Institutional Theory and Organizational Change

Institutional Theory and Organizational Change

Staffan Furusten

Whether or not they are aware of it, managers do not fully control the nature and timing of their decisions. Their framework of action is limited by institutional constraints in the surrounding environment – what is technically, economically, socially and culturally possible in different contexts. With a better understanding of their environment – and how it affects how they think, what they do and why they do it – decision-makers are also better able to make more carefully considered decisions about organizational change. In this book Staffan Furusten discusses why it is difficult for organizations around the world to resist the pressures of the institutional environment and how organizations worldwide – big and small, private and public – are becoming increasingly alike.

Chapter 2: Institutional products

Staffan Furusten

Subjects: business and management, critical management studies, organisation studies, economics and finance, institutional economics

Extract

In this chapter, we will familiarize ourselves with the type of institutional environment elements that organizations encounter directly in everyday operations, namely elements that I refer to here as ‘institutional products’. This includes materializations of knowledge, ideas and ideologies, such as those that individuals and organizations offer up to other individuals and organizations around the world. In this way, organizations encounter information, rules and services. In many cases, this involves services sold commercially, but it can also be a matter of information or regulations developed out of more general interests. What the two types have in common is that they are produced by one set of actors and directed at another. Thus, they con- tribute to the creation of legal, social and mental structures that organizations must adapt to in one way or another, and that consequently affect their ability to develop, what decisions can be made, and their options for governing and controlling organizations. They thereby also constitute the conditions necessary for organizations to be able to operate at all. Institutional products can take many forms, and a crude division can be made into material products and social products, where the material products include information and rules, and the social products include services. Also linked to the form institutional products take is how they are packaged. As with all types of products, products in the environment also need to be packaged.

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