-
‘isomorphism’, ‘de-coupling’, and’ coercive cts have since examined institutional leader-
pressure’, are now main stream in much ship (e.g. Kraatz and Moore, 2002). Instituti-
organizational theorizing. Recently, there onal leadership, ‘ the promotion and protect-
have been new terms coined to describe the tion of values’ (Selznick, 1957: 28) is differ-
growing interest in agency in institutional ent from traditional leadership: ‘task and
analyses. Now, it not uncommon to see person-oriented behaviors of leaders as they
phrases such as ‘institutional strategy’ attempt to provide guidance, support, and
(Lawrence, 1999) and ‘institutional feedback to subordinates’ (Boal and Schultz,
entrepreneurship’ (DiMaggio, 1988; Suddaby forthcoming). It is the concept of institutional
and Greenwood, 2005), to describe the leadership that we examine in this article.
behavior of individuals and organizations that In this article, we do three things. First, we
are attempting to change the institutional discuss Selznick's original ideas about
landscape in a particular environment. In this institutional leadership and the role they play
chapter, we continue this line of inquiry, not in institutionalization processes. We also
by going forward, but by stepping back and review the trajectory of his work, by
highlighting the contribution early work on examining the work in the organizations and
examining agency in institutional analysis. institutions literature that have built upon
Here, we discuss and extend ideas around Selznick's ideas. Second we extend his work
institutional leadership. by examining the three functions of
It has been 50 years since Selznick institutional leaders. First, they manage the
published his seminal work Leadership internal consistency of
722
the firm (Selzick's notion of commitment to and technical its operations, the slower the
the values and mission of the organization). institutionalization process. Thus, to
Second, they develop external supporting institutionalize an organization is to ‘infuse
mechanisms to enhance the legitimacy of the with value beyond the technical requirements
organization. Third, institutional leaders, of the task at hand (pg. 17).’ This’ infuse
overcome external enemies. We conclude by with value’ statement is closely connected
suggesting a reconciliation between with an organization's concerned with self-
institutional leadership and the work on maintenance (the organization's desire to
traditional (or organizational) leadership. Our maintain its existence beyond the technical
core argument is that organizational requirements of the organization). Note the
leadership, or leaders inside of organizations, active nature of the word institutionalize.
is based upon a notion of instrumental Selznick is suggesting the process of
agency, hierarchical and charismatic power, institutionalization is a process that occurs as
and typically use a future leaning vision. leaders respond to the internal and external
Institutional leadership, or leaders of forces that are placed upon organizations.
organizations, is based upon a notion of After, describing what Selznick means by
embedded or constrained agency, influence institution, as opposed to organization, he
or negotiated power, and typically uses a returns to his primary objective of describing
backward leaning vision meaning that the the role of institutional leaders in this
vision is there to remind the organization of process. ‘Most of this essay will be devoted
the core values. to identifying and analyzing the chief
functions of institutional leadership (pg 22).’
He distinguishes the institutional leader as
separate from the interpersonal leader (what
SELZNICK'S VIEWS OF might be described as the charismatic or
INSTITUTIONAL LEADERSHIP transformational leader). The interpersonal
leader's task is ‘to smooth the path of human
Most scholars know of Selznick's work interaction, ease communication, evoke
Leadership in Administration as providing personal devotion, and allay anxiety (pg 27)’.
the famous definition of institutions as The institutional leader's task however is ‘the
organizations ‘infused with value’. However, promotion and protection of values (pg 28)’.
this is a secondary concern with his work. The first task Selznick describes is the cre-
Selznick's primary objective in Leadership in ation and maintenance of the organization's
Administration is to understand the behaviors character. Selznick suggests that leading an
and characteristics of those who lead institution:
institutions and how these behaviors are
different than the behaviors of those who lead is far more than the capacity to mobilize
organizations. In Selznick's own words ‘The personal support; it is more than the
argument of this essay is quite simply stated: maintenance of equilibrium through the routine
solution of everyday problems; it is the function
The executive becomes a statesman as he of the leader-statesman-whether of a nation or a
makes the transition from administrative private association-to define the ends of group
management to institutional leadership’ (pg. existence, to design an enterprise distinctively
4). This leads to his discussion of adapted to these ends, and to see that the design
institutionalization as a process; becomes a living reality. These tasks are not
organizations become institutions over time. routine; they call for continuous self-appraisal
The degree of institutionalization depends on the part of the leaders; and they may require
only a few critical decisions over a long period
upon the potential conflict between the of time. (1957: 37)
leader's goals and group's goals; the more
precise an organization's goals and the more It is these few critical decisions that create an
specialized organization's character.
 723
The development of an organization's with leadership of organizations and the
character is a necessary step in the leadership literature is concerned with
institutionalization process of organizations. leadership inside organizations.
‘The study of organizational character-
formation is, then, a phase of institutional
analysis. Here the emphasis is on the
embodiment of values in an organizational Extensions that do not deal
structure through the elaboration of with leadership
commitments-ways of acting and responding
that can be changed, if at all, only at the risk Most of the citations to Selznick's 1957 book
of severe internal crises (1957: 40)’. To are not about institutional leadership. Though
expand upon this point further, Selznick our search and analysis was not exhaustive,
draws upon his examples as diverse as the from the articles that we did review, the
TVA (Selznick, 1949) and the Bolshevik typical citation to Selznick's work is his
party (Selznick, 1952). description of institutions as organizations
Selznick summarizes his arguments about infused with value (Selznick, 1957: 17).
institutional leadership by suggesting that the Another major part of the literature that
function of institutional leadership is builds on Selznick is his work on
inherently political. ‘We have argued that organizational commitments. Of the work
policy and administration are interdependent that focuses on institutional leadership, the
in the special sense that certain areas of top management team literature refers to
organizational activity are peculiarly Selznick often. For example, in their work on
sensitive to policy matters. Because these cognitive and affective conflict, Amason and
areas exist, creative men are needed ... These Sapienza (1997) argue that greater agreement
men are called leaders; their profession is among the top management team, the less the
politics (1957: 61)’. However, he is not affective conflict. They draw this support
referring to the political or power sense of the from Selznick's argument that ‘a central
word politics but politics in the sense of function of top management is to create
consensus. super-ordinate goals that unite action and to
reward cooperative behavior towards those
goals’ (Amason and Sapienza, 1997: 502).
This is similar to the other work on top
EXTENSIONS OF SELZNICK'S WORK management teams that draws from Selznick.

A search of ‘Leadership in Administration’

on Google Scholar generated over 750
citations. Of those citations, 170 have been in The leadership extensions
Academy of Management Journal, Strategic
Management Journal, Administrative Science It is the work of Kraatz and Moore that most
Quarterly, Organization Studies, Human exemplifies the extensions of Selznick's work
Relations, Organization Science, and Journal on institutional leadership. Kraatz and
of Management Studies. Ironically, less than Moore's (2002) study examines the role of
10 of the 750 citations were in Leadership leadership migration in the institutional
Quarterly (more on that later). In this section, changes of liberal arts college education.
we examine how Selznick's ideas on insti- They argued that except for a few theoretical
tutional leadership have been extended in the statements about the role of leadership in
current literature. After that, we speculate as institutional change and the rare empirical
to why Selznick's concept of institutional exception (Hirsch, 1986; Leblebici, Salancik,
leadership hasn't been more prominent in the Copay and King, 1991), the role of leadership
leadership literature: our brief answer is that in institutional change has been neglected
Selznick is concerned over the past 40 years. Drawing from
724
Selznick's statement that a critical component to evaluate the senior managers. These
of institutionalization is the selection of assessments created a ‘carrot and stick’ (pg.
leaders from a homogeneous pool of 596) approach to managing internal
candidates, Kraatz and Moore examine three expectations. Similar to Selznick's original
mechanisms of how leadership changes leads conclusions, Tengblad concluded that the
to institutional change: (1) knowledge CEOs in his study spent enormous energy in
transfer and interorganizational learning; (2) managing the external expectations of their
introduction of new mental models and organizations. However, this management
assumptions; and (3) attenuation or process did not automatically lead to changes
replacement of institutional values (2002: to the organization.
123). Kraatz and Moore find support for their By bringing institutional leadership back
hypotheses regarding the factors that allow to the forefront of institutional analysis, we
leadership migration to impact organizational argue that institutional leadership might be
change. the reconciliation between the first wave of
While this represents an exemplar in the institutional analysis which were more
extension of Selznick's work, other scholars interested in a deterministic view of
have also contributed to a better institutionalized action (DiMaggio and
understanding of institutional leadership. In a Powell, 1983) and the calls for a more
wonderful study examining the role of agentic view of institutions (Hirsch and
CEO's, Tengblad builds upon Selznick's Lounsbury, 1997). Recently, authors have
conception of the institutional leader by been calling attention to a middle ground of
defining the role of the CEO as managing institutionalized action; institutional work
internal and external expectations. In a (Lawrence and Suddaby, 2005). By
replication of work by Sune Carlson institutional work, the concern is on how
(Carlson, 1951), Tengblad observed eight institutions maintain their status and
CEOs for a total of 159 days. He directly legitimacy in the face of their own
followed CEOs around for 26 days (more institutionalized environment. We argue that
than 300 hours) and had the CEOs conduct the institutional leader's role in maintaining
self-recordings of themselves for 133 days. the legitimacy of their institutions warrants
Tengblad focused his study on understanding renewed attention.
how CEOs handled financial expectations.
One of his key findings was the increasing
use of organizational culture as a
management and communication tool. SO WHAT DO INSTITUTIONAL
‘Messages about the desired state of affairs LEADERS DO?
(formulate, for instance, as 'ten command-
ments', 'cornerstones', 'business mission' or We argue that institutional leaders do three
'corporate vision') were transmitted through things to maintain the legitimacy and survival
booklets and brochures in most companies. of their institution. The first is that they
During the observations the CEOs made manage the internal consistency of the
numerous efforts to spread these messages’ organization. This extends Selznick's
(Tengblad, 2004: 592). Tengblad argued that concepts of leaders maintaining internal
the CEOs in his study often resorted to using commitment to the organizational values and
the mission of the organization as a way of mission. The second is that institutional
communicating the financial expectations. leaders develop external supporting
The CEOs did not just want to paint a ‘rosy mechanisms that lead to increasing
picture’ but wanted to demonstrate that they legitimacy of their organization (the how
were doing all they could to improve their organizations become institutions). The third
financial outlook. Internally, Tengblad found activity that institutional leaders engage in is
that the CEOs used a variety of assessments actions to overcome external enemies.
 725
Internal consistency on an important ceremonial tradition, the
annual presentation of the Thayer Award
It is clear that institutional leaders play an (James, 1985: 678). ‘Duty, Honor, County'‘:
active role in developing the vision and the cadet motto (Thomason, 1971: 43) -
mission of the organization. However, while powerfully defines historical identity and
some scholars view the vision setting process guides behavior for the cadets of the U.S.
as a strategic or organizational function (Boal Military Academy and for graduates of the
and Schultz, forthcoming, Nutt and Backoff, USMA for the rest of their lives (Boal and
1997), from an institutional perspective, Schultz, forthcoming; Ellis & Moore, 1974):
vision setting is also inherently political.
Organizational visions give rise to stories, Duty, honor, country: Those three hallowed
myths, and ceremonies (Meyer and Rowan, words reverently dictate what you want to be,
1977) they enable the organization to what you can be, what you will be. They are
your rallying point to build courage when
remember the’ good old days’ or to reinforce courage seems to fail, to regain faith when there
some key values of the organization (Bolman seems to be little cause for faith, to create hope
and Deal, 2003). Selznick describes one task when hope become forlorn ... The code which
of institutional leadership that helps in the those words perpetuate embraces the highest
institutionalization process as ‘the moral law ... Its requirements are for the things
elaboration of socially integrating myths’ that are right and its restraints are from the
(1957: 151). These myths are used to help things that are wrong ... The long, gray line has
never failed us. Were you to do so, a million
‘infuse day-to-day behavior with long-run ghosts in olive drab, in brown khaki, in blue and
meaning and purpose’ (1957: 151). gray, would rise from their white crosses,
Gregory Berry (2001) notes, ‘Stories are a thundering those magic words: Duty, honor, co-
fundamental way through which we untry (Duffy & Carpenter (1997, pp. 197-200).
understand the world .... By understanding
the stories of organizations, we can claim This speech is an example of institutional
partial understanding of the reasons behind leadership in two ways. The first is by
visible behavior’ (2001: 59). As such the noticing what was not said. MacArthur's
exchange of stories, rather than merely speech was more about character, mission,
routines, allows participants to develop a new values of the organization (hence its
‘collective story’ through which they can institutional character) than it was about
become a social learning system. Stories are tactics. Second, this speech has been ‘retold’
thus an important part of establishing internal countless times, reinforcing the military's
consistency. Balancing the past, present, and commitment to these values. For example,
future through storytelling is an essential skill each year New Cadets at the USMA are
for institutional leaders who hope to promote issued a personal copy of Bugle Notes
it. It is in the creating, telling, and retelling of (Thomason, 1971). One of the coauthors'
key stories by institutional leaders that the personal copy, which he received on his first
past, the present, and the future of the day at the USMA, contains this dedication:
organization are connected.
Creating and seizing upon ceremonies are To the men who join the corps in 1971, 169
also in important part of maintaining internal years after its beginning, this book is dedicated.
consistency (Bolman and Deal, 2003). A Bugle Notes is the story of the Long Gray Line.
Within these pages can be found the reasons for
great example of this is a speech given by the greatness and esprit of those who have
Douglas McArthur. General Douglas graduated from West Point. Herein lie the
MacArthur's farewell address to the Corps of relationships of the corps to the United States,
Cadets at West Point, May 12, 1962, the Army, and itself. These are the traditions
illustrates how institutional leaders held sacred by every West Pointer; they are your
symbolically shape behaviors of individuals heritage. Cherish them, and pass them on to
by capitalizing those who will follow after you (1971: 1).

In the heart of this copy of Bugle Notes

(Thomason, 1971, pp. 108-118) is printed the
726
complete text of MacArthur's speech, a and eventual return or arrival in victory.
deliberate effort to infuse with value the army Shamir and his colleagues (2005), in their
of the future by connecting it to the army of analysis of the narrative accounts, found that
the past. the theme of struggle was common among
We suggest that institutional leaders take leaders. Through battles and ordeals, leaders
part in building an autobiographical pattern saw themselves transformed, thereby
of historical accounts of their organization to attaining the power to assume the task of
produce a coherent picture of an leadership. One of the insights that Bluck and
organization's identity, their own roles within Habermas (2000) provide is that one source
their organization, and the realities of of an individual's motivation is the sense of
organizational life while also preparing the self that the life story provides. The themes
organization to effectively respond to future and order that structure life events in the
environmental changes. There are a number creation of the life story schema set the
of possible ways in which institutional rationale for behavior across time, and guide
leaders might organize events into a coherent future goals and actions by their linkage with
pattern producing an overarching institutional that life story model.
narrative. In their work on the individual- Beyond being an expression of their own
level life story construct, Bluck and identity, institutional leaders use their life
Habermas (2000) suggest thematic stories in an effort to influence their
coherence, as an important part of the followers, by framing expectations and
individual and institutional story creation impressions, serving as a role model,
process. showing the legitimacy of their leadership
Thematic coherence is useful in role, and shaping collective expectations and
comprehending periods of organizational meanings (Shamir et al., 2005). By extension,
transition, such as Andrew Grove's concept a shared organizational life story provides the
of strategic inflection points (1996, 1997). inspiration for collective behavior among
‘Strategic inflection points are caused by members by connecting it with the past
fundamental industry dynamics, technolo- through the organization's history. In
gies, and strategies that create new opportu- establishing the rationale behind the
nities for institutional leaders to develop new organization's life story, the schema
visions, create new strategies, and move their generates an organizational identity that
organizations in new directions as they insures continuity between past and future
traverse through turbulence and uncertainty’ goals and actions. Looking at the
(Boal & Hooijberg, 2000, p. 520). Strategic development of an effective leader vision,
inflection points may be virtually impossible Strange and Mumford (2005) found that
to detect a priori, but by maintaining thematic vision emerged in a process where leaders
coherence, institutional leaders impose their reflected on the fortunes of past goals and
own sense on successes and failures in the behaviors in deriving mental models for the
face of extreme uncertainty. future. The vision formation process causes
One theme that is frequently used by leaders to use a descriptive mental model of
institutional leaders to establish meaning for the organization-one that articulates the
their followers is the concept of the hero's themes and relationships between actions and
journey. Coined by Joseph Campbell in his outcomes -and by assessing that model in
book, The Hero with a Thousand Faces light of organization members' experience, to
(1972), he argued that all myths, regardless then devise a prescriptive model for
of the culture that produced them, shared the situations yet to be encountered. Storytelling
same basic narrative features and structure. and the coherence demanded by the structure
Central to his view of myth is the figure of of the life story schema combine in the
the hero, his or her journey or struggle in ongoing vision formation process occurring
adventure, within organizations.
 727
The enduring values, expectations, and External supporting mechanisms
responsibilities that maintaining coherence Another task that institutional leaders
produces for the organization-and which are perform is to develop external supporting
manifested in its vision-show the opportunity mechanisms in order to maintain survival and
that institutional leadership has in defining an obtain legitimacy for the organization.
organization's approach to future Organizational survival requires maintaining
circumstances. Although all individual a balance between stability and flexibility
members are’ coauthors’ of an organization's (Brown & Eisenhardt, 1998). Vision setting
life story (Czarniawska, 1997: 14), powerful and story-telling are excellent mechanisms to
individuals, such as institutional leaders, can maintain internal consistency and produce
produce narratives for which the rest of the stability in an organization. Without stability
organization is more of a passive audience. a firm would not be able to accumulate
Control over storytelling and the way knowledge, and would be in a constant state
members interpret an organization's path over of flux never being able to move any distance
time allows control over the vision formation from its original founding because the
process, and should significantly influence organization would have no basis to evaluate
the character and effectiveness of every new fad. Institutional leaders over this
organizational mission. Although many inertia problem by serving as cognitive
individuals may possess experience relevant network brokers (Burt, 1992). By interaction
to the development and evaluation of past with a wide range of networks, inside and
mental models of the organization, outside the boundaries of the firm,
institutional leaders have a unique position individuals are encouraged to bring new
from which to influence this critical feedback ideas/schema to old problems as well as
mechanism in the vision formation process. discover new problems to which known or
Leader background and experience from the knowable shared schema can be applied
past is influential in developing descriptive (Kraatz and Moore, 2002).
mental models and leader experience with One of the ways that institutional leaders
those models as they confront the demands of ensure their survival is to maintain their
current organizational situations influence legitimacy. In Suchman's (1995: 574)
prescriptive mental models. definition, legitimacy is the ‘generalized
An institutional leader's own life story, perception that the actions of an entity are
thus, enters into the vision formation process desirable, proper, or appropriate within some
along with the life story of the organization socially constructed system of norms, values,
itself and its members. The requirement for beliefs and definitions.’ Institutional theory
coherence in both organizational and leader helps us to understand that as companies are
life stories means that a institutional leader embedded in the economic and institutional
imparts much of their own meaning and environment, we can infer the cultural
sense-making onto the organization; actions meanings, ideals and norms that have been
and events are interpreted through the lenses socially accepted in a society. These norms
of thematic and causal coherence in the can be seen as flexible guidelines that
context of the histories of both the organi- companies must maintain in order to achieve
zation and the institutional leader. When Jack congruence with society and in the legal
Welch was the head of General Electric, he environment.
taught a course on Leadership and Values Organizations and their associated practi-
seven times a year to high-potential middle ces are built upon three types of legitimacy
managers. In addition, courses were taught (Scott, 2001). A new practice is normatively
by the vice-chairman and the CPO. In fact, legitimate when it is consistent with wider
corporate leaders taught 60 percent of the societal values. Regulatory legitimacy is
senior-level courses, with Welch often stan- conveyed when existing rules and laws
ding in front of the group (Greiner, 2002). support a new practice. A new practice is
728
culturally/cognitively legitimate when it is component of institutional leadership at the
connected to wider belief systems inside of individual level, specifically, the strong
the institutional environment. When an adherence to a set of principles that drive the
organization is endorsed and supported by a actions of the individual. These pieces
segment of society large enough to ensure its (among others) serve to identify and const-
effectiveness and survival it can be ruct the external version of an institutional
considered to be legitimate (Pfeffer & leader - an individual who utilizes institu-
Salancik, 1978), and as such, the organization tional supporting mechanisms and existing
only needs to be supported by a segment of a governance mechanisms and cognitive
population in order to remain legitimate in frameworks to alter power arrangements
the presence of attacks from external sources. through explicit institutional strategies.
As organizations utilize socially acceptable In a recently published dissertation,
procedures to conduct potentially Patterson (2007) extends the idea of
controversial activities, the organization can institutional leader as evangelists in her
manage the impression that it is rational and examination of D. D. Palmer and his efforts
legitimate (Scott, 1987). to create the field of chiropractic medicine.
Selznick himself recognized the She examined how Palmer created Palmer
relationship between institutional leaders and Chiropractic College to gain legitimacy for
the legitimacy of the institution they are chiropractic medicine. Her work shows the
attempting to lead. To understand the nature link between the creation of chiropractic
of institutional leadership, we must have colleges and the growing support and cognit-
some notion of the meaning and significance ive legitimacy of chiropractic medicine.
of the term’ institution’ itself (1987: 4)’. This Drawing from the work in institutional
leads to the discussion of the differences theory, we argue that institutional leaders
between institutions and organizations. perform two tasks to gain external legitimacy
Organizations are ‘a rational instrument for their institution. First, institutional leaders
engineered to do a job (1987: 5)’. An develop supporting mechanisms (Washington
institution is ‘a natural product of social and Ventresca, 2004) that help to maintain
needs and pressures-a responsive, adaptive their existence and sustain the acceptance and
organism (1987: 5).’ The pressures of use of the practice. These supporting
institutions come from two sources: external, mechanisms commonly take the form of state
or the wider environment, and internal, or the or normative support for particular practices.
inner workings of the organizations. Using Drawing from Scott's three pillars of
examples of the military and the Catholic institutionalism, these practices could be the
Church, Selznick describes how these development of an association, interest
pressures produce administrative ideologies group, or lobbying group to impact the norm-
useful as communication and self-defense ative or regulative aspects of the environment
techniques, the creation and the protection of The second process recalls the major
elites, and the emergence of contending contribution of Berger and Luckman (1967)
interest-groups. Selznick argues that the in that institutional leaders strive for
diversity of forces has a unifying effect in widespread social acceptance or their
that they define the’ commitments of the organization. Stigmatized practices are very
organization and give it a distinctive identity difficult to institutionalize because they are
(1957: 16)’. generally contested. This aspect provides
Rao (2002) also identifies strong individu- boundaries to tease apart how an organization
als as 'evangelists' for a practice, alluding to might have established supporting
the significant of a singular powerful actor mechanisms yet never gain wide-spread
who drives the legitimation of a practice social acceptance (prostitution, drug use, and
much like a religion or ideology. Rao's same-sex marriage would be examples of
terminology most aptly signifies an important such institutions).
 729
An example of this type of institutional (other organizations have stopped performing
work would be the efforts of Captain Palmer the practice). Patterson (2007) identified the
E. Pierce. As the first president of the attacks to chiropractic medicine as coming
National Collegiate Athletic Association from traditional medicine in the form of basic
(NCAA), he worked to eliminate the violence science laws. These laws were put in place to
in college football which was causing as a form of regulation against anyone
numerous deaths (Falla, 1981). The violence practicing medicine; all medical practitioners
in football was so bad, that many schools regardless of specialty had to pass a set of
abandoned the sport or switched to the less science requirements that the traditional
violent sport of rugby (Smith, 1988). His medicine community knew chiropractors
efforts not only helped to reduce the could not pass.
violence, but also helped to grow the Another attack comes from fragmentation
membership of the NCAA. Founded in 1906 of the population that originally
with only 38 member schools, by 1942, the institutionalized the practice (Zucker, 1987).
NCAA had 314 schools which included Institutions are only legitimate for a given
‘nearly every college or university of population or segment of society. If the
importance in the country’ (Stagg 1946: 81). population splits, either politically as
organizations within the population fight over
jurisdiction, or socially, the supporting
Overcome external enemies populations create niche populations, then
The final task of institutional leadership is support for that practice may wane. We also
overcoming external enemies. Institutions argue, extending the work of Zucker (1987)
don't exist in a vacuum. Friedland and Alford and Greve (1995) that an organizational
(1991) suggest that organizational fields practice comes under attack as other actors
operate under diverse belief systems that choose to invest in a competing practice.
differ fundamentally in their content, as well Here we contend that there is competition
as the nature of central assumptions and among practices to become institutionalized.
ordering principles that they refer to as Thus, if a set of actors decide to
institutional logics, However, Washington, et institutionalize a second practice, this might
al (2005) argues that there could be multiple in fact deinstitutionalize the first practice.
institutions competing for control over the In short, we argue that institutional leaders
organizational field. These competing are involved in their own institutions work of
institutions have different sources of interest maintaining survival. The activities of the
and identities. Much like the institutional institutional leaders range from vision
leaders of the NCAA defending their setting, story telling, network brokering to
institutions against the NAIA, AAU, and defending the practices of their institution.
AIAW (Washington et al, 2004; Washington Future research could empirically test these
and Ventresca, 2007) we argue that ideas by examining the practices of institu-
institutional leaders also have to defend tional leaders. In the next section we return to
against external enemies. one problem that plagued us as we conducted
Where will the attack come from? First, our literature review of institutional
we argue that leaders have to defend against leadership; why is there a lack of institutional
the death of their existing practice. Oliver leadership ideas in the leadership literature.
(1992: 581) argues that’ threats to the persi-
stence of an institutionalized practice may be
explained by a decline in ... the functional Reconciling leadership research
necessity of the practice.’ These threats can with Leadership in Administration
come from political pressures (changes in
laws, or regulations) technical pressures A surprising result of our review of how
(innovative practices) or social practices Selznick's work has been cited in
730
management research was the relative Design (2004) has no chapter (of thirteen)
absence of Selznick's work in the traditional primarily on leadership, considers leadership
leadership literature. Of the more than 750 primarily as a process, and does not mention
citations to Selznick's work, less than 10 Selznick in its index at all. Bolman & Deal's
were from Leadership Quarterly - the (2003) somewhat less traditional Reframing
preeminent journal focused on leadership. Organizations has one chapter (of twenty-
This is surprising to us given that all of the one) dealing primarily with leadership, takes
articles in The Leadership Quarterly are a less traditional integrative perspective on
about leadership. Yet we found only 10 leadership, and mentions Selznick only in
articles out of more than 250 articles conjunction with a discussion of the symbolic
published since the founding of The frame of organizational culture.
Leadership Quarterly that even cited Leadership studies have enjoyed a
Selznick and usually he was not central to renaissance in the past two decades, thanks
their arguments. primarily to the shift to the
Selznick's work is similarly absent in other transformational/charismatic perspectives
leadership texts. Stogdill's classic Handbook (Hunt, 1999). Yet a partial result of this
of Leadership (1974: 28) contains only one renaissance has been what Hunt and Dodge
mention of Selznick, a single sentence listing (2000) called ‘leadership déjá vu all over
Selznick among those who treat address again. ‘That is, neglect of historical
leadership by classifying its functions. Yukl's antecedents in the leadership literature has
(2002) advanced leadership textbook, caused an overemphasis on concepts that
Leadership in Organizations, contains no exploit the spirit of the times. Less charitably,
mention of Selznick (1957). Not only is there this neglect generates leadership fads.
a relative lack of Selznick in the academic Similarly, Bedeian and Hunt (2006), in a
literature, there is also a lack of Selznick in recent effort to tease out essential differences
leadership textbooks. Using an admitted between leadership and management, went
convenience sample of two popular even further, questioning whether the long-
organizational behavior textbooks, we found standing confusion between leadership and
the following: Robbins and Judge's (2007) management in both popular and academic
Organizational Behavior contains two understandings of leadership has led to the
chapters (of nineteen) on leadership and need for a complete reconceptualization of
classifies both chapters at the group level of leadership. Selznick's (1957) work may thus
analysis. Robbins and Judge contains no be positioned for another’ shot’ at
mention of Leadership in Administration. influencing the field of leadership.
Similarly, a ‘core concepts’ organizational Lowe and Gardner (2000), in their
behavior textbook, Schermerhorn, Hunt, and summary and evaluation of the first ten years
Osborn's (2004) Core Concepts of of The Leadership Quarterly categorized the
Organizational Behavior contains one articles from that journal's first decade in to
chapter (of nineteen) on leadership, considers the following categories: trait theories,
leadership as an organizational process, and behavioral theories, contingency theories,
does not mention Selznick in its index at all. multiple-level approaches, neo-charismatic
Perhaps the problem is the traditional approaches, leadership and information
academic classification of leadership as an processing, other prominent approaches (e.g.,
organizational behavior topic. Considering romance of leadership, top management
the perspective in Selznick (1957), maybe we teams), and new directions (e.g., political
would be better off to consult the treatment leadership, strategic leadership). Their table
of leadership in organization theory textb- (pp. 477-479) of leadership paradigms and
ooks. However, we found similar results in a theories identified only one article on
similar sample of popular organization theory institutional theory and classified it among’
textbooks. Daft's Organization Theory and other prominent approaches. ‘
 731
In the early days of The Leadership argued that institutional leaders operated
Quarterly, however, there was a strong within an embedded agency perspective.
‘taste’ for institutional leadership. While actions are not totally determined by
Birnbaum's (1990) article, published in the the institutional constraints of the
first volume of The Leadership Quarterly, organization, these mission and values of the
was an excellent analysis of how college and institution does reduce the degrees of
university presidents assessed their own freedom of the leader. An organizational
effectiveness. The question goes to the heart leader however, is less constrained. In much
of our argument that institutional leaders research, it is the risk taking part of being a
create external supporting mechanisms and leader – stepping outside of the organiza-
overcome external enemies. He found that tional boundaries – that is often the differen-
the presidents in his sample used institutional ce between managers and leaders (Hacker
performance and constituent (key and Washington, 2007). The view of constra-
stakeholders) satisfaction. For our purposes, ined agency is connected to the tactics of
this article represents the type of work that influence and negotiation for the institutional
we think there should be more of. More work leader. Keeping the institution on track
on institutional leaders need to exam the requires the institutional leader to develop
processes by which leaders lead political skills. This is in sharp contrast to the
organizations, not examine the traits, organizational leader that uses either their po-
behaviors, and characteristics of leaders. sition or their charisma to ‘get things done’.
We, along with others, argue that the lack One of the sharpest distinctions between
of inclusion of Selznick's work on institutional leaders and organizational
institutional leadership is due to leadership's leaders is their use of a vision statement. For
focus on leadership inside of organizations an institutional leader, the vision is a chance
(Biggart and Hamilton, 1987; Boal and to embed the values and mission of the
Hooiberg, 2000; Dubin, 1979; Hunt, 1991; organization into the everyday reality. For an
Selznick, 1984). ‘Theories of leadership have organizational leader, the vision is a chance
tended to focus on the characteristics of to look forward to future challenges and
leaders, on the behaviours leaders exhibit, or developments.
on the situational factors that determine In this section we argue that both the lead-
effective approaches to leadership. Early ership literature and the institutional theory
research on leadership attempted to identify literature can benefit from a return to Selzni-
the attributes of great leaders, such as ck's ideas about institutional leadership. Alth-
Napolean and Washington, that set them ough most scholars would put Selznick in the
apart from ‘lesser’ persons (Biggart and ‘old institutional theory’ category, with the
Hamilton, 1987: 430-431 )’. The leadership growing calls for more agency the neo-instit-
literature classifies these types of studies as utional studies (Hirsch and Lounsbury, 1997)
supervisory theories of leadership. Selznick's ideas are even more important to
‘Supervisory theories of leadership, (e.g., understanding institutional phenomena. The
path-goal, contingency, Leadership Menber old literature on institutional theory used to
Exchange) focus on tasks and person- focus on concepts of isomorphism, legitima-
oriented behaviour of leaders as they attempt cy and diffusion. While these are three differ-
to provide guidance, support, and feedback to ent ideas, they all share a common trait in
subordinates’ (Boal and Hooijberg, 2000). that you can examine issues of isomorphism,
While institutional leadership is concerned legitimacy, and diffusion with out looking
with the leadership of organizations. inside of the organization. All three ideas
Table 1 summarizes our arguments about lend themselves wonder-fully to the ‘now
the relationship of institutional leadership and legitimate’ use of event history analysis whe-
organizational leadership. We have re researchers develop variables that measure
732

Table 30.1

institutional concepts and then examine how environment, and they are involved in the
these variables impact the adoption of a parti- politics of organizational decisions and
cular factor that represents legitimacy, diffu- would represent a key part of the puzzle to
sion, or isomorphism. While there are wond- understanding institutional phenomena. We
erful studies that use this approach to studyi- argue that more work similar to that by
ng institutionalism, these studies are losing Kraatz and Moore (2002) should be done.
their prominence in institutional analysis. This type of work is also being called for in
Recently, there have been work focusing the leadership literature.
on institutional strategy (Lawrence, 1999),
institutional entrepreneurship (DiMaggio, CONCLUSION
1988; Suddaby and Greenwood, 2005; etc.)
and institutional work (Lawrence and Sudd- While we have focused on institutional
aby, 2006). These concepts all share an inter- leadership, we do not think all leaders are
est in the more micro-processes of institutio- institutional leaders. Thus, we have two
nalization. How do institutions compete for boundary conditions of institutional
primacy in a new field? How do new leadership. First, not all organizations are
practices become institutionalized? How are institutions. In addition to understanding
institutions created, maintained and disrupt- institutional leadership, Selznick also informs
ed? These are the new questions in institute- of as to how we should study institutions.
onal theory. Answers to these questions can
be found by returning to the study of leaders. The study of institution is in some ways
The argument is not that leaders are fully comparable to the clinical study of personality.
rational (or even boundedly rational) and It requires a genetic and developmental
approach, an emphasis on historical origins and
make strategic decisions. The argument is growth stages ... Our
that leaders do things, they make sense of the
 problem is to discover the characteristic ways in REFERENCES
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theorists need to be more precise in amnesia and vestigial assumptions of our
describing the collective they are studying; forefathers. The Leadership Quarterly, 17:
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 SECTION V

Reflections
 31
Is the New Institutionalism
a Theory?
Donald palmer, Nicole Biggart and Brian Dick

INTRODUCTION new institutionalism focused their attention

on norms and mandates such as laws and reg-
The new institutionalism (NI) developed in ulations, belief systems, cultural pressures
the 1970s at a time when an increasing and social comparison processes (e.g., Meyer
number of scholars studying organizations and Rowan [1977]/1991; Powell and
began to embrace the notion that much of DiMaggio [1983]/1991). The new institution-
what happened inside organizations had little alism helped to explain why organizations
to do with the objective tasks in which organ- often looked alike, even if they were engaged
izations were engaged and much to do with in quite different activities in varied contexts,
the objective tasks in which organizations and why managers would adopt
were engaged and much to do with the social administrative practices developed in
relationships in which they were embedded. dissimilar industries. It recognized that
This focus on the larger social structure in organizing is not only about reaching for
which organizations are situated was a huge technical efficiency in getting the job done,
intellectual leap over the managerialist but also about presenting one's organization
engineering approach to organizations that and management as 'informed,' 'up-to-date,'
accompanied the post WWII economy. and 'compliant.'
Dominated by industrial engineers, organiza- In the 1980s W. Richard Scott wrote an
tional analysts had difficulty conceptualizing assessment of the new institutionalism, an
social elements of organizing beyond the approach that was very much in ascendance
psychological traits of workers and the orga- at the time. In 'The Adolescence of
nizational structures that conditioned their Institutional Theory,' Scott (1987) appraised
interact-ions. While some organizations- a theoretical teenager, albeit one with a
environments scholars, such as resource distinguished ancestry, to assess the NI's
dependence theorists and population ecolog- contributions thus far and the potential for
ists, focused on the resource environment of further development and intellectual gifts. In
organizations (e.g., Pfeffer and Salancik concluding his assessment, Scott (1987: 510)
[1978]/2003; Hannan and Freeman 1977; wrote that '[t]hroughout. I have
Aldrich and Pfeffer 1976), proponents of the
740
attempted to sound an optimistic note. conceptualizations are more relevant to
Institutional theory is at an early stage of practicing organization studies scholars than
development. Adolescents have their are abstract normative models. (cf. Cohen
awkwardness and their acne, but they also 1968). We use the conception of theory
embody energy and promise. They require building advanced by Edward Litchfield and
encouragement as well as criticism if they are James D. Thompson, two influential figures
to channel their energies in productive in the emergence of the field of organization
directions and achieve their promise'. studies, as out in-use theory building
Some twenty-five years later, institutional benchmark. We think that most organization
theory is still very much with us. No longer studies scholars have been guided by their
an adolescent, it is reaching adulthood (Scott implicit affinity for this framework. Further,
forthcoming) and has become part of the we think it represents the kind of theory
organization theory community alongside building that some contend bolds the most
resource dependency, population ecology, the promise. DiMaggio (1995) has recently
resource-based view of strategy, and a few identified three types of theory in use,
other stalwart conceptualizations that help us covering law theories, narrative theories, and
to understand the dynamics of a world enlightenment theories, each of which has
organized into firma, NGOs, agencies, and strengths and weaknesses. Covering law
industries. Indeed, the new institutionalism is theories consist of generalizations that
arguably now the dominant paradigm in describe the world as we see and measure it;
organization studies (Mizruchi and Fein that is, they explain what the world is like.
1999; Gmür 2003).But has its adolescent Narrative theories consist of accounts that
promise been realized? Although Jennings explain the way the world works; that is, they
and Greenwood (2003: 201) consider the new explain how and why the world is like it is.
institutionalism to be a mature theory, they Enlightenment theories are complex,
contend that it still relies more on richness defamiliarizing and rich in complex,
and relevance than rigor. A more cynical defamiliarizing and rich in paradox aimed at
appraisal might be that the new clearing away conventional notions to make
institutionalism represents merely an room for artful and exciting insights; that is,
umbrella for a diverse array of theory and they are surprise machines. DiMaggio
research seeking a legitimate pedigree. There contends that the best theory building
are many ways to assess a theoretical approaches tend to be hybrids, which draw
program’s progress. In this essay we asses on different types of theories in combinations
the extent to which the new institutionalism where the strengths of one counterbalance the
has become a theory as opposed to a more weaknesses of the others. Litchfield and
loosely organized perspective or framework. Thompson’s suggested mode of theorizing
We adopt this metric, because arguably the represents a hybrid of the covering law and
most frequently stated goal of work in out narrative approaches. We recognize, though,
field is to develop theory about organizations that the Litchfield and Thompson
rather than simply adding to our knowledge characterization of theory is open to question.
of them. Indeed, in many journals, the Thus, we conclude our chapter by examining
absence of a theoretical contribution is conceptions of theory that have been offered
grounds for a submitted manuscript’s in opposition to the dominant view: social
rejection (cf. the notice to contributors for mechanism, postmodernism, and critical
Administrative Science Quarterly). realism. In each case, we inquire into the
We use a conception of theory building ‘in extent to which the new institutionalism has
use’ by organizational studies scholars as our come to resemble a theory in that particular
benchmark against which to evaluate the new conception’s sense and how these alternatives
institutionalism. Concrete in-use might enlighten the NI.
 741
LITCHFIELD AND THOMPSON’S Concepts
VISION OF ORGANIZATION THEORY The New Institutionalism is characterized by
a growing number of concepts. These
The first issue of Administrative Science concepts can be grouped into three
Quarterly contained essays by two of the categories: institutional structures, attributes,
journal’s founders, Edward Litchfield (1956) and processes. We review what we believe
and James Thompson (1956). In these essays, are several key new institutional concepts,
Litchfield and Thompson laid out a common with an eye to indicating the extent to which
vision of organization theory that contained they are well elaborated and operationalized.
four elements. Organization theory, first, We do not aspire to completeness. There are
should be composed of abstract concepts that many more new institutional concepts than
can be operationalized and postulated those we consider in this section of the
relationships that can be empirically chapter. Rather we aspire to
evaluated. Second, it should be general, representativeness, with respect to the level
transcending different types of organizations of precision with which the concepts have
and contexts. Third, organization theory been elaborated and operationalized.
should be comprehensive, pursuing multiple Structures The most fundamental NI
levels of analyses, drawing on a wide array of structural concept is the institution, which
the social sciences, and apprehending the full corresponds to a way of organizing human
range of behavior in and of organizations. activity that is stable, resilient, and hence
Finally, it should be cumulative, growing in relatively enduring because it is considered
explanatory power over time. appropriate by relevant actors, in particular
powerful ones. Institutions can have a sense
of permanence that makes it almost
Concepts and relationships unimaginable that they could ever be
different or might at one time not have
Litchfield and Thompson complained that existed. The taken-for-granted nature of
organization theory in their time was institutions is part of their power – they are
characterized by a plethora of vague concepts often not called into question or examined for
that were ambiguously related to one another their efficacy or appropriateness (Meyer and
and that researchers often documented Rowan ([1977]/1991:44-5; Scoot
empirical regularities without providing a forthcoming). According to Scott (2001: 47-
theoretical framework within which they 70), there are three broad classes of
could be interpreted. They contended that institutional structures. Regulative structures
organization theory should aspire to develop are generally formal and explicit, legally
a coherent set of abstract constructs that sanctioned, and indicated by rules and laws,
could be operationalized and postulated often enforced by the state. Normative
relationships that could be empirically structures are base on the value or moral
verified. An examination of Thompson’s expectations associated with roles and, in the
([1967]/2006) classic integration of contemporary world, are generally associated
contemporary organization theory suggests with processes of professional accreditation
that he at least also envisioned organization and certification. Finally, cultural-cognitive
theory to include not just ‘covering laws’ but structures are based on the shared
causal explanations of such relationships. understandings of actors, which are generally
Almost forty years later, Sutton and Staw taken-for-granted and legitimated by the
(1995) presented a strikingly similar larger cultural and institutional milieu (e.g.,
conception of organization theory as a logical what a ‘good’ person should do in a situation
framework that explained why variables or or what a ‘just’ solution is in a dispute.
constructs come about or why they are Specific institutional structures, such as
connected (1995: 375). ‘conceptions of control’, ‘myths’, ‘logics’,
742
and 'recipes' occupy an ambiguous respect to their relations to other organiza-
relationship with respect to these three tions). Fields are also different from 'netwo-
categories, seemingly spanning two or all rks: which are composed of organizations
three categories. For example, a particular that are not necessarily subject to the same
conception of justice can find expression in institutional constraints. Early proponents of
cultural forms and be codified in law. the new institutionalism distinguished
There is a considerable amount of research between two types of fields: 'technical' and
that measures the regulative dimension of 'institutional' (Scott and Meyer [1983]/1991).
institutional structures. For example, research While in technical environments rewards are
on the proliferation of the finance conception accrued by organizations for 'effective and
of control examined the spread of the efficient control of their production systems:
multidivisional form (Fligstein 1990). There institutional environments require that organ-
is also much work that taps the normative izations conform to rules and regulations 'to
dimension of institutional structures. For receive support and legitimacy' ([1983/1991:
example, research on the evolution of the 123). However, as we note below, it is
normative framework that underpins the noteworthy of the new institutionalism's
modern market for corporate control exam- expanding comprehensiveness that, later on,
ined changes in the language used in the this distinction was put into question.
business press to describe hostile takeovers Many proponents of the NI consider the
and their principal players (Hirsch 19!56). field to be a unique and crucial concept of
There is even research that attempts to map this approach. DiMaggio has argued that 'the
both the regulative and normative dimensions organization field has emerged as a critical
of institutional structures. For example, unit bridging the organizational and the
research on the proliferation of the share- societal levels in the study of social and com-
holder model of governance in Germany munity change' (quoted in Scott 2001: 148).
examined the use of language that privileged Davis and Marquis (2005a) contend that it is
stock holder interests in corporate annual the level of analysis most likely to give rise
reports and tracked the adoption of govern- to improved understanding of modern
ance structures and accounting systems that organizations. Thus it is ironic that fields are
reflect those interests (Fiss and Zajac 2004). seldom characterized precisely. To the best of
But work that explores the cognitive our knowledge, most NI studies do not go to
expression of institutions is just beginning. great lengths to establish the boundaries of
One interesting study in this vein examines the fields they study. More often than not,
the emergence of the cognitive construct fields are defined as coterminous with more
'nanotechnology' that accompanied the traditional aggregates such as industries (ct.
emergence of the industry that we now know Thornton and Ocasio 1999) or groups of
by this name (Grodal 2006; also see George, organizations listed in standard annuals such
Chattopadhyay, Sitkin, and Barden 2006). as the Fortune 500 (Fligstein 1990).
Another fundamental NI structural con- Attributes The most fundamental NI
cept is the 'field,' which corresponds to the attribute is 'legitimacy,' which corresponds to
domain within which a particular institution the extent to which a structure or practice
operates. It consists of a group of organiza- resembles an institution. The more legitimate
tions that interact with one another and that a structure or practice is considered by actors
are subject to the same regulative, normative, in general and powerful actors more specifi-
and cognitive institutional constraints. Fields cally, the more reasonably the structure or
differ from 'populations' and 'industries,' practice can be called an institution. The
which are composed of organizations that are extent to which structures and or practices are
similar to each other (importantly, with considered legitimate have been for the
 743
most part only measured indirectly by the A variety of historical and quantitative
extent to which the structure or practice is empirical studies have examined how
prevalent in a field (cf. Fligstein 1990) or by strategies and practices become
measuring the extent to which organizations institutionalized. For example, researchers
that adopt the structure or practice receive have shown that actors, both collective and
resources from powerful actors (Baum and individual (Battilana 2006; Garud, Jain, and
Oliver 1991, 1992). However, a few scholars Kumaraswamy 2002; Greenwood, Suddaby,
have attempted to measure legitimacy more and Hinings 2002; Macguire, Hardy, and
directly, by assaying explicit endorsements of Lawrence 2004), can play the role of 'institu-
organizations that conform to institutional tional entrepreneur' (DiMaggio 1991:
expectations by key gatekeepers such as Fligstein 1997: Greenwood and Suddaby
regulators and media representatives 2006; Leca and Naccache 2006) advocating
(Deephouse 1996). and disseminating a particular structure.
Processes The most fundamental NI process Business schools, for example, have taught
is 'institutionalization: which roughly corre- organizational practices as 'appropriate' or
sponds to the mechanisms through which a 'modern' and encouraged their adoption.
way of organizing becomes accepted as Individuals have championed structural
appropriate by numerous and/or powerful innovations and sometimes have been
actors. DiMaggio and Powell ([1983]/1991) successful (Selznick 1957; Hirsch, 1975;
have formulated a series of concepts that Garud and Kumaraswamy 1995). Actors,
describe the way institutionalized elements however, differ in their capacity to bestow
proliferate (coercive, normative and mimetic legitimacy on a way of organizing. High
isomorphism). Following Berger and status actors, in particular those who enjoy
Luckman (1966), Tolbert and Zucker high performance and maintain affiliations
([1996]11999) identify three processes with other high status actors (such as top
involved in institutionalization. The first business schools) and powerful actors who
process, 'habitualization,' results in the occupy positions in formal hierarchies (such
formalization of new structural arrangements. as government officials) or who possess
'Objectification' refers to the development of valuable and scarce resources (such as Chief
a social consensus with regard to the value of Financial Officers), play particularly
these new arrangements. And, finally, important roles in institutionalizing ways of
'sedimentation' (or full institutionalization) 'is organizing (Rao, Greve, and Davis 2001).
characterized both by the virtually complete More recently, social movement theorists
spread of structures across the group of actors have also used these ideas to understand the
theorized as appropriate adopters, and by the success and failure of those seeking to
perpetuation of structures over a lengthy promote or undermine institutions (Davis,
period of time' ([1996]/1999: 178). The McAdam, Scott, and Zald 2005).
related concepts of 'institutional reproduction'
and 'de-institutionalization' signify Relationships
mechanisms through which institutions are The new institutionalism is characterized by
maintained and undermined. Oliver (1992) two types of relationships: tendencies and
has elaborated a series of conditions that she causal relations.
contends undermine institutional regimes. Tendencies Proponents of the NI recognize
Jepperson (1991: 152) also recognizes the two kinds of tendencies. The first type of
process of 'reinstitutionalization,' which is tendency refers to developments that tend to
illustrated by the 'exit from one unfold over time. For example, proponents of
institutionalization, and entry into another the new institutionalism postulate that organ-
institutional form, organized around different izations tend, over time, to become more
principles.' similar to one another. That is, they tend to
become 'isomorphic' even when these
744
changes do not increase organizational effi- New organizational forms developing out-
ciency. DiMaggio and Powell ([1983]/1991) side of institutionalized norms, for example
have identified three types of isomorphic for-profit higher educational systems, must
pressures. Coercive isomorphism 'results orient themselves in regard to accepted forms
from both formal and informal pressures and practices. All three processes are impor-
exerted on organizations by other organiza- tant for understanding how institutionalized
tions upon which they are dependent and by components proliferate. A large number of
cultural expectations in the society within empirical studies have charted the emergence
which organizations function' ([1983]/1991: of institutions over time (see citations in the
67). Regulative structures may demand, section immediately above). However, these
through the force of law for example, that studies have disproportionately focused upon
organizations adopt affirmative action prac- mimetic processes as the mechanism driving
tices. Very different organizations will thus isomorphism (Mizruchi and Fein 1999).
have similar sorts of human resources units Furthermore, while one could imagine the
and practices in response to this outside reg- degree of isomorphism to vary across organi-
ulatory pressure (Sutton, Dobbin, Meyer, and zational fields, proponents of the new institu-
Scott 1994). While changes in organizations tionalism have not identified variables that
resulting from coercive isomorphism gener- regulate the extent to which these tendencies
ally arise from controls placed on are exhibited.
organizations by the state, 'normative The second type of tendency designates
isomorphism' typically arises from characteristics that are time invariant. For
professionalization, similarities in formal example, the NI postulates that when
education and professional networks, which institutional elements are incorporated into an
results in the standardization of organization, they tend to be 'loosely coupled'
organizational responses. Accounting firms with the organization's technical core (Meyer
and hospitals in different market settings, and and Rowan [1977]/1991; for a critique see
with different specializations, may end up Tyler 1987). While one could imagine the
looking much like other accounting firms and degree of loose coupling between
hospitals because that is what is sanctioned institutional and technical elements to vary as
by their professional certification bodies a function of other conditions, proponents of
(Abbott 1983; Greenwood et al. 2002; the new institutionalism have rarely exam-
Gendron, Suddaby, and Lam 2006; Scott, ined this potential problematic (cf., however,
Ruef, Mendel, and Caronna 2000). Finally, Orton and Weick 1990). Early studies on
‘mimetic isomorphism’ occurs when loose coupling focused on the not-for-profit
organizations face environmental uncertainty sector, looking at, for example, education
and so mimic one another, conferring on one organizations (Meyer 1977; Meyer and
another a degree of legitimacy, as a solution Rowan 1978; Weick 1976; for criticism see
to this condition. Copying the structure and Lutz 1982) and the criminal justice system
practices of other organizations allows (Hagan, Hewitt. and Alwin 1979).
organizations to be mutually understood, as Subsequently, the new institutionalism began
well as understood by outsiders when there is to look at the for-profit sector. Some
cognitive uncertainty. Adopting the symbols, researchers have examined what might be
language, structures and practices of other considered the ceremonial adoption of legiti-
organizations allows new or transforming mate practices, sue h as the employment of
organizations to identify themselves new accounting standards (Mezias 1990) or
institutionally as a college textbook publisher stock buy-back programs (Westphal and
(Levitt and Nass 1989), museum (DiMaggio Zajac 2001). Others, though, have examined
1991) or school (Meyer and Rowan 1978; the adoption of substantively significant
Meyer 1977). structures and practices in the for-profit
 745
sector, such as the adoption of the testifies to the fact that the more institution-
multidivisional form and diversifying alized and thus legitimate an organizational
acquisitions (Fligstein 1985, 1987; Fligstein structure or process is, the more beneficial
and Dauber 1989; Fligstein and Freeland outcomes organizations enjoy by embracing
1992; Palmer, Barber, Zhou, and them (see, for example, Baum and Oliver
Soysal1995). For a while, the concept of 1991; Baum and Oliver 1992: Human and
loose-coupling appeared to dwindle in Provan 2000; Ruef and Seott 1998; Singh,
importance. In the process, the concept Tucker, and House 1986: Zucker 1987).
looked like it would be transformed from a Another important causal relationship
largely explanatory framework to a more pertains to the moderating effects of uncer-
strategic one, which offers managers tainty on the relationship between
practical insights for managing their environ- institutional conformity, legitimacy, and
ments, as evinced in research on the relation- organizational outcomes. Proponents of the
ship between entrepreneurial firm linkages new institutionalism believe that the more
and IPO success (Stuart, Hoang, and Hybels uncertainty there is about the efficiency char-
1999). However, there has recently been an acteristics of alternative forms of organizing,
outpouring of studies that have examined the less impact those efficiency
loose-coupling as an explanatory concept in characteristics will have on the choice of
the for-profit sector (e.g., Brandes, Hadani, organizing form and me more impact that
and Goranova 2006; Christmann and Taylor institutional forces will have on this choice
2006; Fernandez-Alles, Cuevas-Rodriguez, (Powell and DiMaggio [1983]/1991). This
and Valle-Cabera 2006; Fiss and Zajac 2006; postulated relationship is arguably one of the
Stevens, Steensma, Harrison, and Cochran new institutionalism's most novel aspects,
2005), indicating that the concept will one which sets it apart from economic and
continue to play more than just a strategic functionalist sociological explanations of
role. Causal relationships The new organizational behavior. It suggests that the
institutionalism's most fundamental causal adoption of institutionalized elements can
relationship is that between benefit organizations, even if it does not
institutionalization, legitimacy, and beneficial increase the efficiency and/or effectiveness of
organizational outcomes (birth, the (indeed, even if they inhibit the efficiency of)
acquisition of resources, high performance, the generation of products and services,
and survival). The relationship between because the efficiency and/or effectiveness
institutionalization and legitimacy is often characteristics of alternative modes of
treated as definitional (see Suchman 1995 for organizing are often unknown (and partly
a critical discussion). Indicative of this, the because institutional elements tend to be
many grammatical forms of institution loosely coupled with an organization's
(institutional. institutionalized, institution- technical core). A number of studies
alization) are used interchangeably with the presented evidence suggestive of the
various forms of legitimacy (legitimate, moderating impact of uncertainty (cf.
legitimized, legitimating, etc). However, one Haunschild and Miner 1997).
study of commercial banks demonstrated that
the adoption of institutionalized practices (the Assessment
adoption of asset strategies prevalent in the This discussion suggests that the new institu-
industry) leads to increased legitimacy tionalism has come a long way with respect
(Deephouse 1996). The predicted relationship to the articulation of measurable concepts
between being institutionalized and (pertaining to structures, attributes, and
legitimate on the one hand and enjoying ben- processes) and the elaboration of empirically
eficial organizational outcomes on the other, verifiable postulated relationships. This con-
though, has been examined in considerable clusion is echoed by Scott (forthcoming) in
depth. And a substantial body of research his stocktaking of the new institutionalism.
746
He argues mat the new institutionalism has discussion of power in organization studies
moved 'from looser to tighter conceptualiza- see Hardy and Clegg [1996/1999]). This
tions.' And he argues that the new institution- raises the question of the extent to which the
alism has moved from elaborating simple to new institutionalism in some cases represents
more complicated relationships; specifically, a new bottle for old wine.
‘from determinant to interactive arguments.’
And he contends that this has happened
partly by moving 'from assertions to General theory: organizational
evidence.' While we identify specific gaps in type, time, and space
conceptual development and empirical vali-
dation, we suspect that progress towards fill- Litchfield and Thompson complained that
ing these gaps will be made in the coming organization theory in their time was frag-
decades. mented into separate theories for different
Still, we think that at least one question kinds of organizations: military organiza-
can be raised about this dimension of the new tions, educational organizations, government-
institutionalism's development as a theory. tal organizations, and business organizations.
More than a few of the concepts and relation- They advocated the development of general
ships that the new institutionalism posits are theory, by which they meant theory that was
borrowed from other theories. Indeed, the applicable to multiple types of organizations
concept of 'legitimacy' is central to many and presumably in multiple times and places.
other theories, going as far back as Max The new institutionalism began as a
Weber's ideas on systems of imperative coor- behavior- and context-specific theory. It was
dination (1968: vol. 1) and Parsons's elabora- developed to explain the ceremonial adoption
tion of what substantively became known as of structures and practices by organizations
structural functionalism (e.g., 1951: 348-59, situated in non-market environments,
1956a, 1956b, 1961), and as recently as contexts in which such inefficient structures
modern management theories such as Pfeffer and practices could survive. Thus it explained
and Salanciks's ([1978]/2003) resource why public schools adopted educational
dependence perspective. Similarly, the con- reforms in which teachers were required to
cept of 'uncertainty' is central to decision develop elaborate lesson plans, an
theory (March and Simon [1953]/1993; organizational practice that was both rational
Cohen, March, and Olsen 1972), contingency and legitimate, but these lesson plans bore
theory (Thompson [1967]/2006; Lawrence little relation to what teachers actually did in
and Lorsch 1967), and (again) the resource their classrooms (Meyer 1977; Meyer and
dependence perspective. The new Rowan 1978). Proponents of the new institu-
institutionalism also borrows postulated rela- tionalism at this time surrendered analysis of
tionships from other theories. For example, it non-ceremonial forms in market contexts to
is difficult to distinguish between coercive economists. Over the years, proponents of the
institutional pressures and resource depend- new institutionalism have continued to
ence-based power. Similarly, it is difficult to examine adoption of organizational elements
distinguish mimetic isomorphism from inter- that are not tied to an organization's technical
organizational learning and other diffusion core (e.g., charitable giving) in non-market
processes. The argument that uncertainty contexts (e.g., the corporate philanthropy
increases the salience of institutional field). However, it has also become
processes parallels arguments that uncer- increasingly more general in several ways.
tainty enhances the salience of status and Perhaps most important, the NI has
social comparison processes. Finally, there increasingly been employed to analyze the
have been attempts to borrow other concepts, adoption of more pragmatic structures and
such as 'power' from other theories (for a practices by for-profit organizations.
 747
The new institutionalism expanded its scope institutionalism by explicitly taking into
by developing arguments that characterized account the temporal dimension. They exam-
markets as fundamentally (albeit. variably) ined how the institutional context in the
uncertain and by characterizing legitimacy as health care sector evolved over time, making
an attribute that can increase a firm's access different kinds of governance arrangements
to valued resources and thus improve its more or less advantageous. Similarly,
performance, in the process transforming the Thornton and Ocasio (1999) demonstrated
concept of efficiency (cf. Fligstein 1990). how the institutional context in the publish-
Two important theoretical pieces summarize ing industry changed over time from a family
the generality of the new institutionalism in logic to a market logic, altering the condi-
this respect. In his stock taking of the then tions that made corporate acquisitions desir-
adolescent neo-institutional approach, Scott able. And Dobbin (1997, 2000) documented
(1987) jettisoned the distinction between how the institutional context in the US
technical (market) contexts and institutional railroad industry changed as the result of
ones and embraced a perspective that viewed alterations in anti-trust policy, shifting the
market and non-market contexts simply as conditions that made railroad foundings and
different institutional spheres. More recently, acquisitions in that industry more or less
Biggart and Delbridge (2004) developed a likely.
classification scheme of different kinds of Finally, there is now a growing body of
market institutions. In their typology markets research that expands the generality of the
are nor a single institutional type. Rather new institutionalism along the spatial dimen-
markets have four qualitatively different sion. This work examines different national
institutional expressions, depending on contexts, which can vary with respect to the
whether they emerge in social environments types of sectors that dominate society (state,
where instrumental or value-based substan- market, and mixed) and with respect to the
tive rationality dominates decision making characteristics of those sectors (types of mar-
and where social action is particularistic or kets). Works by Orrù, Biggart, and Hamilton
universalistic (oriented towards individual (1997) and Biggart and Guillén (1999)
characteristics or supra-individual prince- demonstrate how variation in the institutional
ples). Social environments vary along the context of Asian economies has generated
instrumental-substantive rationality dimen- different market structures and performance.
sion and the universalistic-particularistic Guillén and his associates (Guillén 2000;
dimension and result in four logically differ- Guler, Guillén, and Macpherson 2002) have
ent institutional settings: price, communal, shown how variation in the institutional
moral, and associative economic orders with context of developing economies has
very different hypothesized structures and generated differential rates of adoption of
dynamics. Rather than seeing the market as work process reform and hostile takeovers.
one historically developed institutional form
for organizing exchange. Biggart and Assessment
Delbridge argue that economic exchange We think that the new institutionalism is now
relations can be institutionalized in quite a truly general framework, in that it can be
different ways. This classification system used to explain both ceremonial and substan-
opens up the possibility of economic theory tive behavior in complex organizations of all
resting, and also for seeking other forms or types (i.e., in both non-market and market
institutional types, for example of health care environments, and in different types of
systems or educational structures. market environments) in virtually all times
Ruef and Scott's (1998; Scott et al. 2000) and places. This is an impressive achieve-
empirical analysis of health care systems ment. With this said, we discern a tension
further expanded the generality of the new between the forces seeking to make the new
748
institutionalism more general (identified First, Litchfield and Thompson argued that
above) and those seeking to preserve its sen- organization theory should draw on the full
sitivity to context. range of social science disciplines. This argu-
A major appeal of the NI is its rejection of ment laid the foundation for the two addi-
the often abstract character of much organi- tional contentions. Second, they thought that
zation theory (Davis and Marquis 2005a). organization theory should operate at three
Early organization theorists aspired to levels of analysis - the individual, the
characterizing organizations according to organization, and the environment. Third,
constructs such as technology, size, and they thought organization theory should
centralization, irrespective of environmental apprehend the many dimensions of the
context. A subsequent wave of organization administrative process - decision making,
theorists aspired to characterize organizations implementation, and learning.
according to their environments, but they
characterized organization environments in Disciplines
categories such as 'munificence' and Proponents of the new institutionalism, like
'dynamism' that ignored more fine-grained the proponents of many other theoretical per-
dimensions of context. Many modern spectives in organization studies, have drawn
organization theorists have continued this heavily on sociological theory. Scott (2005)
tendency (Hannan and Freeman 1977; Burt recently located the roots of new institution-
1980). The proponents of the NI have taken alism in the works of classic social theorists
into account the context in which Marx, Durkheim, and Weber. The notion that
organizations are situated to a much greater organizations operate on an institutional level
extent than the advocates of other theoretical has its modern origins in Selznick's (1948,
approaches; considering not just the material 1949) path-breaking study of the Tennessee
relationships in which organizations are Valley Authority, which showed how the
embedded but the nonnative and cognitive authority's environment influenced the goals
environment as well. But characterization of it pursued, shifting them from a progressive
an organization's normative and cognitive to a more conservative agenda. Parsons's
environment requires non-positivist modes of (1956a, 1956b) explicitly theorized the insti-
analysis, such as historical and interpretative tutional level of analysis in his early outline
methods, which Ventresca and Mohr call the of a theory of organizations. Stinchcombe
'new archival project’ (2002). Such modes of (1965) exploited this basic model when he
analysis tend to produce conclusions that are detailed how organizations are constructed of
highly industrially, historically, and spatially elements in their surrounding social structure
specific. Exemplary studies in this vein and that this imprinting is resistant to change.
include Mohr and Duquenne (1997), The new institutionalism also has roots in
DiMaggio and Mullen (2000), Spicer, the work of Berger and Luckmann's The
McDermott, and Kogut (2000) and Kogut Social Construction of Reality (1966), which,
and Spicer (2002). Thus, the more context- put crudely, advanced the notion that there is
specific NI's analyses are, the less no reality beyond what we manufacture and
generalizable its insights tend to be. agree upon together. This notion had wide-
ranging effects in social thought, but only in
macro-units of analyses among new
Comprehensive theory: disciplines, institutionalism scholars. The notion of insti-
levels, and substantive areas tutions as inter-subjectively meaningful
social constructions permeated NI studies at
Litchfield and Thompson argued that organi- the levels of the organization, field, and
zation theory should aspire to comprehen- global systems, but few NI scholars have
siveness. By this they meant three things. elaborated the implications of this view
 749
at a micro-level. Institutions are by definition collective meanings that allow social
constructs that are only visible when enacted processes to develop, stabilize, institutional-
by individuals in social settings, including ize, and change in organized settings, for
organizations. However, those interested in example Barley's (1986) study of the intro-
micro-processes in organizations such as duction of CT scanners into radiology
decision-making and identification processes departments demonstrated the disruption of
(Elsbach and Kramer 1996) have largely established interactional and authority
approached these dynamics from the per- patterns. New machines demanded new prac-
spective of individual psychology. tices and created opportunities for subordi-
In what ways can we think of individuals nates to become experts and reverse roles
enacting institutions? Biggart and Beamish with superiors. With time, new practices and
(2003: 257) argue that conventionalized roles were institutionalized. Similarly,
activities, for example routine ways of Bechky (2003) examined how occupational
making and justifying decisions, are actually categories and boundaries are negotiated
'institutions writ small.' Conventions are through material technologies. She found that
taken-for-granted and socially efficient ways engineering prototypes and technical
of enabling actors to coordinate with and drawings used by a semiconductor firm were
evaluate each others' actions, not only in the imbued with meanings. Artifacts symbolized
moment, but over time as a socially legiti- and structured relations between groups of
mate pattern. According to Palmer and assemblers, technicians, and engineers.
Biggart (2002), because organized ‘action is Although they do not claim to be part of
collective, situations must be interpreted the new institutionalism, there are logical and
iteratively in mutually intelligible ways, theoretical links between these scholars and
therefore developing and utilizing institutional theory. When meanings crystal-
institutionalized conventions’ may be a lize in objects and communities of practice
solution to individuals' uncertainty in such as radiologists and hardware designers
ambiguous settings. Institutionalized they are in the process of becoming institu-
organizations are in fact bundles of tionalized (Biggart and Beamish 2003). To
conventions about decision-making rules and the extent that the new institutionalism wants
other organizational routines that have to claim to be a comprehensive theory that
congealed into structural forms. can operate at all units of analysis, it must
Social construction as both a concept and develop a micro-logical orientation that
as a process for study has had far more devel- shows the emergence of meaning, its devel-
opment in other areas of the social sciences, opment into inter-subjectively agreed-upon
including anthropology and communica- classifications, definitions, and values, and
tions. The analysis of micro-social processes the development of structures that emerge
has traditionally been the purview of tradi- from these understandings. Psychology and
tions rising out of pragmatism, particularly economics, by themselves, predicated as they
symbolic interactionism, but also the French are on methodological individualism, cannot
conventions school (also known as the new conceptualize the shared and taken-for-
economics of conventions), and in the granted meanings that are central to new
Science and Technology Studies tradition of institutionalism.
the dynamics of scientific discovery and One can imagine five lines along which a
practice (Latour and Woolgar [1979]/1986; micro-NI might develop. First, a micro-NI
Latour 1987; Pickering 1992). These related could look at traditionally psychological
perspectives have found their way into orga- areas of investigation such as employee
nizational studies recently through the analy- selection, work design, training and leader-
sis of technological artifacts in organized ship to examine how differently institutional-
settings, artifacts that become imbued with ized firms develop conventional solutions
750
around these issues. Second, it could theorize Coase (1937) and extended and codified by
the role of individuals as institutional entre- Williamson (1975, 1981). The central idea in
preneurs to develop a truly institutional this line of inquiry is that economic transac-
theory of leadership (cf. Biggart and tions (not producers [the source of supply] or
Hamilton 1987; DiMaggio 1991; Hargadon consumers [the source of demand]) are the
and Douglas 2001). Third, a micro-NI could fundamental unit of analysis in economics.
examine the cultural-cognitive components The institutional structures through which
involved when decision makers attempt to transactions are governed are the fundamen-
'read' the institutional environment for tal variables. Put bluntly, institutional
strategic opportunities and threats (George et structures persist to the extent to which they
al. 2006). This line of research, while rooted are efficient means of governing transactions
in the psychology of decision making, opens under particular conditions (which pertain to
the door to incorporating interpretive uncertainty. asset specificity. etc.). Nelson
processes that decode social meanings. and Winter (1982) have developed a more
Fourth, it could pursue a comparative nuanced brand of institutional economics
analysis of conventions in different which emphasizes the path-dependent
institutionalized fields that might suggest process through which institutional change
ways in which organizational actors find occurs, a path in which new forms emerge
solutions to problems of organizing, for from existing ones.
example, how architects in state-directed This work adds an important caveat to ear-
building programs construct building plans in lier institutional economics: while
comparison to those in industrialized arenas institutional structures persist to the extent to
of the same era (Guillén 2006). Finally, a which they are efficient, a structure's
micro-NI could develop a more active efficiency characteristics are only evaluated
understanding of institutionalization with respect to concrete alternative structures
processes (cf. Zucker [1977]/1991). At in the market at the time. Thus, persisting
present institutional theory is relatively static, institutional structures are not optimally
assuming the processes from which structures efficient, but only relatively so. As such, it
emerge (see Barley and Tolbert 1997 for a brings economic institutionalism in closer
discussion of this problem). An interactive NI correspondence with sociological
offers the promise of seeing how institutions institutionalism. Perhaps the best example of
emerge out of negotiation, conflict, and this line of work is the simultaneously
collaboration. historical and game theoretic comparative
There is also work in economics upon analyses of economist Avner Greif (1994).
which new institutionalists might draw. Greif examined two premodern trading
Institutional thinking in economics dates societies with different institutional
back to the work of Veblen, Commons, structures, the 11th-century Maghribi traders
Mitchell and Coase, who looked at the indi- living in a Muslim world and the 12th
vidual to see how socialization and organiza- century Genoese traders which were part of
tional arrangements shape the choices he or the Latin world. The Maghribi society was a
she makes (see Hodgson 1998 and collectivist one, with information shared and
Rutherford 2001 for more on institutional punishments collectively enforced, and the
economics). These new economists differed Genoese society was decidedly individualist.
from neoclassical economists in not assum- Both faced the danger of embezzlement when
ing that actors have fixed preferences, but using overseas agents but resolved this
argued that their preferences may be socially principal-agent problem with different
formed and influenced by the context in institutional means and each society created
which they find themselves - for example in a practices and sanctions consonant with their
newly emerging middle class (Veblen cultures. Greif goes on to argue that
[1899]/1979). This strain was developed by differently efficient
 751
solutions cannot be changed because of the institutional thinking is enjoying something
effects of path dependence. The work of of a renaissance in political science, in part as
Milgrom and Roberts (1992) also approaches a critique of the methodological individual-
issues of interest to the NL They ask why ism of rational choice. Robert Lieberman's
organizational forms take the shapes that they (2002) reconciliation of ideational and insti-
do. This is a fundamental theory of the firm tutional approaches with economically
question posed by Coase (1937) and inspired ones was one of the ten most down-
Williamson (1975) but like Greif they find loaded articles in political science between
the answer in the structure of social relation- 2002 and 2004 (APSA 2005: 13). New
ships between firms, not assuming that all collections of work are appearing that
contracts are arms-length but may be compete with rational choice approaches
alliances or relational contracts. (Lecours 2005; Mahoney and Rueschemeyer
The new institutionalism in organization 2003). Institutional analysis in political
studies, though, has not much benefited from science never disappeared from European
the resurgence of institutional thinking in thought where historical and ideational
economics. Economic institutionalism regis- approaches have always been important.
tered an impact within organization studies Many of these political science analyses are
soon after it experienced its resurgence in using new institutionalism to account for the
economics (cf. Walker and Weber 1984). possibilities and difficulties for institutional
And it has had a substantial impact in the change in settings such as post-colonial
strategy area in recent years (cf. Mayer and multicultural Canada and the formation of the
Salomon 2006). However, economic institu- European Union.
tionalism is typically presented as a stand- The NI approach in organization studies
alone approach, rather than as a component has benefited from the resurgence of institu-
of the new institutionalism as we have tional thinking in political science. Indeed,
characterized it here. We suspect that this is one might say that the regulative pillar of
because the long-standing antagonism betwe- institutional theory is to a large extent built
en economics and sociology (the primary upon the theoretical foundation of the institu-
foundation of NI) has spilled over into the tional wing of political science. Certainly the
field of organization studies. Indeed, many work of several new institutionalists is
lament the growing influence of economic heavily influenced by institutional thinking in
thinking in organization science (Pfeffer political science (cf. Campbell 1998;
1993, 1995; Hirsch, Michaels, and Friedman Clemens 1993). And some new institutional-
1987; Hirsch, Friedman, and Koza 1990). ist scholars have done more than simply
However, as economists 'relax' assumptions borrow from institutional scholarship in
of individual omniscience and rationality, political science; they have developed ideas
some borrowing from NI is likely as well. that suggest the limitations of that scholar-
Proponents of the new institutionalism ship. Perhaps most important, Edelman
have also drawn on work in political science. (1992) has shown how regulative structures
The earliest political scientists focused pri- can be considered endogenous products of
marily on the institutional structure of politi- institutional development in the area of equal
cal life; in particular, the structure of opportunity legislation and policy. With this
governing bodies of the state, political par- said, the new institutionalism's incorporation
ties, and trade unions. This institutional focus of institutional thinking in political science is
was rejected by what might be called modern far from complete. This is perhaps most evi-
political science, which to a large extent dent in the failure of the new institutionalism
focuses on voter behavior and which recently to develop a unique understanding of power,
has drawn on micro-economics in the form of despite the repeated exhortations of leading
rational choice theory. Recently, though, figures in the field to do so (DiMaggio and
752
Powell 1991: 30-1: Hirsch 1997: Perrow Subsequently, however, some proponents
1985). We think that new institutionalists of the new institutionalism begun to theorize
might make headway in addressing this an even higher level of analysis: the global or
deficiency by drawing on radical analyses of world system. These theorists, most notably
power within political science and political John W. Meyer and his associates (Boli,
sociology that characterize it as a Ramirez, and Meyer 1985; Meyer and
multifaceted phenomenon that includes sym- Jepperson 2000; Ramirez and Boli 1982;
bolic and cognitive elements (cf. Gaventa Ramirez and Meyer 1980) contend that
1982; Lukes 2005). institutionalized forms and practices may
develop and disseminate above the field,
Levels of analysis sector, and nation-state levels. Ideas,
Proponents of the new institutionalism have imageries, and functions may emerge in one
clearly focused primarily on the setting but migrate globally, being
environmental level of analysis, viewing the incorporated in regulative, normative, and
environment as the source of rationalized cognitive systems operating at the world
myths that could be used as building blocks system level. For example the notion of what
by new organizations or as material for constitutes progress may be encapsulated in
change by existing ones. Soon thereafter, measures such as the Gross National Product
proponents of the new institutionalism (GNP) which diffuses through the world
advanced a new level of analysis within the polity, which is composed of international
broader environment, the 'field' (DiMaggio bodies such as the World Bank, the United
and Powell [1983]/1991). As indicated Nations, and the International Monetary
above, fields group organizations according Fund. This results in common measurements
to their tendency to establish relationships and policies in very different settings. Ideas
with one another and according to their such as financial transparency and practices
regulation by a common set of institutional such as accounting rules, initially alien in
constraints. New institutionalists also non-Western societies, are carried across
recognize another level of analysis similar to national boundaries by consulting firms and
the organizational field but operating at a Western educational institutions that attract
higher level of aggregation: the societal international students who eventually return
sector. Scott and Meyer ([1983]/1991: 117) home with new constructs. Ideas, concepts,
define the societal sector as; ‘(1) a collection and practices are thus rationalized as 'normal'
of organizations operating in the same and become embedded in organizations
domain, as identified by the similarity of globally (cf. Drori, Jang, and Meyer 2006).
their services, products or functions, (2) Proponents of the new institutionalism,
together with those organizations that though, have also pursued lower levels of
critically influence the performance of the analysis. The earliest proponents or the new
focal organizations ... The adjective societal institutionalism implicitly theorized
emphasizes that organizational sectors in dynamics within organizations when they
modern societies are likely to stretch from contended that the institutional elements
local to national or even international actors.' drawn from the environment were not tightly
The concepts of field and societal sector coupled with the organization’s technical
emerged out of role-set theories in sociology core. Subsequently, Fligstein (1996)
where individuals are seen in terms of the developed what he referred to as a
roles and relationships they have with each 'political/cultural' theory of the firm, which
other, not just as a collection of individuals. considers the interplay between regulative,
Organization fields and sectors are similarly normative, and cognitive structures within
communities of interconnected firms or other the organization. He contended that different
forms of organization such as suppliers or coalitions of managers that embrace
regulatory agencies. dissimilar norms and
 753
cognitive models, which are derived from the change. These analyses portrayed change
environment, vie for power within the firm. justified on rationalist or functionalist
The coalitions that rise to power adopt grounds as primarily symbolic in character,
structures and pursue strategies and tactics geared not to alter the way organizations
that are consistent with their cognitive conducted their business but rather towards
models. Fligstein argued that executives with winning approval from important
finance backgrounds rise to power in the constituents of their environments (Meyer
1960s and 1970s, replacing marketing and and Rowan [1977]/1991). Some recent new
production executives. Finance executives institutionalist analyses continue this
embraced the finance conception of control, debunking tradition (Drori, Jang, and Meyer
which understood the firm to be a portfolio of 2006). Soon after the new institutional lens
investments. The finance conception of was ground, though, it was adopted by
control bad its origins in agency theory, organization studies scholars as a tool with
which was disseminated by the major US which they could ply their trade. In the early
business schools. It was consistent with the years of the field (long before (he new
adoption of the multidivisional form and the institutional framework was fashioned),
pursuit of diversification via mergers and organization studies scholars embraced
acquisitions, a policy that was also consistent Litchfield and Thompson's exhortation to
with recent developments in anti-trust law focus attention on the administrative process,
and federal government policy. Others have which they characterized as a ‘cycle of
also developed new institutional arguments at action,’ consisting of decision making,
the level of' the organization, such as programming. communicating, controlling
Ocasio's (1999) analysis of the and reappraising (Litchfield 1956: 12). As the
institutionalization of norms and rules field developed, the conception of the
regulating executive succession in large administrative process broadened. Mintzberg
corporations. (1971) discovered that the administrative
More recently, some proponents of the process consisted of a wide range of activities
new institutionalism have migrated to the that were divorced from decision making,
individual level of analysis. For example, programming, etc. And Pfeffer (1976)
Zbaracki (1998) has examined managers' identified the institutional level as an
adoption of Total Quality Management important and largely ignored domain of
(TQM), analyzing how managers managerial action. When it emerged in the
conceptualize and in the process transform late 1970s, the new institutionalism became a
this innovation as they adopt it. Elsbach new theoretical resource from which
(1994) has looked at how the cattle industry hypotheses could be drawn for deductive
responded to a health crisis, examining how work and to which new ideas could be added
managers employ legitimated logics to via inductive work on virtually every
protect themselves from potentially substantive topic of the day. It is now hard to
damaging criticisms. In both articles, think of a substantive topic within
managers are drawing on institutional organization studies where the new
elements in the environment to conceptualize institutionalism has not left its mark: from the
and solve managerial problems. Finally, hiring of workers (Dobbin and Sutton 1998),
George et al. (2006) have attempted to the choice of accounting system (Mezias
develop the cultural-cognitive pillar of the 1990), the adoption of innovations
new institutionalism by engaging with (Westphal, Gulati, and Shortell 1991), the
behavioral theories of decision making. implementation of innovations (Zbaracki
1998), to the promotion of top managers
Substantive areas (Ocasio 1999), the pursuit of particular
The earliest new institutionalist analyses strategies and structures (Fligstein 1990), the
were geared towards debunking rational and adoption of particular growth tactics (Palmer
functionalist accounts of organizational et al. 1995);
754
and the understanding of temporal and spatial fundamentally arbitrary. In the hands of
variation in all of the above (Guler, Guillen, contemporary organization studies scholars,
and Macpherson 2002; Schneper and Guillén these fundamental insights have increasingly
2004). been used to develop theories, analyses, and
even prescriptions about how organizational
Assessment leaders can obtain legitimacy and attendant
This discussion suggests that new institution- benefits for their organization. And in the
alism is now an extremely comprehensive process, a theoretical perspective that views
theory. Proponents of the new institutional- organizational action as fundamentally non-
ism have drawn upon several of the social rational and non-functionalist becomes a tool
sciences for their insights, although they for analyzing behavior in and of organiza-
could range further from their largely socio- tions in such a way that it is seen as even
logical base to incorporate the work of polit- more self-consciously instrumental.
ical scientists, economists and, in particular,
the work of psychologists to a greater extent.
The proponents of the new institutionalism Cumulative theory
have also plied their trade at multiple levels
of analysis, although they could certainly If a general theory explains organizations in
stray further from the highest levels to multiple settings and a comprehensive theory
examine organizational and even more draws on many disciplines to explain a wide
individual level phenomena. Finally, range of organizational phenomena at
proponents of the new institutionalism have multiple levels of analysis, a theory that is
used their theoretical lens to examine a wide cumulative is one that grows better with
range, perhaps the full range of additional studies that expand its scope,
organizational phenomena recognized by strengthen its powers, and reveal und
contemporary organization studies scholars. diminish its limitations. For a theory to grow,
With this said, we wonder whether some researchers must self-consciously tackle the
of the NI's most penetrating insights are at theory as an object of study, growing and
risk of being lost as it expands to incorporate pruning it as evidence and argument support.
multiple disciplines, operate at multiple From a theoretical standpoint, it must refine
levels of analysis, and address a cornucopia existing concepts, clarifying and perhaps in
of substantive topics. We think that such a the process bifurcating existing concepts. It
risk is exacerbated by the fact that organiza- must refine existing relationships, identifying
tion studies scholars have increasingly been scope conditions and moderating and
concentrated in graduate schools of manage- mediating mechanisms, and, of course, it
ment and business and that their scholarship must add new concepts and relationships.
is influenced by managerial and business This can be accomplished deductively, by
concerns (Augier, March, and Sullivan 2005; examining logical gaps, limitations, and
Perrow 2000). The unique insight of the new inconsistencies in the corpus of ideas that
institutionalism, an insight that it shares with compose the theory. And it can be
few if any other organization theories, is that accomplished inductively, by conducting
organization" and organizational participants research to examine the adequacy of existing
are products of the larger social structure; in concepts and relationships.
particular, the cognitive elements of that There are signs that proponents of the new
structure. As a result, organizations and the institutionalism self-consciously attempt to
people who inhabit them act in ways that are build on one another's work. Perhaps most
taken for granted as appropriate and even notably, and discussed above, the concept of
presumed to be rational, despite the fact that institution has become increasingly more
these ways of being are multidimensional. Scott and Meyer
 755
([1983]/1991) distinguished between techni- forward progress. Perhaps no area is defined
cal environments, in which organizations by the spinning of wheels more than me new
compete with one another on the basis of institutionalist work on the diffusion of inno-
their efficiency and effectiveness of opera- vation. Early work in this new institutionalist
tion, and institutional environments, in which domain generated evidence that issues of
organizations vie for legitimacy. Later, Scott efficiency and effectiveness became less
(1987) contended that all environments are important in the adoption or new innovations
institutional, but differ in their institutional as new practices proliferated (Tolbert and
character. Importantly, in Scott's formulation, Zucker 1983). Subsequent work built on this
the market is one type of institutional setting, early research by showing how normative
in which organizations follow the logic of processes (the incorporation of professionals
competition and compete on the basis of who championed innovations) and mimetic
efficiency and effectiveness. More recently, processes (linkage to other organizations
Biggart and Delbridge (2004) elaborated a already embracing the innovations)
typology that distinguishes between different stimulated adoption at the late and early
types of market settings on the basis of their stages of a new practice’s proliferation
institutional structure. (Palmer, Jennings, and Zhou 1993).
Similarly, the concept of loose-coupling Additional work added precision to this
was initially conceived as a baseline assump- research, focusing on how the characteristics
tion of the new institutionalism, allowing of adopters, objects of social comparison, and
proponents of this perspective to analyze the the innovations themselves shaped diffusion
adoption of innovation in market contexts. (Davis and Greve 1997). However, research
For-profit organizations could more easily be on the diffusion of innovation typically failed
understood to incorporate institutionalized to consider the operation of coercive
elements that increased their legitimacy but processes (Mizruchi and Fein 1999). Instead,
not their efficiency if those elements were a plethora or studies proliferated that
integrated in a way that left them loosely- evaluated essentially the same hypotheses as
coupled with their technical core. However, applied to different kinds of organizations
Westphal and Zajac (2001) reinvigorated the and different kinds of innovations.
concept of loose-coupling by characterizing it
as a variable attribute of organizations which Assessment
could be analyzed like other innovations. The new institutionalism has exhibited signs
They contended that stock buy-back of growth, as concepts become differentiated
programs became legitimate as agency theory and refined and relationships become
became widely accepted, because they elaborated, partly as the result of empirical
promised to reduce the separation of research. To this conclusion, though, we add
ownership and control which generated one caveat. As the NI might predict,
agency costs. They argued, however, that organizations studies scholars seeking
firms typically announced but did not legitimacy for their own work often cast their
implement such problems so that they could work as falling under the protective umbrella
obtain the legitimacy benefits from them of theoretical perspectives in vogue at the
without actually changing corporate policy. time. We think that too often the new
They demonstrated that firms adopted such institutionalism has served as a shade tree
loosely-coupled stock buy-hack programs to under which organization studies scholars,
the extent that they were linked to other firms some of whom are only peripherally
that had already pursued them. connected to the new institutionalist project,
Certainly, though, there are areas where have found company and support with little
the new institutionalism appears to be in the way of self-criticism and self-
spinning its wheels more than it is making improvement. This was perhaps to be
expected in the theory's adolescence, as
756
scholars promoted new institutionalism as useful in explaining organizational change
superior to alternative theories such as and because current organizational realities
economic perspectives. However, for are in flux. Further, they argue that the new
theoretical development the NI community is institutionalism is a particularly fruitful
obliged to consider issues of validity, archive from which to draw social
paradigmatic purity, application, mechanisms, because the new
methodologies, and other matters that reveal institutionalism operates at the field level of
the strength and limits of the NI. analysis and organizational fields are in flux.
This approach to organization theory differs
from the Litchfield and Thompson approach
in important ways. It eschews general theory
ALTERNATIVE MODELS OF THEORY and cumulative theoretical development. It
also eschews prediction, which is inherent in
Our assessment of the theoretical status of the the L&T view. Importantly, Davis and
new institutionalism uses Litchfield and Marquis contend that organization theorists,
Thompson's model of theory as they devel- at least macro-organizational behavior theo-
oped it 40 years ago as a benchmark. We rists, have already largely embraced this
adopted this yardstick because we believe the approach. Davis (2005) reports a survey of
most contemporary organization theorists the last 10 years of Administrative Science
develop their ideas with this model of theory Quarterly that reveals that the vast majority
building in mind. However, there are compet- of macro-organizational behavior articles are
ing models of doing organization studies. In 'problem-driven'; that is, motivated by a
this section we briefly review three desire to explain events in the world rather
alternative conceptions of what constitutes a than by a desire to test a particular theoretical
'good' theory: the social mechanism idea. Furthermore, most of these problem-
approach, postmodernism, and critical driven articles drew on multiple theories to
realism. Furthermore, we assess their develop possible (sometimes alternative)
suitability for developing the new explanations of these events.
institutionalism as a theoretical enterprise. Davis and Marquis (2005a) review a
variety or studies that use the social
mechanisms approach and draw on
institutional theory to implement this
The social mechanism approach approach, one of which is Davis and
Marquis's (2005b) own study of the causes
Recently Hedström and Swedberg (1998) and consequences or convergence in
proposed the articulation of cause and effect corporate governance form, as evinced in the
relationships called social mechanisms that listing of foreign firms on the New York
occupy a position between pure description Stock Exchange (NYSE) and Nasdaq. Davis
and universal laws. These postulated middle- and Marquis drew on institutional theory to
range relationships do not hold in all contexts identify several social mechanisms that might
and cannot be used to predict social develop- explain these listings. Foreign firms might
ments. Rather, they can only be drawn on to list on the NYSE and Nasdaq after they
explain social developments in specific turned American, presumably suggesting the
contexts after the facto Davis and Marquis operation of the institutional mechanism
(2005a; see also Davis 2006) are the foremost known as mimetic isomorphism. Or firms
proponents of the social mechanism approach might turn American after they have been
in organization studies. They contend that listed on the NYSE and Nasdaq for a while,
this approach is particularly appropriate in perhaps suggesting the operation of coercive
the contemporary period because social mechanisms. Or foreign firms might turn
mechanism reasoning is particularly American to the extent that they are tied
 757
via interlocking directorates to American mechanism approach would also have to
firms, presumably suggesting the operation embrace the process called ‘reappraisal’
of normative mechanisms. Or foreign firms which Litchfield and Thompson considered
might remain inert, while new firms are born fundamental to the scientific method.
American, suggesting the operation of Specifically, proponents of the social mecha-
imprinting. According to Davis and Marquis, nisms approach would have to view efforts to
the new institutionalism could not provide validate one as opposed to another possible
researchers with an a priori definitive social mechanism explanation of an
explanation of why foreign firms listed on the organizational development as an opportunity
NYSE and Nasdaq. But it could provide a to evaluate and thus confirm, reject, or refine
number of possible explanations of why existing social mechanisms arguments.
firms listed on the NYSE and Nasdaq that
could be tested for post hoc plausibility.
Their empirical analysis provided support for
the imprinting mechanism. Postmodernism
This use of institutional theory as a
compendium of causal arguments that can be Postmodernism has a variety of expressions
drawn upon to explain organizational phe- (cf, Weiss 2000; Deetz 2000). One can distin-
nomena seems sensible. There are many con- guish four thrusts of postmodernism in
crete historical developments that have organization studies. A substantive thrust
organizational dimensions and that cry out characterizes contemporary organizations as
for adequate explanation. For example, the qualitatively different (i.e., us postmodern)
emergence and proliferation of terrorism, from previous (modern) organizations. A
especially slate-sponsored and religion- methodological thrust advocates the use of
inspired terrorism, throughout the world is an deconstruction to reinterpret dominant under-
important phenomenon, perhaps most standings or organizations. Perhaps most
obviously because it is responsible for importantly, deconstruction provides a means
considerable political instability and much to read scientific understandings of organiza-
human suffering. Yet our understanding of tions as value-laden and biased accounts that
terrorism is infantile (Stampnitzky 2006) and are but one of many possible interpretations.
terrorism is certainly an organizational An epistemological thrust, referred to as the
phenomenon, requiring complex coordina- skeptical postmodernism by Kilduff and
tion. We think an analysis of terrorism that Mehra (1997), calls into question the
draws on organization theory, including the enterprise of attempting to uncover the truth
new institutionalism, could be exceptionally about organizations, by calling into question
insightful (cf. Perrow 1999). the independent existence of organizational
With this said, we think that adopting the reality and maintaining the existence only of
social mechanism approach to theory build- multiple interpretations of a presumed reality.
ing to the exclusion of the L&T approach Finally, a theoretical thrust, characterized as
would be worrisome. Perhaps most impor- the affirmative postmodernism by Kilduff
tant, a single-minded application of the social and Mehra (1997), attempts to develop new,
mechanism approach would by definition interesting, and exciting understandings of
bring the creation of new theory to a halt. If organizations, at the same lime holding in
we only borrowed social mechanisms from reserve various degrees of skepticism about
existing theory to develop explanations of the independent existence of organizational
observable phenomena, the store of social reality. It is this theoretical thrust that is most
mechanisms available to explain observable relevant to our analysis here.
phenomena would not grow. In order for The types of understandings that the
theory to grow, proponents of the social affirmative postmodernism develops, about
758
organizations have a number of defining be efficient. Insofar as the adoption of these
characteristics, some of which they share structures and practices facilitated their
with understandings produced by other alter- survival, by bringing adopting organizations
native modes of inquiry, such as feminist legitimacy and resources, they acted as if
theory, critical theory and post-structuralism they were efficient.
(Agger 1991). Postmodern understandings With that said, the proponent, of
tend to explicitly acknowledge the point of postmodernism tend to eschew the pursuit of
view from which they an, developed. Further, theories composed of precise constructs and
the points of view from which postmodern formal relationships that apply across
understandings are developed lend to be contexts and grow cumulatively independent
those of constituents who are typically of the phenomena that they are designed to
ignored (e.g., subordinates, women, apprehend (Van Maanen 1995). Thus, to the
minorities, etc.). Postmodern understandings extent that new institutionalists embrace a
tend to be conveyed through a more personal postmodern sensibility, they will likely
language. They lend to be less definitive, impede the development of the new
inviting leeway fur audience interpretation. institutionalism as a theory in the Litchfield
And they may aid in stimulating practical and Thompson sense. We do not by any
action on the part of the constituency from means intend this assertion to imply a
whose point of view they are formulated. critique of the postmodern perspective. We
There are relatively few studies that include merely wish to note what we believe is the
all of these characteristics, although there are obvious; that the, pursuit of the postmodern
a few exemplary studies, perhaps most perspective, like the pursuit of the social
famously Martin's (1990) analysis of a male mechanisms approach, is fundamentally
top manager's utterances about a pregnant incompatible with theory building in the
female employees' devotion to the firm. Litchfield and Thompson sense.
While the new institutionalism does not
exhibit any of the above four specific charac-
teristics, it does tend to exhibit a general Critical realism
point of view that resonates with postmod-
ernism. Postmodernism takes seriously the Critical realism (CR) is a largely British
idea that reality (to the extent that we can philosophy developed by Roy Bhaskar
speak of reality as an independent state) only ([1975]/1997, [1979]/1998, 1986) and others
comes into practical existence insofar as it is (e.g., Archer 1995: Collier 1994; Sayer
encoded in representations of social actors. [1992]/1997, 2001) that offers a 'third way'
Thus, postmodernism considers representa- between positivism and postmodernism. In
tions of reality (and the relationships among contrast to both approaches, it begins with
them), rather than reality itself (and the rela- the ontological nature of the objects under
tionship of representations to it), as the cru- study, which then determine, their proper
cial objects of study. The earliest proponents epistemology (i.e., how they can be known),
of the new institutionalism called into ques- rather than the other way around (termed the
tion the independent existence of the techni- ‘epistemic fallacy’). CR has become
cal realities of organizational structures and increasingly popular among social theorists
practices. They considered many organiza- and practitioners. However, it has only
tional structures and practices to be rational- recently begun to make headway into the
ized myths that look on the appearance of organization studies and management
reality and were taken for granted as such. literature (e.g., Ackroyd and Fleetwood 2000:
Thus, educational organizations adopted Ekström 1992; Reed 2005).
structures and practices prevalent in business Similar to the social mechanisms
organizations because they were assumed to approach, CR provides an explanatory
framework based upon the identification of
 759
the mechanisms that produce the organiza- actors, institutional logics will unfold in the
tional phenomena observed by researchers. In domain of [the] actual as institutions.
contrast to their approach, however, CR Institutions are the results of the ways in
provides a stratified social ontology which actors transpose those institutional
distinguishing between the levels of the real, logics through precise scripts, rules, and
the actual, and the empirical. Acknowledging norms in specific contexts' (2006: 632).
that all social phenomena operate in open The identification of these abstract causal
systems, these distinctions allow critical powers, the institutional logics, is carried out
realists to explain why a particular mecha- by organization researchers through a process
nism that is 'in play,' so to speak, may only be of retroductive logic. Following Sayer
contingently actualized and empirically (1992), Leca and Naccache (2006: 635: also
identified. Hence, the powers of generative see Bhaskar [1975]/1997) note that there is a
mechanisms operate 'transfactually' in open three stage process where researchers observe
systems and may not be realized due to the connections or regularities that have been
operation of countervailing causes (i.e., other actualized in an institution, build hypothetical
mechanisms). That is, their powers ‘may be models that might account for the observed
possessed unexercised unrealized, and phenomena, and then subject the models to
realized unperceived (or undetected) by empirical scrutiny. By incorporating CR into
[humans]' (Bhaskar [1975]/1997: 184). Thus, the new institutionalism they hope that this
the stratified ontology of CR may give a approach will be able to ‘bring agency back
firmer grounding to Davis and Marquis's into the institutional framework without
(2005a: 336) invocation of Coleman's notion denying the crucial importance of
of 'sometimes-true theories.' Furthermore, institutional embeddedness and thus move
unlike Litchfield and Thompson's view, beyond the vague notion of institutional
which focuses on identifying empirical pressures to investigate the dialectical
regularities, that is regularities that are interplay between actors’ actions and
actualized and empirically observed, CR institutional embeddedness’ (Leca and
identifies the important theoretical interest to Naccache 2006: 643: cf. Archer 1995).
lie at the level of the real. CR, then, appears to potentially provide
For example, Leca and Naccache (2006) the new institutionalism with an adequate
approach the NI from a critical realist per- response as to what their theory is. That is,
spective, providing a non-conflationist the various concepts, tendencies, and rela-
account of agency and structure in their tionships that make up the new institutional-
analysis of institutional entrepreneurship. ism refer to the generative mechanisms
Corresponding to the three domains identi- (consisting of both 'things' and 'relationship')
fied by CR, they place the actor’s experience of complex organizations that, in open
at the domain of the empirical, institutions at systems, may or may not be actualized and
the domain of the actual, and institutional are contingently empirically identified by
logics at the level of the real. At the level of social scientists. Since social scientists will
the empirical, organization researchers are never be able to construct a completely
interested in interpreting the subjective closed system, theory choice must be decided
meanings actors give to their activity through by explanatory power, rather than empirical
discourse analysis. At the level of the actual, prediction, although this will certainly remain
institutions can be identified, even if actors an important, but not final, criterion. A
do not recognize them because they have general theory is justified because complex
become taken-for granted. Finally, the insti- organizations share similar powers and
tutional logics that underlie and shape insti- liabilities across an array of organizational
tutions lie at the level of the real. ‘Depending domains, from hospitals to corporations, from
upon contextual factors and the actions of schools to the criminal justice
760
system; the same mechanisms (e.g., loose- with the emerging critical realist perspective,
coupling or isomorphic pressures) are at which seeks to carve out a middle ground
work. Finally, institutional processes, which between positivism and postmodernism.
have received less examination in the new Clearly there is much that can be done to
institutionalism than they deserve (Barley move the new institutionalism further in the
and Tolbert 1997), such as institutionalize- direction of a theory in all four senses of that
tion and deinstitutionalization, might be term. A theoretical understanding of the
profitably explored through the micro-level has only been weakly developed
'morphogenetic approach' developed by by the new institutionalism. For example, we
Archer (1995: Willmott 2000; Mutch 2005). think that it would useful to build upon the
Nevertheless, it seems that critical realism sociology of culture (DiMaggio 1997), to
may be open to the same problem as the improve our understanding of categories such
social mechanisms perspective if the process as conventions and scripts (Biggart and
of 'reappraisal' is nor explicitly incorporated Beamish 2003), and to engage with symbolic
into its theoretical approach. interactionism, dramaturgical,
ethnomethodological and other interactionist
theories that presume institutionalized
understandings that are necessary for
CONCLUSION temporal stability in social interaction.
The question in our minds is how much
Is the new institutionalism, after 30 years, further should the new institutionalism go?
fulfilling its promise as a theory in Litchfield As children in the US, we were told that if we
and Thompson's terms? Our answer is a were to dig deep enough, we would end up in
qualified 'yes.' The new institutionalism has China. That is, we would end up not at the
developed a multitude of measurable con- center of things, but rather in different even
cepts and empirically verifiable relationships antagonistic place. We think this just might
to describe and explain organizational phe- be the case with theories. At some point,
nomena. The new institutionalism also attempts to develop a theoretical orientation,
appears to be one of the most general and to make it more elaborate, more general,
comprehensive theories plied by organiza- more comprehensive, and more
tional scholars today; arguably more general encompassing of other modes of theorizing
and comprehensive than a number of theories threatens to transform it into something else,
that came before it such us the resource its theoretical competitors. For example, it
dependence and population ecology seems possible that attempts to build up the
perspectives. And cumulative growth in the new institutionalism’s currently
new institutionalism, resulting partly from underdeveloped understanding of individual
empirical research, can be deflected. Is the level phenomenon by drawing more on
new institutionalism a theory in other senses psychology and social psychology might
of the term as well? Again our answer is a result not in the articulation of new ideas but
qualified ‘yes.’ It has been used as a library rather the re-labeling (as new institutional) of
from which researchers call borrow social old ideas. Thus we think that new
mechanisms to explain organizational institutional scholars should remain alert to
phenomena. And that branch of the new the possibility that they are engaging in
institutionalism that seeks to uncover the semantic games and stay focused on the goal
operation of taken-for-granted cognitive of identifying truly new insights about
structures resonates with the main tenets of behavior in and of organizations as they
postmodernism. Finally, the general orienta- deepen and expand the scope of NI theory.
tion of the new institutionalism is compatible
 761
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 32
How to Misuse Institutions
and Get Away with It:
Some Reflections on
Institutional Theory(ies)
Barbara Czarniawska

THE ABUNDANCE OF DEFINITIONS rooms, buildings, or plants in which activity

of a particular kind regularly goes on’
The editors of this volume asked me to write (Goffman, 1961: 15, my italics). But Goff-
about the uses and misuses of institutional man also spoke of 'members of an institution'
theory - a quest that provide-d me with a per- (1961), which is closer to Mary Douglas’s
verse pleasure. In my reading, the most inter- suggestion that institutions are legitimized
esting interpretations of institutional theory social groupings (Douglas, 1986: 41).
result from the misuse of the term 'institu- None of this, however, is close to what
tion'; in Latin that means a human, inten- Thorsten Veblen (1899) seemed to mean
tional act of creating and enacting some type when speaking of institutions. To begin with,
of collective practice. As noted by March and Veblen used the term 'institution,' assuming
Olsen (1989) in their overview of various that it did not require a definition: 'The
definitions of the word, this meaning is used institution of a leisure class is found in its
primarily in law and economics. In the every- best development at the higher stages of the
day meaning of the ward (which enters barbarian culture' (1899: 1); and 'In the
almost every scholarly text), however, an sequence of cultural evolution the emergence
institution is a public administration organi- of a leisure class coincides with the
zation. Another meaning, close to it, is the beginning of ownership. This is necessarily
Goffmanian definition: 'Social establish- the case, for these two institutions result from
ments - institutions in the everyday sense of the same set of economic forces' (1899: 15).
that term - are places such as rooms, suites of Veblen was a cultural evolutionist, and
770
believed that people who act collectively barren in no time. As it is, institutional theory
form certain patterns of action that are even- is not a theory at all, but a framework, a
tually taken for granted. If they are contested vocabulary, a way of thinking about social
or broken, it results in normative life, which may take many paths. It would be
justifications, corrections or/and sanctions. my recommendation to attempt an
Such normatively justified patterns of action institutional theory account of institutional
are institutions. theory.
Gabriel Tarde would have agreed, but This is probably too large a task for a
added that people also imitate one another; single author or a single text, at least this
after all, it was Tarde who launched the author and this text; the Reflection part of
notion of diffusion in social sciences. He did this volume consists, in fact, of contributions
not think, however, that ideas spread like par- toward that purpose. My own input
ticles; in his view, particles may spread the comprises three pieces that may be added to a
way ideas do, as he believed that natural larger mosaic: a reflection on the local varia-
sciences should borrow metaphors from tions of institutional theory, a commentary on
social sciences, not the other way around. the (mostly missing) connection between
Tarde is often seen as a 'diffusionary institutions and technology, and a suggestion
evolutionist,' as he differed from diffusionists of possible gains from insights concerning
(the early school in anthropology, repre- institutions in literature theory.
sented by Franz Boas, 1904/1974) in noting
the variation inherent in each displacement,
and from evolutionists in pointing out the LOCAL TRANSLATIONS:
role of action, i.e. imitation. Thus he spoke of 'SCANDINAVIAN INSTITUTIONALISM'
'evolution by association' (Tarde, 1893/1999:
41) à la Stephen Jay Gould, or 'diffusion by When the word got around that Steve Burley
transformation.' His influence is rarely and Pamela Tolbert (1997) had written about
acknowledged by the contemporary ‘European institutionalism,’ all of us in
institutionalists, however, as they seem to Scandinavia ran to check who and what
prefer his rival, Emile Durkheim. This would be quoted. Much to our surprise, the
inclination may change, as 'Tardomania' has ‘European institutionalists’ turned out to be
supposedly made an appearance, at least in Max Weber and Emile Durkheim and the
France, Italy Germany, and Denmark contemporary writers were represented by
(Mucchielli, 2000; Latour, 2002). Anthony Giddens. Not for the first time we
At this point, some readers may expect a could observe that 'local knowledge' seems to
recommendation that the interested be of interest primarily when it reproduces
community of scholars should mobilize, 'global knowledge', which is that which
turning institutionalism into a ‘proper circulates at any given time among many
theory,’ with proper definitions of its subject localities.
and a set of axioms and logically connected Yet all local translators arrive at their own
statements. This, in my view, would he the version or versions of the global idea. Guje
death of institutional theory as we have Sevón and I coined the term 'Scandinavian
learned to know and appreciate it. Apart from institutionalism' (Czarniawska and Sevón,
the fact that any social theory would be killed 1996) to denote works from Denmark,
by strict formalization, the strength of Norway, and Sweden, written under the
institutional theory lies in the tolerance of its influence of Richard W. Scott, James G.
propagandists. Here, I think, most thanks March, and John W. Meyer.¹ What seemed to
should be directed to Walter W. Powell and characterize this group of texts and authors
Paul J. DiMaggio (1991). Had they insisted was a common interest in the construction
on policing the field, it would have turned and deconstruction of institutions
 771
(institutionalization and deinstitutionalize- transdisciplinary character of Scandinavian
tion) as the most fruitful way of organization theory, with its roots in econom-
conceptualizing social order. ics and engineering, but also with strong
This interest may be seen as being shared links to sociology, psychology, and
by all social sciences, so further delimitations anthropology.
are needed. The Scandinavian translators Field studies were rendering unequivocal
were mostly organization schulars, so the results; it was action rather than decision that
issue of organizing was or central interest to was at the center of organizing (Brunsson,
them. For many decades, organization theory 2007). As pointed out by March and Olsen
has been developed around the rational (1989), organizational action heeds the logic
theory of choice as applied to decision of appropriateness, and not, as the theory of
making. This theory did a poor job of rational choice would have it, the logic of
explaining the results of studies conducted in consequentiality. Actions are decided on the
the field of organizational practice. To basis of actors' classifications of the situation
explain why the Scandinavians exhibited in which they find themselves, as well as
such great interest in new institutional theory, their own identity. Logic of consequentiality
a few words on the tradition of organization or of rational choice is used to legitimize the
studies in Scandinavia are in order. actions undertaken, especially when
To begin, Scandinavian organization questioned. The combination of insights of
theorists had traditionally had a strong one of the classic authors of decision-making
interest in the practice of organizing. Long theory and a Norwegian political scientist
before Pierre Bourdieu legitimized ‘social resulted in the theory that fit the data, as the
practices’ as the central study object. Scandinavians found them.
Scandinavian researchers studied 'praxis' Why 'new' institutionalism? The 'old'
('practices' cannot be used in plural in institutionalism emphasized the central role
Scandinavian languages) of organized work. of norms and socialization processes, of rule
This interest led naturally to a great number and role conflict, and revealed that rules and
of field studies, facilitated by easy access, identities are taken for granted in a 'normal
especially to public sector organizations, attitude.' Institutions could be thus defined as
where the transparency rule permitted collections of stable rules and roles and
researchers access to anything that was not corresponding sets of meanings and
classified as confidential. As a result, interpretations.
perhaps, the approach has been strongly New institutionalism, as presented by
process-oriented, as opposed to structure- Powell and DiMaggio (1991), adopted the
oriented. centrality of the logic of appropriateness to
Furthermore, in conscious opposition to organizational action, and continued the
the universalizing tendencies, the researchers emphasis on rules and roles, as well as the
were taking the embeddedness of the prac- construction of meaning that occurs in
tices they studied very seriously indeed. This organizations. It also radicalized older
focus did not make their interests parochial; approaches by presenting identifies as results
indeed, connectedness was another typical of actions rather than their antecedents (see
trait or Scandinavian research (Czarniawska especially Meyer, 1986); it dynamized them
and Sevón, 2003). Most authors are well by focusing upon the process of rule
versed in the North American tradition, albeit development (institutionalization); and it
they treat it critically; are familiar with increased their complexity by adding nuances
European developments; and, more recently, to the theory of conflict.
direct their curiosity to the remaining conti- It has been suggested by many critics,
nents, especially Asia and Australia. This however, that the issue of change was not
practically demands a great openness to other properly explained by the new
academic disciplines, and results in the institutionalists.
772
It was understandable in light of the fact that whereas routines create novelty by faulty
the main thrust of the insututionalist reproduction.²
approach was to contradict traditional orga- This acknowledged ambiguity of change
nizational theory which, informed by rational was the focus of what we called a
choice theory, was based on the assumption Scandinavian institutionalism. It can be said
that change was an organizational norm. to have originated in the works of Johan
Stability, not change, was the norm, claimed Olsen and Nils Brunsson (see e.g. Olsen,
the institutionalists. 1970, 1989; Brunsson and Olsen, 1993).
Powell's (1991) defense did not fully Many examples can be found in edited
answer this criticism; he claimed that change volumes such as Scott and Christensen, 1995;
must be treated as an exception rather than as Czarniawska and Sevón, 1996, 2003, 2005;
a role. Although this insistence on stability or special issues of American Behavioral
over change can be seen as part of the Scientist, edited by Christensen, Karnoe,
provocative program of the new Pedersen, and Dobbin (1997) and
institutionalism, a further glimpse into the Westenholz, Pedersen, and Dobbin (2006).
roots of the 'old' institutionalism can be Born mainly in contact with the US new
revealing. Institutionalism's philosophical institutionalists, the Scandinavian
roots are usually be traced back to the institutionalism nevertheless reached for
Chicago school of pragmatism, especially to additional sources of inspiration, to be able to
George Herbert Mead (Aboulafia, 2001). address the issue of change more fully.
Two of the authors who inspired Mead's Change and stability together were seen as an
understanding of the social world were the organizational norm, and the logic of
European psychologist, Withelm Wundt, and appropriateness as complementary to the
the US psychologist, James Watson, one of logic of consequentiality.
the founders of behaviorism. The only" Describing organizations as a combination
dissension between Mead and Watson was of change and stability assumed a paradoxi-
over the face that the symbolic meaning of cality in organizational life (in tune with
communication was not included in Watson's Luhmann's theory of antipoietic systems - see
behaviorism. Thus Watson's approach, Luhmann, 1986; and Seidl and Becker,
according to Mead, failed to incorporate what 2005). The dynamic focus has been main-
was truly human. They agreed, however, that tained; the processes that attract the attention
institutions were 'natural' systems, and thus of researchers are processes of identity for-
stable (see also Scott, 1981). mation and deconstruction, rule establish-
Was this conception wrong? Of course not ment and rule breaking, institutionalization
- unless we permit the existence of and deinstitutionalization.
supernatural forces, all we know is natural. The emphasis on the processes of constru-
Culture, like people and everything else, is ction indicates another source of inspiration,
the product of nature. This does not give us which can be traced to the enormous
an explanatory apparatus of any power, how- popularity in Scandinavia of the works of
ever. In such light, population ecology would Peter Berger and Thomas Luckmann (1966,
be the only theory that made sense. 1995; Berger, Berger, and Kellner, 1974;
Unfortunately, this type of explanation did Luckmann, 1978), heirs of Alfred Schütz and
not allow the Scandinavians to interpret what his genial combination of European phe-
they were repeatedly witnessing in the field: nomenology and American pragmatism.
that, although 'planned change' never fully Considering Mead's influence on US institu-
succeeds, people do persuade each other to tionalism (especially visible in the work of
change their opinions, beliefs, and ways of John Meyer, Walter Power, and Paul DiMa-
acting - and nor only by mistake. The results ggio), the bridge was not difficult to assem-
are paradoxical: planned change stabilizes, ble. The constructivist version of institution
 773
theory permitted the Scandinavians to con- by 'real changes,' thus maintaining an
tinue their tradition of organization studies, unnecessarily dualist view of organizations
consisting of fieldwork with the processual and producing an unintended impression that
focus. Their main interest remained the symbolic changes are 'unreal' (for a critique
question of how institutions emerge, change, of such dualism, see Gagliardi, 2006).
and vanish - not merely that they do. They Studies of science and technology, such as
offered a type of research complementing, on those by Latour and Woolgar (1979/1986),
the one hand, largely speculative historical Callon (1986), Callon and Latour (1981), and
research, such as that of Torstein Veblen, Knorr-Cetina (1981, 1994), revealed that
Gabriel Tarde. Thurman Arnold, and Michael objects and facts are socially constructed as
Oakeshott;³ and, on the other hand, the statis- much as symbols are; that all human knowl-
tical studies of the type for which John W. edge is social; and that, as much as it is
Meyer and his collaborators are famous. Thus sensible and practical to believe that things
Scandinavian research answers the need for exist even when nobody looks at them, it can
micro-studies of institutions, as formulated never be 'proven' or ‘demonstrated’ that they
by Renate Meyer (2006). A growing exist. Thus the adjective 'social' as in 'social
collection of such studies will soon enable a constructivism' is obviously redundant. The -
combination that seems desirable to me: a point is that, in spite of the appearances of
series of field studies documenting in micro- stability and many stabilizing mechanisms,
perspective institutionalization processes that among which is the emergence of institu-
require decades, if not yet centuries. tions, the reality is under constant construc-
What is needed, then, is a review of tion. In tune with Tarde's postulates, but to
existing local translations of institutionalism. the irritation of natural scientists, students of
I am certain there are others, but just as science and technology have also demon-
Renate Meyer (2006) did not know about The strated that the practice of natural science is'
Scandinavian version, I have never heard of much closer to that of social sciences and
them. Revealing and recording them will humanities than anyone suspected.
permit the achievement of two goals: creating At the same time, the society/Nature
a data basis of micro-studies across places dichotomy was taken for granted in
and times, and applying institutional theory organization studies as in most social science,
onto itself. More of this in the second last causing notorious problems when
section. confronting technology. Scholars in the
Tavistock tradition (e.g. Rice, 1958;
Woodward, 1965) tried to fill the gap by
introducing the notion of socio-technical
SOME THINGS MISSING? systems. Yet conceptual energy was focused
TECHNOLOGY AND INSTITUTIONS on the ‘socio-,’ and the notion remained
firmly dualistic. The concept was revived by
Supporters of numerous variations of social some authors during sociology's turn to
constructivism engaged in a fight against technology throughout the 1980s (e.g.
scientist realism try to demonstrate that Mayntz, 1988; T. E. Burns and Dietz, 1991),
people, not nature, construct culture; objects but primarily within the same dichotomizing
were supposed to be ruled by different laws spirit, even if the 'socio-' part of the term was
than meanings are. In such interpretations, enriched by notions of technological design
organizational life was seen as being rife with and regulation. Contingency theory within
spiritual endeavors, and organizational organization theory started from a Tavistock
change seemed to be a change in symbols perspective (Burns and Stalker, 1961), but
and metaphors. The result was an unfortunate ended by actually excluding physical
debate around the question of whether or not technology through abstracting the notion of
those 'symbolic changes' were accompanied technology into task
774
structures of various kinds. And the new By envisioning organizations as action
institutionalism kept the distinction between nets transcending face-to-face interactions
'institutional environments' and 'technical (Czarniawska, 2004), it is easy to see that the
environments' (Meyer and Scott, 1981), a existence of any such action net requires a
clear echo of the traditional distinction stable lock into large technical systems. The
between administration and industry, but telephone connects to satellite-based global
problematic at a time when administration is telecommunications systems, the toaster to
run by computers, and engineering follows integrated electricity grids fed with nuclear
management fads. A need for dispensing with energy, and wrist watches to a technical
the dichotomy can be seen in the following system called world Time. These ubiquitous
quote from Goodman and Sproull (1990), technical systems and their countless termi-
who concluded their overview of the nals are easily overlooked by the layperson
organization technology studies in the 1980s and the organization theorist. Where does
with: water come from? From the tap, of course.
Joerges and I introduced the argument
While there appears to be a movement to focus that, through time, various institutional
primarily on technology as socially constructed, responsibilities have been partially
we feel that some balance is necessary. There transferred to machine technologies, and
are issues that concern technology as a physical
reality. These have not been well addressed and
therefore partially removed from everyday
have implications for doing work on technology awareness (Joerges und Czarniawska, 1998).
and organizations... We feel that a fruitful As organized actions are externalized in
approach would be to increase our machines, and as these machines grow more
understanding of both the social and me physical and more complicated, norms and practices
aspects of technology… The real contribution, of organizing progressively devolve into
however, will be understanding the intersection society's material base: inscribed in
between both forms of reality. (1990 260-261)
machines, institutions are literally 'black-
boxed' (Whitley, 1972). As a result, 'technical
One such contribution could be found in
norms;' or 'rules of technology: although they
those approaches to science and technology
regulate and order social life, remain absent
research in which nonhuman components
from the attention of social scientists. Social
were conceptualized as social subjects of
scientists are interested in social norms;
action and as autonomous political actors
technical norms have, until recently,
(Callon, 1988: Latour, 1996). Bernward
remained within the purview of engineers.
Joerges and I (1998) thought that technolo-
Two things have happened recently,
gies were better conceived of as
however: A series of catastrophes has
institutionalized organizing patterns than as
reintroduced material technology as a central
organizational members. Trust in machinery
concern in organization studies (see e.g.
is 'system trust (Giddens, 1990), as distinct
Barry Turner. 1978/1997: Perrow, 1984;
from personal trust. In other words, we
Weick, 1988: Vaughan, 1990; Shrivastava,
extended to organizations Latour's (1992)
1993; Weick and Sutcliffe, 2001); and there
argument that 'technology is society made
is a growing interest among organization
durable.' Technology makes organizing
scholars in science and technology studies
durable, thus contributing to the institutional
(see e.g. Czarniawska and Hernes, 2005),
stability of one of its products - The modern
especially in the computer industry (see e.g.
organization - and through it many others.
Lanzara and Mörner, 2005).
What is more, this process is circular;
In order to get closer to the institutional
modern organizations, as users of machines
norms inscribed in the machines, one must
for producing machines and other artifacts,
observe technical things functioning in their
have the task of inscribing institutional order
'natural" - that is, social - contexts. Again,
into matter.
 775
computers offer the most obvious examples, saw as being interrelated. We related them to
within and outside of organizations. When other, nontechnical genres of inscription:
we start the new PC we just bought, a smiling norms for human action, machine behavior,
face will welcome us and let us know what and the natural environment.
we are supposed to do, via a step-by-step The first subgenre contains norms for
action program. For those of us who have human action, defining human rights and
bought many a PC over the years, it comes as duties vis-à-vis a machine or some other
no surprise to see that the instructor in the material artifact: ‘Turn bottle cap clockwise.’
program is no longer a man and the learner a The second subgenre has norms for machine
woman; the virtual world does its best to behavior: DIN A4, for example, the standard-
follow the rules of political correctness, with sized page for European copying machines;
mixed results (Gustavsson and Czarniawska, or 220 V. the regulation voltage in Europe.
2004). Such norms prescribe the way specific
Thus even such cases of intentional technical artifacts are to be constructed and
personal control are instances of institutional how they are to function. The third subgenre
control. The controlling power of technical consists of such norms for the natural
norms stems from the fact that a given prac- environment as emission and immission
tice has been incorporated into an artifact and limits for S02 air pollution or the nitrate
therefore seems impossible to question. content of groundwater.
Technology is one of the ways in which soci- These examples show that technical norms
ety controls itself, socializes its members by are embedded in a complicated mesh of insti-
unobtrusive measures, and thereby constantly tutions. All three types of norms are specified
re-constructs itself. by various prescriptions for measuring and
Treating technical norms as social norms testing and are, in general, connected to a
of a particular kind does not imply a multitude of interrelated procedural norms. In
determinist connection between the content addition, technical norms are always
of the technical and nontechnical norms they referring back to nontechnical ones.
may or may nor promote. A computer in a Organizations establish and maintain tech-
matriarchal society would probably speak nical norms in relation to the environmental
with a female voice, but it would still be technical norms, as well as norms for users
recruited into supporting as well as and producers like themselves. Furthermore
subverting the dominant institutional order. technical norms always evoke manifold
Rather than unmasking particular power references to nontechnical institutionalized
games or positing deterministic structural rules and cultural symbols (gender equality
relationships, the idea that institutions are for example). As mentioned, the process is
inscribed in technology calls for something circular. Each machine norm implies a pro-
like an 'ethnomethodology of machines.’ ducer and a user norm, and each producer
What social order does the dialogue with our and user norm alludes to a machine norm.
computers follow, and try to instill in us? Similarly, each type or norm reflects certain
Technical norms are the institutional normative images present in the wider
structure of machinery. As such, they are context, and vice versa. These
inscribed by organizations: Inscriptions made interconnections are best revealed in cases in
by non-organized agents (graffiti, a which artifacts are moved outside the
handwritten label on a homemade dish) are institutional context of their production, as
not legitimate technical norms. Furthermore, documented by the anthropologists' sense of
technical norms contain an explicit or wonder over the possible uses of Coca-Cola®
implicit reference to some quantitative meas- cans in some cultures (Sahlins, 2001).
ure. In our article, Joerges and I enumerated The divisions among the three types of
three subgenres of technical norms that we technical norms are in no way unambiguous.
776
In fact, their attribution to one class or the the new institutionalism, in order to live up to
other may be controversial, and in this sense their mission of explaining the social charac-
may remove their taken-for-grantedness. ter of the organizational world, need to
Blurring genres and redefining their bound- reflect on their own metaphors.
aries is an affair of politics ('Who are those The issue at stake is much more than
computer guys to tell me what to do?'), jokes metaphorical purism. It is possible lo
("Be nice to from computer, or else!'), and translate the physical metaphors of new
experimentation (‘Let's see if we can use it institutionalism into literary categories as
this way instead’). In the everyday life of well as the other way around, each time
organizations, all three blend, and the effects producing some sort of creative
4
of that blending are pragmatically decided; displacement. In the case at hand, however,
for some purposes it is important to keep the replacement of physical metaphors by
them apart, for others, to blend them. cultural ones may finally remove the
Organizational actors may or may not prob- assumption of stability that sneaked into the
lematize their contents, form, or sheer exis- new institutionalism, acknowledge the
tence, but researchers must. Technology interplay between intentions and
ought to become an interesting topic for the contingencies, and permit self-reflection.
institutionalists, precisely because technical I return to the notion of institutional
norms tend to operate outside the awareness isomorphism, as explicated in the original
of their habitual followers. Smoothly and DiMaggio and Powell article from 1983. This
reliably prescribed machine operations notion assumes the homogenization of an
become sealed off from representations of organization field due to coercive pressures,
organizational life, and, by the same token, mimetic processes, and normative pressures.
the constitutive parts of the action nets repre- Later comments by Powell (1991), written in
sented by the concept of 'organization' remain reply to various criticisms, addressed the
invisible, and are not given in voice in sources of heterogeneity, albeit treating it
organizational accounts. merely as a type of error variance. The
introduction to Powell and DiMaggio (1991)
took a more generous view of the possibility
that homogenization may be accompanied by
SOMETHING COULD BE ADDED: heterogenization, but it was also more
A NARRATIVE INSTITUTIONALISM? abstract than the specific original wording,
thus making it impossible to judge if they
actually changed their minds or were merely
My interest in narratology brought another placating their critics.
field with a developed theory of institutions This problem is not as troublesome once
to my attention: literary theory (see e.g. the metaphors are exchanged. In genre
Zeraffa, 1973; Bruss, 1976, 1982). Thus the theory,5 which is the institutional theory of
idea of arranging an encounter between a literature, the sources of homogeneity and
narrative approach and the new institutional- heterogeneity are the same. The result may
ism (Czarniawska, 1997) was based on the veer to one side or another temporarily and
hope that the combination could lead to locally; what is more, because no
greater metaphorical clarity in both. In what 'thermostats' are fitted, the imbalance can
follows, I neglect narratology in order to con- lead to the extinction of a genre or to its
centrate on institutional theory, which must temporary dominance over others. No
not be seen as a proof that it is only institu- predictions of the kind 'If A then B ... 'can or
tionalism that can benefit from the encounter need be made. But an understanding of the
(for a reverse example, see e.g. Gumbrecht, dynamics can be attempted, because the
1992, applying Luhmann's theory to litera- coercive pressures or attempts to use power
ture). However, I believe that proponents of to establish the superiority
 777
of one genre over another invariably produce construct their identity around it - authorize
counter-narratives and subversive genres. it, as it were. Once again, the reaction of the
Thus one could claim that the Académie readers - or the spectators - may be
Française promoted freedom of expression in acceptance or rejection.
French an; that the increasing control of All these contradictions may be connected
positivism revealed the strength of symbolist with a paradox that seems to be inherent in
approaches; and that the bureaucratic orders institutionalism, at least in its constructivist
of central administrations produce bursts of version (Sismondo, 1993 used Berger and
creative avoidance activities. The emergence Luckmann, 1966 as an example). On the one
of institutions is always rife with paradoxes. hand, the construction of institutions implies
Mimetic processes become much more and demands a proactive vision of human
complex, as well, when interpreted in terms actors busying themselves with plotting,
of fashion (a social phenomenon) rather than performing, and accounting for what they do,
individual imitation (Czarniawska, 2005). and thus producing reality as they know it.
The concept of fashion, conceived in the way On the other hand, the notion of institutions
Tarde (1890/1962) and Simmel (1904/1973) suggests accretion, a passive process under
understood it, combines a striving to conform no one's control - something that just
with a striving to be original. The municipal- happens.
ities espousing yet more reforms and changes For Sismondo, this is a historical accident,
are afraid of being left alone ('What if a somewhat unreflective combination of two
everybody else reforms?’) and are proud or different thought traditions, which is obvi-
being avant-garde (‘We were there before ously ‘wrong.’ There is no point in insisting
anybody else'). that it be corrected, however. For me, it
Finally, normative (professional) pressures opens a vast area of possibilities, because and
may be the most ambiguous of all. On the not in spite of its lack of coherence. Is not a
other hand they were described in DiMaggio fuller, richer picture of knowledge and reality
and Powell (1983) as idealistic and at being created by this emphasis on a
variance with social realities; and on the combination of plots and intentions, which
other, as hierarchical, authoritarian, and akin produces unintentional but powerful
to coercive pressures. The narrative version changes? According to this reading, even
of institutionalism needs no more than institutionalism and the rational model can
corroborate this ambiguity. Within complement each other. The rational model
professional environments, there is always a promotes change and the illusion of
simultaneous pressure to adhere to tradition controllability, which, according to Luhmann
and to rebel against it, to create new (1986), is necessary to keep the system
traditions and to follow the conventional way going. The institutional response is that the
of doing things. change happens only within the frames
Additionally, genre theory reveals permitted by the institutional thought
interplay between intentionality and field structure; and observations confirm this view,
forces that is hardly visible in the insofar as it concerns planned change. But
'institutional isomorphism' version of events. the changes are many, and truly radical ones
Literary works can be and are consciously are, by definition, unpredictable; although it
constructed, but it does not mean that the could be claimed that the probability of such
intentions of the readers will ever radical changes would be smaller if all
approximate the intentions of the authors or planned change ceased to exist.
that a text can be intentionally created as an 'Looking at the system from the outside' is
exemplar - a beginning of a new genre a metaphorical, paradoxical attempt in.
ordered by fiat. Once a pattern begins to Escherian spirit, as Luhmann repeatedly
emerge, actors try to appropriate it, give it a stated in his writings Thus it does not make
name, translate it for their own needs, sense, from this imaginary travel to the
778
outside, to make 'predictions' or to form (1985, 1989), inspired by Arnold (1935) and
'recommendations for action: which can be by Meyer and Rowan (1977), who spoke
used 'inside.' ‘It is not the task of an external about rationalist decision façades and action-
observer to de-paradoxize the system and oriented practices, postulated hypocrisy as a
describe it in a way that is suitable for multi- joining mechanism; March and Olsen (1989)
level logical analysis' (Luhmann, 1986: 179). spoke of 'healthy hypocrisy.’
What our imaginary 'vision from outside' Many new institutionalist works, however,
says is that the system survives, thanks to its steer away from such solutions and return to
fictions - its illusions of selection, rational Arnold’s dilemma, doing precisely what, in
choice, and intentionality - combined with his opinion, made no sense: formulating their
complexity and with the knowledge of observations about the paradoxical nature of
closeness, repetition, and self-reflection. the system in a language of one of the sub-
Pointing out the 'iron cage' of institutions, systems - the one that forbids paradoxicality.
DiMaggio and Powell failed to see what Perhaps this need to formalize and formulate
Luhmann has been emphasizing all along. Of predictions is connected with the trap of
course it is an iron cage, but it 'functions' institution-maintenance that lies in wait for
well, as long as people inside believe that every institutionalist. Genres and other
they are free. 'The autopoiesis does not stop institutions presuppose permanence (an
in [the] face of logical contradictions: it institution is a practice that lasts) and
jumps, provided that possibilities of further difference (an institution must be different
communication are close enough at hand' and differentiable from other institutions).
(Luhmann, 1986: 180). It would be affair to Such a statement is apparently in perfect
claim that the new institutionalists are congruence with the stationary assumptions
unaware of this paradox, but many try to of the new institutionalism.
deparadoxize their theory - an unnecessary
feat, given that a theory describing paradoxes
does not have to be paradoxical itself. DON’T GO TOO FAR; TURN AROUND
Neither does it have to exclude paradoxes at AND TAKE A LOOK
all costs; in general, it does not have to
imitate the system it describes. Such an As long as a genre or an institution is used
‘anthropological approach toward social properly - for classification - this is not a
ideas,’ as Thurman Arnold (1935: 30) called problem. 'Any public tends to classify what it
it, is not supposed to lead to 'a logically receives and to receive it through a classifica-
formulated set or principles' (1935: 30), tion of everything that it has received before'
which some new institutionalists try to (Lejeune, 1989: 147). This is what the con-
develop. Neither should it demand that the cept of the 'institutional thought structure'
system it observes should stop producing (Warren, Rose, and Bergunder, 1974) was all
such principles: ‘It is the system under about.
examination which can no more help The possible transgressions are two. One
producing principles than a hen can keep is to attempt to construct a complete theory,
from laying eggs’ (Arnold, 1935: 30). as Northrop Frye (1957/1990) tried within
Karl E. Weick's (1979) description of the genre theory. Lejeune's (1989: 152) critique
world of organizations was similar to was firm: 'To elaborate "a theory of genres"
Arnold's, with the added mechanism of is to try to formulate a synthesis in the
‘loose coupling,’ which permitted different absolute by making use of concepts that
and even contradictory subsystems to coexist make sense only in the historical field'
peacefully under the same label and under the (Lejeune, 1989: 152). As mentioned, this
same organizational roof. Brunsson danger has
 779
been avoided, at least in DiMaggio and behind the institutionalist ideas? Why should
Powell's tolerant presentations of a variety of one attempt to formalize a world undergoing
institutional theories. construction?
The other risk is that the phenomenon in There is always the possibility of
the focus of reflection - the unproblematic alternating between the position of an
(because it is institutionalized) use of observer and that of the actor - in this case as
classificatory devices - re-occurs within the observers of and actors in social science.
reflection itself. One solution to this problem Thus I end as I began: with a plea for an
is to place oneself and one's analysis in the institutional account of institutional theory.
closed system that is being depicted, as the
genre analysts often do. The narrative angle
makes self-reflection easier, in view of the NOTES
observation that theoretical narratives are
produced within the same institutional 1 Roine Johansson limits this development to
thought structure as the narratives of the Sweden (Johansson, 2002).
field. Seeing one's theory as a narrative 2 Paul DiMaggio's (1988) view of the
temporality of every institutional order is e10se to
among many for, in case of institutional this idea, but is more conflict oriented.
theory, a genre among others) can help to 3 According to Ernest Gellner, on the occasion
locate it institutionally. Otherwise, the of the 70th anniversary of the foundation of LSE,
theoreticians are doomed to including a blind Oakeshott and Gellner quarreled, Gellner arguing
spot in their theory, which covers their own that 70 years is long enough to speak of the estab-
position in it. lishment of an institution, and Oakeshott arguing
Lack of self-reflection is not a trait of me that it requires at least 200 years (Gellner, 1980). I
am on Oakeshott's side, as the recent changes in
new institutionalism alone. The 'old' institu- Russia have demonstrated; 70 years is not enough
tionalists also took the notion of one institu- to change an institutional order.
tion for granted: the institution of social 4 The very distinction between 'physical' and
science research. Even sociologists of knowl- 'cultural' metaphors is tenuous. As mentioned,
edge, such as Berger and Luckmann, Tarde saw diffusion as a cultural process, whereas
assumed that their task was to study everyone biologists-speak of both diffusion (a movement of a
else - that sociology itself can be studied only substance from an area of high concentration to an
area of lower concentration) and translation (of
by philosophy (Berger and Luckmann, 1966). messenger RNA in a bacterium E.coli, for
One could argue, however, that the 'old' example). The term 'translation', as used in the
institutionalism was born in harmony with its sociology of translation, is also nonlinguistic (Steve
institutional environment, in the sense that its Brown, 2002).
ideas blended well into the mainstream of its 5 Genres are sets of rules and conventions gov-
time. Not so the new institutionalism, some- erning expectations about the length and composi-
what in opposition to the present mainstream tional structure of communicative acts, but also
ways of conceptualizing reality, farms of seeing and
in social sciences, and appearing to try to interpreting particular aspects of the world. I am
appease the institutional core by sacrificing referring here to dynamic genre theories, such as
its traditional methods, which were close to those developed by Bakhtin (1979/2000) and Bruss
those of anthropology. The result, however. (1982).
Seems sometimes not so much paradoxical as 6 'Facts, as telescopes and wigs for gentlemen,
confused. Many studies report straightfor- were a seventeenth century invention' (MacIntyre,
ward statistical analyses. Surely it is the task 1988:357).
of an institutionalist to explore the way
statistics are built and used, and not to take
them as ‘facts’,6 ‘revealing regularities’? Ma- REFERENCES
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 33
Been There, Done That, Moving On:
Reflections on Institutional
Theory's Continuing Evolution
Paul Hirsch

In the literature of Sociology, one seldom FROM POLITICS TO CULTURE

finds references today to terms like grand vs
middle range theory, structural-functional- My introduction to the term ‘institution’
ism, and social Darwinism. But, for more came from Parsons' classic (1956) essay on
than two decades, debates over these terms three levels of analysis in the study of organ-
raged throughout the discipline - until the izations, published in the first issues of
field moved on - having arrived at some con- Administrative Science Quarterly. In this
ceptual agreements and letting the rest drift framework, work gets done at the firm's¹
away. The recent history of Institutional technical level and is coordinated at its
Theory repeats conflicts over many of the managerial level. Laws and regulations are
same issues and themes. I am pleased to say created outside the firms' boundaries, or the
we have also followed suit in resolving these institutional level, and enforced in the
by having the various sides' framing of issues markets and external environments in which
converge some, and otherwise, moving on. these organizations operate. Parsons' concep-
Since this chapter reflects on some of these tion of this process was two-way, with each
paradigm conflicts as I saw them, much of side mutually influencing the other. Going
the essay is historical, written in the past way beyond a closed system conception of
tense. The good news is I am pleased to organization, his 'Institutional' level encom-
celebrate the end of an era of tough conflicts passed a political world in which lobbyists,
over defining Institutional Theory, and trade associations and others with direct
participate in its future development. interests met with authorities to negotiate
784
over rules that would govern their firms' action occurred and change was possible. As
behavior. In Parsons' terms: Stinchcombe (1997: 2) put it: 'Institutions
were created by purposive people in
Subject to the overall control of an institutionali- legislatures and international unions, and in
zed value system in the society and its subsyste- pamphlets of business ideologists.'
ms, the central phenomenon of organizations is Of course, the action's result could well be
the mobilization of power for the attainment of
the goals of the organization. The value system
to reinforce existing rules - but this remained
legitimizes the organization’s goal, but it is only a variable, with outcomes often uncertain.
through power that its achievement can be made For example, my article, 'Organizational
effective. (1956: 22 5, italics in the original) Effectiveness and the Institutional
Environment,' published in ASQ (1975b)
Parsons' framework, and the subsequent utilized the concept 'institutional' to track
influence of the open systems perspective how U.S. patent law and State regulations
had a large impact on the developing organi- about prescribing brand-name drugs were
zational field. The value (and possibility) of influenced by the pharmaceutical industry’s
analytically deriving an organization's lobbying.²
behavior from its external environment was As a student of culture as well at the time
new (Hirsch, 1975a). (Hirsch, 1972), I found the two concepts -
Also exciting was the opportunity this pro- culture (on the one hand) and institution (on
vided to examine how, in turn, the the other) did not overlap and were not linked
organization could work to change a in the field. For sociological articles
regulation or law from being, in James addressing culture at that time, it was deemed
Thompson's terms (1967: 24), an unwelcome necessary to connect the topic addressed to
'constraint' to a more manageable social structural issues (e.g., economic
'contingency' and, finally, a manipulable concentration or audience demographics),
'variable.' Two notable consequences of so rather than focus on (just) its narrative or
analyzing organizations were developing aesthetic content, imagery or other
strategies to 'beat' the market, and having a nonmaterial features. The 'Production of
unit of analysis between the individual and Culture' school (Peterson and Berger, 1975;
society that could ‘act.’ Organizations were Hirsch and DiMaggio, 1977) successfully
seldom conceived as such independent units extended the dominant studies of social
in economics (in which firms were 'typical,' structure to cultural issues and sites; the later
not distinctive), or sociology (which 'cultural turn,' which partly reordered and
conceived organizations as tools reversed these priorities in subfields across
implementing agendas set externally). social sciences, had not occurred yet
Several of the fault lines that would later (Peterson and Anand, 2004; Hirsch and Fiss,
develop between what DiMaggio and Powell 2000).
(1991) framed as 'old' and ‘new’
institutionalism trace to conflicting interpre-
tations which subsequently developed around
such questions as: how open to influence
from below are open systems?; how much REFRAMING THE CONCEPT OF
influence (if any) can managers exert in INSTITUTION: FROM ACTION TO
constructing their organizations' environ- ICON - A TRAIN LEAVES THE STATION
ments?; and, is the appropriate unit of
analysis for organizational studies the
organization, or the image and category of I visited Stanford in 1975. Dick Scott was on
organization it is presumed to fit? leave and I was honored and pleased to be
At this time (mid-1970s), the term 'institu- asked to teach the Sociology of
tion' was not coupled with the term 'theory.' Organizations class. It was a wonderful year,
Rather, it implied a place at which political during which John Meyer and Brian Rowan
 785
were finishing what became their classic John Meyer et al.'s volume, Organizational
article (1977) on 'Institutionalized Organi- Environments: Ritual and Rationality (1983),
zations: Formal Structure as Myth and Perrow (1985) commended what he'
Ceremony.' It proclaimed an explicit re-entry described as a resulting contingency-like,
of a cultural framing to explain organiza- framework, exhibiting a continuum in which
tional actions in the face of environmental the assessment of some (mainly industrial),
demands. The multiple ways in which Meyer organizations was based on production and
and Rowan also showed organizations could efficiency standards, while greater reliance
‘game’ the system to attain legitimacy were on myth and ceremony characterized
as clear and impressive as their point that to assessments of (mainly) government agencies
gain legitimacy organizations needed to and non-profit organizations. At this time,
respond to signals from their environments, both conceptions of organizations and
or appear to do so. My sense at the time was measures were included and distinguished in
their contribution was compatible with, and the growing institutional framework.³
added to, the ways in which Thompson Meyer's innovative approach was
(1967) had suggested organizations could extended and applied in multiple projects
gain from and exert a reciprocal influence on with Scott. The term 'institutional' was added
their environments. to what in sociology had more traditionally
In the years which followed, writers on been attributed to culture's and"' symbols'
institutional theory rightly credited and influence on people and organizations.
praised Meyer and Rowan's formulation for Cognitive framing rather than a ' focus on
being among the first to shift the field's atten- socialization also displace-d more
tion away from the technical sides of measur- conventional references to 'values' and
able performance, focusing more on the 'norms.' Before long, what we now know as
importance of organizations' conformity to 'Institutional Theory' was launched, with
the appearance and symbols defined as legitimacy as the currency for success, and its
legitimate by their external evaluators. conferral unidirectional (top down). This
Interestingly, these two sides of their formu- latter focus, emphasizing the persistence of
lation both contributed to what later became 'taken for granted' rules to conform to,
called 'old' and 'new' institutionalism. On one brought on comparisons with population
hand, its discussion of the symbolic envi- ecology - for which environments also
ronment's power to confer legitimacy had a 'dominate or overpower organizations"
strong influence on DiMaggio and Powell's (Aldrich, 2006: 41) and similarly 'treat
(1983) initial presentation of the powerful organizations as a population within an
role of legitimacy in rewarding conformity organizational field' (Greenwood and
through isomorphism; this one-way conferral Hinings, 1997: 1026). Brint and Karabel
of status in exchange for conformity was an (1991: 355) also noted its contributions to the
important step towards their subsequent for- study of institutional forms and functioning,
mulation of 'new institutionalism' (1991). On while' also criticizing the absence of interest
the other hand, Meyer and Rowan's enu- in their origins and transformations.4
meration of ways organizations (through Interestingly, the theory's interpretation of
myth and ceremony) can reap rewards by decoupling as a deliberate strategy to avoid
only appearing to be (but not actually) con- following roles also brought on alternative
forming to that environment's signals is more formulations, proposing the same behaviors
consistent with what became 'old' institu- to instead be responses to confusion over
tionalism. These were well documented in multiple signals and rule ambiguity (Weick,
(Marshall) Meyer and Zucker's (1989) study 1995; Martin, 1992).
of Permanently Failing Organizations, for The theoretical ascent of culture, as estab-
example. In his (otherwise critical) review of lishing the appropriate behaviors to follow,
786
both challenged and reversed earlier over- as a 'battle of the coasts.' After DiMaggio and
statements by structuralists, which (para- Powell (1991) published their famous ideal
phrasing Marx) had framed culture as type dichotomy of the 'old' and 'new'
insignificant ‘superstructure.’ The sides were institutional schools, it became clear from
now reversed.5 In this developing version. departmental composition and hirings that the
Institutional Theory effectively ignored the more political version of what was now
'flipside' earlier allowed by Meyer and called 'old' institutional theory remained
Rowan (1977), and Meyer, Scott, et al. ( rooted in the east, while advocates of the
1983) to interact with their environments, 'new' institutional school were based
over determining what rules must be primarily at Stanford and on the west coast.
followed. This understanding of the term The 'new' institutional framework, joined by
‘institutional’ as political in nature, which I population ecology (also rooted on the west
(and others) had utilized (and still also see) as coast, mainly Berkeley), discounted the idea
the analytical level where the process of that organizations can or should adapt to or
change and bargaining over roles occurs, was impact their surroundings (Greenwood and
now reframed more as an untouchable icon, Hinings, 1996). Published articles working
whose signals are set and rules enforced and from this perspective came
not subject to challenge. disproportionately from scholars based in
For the discipline of Sociology, this (and graduating from) departments on the
revived echoes of a long-standing debate west coast. (Ironically, if each coast was
between a focus on stability ('romancing the disproportionately tied to one or the other of
norm') and proponents of change. Max these poles, departments in the mid-west
Weber, along with noting the power and [e.g., at the Big Ten schools] were generally
great efficiency of rule-following learning from both and not taking sides.)
bureaucracies, had also worried about how A pictorial version of this review, coupled
the rules they enforce can be socially harmful with the happy observation that the two poles
and in need of change. At the time of the are no longer so far apart, appears in Table
discipline's arrival in the U.S., its proponents 33.1 of the Appendix.
divided between advocates of social
Darwinism vs. those seeking to reform
poverty and injustice. The dispute between
'old' vs 'new' institutionalism recalled earlier
competing agendas – to study deviance vs. RESOLUTION AND
dominance, peripheries vs. centers, exotic vs. BRIGHT FUTURE
normal activities, as well as middle range vs.
functionalist formulations, and (statistically)
variation on scatter-plots vs. a greater focus In the midst of this contention, I was honored
of regression lines. A critique of new to be selected to assess the field, as the
institutionalism as more 'sociology without Academy of Management OMT Division’s
villains' was nor much of a departure from Distinguished Scholar for 1998. In this talk
these earlier intellectual debates. (‘Process Detective: A Role for the
Organization Researcher'), I had a chance to
reflect on how the Open Systems revolution
BATTLE OF THE COASTS had turned out so far. I noted the irony that it
expanded the explanatory field to which we
For the organizational field, this debate also turn to explain organizational outcomes, but
took on what Howard Aldrich (2007) noted was failing to provide adequate
 787
explanations for how these unfolded. My We look forward to the reconciliation of the old
concern was that: and new institutional perspectives... There is so
much of value and interest in each, we do not
we now risk a closed system model of the see how they can remain empirically and
environment. It calls its own shots, does not intellectually separate for very long (1997: 417)
conform to models of what makes it change,
doesn't seem to be dependent organizationally
on many input or output analogue". We placed Happily (though the article was discouraged
the environment in control, no questions asked. by an ASQ editor al the time), the field has
At this broader level, formalisms and scientific subsequently moved in this direction.
management can be redefined as re-engineering Similarly, I suggested that the research in the
or process controls; informal relations can be
reframed as network studies. We have
three pillars of Scott's (1995) typology of
reconstituted a closed system or either level. So, institutional perspectives be combined or
it’s probably time for a new theory to come collapsed, to encourage more options for
along and put more interaction and enactment locating 'additional complementarities and
back into the theoretical equation. alliances across them' (Hirsch, 1997: 1721).
It is heartening so many of these visions
An easier solution became apparent when have been realized. The chapters in this
Michael Lounsbury and I imagined handbook attest to it, and their indifference to
combining the best of 'old' and 'new' the framings of the 'old' vs. 'new' debate can
institutional theories. In fact, it seemed clear help make it a thing of the past. We now
these ideal types could not go much farther benefit from the larger inventory of
before each needed to incorporate and sophisticated concepts and methodological
'borrow' elements associated with the other. tools to conduct our studies. As suggested at
We proposed this as the resolution for the start of the essay, we have been there and
'Ending the Family Quarrel" (Hirsch and are done with the preliminaries. The prospect
Lounsbury, 1997), suggesting that more of much fascinating research lies ahead.
history and polities be permitted entry into Now, to move on and continue the
the 'new' and more symbols and cultural institutional journey!
framing be included the ‘old.’ We concluded
these suggestions by stating:
788
NOTES Hirsch, P. (1998). Process detectives: a role for
the organization researcher. Distinguished
1 The terms 'organization' and 'firm' are being Scholar Lecture, AOM Division of
used here interchangeably. Organization and Management Theory
2 If replicated today, one would learn that the (unpublished).
number of lobbyists employed by this still powerful Hirsch, P. (1997). Sociology without social
industry in 2007 was more than double the number structure: Neoinstitutional theory meets brave
of U.S.30101997c Senators and congressmen (CBS new world. American Journal of Sociology,
News, Sixty Minutes 2007). 102 (6): 1702-1723.
3 Meyer's influence in reviving culture as an Hirsch, P. (1986). From ambushes to golden
important part of the sociological landscape in parachutes: corporate takeovers as an instance
which to conduct research also contributed to the of cultural framing and institutional
explosion of studies on 'organizational culture.' His integration. American Journal of Sociology,
student, Terence Deal co-authored one of the first 91 (4): 800-837.
(and bestselling) texts in this area (Deal and Hirsch, P. (1975b) Organizational effectiveness
Kennedy, 1982).
and the institutional environment. Adminis-
4 Interestingly, DiMaggio and Powell (1991:
trative Science Quarterly, 20 (4): 327-344.
12), who included Brint and Karabel's essay in the
same volume, also agreed that this version of Hirsch, P. (1975a). Organizational analysis and
institutional theory 'usually downplayed conflicts of industrial sociology: an instance of cultural
interest within and between organizations.' lag. The American Sociologist, 1O (1): 3-12.
5 I have consistently insisted both be included in Hirsch, P. (1972). Processing fads and fashions:
our studies (d. Hirsch, 1986). In one Author's Bio an organization-set analysis of cultural
(Hirsch, 1997), I wrote that I 'have straddled the industry system. American Journal of
boundaries dividing culture and social structure for Sociology, 77 (4): 639-659.
two decades, usually seeking more balance by Hirsch, P. & Fiss, P. (2000). Doing sociology and
taking the side of whichever one seems to be getting culture: Richard Peterson's quest and contri-
the worst of it from the other.' bution. Poetics, 28: 97-105.
Hirsch, P. & Lounsbury, M. (1997). Ending the
family quarrel: towards a reconciliation of
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pp. 1-38, in W. Powell & P. DiMaggio (eds.), Sage.
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Analysis. Chicago: University of Chicago cal approach to the theory of organizations II.
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Greenwood, R. & Hinings, C.R. (1996). Perrow, C. (1988). Complex Organization: A
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Peterson, R.A. & Anand, N. (2004). The Stinchcombe, A. (1997). On the virtues of the old
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Thousand Oaks, CA.: Sage.
 34
Reflections on Institutional
Theories of Organizations
John W. Meyer

Contemporary institutional theorizing in the And within sociological versions, I concen-

field of organizations dates back thirty-odd trate on phenomenological theories. These
years. This particularly describes what are reflect my own interests, are continuing loci
called new or neo-institutionalisms. These of research creativity, and contrast most
terms evoke contrasts with earlier theories of sharply with other lines of social scientific
the embeddedness of organizations in social theorizing about organizations. In practice,
and cultural contexts, now retrospectively 'organizations' tends to be both a research
called the 'old institutionalism' (Hirsch & field, and a realist ideology about modern
Lounsbury, 1997; Stinchcombe, 1997). They society: phenomenological thinking steps
went through a period of inattention, so that back from that commitment, and is useful in
when institutional thinking came back in analyzing, for example, why so much formal
force after the 19605, it seemed quite new. organization exists in the modern world
Institutional theories, as they emerged in (Drori, Meyer, & Hwang, 2006).
the 1970s, received much attention in the
field, along with other lines of thought
emphasizing the dependence of modern
organizations on their environments. Perhaps BACKGROUND
surprisingly, they continue to receive atten-
tion, and seem to retain substantial measures Throughout most of the post-Enlightenment
of vigor. One secondary aim, here, is to history of the social sciences, notions that
explain why. human activity is highly embedded in
I primarily review the status and prospects institutional contexts were central.
of tile principal themes of institutional theo- Individuals were seen as creatures of habit
ry. I concentrate on sociological institutional- (Camic, 1986), groups as controlled by
ism, as capturing core ideas in their most dra- customs (famously, Bagehot's cake of custom
matic form, rather than the limited arguments or Spencer's folkways and mores), and
emphasized in economics or political science. societies as organized around culture.
 791
The nature of the institutions and their older institutional theories tended to crumble.
controls over activity, in social scientific Studies of persons no longer attended to
thinking, was never clear and consensual. notions of habits (Camic, 1986), and
Theories ranged from economic to political concepts of culture, and custom as driving
to religious. And they variously emphasized forces receded. If the old institutions
more cultural forms of control or more remained, they remained as dispositional
organizational ones. Then, as now, anything properties of the actors involved - tastes and
beyond the behavior of the people under values of individuals, core values of states
study could be seen as representing a and societies.
controlling institutionalized pattern (a The key concept in the new system was
strikingly clear definitional discussion is in the notion of the 'actor' - variously, individual
Jepperson, 1991). persons, national states, and the organizations
Over the long history of social scientific created by persons and states. Society was
thinking through the mid-twentieth century, produced by these powerful entities. It was
institutional theories grew and improved. made up exclusively of actors, and even the
Sophisticated syntheses like Parsons' were rapidly disappearing peasants could be
produced, with many variations on broad analyzed as individual actors. Social change
evolutionary schemes and typologies, as high was a product of such actors: thus the
Modernity progress. But they came into continuing use of an individualistic version
dialectical conflict with another aspect of the or Weber's Protestant Ethic thesis as a proof
same Modernity. As 'men' came to believe text for proper social analysis (e.g., Coleman,
they understood the institutional bases of 1986; Jepperson & Meyer, 2007). And all
human activity, the)' also came to believe this had a nonnative cast - social institutions
they could rise above, and control, them - no that restricted the development and choices
longer subject to, but playing the parts of, the of real social actors could be seen as
now-dead cultural gods. Embeddedness in inefficient at the least, and perhaps as
culture and history was a property of the destructive of freedom and progress.
superstitious past, over which the Moderns The new models remain in force, and it is
had triumphed. So institutional thinking now conventional in social science
could survive in anthropology and about publications to refer to 'actors' rather than
primitive societies (including earlier Western people and groups. But over time there have
history), but only tenuously in the social been doubts about models of society and the
sciences of Modernity (Meyer, 1988). world as made up of interested actors, and
In short, the old institutionalisms were only of actors. Too many studies of
driven into marginality by the rise of (often individual persons showed astounding levels
policy-oriented and scientistic - see Toulmin, of embedded non-actorhood in what: were
1990) conceptions of social life as made up supposed to be political, economic, and
of purposive, bounded, fairly rational, and cultural choices. A whole literature on
rather free actors. Society was discovered, organization in actual social tire showed the
headed by the sovereign state as its central overwhelming importance of uncertainty in
actor, freed by the constitution of Westphalia. organizational (non)decisions (Cyert &
The human person as individual actor was March, 1992) and of the informal resolutions
discovered, unleashed by markets, democ- involved in practice (Dalton, 1959; and many
racy, property rights, and religious freedom. others): formalistic or technicist analyses
And rationalized social life, made up of (e.g. Perrow, 1970; Blau & Shoenherr, 1971)
bureaucracies essentially delegated from the seemed much too limited. And notions of
state (as in Weber or Fayol) or associations rational sovereign nation-state action as
built up by individual actors (as in Barnard), driving development did not stand up against
was discovered and celebrated. the realities of chaotic Third World nation-
In the new schemes, built around notions state and the surrealities of the First and
of society as made up of empowered actor's, Second Worlds' Cold War.
792
So, since the 1970s, in every social called 'path dependence.' So that individuals
science field except anthropology (where of organizations, faced with a new problem,
older institutionalisms had never receded), use their accustomed older solutions whether
'new' institutionalist theorizing appeared, or not these ever worked or can reasonably
with models again envisioning people and be expected to work (see the various essays
groups as embedded in larger structures and by March and his colleagues, 1988).
cultures of one soft or another (See Jepperson In the present essay, we leave aside this
2002 for a review). There have been as many line of institutional theory, and concentrate
different varieties as in the 'old' only on lines of argument locating
institutionalisms, but they all have had one institutionalized forces in wider
main element in common. They all have environments than the history of the actor
come to terms with one or another version of itself. These tend to fall on a broad
the idea that society is made up of interested, continuum ranging from more realist theories
purposive, and often rational actors. to more phenomenological ones. After
If the old institutionalisms had seen people reviewing this range of arguments, we turn to
and groups as rather naturally embedded in focus more intensively on the
broad cultural and structural contexts, the phenomenological side of the spectrum,
new institutionalisms incorporate a tension in which is of special interest here, the locus of
the conceptualized actor-environment the most distinctive advances in the field, and
relation. This is often seen as a stress an important contribution to a field which
between structure (i.e., the environment) and tends to merge theory and realist ideology in
agency or actorhood (see e.g., Giddens, 1984; ways that are often unexciting.
or Sewell, 1992), in replication of the debates
in the old institutionalism about free will and
determinism. Realist institutionalisms
The new institutionalisms see the social
environment as affecting the behaviors and Some institutionalist lines of thought, arising
practices and ideas of people and groups now particularly in economics and political sci-
conceived as bounded, purposive and sover- ence, retain very strong notions of society as
eign actors. Many different lines of thought made up of bounded, purposive, sovereign,
are involved, varying in their conception of and rational actors. In economics, these
what an actor is, and what properties of might be individuals or organizations, oper-
which environments are relevant. ating in market-like environments. In
political science, they might be sovereign
national-states operating in an almost
TYPES OF INSTITUTIONAL THEORY anarchic environment. Institutionalism, in
such schemes, involves the idea that some
Most institutional theories see local actors – fundamental institutional principle must be in
whether individuals, organizations, or nation- place before systems of such actors can
al states - as affected by institutions built up effectively operate. The classic core principia
in much wider environments. Individuals and required in economic versions is property
organizations are affected by societal rights (North & Thomas, 1973). In
institutions, and national-states by a world international relations theory it is the
society. In this chapter, we focus on these principle of nation-state sovereignty
lines of theory. (Krasner, 1999).
But it can be noted that some other lines Once the core principle is in place, sys-
of thought treat modern actors as affected by tems of actors freed from further institutional
the institutionalization built into their own influences are thought to function stably and
histories. Older ideas about habit, custom, effectively over time. Indeed, further institu-
and culture are resurrected as theories of tional interventions in the market or interna-
what is now tional polity are thought, in extreme versions
 793
of these traditions, to be counter-productive the institutional context of actorhood, and a
disturbances of rationality. There is a ten- conception of the modern actor as rather
dency to see the situation as one of more penetrable. The institutions have
punctuated equilibrium. Collective history cultural or discursive dimensions, and also
operates briefly, creating the crucial change, structural or organizational ones. The key
and then stable equilibria ensue. So there are term describing institutionalized culture,
accounts of the unique circumstances here, is ‘norm,’ especially common in
producing the construction of property rights political science (see for extended examples,
in Western history. And there are discussions Katzenstein, 1996). The key notions of
of the similarly unique circumstances institutionalized organization, especially
producing the magic of Westphalia, thought utilized in sociology; are 'relation' or
to undergird the rise to world dominance of 'network' (Granovetter, 1985).
the Western nation-stale system. A norm is a rule with some degree of
Extreme realist institutionalism, thus, binding authority over actors - for instance,
retains very strong assumptions about the in international relations, the principle that a
capacities of actors, and very limited pictures slate should not kill the diplomats
of the institutional environment. The representing other states; or the proscription
environment really contains only one narrow of chemical weapons in war. In the most
institutional rule - and in most versions it is a realist theories, a norm is created by the
rule created by the actors themselves, whose actors involved, and has binding power over
existence and character are seen as entirely an actor only inasmuch as that actor
prior to the institutional regime. continues to support it. In less realist
Over time, realist institutionalism has versions, norms may have been created by
tended to become a good deal less extreme, forces in the past, and may have binding
and more realistic (see e.g., North. 1981). To power whether or not present actors support
property rights, the economists add a variety them. In these latter accounts, norms are
of other important institutions needed to internalized by actors through some 'sort of
make the modern system go (Jepperson & socialization process: thus, in a compromised
Meyer, 2007). A variety of institutions must realism, actors are partly creatures of the
reproduce and socialize the population, for rules, not only creators of them.
instance, and a knowledge system is required Similarly, a network relation between
to encourage technical improvements actors is a simple form of organizational
(Mokyr, 1992). And perhaps even some institutionalization. Such relations are
cultural supports for entrepreneurship are thought to constrain actors, as well as provide
needed (Landes, 1998). Similarly, realist opportunities for their activities. In the most
political scientists add institutional elements realist versions, actors create their networks:
necessary to make the world political system in less realist models, the networks are more
work: guarantees of agreements, and trust, institutionalized, have prior histories and
for example. In political science realism, as external determinants and thus generate
well as in economics, however, the considerable path dependence.
institutions thought to be required are also
mainly thought to be products of the
interested activity of the basic actors Sociological institutionalism I:
involved. social organizational versions

Moving further away from realist models, we

come to some core ideas of modern sociolog-
Compromises with realism ical institutionalism (see DiMaggio &
Powell, 1983; Powell & DiMaggio, 1991;
Moving away from more extreme realist Scott, 2001; Jepperson, 2002; Hasse &
thinking, much modern social science is built Kruecken, 2005). Here, actors are
up around more complex pictures of substantially empowered and
794
controlled by institutional contexts, and these perspective in which the actors of modern
contexts go far beyond a few norms or society are seen, not simply as influenced by
network structures. Further, these contexts the wider environment, but as constructed in
are by no means simply constructions built and by it (see Jepperson, 2002 for a review).
up by the contemporary actors themselves, Related ideas in political science are called
but rather are likely to have prior and ‘constructivism.’ Rationalized organizations
exogenous historical origins. as actors are creatures of rationalized
Institutions, in these conceptions, are environments (Meyer & Rowan, 1977:
packages or programs or an expanded sort. Meyer & Scott, 1983; see also Zucker, 1977).
‘Regimes’ is a term employed in political The individual as actor is a continually
science for the idea – organizational expanding construction of modernity (Meyer,
packages infused with cultural meaning 1986, following on a long discussion in the
(often from professions as epistemic literature, including Berger, Berger, &
communities). So one can refer to a neo- Kellner, 1973). The nation-state as actor is a
liberal regime in the contemporary world. Or construction of a world polity (Meyer, 1980;
an anti-trust program in earlier America Thomas, Meyer, Ramirez, & Boli, 1987;
(Fligstein, 1990). Sociologists capture this Meyer, Boli, Thomas, & Ramirez. 1997).
idea by referring to societal sectors, or social The concept of 'actor' in this scheme is far
fields, or arenas of action. Institutions, in removed from that envisioned in realist per-
these senses, are complex and often coherent spectives. The realists imagine that people
mixtures of cultural and organizational are really bounded and purposive and
material. sovereign actors, and that nation-stales are
Similarly, the institutions involved too. And so are the organizations deriving
penetrate actors in multiple and complex from these. The sociological institutionalists,
ways, ranging from more realist formats to on the other hand, suppose that actorhood is a
more phenomenological ones. DiMaggio and role or identity, as in a theatrical world
Powell (1983) provide a list that is much (Frank and Meyer 2002): individual actors, in
utilized (see Scott 2001, for a related one). this usage, have socially conferred rights and
On the realist side, they argue that responsibilities, and socially conferred
institutional Structures affect actors through agency to represent these (and other) interests
what they call 'coercive' processes, including (Meyer & Jepperson. 2000). Actorhood, in
nation-state legal actions. On the middle this usage, is scripted by institutional
ground, they envision 'normative' controls of structures; and the relation between actor and
environments over actors, emphasizing the action is no longer a simple causal one - both
influence of professionalized standards. And elements have institutional scripts behind
then, moving to a more phenomenological them, and their relation has, causally
perspective, they suppose that environments speaking, strong elements of socially
create standards that actors adopt 'mimeti- constructed tautology. That is, the actor-
cally,' reflecting taken-for-granted standards. action relation is a package., and as people
At this point, actors are not really well-- and groups enter into particular forms of
bounded entities any more, but may be built actorhood, the appropriate actions come
up of cultural and organizational materials along and are not usefully to be seen as
from their environments. choices and decisions, institutional theories,
thus, do not depend on particularly elaborate
social psychological assumptions about
people or groups: almost any social psycho-
Sociological institutionalism II: logical model is good enough to explain what
phenomenological versions institutionalization has made socially
obvious.
A key turning point in the rise of the new Thus, when a group of modern people
institutionalism is the development of a gather to assemble or change an organization,
 795
they do not do so from scratch. Everywhere, extreme cultural dependence of modern
there are models put in place by law, ideol- organizational structures. Thus, the
ogy, culture, and a variety of organizational institutionalists emphasize that much modern
constraints and opportunities. People are social rationalization has mystic functions
likely to install these in the organization they encouraging the formation of organizations
are building with little by way of thought or and their components. This sometimes leads
decision: exotic psychological assumptions to criticisms that institutionalism is only
are not required. There will be offices and about 'symbols' rather than ‘realities,’ and
departments that were unknown a few institutionalist research occasionally in fact
decades ago (CFO, or Chief Financial makes this mistake. On the other hand, the
Officer; HR, or Human Relations realists, ignoring the dependence of modern
Department). Few will spend time deciding organizational structure on the rapidly-
to adopt these institutions, and thus perhaps expanding myths of rationality, have no
the word 'mimetic' applies. But it is an serious explanation for the rise - in every
imprecise word, in this context, because the country, every social sector, and almost every
people adopting the new structures will often detailed social activity - of so much modern
be able to articulate clearly the legitimating organization itself (Drori et al., 2006).
rationales for their action, as if these were Phenomenological ideas are by no means
thought-out purposes. The purposes come incompatible with more realist ones - in most
along with the enterprise. situations, both can be true and often are.
As an illustration at the individual level, Tensions arise because realist models tend to
any good student in a prestigious American be exclusionary and core modern ideologies,
university ought to be able, almost instanta- undergirding polity, economy, culture, and
neously, to write some paragraphs about 'why society. They are normative models as well
I decided to go to college: But on inspection, as cognitive ones, and thus alternative lines
it turns out that almost none of these students of thought are seen as in part normative
actually decided to go to college, as they had violations. Further, closed-system realist
never contemplated any alternative. Going to models are often central to policy advice, and
college was taken for granted. Indeed, any this function is limited by more open-system
student who had spent serious time deciding institutional theories.
whether of not to go to college would be very
unlikely to have a record enabling admission
to a prestigious one. Nevertheless, many The career of sociological
researchers studying college attendance institutional theory
formulate their task as analyzing a 'decision'
– a decision they probably never made, and The phenomenological perspectives of
their subjects probably never made. A sociological institutionalism have prospered
number of methodological errors follow, and over the last three decades. Before discussing
beset the research tradition involved. Parallel why this is so, we need to note why it should
errors characterize much research in the field not have been so.
of organizations and states: decision analyses
of matters never in fact decided. Mistakes of The ideological absorption of
this sort routinely follow from the established institutional ideas
realist assumptions that human activity, more Modern social science, following on modern
or less by definition, follows from choices. ideology, celebrates a social world made up
Sociological institutionalism of the of strong actors, in the realist sense. Theory
phenomenological sort is not only furthest and ideology give great emphasis to notions
from realism, but arises in some opposition to of society as a product of such actors and
it. Realist theory, it is argued, grossly their purposes. Methods of social research,
understates the and public data collection, build data on and
796
around these units, and define proper developments, in American organizational
analyses as focused on both their life, around affirmative action pressures and
independence and their purposive action. requirements (see Dobbin & Sutton, 1998;
And norrnative ideologies infusing both Edelman, 1992; Dobbin, Sutton, Meyer, &
research and public life give much preference Scott, 1993; Edelman, Uggen, & Erlanger,
to treatments that take individual persons 1999). After the long wave of legalizing pres-
(and also nation-states and organizations) as sures on organizations, a whole set of
highly interested and agentic actors schemes are produced - policies, offices, and
(Jepperson & Meyer, 2007). professions - responding to these pressures.
More concretely, modern democratic Organizations incorporate packages of these.
political systems rest, for their legitimacy, on But after a time, it is all naturalized in the
doctrines of free individual choice. If the preferred models of relatively rational
individuals and their choices are construc- actorhood. And by now, any reasonable
tions of the powers of the system itself, the organizational manager would be able to
legitimacy of democracy tends to disappear. explain why his or her organization has
Similarly, if choices of individuals and affirmative action policies - these policies are
organizations in markets are in fact 'wired' obviously the best way to ensure hiring the
consequences of the market system, the legit- most able people.
imacy of the free economy is undercut. The Given that the processes stressed by the
same points can be made about religious and phenomenological versions of institutional
cultural choices in the nominally free society. theory are in many ways constantly undercut
Thus, there are cultural tendencies in the or absorbed by evolving modern organiza-
modern actor-centered society to celebrate tional systems, the question arises as to what
actors in a very realist sense: these tendencies forces keep these lines of theory alive, well,
are very strong ideological currents in the and in fact prospering. If the social world
social sciences. Social science influence over were moving toward a modern equilibrium,
policy tends to depend on them (Jepperson & we have noted above, institutional theories
Meyer, 2007). would tend to be absorbed in a socially con-
Consider that much organizational structed realist ideology. Obviously, equilib-
research and theory go on, worldwide, in rium is not what is going on.
schools of business and education and public The rapid social changes distinctive to the
policy. These schools are built on the notion period since World War II have tended to
that organizational leaders are decision- create rapid cultural expansions of the sorts
makers, and their main tasks are to train their attended to by institutional theories. The
students to be such decision-makers. They period, in other words, creates both institu-
are in no position to emphasize that their tional theories and a globalizing social world
students are, or should be, drifting non- which operates along the lines suggested by
decision-making followers of those theories.
institutionalized currents. Scott (2007), for
instance, defends realist institutional theory Stateless globalizations
on precisely these grounds. Recent centuries of development have syste-
Thus, as new institutional forces are built matically tended to create interdependencies
up in the modern system, the system itself transcending the organizational capacities of
tends to absorb them in expanded theories of extant political systems to maintain control
actorhood and decision-making. (classically, Wallerstein, 1974). Rapid expan-
Organizational members and research ana- sion and globalization have created sweeping
lysts tend over time to see the organizational economic, political, social and cultural forms
elements newly adopted under institutional of (often conflictful) movement and integra-
pressures as if they were functional, rational, tion extending far beyond the boundaries of
and reasonable organizational choices. This controlling organizational structures. Forces
process is analyzed with care in studies of the for
 797
social control and stability, thus, emphasize notions of lawful nature, inherent rationality,
both the authority and the responsibilities of and the natural rights of humans (or, in gen-
the existing actors in national and world soci- eral, natural law: Thomas et al., 1987; Meyer
ety. At the world level, meanings have piled et al., 1997). These movements take the form
up, rationalizing and expanding the powers of broad global wave-like developments, and
and responsibilities of national states. And a 'wave theory' like sociological institution-
similarly, individualisms, stressing the rights, alism is appropriate for the massive changes
powers, and capacities of individuals, have involved.
expanded enormously, supporting for Thus the character of worldwide social
example the long-term and dramatic change since World War II continually rein-
expansion of education around the world forces the more phenomenological versions
(Boli & Ramirez, 1987; Meyer, Ramirez & of sociological institutional theory. I briefly
Soysal, 1992). The whole process is analyzed note some of these massive social changes,
in Tocqueville's discussion of social control and their wave-like diffusive character. All
in stateless America (1836/1969), and his the changes involved refer to laws and
emphasis on the resultant empowerment and rationalities and rights built into nature rather
control of the individual, including the rapid than particular societies. They are built
expansion of a great deal of mobilized and around rapidly-expanding meaning systems
rationalized social organization. and formally structured in decentralized
The term globalization now tends to refer associational formats rather than around
to (a) economic interdependencies, and (b) sovereign actorhood.
very recent time periods. But for our pur- First, there is in place of positive law the
poses, the time frame is much longer, and the dramatic expansion of science (Drori, Meyer,
interdependencies involved more political, Ramirez, & Schofer, 2003). Science expands
social, cultural, and military than economic. exponentially in terms of numbers of people
The post World War II period represented a and amounts of resources involved, and also
dramatic up-turn in the long history. The fail- in terms of the social authority it carries. It
ure of social control in an interdependent expands enormously in terms of content cov-
world was dramatic and incontrovertible. erage, as essentially all aspects of natural and
Two devastating world wars (both between social worlds come under scientific scrutiny.
supra-state forces), a disastrous depression And it expands spatially, finding a strong
seen as rooted in nationalist provincialisms, presence in essentially all the societies of the
the holocaust and sweeping destruction of world. Science, as reality and even more as
social life, and the end of normal war given metaphor, provides a cognitive and norma-
nuclear weaponry, all made it obvious that tive base for all sorts of integrating world
new forms of order and control were neces- regulation - making the world more govern-
sary. This was all enhanced by the Cold War able (Foucault, 1991; Rose & Miller, 1992;
conflict, and by the destruction of the older Drori & Meyer, 2006).
stabilizing colonial arrangements. An old Beyond science, there is the enormous
nominally-anarchic world of conflicting expansion of rationalizing social science - by
nation-states was no longer remotely justifi- far the most rapidly expanding fields in the
able: war, for instance, lost meaning as a life of the university in the last half of the
heroic achievement in interstate competition. twentieth century (Drori & Moon, 2006;
But on the other hand nothing like a world Frank & Gabler, 2006). Theories, and occa-
state was plausible. sionally evidence, expand rapidly and take
In the absence of much possibility for the center stage in much policy-making
state-like world organization, with a cultural around the world. In a world celebrating the
system organized around positive law, the equality of persons and societies, rationalistic
world has produced an astonishing set of social theories are seen as applicable
socio-cultural movements building up a
798
everywhere: any country can develop, any et al., 2006). The old nation-state, with its
person can be equipped with cultural capital, passive bureaucracies, is reformulated as a
independent of time and place. And any modern organization, filled with agencies
organization, anywhere, can and should be a that are to function as autonomous and
rational actor. accountable organizations (i.e., actors:
Second, in partial replacement for an older Brunsson & Sahlin-Andersson, 2000). Old
Modern celebration of the primordiality of family firms are reconstructed as modern
the national-state, there is the dramatic rise of organizations with empowered managerial
a natural law emphasis on human rights. The capabilities, and with work forces full of
standing of persons as citizens of national participatory modern individual actors.
states is replaced by a greatly expanded set of Traditional structures housing professionals -
doctrines of the person as an entitled and hospitals and schools and legal and
empowered member of the human race in a accounting partnerships - are reformulated as
global society (e.g., Soysal, 1994). More and real agentic social actors, capable of the
more categories of humans are directly highly purposive pursuit of their own goals
capacitated in this system women, children, (Scott, Ruef, Mendel, & Caronna, 2000).
old people, handicapped people, gay and All of the institutionalizations of the new
lesbian people, indigenous people, racial and globalized (or 'knowledge,' or 'postmodern')
ethnic minorities, and so on (for examples, society noted above find a core basis in the
see Ramirez, Soysal, & Shanaban, 1998; dramatically expanded educational systems
Bertovitch, 1999; Frank & McEneaney, of the post- War world (Meyer et al., 1992.
1999; Abu Sharkh, 2002). And the moral and for mass education; Schofer & Meyer, 2005,
legal principles involved rapidly take for the university). The university, in
coverage (though commonly not practical particular, is the core home of the explosions
effect) worldwide (Hathaway, 2002; Tsutsui of scientific analyses of nature, and
& Wotipka. 2004; Cole, 2005; Hafner-Burton rationalistic analyses of social life that try to
& Tsutsui, 2005). tame the modern supra-national environment
The new human, in this expanding system, And it is the core home where ordinary
has greatly enhanced rights, and responsibil- persons of an older world are transformed
ities. But also greatly expanded attributed into knowledgeable and empowered carriers
capacities for economic, political, social, and of 'human capital' for the new society (Frank
cultural action. These capacities support the & Meyer, 2007). If classic bureaucratic
extraordinary worldwide expansion in both structures of the Modern society rested on
mass and elite education in the world since populations equipped with mass education
World War II (Meyer, Ramirez & Soysal, (Stinchcombe, 1965), the organizations of the
1992; Schofer & Meyer, 2005). Knowledge Society rest on university-
The expanded model of empowered and installed knowledge and empowerment
entitled individuals, operating in a tamed and (Frank & Meyer, 2007). Worldwide, about 20
scientized natural and social environment, percent of a cohort of young persons is
generates - as in Tocqueville's America - the enrolled in university-level training (Schofer
expanded modern picture of the human actor; & Meyer, 2005).
and of the host of social organizations this
actor creates. The world is now filled with Actors and others
human persons who assume the posture of The post-War period has, thus, experienced
empowered actor, and have the capacity to dramatic expansion in cultural
create and participate in collective rationalization. On the one side there has
organizations formed as social actors. been the exponential and global growth of the
So organization and organizations scientific and rationalistic analysis of natural
blossom everywhere (see the studies in Drori and social environments. On the other lies
 799
a similarly exponential and global growth in occupations, agency with very constrained
the rights and powers attributed to the human interested actorhood has been a great success:
beings who enter into society. And in the cul- everywhere there are consulting firms,
turally-constructed crucible at the center of therapists, advisors, researchers, and other
all this, the result is the extraordinary modern creatures of a higher purity.
growth in social actors. Passive old national Thus actors themselves often step out of
state bureaucracies turn into actors filled with their narrow actorhood, and take on the
plans and strategies. And persons everywhere higher calling of agency for universal truths
shift from traditional (i.e., peasant) identifies and the collective good. So we have
into modern schooled ones: as an indicator, successful national-states offering themselves
persons turned actors are able to opine on all to their competitors as models of the proper
sons of general questions - and survey conduct of business. And successful
research can now be done almost anywhere organizations delighted to display their
(Meyer & Jepperson 2000). virtues, rather than concealing them from the
But the question arises, who is doing all competition. And individual persons entering
this cultural construction? Who or what sup- into public life with disinterested analyses of
ports the rationalization of me natural and what their President should do (Jepperson,
social environments? Who props up all the 2002a).
new human rights and powers? If ‘interested actor’ is one core role in the
The world or actors - entitled and empow- modern system, we need a term for the roles
ered beings with the rights to have goals and of actors that adopt a legitimated posture of
the capacities to be agents in pursuit of those disinterest, and tell more interested actors
goals - is also a world in which me same how to be and what to do. I suggest the old
actors have the legitimated capacity to use Meadian concept of 'Other' (Meyer, 1999).
their agency in pursuit of collective goods of The modern world is filled with these others.
all sorts. Indeed, the agency of actors is There are the representatives of the whales
collectively legitimated and dependent. In and other creatures, of the distant ecological
this sense, a properly constructed actor is future, and of the rights of humans in the
always partly an agent for one or another most distant places and cultures (e.g., over
collectivity - in the modern system, often a issues like female genital cutting - see Boyle,
fairly universal one - as well as an agent for 2002). And there are the proponents of social
his or her own needs and goals as actors rationality and critics of corruption anywhere
(Meyer & Jepperson, 2000). Thus modern in the world. Closer to home, there are the
actors are partly above petty interest, and are advisors and therapists, offering consultation
agents for more general and universal goods. to individuals and organizations and national-
So the most rapidly expanding individual states on how to be more virtuous and more
occupations, worldwide, are the nominally effective actors.
disinterested professions: they may partly This whole system offers explanatory
serve particular interests, but they are in good opportunities calling for sociological institu-
part agents for the collective - more tional theories. The modern nominally-realist
accurately for what used to be called God interested actor is at every side surrounded by
(Truth, and the like). And the most rapidly institutions with much cultural character and
expanding organizational structures in the legitimacy - the sciences and professions
world may, similarly, be the non-govern- constructing the rationalized environment of
mental and often non-profit organizations proper 'action,' the legal and intellectual con-
that serve as agents for various universal structors of expanded human rights and
goods, often at the global level (Boli & capacities, and the 'Others' who create these
Thomas, 1999). And even among the more arrangements and who often directly instruct
mundane profit-making organizations and the expanded actors. And of course, the
800
FALTA PÁGINA 800 E 801
801
802
 Constructions of institutional models may reflect social audiences art: so eagerly responsive
successes and failures in organizational or (Drori et al., 2003).
international stratification systems, without Similarly, realists lend to see any diffusive
necessarily reflecting the interests of the influence of the stratification system as
powerful bodies in that system. Because
globalization involves the construction of myths indicating the power and interest of the elites
of underlying world similarity, an extraordinary of that system. This is implausible. Thus, in
amount of diffusion goes on as a matter of global society, the world environment move-
fashion (Strang & Meyer; 1993). So Japanese ment clearly reflects the values and orienta-
economic success of the 19805 produced a little tions of American society. But the American
wave of Japanified policies around the world, in national-state actor clearly resists subscribing
no way reflecting the purposive power or to this system, as do leading American
interest of the Japanese national-state. Similarly,
there is much imitation of elite firms in any corporations. As another example, the world
industry, whether or not the elite firms human rights movement clearly reflects
encourage, or gain from, this imitation. American values: but the American national-
 When powerful or successful organizations in state actor was reluctant to have a human
fact portray themselves as models for others, it is rights declaration built into the United
often unclear that they are acting in what is Nations; and continues to refuse to ratify
ordinarily conceived to be their interest. The various human rights treaties. In exactly the
American national-state, for instance, likes to
same way, massive worldwide efforts at all
encourage others to do things the 'right' way me
American way - as a matter of encouraging sorts of organizational reform and rationali-
virtue in the world. There is no evidence that zation clearly reflect American ideologies of
much of this aid activity particularly benefits the organization: but the American national-state
interests of the American state. aggressively resists participation.
Exactly the same criticisms can be made
In many areas, institutional and realist expla- of realist argument in other organizational
nations of the development of institutional- arenas. Elite universities may be sources of
ized models overlap. And conflicts between much educational rationalist ideology, but are
them are often conflicts over the interpreta- often organizationally primitive (e.g.,
tion of the effects of me same variables. Thus Oxford, Harvard). The same is true of elite
when institutionalists note the impact of pro- fins and agencies.
fessionalized models (e.g., in the accounting All in all, in the modern stateless but glob-
area), the realists talk grimly of the profess- alized world, institutionalist arguments
sions involved as carrying out ‘professional explaining the dramatic rise of cultural
projects’ presumably to enhance their inter- models of expanded actorhood show every
ests and powers (see Abbott, 1988 for exam- prospect of continued success. Only in a
ples often incorporating this sort of more stabilized world society would the pro-
reasoning). The impact of the scientists who cess of social construction of actor motive-
discovered the ozone layer problem is, how- tions catch up, creating the proper appearance
ever, difficult to interpret as a simple of an apparently realist world society.
Machiavellian scheme to enhance the power
of the sciences. And, indeed, the whole
'professions as plots against the body politic' Institutionalized models affect
scheme runs into the problem that the picture the construction of actors
of the profession as a rational self-interested The most conspicuous success of sociological
actor requires the assumption that the general institutional theory has been in the
population is naïve and foolish. This is unre- demonstration of powerful effects of
alistic: explaining the expanded authority of institutional models all the construction and
the sciences in the modern system requires an modification of actors. Thus national-state
institutional analysis of why so many structures reflect standard world models,
 803
despite me enormous resource and cultural Meyer, 2005). Coercive pressures were
variability of the world (Meyer et al., 1997). clearly not involved - indeed the centers or
Schools similarly reflect both world and power in world society (e.g., the United
national social forms. And so do firms and States, the World Bank, or the major
hospitals and organizations in essentially any corporations) tended initially to be skeptical
other sector (Drori et al., 2006). Furthermore, about the virtues of 'overeducation' for
extant actors of these sorts change over time, impoverished countries. Similarly, global
reflecting changes in institutionalized standards of women's rights tended to
models. produce national reactions quite apart from
Now that effects of this soft are widely any coercive forces. And in other areas - like
and routinely recognized in the field, environmental policy, or efforts to build
discussion shifts to questions of mechanisms. international quality standards - where
Institutionalists, convincingly, show that realists try to discern coercive pressure,
organizational conformity to standard models empirical analyses tend to be unconvincing.
is widespread and can occur in very routine Contested areas of interpretation, here,
ways through taken-for-granted understand- revolve around the impact of professional
ings. They commonly show the effects of bodies and non-governmental organizations.
processes such as simple linkage between The sorts of normative pressures produced by
organizational settings and me wider environ- these forces can be given something of a
ments carrying the institutions. Thus, at the realist interpretation. The problem is that the
nation-stare level, world models are adopted relevant professions and associations are
more quickly in countries with many non- amply represented inside actors, nor only
governmental organizational linkages to outside them. That is, modern national and
world society (Meyer et al., 1997). Similarly, organizational actors already incorporate in
professional linkages facilitate the quick their own authority systems formal
adoption of environmental policies (Frank el representatives of the wider world cultures
al., 2000, call the professions 'receptor sites' dealing with the environment, organizational
for the local incorporation of wider rationalization, human rights, and so on.
rationalized models). At the organizational Modern organizations and national-states
level, the adoption of fashionable personnel appear to be eager to construct themselves as
policies is enhanced by having professional- actors, thus incorporating, often wholesale,
ized personnel officers (Dobbin et al., 1993). global standards (for nation-state examples,
Realists try to see processes of coercive see McNeely, 1995; or Boli, 1987).
power as involved in such relationships, and In an expanding and globalizing world
there are situations in which this is clearly the society, people and groups everywhere seem
case. But the rapid social changes we have to be eager to be actors - this often takes
discussed as globalization continue to precedence over other goals, and can produce
generate waves of organizational change that assertions of actor identity far from any act-
cannot easily be conceived as reflecting ual actor capability. People, in short, may put
straightforward coercive power and control more effort into being actors than into acting.
by environments. Wave-like processes are We can see this readily in the empirical
endemic in the modern system (Czarniawska studies of modern individuals in increasing
& Sevón, 1996), and institutional theories numbers of countries. They produce opinions
gain much credibility from the obvious and judgments, routinely, in matters they
empirical situations involved. know nothing about. A good American, it
Thus, with the global rise in conceptions seems clear, would produce opinions about
of the nation-state as a development-oriented whether the United States should invade a
social actor, university enrollments shot up in country that does not exist. Good
every type of country (Schofer & organizations have policies about things that
804
never occur. National Slates promote world The institutionalist answer is that actor struc-
norms with which they have no capacity to tures, forms, and policies reflect institutional
conform at home. Agentic actorhood is, in prescriptions and models in the wider envi-
the modern system, a central good (Meyer & ronment. Such institutional models make it
Jepperson, 2000; Frank & Meyer, 2002). possible to build great organizations in
Some of the intellectual tensions involved situations where little actual control is likely
here - between a realistic institutionalism and or possible - school systems, for instance; or
an unrealistic realism - show up in a discus- in developing countries, national-states.
sion by Mizruchi and Fein (1999). These This line of argument has had much
researchers, committed to an older realist tra- empirical success in the cross-national study
dition in the study of organizations, seem of national-states. It is common, now, to dis-
puzzled by the extraordinary citation atten- cover that nation-states subscribe to human
tion continuingly given to the classic paper rights standards - but the subscribers are no
by DiMaggio and Powell (1983). So they more likely to implement these standards in
turn from their normal work as organizational practice than are the non-subscribers
researchers to become sociologists of science (Hathaway, 2002; Cole, 2005; Hafner-Burton
(it is often a dangerous business for social & Tsutsui, 1005). The same finding holds for
scientists to study their own fields), and to research on child labor rates (Abu Sharkh,
investigate the uses of the classic paper. They 2002), and for research on the education of
are disturbed by the fact that few references women (Bradley & Ramirez, 1996).
pick up on the more realist themes in the The line of argument has had dramatic
paper (coercive isomorphism, which can empirical success in studies of organizations,
readily be subsumed by realists; and too. Brunsson (1985; 1989), develops it as a
normative isomorphism, which a realist can contrast between policy talk and practical
re-shape into conformity). And all the action. He sees a hypocritical inconsistency
research emphasis goes to the famous between the two as a central consequence and
'mimetic isomorphism,' which lies far from requirement for the rationalized society.
the realist track. The reason for this is Thus, inconsistency that to realists is a social
obvious: any line of interpretation that can be problem is to Brunsson a stabilizing solution.
given a realist spin, in modern social science, In other work, the line of argument is
tends to be given that spin. So institutionalist extended to account for the high frequency of
arguments tend to survive best if they are organizational reforms, and the lack of
furthest from realism. Oddly, Mizruchi consequences of much reform (Brunsson &
himself later ends up employing mimetic Olsen, 1993). If reform is commonly a
isomorphism as an explanatory idea process of constructing improved actorhood,
(Mizruchi, Steams, & Marquis, 2006). rather than improved action, the often-noted
'failure of implementation’ is to be expected.
Given the enormously exaggerated models of
The construction of actors is often the proper actor - individuals and
loosely coupled with practical activity organizations alike - characteristic of the
Sociological institutional theory, in part, aro- modern globalized world, any respectable
se from the observation that organizational reform should have excellent prospects for
policies and structures are often loosely cou- disimplementation.
pled with practical activity (Meyer & Rowan, Despite its obvious uses, the concept of
1977, 1978). Given this commonly recog- 'loose coupling' has been a considerable
nized reality, the question arose - why are the source of tension in the field. This arises
structures and policies there? The question because realist thinking is quite central to
took force from the fact that conventional modern ideology as well as to much social
theories of organizational structure empha- theory. And from a realist point of view,
size that, for functional and political reasons,
structure is put in place to control activity.
 805
decoupling between organizational rules and piece of poetry (Bendor, Moe, & Shotts,
policies and programs and roles, on the one 2001). They proved that the illustrative simu-
hand, and local practical action, on the other, lation models (which it seems nobody had in
is deeply problematic. Rules are created by fact taken very seriously) were inconsistent
powerful and interested actors, desiring to with the real arguments of the paper, and
control action. They are put in place in par- made dramatic assertions about this as indi-
ticular organizations because me interests of cating a fundamental failure of the scientific
powerful actors demanded it. They should enterprise involved. (Again, the authors
normally be implemented in practice. Only rested the importance of .their paper on asser-
limited realist theory can explain why not. (a) tions about the nature of science itself - often
Perhaps the powerful actors creating rules a warning sign in the social sciences, e.g.,. p.
want to deceive the world around them. But 169; 'We evaluate' the verbal theory and
if they are so powerful, why would they need argue that it fails to create an adequate'
to do this? And if they do depend on impres- foundation for scientific progress.')
sions of others, why are these others so easily
deceived? (b) Perhaps particular actors
subscribe formally to me rules intending to Institutionalized models impact practices
deceive the powerful forces behind these independent of organized actor adoption
rules. But if so, why are the powerful forces In the modern system, institutionalized forces
so easily deceived? (c) Perhaps local partici- usually diffuse more as cultural waves than
pants simply cheat on the organized actor, through point-to-point diffusion. Thus,
suboptimally going their own way and vio- standards arise in world discourse, promul-
lating the rules. If so, why are organized gated by professional consensus and
actors so little able to notice? associational advocacy. The new emphasis
The extreme tension experienced by might be, say, on the improved treatment of
realist theorists over the 'loose coupling' children with some specific' handicaps.
notion can be illustrated by the treatment of a National, states, of course, adopt appropriate
renowned initial essay on the subject. Before policies with some probability, which might
the rise of new institutional theories, March vary depending on their, linkage to the world
and his collaborators, working from the organizations and professions involved.
'uncertainty' tradition, produced a precursor. But of course organizations internal to that
Their essay was called 'A Garbage Can state are also immersed in responsible agentic
Model of Organizational Choice' (Cohen, actorhood organized by, the global culture.
March, & Olsen, 1972). Instead of working So independent of national policy, schools
from rational decision models outward to and medical organizations and professional
incorporate more uncertainty, this essay associations and even some business firms
started from the frame of decision-making would be likely to notice the new models and
under almost complete uncertainty. The incorporate aspects of them. This might dep-
authors illustrated their points with some end on their own linkages to world society.
quickly forgotten simulation models, but the And independent of what policies and
impact of the paper on a field that had grown programs states and non-state organizations
a bit deadly - was simply as a strong put in place, modern people too lend to be
fundamental theoretical image or metaphor. agentic actors immersed in wider society
The paper is much cited, almost entirely for (including global society). So all sorts of
its grounding imagery rather than its specific local actors - parents, teachers, medical
analytic points. professionals, neighbors, relatives - have
Interestingly, thirty years later, several some probability of picking up the new world
researchers committed to the extreme rational or national story tines, independent of the
choice version of realism, found it necessary national state policies or of any organized
to mount a massive attack on this actor at all.
806
Realist theories, with very limited concep- over time are too weakly standardized to tell
tions of the embeddedness of actors in wider (Hafner-Burton & Tsutsui, 2005).
cultural arrangements, tend to have blind Similar studies at the organizational level
spots on such processes. And for this reason, of analysis show similar effects. Practices in
realist theories - and thus much social the treatment of employees, for instance, drift
scientific theory and ideology - have the along following world or national models in
greatest difficulty accounting for large-scale good part independent of formal policies
modern social change, because such change (Drori et al., 2006). In the same way, the
tends to flow through diffusive waves rather practices of teachers or doctors reflect
than down through an organized realist shifting customs in good part independent of
ladder of world to state to organization to organizational policies (Coburn, 2004).
individual effects. The global expansion of Realist theories have little to say about
organization (and organization theory) itself such broader effects. So sweeping social
is an excellent example (Drori et al., 2006). changes occur, at the edges of social
The social scientific failures in explaining scientific notice. Modern society is organized
large-scale change are stunning. The move- around general and cultural models, as much
ment for racial and ethnic equality, the as around hard-wired organizational
women's movement, the environment structures. And these models are increasingly
movement, the modern movements for worldwide in character (Meyer et al., 1997).
organizational transparency, the breakdown
of the Communist system, the movement for
gay and lesbian rights - all these worldwide
changes were poorly predicted, and are CONCLUSIONS
poorly explained, by social scientific
thinking. The rapid expansion of a stateless global
Empirically, research on the diffusive society - in transactions and perceptions alike
impacts of world models on social practice - has produced a great wave of cultural
independent of national-state action is con- materials facilitating expanding organization
vincing. The word models impact national at every level. Scientific and rationalistic pro-
policy, certainly: but they impact practice fessionals and associations generate highly
whether or not they impact policy. The world rationalized and universalized pictures of
movement to constrain child labor seems to natural and social environments calling for
have very large effects on practice whether or expanded rational actorhood of states,
not countries subscribe to the appropriate organizations, and individuals. Legal and
prohibitions (Abu Sharkh, 2002). World social scientific professionals generate
movements for women's rights have dramatic greatly expanded conceptions of the rights
effects increasing the educational enrollment and capabilities of all human persons,
of women, independent of any national transcending national citizenship.
policies (Bradley & Ramirez, 1996). Universities and other educational
Changed world models related to arrangements expand, worldwide, installing
reproduction impact birth rates independent newly rationalized knowledge in newly
of national policy (Bongaarts & Watkins, empowered persons.
1996). The world environment movement So models of organized actorhood expand,
impacts practice both through national policy penetrate every social sector and country. All
and around it (Schofer & Hironaka, 2005). It sorts of older social forms - bureaucracies,
is probably also true that the world human family structures, traditional professional
rights movements have impacted local prac- arrangements - are transformed into organi-
tice independent of national policy subscrip- zations. The process is driven by a cultural
tions - the data on human rights practices system that is a putative substitute for
 807
traditional state-like political arrangements - from such sources. Naturally, successful
realist analyses that tool the process in pow- models tend to be derived and edited from
erful interested actors miss out on most of the the most successful organizations - which
important changes. The process spreads realists then call hegemonic - but this does
through the diffusion of models of actorhood, not mean that the interests of those organiza-
not principally via a power and incentive tions play a causal role.
system. The changes transcend practicality, Institutionalisms are instructed to
leaving great gaps between policy and prac- investigate the realist 'mechanisms' by which
tice essentially everywhere - almost any local structures conform to wider models: it
organization can be seen as a failure, now. is not a good idea to take seriously the
And the changes diffuse at multiple levels - pretenses of modern interested actorhood
through central organizations and through involved. Conformity to standard models
their professionalized memberships and may not involve much 'influence' or much
populations. decision-making. The relevant network
Sociological institutional theory – linkages, for example, may simply involve
especially its phenomenological version – the most elementary forms of information
captures the whole post- World War II transmission.
enterprise very well, and for this reason has Institutionalists are told to investigate the
been successful. In a world less rapidly assumed true linkages that powerful
changing the preferred realisms or modern interested actors put between policy and
ideology and social theory might have practice; it is wiser to imagine that
constructed realist explanations but change developing the posture of the proper actor is
has been too rapid. Realist theories and a main goal of modern people and groups,
ideologies have not caught up with the transcending their needs to implement this
explosion of human rights (e.g., gay and posture in actions. In a world in which an
lesbian rights), of environmental doctrines enormous premium is placed on actorhood,
and policies, of all sorts of social entering into this identity is obviously
rationalization (e.g., a global standards central.
movement), and the transformation of all Institutionalists are told that the analysis
sorts of unlikely social structures into of diffusion waves is unscientific - the only
putatively rational organizations. correct approach is to assume each particle in
Much social theory, however, retains its such a wave is a properly rational and
theoretical/ideological preference for tradi- interested actor: following this advice would
tional realisms, leaving the great social mean giving up on really trying to explain the
changes of the modern period poorly dramatic social and organizational changes of
explored. So this leaves much intellectual our period. The great changes of our period -
space within which institutional theory can often poorly recognized by realist social
develop. In this context, the best strategy for sciences - occur much more through waves of
institutional theory is to keep to its last. and conforming non-decision than through
to avoid attending to the clamor arising from networks of fully formed and autonomous
realist ideological assumptions. rationalized actors.
Thus, institutionalists sometimes are
instructed to seek for the interested actors
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 Index

(figures in bold, tables in italics)

accreditation 21, 40, 58, 67-68, 174, 220, 231, 235, 532, alterity construction 223
582, 598, 741 American pragmatism. See pragmatism
acquisitions 88, 129, 133, 394 antitrust regulations 9, 374, 547, 655, 664, 708, 747, 753,
actor(s) 794
cognitive 522 Asylums (Goffman) 279
definition 791, 799
economic 34, 304, 317, 564, 632
foreign 315 biotechnology 294, 440-42, 405, 606-9, 611, 613, 617-18
ideal types and 102-3, 109-11, 119, 121-22, 128-29, bricolage 113, 117, 308, 312, 354, 413, 415, 420, 423-24,
164, 194, 230, 304, 313, 400, 483, 786-77 426, 658
imitation by 223-24 bureaucracy 101, 107, 172, 281, 367, 477, 481, 667
institutional 27, 118, 158, 163, 186, 190, 212, 261, 264, business process reengineering (BPR) 220, 226
427, 433, 632, 743
institutional change and 158, 205, 245, 632-33 capitalism 101, 110, 128-29, 304, 316, 398, 400, 437, 439,
models 567, 807 450-51, 461, 484, 509, 512, 556, 654, 657, 659,
multiple institutional environments and 305 666-67, 679, 695
nation-state 794 capitalist market 101, 104
networks and 374 categorization 112-13
other 799-800 ceremonial conformity 4
rational 62, 154, 178, 190, 390, 450, 451, 480, 566-67, Civil Rights Act 374, 382
690, 702, 709, 792, 796, 798, 806 classification 112-13
rationales of 207-9 collaboration 26, 32, 209, 549, 554, 607-8, 614-15, 618,
social 27, 59, 61, 63, 69-70, 106, 112-13, 249, 302, 750
308, 317, 419, 423-25, 451, 452-53, 461, 466, collective corporate social responsibility (CCSR) 371-72
476, 522-23, 541, 758, 791, 798-99, 803 commercialization 286-88, 606-12
soft 222 consumer advocates 364-66, 654-55
template use by 231 Consumer Research (CR) 364
actor-network theory 93, 281, 619, 696, 781 Consumer Union 365-66
affirmative action 22, 85, 88, 132-33, 744, 796 Consumer Watchdog Organization 364
agency contingency theory 3, 7, 11, 478, 674, 679, 746, 773
characteristics 544 corporation(s)
embedded 17, 103-4, 114-17, 120, 144-42, 198, 201-2, branding 235
634, 689, 692, 731 editing 235-36 (see also idea(s): editing)
institutional change and 633 governance 245-46, 250, 253-56, 261-62, 391-96
institutionalization and 678-79, 691 managers 396
institutional politics and 173 models 392
institutional theory and 686-88 reputation 235
temporal dimensions 526-27 takeovers 394-95
theory 396 critical realism 200, 212, 740, 756, 758, 760
See also agent(s) critical theory
agent(s) Foucault, Michael and (se e Foucault, Michael)
institutional entrepreneurs and 633 of the Frankfurt School 679-80, 693-94
legitimacy 69 goals 692
models 396 institutional theory and 482, 692-93 (see also
See also agency institutional theory)
814
critical theory (Continued) performativity and 281
logics of action in 102-4, 108, 117, 282-83, 613, 615, scientific 234, 684
618, 688. See also institutional logics social construction and 712-13, 716
and naturalization of present 679-80 theory 26, 109, 167, 485, 520, 532, 716
patterns of activity in 101, 679 dispute resolution 38, 321, 658, 660
value-orientations of 675 Durkheim, Émile 462, 473-78, 480, 482-84, 486, 545, 604,
culture 676, 710, 748, 770
measuring effects of 109
normative 53
world society theory and 462 ecology. See organizational ecology editing. See idea(s):
editing
embedded agency 17, 103-4, 114-17, 120, 144-42, 198,
decision-making 34, 81, 172, 219, 391, 561, 567, 635, 771, 201-2, 634, 689, 692, 731
796, 805 embeddedness
decoupling of actors 115-16
definition 87, 90, 346 contracts and 603
deliberate 4 institutional context and 434, 610-13
field heterogeneity and 86-87 entrepreneurs. See institutional entrepreneur(s)
forms of 86 entrepreneurship 285-88, 291
isomorphism and 78, 91 environmentalism 426, 453, 463, 655, 661
legitimacy and 79, 81-82, 396 equal employment opportunity 69, 132-33, 374, 379
measurement 85 ethnomethodolgy 276-77, 279-82, 292, 295, 491-93, 510,
networks and 88 519, 775
predicting 87-88 European Economic Community (EEC) 310
reasons for 86-87 European Union (EU) 4, 210, 310, 313-15, 751
risks 86 evaluators 63
rule avoidance and 785 event sequencing 116-17, 128-29
sustainability 88 expectation states 284-85
tradition and 333
de-institutionalization
actors in 317 Federal Reserve 359
definition 327, 331 Federal Trade Commission 365
diffusion and 303 field(s)
institutional change and 302, 630 definition 525
pressures for 332-33, 355 discourse analysis and 717 (see also discourse analysis)
process 332, 344-47, 348 heterogeneity 86, 90
social pressure and 302 institutional 19, 24, 131, 156, 161, 198-200, 203, 205,
transnationalization and 301 209-10, 255, 302-3, 416, 419, 424, 426, 510, 524-
democracy 101, 104, 234, 791, 796 25, 529-30, 613, 634-36, 639, 660, 687-88, 742
deregulation 232, 316, 438, 443, 445 isomorphism and 90
diffusion membership 542
coercive 6 movements and 652, 660-62
definition 224 multi-level 660-62
field-level populations and 142 neo-institutionalism and 742
globalization and 318, 454, 456, 464, 541-42, 552 networks and 618, 742 (see also network(s))
governance and 393-95 organizational (see organizational field(s))
institutional theory and 624 performance and 615-17
isomorphism and 78-79,89, 708 technical 742
legitimacy and, 89 types 601, 742
legitimation and 58 See also organizational field(s)
mechanisms for 6-7, 708 Food and Drug Administration (FDA) 612
mimetic 6, 222-23 form(s)
models 90, 142,230, 395, 665 as codes 355
normative 6 creation 355
politics and 664-66 definition 352, 355
speed 306 ecological theories of 491
taken-for-grantedness and 653 as identities 355
theorization and 162 institutionalization of 355-56
of world society models 453 multidimensional (MDF) 599-600
See also institutionalization networks and 611
discourse analysis as settlements 353-57, 368
action and 714 social 496
definition 712-13 Foucault, Michael 176, 465, 532, 555, 675-77, 680-92,
institutional theory and 162, 485, 711-16 694, 696-97
language and 531-33 founder effect 108-9
levels of 716
 815
frames 353-57 human resource management (HRM) 374, 462, 463, 685
framing 105, 121, 136 human rights 454, 457-61, 775, 798-99, 801-4, 807
cognitive 136, 785
cultural 160, 167, 183, 254, 306, 706, 785, 787
linguistic 152, 160 idea(s)
normative 160, 393 carriers 227-30
Frankfurt School of Critical Theory 679-80, 693-94. See circulation 221, 223, 227, 229-30, 289
also critical theory; Habermas, Jürgen editing 225-27
flow in networks 228
ideal types 102-3, 109-11, 119, 121-22, 128-29, 164, 194,
gnre theory 776-78 230, 304, 313, 400, 483, 786-87
Global Business Coalition (GBC) on HIV/AIDS 372-73, translation (see translation)
376-85, 383 identity
globalization as bricolage 423-24
carriers in 466 centrality of 421
consequences 371 claim 418, 421, 421, 424-25
definition 300, 451, 453-56, 459, 462, 797 collective 111, 183, 266, 328-29, 331, 338, 351, 355,
destabilization by 278, 299 421
diffusion and 318, 454, 456, 464, 541-42, 552 creation 418, 420, 424
embeddedness and 466 definition 416, 419
institutional constraints from 460 distinctive nature of 422
isomorphism and 466 history and 426
limits 305-7 hybridization 421-22
movements and 373 institutionalizing 420-21
neoinstitutionalism and 452-53, 456, 465-66 institutional theory and 425-27
neoliberal theory and 450 isomorphism 419 (see also isomorphism)
organizational change and 803 meanings 420 (see also meaning(s)
outside constituents in 399 mobilization and 421
in pharmaceuticals 442 models 416
rationalization and 456, 456, 460-61, 553 performance and 424-25
realist perspective of 456 persistence 422-23, 427
research on 450, 463-64 social construction of 416
rise of 456-57 sources 128
side-effects 442 status and 422
stateless 796-98 symbols 424
of trade 373 theory 16, 35, 210, 414, 418, 494
world polity and 457-60 traditions 42
world system theory and 449-50, 452-55, 462, 465, 467 verification 245
See also transnationalization imitation
golden parachute 16, 133, 385, 394, 600 broadcasting mode 228, 230-32
governance chain mode 228, 230-32
business systems perspective of 400-401 identity and 223
comparative study 400-401 imperfect 626-27
as control 262 innovation and 303, 581
cultural differences in 400 models 231
cultural logics and 245 motivation for 223
diffusion 393-96 networks 84
players 397-400 by others 228, 230-32, 637, 802
pluralism 253-56 indexicality 492
resistance to 396-97 informational cascade 566
scandals 402 information and communication technologies (ICTs) 373
variation 395-96 institution(s)
varieties of capitalism (VoC) appraach to 400-401 accretion 777
grounded theory 494 agency in 135, 192
bricolage in (see bricolage)
change in (see institutional change)
Habermas, Jürgen 674, 693, 696 Chicago School and 495-96
Handbook of Leadership (Stogdill) 730 compliance 710
health maintenance organizations (HMOs) 118 creation 4, 26 ,95, 105-6, 241, 272, 308-9, 327, 556,
HIV/AIDS 653, 666-68, 704, 744, 777, 782, 801 (see also
corporate assistance with 379, 382 (see also Global bricolage; institutionalization)
Business Coalition (GBC) on HIV/AIDS) cross-category comparisons of 9-10
death toll 372 cross-national comparisons 10, 28
economic consequences of 376 cultural-cognitive elements in 153, 705-11
as pandemic 371 definition 4, 20, 32, 233, 300, 483, 495-97, 703, 705,
prevalence rates 374-75 709-10, 713, 769, 794
816
institution(s) (Continued) institutional entrepreneur(s) (Continued)
as discourse 162 professions as 544
erosion 327-28, 332, 347, 348 role in organizations 136, 528
evaluation 508 social movements as 544
historical situation of 497, 666-68 See also institutional entrepreneurship
isomorphism (see isomorphism: institutional) institutional entrepreneurship
leaders (see leadership) academic 552-54
maintenance 189-90 field and 204-5
meaning and 520-25 (see also meaning(s)) inducements 207
movements and 653-56 (see also movements) methodologies 115-16
networks and 605-10, 618 (see also network(s)) neo-institutionalism and 542-45
norms and 106, 793 power and 209
origins resources and 207-8
pluralism 244, 247-53, 258-61, 748-59 stimulus 202-4
politics in 68, 171, 173, 174 See also institutional entrepreneur(s)
power and 170, 172-73 (see also power) institutional environment 5, 27, 58, 79, 81-82, 84, 90, 130,
as processes 498 243-44, 397, 414, 421, 434, 542, 561, 564
regulative structures 32, 131, 741-42, 744, 751 institutional fields. See field(s): institutional
reproduction 26, 277, 636, 643, 657, 710-11, 743 institutionalism
resistance within 189, 192 comparative 1, 28,450,453
sanctions and controls in 711 ecological analysis and 573
social change and 482-84, 791 narrative 776-78
taken-for-grantedness 496, 741 (see also taken-for- realist 792-93
grantedness) Scandinavian 34, 92, 219, 222, 521, 531, 770-73
transnational 308-9 sociological 793-800
variety in 135 institutionalization
See also corporation(s); organization(s) agency and 678-79
institutional change codification in 653
actors in 158, 205 (see also actor(s)) definition 5, 11, 413, 676-77, 702
adaptive nature of 631 diffusion and 161 (see also diffusion)
ambiguity in 772 dynamics 159, 161,233,653
competition 631 fields and 160 (see also organizational field(s))
diffusion and 629 (see also diffusion) habitualization in 302, 309, 311, 529, 677, 743
dynamics 20, 629, 631, 654-55 identity and (see identity)
editing rules for 225-26 incomplete 631-32, 639
environmental shocks and 632 institutional theory and 676-79
event sequencing and 116 (see also event sequencing) of law 159
fashion and 222 legitimation and 52-53, 57-58, 506
heterogeneity and 633, 641 models 89-90, 653, 800-806
ideas and (see idea(s)) monitoring 653
institutional theory and 629-34 objectification in 34, 302, 309, 311, 677, 684, 743
leadership and 723-24 (see also leadership) particularities 155-56
learning and 626-42 process 157-59, 529-31, 655, 677-78, 688-89, 702,
mechanisms 626-27, 629, 746 707-8, 711, 713, 722
micro-perspective 285-92 sedimentation in 34, 302, 309, 311, 316, 493, 511, 522,
models of 27 526, 529, 531, 533, 694, 743
power effects of 190 social construction of reality in 677-78
sources 631-34 taken-for-grantedness and 709 (see also taken-for-
unintended consequences and 635-36 grantedness)
institutional context 3-6, 12, 22, 29-30, 102, 182, 434, 544, transnationalization and 300-301, 313-17
618-19, 636 See also de-institutionalization
institutional economics 390, 544, 565, 708, 718, 750. See institutional logics 21
also organizational economics action and 602
institutional entrepreneur(s) assumptions of 105
action 526-29 changes 100, 114-19
as actors in 206-7, 633 classification 112-13
characteristics 199-201, 208 culture and 105
definition 198,498 definition 21, 100-101, 602
field conditions and 202-5, 634 embedded agency and 103-4 (see also agency:
frames and 354 (see also frames) embedded)
institutional change and 18-21, 115, 171, 198 fields and 107, 425
inter-actor relationships in 209 history 102-3, 108-9
legitimacy 136, 158 institutional analysis and 106, 109-11, 121
motivation 526-29 meta-theory of 103-9, 122
misconceptions regarding 119-20
 817
institutional logics (Continued) isomorphism (Continued)
multiple 244, 254, 277, 604-6, 609, 616, 630, 650-52, 655, competitive 23
657-60, 665, 667 decoupling and 78, 91
origins of 119 definition 132
power structures and 112 diffusion and 79, 89, 651 (see also diffusion)
social actors and 113 dynamics 14
See also logic(s): of action environment and 81, 84
Institutional order 119, 154-55, 157, 159, 161, 165, 203, fields and 90, 703
502, 505, 524, 527, 692 global 466
institutional recombination 308, 309, 313, 317 history 84
institutional theory institutional 15-17, 78-80, 84-85, 89-90, 254, 420, 588
adaptation 403 legitimacy and 4, 419, 785 (see also legitimacy)
advantages 32 mechanisms 6, 83, 704
basic elements 6, 308, 486 mimetic pressures for 80, 83-84, 394, 433-34, 581, 637,
change and 629-34 744, 746
coercive pressures in 434, 708 model 15
cognitive guidance systems in 426 normative pressures for 80, 83, 86, 433-34, 581, 629,
contextualization 32-33 709, 744, 776, 803
corporate governance and 389, 390-93 rationalized myths and 78
critical theory and 692 (see also critical theory) sources 479
definition 130 surface 4
discourse and 713 ISO 9000 25, 67, 71, 80, 303
diffusion and 624
economics and 564-67, 569
employees and 399 knowledge
exploration/exploitation and 639 acquisition 627, 727
globalization and (see world society theory) categories 104-5, 206, 280, 431, 465, 521, 547, 587-88,
heterogeneity and 642 638, 674, 680
history and foundations 3-23, 29, 99-100, 706, 708, claims 433,614
785, 790 critical theory 680-85
institutional entrepreneurship and 539 language and 531 (see also language)
institutionalization and 676-79 management 220
institutional logics in 21 power and 681, 683-85, 687-91, 694
isomorphism and (see isomorphism) sociology of 25, 519-24, 529-33
meaning and 277 (see also meaning(s)) transmission 250, 285, 531
normative expectations in 426, 708
organizational field and (see organizational field(s)) language
organizational identity and 413-14 discourse and 531-33
pressures and 426, 433-34, 708 in institutionalization 162, 288, 292, 485, 520, 744
processual studies of 8-9 knowledge and 531, 694
prospects for 800-806 power of 158, 176,213,278
social construction of 2-21 taken-for-grantedness 153, 294
social movement and 137, 373, 375 leadership
rationalization and 276 external enemies and 722, 724, 729, 731,733 fads 73
realist 792-93 institutional 256, 722-24, 731, 732, 750
social scientific inquiry in 674 legitimacy and 724, 727-28
taken-for-grantedness 693 (see also taken-for- management and 722
grantedness) organizational 132, 262-64, 423, 722, 731, 732
translation in 403 (see also translation) power and 732
unintended consequences and 636 role of 724-33
value-orientation in 674-75, 683, 687-88, 690-91, 693, Leadership in Administration (Selznick) 260, 721-23, 730
695 Leadership Quarterly 723, 730-31
See also structural contingency theory learning
Institutions and Organizations (Scott) 51, 474, 493, 709 analysis 628
integrity 246, 249, 253, 255, 260-61, 268, 422 change processes and 629-30
intellectual property 441, 454, 609, 611-13, 620 competition and 642
internationalization. See globalization definition 627-28
International Labor Office (ILO) 309, 463, 550-51 field-level change and 636
International Monetary Fund (IMF) 309-10, 313-14, 551 inferential 626-27, 640-41, 643
international relations 301, 306-7, 318, 450, 792-93 institutional change and 627, 634-42
International Standards Organization, 25, 67, 71, 80, 303 institutional theory and 636-37
isomorphism intraorganizational 636
agentic perspective of 84-85 networks and 636 (see also network(s))
coercive pressure for 80, 83, 86, 434, 580-81, 629, 721,
744, 776-77, 803
818
learning (Continued) loose coupling 81, 90-92, 96, 251, 258, 262, 403,453,
non-mimetic 641 459,464,554,678,688,744-45,755,778,804-5.
regu1atory pressures and 642 See also decoupling
search and 637-39 Luhmann's systems theory 545-49, 553
selective 640-41
theory 16, 627-28, 630, 634, 636-37, 639, 643
lebenswelt 520-23, 526, 529,533 macroeconornics 435,438
legitimacy management
agents 69 evidence-based 234, 240
antecedents 58 fads 221, 774
assessing 57, 62-63, 249 function 723
categories 18, 50, 52-53, 58, 56, 60, 67-68, 18, 303 impression 17,51,58,70,87,397
542, 544,5 80, 564, 586, 727-28 leadership and 722
characteristics 52, 61-62, 542, 665 new public (NPM) 220, 227, 437,439,551
consequences 58-59 by objectives (MBO) 185-86, 220, 226
cues to 422 supply chain 220, 226
decoupling and 396-97 techniques 220, 439 (see also specific techniques)
definition 50-52, 247 Total Quality (TQM) 58, 220, 231, 395, 423, 430, 485,
and diffusion 89 581, 753
evo1ution 49-59, 63 marketization 234, 439
gain/loss of 51, 414 Marx, Karl 193, 249, 329, 451, 453, 460, 473-76, 480-84,
guidelines 69 486, 509, 546, 674-75, 679, 693-94, 697, 748, 786
history 49 Mead, George Herbert 229, 265, 284, 473, 493-96, 500,
interorganizational relationships and 56 521, 526, 706, 772
isomorphism and 4, 422 (see also isomorphism) meaning(s)
leadership and 724, 727-28 definition 152
manipulation 59 institutional fields and 205
market access and 64 institutions and 520-25
measurement 18, 53, 60 shaping of 284, 529
media and 56 social 28, 292, 157, 418, 420, 497, 521, 750
mediators 69 world society theory and 462
mimicry in 542 mergers and alliances 116,399,440-41,445,564,612
neo-institutionalism and 247 (see also neo- insti Merton, Robert 63, 106, 281, 466, 477, 487, 495, 610, 787
tutionalilsm) Meyer John 2, 2-13, 24, 34-35, 50, 86-87, 90, 100, 153,
pluralism and (see pluralism) 175, 219, 222, 450, 462, 478-80, 539, 541, 550,
rationale for 51 597, 686-88, 707, 709, 770, 772-73, 784-85, 787,
rationalized myths in 222 (see also myths: rational) 788
reputation and 62, 66 (see also status) microsocio1ogy 282, 511, 519
resource flows and 64 mimesis 23, 83, 223, 361, 414, 416, 509, 627, 653. See
sociopolitical sources 54-57, 68, 128, 506 also isomorphism: mimetic pressures for
status and 62, 66, 66 (see also reputation) modern organizational institutionalism 3-7, 28, 371,
subjects 54 373,457
sustainability 62 movements
taken-for-granted aspects of 53 against institutions 653-56, 663, 665
theories of 69 diffusion and 652, 656-57, 664-66
visibility 52-54 in fie1ds 652
See also legitimation intra-institutional 656-60
legitimation 52-53, 57-58, 506. See also legitimacy measuring 663-64
lesbian/gay issues 372, 374-75, 380, 382, 383, 650, 660, mobilization in 656-60, 664-66
667-68, 798, 801, 806 modeling 663-64
logic(s) origins 652
of action 102-4, 108, 117, 282-83, 613, 615, 618, 688. politics and 664-66
See also institutional logics social (see social movement)
aesthetic 114, 128-29 theorization and 656-57
alternative 208 multidisciplinary practice (MDP) 54, 116, 158, 434-35
competing 107, 114, 117-19, 121, 140, 187, 189, 190- multinational corporation (MNC) 28, 371, 373, 457
91, 602, 608, 651, 655 myths
editorial 105, 107, 111-12, 114, 117, 129, 133 institutional 11, 29, 50, 58, 70, 152-53, 155, 190, 208,
efficiency 128-29 493
evolution 133 rational 3-9, 12, 20, 24-25, 28, 30, 61, 78-81, 152-53,
institutional (see institutional logics) 156, 218-20, 222, 561, 597, 707, 752, 758
market 105, 107-8, 111-14, 116-17, 121, 129, 224, 339,
747 National Institutes of Health (NIH) 608-9
organizational actions and 111-14 nation-states 301, 308-10, 371, 423-24, 427, 449-53, 455,
457-59, 461-64, 541, 550, 552, 668, 752, 791-94,
796, 803-4
 819
negotiated order 500-502 organization(s)
neo-institutionalism accountability 443-46
analysis levels 752-53 behavior 5, 433
assessment 745-47, 754-55 categories in 293, 439
causal relationships 745 ceremonies 725, 747
change and 263 (see also organizational change) change (see organizational change)
cultural/cognitive mechanisms 253 character 722
diffusion and 555 (see also diffusion) competition 576
entrepreneurship and 553 cultural shaping 541
field and 742, 752 density dependence 575-76
governance and 253-54 (see also governance) diversity 574-75
history 491, 706, 739 failure 283, 575-78, 586-89
homogenizing forces 554-55 field membership and 542
institutionalization and 352, 741-43 (see also governance 245-46, 250, 253-56, 261-62
institutionalization) health care 99, 107, 439, 575
legitimacy and 616 (see also legitimacy) hypocrisy 8, 778
macro-perspective in 541 idea adoption 220-27, 395
meso-perspective 542-45 identity (see identity)
movements and (see movements) inertia 576-77
networks and 742 institutional contexts of 3, 6
political science and 751 institutionalization of 4, 246
postmodernism and 757-58 institutional theories of 78, 477-80
power and 746 internal consistency 725-27
self-reflection in 779 international 454 (see also globalization)
social construction and 717 isomorphism and (see isomorphism)
social mechanism approach to 756-57 leadership 113, 132, 262-64, 423, 434, 722, 731,732
societal sector in 81-82, 103-4, 119, 121, 480, 543, learning (see learning)
639, 752, 794 legitimacy (see legitimacy)
tendency analysis in 743-45 logics 235 (see also logic(s))
theory 131, 163, 170, 368, 547-50, 555, 605, 651, 663- memory 627, 639
68, 677, 687, 693, 711, 716-17 mergers (see mergers and alliances)
network(s) monitoring 235
decoupling and 88 mutualism 576, 610
directors 375, 384, 399 naming patterns 415
embeddedness 618 negotiated order of 500
fields and 602 network contexts of 6
individuals and 613 non-profit 9, 357, 364, 372, 385, 541, 575, 655, 785,
institutional logics and 604 (see also institutional 799
logics) organizing in 234
institutions and 597-601, 605-10, 618 power contests in 9, 111-12 (see also power)
social 88, 207, 307, 384, 395, 419, 434, 503, 508, 555, professional networks and 374
565, 598-99, 600, 604 rational-legal authority in 477-79, 481
theory 16, 31, 82, 93, 281, 596, 601-2,604, 618-19, 696 reputation 59
as transmission channels 597-98 resources in 64, 576
new institutionalism (NI). See neo-institutionalism responses to institutional pressures 16
new public management (NPM) 220, 227, 437, 439,551 scandals in 443-46
non-governmental organizations (NGOs) 202, 312-14, 451, social facts and 84-85, 113, 131, 251, 462, 475, 477,
460, 463, 740 695, 704
non-profit organizations 9, 357, 364, 372, 385, 541, 575, social movements and 373 (see also social movement)
655, 785, 799 as source of legitimacy 56
North Atlantic Free Trade Association (NAFTA) 310 status 59, 111 (see also status)
nouvelle cuisine 361-64 structural overlap in 116
survival of 58
symbols in 415
organization(al) theory technology and 439
concepts 741-43 theory (see organization(al) theory)
contingency theory and 773 (see also contingency transmission of practices in 10
theory) vision 725-27, 731,732
history 1,3, 14,33 organizational change
institutionalism and 14, 474, 625 by bricolage (see bricolage)
isomorphism in 79-90 (see also isomorphism) globalization 803
leadership and 730 (see also leadership) inertia 576
legitimacy in (see legitimacy) institutional change and 423
Litchfield/Thompson and 741-56 leadership and 724 (see also leadership)
See also neo-institutionalism
820
organizational change (Continued) positivism 274,511,558,750,760,777
organizational ecology and 568, 577 (see also postmodernism and 129, 740 756-58, 760
organizational ecology) power
pluralism and 245, 256-60, 262-63 avoidance 393, 508, 600
processes 259, 576-77 categories 173-74, 177-78, 180, 187, 190, 682-85, 687,
social movements and 137, 756 (see also social 689-90, 692
movement) competition for, 111-12
See also institutional change corporate governance and 390
organizational ecologists 342, 352, 355, 368, 422, 566, decoupling and 87
568-69, 574, 579, 585 definition 174, 188-89, 684-85
organizational ecology 3, 55, 259, 263, 352, 368, 566, 574- dynamics 157
80, 583, 586 force and 188-89
organizational economics 560-62, 564. See also institutional theory and 686-88
institutional economics institutions and 170, 172-73, 390, 481-82, 523-26
organizational field(s) knowledge and 683
actors and 140 leadership and 732
agency in 135 meanings and 157
change in 135, 139 obedience to 390
configurations 133-37 as object of research 187-88
constituents 131,543 in organizational fields 192
construction 160 politics and 547
definition 130-31, 138, 224, 303, 479, 505, 543, 601 resistance to 390
emerging 204 sources 112
filtering processes and 136 stereotypes and 285
history 131-33, 143 struggles among organizations 9
homogenizing forces in 541-45 subjectification and 683-85
identity and 224 pragmatism 265-66, 520, 523, 528, 749, 772
institutional logics 425 (see also institutional logics) prestige
mature 204 legitimacy and 66, 66
membership 542 media 56
social evolution and 548-49 occupational 99, 112, 128-29, 285, 422, 433, 597
social movements and 303 stereotypes and 285
social world and 505 Principles of Scientific Management (Taylor), 396
sociology of knowledge and 524-25 (see also professional services and practice
sociology: of knowledge) academic scientists and 433
subject position and 201-2 change in 434-35
success of 63 characteristics 432
structuration of 6 client interactions in 436-37
variety in 135 conditions of 432
See also field(s) definition 432
organizational forms. See form(s) delivery 431
organizational homogeneity theory 7 demographics 435-36
organizational institutionalism 5, 50-52, 301-4, 531-33 as institutional entrepreneur 544
Organization for Economic Co-Operation and institutional theory and 433-35
Development (OECD) 309, 551-52, 556 knowledge claims and 433
orphan drugs 612 markets and 437-39
models for 432
technology and 436-42
paradox of embedded agency 115, 198, 201-2, 634, 663, progressivism 107, 367, 667
689, 692. See also agency: embedded punctuated equilibrium 108, 256-57, 652-53, 667, 793
performativity 281-82
pharmaceutical companies 60, 191, 305, 372, 379-82, 385,
433-34, 440-41, 445, 582, 606, 609-10, 641 rationalization
pluralism cultural 100, 461-62, 463, 798
adaptation to 250 definition 452, 461
categories 244, 247-53 globalization and 456, 456, 460-61, 553
change and 258 indicators 13
comprehensiveness 748-54 legitimation and 58
consequences 244-45 market 108, 120
legitimacy and 249-50, 260-61 moral 234
variable effects of 258-59 of society 541-42, 795, 807
point of provider organizations (PPOs) 118 taken-for-grantedness of 276
poison pill 16, 133, 374, 380, 384-85, 394, 482 rationalized myths 3-9, 12, 20, 30, 78-81, 53, 220, 222,
population ecology 11, 22, 35, 79-80, 90, 574, 629, 740, 279, 561, 597, 707, 752, 758
760, 772, 785-86. See also organizational ecology
 821
realist theory 450, 452, 455, 792-93, 795, 805-7 social world 502-5, 541-55
reality construction 265, 520, 524, 532-33, 677-78, 696, societal institutionalism 301, 304-5
713. See also institutionalization: social society
construction of reality in; Social Construction of 'audit' 231, 235
Reality, The as body of institutions 493
reciprocal typification 34, 631, 677, 702, 706, 713 characteristics 545-54
regulation definition 540
agencies 5 differentiation 540, 545-46, 552-53
decoupling and 87 dynamics 547
expansion 233 evolution 547-49
global 379, 797 homogenizing forces in 541-45
governance and 233 as inter-institutional system 104-5
networks 308 systems 546 (see also systems theory)
rate 97, 273, 654-55, 662 sociology
soft 231, 233, 311 Chicago School of 493-94,510-13,772
See also deregulation economic 565, 603
regulatory activism 232 focus 473-74
reputation 59-60, 62-63 historical 474
resource institutionalism in 705-6
-dependence theory 3, 5, 13, 51, 584 interactionist 495-96
mobilization 207-8 of knowledge 25,519-24,529-33
partitioning 576 neo-institutional 51
Rules of the Sociological Method (Durkheim) 475 Spencer, Herbert 473-76,480
stakeholder theory 244, 264
status
Scandinavian institutionalism 34, 92, 219, 222,521, 531, competition for, 61, 111-12
770-73. See also institutionalism enhancement 63
science expectations 284-85
academic 659 honor and 61
expansion 797 legitimacy and 59-61 66
institutionalization 659 organizational resource flows and 64
neuro- 285, 555, 614-15, 617 segregating nature of 61
society rationalization and 542 sources 112
sensemaking 30, 139, 276, 278, 282-85, 290-93, 295-96, structural contingency theory 3, 7, 10
414, 425, 602, 653 Studies in Ethnomethodology (Garfinkel) 278, 295
service learning 160-61 supply chain management 220, 226
settlement(s) 353-55, 356, 357, 368 symbols 415, 424, 531-32
small business industry corporations (SBICs) 357-61 systems theory 545-49, 553
social capital 398, 565, 597, 603-5, 611, 618, 632
social change 452, 482-84, 486
social construction taken-for-grantedness 54, 68, 248, 288, 303, 392, 530, 575,
actors in 222 (see also actor(s)) 587, 693, 703, 710, 717, 776
discourse analysis and 162, 712 techno1ogy
forms and 368 (see also form(s)) information and communication (ICT) 373
of identity 416, 421 in institutions 774-75
institutional theory and 2-21, 704-9 norms 774-76
institutions and 163, 188, 222, 491-93, 585, 677-78 transfer 287-88, 294, 441, 554, 608, 611, 616, 618
interactional rituals and 279 templates
of legitimacy 506, 508 for action 132, 191
neo-institutional theory and 717 circulation 232-33
of reality 465, 524, 677-78, 713 (see also Social creation 230-36
Construction of Reality, The) cultural-cognitive 133,306,419,426
Social Construction of Reality, The (Berger and Luckman) institutional 479, 496
278, 519, 533, 677, 748 isomorphism and 233
social meaning 28, 292, 157, 418, 420, 497, 521, 750 logics and 605
social movement organizational 236, 303, 602
institutional change and 170, 303 text 712-13
as institutional entrepreneur 544 theory
institutional theory and 137, 375 actor-network 93, 281, 619, 696, 781
organizations 87, 137, 186, 373, 378, 395 agency 396
social movement theory 19, 24-25, 137, 208, 210, 353, contingency 3, 7, 11, 478, 674, 679, 746, 773
370-71, 373, 375, 378, 385, 506, 663, 650-51 covering law 740-41
social order 5, 234, 279-82, 318, 475, 493-94, 500, 528, critical (see critical theory)
631, 693, 771 discourse 26, 109, 167, 485, 520, 532, 716
social psychology 58, 69, 278, 282, 494, 760 enlightenment 740
social systems 53, 56, 175-76, 178, 188, 247, 301, 305, genre 776-78
392, 398, 474, 484, 605, 618
822
theory (Continued) tradition (Continued)
grounded 494 at Texas A&M 334-44
identity 16, 35, 210, 414, 418, 494 transmission 219, 294, 329
institutional (see institutional theory) transaction cost theory 28, 491,562
learning 16, 627-28, 630, 634, 636-37, 639, 643 translation 17, 24, 28, 35, 85, 92-93, 142, 156-57, 161-62,
narrative 740 164, 205, 224-28, 403, 521, 565, 652, 658, 770-74
neo-institutionalism 131, 163, 170, 368, 547-50, 555, (see also institutionalism: Scandinavian)
605, 651, 663-68, 677, 687, 693, 711, 716-17 transnational communities 310-11
neoliberal 450 transnational cultural models 306
network 16, 31, 82, 93, 281, 596, 601-2, 604, 618-19, transnationalization 300-301, 313-17. See also
696 globalization
organizational (see organization(al) theory) transnational recombination 311-12
realist 450, 452, 455, 792-93, 795, 805-7 transnational social networks 307
resource-dependence 3, 5, 13, 51, 584 transparency 91, 231, 234-35,237,431-32,435, 694, 806
social movement 19, 24-25, 137, 208, 210, 353, 370-
71, 373, 375, 378, 385, 506, 663, 650-51
stakeho1der 244, 264 UNESCO 463, 550
structural contingency 3, 7, 10 United Nations 62, 309, 372, 377, 380, 459, 752, 802
systems 545-49, 553 universities 99, 243-45, 250-51, 276, 285-88, 292, 294,
transaction cost 28, 491, 562 334, 345, 436-37, 443-44, 548, 552-54, 606-10,
world society 449-50, 452-55, 462, 465, 467 612, 615-17, 729, 798, 802, 806
thrifts 366-68 utopianism 260
Total Quality Management (TQM) 58, 220, 231, 395, 423,
430, 485, 581, 753 venture capital 26, 358-61, 553, 607-13
tradition venture capitalists 358-61, 434, 441, 609, 611, 613
assimilation and 333 vocabu1aries
categories 85, 462-64 change 160
change in 330-34 institutional 109, 115, 136, 158
characteristics 294, 328-30, 349 legitimated 153
competition of 333 management 220
creation 330 of motive 101, 511, 532
custodians of 346, 348 of structure 153
dilution and 333, 346
disembedding and 333 Weber, Max 3, 50, 53, 79, 112, 155, 229, 281, 329, 462,
displacement 348 473-81, 486, 519, 521, 526, 545, 695 ,746, 748,
dissipation 331-32, 332, 348 770, 786
erasure 333 welfare state 549-54
erosion 331-34, 344-47 women's issues and rights 10
in institutional entrepreneurs 158 World Bank 309, 310, 314, 483, 752 ,803
as institutionalized practice 330-31, 434 world culture 460-62
migration 348 World Economic Forum (WEF) 375-76
reconstruction 347 world polity characteristics 457-60
sensemaking and 293 world society theory 449-50, 452-55, 462, 465, 467
taken for granted nature 329 world system institutionalism 301, 305-6, 308
World Trade Organization 25,184,309,314