Institutions and Organizations (2nd ed.)

Citation

Lawrence, C. (2003), "Institutions and Organizations (2nd ed.)", Information Technology & People, Vol. 16 No. 3, pp. 374-377. https://doi.org/10.1108/09593840310489430

The notion that organizations are not governed by the deterministic logic of strategic rationality has long had a home in information systems research and readers of this journal, in particular. Accordingly, it is not a surprise that IS researchers are increasingly choosing to draw on institutional theory to inform research in our field (Avgerou, 2000; Orlikowski and Barley, 2001; Robey and Boudreau, 1999). For those who elect to go down the neo‐institutional path, Richard Scott's Institutions and Organizations often serves as the starting point and theoretical compass to guide inquiry in this tradition. Neo‐institutional theory has developed into a highly regarded body of knowledge that has found a home in many different social science research domains including economics, political science and sociology. Scholars within the IS research community have drawn from institutional theory as it is found in economics (for example see Ciborra, 1993), but recently many IS scholars are increasingly employing institutional theory as it is understood by our colleagues in sociology. Perhaps one reason there is growing interest from our research community is the increasing realization that technology within organizations impacts and is impacted by, institutional dynamics.

Neo‐institutional theory was borne out of a desire to address the shortcomings associated with the rational actor model of organizations. Theorists within this tradition have attempted to formulate and articulate a theoretical foundation that will help us solve the problem of, “What we observe in the world is inconsistent with the ways in which contemporary theories ask us to talk” (March and Olsen, 1984) and to “reveal aspects of reality that are inconsistent with organizations’ formal accounts” (DiMaggio and Powell, 1991). Within institutional theory there is an explicit recognition of the role the external environment plays in shaping organizational life, which counters the notion that organizations are closed systems, populated with goal seeking rational actors pursuing efficiencies, independent of the macro‐environment.

Institutions and Organizations is part of Sage Publications’ Foundations of Organization Science series, which aspires to capture, and then perpetuate, the knowledge of master teachers in different areas of organizational theory. Because of this, the target audience is PhD candidates exploring the field and those scholars expanding their knowledge of different bodies of literature. One of the strengths of the book, along with the series, is that it brings the main components of a large body of knowledge into one text, coupled with the insights of distinguished scholars in the area.

Scott's objectives in Institutions and Organizationsare threefold. The first is to provide insight into the historical development of institutional thinking by calling on the formulations from leading economists, sociologists and political scientists throughout the twentieth century. The second aim is to provide an analytic framework that reflects the ontological assumptions and methodological approaches employed by institutionalists within economics, political science and sociology. Although, as the author states early on, there is an emphasis on neo‐institutional theory as it is found in sociology. Finally, Scott discusses and situates the rapidly expanding body of empirical work that exists within this theoretical tradition.

In the first chapter Scott lays out the historical foundations of institutional theory as well as early institutional arguments in economics, political science and sociology. The early historical period examined runs from approximately 1880 to 1945. He also offers insight into many of the early theoretical contributors, including Durkheim, Weber, Marx, Spencer and Sumner. Through Scott's historical discussion we are able to see the evolution of institutional ideas and the areas where the three disciplines diverged with regard to rationalities and theoretical emphases. Scott concludes the chapter by establishing an important shortcoming shared by early institutionalists, which is primarily a lack of interest in the role institutions play in shaping organizations and the institutional nature of some organizations.

Chapter 2 establishes the strong connection that has occurred during the last 60 years between institutional theory in the social sciences and organizational analysis. The so‐called “new” institutionalism in organizational theory often reflects the work completed since the early 1970s. Scott does a commendable job establishing the fact that “neo‐institutional” theory has come to represent decidedly different ideas and rationalities between the fields of economics, political science and sociology. For example, neo‐institutional economics adheres to formal rationality and bounded rationality to explain and justify the existence of organizations. On the other hand, neo‐institutional theory in sociology emphasizes the role of cultural cognitive frameworks and seeks to understand the role the larger environment plays in shaping modern organizations.

In chapters 3 and 4 Scott sketches out an analytic framework built around what the author calls the three pillars of institutions. The pillars are the regulative pillar, the normative pillar and the cultural‐cognitive pillar. The pillars represent the primary categories and distinct approaches scholars have employed across the social sciences with regard to institutional theory. Each of the pillars is analyzed from six different perspectives, which are the basis for compliance, basis of order, mechanisms of diffusion, logic, indicators and basis of legitimacy. The taxonomy serves as a useful device that enables the reader to better approach and distinguish between the different assumptions and theoretical underpinnings that can be found in the substantial neo‐institutional literature. Chapter 4 extends the taxonomy by focusing on the carriers of institutions. Together these two chapters and the corresponding taxonomy represent an excellent framework that enables a student of institutional theory to identify the major ideas that exist within this body of literature. This is particularly useful in institutional theory because, depending on which social science discipline within which one stands, there are distinctly different assumptions and theoretical concerns.

Chapter 5 moves beyond the discussion of how institutions shape organizations and into a more detailed discussion of how institutions are constructed, maintained and diffused. The aforementioned taxonomy is once again employed to draw on the way in which scholars in different disciplines view the construction of institutions. Scott identifies two distinct approaches scholars have used to gain insight into the manner in which institutions are formed. The first is what he terms the “variance approach”, which attempts “to examine which factors best account for the characteristics or behavior of institutions” and the “process approach” which places primacy on how elements come together to construct institutions.

Chapter 6 has an explicit focus on the manner in which institutions impact and shape larger populations of organizations. It is argued that this level of analysis is critical for understanding institutional dynamics because it allows us to see the influence institutions have in shaping the environments in which organizations are nested. The author also looks at the dynamics that occur at the boundaries between populations of organizations and interesting developments that sometimes occur in these fertile areas.

Chapter 7, which is titled Institutional Processes Affecting Organizational Structure and Performance, is almost entirely based on the ideas and thinking most associated with neo‐institutional theory as it is recognized in the organizational theory literature. This chapter introduces important concepts such as the role of legitimacy in social systems and the existence of startling similarities among organizational forms which institutionalists call isomorphism. The author also elucidates the gradual move beyond the focus of early neo‐institutionalists, who had a singular focus on how institutions affect organizations, and into current research that examines the recursive relationship and the mutual impact that institutions and organizations have on one another.

Chapter 8, which is titled Institutional Change, is the most significant contribution between the first and second editions of this text. The notion of institution, by its very nature, conveys permanence and constancy. However, Scott draws on research conducted in the last ten years that looks at de‐institutionalization, which brings new practices and organizational forms, that later become institutionalized. Three case studies are used to reveal differing change processes. The author also draws on Giddens notion of structuration.

For those interested in following our colleagues into this vast literature, Scott's work provides an excellent introductory guide and will serve as an able companion during initial explorations. In fact, it seems like the institutional literature is fertile ground for IS scholars to explore as there is a need to bring technology into the larger institutional debate as well as to begin the examination of the institutional nature of technology itself. Institutions and Organizations is meant merely as an overview to the theoretical area and, at times, only provides superficial coverage of important elements of the theory. IS scholars interested in delving into the intricacies of institutional theory will no doubt be drawn to the work of DiMaggio and Powell (1991) and to many of the original works Scott cites.