Institutional orders and logics

Friedland and Alford argue that institutions are “supraorganizational patterns of human activity” (1991, p. 243) through which individuals and organizations organize time and space and order reality. The authors propose that in the western world the core societal institutions (defined as “institutional orders”) are Capitalism, Family, the Bureaucratic State, Democracy, and Christianity. This list has subsequently been extended by a group of scholars—among which are Thornton, Ocasio, and Lounsbury (2012)—to encompass Family, Community, Religion, State, Market, Profession, and Corporation. Each institutional order is ruled by a central logic (Friedland & Alford, 1991; Thornton, et al., 2012; Johansen & Waldorff, 2015).

Friedland and Alford theorized institutional logics as “a set of material practices and symbolic constructions” (1991, p. 248). Symbols are intangible meanings—“ways

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of ordering reality”—while practices are tangible ways to “organize time and space”

(Friedland & Alford, 1991, p. 243). Thus, Friedland and Alford conceptualize institutions as simultaneously “material and ideal.” While the institutional order sets unique organizing principles that influence actor’s behavior, institutional logics sets a frame of reference that influences actor’s choices, their sensemaking, and their sense of identity (Thornton, et al., 2012). Logics can therefore be interpreted as the orders’ content; for example, participation is the institutional logic of the institutional order state. Institutional logics are positioned to be more powerful than institutional orders as they guide institutions and social meaning (Friedland &

Alford, 1991). Institutions and their ruling logics co-exist in society often creating contradictory social arrangements (Friedland & Alford, 1991); such contradictory social arrangements create the very base for societal transformation to happen (Friedland & Alford, 1991). Thus, institutional logics provide institutional theory with a way to account for and explain institutional stability and change (Friedland

& Alford, 1991; Thornton, et al., 2012; Johansen & Waldorff, 2015).

As this study primarily deals with the market institutional order, I will here analyze it in greater detail than the remaining orders to provide the necessary information to support the findings that will be presented in Chapter 5. Friedland and Alford argue that a market “is not simply an allocative mechanism but also an institutionally specific cultural system for generating and measuring value” (1991, p. 234). The market institutional order is certainly the one that over the years has attracted consistent attention by institutional scholars (Greenwood, et al., 2014). Because of the tendency to conflate the notions of orders and logics, and depending on the research context, the market institutional order has been analyzed over time by different scholars as business (Reay & Hinings, 2009), market (Glynn & Lounsbury, 2005), or for-profit logic (Battilana & Dorado, 2010; Tracey, et al., 2011). In a study of critics’ reviews of the Atlanta Symphony Orchestra performances, Glynn and Lounsbury (2005) analyze how a traditional dominant aesthetic logic yielded to a new market logic. In the study, the authors use the notion of the market logic to refer to “broader notions of self-interest and profit-motive that animate commercially driven action in Western capitalistic economies and are predicated on formal rationality” (p. 1037). Another example of how the market order has been treated in institutional studies can be found in the work of Thornton (2002) in the case of higher education publishing transitioning from an editorial to a market logic. Within this context, the market logic is presented as characterized by the role of the CEO

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as the dominant source of authority, who gains legitimacy through the firm’s market position and public shareholders. The mission underlying the logic is to build competitive positioning of the firm and increase profit margins. The logic has a major focus on resource competition using strategies such as building market channels and growth by acquisition. The dominant logic of investment is to commit capital to the highest market return.

Interinstitutional System

Friedland and Alford conceive society as a “potentially contradictory interinstitutional system” (1991, p. 240). The interinstitutional system operates at three levels of analysis: “individuals competing and negotiating, organizations in conflict and coordination, and institutions in contradiction and interdependency”

(1991, p. 241). In Figure 7, the individual level is defined as “micro”; the organizational level is defined as “meso”; and the societal level is defined as

“macro.” This definition is in line with most studies on institutional logics (Thornton, et al., 2012). Individual actions are observable at the micro level;

organizational identity, strategies, and practices are observable at the meso level;

institutional logics are observable at the macro level of analysis. Friedland and Alford (1991) consider these levels nested, progressively specifying constraints and opportunities for individual action. Thus, the interinstitutional system enables researchers to understand the levels that define institutions (Thornton, et al., 2012).

Figure 7. Levels of analysis as described by Friedland and Alford (1991). The levels are conceptualized as nested, progressively specifying constraints and opportunities for individual action.

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An institutional logics perspective assumes institutions to be heterogeneous—

contrary to what was argued by the previous wave of new institutionalism.

Institutions differ because of their overarching logic, but it is at the field level that the logic gets specified in its symbolic and material expressions (Greenwood, et al., 2014). DiMaggio and Powell, in an often-cited article titled The Iron Cage Revisited (1983), define organizational field as “those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products” (p. 148). The power of such unit of analysis is that it does not only look at competitors or firms in the organization’s network, but it also includes the totality of all possible relevant actors (DiMaggio & Powell, 1983). The concept of organizational field has great importance for contingency variables that influence organizational structures; examples are organizational size, function, or range of services delivered (Greenwood, et al., 2014). Thus, when two organizations are faced with similar institutional pressures, organizational heterogeneity is extremely likely due to contingency factors (Greenwood, et al., 2014). Organizational fields are viewed as carrying their own logics, nested within institutional orders (Goodrick

& Reay, 2011).

Organizational Logics

Spicer and Sewell (2010) elaborate on the concept of organizational logic, as a meso-level construct that is situated between the institutional theory’s field-level logic and the sense making activities of individual actors. Like institutional logics, the authors argue, also organizational logics can be conceptualized as an interaction between “a symbolic system that informs cognition about an organization and the material manifestation of that cognition in the form of the specific practices that are enacted in that organization” (2010, p. 916). Under this light, organizational logics can be interpreted as a mode of cognition connected to the legitimation of action.

To summarize, the authors articulate their proposition as follows (Spicer & Sewell, 2010, p. 918):

We propose that an organizational logic is a composite expression of a range of institutional logics localized in time and space and, considered as such, it serves as a meso-level construct that bridges the methodological holism of field level analyses of

institutions and the methodological individualism of psychological approaches to human agency and cognition.

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Organizational logics can be interpreted as the assumptions of what is considered to be legitimate and effective for an organization within a given context (Spicer &

Sewell, 2010). Going back to Friedland and Alford’s explanation of orders and logics, each of the most important institutional orders of our contemporary society has a central logic that “constitutes its organizing principles and which is available to organizations and individuals to elaborate” (1991, p. 248). Spicer and Sewell (2010), with the concept of organizational logic try to understand how organizations elaborate on the current institutional logics to create their distinct organizational logics. By so doing the authors argue that organizational logics are related but at the same time conceptually and empirically distinct from institutional logics. Moreover, the authors argue that if we accept that institutional logics are subject to change, we can also assume that organizational logics will also change.

A particular organizational logic, Spicer and Sewell (2010) argue, is empirically operational when a specific configuration of discourses is observable at the organizational level. A discourse visible at the organizational level, the authors argue, “reflects the ideational content of broader institutional logics as they are taken up and elaborated by individual actors” (2010, p. 918). By analyzing changes in discourses at the organizational level, we can understand how actors, both individually and collectively, use discursive resources to influence the symbolic and practical climate of an organization. Under this light an organizational logic can be interpreted as “a spatially and temporally localized configuration of diverse discourses” (2010, p. 913). Given that organizations are immersed in a multiplicity of discourses, we can expect contradictions and tensions between the discourses making up the organizational logics to arise, offering the opportunity for actors to exercise projective agency. This projective agency creates the opportunity for organizational logics to change.

Spicer and Sewell also argue that discourses are modified through three main forms of discursive agency: (1) undertaking acts of ironic accommodation between competing discourses; (2) building chains of equivalence between the potentially contradictory discourses; and (3) reconciling new and old discourses through pragmatic acts of bricolage. By investigating transformations in the organizational logic of Australia’s largest public broadcaster, the authors found out that by using these forms of discursive agency, actors were able to transform the dominant organizational logic from the one of nationalism to the one of globalization.

80 Take Away Concepts

Institutional orders set unique organizing principles that influence actor’s behavior.

Scholars recognize seven major institutional orders characterizing contemporary Western society: Family, Community, Religion, State, Market, Profession, and Corporation. Each institutional order is ruled by a central logic, a set of material practices and symbolic constructions, that sets a frame of reference that influences actor’s choices, their sensemaking, and their sense of identity. The institutional logic perspective is apt to analyze the interrelationships between institutions, organizations, and individuals within a social system. Between the institutional logic and the sense making activities of individual actors, we find the meso-level construct of organizational logic, that is the set of assumptions of what is considered to be legitimate and effective for an organization within a given context. A particular organizational logic, is empirically operational when a specific configuration of discourses is observable at the level of the organization. As we’ll see in the findings section, the concept of organizational logic will be used in Study2, to observe the transformations in the organizational logics of Telenor Group.