Can institutional theory be refuted, replaced or modified?

PurposeInstitutional theory assumes practice adoption and subsequent decoupling. However, there is a range of alternative organizational theories that challenge this view and offer instead their reinterpretation, extension and modification of institutional predictions with regard to the adoption and possible range of various responses and processes that follow the decision to adopt. This paper aims to review this spectrum of theories and suggest how they clarify, supplement, correct, restrict and/or abandon some institutional explanations and predictions.Design/methodology/approachExtensions and alternatives to institutional theory are mainly motivated by the need to have a theory of practice adoption and variation, and a plethora of alternative practice adoption theories currently exists in the literature. The authors review these theories and compare them against institutional theory and against each other.FindingsThe analysis revealed shortcomings and advantages of alternative theories compared to institutional theory and against each other. It is suggested which theory is most useful in each domain of application. The authors review and compare institutional theory, Scandinavian institutionalism, management fashion theory, virus theory and institutional inertia theory and analyze how and whether they are able to reproduce the success of institutional theory and successfully address and resolve its shortcomings and gaps. The authors conclude by discussing whether regular emergences of new theories that account for the idea-handling stage of diffusion signals institutional theory’s limit of validity in this domain.Originality/valueThe problem of idea emergence/diffusion/disappearance and adoption/variation/use are fundamentally different, but both of them motivated researchers to go beyond institutional theory. Despite being the dominant theory of organizations internally consistent and explaining a wide range of empirical observations, it is evident that institutional theory is not a complete theory. This paper contributes to this problem by exploring and comparing existing candidates for practice variation theory.

Purpose– This paper aims to investigate how sports science was institutionalised and rapidly deinstitutionalised within a Premier League football club. Institutional theory has been critiqued for its lack of responsiveness to change, but recent developments within institutional theory such as the focus on deinstitutionalisation as an explanation of change, the role of institutional entrepreneurs and the increasing interest in institutional work facilitate exploration of change within institutions.Design/methodology/approach– The authors deploy a longitudinal case study which ran from 2003-2011. Data was collected via observations, semi-structured interviews and through extensive literature reviews.Findings– Via this longitudinal case study, the authors illustrate that the antecedents of deinstitution can lie in the ways by which an institution is established. In doing so, they highlight the paradoxical role potentially played by institutional entrepreneurs in that they can (unwittingly) operate as agents of institutionalisation and deinstitutionalisation. Their study suggests that the higher the performance imperative within a field, the more likely the institution as a generic concept will be deinstitutionalised and the more likely to be appropriated and customised in order to gain inimitability and thus competitive advantage. Finally, the authors make an additional contribution by integrating the affective aspects of institutional work to their analyses; stressing the role played by emotions.Research limitations/implications– As with many case studies, the ability to generalise from one case, however detailed, is limited. However, it provides evidence as to the paradoxical role that can be played by institutional entrepreneurs – especially in highly competitive environments.Practical implications– The study suggests that the HR function has a potential role to play with regards to institutional continuity through a focus on leader and institutional entrepreneur succession planning.Originality/value– The paper makes an original contribution by highlighting both institutional and deinstitutional work within a single case. It highlights the paradoxical nature of institutional entrepreneurs in highly competitive environments and illustrates the importance of emotion to institutional maintenance and deinstitution.

In this paper, similarities and differences between the institutional theory of organization and organizational culture theory are analysed, and how these theories complement each other is highlighted. This study posits that both the institutional and cultural theories of organizations have the same research subject and that they approach it from the same research paradigm. The level of analysis distinguishes the two, and therefore, an interaction between the institutional and cultural theories of organizations is useful. Organizational culture theory supports the institutional theory in explaining the underlying factors and the forms of the implementation of institutional pattern in organizations. The institutional theory of organizations supports the organizational culture theory to expand its findings regarding the sources of organizational culture.

Traditionally, institutional theory has portrayed institutions as having a deterministic influence on lower-level institutional actors, such as organizations. It is argued that organizations become relatively alike when they are faced with the same institutional demands—a process termed “isomorphism”. This traditional position has been subject to major criticism because it did not explain observed organizational agency. These critiques resulted in an “agentic turn” in institutional theory. Scholars did sterling work in bringing agency into institutional theory by introducing the perspectives of: “institutional work”, “institutional entrepreneurship”, “hybrids”, and “decoupling”. However, in turn, these studies received criticism for portraying organization as overly “heroic” and overlooking the structural embeddedness of organizations. Therefore, more recently, the microfoundational perspective has been introduced to institutional theory. The line of argument is that this perspective offers a more nuanced view of agency versus structural determinism in institutional theory. In short, the microfoundation perspective explores the mechanisms through which higher-level institutions affect lower-level institutional actors, such as organizations, and vice versa. Although the microfoundational perspective shows promise, research is still in its infancy and highly fragmented. We, therefore, sought to contribute by firmly embedding the microfoundational perspective into institutional theory and advancing a definitive explanation of institutional phenomena. Based on a review of the literature (presented in Chapter 1), we developed a number of research avenues that seemed promising in pursuing our objective. We followed these research directions in four studies presented in Chapters 2 to 5. Our overall research question driving this dissertation was: “How can the microfoundational perspective in institutional theory advance an explanation of institutional phenomena?”

Chapter 3 Taking Things A Bit too Far: Some Problems with Emergent Institutional Theory

Modern economic science has an extensive and varied methodological toolkit for studying various economic phenomena, one of which is organization — the proposed explanation of the emergence and termination of existence based on the transactional approach. Institutionalists prioritize the rules (institutions) that structure the interaction of economic agents within the firm to reveal the firm's nature. Differences in views on nature are explained by researchers' methodological choice, which is due to methodological pluralism, their modern scientific community in the context of the transition from postmodern to metamodern. The study's relevance lies in the fact that now in economic science, there is no comprehensive analysis of the evolution of economic knowledge development in conjunction with philosophical knowledge development — the philosophy of postmodern and metamodern poses before the economic theory of organizations. The present study fills this gap, revealing the influence of the philosophy of postmodern and metamodern on the formation and development of organizations' institutional theory. The study aims to identify the general development logic of the institutional theory of organization and the relationship with the philosophy of postmodern and metamodern. The research methodology includes methodological institutionalism, method of rational reconstruction of scientific knowledge, comparative analysis method, analysis method, and synthesis. The study results are to identify the impact of postmodern and metamodern on organizations' institutional economic theory.

Academy of Management ReviewVol. 38, No. 2 DialogueWhere Are the Old Theories of Organization? Prospects for Retrospection in Organization TheoryJohn Hassard, Julie Wolfram Cox and Michael RowlinsonJohn HassardManchester University, Julie Wolfram CoxMonash University and Michael RowlinsonQueen Mary London UniversityPublished Online:16 Apr 2013https://doi.org/10.5465/amr.2012.0100AboutSectionsView articleView Full TextPDF/EPUB ToolsDownload CitationsAdd to favoritesTrack Citations ShareShare onFacebookTwitterLinkedInRedditEmail View articleREFERENCESAdler P. (Ed.). 2009. The Oxford handbook of sociology and organization studies: Classical foundations. Oxford: Oxford University Press. Google ScholarBuchanan D., Bryman A. 2009. The organizational research context: Properties and implications. In Bryman A.Buchanan D. (Eds.), The Sage handbook of organizational research methods: 1–18. London: Sage. Google ScholarBurrell G., Morgan G. 1979. 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Purpose Drawing on institutional entrepreneurship theory, this study examines (1) how ride-hailing service markets are created and legitimized and (2) how the involved stakeholders (acting as institutional entrepreneurs) co-evolve to improve city connectivity. Design/methodology/approach Employing qualitative methods, this study engages thirty-one interviewees, including drivers, users, policymakers, and influencers. In addition to interview data, this study uses visual methods, online documents, and participant observation. Findings The findings shed light on policymakers’ struggles in managing the emerging digital technology-induced industry and illuminate the co-evolution of various actors in legitimizing the ride-hailing industry, delineating four distinct phases: introduction, local validation, expansion, and general validation. Originality/value This research enriches the institutional entrepreneurship theory by demonstrating the fluid boundaries between economic, political, and policy entrepreneurs, revealing that roles are more interconnected and overlapping than previously acknowledged. It introduces the concept that collective and adaptive actions by various actors are crucial for driving institutional change, moving beyond the traditional focus on individual entrepreneurs. By examining how ride-hailing platform operators navigate and shape multiple institutional orders to their advantage, the study highlights the dynamic interplay between enabling conditions and entrepreneurial actions within institutional theory.

Purpose Prior studies on Islamic finance provide a limited linkage between organizational theory and the complex Shariah governance framework embraced by Islamic banks worldwide. This paper aims to show the relevance of the application of “institutional theory” in the Shariah governance framework of Islamic banks. Design/methodology/approach This study applied library research to investigate the application of institutional theory in the Shariah governance framework of Islamic banks. The authors also critically reviewed prior empirical and review papers for accomplishing the research objectives. Findings Based on the critical review, the authors found that institutional theory is the most influential in progressing Shariah governance as it contributes toward the organizational image, helps to achieve religious legitimacy, and inspires a more robust regulatory environment. In addition, a well-designed Shariah governance framework is driven by institutional theory and that could assist in providing guidelines, strategies and procedures for Islamic banks to better conduct; monitor and control their social, religious and accountability obligations. The authors also highlighted the societal, economic and legal environment of Islamic banks in relation to the propositions of institutional theory. They emphasize that a well-designed Shariah governance framework driven by institutional theory could assist in providing guidelines, strategies and procedures for Islamic banks to better conduct, monitor and control their social, religious and accountability obligations. Research limitations/implications This study highlights institutional theory to serve best the development of operational strategies and structures of Islamic banks including the roles, functions and powers of the various stakeholders including regulators and those involved in the Shariah governance process of Islamic banks. The authors recognize the institutional theory to perform a key role in enriching the structural framework of Islamic Financial Institutions. This study is heavily dependent on prior research rather than empirical investigations. The authors did not cover other Islamic finance areas (such as Islamic insurance, Islamic microfinance and Halal industries). Thus, future researchers can apply institutional theory in Shariah governance practices and implementations of setting up rules by the regulators and respective institutions. Originality/value To the best of the authors’ knowledge, this is the first study that attempts to show the importance of the application of institutional theory in Shariah governance of Islamic Banks. Thus, this study, therefore, adding a novel dimension to the literature by arguing why institutional theory, is more pronounced (as compared to the other theoretical frameworks) in the formation and discharge of the roles, powers and functions by the different governance organs (such as regulators, the board of directors, management and Shariah supervisory board) operating in this unique corporate governance landscape.

This text consults seven variants of institutional theory to explore how these can be applied to strategic management. These variants are New Institutional Economics, Old Institutionalism, New Institutionalism, institutional entrepreneurship and change, intra organizational institutionalization, institutional logics, and institutional work. In doing so, three strategic management styles are distinguished: competitiveness based strategic management, legitimacy based strategic management, and performativity based strategic management. While the competitive based style sees institutional theory submitting to mainstream strategy research, offering additional variables and considerations to explain competitive advantage, the legitimacy based style makes institutional theory a strategy theory in its own right by providing an explanation for an organization's viability that emphasizes legitimacy over competitive advantage. The performativity based style is an even more radical departure from mainstream strategizing by purporting that a future is actively created with organizations making contributions as emerging issues are being dealt with.

Purpose– Institutional theorists treat law and regulations as external factors that is part of the organization’s environment. While institutional theory has been criticized for its inability to recognize the role of agents and to theorize agency, the growing literature on institutional work and institutional entrepreneurship, partially informed by and co-produced with practice theory, advances a more dynamic view of processes of institutionalization. In order to cope with legal and regulatory frameworks, constituting the legal environment of the organization, there are evidence of organizational responses in the form of bargaining, political negotiations, and decoupling of organizational units and processes. The purpose of this paper is to report how legal and regulatory frameworks both shape clinical practices while at the same time they are also informed by the activities and interests of professional communities and commercial clinics.Design/methodology/approach– This paper reports an empirical study of the Swedish-assisted conception industry and is based on a case study methodology including the use of interviews and formal documents and reports issues by governmental agencies.Findings– The empirical material demonstrates how scientists in reproductive medicine and clinicians regard the legal and regulatory framework as what ensures and reinforces the quality of the therapies. At the same time, they actively engage to modify the legal and regulatory framework in the case when they believe it would benefit the patients. The data reported presents one successful case of how PGD/PGS can be used to develop the efficacy of the therapy, and one unsuccessful case of regulatory change in the case of patient interest groups advocating a legalization of commercial gestational surrogacy. In the former case, scientific know-how and medicinal benefits served to “push” the new clinical practice, while in the latter case, the “demand-pull” of patient interest groups fails to get recognition in regulatory and policy-making quarters.Originality/value– The study contributes to the literature on agency in institutional theory (e.g. the emerging literature on institutional work) by emphasizing how legal and regulatory frameworks are in a constant process of being modified and negotiated in the face of novel technoscientific practices and social demands. More specifically, this process include many scientific, technological, economic, political and social relations and resources, making the legal environment of organizations what is the outcome from joint negotiations and agreements across organizational and professional boundaries.

PurposeThis paper aims to deal with the concepts of “institutions” and “institutional logics” in the context of business-to-business (B2B) marketing systems and uses institutional theory as a framework to look at value co-creation.Design/methodology/approachBy integrating the literature on value co-creation, institutional theory and institutional entrepreneurship, the paper argues that the boundaries of B2B marketing systems are continuously reshaped through legitimation processes occurring through actors’ institutional work, thus making co-created value the only legitimate value.FindingsThe paper proposes a conceptual framework and furthers the conceptual development of value co-creation and augments the literature on service-dominant logic and the notion of co-created value by assuming a legitimacy-based B2B market systems perspective.Practical implicationsThis paper presents a number of propositions that serve to illustrate several managerial implications. These arise from organizations co-creating value by conforming to the various institutional logics that maximize their legitimacy.Originality/valueThe paper makes a contribution by developing a critical theoretical framework based on the application of institutional theoretical constructs/concepts (e.g. ceremonial conformity, decoupling, considerations of face, confidence and good faith).

PurposeThe purpose of this paper is to critically explore the implementation of cost accounting systems (CAS) using content analysis. In particular, it aims to examine the impact of Sri Lankan cultural and local characteristics on the adoption of CAS. In particular, it examines the factors that facilitate or hinder the adoption of CAS in Sri Lanka.Design/methodology/approachPrimary data for the research were obtained by interviewing selected respondents from Sri Lanka’s manufacturing and service sectors. They were shortlisted using maximum variation sampling to obtain a representative cross-section of the national population. A total of 16 respondents were interviewed, which resulted in 57 interview paragraphs to be coded. Several theories were used to analyse them, namely, the theory of institutional isomorphism (homogeneity) and the theory of heterogeneity, as well as Clifford Geertz’s cultural theories.FindingsA cross-comparison between the findings and relevant literature indicates the existence of complete institutional isomorphism and partial institutional heterogeneity in Sri Lanka. Heterogeneity exists in organisations such as foreign multinationals, which have adopted unique and sophisticated CAS. In addition, inadequate access to information and the orientation of the local culture has affected the implementation of CAS in Sri Lanka, with a lack of awareness of the importance of CAS, a sluggish approach to costing and cultural values forming prominent barriers to its implementation. These findings are plausible in light of the relationship between a sluggish approach towards costing (a low cost awareness), and local attitudes towards the implementation of more efficient accounting practices such as CAS.Practical implicationsThis research is invaluable as a tool for Sri Lankan policymakers and practitioners, enabling the public and private sectors to provide education and training to enhance staff understanding and promote a positive attitude towards costing. With more efficient institutional CAS, the country’s economy will be more competitive internationally. As well as policymakers and practitioners, this research could be used by academicians for advancing theoretical development around the cultural triggers and barriers for adopting more innovative and fresher CAS in Sri Lanka.Originality/valueThe originality of this research can be justified on two counts. Firstly, although a wealth of research exists that examines the influence of culture on behaviour, this research specifically evaluates the impact of cultural factors on attitudes towards costing. These factors could be facilitators or obstructions for implementing CAS. Secondly, this research aims to combine both earlier and recent theories of institutionalism with Clifford Geertz’s cultural theory, to investigate how people and institutions in Sri Lanka adopt CAS. Earlier studies have focused merely on earlier theories of institutional homogeneity.

This paper reflects our conversation at the border - a dividing line but also a potential meeting place – of organizational culture theory and institutional theory. First, we discuss the border between institutional theory and organizational culture theory by exploring two notions central to both - taken for grantedness and meanings. We ask what is taken for granted about institutions and organizational culture and how institutions and organizational cultures materialize? Our conversation reveals that although the notion of the taken for granted is important to institutional theory and organizational culture theory, what this means and implies is quite different for each. We also found that even though institutions and cultures involve meaning and evolve through meaning making, the two are understood and hence explored methodologically in quite different ways. So what seemed to be similar in these two theoretical frameworks actually differentiates them. Nevertheless, and still optimistically, we move on to suggest possible ways to bridge organizational culture theory and institutional theory, specifically through the notion of identity - both individual, organizational and interorganizational.

The most recent efforts in institutional theory applied to organization studies search for ways to overcome consequences of traditional dichotomies based on levels of analysis, social structures versus agency as source of practices, and so on. If in other social sciences that debate has received fundamental contributions in the last three or four decades, this is not the case for Organization Theory, where discussions are much more recent and based especially on Sociology authors. The main purpose of this theoretical essay is to describe some neofunctionalist concepts - system openness and closeness, double contingency and expectation of expectations - proposed by Niklas Luhmann, discussing their impact on those dichotomies, in the realm of the Luhmannian theory of institutions. This effort is expected to contribute alternatives to that theoretical discussion that mark institutional organization theory for at least the past two decades.