7-2014 Greenwood Et Al-2014-Journal of Management Studies

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  Rethinking Institutions and Organizations Royston Greenwood, C. R. Hinings and Dave Whetten University of Alberta; University of Alberta; Brigham Young University  ABSTRACT  In this Point–Counterpoint article we argue that institutional scholarship hasbecome overly concerned with explaining institutions and institutional processes, notably atthe level of the organization field, rather than with using them to explain and understandorganizations. Especially missing is an attempt to gain a coherent, holistic account of howorganizations are structured and managed. We also argue that when institutional theory doesgive attention to organizations it inappropriately treats them as though they are the same, orat least as though any differences are irrelevant for purposes of theory. We propose a return tothe study of organizations with an emphasis upon comparative analysis, and suggest theinstitutional logics perspective as an appropriate means for doing so. Keywords:  comparative analysis, institutional logics, institutions, organizations INTRODUCTION This Point–Counterpoint article is a challenge to current institutional scholarship and amap for its redirection. The article has two complementary themes, which, together,suggest that institutional theory needs refocusing. It begins by critiquing institutionaltheory because it has begun to substitute what was srcinally its independent for thedependent variable. That is, in its early formulations institutional theory looked at howinstitutional processes shape organizations. Organizations were the thing to beexplained. For us, this focus is critically important because, as Lynn Zucker observed – rightly in our view – the most important institution in modern society is the organization.It matters, therefore, that we understand them. But over the past several decadesinstitutional scholarship has turned away from this position. We have become overlyconcerned with explaining institutions and institutional processes, notably at the level of the organization field, rather than with using them to explain and understand organi-zations. Especially missing is an attempt to gain a coherent, holistic account of howorganizations are structured and managed. We argue the need to rethink this shift in the  Address for reprints  : Royston Greenwood, Department of Strategic Management & Organization, Universityof Alberta, 4-20H Business, Edmonton, AB, Canada T6G 2R6 ( ). bs_bs_banner © 2014 John Wiley & Sons Ltd and Society for the Advancement of Management Studies  Journal of Management Studies   51:7 November 2014doi: 10.1111/joms.12070  balance of emphasis, to re-emphasize an organizational level of analysis, and to treatorganizations as actors.Even when institutional theory does give attention to organizations it inappropriatelytreats all organizations as though they are the same, or at least as though any differencesare irrelevant for purposes of theory. In this respect, institutionalists are no different toorganizational theorists more generally. For, as Whetten (2009) points out, ‘Organiza-tion scholars tend to view organizations as either all alike or all unique.’ In effect, wewrite as though the following organizations:ã The Mayo Clinicã General Motorsã Museum of Modern Artã Emirates Airlineã Leeds United F.C.ã Applehave more in common than they have differences. Or, that what they have in commonis more important than any differences. There is an unspoken assumption that allorganizations are essentially the same. This practice of ignoring the obvious hetero-geneity of organizations reflects a shift from previous decades during which attentionwas given to systematically capturing   and theorizing   differences across organizations.Our second theme, therefore, is that this shift, too, is misguided because it weakensthe development of theory by omitting important phenomena. In elaborating thistheme we will suggest that differences between organizations could be theorizedusing the concept of institutional logic, which resonates with Weber’s notion of ‘valuerationality’. THEME 1: FROM INDEPENDENT TO DEPENDENT VARIABLE Institutional theory is one of the dominant perspectives within organization and man-agement theory (Greenwood et al., 2008). Its srcins lie in the late 1970s and early 1980swhen a series of innovative papers (DiMaggio and Powell, 1983; Meyer and Rowan,1977; Zucker, 1977) asked why organizations tend to look alike. These studies spawnedwhat is commonly referred to as ‘new’ institutionalism with its emphasis on legitimacy,fields, templates, and schema, and latterly, institutional logics, institutional entrepreneur-ship, and institutional work (Greenwood et al., 2008). ‘Old’ institutionalism was con-cerned with competing values, power and influence, coalitions, and informal structures(Selznick, 1949, 1957).It is important to remember the temporal context of these studies. The decades of the1960s and 1970s were dominated by a concern to better understand Weber’sconceptualization of ‘bureaucracy’. Sociologists (e.g., Albrow, 1970; Blau and Meyer,1956; Etzioni, 1964; Mouzelis, 1968; Perrow, 1970) were particularly attentive to thespread of bureaucracy in modern societies and the causes and implications of thatprocess of rationalization. This emphasis is explicitly raised in both Meyer and Rowan(1977) and DiMaggio and Powell (1983). Organization theorists (e.g., Child, 1972;March and Simon, 1958; Pugh et al., 1969) also explored Weber’s concept of ‘bureau-Rethinking Institutions and Organizations 1207 © 2014 John Wiley & Sons Ltd and Society for the Advancement of Management Studies  cracy’ and began to consider whether it was appropriate for all circumstances andsituations, and its possible variants. This questioning led to ‘contingency theory’(Lawrence and Lorsch, 1967), an approach that identified factors – such as an organiz-ation’s size, its technology, the uncertainty of its environment, and the complexity of itsportfolio – that circumscribed the nature of the archetypal bureaucratic form (forreviews, see Donaldson, 2001; Van de Ven et al., 2013).The common aim of these early sociological and organizational theory approacheswas to understand the organizing of collective effort; that is, to understand how collectivepurposes could be achieved through the panoply of structures and processes of organi-zation. This focus went by various names: Burns and Stalker (1961) referred to ‘man-agement systems’; the Aston Group (Pugh et al., 1963) used ‘organization structure’; andGalbraith (1977) preferred ‘organization design’. More recently, ‘organizational form’has received currency. A key point is that this early body of work sought to understandthe organization  as a whole   in order to appreciate how collective effort could be achievedand collective purposes accomplished (Meyer et al., 1993). A good example of this concern is Lawrence and Lorsch’s (1967) examination of howdepartments within organizations varied in their formal structures, goal orientations,time orientations, and interpersonal orientations. The challenge confronting organiza-tions, according to Lawrence and Lorsch, is to gain the appropriate ‘differentiation’across the major units of an organization, complemented by an appropriate range of ‘integrative devices’. Chandler (1962) is a second example. He studied strategy andstructure, demonstrating that the latter follows the former. Differences in strategy (long-term goals and the plans of action and distribution of resources to achieve those goals),Chandler argued, led to differences in structure, in terms of the degree of functionalspecialization, the extent of hierarchy, and the nature of lines of authority and commu-nication. The growth of organizations, in particular, produces a greater need for admin-istrative coordination and control.Our point is that contingency studies sought to understand how organizations aremanaged and co-ordinated. They looked not at the adoption of isolated practices and/orparticular structures but at the organization taken as a whole. The ‘new’ institutionalperspective, when it first appeared, did not challenge this focus. Its powerful early insightwas that organizational design is not simply one of responding to ‘technical’ contingen-cies. On the contrary, organizations are embedded in an ‘institutional’ context of socio-cultural ideas and beliefs that prescribe appropriate and socially legitimate ways of doing things. Organizational arrangements, in this sense, are not responses solely to technicalimperatives, but are outcomes of these more socio-cultural prescriptions, or ‘rationalizedmyths’. Indeed, the ‘father’ of institutional theory, Philip Selznick, was concerned withhow organizations became institutions, as well as with how institutional processes affectorganizations.Scholarship that followed these early institutional insights implicitly accepted the needto understand how organizations, taken as a whole, are shaped by institutional prescrip-tions and proscriptions. However, because the idea that cultural prescriptions influenceorganizations was so novel, most early studies sought to verify that idea by showing thepattern of diffusion of particular practices, and then inferring from that pattern the playof institutional processes. From these beginnings, research into institutional processes hasR. Greenwood et al.1208 © 2014 John Wiley & Sons Ltd and Society for the Advancement of Management Studies  accelerated and moved in multiple directions. In doing so, it has significantly deepenedour understanding of institutional processes, their srcins, and their consequences.  But  , the srcinal focus of inquiry – understanding the organization as a social mecha-nism for achieving collective ends – has become relatively neglected. Instead of looking  at   the organization through an institutional lens, we now seem to prefer to understand theinstitutions themselves, not the thing that they help us explain. The independent variable(institutions and institutional processes), rather than the phenomena to be explained(collective organizational effort), has become dominant. Recent themes in institutionalanalysis indicate and continue this emphasis. For example, those advocating the giving of attention to institutional work squarely place ‘institutions’ as the phenomena to beexplained – usually at the level of the field (e.g., Zietsma and Lawrence, 2010). Similarly,the vast majority of studies of institutional entrepreneurship and change are distinctivefor their field-level emphasis (Hardy and Maguire, 2008), as are most studies of ‘logics’(Thornton et al., 2012).To confirm our point, we examined the focus of empirical papers published in 2010,2011, and 2012 in three North American (   Academy of Management Journal  ,  Administrative Science Quarterly , and  Organization Science   ) and two European journals (   Journal of Management Studies  , and  Organization Studies   ). These journals are highly respected and have mandatesthat cover the institutional perspective. We looked for articles whose keywords, titles, orabstracts indicated that they were concerned with ‘institutional’ processes. This criterioninevitably misses papers that deal with similar concepts and issues, but primarily from analternative perspective; and also those that use institutional ideas but only incidentally.Despite the potential bias that our selection criterion might incur, the range of ideas andempirical settings of primary interest to the institutional community became apparent.It is notable that almost two thirds of the 45 papers that use the institutional perspec-tive deal with field-level processes. Most of the others address how and why organizationsmight implement some form of change (usually, change to a single practice, not anoverall organizational design); or how and why organizations might respond to a newfield-level demand by adopting, translating, or rejecting a new practice. Though oftenfundamentally insightful and theoretically important for the way that they nuance ourunderstanding of diffusion processes, these studies usually lean towards showing andexplaining the occurrence and nature of institutional processes, rather than to explaining how organizations are actually designed and managed. Although they touch onorganizational design and management, they do so lightly and are intentionally narrowin focus.The consequence is that we have a more elaborate and more complete understanding of critical field-level structures and processes. We know much more about the pattern of diffusion across fields, about how features of a practice – such as its ‘opacity’ or trans-parency – can affect its diffusion, and we have a greater appreciation of how contradic-tions in societal logics affect the diffusion of particular practices. We have better insightinto the roles played by collective intermediaries such as the media, critics, the profes-sions, and analysts, and a more nuanced understanding of what matters to differentstakeholders, and why. We are better informed about the critical role of ‘field configur-ing’ events – such as conferences – in framing and conveying institutional demands. Wehave learned about how and why organizations might respond differently to field-levelRethinking Institutions and Organizations 1209 © 2014 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
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