Micro-Foundations of Institutional Logic Shifts: Entrepreneurial Action in Response to Crises

Abstract

Institutional logics shape how actors interpret and organize their environment. Institutional logics include society’s structural, normative, and symbolic influences that provide organizations and individuals with norms, values, assumptions, and rules that guide decision-making and action. While institutional logics influence individuals and organizations, they do not exist/form in a vacuum, but rather are instantiated in the practices and patterned behaviors of actors who act as carriers of logics in specific contexts. Given the dynamic interaction between institutional logics and individual/organizational actors, research has begun to explore the micro-level processes that influence institutional logic changes to help explain how and why those who are shaped by an institution enact changes in the very context in which they are embedded. Thus, the formation and changing of institutional logics involve precipitating action—which can include entrepreneurial action. Entrepreneurial action—especially in moments of crisis (e.g., when there is a disruptive event, natural disaster, or external feature that disturbs the status quo), can function as a micro-foundation for institutional logic shifts. An entrepreneurship model of dominant logic shifts therefore reveals how crises induce sensemaking activities that can influence shifts in how actor’s see the world, which in turn motivates the pursuit of entrepreneurial opportunities. Significant disruptions, such as environmental jolts, have a triggering effect in enabling individuals to problematize previously held beliefs and logics, allowing them to temporarily “step out of” status quo institutional logics. With prior beliefs and logics problematized, individual decision-makers become open to seeing new interpretations of their surroundings as it is and as it could be. Therefore, actors shift their dominant way of seeing the world (e.g., dominant logic) and then enact this new logic through ventures that, ultimately, can shift and alter institutional-level logics. Therefore, an entrepreneurship model of dominant logic shifts serves as an explanation for how broader institutional logics may shift as a result of the interaction between entrepreneurial action and the environment following a major disruption.