The Concept Of Institutional Entrepreneurship Commerce Essay


The concept of institutional entrepreneurship has attracted considerable attention in recent years. The attention is reflected in the large number of papers published on this topic from a diversity of disciplines. The term institutional entrepreneurship was introduced by Eisenstadt in 1980 (actors who serve as catalysts for structural change and take the lead in being the impetus for, and giving direction to, change), and the concept was further developed by DiMaggio (1988: 14) as an agent who mobilises resources to transform or create institutions that favour his or her interests. It refers to the "activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones" (Maguire, Hardy, and Lawrence, 2004: 657). Actors have to fulfil two conditions to be regarded as institutional entrepreneurs; (1) initiate divergent changes; and (2) actively participate in the implementation of these changes (Battilana, Leca, Boxenbaum, 2009: 68). Actors who initiate changes that break with the institutionalised template for organising within a given institutional context, even if their initiative does not result in change, can be regarded as institutional entrepreneurs.

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Authors on the subject of institutional entrepreneurship have observed puzzling behaviour of the actors, i.e., how are some actors able to visualise new practices and get others to embrace them if the actors themselves are embedded in an institutional field (Friedland and Alford, 1991)? In other words, how can some actors envisage and champion change if they are subject to rules, governed by pre-set norms, their cognitions moulded by structure that defines their interests and produce their identities? This phenomenon known as, "the paradox of embedded agency," is probably the crux of institutional entrepreneurship (DiMaggio & Powell, 1991; Friedland & Alford, 1991; Seo & Creed, 2002).

Scott (1995) argues that organisations must conform to the rules and belief systems prevailing in the environment (DiMaggio and Powell, 1983; Meyer and Rowan, 1977), and legitimacy is earned by institutional isomorphism - structural or procedural. New institutionalism contains ambiguous and contradictory notions of change. New institutionalism correctly points out the limits of a rational choice framework of economic decision making with a model that explains institutional constraints on decision makers. DiMaggio and Powell's 1991 anthology summarises work in sociology.

In economics, the new institutionalism is most closely associated with Douglass North, who won a Nobel Prize for his work in this field in 1993. "By contrast, in the 'early' NIE (new institutionalism in economics) of Nobel Laureate Douglass North (1990, 1991, 1992, 1994), this phenomenon is almost completely reducible to the actions of rational, instrumentally-oriented agents imputed with objective and universal (self) interests." (Bruce & von Staden, Embedded Agency and Institutional Change: The Neglected Sociocognitive Contribution of Douglass North, unpublished manuscript).

Much of the research within New Institutionalism deals with the pervasive influence of institutions on human behaviour through rules, norms, and other frameworks. Previous theories held that institutions could influence individuals either to maximise benefits to act out of duty or an awareness of what one is "supposed" to perform. Institutions are created to make collective action possible. The concept of an institution can be thought of as those (more or less) enduring elements of social life that affect the behaviour and beliefs of individuals and collective actors by providing templates for action, cognition, and emotion (DiMaggio & Powell, 1991; Meyer & Rowan, 1977; Scott, 2001), nonconformity with which is associated with some kind of costs (DiMaggio & Powell, 1983, Lawrence, Suddaby, & Leca, 2011, p. 53).

An important contribution of new institutionalism was to add a cognitive type influence - instead of acting under rules or based on obligation, individuals act because of conceptions. "Compliance occurs in many circumstances because other types of behaviour are inconceivable; routines are followed because they are taken for granted as 'the way we do these things'" (Scott 2001, p. 57). The cognitive element of new institutionalism suggests that individuals make certain choices because they can conceive of no alternative.

New Institutionalism in Organizational Sociology/Studies (NIOS) shows creation, maintenance, and disruption of institutions as independent of human interests. The role of actors seems to be the most logical way to account for institutional change. NIOS has contributed to an understanding of links between organisational forms and societal context. However, the notion of Institutional Entrepreneurship poses a problem - it leads to the classical debate on structure versus agency, and that the actors have to disengage from their social context and act to bring about change. The paradox of embedded agency is one of the most researched areas in NIOS in recent times.

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I begin this paper with a critical review of the field of Institutionalism, in three interconnected topics - Institutional Entrepreneurship, Institutional Work, and Institutional Logics. I compare and contrast the views of selected authors on these three, and the effects of the formal incorporation of institutionalised norms and expectations.

I take the suggestions of Battilana, Leca, and Boxenbaum (2009) for future research in "how actors change institutions," and focus on two of the suggestions as the framework for this research paper. Battilana et al call for expansion of the levels of analysis and want to create synergies among the different research streams. Having established that agency iteration (habit), projection (imagination), and practical evaluation (judgment) might play a role in institutional entrepreneurship, they call for further exploring of conditions under which the projective dimension of agency dominates. They also want researchers to analyse the specific challenges that face entrepreneurs who also act as institutional entrepreneurs as well as similarities and differences between the entrepreneurship and institutional entrepreneurship processes and outcomes of these processes when they are intertwined.

I conclude this research paper outlining my interest on further research on Institutional Entrepreneurship.

The Study of Institutionalism

Empirical analyses of organisations and the institutional environment by Selznick in late 1940s was probably the beginning of the study of institutions, followed by Parsons (1956) theorising how institutions function to integrate organisations with other organisations in society through universalistic rules, contracts, and authority. This section is a review of a selected few papers on three aspects of institutionalism - institutional entrepreneurship, institutional work, and institutional logics with a view to understanding how actors become institutional entrepreneurs despite institutional pressures, and in turn resolve the paradox of embedded agency.

In the late 1970s, authors on organization theory portrayed organisations as agentic actors responding to situational circumstances. The perspective then was that organisations adapted or attempted to adapt to the environment, and in order to survive, organisations must conform to the rules and belief systems prevailing in the environment. Against this, Meyer and Rowan (1977) proposed that rationalisation and diffusion of formal bureaucracies arise under two conditions - 'the complexity of networks of social organization and exchange' and 'the institutional context' (1977: 346). Though networks of social organisations were seen as important influences, most of their research has been focused on institutional context.

As initially formulated, institutional theory suggests that behaviours are patterned and reproduced because social norms become taken-for-granted. Following Meyer and Rowan (1977), considerable research confirmed this "corrective" (DiMaggio, 1988: 5) to that assumption, i.e., organisational interests are pursued in a calculated and rational manner. It is now widely acknowledged that organizational behaviour occurs within a web of socially constructed, taken-for-granted prescriptions of appropriate conduct (Scott, 2001). Organizational fields are clusters of organizations and occupations whose boundaries, identities, and interactions are defined and stabilized by shared institutional logics (Scott, 2001). DiMaggio and Powell (1991) identified a weakness in institutional theory in explaining change and called for the development of a coherent theory of action.

Some scholars see institutions as the rules of the game itself. Institutions regulate the behaviour of actors through both formal and informal rules enforced by third parties (North 1990). Institutions are seen as an outcome of a game in which multiple but known strategic equilibrium are possible. Scholars with this view describe institutions as an endogenous outcome of a societal game. In economics, numerous studies have been carried out on institutional analysis. Masahiko Aoki's early work, as an example, sought to understand the institutionalisation of different forms of corporate organization in Japan and the United States (Aoki 1988). Aoki developed a coalitional model of corporate control and internal organization of firm-internal labour markets based on the different interactions among managers, owners, and employees. This game-theoretic approach has now developed into an integrated framework to comprehend the mutual relationship between actors and institutions, i.e., how institutions constrain actors and how actors reproduce and change institutional environments.

The notion of institutional entrepreneurs refers to either individuals or organisations that act in discordance with the established institutional arrangements and that may eventually change them (e.g. DiMaggio 1988; Lawrence 1999). The practices of individual and collective actors aimed at creating, maintaining, and disrupting institutions describes "Institutional work." With traditional institutional theory, the study of institutional work maintains a fascination with the relationship between institutions and action. It also maintains as central the structurationist notion that all action is embedded in institutional structures, which it simultaneously produces, reproduces, and transforms (Lawrence, Suddaby, and Leca, 2011). Institutional logics are taken-for-granted, resilient social prescriptions, sometimes encoded in laws, specifying the boundaries of a field, its rules of membership, and the role identities and appropriate organizational forms of its constituent communities (Friedland & Alford, 1991; Lawrence, 1999; Thornton, 2004). Selected literature on Entrepreneurship, Work, and Logics are reviewed in the following section.

Institutional Entrepreneurship

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The term Institutional Entrepreneurship is most closely associated with DiMaggio (1988: 14), who proposed that "new institutions arise when organized actors with sufficient resources see in them an opportunity to realize interests that they value highly". These organised actors - institutional entrepreneurs - disrupt the existing arrangement and create new ones. The term institutional entrepreneurship is defined (Maguire, Hardy and Lawrence, 2004: 657) as the "activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones". Institutional Entrepreneurship has been presented as a promising way to account for institutional change endogenously though this notion is also a source of controversy among neo institutional theorists.

In the introduction to their book, "The New Institutionalism in Organizational Analysis," DiMaggio and Powell (1991) identify a core weakness in institutional theory in explaining change, the role of actors and action in the creation, diffusion, and stabilization of institutions and call for the development of a coherent theory of action. Whereas early institutional studies considered mainly the constraints under which actors operate, works on institutional entrepreneurship aimed to build a theory of action based on the tenets of institutional theory (Fligstein, 1997: 397).

Research has suggested that institutional entrepreneurs create institutions and incumbents maintain them (Lawrence and Suddaby, 2006; Hargrave and Van de Ven, 2009). Entrepreneurs perceive that a new set of rules to make the collective action better and they disrupt the institution. In Suddaby and Greenwood's (2005) study both proponents and opponents of institutional change relied on emotional arguments to make their points. Agents may engage in institutional disruption because they are dissatisfied with existing practices. However, institutional researchers have yet to clearly theorize how dissatisfaction with current arrangements may arise and what causes agents to be motivated to engage in various forms of institutional work.

Hargrave and Van de Ven(2009)'s observations suggest that actors are most likely to engage simultaneously in practices of institutional stabilisation and change. They note that 'the simultaneous embrace of contradictory poles can stimulate creativity and innovation'. Thus, negating one pole of a contradiction, they argue, can lead to adverse consequences by generating pressure to satisfy the contradictory pole. The institutional entrepreneurs develop strategies to keep a contradictory positioning in mind between poles by a 'both/and approach' to managing contradictions. The contradictions constitute the foundation for their entrepreneurial ventures. The institutional entrepreneurs thus strive to maintain a balance between poles as both are necessary for sustaining their ventures. Their entrepreneurial practice serves to maintain institutional forms through social redistribution and change institutions by integrating new value conceptions and practices.

The notion of change "poses a problem for institutional theorists, most of whom view institutions as the source of stability and order" (Scott, 2001: 181). If, as institutional theory asserts, behaviour is substantially shaped by taken-for-granted institutional prescriptions, how can actors envision and enact changes to the contexts in which they are embedded? Seo and Creed (2002: 226) referred to this as the "paradox of embedded agency." A central challenge for institutional theory, therefore, is to show how and why actors shaped by (i.e., embedded within) institutional structures become motivated and enabled to promote change in those structures.


Although it seems to be a powerful way to account for the role of actors in institutional change, the notion of institutional entrepreneurship is problematic because it alludes to the classical debate on structure versus agency, which implies that actors are somehow able to disengage from their social context and act to change it. "Even though institutions are characterised by their self activating nature, we know that they do change" (Fligstein, 1991).


Friedland and Alford (1991) - an adequate social theory must work all three levels of analysis, the individual, the organisational and the societal levels of analysis. These three levels are nested.


Skilled individuals upset established routines and build new organizational fields. The core of their argument emphasizes on how people deploy resources, build connections, and forge new practices. In so doing, they place agency in a new and analytically tractable light.

Institutional Work

The practice of individual and collective actors aimed at creating, maintaining, and disrupting institutions is described as Institutional work. The study of institutional work identifies the relationship between institutions and action. It also maintains the notion that all action is embedded in institutional structures that it simultaneously produces, reproduces, and transforms. Institutional work departs from traditional concerns. It rejects the notion that the only agency of interest is that associated with "successful" instances of institutional change i.e., institutional entrepreneurship that produce new structures, practices, or regimes. (DiMaggio, 1988; Maguire, Hardy, & Lawrence, 2004; Suddaby & Greenwood, 2005, Lawrence & Suddaby, 2006; Lawrence, Suddaby, & Leca, 2009). Compared to the other two (institutional entrepreneurship and institutional logics), the concept of institutional work has received relatively little attention and only very recent attention in the institutional literature.

Institutional work focuses on the strategies and practices used by individuals and organisations to shape the institutional arrangements within which they run. It brings to light the complex relationship between different forms of work. Actors are engaged in a complex mixture of work in creating, maintaining, and disrupting institutions. The study of institutional work emphasizes the need to understand the interaction of social structure and agency in creating conditions for stability and change. The concept of institutional work highlights the intentional actions taken in relation to institutions, especially those that are less visible and more mundane-the day-to-day adjustments and compromises of actors as they attempt to create new institutions, maintain existing ones or disrupt institutional arrangements (Dover & Lawrence, 2010). The study of institutional work highlights the messiness of institutional arrangements (Seo & Creed, 2002), and the importance of agency not only in constructing new institutions (DiMaggio, 1988; Maguire et al., 2004) but also in maintaining and disrupting institutions (Powell, 2006; Lawrence & Suddaby, 2006).

The current focus on institutional work extends the theoretical and empirical agenda beyond the creation of institutions to the rest of the life cycle of institutions, including persistence and deinstitutionalization (Hwang & Colyvas, 2011). Institutional work emphasises the importance of individual and collective actors and their awareness, skill and reflexivity. It recognises individual actors and their roles that institutional processes may overlook. Efforts on the practices that create, sustain, and disrupt institutions are better explained through the development of new shared practices that transform social arrangements. As the study of institutional work suggests that agency and practices operate within institutionalised rules, it does not address the embeddedness of actors in institutional context.

Institutional transformations are simultaneously material and symbolic transformations of the world. They involve not only shifts in the structure of power and interests, but in the definition of power and interest. DiMaggio makes this point when he says, "In other words, the institutionalization of an organizational form required institutional work to justify that form's public theory: legitimating accounts that organizational entrepreneurs advance about labor markets, consumer markets, expertise, and distinctive products or services" (1988).

The study of institutional work, thus, represents a framework with a potential to help connect institutional theory more closely and explicitly to practice, both in terms of understanding the nature of organisational practices and making institutional insights more accessible and available to organisational actors.

DiMaggio is certainly right when he contends that institutional theory is not currently adequate to explain "the origins, reproduction, and disappearance of institutionalized social and organizational forms" (1988). However, we will not succeed by going back to utilitarian individuals who are keen to maximise something or avoid uncertainty, or to organizations with the desire to survive try to maintain power over their environments, in both scenarios distant from their institutional contexts. DiMaggio distinguishes these two aspects in most of the new institutionalist work are not sufficient.

Further, some authors question whether institutional work matter. Willmott (2011) argues that institutional-work approach overcompensated for the limited capacity of old institutionalism to explore how the potency and effects of human agency is conditioned by pressures of legitimation, it retains and reproduces the dualism of individual (agency)/institution (structure). "Can institutional theory, and more specifically a focus on institutional work, provide insights into emancipatory processes that, in facilitating a transformation of oppressive conditions, are more potent than the insights generated by elements of some variant(s) of critical analysis?" asks Wilmott.

Institutional work poses interesting questions regarding the relationship between actors and institutions. Hwang and Colyvas (2011) argue that research program on institutional work signals a significant realignment from a foundational neo-institutional agenda. Renewed engagement with insights regarding the institutional construction of actors and the importance of institutions in generating a variety of actors capable of performing institutional work would enrich the institutional work research program.

For the study of institutional work to move institutional research closer to the day-to-day concerns and experiences of organizational actors, it must engage with these sets of questions that are explicitly concerned with the motivations, meanings, and relationships that shape actors' attempts to engage with institutions. If the study of institutional work is to develop a more nuanced understanding of the role of agency in institutional dynamics, it requires engaging with research subjects and topics in fundamentally new ways.

Voronov & Vince (2012) believe that their framework can extend institutional studies by emphasising the role that emotions and domination play in the context of institutional work. Institutional work is a promising field of research precisely because it offers a more nuanced account of individual agents who are (partly) produced by their institutional context yet seek to exercise some control over it. (Lawrence et al., 2009b). Voronov & Vince (2012) call for further developments in the study of institutional work require a stronger connection with the "personhood" of the agents studied. It is important, therefore, to attend to some of the most intrinsic features of personhood-emotions.

The notion of institutional work encourages researchers to adopt a different point of view toward their object of inquiry. Researchers are encouraged to shift their focus from the "organizational field" and large-scale social transformations, and attend more closely to the relationship between institutions and the actors who populate them. This demands a more inclusive account of institutional action that moves beyond simple twofold relationships and discrete logics, toward the assumption that actors, at any given time, are subject to pressures from many different institutions and are often responding locally, creatively, incrementally, and more or less reflexively (Lawrence, Suddaby, and Leca, 2011). An institutional work perspective attends more closely to practice and process than to outcome - asking "why" and "how" rather than "what" and "when."

By shifting the attention away from dramatic actions of the heroic entrepreneur to the small worlds of institutional resistance and maintenance in which institutionalisation and institutional change institutional work defocalises agency.