Maintaining and Diffusing Institutions

1. Maintenance

The concept of institution connotes stability and persistence. Are these conditions problematic? Once an institutional structure is in place, is there anything else to be said? A good many students of organizations assume that institutionalization is an absorbing state and, once com- pleted, requires no further effort at maintenance. Simon (1945/1997), for example, describes a number of reasons for the persistence of behav- ioral patterns once established. He emphasizes, in particular, cognitive patterns: “The activity itself creates stimuli that direct attention toward its continuance and completion” (p. 106). Such individual-level, attention- directing processes also act to decrease the individual’s sensitivity to external stimuli. Organizational ecologists also assume that stability or, in their terms, inertia is a normal state for organizations. Inertia is the product of such organization-level processes as sunk costs, vested inter- ests, and habitualized behavior shored up by the external constraints imposed by contractual obligations to exchange partners and regulatory regimes (Hannan and Freeman 1984; 1989). Change is assumed to be both difficult and dangerous for organizations.

Other theorists, however, argue that persistence cannot be taken for granted. Zucker (1988b: 26), for example, suggests that entropy—“a tendency toward disorganization in the social system”—is the more normal condition. Things—structures, rules, and routines—tend to break down. She argues, as a corollary, that deinstitutionalization is prevalent and has many roots. (These ideas are considered in a later section of this chapter.) Persistence is seen to be tenuous and problem- atic. Theorists such as Giddens (1984) take an intermediate position. He emphasizes the extent to which the persistence of rules, norms, and beliefs requires actors to actively monitor ongoing social activities and continuously attend to maintaining the linkages with the wider socio- cultural environment. Structure persists only to the extent that actors are able to continuously produce and reproduce it.

In his work on the institutionalization of economic systems, Avner Greif (2006: 14) embraces and elaborates this intermediate position, combining agency and structural views, by proposing an equilibrium perspective. Greif argues, as I have proposed, that institutions are sup- ported by varying elements, including rules, beliefs, and norms. “These institutional elements are exogenous to each individual whose behavior they influence.” But they are also “endogenous institutions,” which are self-reinforcing.

Each individual, responding to the institutional elements implied by others’ behavior and expected behavior, behaves in a manner that contributes to enabling, guiding, and motivating others to behave in the manner that led to the institutional elements that generated the individual’s behavior to begin with. Behavior is self- enforcing in that each individual, taking the structure as given, finds it best to follow the institutionalized behavior that, in turn, reproduces the institution in the sense that the implied behavior confirms the associated beliefs and regenerates the associated norms. (Greif 2006: 15–16)

In my reading of the institutional literature, most institutional scholars accord little attention to the issue of institutional persistence. Lawrence (2008: 190) suggests that one reason for this neglect is that much of the work of maintenance is performed by non-elite actors: “the institutional janitors and mechanics who deal with the mess and break- downs of institutional mechanisms that occur as an everyday occur- rence.” Also, as expected, those who do consider maintenance disagree over what mechanisms underlie stability. In particular, the underlying conception of institution—whether cultural-cognitive, normative, or regulative—affects views of maintenance mechanisms. Cultural- cognitive theorists tend to emphasize the important role played by unconscious, taken-for-granted assumptions defining social reality. Jepperson (1991: 145), for example, insists that the hallmark of an insti- tution is its capacity for automatic maintenance and self-restoration. Institutional mechanisms are those requiring no conscious mobilization of will or effort. Similarly, Zucker (1977: 726) argues: “Internalization, self-reward, or other intervening processes need not be present to ensure cultural persistence because social knowledge once institution- alized exists as a fact, as part of objective reality, and can be transmitted directly on that basis.”

To evaluate this claim, Zucker conducted an experimental study to assess the extent to which the degree of institutionalization was observed to affect the extent of uniformity, maintenance, and resistance to change exhibited by subjects. Her study utilized the classic Sherif (1935) stimuli, asking subjects to evaluate the amount of apparent movement by a stationary light in a darkened room. Extent of institu- tionalization was manipulated by instructions given to the subjects. To create lower levels of institutionalization, the subject was told only that the other participant (a confederate) was “another person”; to create intermediate levels, the subject was told that she and her coworker (the confederate) were both “members of an organization,” but their positions were unspecified. And to create higher levels of institutionalization, the subject was told that she and her coworker were both participants in an organization, and the coworker (confederate) was given the title of “Light Operator.” Zucker (1977) reasoned:

Settings can vary in the degree to which acts in them are institu- tionalized. By being embedded in broader contexts where acts are viewed as institutionalized, acts in specific situations come to be viewed as institutionalized. Indicating that a situation is struc- tured like situations in an organization makes the actors assume that the actions required of them by others actors in that situation will be . . . more regularized and that the interaction will be more definitely patterned than if the situation were not embedded in an organizational context. Any act performed by the occupant of an office is seen as highly objectified and exterior. When an actor occupies an office, acts are seen as nonpersonal and as continu- ing over time, across different actors. (pp. 728–729)

Note the extent to which Zucker’s experiment is built on a cultural- cognitive conception of institutionalization. The only factor manipu- lated to account for the behavior of subjects was their cognitive framing of the situation, including their own identity within it. No sanctions or other types of regulative controls or normative pressures were involved in producing the observed effects.

Zucker found that extent of institutionalization exhibited the expected effects: Subjects working in more institutionalized (organization- like) conditions were more likely to transmit the standards they had learned in an initial series of trials (with the confederate supplying the standard) to a new naïve subject, maintain their standards over time (subjects were asked to return one week later to perform the same type of activity), and resist attempts to change their judgments (having adopted the confederate’s standard in the initial period, subjects were exposed to a second confederate who attempted to alter the standard).

Zucker shows that in ongoing social systems, transmission of beliefs and practices to new actors is a vital process underlying persistence. Further, more highly institutionalized practices, being more “objecti- fied,” are more easily transmitted than less institutionalized behavior (Tolbert and Zucker 1996).

Others stressing cultural-cognitive mechanisms in the institutional maintenance point to processes like “mythologizing” work, such as recounting the legends of early leaders, and “embedding and routin- izing” processes, such as training and refresher courses (Lawrence and Suddaby 2006). Zilber (2002) describes a process of “reinterpretation” and “reframing” in which a rape crisis center was able to maintain and legitimate its activities by shifting from a feminist perspective that motivated its creation to a therapeutic perspective as new personnel were recruited. The professional ideology provided a stronger basis for framing and motivating the center’s activities for new workers than the social movement ideology.

Theorists taking a normative view emphasize the stabilizing influ- ence of shared norms that are both internalized and imposed by others. For example, in his examination of “the reproduction of inertia” in a multinational corporation, Kilduff (1993) stresses the role of social networks, whose members draw “on shared normative frameworks, [and] continually monitor interpersonal behavior,” and of accounts that provide “an interpretive and normative base” to support ongoing behavior. The ease of maintenance and transmission of institutional practices is affected by the extent to which new recruits share similar beliefs and interpretive frameworks of current personnel. The more different the new members are, the more effort must be expended to transmit existing beliefs and practices. In her study of law firms, Tolbert (1988) found that firms employing recruits from more heterogeneous training backgrounds were more likely to utilize special training pro- grams, mentoring systems, more frequent evaluations, and other socialization mechanisms than were firms employing recruits primar- ily from the same law school.

Other theorists focus on cross-level effects, stressing the central role of the environment not only in fostering the acceptance of innova- tions (see below), but in supporting and sustaining changes once they have occurred. In a study of public school districts in California, Rowan (1982: 261) demonstrates that districts were more likely to adopt and retain innovations—new programs and personnel—when they were supported by “key members of the institutional environ- ments of local systems,” specifically by state and federal legislatures, state educational agencies, state-level professional associations, and teacher training institutions. If support was lacking from one or more of these external constituencies, districts were less likely to adopt and more likely to drop the innovation when viewed over a 40-year period. Legitimating organizations, such as professional associations who set and enforce standards, confront at least two important challenges (Trank and Washington 2009). They must “offer constituents meaning- ful consequences, either through sanctioning participation in the field or by facilitating constituent organizations’ capacity to acquire resources”; and because they are likely to confront other claimants to their authority, they must “engage in deliberate, conscious action to maintain their field-level power and their gatekeeping role if confronted with a contender legitimation organization” (Trank and Washington 2009: 239–240).

Regulatory theorists are more likely to stress conscious control efforts, involving interests, agency and power, and the deployment of sanctions. Actors employ power not just to create institutions, but also to preserve and maintain them over time (see DiMaggio 1988; Stinch- combe 1968). Regulatory actors engage in “enabling” work, creating rules that facilitate, supplement, and support institutions, “policing work” that attempts to ensure compliance through enforcement, and “deterring, valourizing and demonizing” work in order to expose devi- ants and celebrate high achievers (Lawrence and Suddaby 2006: 230). Neoinstitutional economists, including both transaction cost and agency theorists, emphasize how important it is to devise appropriate governance structures and develop incentives and controls suited to the situation (see Pratt and Zeckhauser 1985). However, if regulation is institutionalized, the rewarding and sanctioning take place within a framework of rules. Power is stabilized and legitimized by the devel- opment of rules.

Some studies attend to the full range of forces supporting persis- tence: cultural-cognitive, normative, and regulative. In Miller’s (1994) examination of a Pietist mission that has survived for almost two cen- turies, all of the institutional elements appear to be at work. The Basel Mission was founded in the early 19th century to educate missionaries and establish evangelical outposts in various parts of the world. Miller examined the records of this organization, focusing on the period from 1815 to 1915, to ascertain the basis for its longevity. He argues that participants were recruited from a relatively homogenous social base; given intensive socialization so that participants came to share similar beliefs and values; placed in a strong authority structure combining aspects of charismatic, traditional, and bureaucratic control elements together with formalized procedures of “mutual surveillance”; and encouraged to develop a sense of “specialness and separation” that insulated them from being corrupted by the secular world.

In their study of the evolution over a 35-year-period of a new industry devoted to the cochlear implant—a device to restore hearing to the deaf—Van de Ven and Garud (1994) analyze a series of events coded as creating variation (novel technical events), selection (rule- making events), and retention (rule-following events). The latter events, retention, are indicators of institutional persistence because they refer to an event that “was programmed or governed by existing institutional rules and routines” (p. 429).5 Viewed over the period of study, their data show how novel technical events dominated during the developmental period from 1956 to 1983, rule-making and rule- following events grew in an oscillatory fashion during the middle period from 1983 to 1986, and then, by 1989, “no more institutional rule-making events occurred while rule-following events continued to occur” (p. 430). They also describe how institutional rules operated to sup- press innovation and to “constrain the flexibility of private firms to adapt to changing circumstances” as existing technologies were “locked in” to specific technological paths (p. 439).

2. Institutional Diffusion

In a thoughtful analysis of diffusion studies, Strang (2010: 6) points out that the widespread interest in diffusion processes “resonates” with contemporary institutional understandings of social action, assuming a modern “world of sovereign actors who decide whether or not to do something new.” While these actors take one another into account, they are relatively independent agents who operate in “a culturally integrated world of voluntaristic action.” In his examination of a large bank, Strang observed the behavior of officers serving on numerous managerial teams charged with developing proposals for corporate innovation in more than a dozen distinct domains. Far from being “cultural dopes” or mindless sponges, Strang’s teams were observed to be expert comparison shoppers, carefully locating best practices in other successful organizations and then customizing these models to fit into their own organization. While such behavior may not be typical or even widespread, evidence that it occurs means that traditional diffusion models need to be modified to recognize the agency of individual adopters, changes over time in conceptions of the innovation, and the importance of distinguishing between formal adoption and implementation.

Much attention has been accorded to diffusion processes—to the ways in which institutional patterns spread over time and space. Much less effort has been given to understanding the processes by which a given institutional pattern or model is created, to who and what processes are involved, and to how the model itself undergoes trans- formation over time. Pizarro (2012) provides an instructive example of these processes in his analysis of the crafting of an “environmental conservation regime”: a template for countries to employ in devising policies to enable the creation of geographic zones for the protection of biological diversity. Prior to World War II, two competing models had emerged—a British model based on game preservation in the colonies, and an American model emphasizing the protection of scenic wonders. Following the war, a growing collection of nation-states came together in an international series of conferences, forming the International Union of Conservation of Nature in 1956. A series of resolutions over the next half-century, reflected not only the convergence around a com- mon template to support diversity protection efforts by its members, but also a continuing evolution of this template as newer and differing countries entered into the process. For example, in later years, much more emphasis was placed on the rights of indigenous peoples within the protected areas. A “fortress model” gradually gave way to a more inclusive ecosystem view with attention to these parks as a source of economic development and cultural value. The “model” widely dif- fused among nation-states around the world, but which version of the model was adopted differed over time as the regime was continually reconstructed.

The diffusion of an institutional form across space or time has a triple significance in institutional analysis. First, extent of diffusion of a set of rules or structural forms is often taken as an indicator of the growing strength of an institutional structure. In this sense, studies of institutional diffusion are often regarded as studies of increasing insti- tutionalization. Recall, however, as emphasized by Colyvas and Jonsson (2011) and noted in Chapter 4, that diffusion in and of itself does not equal legitimation. Practices must be accompanied and supported by changing rules, norms, and/or beliefs operating at multiple levels. Second, because the diffusing elements are being adopted by and incorporated into organizations, studies of diffusion are also treated as studies of institutional effects. In such studies, early or later adoption is often argued to follow different principles because of the changing strength of the institutions and also because of the varying character- istics of the adopting organizations. Studies of factors affecting the adoption behavior of individual organizations are discussed in Chapter 7. Third, the spread of a new form or practice is also an instance of institutional change—but change of a particular kind. It is convergent change: change that reinforces and diffuses existing patterns (see Greenwood and Hinings 1996). Most institutional theory and research has emphasized convergent processes. Only recently has attention turned to disruptive and divergent change, a topic I consider below and in later chapters.

Several distinctions are helpful in understanding the various ways in which institutions are diffused. DiMaggio and Powell’s (1983) useful typology focuses attention on three contrasting mechanisms—coercive, normative, and mimetic—that identify varying forces or motives for adopting new structures and behaviors. As discussed in Chapter 3, these mechanisms map well onto the three types of institutional pillars I identify. Other analysts, such as Brown (1981) and Meyer (1994), distinguish between demand- and supply-side explanations of diffu- sion (see Chapter 5). Demand-side approaches focus attention on the characteristics or conditions of new adopters, whereas supply-side approaches focus on the nature and efforts of agents attempting to spread the innovation. For many types of diffusion processes, it is more useful to examine the attributes or behavior of the diffusion agent or the “propagator” than those of the target or recipient units.

Early researchers tended to view diffusion as a rather mechanical process: the movement of technologies, models, and ideas from one place to another. Attention to the intermediary role of carriers, with the recognition that the mode of transmission affects the message transmit- ted, has helped to correct this misconception (see Chapter 4 and the following section). As noted in our earlier discussion, information is modified, edited, and translated in transmission by the carrier (Czarniawska and Joerges 1996; Sahlin-Andersson 1996). Even more important, there is increasing recognition that the end user also alters the innovation, sometimes in small and other times in major ways. Institutional effects are not one-sided and determinant, but multifac- eted and related to a nonergodic world (precise predictions assume constant states, whereas social contexts are constantly changing; North 2005). As Latour (1986) concludes:

The spread in time and space of anything—claims, orders, arti- facts, goods—is in the hands of people; each of these people may act in many different ways, letting the token drop, or modifying it, or deflecting it, or betraying it, or adding to it, or appropriating it. (p. 167)

These ideas are employed to frame a brief review of selected diffusion studies.

Regulative Processes

To be effective, the use of coercion requires relatively clear demands, effective surveillance, and significant sanctions. Beyond this, it also matters whether the mechanisms employed are primarily those of power, involving imposition of authority—where the coercive agent is viewed as a legitimate agent of control—or rely on the use of threats or inducements (Scott 1987). We would expect institutional effects—the depth or shallowness of institutionalization—to vary by these mecha- nisms, higher penetration being associated with authority. Numerous institutional forms are diffused by some combination of these mecha- nisms in the world of public and private organizations. Djelic (1998) describes variation among Germany, France, and Italy in their response after World War II to the U.S. efforts to export the American model of corporate enterprise. Mechanisms involved included coercion, inducement (the Marshall Plan), and mimicry.

Nation-states with statist or corporatist traditions are more likely to successfully employ coercive, regulative power in introducing inno- vations and reforms than pluralist or individualist systems (Hall and Soskice 2001a; 2001b; Jepperson and Meyer 1991). Private organiza- tions such as firms and corporations routinely utilize their legitimate authority as well as carrots and sticks to introduce new forms and practices within their establishments. Coercive mechanisms emphasize supply-side processes, directing attention to the characteristics of the diffusion agent and to relational carriers, noting the alignment of inter- ests between principal and agent, and the adequacy of information, inspection, and control systems.

Three empirical studies are employed to illustrate the study of dif- fusion supported by regulatory authority. In their well-known study of civil service reforms, Tolbert and Zucker (1983) examine the diffusion of municipal civil service reform in the United States at the turn of the century, from 1885 to 1935. They contrast two types of diffusion pro- cesses: the situation in which particular states adopted the reform and mandated that cities under their jurisdiction embrace it, and the situa- tion in which a state allowed individual cities to choose whether to adopt the reform. States mandating the reform employed legal proce- dures and official sanctions to enforce compliance; the institutional arrangement was that of a hierarchically structured authority system. By contrast, cities in states lacking mandates were responding to change processes resembling a social movement—a decentralized model of reform relying on normative and cultural-cognitive influ- ences (beliefs that it is the right or modern thing to do and an aware- ness that other cities were adopting the reform). As expected, cities in states mandating the reform were much more likely to adopt civil ser- vice provisions than those in states lacking such mandates. They did so much earlier and more completely: Mandated reforms were adopted by 60% of the municipalities within a 10-year period (all did so within 37 years), whereas it took 50 years for nonmandated reforms to approach the 60% level (Tolbert and Zucker 1983: 28–29).

In her study of profound social change in Japan in the late 19th century, during the Meiji period, Westney (1987) provides a historical account of the conscious selection by Japanese officials of various Western models regarded as successful for organizing particular orga- nization fields, such as police systems and postal services. These mod- els, or organizational archetypes, were then imposed on the relevant sectors, employed as a basis for restructuring existing organizational arrangements. The diffusion of these models exhibited differing patterns, affected by the variable authority of the propagating officials, the pres- ence of compatible preexisting cognitive models supplied by indige- nous organizations (e.g., the army for the police), and the availability of a supportive organizational infrastructure in the immediate envi- ronment. Westney emphasizes that, although the original intent of the reformers had been to simply imitate and import successful practices from other societies, much inventiveness was required to fit these models into their new circumstances: both imitation and innovation were observed.

Cole (1989) examined differences among firms in Japan, Sweden, and the United States in the adoption and retention of innovative small-group activities, such as quality circles. His analysis emphasizes the role played by varying national infrastructures—governmental agencies, trade associations, and union organizations—in legitimating, informing, and supporting the innovations. Japan more than Sweden and Sweden more than the United States possessed such supportive structures, with the result that the innovations spread more widely and were more stable in the former than the latter societies. Although these three countries varied in the relative strength of regulatory statist authority, Cole’s analysis also points to important differences in the extent to which trade associations and unions were mobilized to pro- vide normative support for these innovations. This also illustrates the importance of the wider organization field structure in explaining the behavior of individual organizations (see Chapter 8).

Normative Processes

Analysts focusing on normative processes stress the importance of network ties and commitments—relational structures as carriers. Many of the studies emphasizing normative processes focus on professional or collegial networks, interlocking directorates (individuals who serve on multiple director boards), or the support provided by informal ties. Institutional scholars argue that regulatory activities thought to embody coercive pressures often depend more on normative and cogni- tive elements. Examining the effects of governmental influence on employers in the United States, Dobbin and Sutton (1998: 443) call attention to the “strength of a weak state” because the state’s inability to craft clear unambiguous legislation on employment gave rise to processes by which managers “recast policy-induced structures in the mold of efficiency.” The state’s role in eliciting change is overshadowed and augmented by managers’ interests in collectively crafting a norma- tive justification that creates a market rationale for their conformity. In a related discussion, Edelman, Uggen, and Erlanger (1999: 407) suggest that it is not accurate to view legal actions by the state, such as the U.S. regulation of employment practices, as operating independently and from “on high.” Rather, when law is contested, “organizations actively participate in the meaning of compliance” in ways that “renders law endogenous: the content and meaning of law is determined within the social field that it was designed to regulate” (p. 407). The meaning of laws “mandating” equal opportunity or affirmative action were negoti- ated and socially constructed by the actions and reactions of personnel managers who created national networks, first involving firms tied together by military contractors and later involving their professional and business associations.

In effect, the personnel professionals acted as a kind of social movement, developing and testing, and then diffusing best practices from firm to firm (Dobbin 2009). While the legislature and the courts played a role, it was a supporting one. “Judges rarely did more than give the nod to programs already popular among leading firms. Courts followed—they did not lead” (Dobbin 2009: 4). The diffusion of new forms and procedures was more responsive to the spread of norms carried by professional networks (e.g., a firm’s membership in person- nel associations) than to changes in regulatory policies (e.g., the weak- ening of regulatory enforcement during the Reagan years had little effect on diffusion). In his recent study covering more than 30 years of personnel reforms, Dobbin (2009) shows that similar reform processes have operated from the 1960s, from efforts to define and enforce equal opportunity systems through more recent efforts to curtail sexual harassment. Although created by normative mechanisms, most of the reforms have been codified into law-like rules enforced by corpora- tions “governing hiring, promotion, discharge, discipline, maternity leave, sexual harassment,” and others—a set of private governance mechanisms responsive to broadly shared compliance norms (p. 11).

Westphal and Zajac (1994) examine the emergence in business cir- cles, during the period from 1970 to 1990, of an informal norm that the compensation of chief executive officers should be linked to the finan- cial performance of their companies. Although based on theoretical arguments by agent-principal economists and supported by some empirical data showing effects of such incentive plans on short-term stock prices, the argument took on moral weight as more and more boards of Fortune 500 companies adopted them. Corporate boards not taking such actions were regarded as negligent in their protection of stockholders’ interests. The practice spread rapidly among companies, and those adopting the new model were rewarded by the stock market. Often there is competition among those who promulgate normative models. For example, as discussed in Chapter 5, DiMaggio (1991) described the contests occurring among professional camps holding competing visions for developing art museums during the early 20th century in the United States. Following Bourdieu, DiMaggio and Powell (1983: 152) view professionalization as “the collective struggle of mem- bers of an occupation to define the conditions and methods of their work.” Research by Lounsbury, Ventresca, and Hirsch (2003), described in Chapter 8, provides another apt example.

Normative standards may arise slowly and incrementally over time but they may also be explicitly established by self-appointed arbi- ters employing more or less representative bodies and deliberative procedures. Professional and trade associations present clear modern instances of such groups and processes. For example, after consider- able struggle and compromise extending over many years, various medical associations joined forces with a managerial association, the American Hospital Association, to form the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Whereas licen- sure is a governmental, regulatory process, accreditation is a “nongov- ernmental, professional-sponsored process”—a normative process aimed at promulgating high standards for the industry (Somers 1969: 101). Although accreditation is not legally mandated, in professionally dominated arenas such as health care, organizations lacking accredita- tion are suspect and ineligible for reimbursement from governmental funding sources. Empirical studies show that organizations such as hospitals, for example, accredited by appropriate professional bodies were considerably more likely to survive than those lacking such nor- mative support (see Ruef and Scott 1998).6 Research by Westphal, Gulati, and Shortell (1997), discussed in more detail in Chapter 7, details the strong role played by the JCAHO in the adoption of total quality management programs by U.S. hospitals during the period 1985 to 1993. Of the roughly 2,700 hospitals in their sample, those adopting some version of total quality management increased from virtually none in 1985 to nearly 2000 in 1993. Greenwood, Suddaby, and Hinings (2002) describe negotiations and debates within the pro- fessional association of Canadian accountants as they worked to theo- rize and institute new models of governance for accounting firms. These changes resulted from a contested, deliberative process that was enacted into a set of codified rules regarding the structure of profes- sional service corporation. Once this settlement was in place, the new models began to diffuse widely.

As discussed in Chapter 5, we are witnessing a period of active institution-building at the transnational level. An important attribute of the new systems being constructed is that they rely much more on “governance” systems than on “governmental” forms. The newer structures utilize “soft” rather than “hard” laws—depending on the actions of private rather than (or in combination with) public organiza- tions, and on network rather than hierarchical structures (Mörth 2004). In short, they substitute normative for regulatory systems. These softer laws are circulated by and embodied in a variety of types of carriers and mechanisms, including “reporting and coordinating procedures,” “monitoring,” and “agenda setting” in which arenas are created in which “good and desirable” practices are proposed and disseminated (Jacobsson and Sahlin-Andersson 2006). Sometimes combinations of NGOs and firms form cooperative associations to develop and promul- gate standards that are enforced by self-policing as well as by inspec- tions conducted by external oversight units. Compliance is rewarded by certifications in industries as varied as forestry products, the apparel industry, coffee companies, and organic farming. Bartley (2003: 434), who studied the development of environmental and labor standards in the apparel and forest products fields, argues that such systems of pri- vate regulation have developed rapidly since the 1990s because the spread of neoliberal and fair trade belief systems has “led both state and nonstate actors to support private, rather than public forms of regulation.”

Most empirical work focuses on factors affecting the diffusion of a successful normative model, with much less attention given to pro- posed models that fail to catch on. Representative empirical studies of institutional diffusion of organizational forms and practices, perhaps the most widely studied aspect of institutional processes, are discussed in Chapter 7.

Cultural-Cognitive Processes

Following Berger and Luckmann, Strang and Meyer (1993) stress the centrality of cultural-cognitive elements in institutional diffusion processes. They argue that diffusion is greatly affected by theorization processes. For diffusion to occur, the actors involved need to regard themselves as similar in some important respect (the creation of catego- ries such as the generic “organization” or particular subtypes such as “hospitals” facilitates this process). Theorization also provides causal accounts, explanations for why some kinds of actors need to add spe- cific components or practices. As discussed earlier in this chapter, theo- rization contributes to “objectification” (Tolbert and Zucker 1996).

Organizational ecologists have embraced the cultural-cognitive conception of institutions by recognizing that “organizational density”— the numbers of organizations exhibiting a given organizational form— can be interpreted as a measure of the legitimacy of that form: the extent to which it is institutionalized. Many studies by organization ecologists have documented the importance of “density dependence,” demonstrating that the number of organizations of a given type was positively correlated with the founding of additional organizations of the same type. Research on numerous, diverse populations of organi- zations revealed that as a new form emerged, numbers increased slowly at first, then more rapidly, finally tailing off or declining (for a review of these studies, see Baum and Shipilov 2006; Hannan and Freeman 1989). Carroll and Hannan (1989) were the first to provide a theoretical interpretation of this empirical finding, arguing that organi- zational density serves as an indicator of the cognitive status of the form: its cognitive legitimacy. They propose that an organizational form is legitimate to the extent that relevant actors regard it as the “natural” way to organize for some purpose. From this perspective, rarity of a form poses serious problems of legiti- macy. When few instances of a form exist, it can hardly be the “natu- ral” way to achieve some collective end. On the other hand, once a form becomes prevalent, further proliferation is unlikely to have much effect on its taken-for-grantedness. Legitimacy thus grows monotonically with density but at a decreasing rate. (pp. 525–526)

However, as the numbers continue to increase in a given environ- ment, legitimation processes give way to competitive processes—the dampening of new foundings and the consolidation of existing forms—so that the density curve levels out or declines over time.

This interpretation of density as connoting legitimacy has proved to be controversial. Zucker (1989) argues that Carroll and Hannan pro- vide no direct measure of legitimacy, simply assuming the connection between prevalence and legitimacy (see also Baum and Powell 1995). Baum and Oliver (1992) suggest that prevalence may be only a proxy for other, related effects such as embeddedness. Their study of day care centers in Toronto found that when measures of the latter, such as the number of relations between centers and governmental institutions, are included, then density effects disappeared. Carrol and Hannan (1989; Hannan, Carroll, Dundon, and Torres 1995b) responded by not- ing the widespread use of indirect indicators in the sciences, the sup- port for the association between prevalence and legitimacy provided by historical accounts related to the early experience of the populations studied, and the advantage offered by its generality—its applicability to any type of population.

Many other institutional scholars have studied the diffusion of ideologies or belief systems, forms or archetypes (conceptions as to how to organize), and processes or procedures. Nothing is as portable as ideas. They travel primarily by symbolic carriers, although they also are conveyed by relations and artifacts. They may circulate via specific social networks, but they also ride on more generalized media (see Boxenbaum and Jonsson 2008; Czarniawska and Joerges 1996; Sahlin and Wedlin 2008; Sahlin-Andersson and Engwall 2002).

Mauro Guillén (1994) carried out detailed historical analyses comparing the diffusion of managerial ideologies in the first half of the 20th century in the United States, Germany, Great Britain, and Spain. He differentiated between management theory, transmitted among intellectuals and indexed by the flow of books, articles, and professional discourse, and management practice, the use of tech- niques by practitioners as indicated by surveys and case studies. Scientific management, one of the early major managerial ideologies, was discovered to be more highly diffused among practitioners than intellectuals and to have penetrated the United States and Germany much earlier than Great Britain and Spain. Guillén argued that differ- ences among the four societies in international pressure, labor unrest, state involvement, and professional groups, among other factors, help to account for the differences in diffusion patterns observed.

Shocked out of their complacency by the fierce competition pro- vided by Japanese automobile and electronics manufacturers in the mid-1970s, American firms began to explore and experiment with a range of practices that came to be labeled total quality management (TQM; see Cole and Scott 2000). As described by Cole (1999), American business was not quick to respond, unsure of the nature of the chal- lenge it faced or what to do about it. A period of sense-making ensued as communities of actors crafted and sifted interpretations. Although expert gurus offered insights, consulting companies proffered advice, professional associations (e.g., the American Society for Quality) offered normative justification, and award programs (e.g., the Baldrige National Quality Award) offered prestige and financial incentives, little consen- sus developed regarding the core ingredients of TQM. The movement was not sufficiently theorized or supported by adequate normative and regulative structures to diffuse widely or to have deep effects in this country (see Cole’s [1989] comparative research, described earlier in this chapter). Some practices, such as quality circles, were widely discussed, but tended to receive more lip service than use. Companies felt the need to change, but the directions and recipes offered did not provide clear guidelines. Perhaps the most important change associ- ated with TQM was in the cognitive framing of quality, shifting atten- tion from the concerns and criteria of internal engineers to external customers and from a “detect-and-repair” to a “prevent-and-improve” mentality. Although the quality fad seems to have run its course, it provided the basis for some useful organizational learning (see Cole 1999). Not all attempts at institutional diffusion succeed.

Source: Scott Richard (2013), Institutions and Organizations: Ideas, Interests, and Identities, SAGE Publications, Inc; Fourth edition.

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