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 6: From elements in the environment to organizational practice

Staffan Furusten

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

Extract

In previous chapters, I discussed how the institutional environment is made up of actors, products, movements and societal trends. In this chapter, I shift perspective from what the institutional environment is comprised of to how different elements in the institutional environment become components of individual organizations’ practice. I will thereby discuss how institutional environment elements are spread to internal organizational development processes in individual organizations. This is broken down into two main types of activities that occur in parallel in individual organizations and others that operate in their surrounding environment: decontextualization and recontextualization. By this it is meant that elements in the institutional environment are not produced and spread on their own. For this to take place, two types of active actions are required. The first has to do with the release of information, for example, from its context (decontextualization), by packaging it in a form that gives it the capacity to be mobile – that is, able to be moved. The second type of action involves introducing decontextualized information in a different context (recontextualization) from where it was produced. The chapter begins with a discussion of the phenomenon of diffusion and how we generally view what it involves. I then move on to a more sophisticated discussion about how the diffusion of information has to do with active actions performed by both the producers and recipients of information. In an ideal world, the diffusion of ideas would be an easy matter.

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