Institutional logic

Institutional logic is a core concept in sociological theory and organizational studies, with growing interest in marketing theory. It focuses on how broader belief systems shape the cognition and behavior of actors.

Friedland and Alford (1991) wrote: "Institutions are supraorganizational patterns of human activity by which individuals and organizations produce and reproduce their material subsistence and organize time and space. They are also symbolic systems, ways of ordering reality, and thereby rendering experience of time and space meaningful". Friedland and Alford (1991, p. 248) elaborated: "Each of the most important orders of contemporary Western societies has a central logic – a set of material practices and symbolic constructions – which constitute its organising principles and which is available to organizations and individuals to elaborate." Thornton and Ocasio (1999: 804) define institutional logics as "the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality".

Overview

Focusing on macro- societal phenomena, Friedland and Alford (1991: 232) identified several key Institutions: the Capitalist market, bureaucratic state, democracy, nuclear family, and Christianity that are each guided by a distinct institutional logic. Thornton (2004) revised Friedland and Alford’s (1991) inter-institutional scheme to six institutional orders, i.e., the market, the corporation, the professions, the state, the family, and religions. More recently, Thornton, Ocasio and Lounsbury (2012), in more fully fleshing out the institutional logic perspective, added community as another key institutional order. This revision to a theoretically abstract and analytically distinct set of ideal types makes it useful for studying multiple logics in conflict and consensus, the hybridization of logics, and institutions in other parts of society and the world. While building on Friedland and Alford’s scheme, the revision addresses the confusion created by conflating institutional sectors with ideology (democracy) and means of organization (bureaucracy), variables that can be characteristic several different institutional sectors. The institutional logic of Christianity leaves out other religions in the US and other religions that are dominant in other parts of the world. Thornton and Ocasio (2008) discuss the importance of not confusing the ideal types of the inter-institutional system with a description of the empirical observations in a study—that is to use the ideal types as meta theory and method of analysis.

New institutionalism

While the concept of institutional logics has emerged from the new institutional theory, also called "neo-institutional theory", it expands its theoretical scope by not only explaining homogeneity but also heterogeneity in organizational and individual behavior.

Organizational theorists operating within the new institutionalism (see also institutional theory) have begun to develop the institutional logics concept by empirically testing it. One variant emphasizes how logics can focus the attention of key decision-makers on a particular set of issues and solutions (Ocasio, 1997), leading to logic-consistent decisions (Thornton, 2002). A fair amount of research on logics has focused on the importance of dominant logics and shifts from one logic to another (e.g., Lounsbury, 2002; Thornton, 2002; Suddaby & Greenwood, 2005). Haveman and Rao (1997) showed how the rise of Progressive thought enabled a shift in savings and loan organizational forms in the U.S. in the early 20th century. Scott et al. (2000) detailed how logic shifts in healthcare led to the valorization of different actors, behaviors and governance structures. Thornton and Ocasio (1999) analyzed how a change from professional to market logics in U.S. higher education publishing led to corollary changes in how executive succession was carried out.

While much earlier work focused on ambiguity as a result of multiple and conflicting institutional logics, at the levels of analysis of society and individual roles, Friedland and Alford (1991:248-255) discussed in theory multiple and competing logics at the macro level of analysis. Recent empirical research, inspired by the work of Bourdieu, is developing a more pluralistic approach by focusing on multiple competing logics and contestation of meaning. By focusing on how some fields are composed of multiple logics, and thus, multiple forms of institutionally-based rationality, institutional analysts can provide new insight into practice variation and the dynamics of practice. Multiple logics can create diversity in practice by enabling variety in cognitive orientation and contestation over which practices are appropriate. As a result, such multiplicity can create enormous ambiguity, leading to logic blending, the creation of new logics, and the continued emergence of new practice variants. Thornton, Jones, and Kury (2005) showed how competing logics may never resolve but share the market space as in the case of architectural services.

Recent research has also documented the co-existence or potential conflict of multiple logics within particular organizations. Zilber (2002), for example, described the organizational consequences of a shift from one logic to another within an Israeli rape crisis center, in which new organization members reshaped the center and its practices to reflect a new dominant logic that they have carried into the organization. Tilcsik (2010) documented a logic shift in a post-Communist government agency, describing a conflict between the agency's old guard (carriers of the logic of Communist state bureaucracies) and its new guard (carriers of a market logic). This study shows that, paradoxically, an intra-organizational group's efforts to resist a particular logic might in fact open the organization's door to carriers of that very logic. Almandoz (2012) examined the embeddedness of new local banks' founding teams in a community logic or a financial logic, linking institutional logics to new banking venture's establishment and entrepreneurial success. As these studies demonstrate, the institutional logics perspective offers valuable insights into important intra-organizational processes affecting organizational practices, change, and success. These studies represent an effort to understand institutional complexity due to conflicting or inconsistent logics within particular organizations, a situation that might results from the entry of new organization members or the layering (or "sedimentation") of new organizational imprints upon old ones over time.

Institutional theory in marketing

This growing area of research highlights the way that market structures, processes and consumer behaviors can be shaped by different institutional logics. For example, different rhetorical strategies grounded in particular institutional logics might be used in order to better persuade potential consumers.

Historicizing institutional logics

Recent work in institutional theory has attempted to bring historiography into our understanding of institutions. In particular, scholars have drawn onto the Annales School in history. Concepts such as mentalities, critical events, and time horizon have been mapped out and explained in institutional terms, to be mobilized in future research. Such theoretical framework complements existing apparatus in institutional theory, in the sense that it helps understand historical and temporal dynamics in institutional theory.

See also

* Business model
* Concept-driven strategy
* Idea networking
* Meaning-making
* Sensemaking

References

Further reading

* Boltanski, Luc and Laurent Thevenot (9861991). On Justification Economies of Worth. Princeton, NJ: Princeton University Press.
* Friedland, Roger, and Robert R. Alford. 1991. Bringing Society Back in: Symbols, Practices, and Institutional Contradictions. pp. 232–266 in The New Institutionalism in Organizational Analysis, edited by Walter W. Powell and Paul J. DiMaggio. Chicago: University of Chicago Press.
* Gillett, Alex G., and Kevin D. Tennent. 2018. Shadow hybridity and the institutional logic of professional sport: Perpetuating a sporting business in times of rapid social and economic change. Journal of Management History 24.2: 228-259: https://www.emeraldinsight.com/doi/abs/10.1108/JMH-11-2017-0060
* Haveman, Heather A., and Hayagreeva Rao. 1997. Structuring a Theory of Moral Sentiments: Institutional and Organizational Coevolution in the Early Thrift Industry. American Journal of Sociology 102: 1606-1651.
* Lounsbury, Michael. 2001. Institutional Sources of Practice Variation: Staffing College and University Recycling Programs. Administrative Science Quarterly, 46: 29-56.
* Lounsbury, Michael. 2002. Institutional Transformation and Status Mobility: The Professionalization of the Field of Finance. Academy of Management Journal, 45: 255-266.
* Lounsbury, Michael. 2007. A Tale of Two Cities: Competing Logics and Practice Variation in the Professionalizing of Mutual Funds. Academy of Management Journal, 50: 289-307
* Lounsbury, Michael & Ellen T. Crumley. 2007. New Practice Creation: An Institutional Approach to Innovation. Organization Studies, 28: 993-1012.
* Lounsbury, Michael & Eva Boxenbaum (Eds.) 2013. Institutional Logics in Action, Volumes 39 a and b of Research in the Sociology of Organizations.
* Marquis, Chris & Lounsbury, Michael. 2007. Vive la Résistance: Competing Logics in the Consolidation of Community Banking. Academy of Management Journal, 50: 799-820.
* Ocasio W. 1997. Towards an Attention-Based View of the Firm. Strategic Management Journal, 18:187-206.
* Schneiberg, Marc. 2007 ‘What’s on the Path? Path dependence, organizational diversity and the problem of institutional change in the U.S. economy, 1900-1950’. Socio-Economic Review 5: 47-80.
* Scott, W Richard, Martin Ruef, Peter Mendel, and Carol Caronna. 2000. Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care. Chicago: University of Chicago Press.
* Suddaby, R. and R. Greenwood. 2005. Rhetorical strategies of legitimacy. Administrative Science Quarterly, 50(1): 35-67.
* Thornton, Patricia H., and William Ocasio. 1999. Institutional Logics and the Historical Contingency of Power in Organizations: Executive Succession in the Higher Education Publishing Industry, 1958-1990. American Journal of Sociology 105: 801-843.
* Thornton, P.H. 2002. The Rise of the Corporation in a Craft Industry: Conflict and Conformity in Institutional Logics. Academy of Management Journal, 45: 81-101.
* Thornton, P.H. 2004. Markets from Culture: Institutional Logics and Organizational Decisions in Higher Education Publishing. Stanford, CA: Stanford University Press.
* Thornton, Patricia, Candace Jones, and Kenneth Kury 2005. “Institutional Logics and Institutional Change: Transformation in Accounting, Architecture, and Publishing, in Candace Jones and Patricia H. Thornton (eds.) Research in the Sociology of Organizations, London: JAI.
* Thornton, Patricia H. and William Ocasio (2008). “Institutional Logics,” in Royston Greenwood, Christine Oliver, Kerstin Sahlin and Roy Suddaby (eds.) Handbook of Organizational Institutionalism, CA: Sage.
* Thornton, Patricia H., William Ocasio, and Michael Lounsbury (2012). The Institutional Logics Perspective: A New Approach to Culture, Structure and Process. Oxford, UK: Oxford University Press.

{{DEFAULTSORT:Institutional Logic
Sociological theories
Social constructionism