When Actors Meet Institutions: Institutional Entrepreneurship, Institutional Logics and Hybrid Organizations

Abstract

This paper proposes a contingency theory of institutional entrepreneurship. Institutional entrepreneurship has emerged to explain how agency can be incorporated within institutional theory. Following existing literature on the “paradox of embedded agency”, we build on the definition of the conditions that enable actors to pursue their best interests by creating, modifying or disrupting existing institutions, namely the position in the organizational field, in the organizational hierarchy and in the intraorganizational network. We discuss the existence of different kinds of institutions, each requiring for individuals a specific amount of resources (ability) and interest (willingness) for change. We build on the categorization of institutions related to the actors who make the rule (being that the state or some other entity) and to the way in which such rule is enacted and throught which is enforced (centralized or decentralized), thus identifying public-centralized, private-centralized and private-decentralized institutions. We propose for each kind of institution the enabling conditions that, by providing for both the ability and willingness, make an individual more likely to promote divergent change. The process of emergence of social enterprises has been relatively overlooked by organizational and management literature. Nonetheless, to address many of the contemporary societal challenges and promote social change, these organizational forms have recently been flourishing. We theoretically explore how such process of creation unfolds, identifying the external challenges these organizations face and the strategies they need to pursue to enable their emergence. Through anecdotal evidence, we suggest that this process may call first for the deinstitutionalization of existing institutional logics and then for a legitimacy building at three levels (pragmatic, moral and cognitive). We discuss contributions for research related to institutional logics, social and institutional entrepreneurship and liability of newness for a new organizational form. Building on extant literature on institutional logics, we investigate the effect of logic multiplicity on organizational mission performance. In particular, we theorize that - irrespectively of the nature of the logics at play - an increase in their sheer number triggers negative effects for organizational mission performance, in view of the challenges caused by logics’ jurisdictional overlap and degree of centrality. However, we also argue that this negative effect applies up to a certain point, after which positive effects on organizational mission performance may spur from the possibility to recombine the many more organizational elements brought by the higher number of logics at hand, increasing innovation. Also, we see whether the efficiencyenhancing elements of being a for-profit affect the concave relationship between logic multiplicity and performance discussed above. We examine these three points in the context of the US healthcare industry by looking at over 300 long-term care California hospitals between 2008-2013. Our results show for hybrid organizations a concave relationship between the number of logics they incorporate and their mission performance, pointing first at the negative and then at the positive effects of logic multiplicity. These findings contribute to literature on institutional logics, paradox theory and hybrid organizations.This paper proposes a contingency theory of institutional entrepreneurship. Institutional entrepreneurship has emerged to explain how agency can be incorporated within institutional theory. Following existing literature on the “paradox of embedded agency”, we build on the definition of the conditions that enable actors to pursue their best interests by creating, modifying or disrupting existing institutions, namely the position in the organizational field, in the organizational hierarchy and in the intraorganizational network. We discuss the existence of different kinds of institutions, each requiring for individuals a specific amount of resources (ability) and interest (willingness) for change. We build on the categorization of institutions related to the actors who make the rule (being that the state or some other entity) and to the way in which such rule is enacted and throught which is enforced (centralized or decentralized), thus identifying public-centralized, private-centralized and private-decentralized institutions. We propose for each kind of institution the enabling conditions that, by providing for both the ability and willingness, make an individual more likely to promote divergent change. The process of emergence of social enterprises has been relatively overlooked by organizational and management literature. Nonetheless, to address many of the contemporary societal challenges and promote social change, these organizational forms have recently been flourishing. We theoretically explore how such process of creation unfolds, identifying the external challenges these organizations face and the strategies they need to pursue to enable their emergence. Through anecdotal evidence, we suggest that this process may call first for the deinstitutionalization of existing institutional logics and then for a legitimacy building at three levels (pragmatic, moral and cognitive). We discuss contributions for research related to institutional logics, social and institutional entrepreneurship and liability of newness for a new organizational form. Building on extant literature on institutional logics, we investigate the effect of logic multiplicity on organizational mission performance. In particular, we theorize that - irrespectively of the nature of the logics at play - an increase in their sheer number triggers negative effects for organizational mission performance, in view of the challenges caused by logics’ jurisdictional overlap and degree of centrality. However, we also argue that this negative effect applies up to a certain point, after which positive effects on organizational mission performance may spur from the possibility to recombine the many more organizational elements brought by the higher number of logics at hand, increasing innovation. Also, we see whether the efficiencyenhancing elements of being a for-profit affect the concave relationship between logic multiplicity and performance discussed above. We examine these three points in the context of the US healthcare industry by looking at over 300 long-term care California hospitals between 2008-2013. Our results show for hybrid organizations a concave relationship between the number of logics they incorporate and their mission performance, pointing first at the negative and then at the positive effects of logic multiplicity. These findings contribute to literature on institutional logics, paradox theory and hybrid organizations.LUISS PhD Thesi