Managing institutional complexity in a transitional economy

Abstract

PurposeThe purpose of this paper is to examine how senior managers in a transitional economy context deal with the challenge of handling competing institutional logics through legitimacy work.Design/methodology/approachThe paper draws on the qualitative analysis of semi-structured interviews with 34 senior managers in Ethiopia in matched pairs of four commercial organisations in private and state sectors and secondary sources.FindingsThe research reveals how the erstwhile protected state-owned organisations responded to institutional complexity, by seeking to extend their legitimacy claims whereas the emergent private sector organisations sought to construct a new legitimacy, in part by adopting some of the logics used by state-firms.Research limitations/implicationsExtending this study with longitudinal comparative case studies across other emerging market economies could cast light on the varied ways in which organisations manage institutional complexities.Practical implicationsIt is imperative that the government and policy makers have clarity in issuing directives and other signals about valued objectives to be pursued by enterprises. Otherwise, the organisational level actors may remain uncertain about the acceptable behaviours and responses and are likely to waste time and resources in trying to anticipate an unclear sense of direction.Originality/valueThis is a novel study which examines how organisational actors manage institutional complexity in a transitional economy context by undertaking legitimacy building work and appearing to meet state-public expectations.