Towards micro-foundations of institutional change

Abstract

PurposeGiven managerial choices and the sociocultural context in which they are made are at the heart of management history, then an understanding of both is critical. This paper argues that the “late” North (2005) provides such an understanding.Design/methodology/approachThis study is a research review synthesizing much disparate but cognate literature across the new institutionalism in organizational sociology/studies and in economics.Findings“Late” North (2005) provides an important ontological frame for dealing with the so-called “paradox of embedded agency”, an approach that may afford management historians a more thorough account of how institutions are formed and change over time. North has always maintained that institutional change is the outcome of deliberate or intentional choices made by actors. However, and unlike his earlier work which ignores how humans come to make the said choices, North (2005) explicates the sociocognitive process by which intentionality emerges with expanded consciousness, as humans construct ideas and beliefs about reality, beliefs that shape decisions to alter the said reality via the process of institutional change.Originality/valueIt is rather curious that despite North’s status as a “historian”, management historians – or at least those publishing in this journal from its founding in 1995 – do not seem to be terribly interested in North’s work. Although North rates a mention in rival journals, other than Dagnino and Quattrone’s (2006) study, papers in this journal invoking institutional theory align with the new institutionalism in organizational sociology/studies (NIOS) rather than North’s new institutional economics (NIE). Even in the related sub-discipline of business history, those professing an interest in institutions are more interested in the NIE of non-historians Coase and Oliver Williamson than they are in North’s NIE. And, in recent work analysing the place and significance of institutional theory in historical research, the foundations are unmistakeably NIOS rather than North’s NIE.