Innovation in Denmark: a discursive study of Danish organizations

(1)

Innovation in Denmark:

a discursive study of Danish organizations’

focus on innovation.

Mikael Boisen Westh

M.Sc. in Strategy, Organization and Leadership Supervisor: Eva Boxenbaum, IOA

Copenhagen Business School August, 2011

Number of pages: 76 Number of STUs: 172.982

(2)

Abstract

This thesis takes its point of departure in the societal discourse in Denmark about innovation.

I argue that there is a wide-spread belief in Denmark that we must live off our ability to innovate if we are to stay competitive in the future. This belief is shared by politicians, international organizations such as the European Union and OECD, trade associations and unions in Denmark as well as major private sector companies. Following the arguments of new institutional theory, Danish organizations should be influenced by this societal belief and to some extent focus on innovation to gain legitimacy. My research question was:

 How have Danish private sector organizations discursively responded to the societal discourse on innovation?

o Is there variation in the manner and extent to which different organizations have responded?

o Is there variation in the manner and extent to which different organizational fields have responded?

Through a discourse analysis of texts produced and disseminated by fifteen large, Danish private sector companies from five different industries I have analyzed how and to what extent Danish organizations have picked up the societal discourse on innovation. I analyzed the websites and annual reports of Novo Nordisk, Lundbeck, LEO Pharma, Coloplast, GN Store Nord, William Demant, Novozymes, Chr. Hansen, Danisco, Maersk, DSV, DFDS, Danske Bank, Jyske Bank, and Sydbank to determine how and to what extent these organizations have incorporated the discourse in innovation.

My findings demonstrate that the societal discourse on innovation is shared by our biggest companies: eleven out of the fifteen organizations I analyzed discursively recognize the need for innovation. In addition, I found significant variation between various industries as well as some variation within industries. Most notably did none of the financial organizations show any focus on innovation, whereas the biotechnology companies showed a very strong focus on innovation. Outside the financial sector, eleven out of twelve organizations communicated a focus on innovation, and the societal discourse on innovation thus seems to be shared by our largest companies.

(3)

1. Introduction

1.1 Background

There seems to be a widespread acceptance that Denmark, Europe, and the Western World alike must live off innovation and knowledge if we are to stay competitive in the future. The American president Barack Obama gave innovation focal attention in his latest State of the Union Address, and spoke of the need for a new generation‟s “Sputnik Moment:”

The first step in winning the future is encouraging American innovation. (…) What we can do -- what America does better than anyone else -- is spark the creativity and imagination of our people. (…) In America, innovation doesn‟t just change our lives. It is how we make our living (The White House, August 2011).¹

That is, if America is to prosper again and fuel new economic growth after the financial crisis, American organizations must be innovative. The beliefs apparent in the quote above seem to be shared by many. In 2010, e.g., the Organization for Economic Co-operation and Development (OECD) launched an innovation strategy stating that “In 2007, Ministers acknowledged the need for a cross-government policy to harness innovation as a major driver of productivity that can strengthen economic growth and development” (OECD, August 2011).² OECD, as part of this innovation strategy, published “The OECD Innovation Strategy – Getting a Head Start on Tomorrow” in which the executive summary stresses the need for the private sector to be innovative: “Innovation in firms must be unleashed. Firms are essential for translating good ideas into jobs and wealth” (OECD, 2010: 12). The European Union, in a similar vein, has research and innovation as a distinct policy area, arguing that:

Research and innovation help deliver jobs, prosperity and quality of life. Although the EU is the global leader in many technologies, it faces increasing challenges from traditional competitors and emerging economies alike (…) In particular, EU Industry needs to close the spending gap between itself and counterparts in the US and Japan to remain competitive at the cutting edge of technology and innovation.” (The European Union, August 2011).³

1 http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address

2 http://www.oecd.org/document/6/0,3746,en_41462537_41454856_45150854_1_1_1_1,00.html

3 http://europa.eu/pol/rd/index_en.htm

(6)

From a political perspective, there thus seems to be a shared understanding among political leaders and international organizations that our companies must be innovative if we are to experience economic growth in the future and stay competitive in the global economy. Since I have limited myself to Danish organizations in this thesis, it is interesting that the beliefs of Barack Obama and the international organizations just described seem to be shared by the Danish Prime Minister Lars Løkke Rasmussen:

We must make creativity and ideas grow. (…) We must focus specifically on knowledge as an essential condition for new growth. (…) Danish companies must be even more innovative in the future than they are today (Statsministeriet, August 2009).⁴

This speech was given at the opening of the Danish parliament in 2009. It focuses on creativity and innovation as essential to economic growth and very specifically gives the responsibility to our private sector companies. That is, if Denmark is to experience economic growth Danish private sector companies must be innovative. Similarly, the Danish Ministry of Economic and Business Affairs states that innovation is a central element in creating new growth in Denmark, and that there is a need for Danish companies to strengthen their efforts to create new products and services: “The government‟s goal is that by 2020 Denmark has to be among the countries in the world where the companies are most innovative” (Ministry of Economic and Business Affairs Denmark, August 2011).⁵ The Ministry of Economic and Business Affairs therefore made the publication “Strengthened Innovation in the Companies.”

Naturally, these beliefs reflect a political discourse and need not be shared by anyone else than politicians.

Focusing specifically on Denmark and moving away from politics, however, powerful Danish organizations also seem to share these beliefs. The Danish Chamber of Commerce, one of the largest professional business organizations in Denmark representing 20,000 companies and 100 trade associations, suggested setting up an official innovation council arguing that:

“Denmark must innovate itself to growth, and an innovation council can provide an overview, get knowledge out to the firms, and create new ways of thinking” (Dansk Erhverv, August

4 http://www.stm.dk/_p_12951.html

5 http://www.oem.dk/arbejdsomraader/erhvervsudvikling-og-vaekstvilkaar/innovation

(7)

2011).⁶⁷ The Danish Chamber of Commerce, alongside their proposal, published a pamphlet called “Innovation Creates Growth” in which they argue that: “If Denmark in the future is to make it in the global innovation economy it will take forward-looking initiatives and political action” (Dansk Erhverv, 2011: 5). We thus also here see a clear belief that innovation, private-sector organizations and economic growth go hand in hand, and The Danish Chamber of Commerce even talks about a „global innovation economy.‟ From the perspective of the employees, DJØF, the Association of Danish Lawyers and Economists and a major trade union for people with a higher education, published an industrial policy under the name

“Roads to Knowledge Based Growth” in which two of the five roads to increased growth focus on innovation: more investments in research and innovation in interaction with companies and more innovative public-private sector interaction (DJØF, 2011: 4). Employers and employees alike thus seem to agree: Danish private sector companies must be more innovative if Denmark is to survive in the global economy. In the media as well, this discourse seems to be shared. Liberal editor at the centre-right newspaper Berlingske, Jesper Beinov, in a blog argued that: “Countries like Denmark have to survive by a combination of diligence and innovation since the sources of prosperity today are coming from radical renewal in production and services” (Berlingske Tidende, August 2011).⁸

So far I have thus argued that political leaders, international organizations, Danish organizations and the media alike share a discourse about innovation being essential to create economic growth. In other words, if we are to create new growth after the financial crisis, our companies must be more innovative. The question then is if our companies agree. At first glance, the answer seems to be yes. Powerful and influential companies in Demark already have a strong focus on innovation, at least officially. At the Danish Top Executive Network Summit 2011 there was a strong focus on innovation, as the theme was „Towards 2020 – Prepare for Development Leaps, Innovation Junctions and Exponential Growth.‟⁹ Some of the key speakers were an inventor, a director of global sales and business development, and a chief science officer, and two of the themes at the summit were “innovation junctions” and

“technology and innovation” (VL Groups, 2011). According to Jeff Olsen Gravenhorst, CEO of ISS A/S, one of the leading facility services companies in the world and the biggest Danish

6 http://www.danskerhverv.dk/OmDanskErhverv/Profil/Danish-Chamber-Commerce/Sider/Danish-Chamber- Commerce.aspx

7 http://www.danskerhverv.dk/Nyheder/Sider/innovation-skaber-vaekst.aspx

8 http://beinov.blogs.berlingske.dk/2011/06/07/nar-%c3%b8st-og-vest-m%c3%b8des/

9 http://vluk.gominisite.com/Summit-2011---Towards-2020

(8)

company measured on number of employees, speaking at the summit, innovation is an outright necessity if a given company wants a market share in the future.¹⁰ To survive, then, companies must innovate, according to Jeff Olsen Gravenhorst:

So when we look at this challenge, what is it that ISS has to focus on when going forward, what is it that a service provider has to focus on to get a share of this market in the future? It is, of course, innovation (Danmarks Radio, August 2011).¹¹

According to Gravenhorst, then, innovation is not just a necessity for the Danish economy as a whole. For the particular companies, innovation is also imperative if they want to survive and grow. Similarly, Maersk, the biggest Danish company measured by revenue, argue that:

“Innovation is a fundamental part of modern business. If you don‟t innovate, you stand still.

And in today‟s world, standing still means going backwards as others keep moving ahead”

(Maersk website, August 2011).¹² Top executives in Denmark and two of the biggest companies in Denmark, measured on number of employees and revenue, thus all seem to agree with the politicians and various organizations that innovation is and will be fundamental for survival and future economic growth – for our society as a whole and for the particular organizations as well. I therefore believe that it is fair to argue that there is a widespread belief in Denmark that we must live off of our ability to be innovative and that Danish organizations should be influenced by this institutional context and pick up the discourse on innovation.

In this section I have shown that politicians, international organizations, Danish organizations, and Danish private sector companies seem to share a discourse regarding innovation as being essential in today‟s economy and a necessity for future economic growth. There also seems to be a shared understanding that most of this innovation must come from private sector companies. At a first glance, then, it seems that there is a consensus that innovation is a necessity in Danish private sector companies. It is a discourse that is shared by politicians,

10 http://www.issworld.com/about_iss/organisation/pages/default.aspx

11

http://www.dr.dk/DR2/Danskernes%20akademi/Oekonomi_Ledelse/VL_Doegn_2011/VL_Tema.htm?play=http

%3A%2F%2Fvodfiles.dr.dk%2FCMS%2FResources%2Fdr.dk%2FDR2%2FDanskernes_akademi%2F2011%2F02%2 F0957648d-d40c-4ea9-880a-47649a76c4a4%2FISS-

web_3d1cd0728afb4d85a7de2851a53baf66.mp4%3FID%3D865544

12 http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/WorkingWithInnovation.aspx

(9)

international and national organizations and business leaders. There is a widespread belief that innovation is a necessity, and this view is rarely, if at all, contested. I therefore argue that innovation has become taken for granted in our society, and innovation is thus something that we can expect our organizations to focus on. What this thesis, then, sets out to research is how the discourse on innovation in our society is reflected in Danish private sector companies. I will perceive the necessity of innovation as a widespread belief in our society that our organizations should adhere to.

1.2 Institutional Theory and Discourse Analysis

I have, so far, described the discourse on innovation in our society and argued that there is a widespread belief that we must live off our ability to innovate to survive in the global economy. How our organizations respond to this discourse and belief is the focus of my thesis. My thesis builds on the arguments from the new institutional theory which argues that organizations are influenced by social understandings that define what rational behavior is (Greenwood et al., 2008: 3). By applying institutional theory I can therefore offer a societal explanation of why Danish organizations want to be innovative: that is, there is a widespread belief in the Danish society that we must be innovative to create economic growth, which imposes institutional pressures on our organizations. I can thus, through an application of institutional theory, study how the societal discourse and belief that we have to live off innovation has been discursively integrated into Danish organizations. The foundation for this thesis is therefore that organizational structure, strategies and practices are influenced by the wider society through the institutional environment. To study how Danish organizations have reacted to the discourse in our society about innovation, I employed discourse analysis as a methodological tool. I analyzed texts produced and disseminated by fifteen Danish organizations from five different organizational fields to study whether and how they have integrated the societal discourse on innovation.

1.3 Research Question

Summing up the two previous sections, what I researched in my thesis was whether and how fifteen organizations from five different organizational fields have responded to and incorporated the societal discourse on innovation. These organizations are Novo Nordisk, Lundbeck, LEO Pharma, Coloplast, GN Store Nord, William Demant, Novozymes, Chr.

Hansen, Danisco, Maersk, DSV, DFDS, Danske Bank, Jyske Bank, and Sydbank. There seems to be a widespread belief in our society that we must live off innovation, and according

(10)

to the new institutional theory our organizations should be influenced by this belief. Through a discursive study of the texts these organizations produce and disseminate to their environments I have studied whether and how they have have responded to this belief. My research question therefore was:

 How have Danish private sector organizations discursively responded to the societal discourse on innovation?

o Is there variation in the manner and extent to which different organizations have responded?

o Is there variation in the manner and extent to which different organizational fields have responded?

The structure of my thesis is as follows: in the following section I will introduce the new institutional theory and its different components as they are relevant to my study. I will then move on to explain discourse analysis as a methodological tool to be used in institutional theory before presenting my data. Subsequently, I will move on to the actual analysis of my data and then a discussion of my findings before I will wrap up my study in the conclusion.

2. Institutional Theory

2.1 Introduction

Although apparent in several disciplines, institutional theory has been more constant in sociology than in other disciplines, and most institutional analysts refer to Max Weber as their prime influence. Weber, however, never himself made use of the term “institution,” but he tried to understand the ways in which cultural rules define social structures and how they govern social behavior (Scott, 1995: 10-11). Building from that, institutional theory posits that organizational forms, strategies and practices are influenced by institutions in the wider society which impose influence on organizations. The foundation for this thesis will thus be that organizational structure, strategies, practices, etc. are influenced by the wider society through the institutional environment. To survive in this environment, organizations must do more than succeed economically; they need to establish legitimacy (Meyer and Rowan, 1977).

Through institutional theory I can thus look at how a set of organizations are trying to establish legitimacy by living up to certain societal, or institutional, beliefs about innovation

(11)

as a necessity to stay competitive. In this thesis I will thus research the influence of institutional environments on organizations, or, more specifically, the institutional pressures in Denmark related to organizations‟ focus on innovation. In the following I will give a more detailed overview of new institutional theory, and how it is relevant in the context of this thesis.

2.2 Institutional Theory

The new institutional theory developed in the 1970s as a reaction to what some believed were overly agentic perspectives on organizational behavior, such as rational choice theory (Greenwood et al. 2008: 3). The new institutional theory, as the name suggests, departed from the old institutionalism in organization theory as well. Both the old and the new institutionalism reject rational-actor theories of organization, and both argue that culture shapes organizations. The new institutionalism, however, parts from the old by downplaying conflicts within and between organizations and by focusing on organizational fields in its conceptualization of the environment. That is, institutionalization happens at the sectoral or societal levels where organizational forms, structures and rules become institutionalized. The new institutional theory, in addition, stresses the unreflective and taken-for-granted nature of human behavior and sees interests and actors as constituted by institutions themselves (DiMaggio & Powell, 1991: 11-15). Or, as Scott (1995) put it, the new institutionalism has emphasized cognitive frameworks over normative ones and has focused attention on the effects of cultural belief systems operating in the environments of organizations (Scott, 1995:

31).

One of the founding papers of the new institutional theory, henceforth just called „institutional theory,‟ was Meyer and Rowan‟s (1977) article which argued that organizations incorporate rationalized institutional rules to gain legitimacy and resources. As their central argument goes:

That is, organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. (Meyer and Rowan, 1977: 340)

(12)

According to Meyer and Rowan, then, formal organizations will reflect their institutional environments more than they will reflect the demands of their ongoing work activities.

Organizations adhere to structures and ideals to appear rational and to gain legitimacy, and in that way they enhance their survival prospects:

Incorporating externally legitimated formal structures increases the commitment of internal participants and external constituents. And the use of external assessment criteria – that is, moving toward the status in society of a subunit rather than an independent system – can enable an organization to remain successful by social definition, buffering it from failure (Meyer & Rowan, 1977:

349).

Meyer and Rowan (1977) thus argued that by submitting to rationalized concepts in their institutional environments, organizations show that they are acting on collectively valued purposes, and that they use the legitimacy they attain to strengthen their support and to secure their survival. Or in other words, organizations that conform to institutionalized myths attain legitimacy and resources and in that way secure their survival. Meyer and Rowan further argued that “technical activities and demands for efficiency create conflicts and inconsistencies in an institutionalized organization‟s efforts to conform to the ceremonial rules of production” (Meyer & Rowan, 1977: 355). The conflict between ceremonial rules and efficiency can be solved through decoupling: elements of structure are decoupled from activities and from each other. Decoupling therefore enables organizations to maintain standardized formal structures while ongoing activities vary in response to practical considerations (Meyer & Rowan, 1977: 356-357).

Another founding and highly influential paper was DiMaggio and Powell‟s (1983) article where the authors argued that where much of the organizational theory of the 1970s sought to explain variation, the question should rather be why there is such homogeneity of organizational forms and practices. DiMaggio and Powell argued that when an organizational field becomes established there is a push towards homogeneity, or: isomorphism. They further argued that organizations are becoming still more similar, not because they are driven by competition or the need for efficiency, but because of the structuration of organizational fields:

(13)

… highly structured organizational fields provide a context in which individual efforts to deal rationally with uncertainty and constraint often lead, in the aggregate, to homogeneity in structure, culture, and output (DiMaggio & Powell, 1983: 147).

Such an organizational field, according to DiMaggio and Powell, is a number of organizations that constitute a recognized area of institutional life. That is, suppliers, consumers, regulatory agencies and other organizations producing similar outputs. DiMaggio and Powell further contended that early adopters of an organizational innovation will be driven by a desire to improve performance, but as an innovation spreads, a point will be reached beyond which an adoption will provide legitimacy more than improved performance (DiMaggio & Powell, 1983: 148). Legitimacy is therefore a central concern to both Meyer and Rowan (1977) and DiMaggio and Powell (1983). DiMaggio and Powell also identified three analytically distinct mechanisms of isomorphism: coercive, mimetic and normative isomorphism. Coercive isomorphism results from formal and informal pressures from laws, regulations and standards, mimetic pressures stems from uncertainty and implies imitating other organizations, and normative isomorphism comes from professionalization, that is, norms, socialization and professional methods of work. DiMaggio and Powell point out that conforming to any of these pressures will not increase organizational efficiency. Rather, being similar to other organizations in a field will make it easier for a given organization to transact with other organizations, it will make it easier to attract employees, and it will provide the organization with legitimacy (DiMaggio & Powell, 1983: 150-154). Taking Meyer and Rowan‟s (1977) and DiMaggio and Powell‟s (1983) arguments together, then, organizations adopt structures, forms, practices and strategies that are perceived as legitimate in the eyes of society and in that way attain resources securing their survival. On the field level, organizations are becoming still more similar within these organizational fields. This process is called isomorphism and has three analytically distinct mechanisms: coercive, mimetic and normative. Being similar to other organizations will not necessarily make a given organization more effective, but it will give the organization legitimacy, which enhances its survival prospects.

According to Greenwood et al. (2008), empirical support for these founding arguments of institutional theory abounds and comes from a wide array of practices and settings: studies have verified that organizations seek to attain legitimacy by adopting practices that are

(14)

assumed to be rational, that organizations converge around these practices, and that social values in different countries lead organizations to use different organizational practices (Greenwood et al., 2008: 8-10). From these founding propositions, then, institutional theory expanded in scope and diversity. One of the most cited works within institutional theory has been Richard W. Scott‟s pillars that underpin institutions (Greenwood et al. 2008: 15). Scott (1995) distinguished between three such pillars: regulative, normative and cognitive. The basis for compliance in the regulative pillar is expedience, and its indicators are laws, rules and sanctions. The normative pillar, on the other hand, rests on social obligation for compliance with certifications and accreditations as its indicators. Finally, the cognitive pillar revolves around the „taken-for-grantedness‟ as its basis for compliance. Its basis for legitimacy is culturally supported, and it is indicated by isomorphism; that is, when more and more organizations have adopted a given structure, form or practice (Scott, 1995: 35).

According to Greenwood et al. (2008), however, few researchers have successfully operationalized the three different pillars which are often intertwined. In the same vein, the distinction between the three pillars has led to a divide in institutional theory where different researchers have emphasized different pillars leading to a growing divide between different institutional approaches (Greenwood et al. 2008: 15). For these reasons, Phillips and Malhotra (2008) criticize the three pillars on the grounds that if an institution is enduring and stable, then it does not need regulatory sanctions or other social controls to support it since it is taken-for-granted. Instead, Phillips and Malhotra argue that institutions are fundamentally cognitive, and that the two other pillars are not necessary in institutional theory (Phillips &

Malhotra, 2008: 710-711). According to Phillips and Malhotra, Scott himself has argued that it is the cultural-cognitive pillar that gives the deeper foundations of institutions, and that beliefs, norms and rules rest on this pillar (Phillips & Malhotra, 2008: 715). According to this view, then, institutions are fundamentally cognitive and self-reinforcing with no external sanctions. That is, they rest on the taken-for-grantedness as a basis for compliance:

organizations adopt structures and forms because they can conceive of no alternatives.

Phillips et al. (2004) argue that institutions involve mechanisms that associate non-conformity with increased costs economically, cognitively and socially, and that institutions therefore are subject to self-regulating controls (Phillips et al., 2004: 637-638). Berger and Luckmann (1966) argued for this position from the outset of institutional theory:

To say that a segment of human activity has been institutionalized is already to say that this segment of human activity has been subsumed under social control.

(15)

Additional control mechanisms are required only in so far as the processes of institutionalization are less than completely successful (Berger & Luckmann, 1966: 73).

In this thesis I will therefore focus on the cognitive pillar, or the taken-for-grantedness, as fundamental in institutional theory: organizations in Denmark can be expected to focus on innovation because it is taken for granted in the Danish society that innovation is what we must live off. The basis for legitimacy, in that case, is that actions or forms are culturally supported. A societal discourse on innovation, which I outlined in the previous section, is thus expected to be taken up by organizations, not through rules, laws, norms, or social obligation, but because it is socially supported and taken-for-granted. That is, organizations can be expected to focus on innovation to attain legitimacy since innovation is a „culturally supported‟ practice.

2.3 Institutional Logics and Strategic Responses

If the question that DiMaggio and Powell (1983) sought to answer was why organizations are so alike, other researchers within institutional theory have sought to answer the opposite question: how do we explain differences? From the arguments of DiMaggio & Powell it would follow that all organizations are alike, or that they would become alike over time. But how do we then explain variation between organizations and institutional change? Friedland and Alford (1991) provided one possible answer when they introduced institutional logics to institutional theory. In line with DiMaggio and Powell, Friedland and Alford argued that:

From an institutionalist perspective, organizations which adopt the appropriate forms perform well not because they are most efficient, but because these forms are most effective at eliciting resources from other organizations which take them to be legitimate. (Friedland & Alford, 1991: 243)

Friedland and Alford then went on to argue that institutions are “supraorganizational patterns of human activity and symbolic systems that individuals and organizations use to order reality and make it meaningful” (Friedland & Alford, 1991: 243). Each of the important institutional orders in Western societies, they argued, has a central logic that organizations and individuals draw upon when making sense of activities: capitalism, family, bureaucratic state, democracy, and Christianity (Friedland & Alford, 1991: 249). Thornton, in a review of empirical studies,

(16)

included six sectors: markets, corporations, professions, states, families and religions (Thornton & Ocasio, 2008: 104). These logics, however, are conflictual, and the most important struggles between organizations concern the type of institutional logic appropriate in a given situation, and it is the outcomes of these struggles that may transform institutions:

Through individual, organizational, and class politics, institutional contradictions may be politicized and institutions transformed (Friedland & Alford, 1991: 256). Organizations, as actors, can thus instigate change by appealing to different logics. Institutions are therefore not stable, but are changing over time. Thornton and Ocasio (2008), however, warned that the phrase „institutional logic‟ has become a buzz word that researchers take for granted and thus fail to define. Thornton and Ocasio (1999) themselves defined institutional logics as socially constructed historical patterns of material practices, assumptions, values, beliefs and rules that individuals use to provide meaning to their social reality (Thornton & Ocasio, 1999: 804).

Institutional logics, then, open up for individual agency and differences in institutional theory since there are multiple sources of rationality. That is, different societal sectors and different organizational fields can differ in which logics they are influenced by (Thornton & Ocasio, 2008: 101, 104). Or in other words, institutional logics lead to contradictions in the institutional environment, and the focus can therefore not only be on isomorphism:

differences and change has a place in institutional theory, and institutional theory has moved towards including multiple sources of rationality and multiple sources of legitimacy.

The early researchers within institutional theory also acknowledged that institutional theory must better address how and why institutions change, and as early as Berger and Luckmann (1966) it was acknowledged that institutions do change:

Institutionalization is not, however, an irreversible process, despite the fact that institutions, once formed, have a tendency to persist. For a variety of historical reasons, the scope of institutionalized actions may diminish; de- institutionalization may take place in a certain areas of social life. (Berger &

Luckmann, 1966: 99).

Powell, too, acknowledged that there are differences that institutional theory needs to account for and argued that we need a better understanding of the sources of heterogeneity in the institutional environments and the processes of institutional change (Powell, 1991: 183).

Powell went on to argue that:

(17)

I also want to suggest that much of the imagery of institutional theory portrays organizations too passively and depicts environments as overly constraining.

There is a wide range of institutional influences, and internal responses to these pressures are more varied than is suggested by our initial arguments. (Powell, 1991: 194)

Another research that seeks to explain variation more than isomorphism is Oliver‟s (1991) article that blended resource dependence theory with the institutional perspective to come up with strategic responses to institutional pressures that organizations can employ. Oliver argued that organizational behavior can vary from passive conformity to active resistance in response to institutional pressures, and she described five distinct strategies that organizations can employ: acquiescence, compromise, avoidance, defiance, and manipulation (Oliver, 1991:

152-159). Organizations can thus actively conform or resist institutionalization to varying degrees as organizations can have different strategic responses to the institutional environment. According to this view, then, agency and self-interest do have a place in institutional theory. DiMaggio also acknowledged that institutional theory had to open up for more agency, power, interests, and institutional change and suggested that individuals may act as „institutional entrepreneurs‟ that seek to achieve interests that they value, and that new institutions arise when actors with sufficient resources realize these interests (Hardy &

Maguire, 2008: 198). A stream of research focusing on change through institutional entrepreneurship has followed, with the basic propositions that institutional entrepreneurship is “activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones” and that institutional entrepreneurs are “actors to whom the responsibility for new or changed institutions is attributed” (Hardy & Maguire, 2008: 198). These institutional entrepreneurs may be individuals, organizations, networks, associations, and social movements (Hardy &

Maguire. 2008: 200). Yet other studies explaining variation argue that ideas and practices are modified by the organizations picking up and incorporating these ideas. While early institutional theorists depicted the adoption of practices and structures by organizations in a field as a „diffusion‟ of ideas where practices and structures were transmitted across organizations, other researchers have employed the metaphor of „translation‟ where specific ideas, practices or structures are translated and thus reshaped and adapted by the organizations picking up those new ideas, structures or practices (Zilber, 2008: 162). As Sahlin and Wedlin

(18)

(2008) argued: “ideas are translated throughout their circulation, and as they evolve differently in different settings, they may not only lead to homogenization but also variation and stratification” (Sahlin & Wedlin, 2008: 219).

From the founding papers and the classical arguments of institutional theory, researchers have thus begun to look more at how and why institutions change, and have been trying to bring some degree of agency into institutional theory. The picture is therefore not only of organizations passively adopting the same structures and forms leading to isomorphism: there can instead be multiple pressures and multiple sources of legitimacy, as well as a multitude of strategic responses to the institutional environment. Organizations and organizational fields can thus differ in the logics upon which they draw, they can differ in their strategic responses to the same institutional pressure, and they can translate the same ideas, structures or practices differently. When looking at how Danish organizations in different organizational fields react to the societal belief that we must be innovative, one can thus expect to find differences across organizations and across fields.

2.4 Legitimacy

Whether studying isomorphism, institutional change, strategic responses or translations, one concept remains central in institutional theory: the concept of legitimacy. Suchman (1995) argued that the transformation from viewing organizations as tightly bound rational systems over open systems to the institutional perspective has made legitimacy a focal issue:

legitimacy has become an anchor-point addressing the forces that constrain, construct and empower organizations and its actors (Suchman 1995: 571). Suchman argues that organizations pursue legitimacy for a number of reasons: legitimacy enhances the stability and comprehensibility of organizational actions, it leads to persistence since audiences will supply resources, and audiences will perceive the organization as being more meaningful, predictable and trustworthy (Suchman 1995: 574-575). Suchman went on to argue that the literature within organization theory can be divided into a strategic camp and an institutional camp. The strategic approach views legitimacy as an operational resource that organizations extract from their environments and use in pursuit of their goals. The institutional perspective, on the other hand, posits that external institutions construct and interpenetrate organizations and that cultural definitions determine how organizations are built, how they are run, and how they are understood and evaluated. Legitimacy thus empowers organizations by making them natural and meaningful, and legitimacy is therefore not a resource that organizations can

(19)

extract. Suchman, however, argued that it is possible to take the middle way: addressing the dilemmas that focal organizations face in managing their symbolic relationships with their constituents and at the same time acknowledging that cultural environments are fundamentally constitutive of organizational life (Suchman 1995: 575-577).

In institutional theory, the seminal work of Meyer and Rowan, which is described above, made legitimacy central to institutional theory from the outset by arguing that legitimacy enhances organizations‟ prospects of survival, and that legitimacy can result from conforming to institutionalized myths in the organizational environment (Meyer & Rowan, 1977).

According to Deephouse and Suchman (2008), however, Meyer and Rowan never actually defined legitimacy, but definitions of legitimacy abound. Scott argued that legitimacy is a

“condition reflecting cultural alignment, normative support, or consonance with relevant rules or laws” (Scott, 1995: 45). Yet another definition is Suchman‟s (1995) definition of legitimacy: “Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman 1995: 574). The strength of this definition, according to Suchman, is that it is a broad-based and inclusive definition that incorporates both the evaluative and the cognitive dimensions.

Deephouse and Suchman (2008) argued that there can be various sources of legitimacy, such as specific legitimacy-granting authorities (e.g. the state, intellectuals, and lawyers), the media, society-at-large, and inter-organizational relations (Deephouse & Suchman, 2008: 57).

According to Deephouse & Suchman (2008), “any act of legitimacy may operate on a variety of dimensions,” e.g. regulatory, cognitive, and normative. In the same vein, they argue that subjects, e.g. an organization, seek support from a multiplicity of sources simultaneously. It is thus important to note that there can be many sources and dimensions of legitimacy, and that organizations can seek support from several sources. Suchman (1995), however, argued that the best way to acquire legitimacy is through conformity with the environment, a proposition reinforced by numerous studies, according to Deephouse and Suchman (2008). This is also in line with Meyer and Rowan‟s (1977) original article which argued that organizational conformity with institutional myths will provide an organization with legitimacy. Even though that there can be a multitude of sources and dimensions of legitimacy, then, we can expect organizations to conform to the institutional environment to attain legitimacy. This is

(20)

in line with the view that it is the cognitive pillar that provides the deeper foundations of institutional theory.

In the context of my thesis it can therefore be assumed that organizations in Denmark will conform to the institutional pressure to being innovative since it can be presumed that in Denmark, focusing on innovation will be viewed as desirable, proper and appropriate behavior and will therefore provide organizations with legitimacy. According to the literature on institutional logics, institutional entrepreneurship, translation and strategic responses, however, there will be differences between various organizations and various organizational fields in the extent to which they pick up the belief about innovation, the logics on which they draw, how the discourse or practices regarding innovation are translated into various organizations, and in what their strategic responses will be. Or in other words, it can be assumed that focusing on innovation will provide organizations with legitimacy, but the way in which they do this will vary between different organizations and different organizational fields.

3. Methodology

So far I have discussed and explained the aim of my thesis and the theoretical foundation for my analysis. To sum up so far, I have established that the aim of this thesis is to look at how Danish organizations have discursively integrated the discourse about innovation and whether there are differences between various institutional fields. Subsequently, I laid out the theoretical foundations for the thesis: that organizations are shaped by norms and rules in our societies, and that organizations in this institutional environment must attain legitimacy to survive. Taken together, then, we thus see a shared acceptance in our society that we must live off of our ability to innovate, and that organizations should be shaped by this and conform to this belief to attain legitimacy. To answer my research question and to see the link between the societal discourse and our organizations, I will in the following section explain and operationalize discourse analysis as an analytical tool. In this section I will first explain the scientific paradigm that I am employing in this thesis before I go on to describe discourse analysis as an analytical tool to be used in institutional analysis. I will then move on to explain how exactly I am going to utilize discourse analysis, and then finally describe the objects of my research.

(21)

3.1 Scientific Theory

The scientific standpoint that I have taken in this thesis is a social constructivist one: that is, I see the world as socially constructed and subjective. The thesis will thus be of interpretative nature. I am trying to get an understanding of „what is going on‟ and the thesis is thus explanatory. It lies at the very heart of institutional theory that institutions are social constructions, and that institutionalization, the process through which institutions are produced, is a social process by which individuals come to accept shared definitions of social reality (Phillips et al., 2004: 638). I am thus employing an interpretive, qualitative approach to generate meaning and to provide an understanding of „what is going on.‟ According to Zilber (2008), longitudinal, quantitative studies have become the dominant approach in institutional theory, thus breaking with the foundations of the new institutional theory which emphasizes meaning. According to Zilber, institutional theory originated from the social constructionist approach, and research within institutional theory should therefore focus more on meaning than on structures and practices (Zilber, 2008: 151-154). Zilber further pointed to the power of language since language constructs reality (Zilber, 2008: 158). By employing a qualitative, discursive method in my study, I am thus able to look at how actors (in this thesis organizations) make sense of the societal discourse on innovation, how they socially construct meaning, and how they take part in the social construction of institutions. In addition, Berger and Luckmann (1966) defined institutions as social constructions that become taken-for- granted through repeated social enactment primarily through the use of language. In the following section, I will therefore turn to discourse analysis as a tool to be used in institutional analysis.

3.2 Discourse Analysis

As aforementioned, research within institutional theory has primarily been large-scale, quantitative analyses (Zilber, 2008: page 154), but recently, language has become a main focus in organizational institutionalism (Meyer, 2008: 531). According to Alvesson and Kärreman (2000), one of the most profound trends within the social sciences in general has been an increased focus on language. Scholars within disciplines such as sociology, social psychology and communication theory have suggested that the proper understanding of societies, social institutions, identities and cultures can be regarded as discursively constructed ensembles of texts, and that organizational analysis is being subjected to this linguistic turn as well. According to Alvesson and Kärreman, however, a great majority of

(22)

organizational researchers have an overly simplistic understanding of language, viewing language as simply mirroring an external reality and as a transparent medium for the transport of meaning (Alvesson & Kärreman, 2000: 136-140). Alvesson and Kärreman, instead, urge researchers to view language as active, processual and outcome oriented, and as a tool used to persuade, enjoy, engage, discipline, criticize, express feelings, clarify, unite and do identity work. They propose an approach to discourse analysis where interest is on discursively produced outcomes such as texts working toward an interpretation that goes beyond those specific texts (Alvesson & Kärreman, 2000: 142-147).

More specifically, within institutional theory, Phillips et al. (2004) argued that discourse analysis provides a framework for studying the processes underlying institutionalization.

They propose a discursive model of institutionalization highlighting the relationship between texts, discourse, institutions and actions. Phillips et al. argue that the majority of institutional theory has been realist investigations where organizational practices have been disconnected from the discursive practices that constitute them (Phillips et al., 2004: 635). Instead, they argue that language is fundamental in institutionalization: “Institutionalization occurs as actors interact and come to accept shared definitions of reality, and it is through linguistic processes that definitions of reality are constituted” (Phillips et al., 2004: 635). In particular, texts are seen as fundamental. Institutions, then, are not only social constructions, but social constructions constituted through discourse, and these institutions are constructed primarily through the production of texts which mediate the relationship between action and discourse (Phillips et al., 2004: 638). A fruitful avenue for language-oriented organizational research would thus be through a detailed exploration of texts, they argue (Phillips et al., 2004: 646).

In a study by Palmer, Jennings and Zhou (1993), texts where shown to be fundamental in the institutionalization of the multidivisional form in major US corporations in the 1960s, according to Phillips et al. (2004). Normative pressures operated through business schools and the use of a particular book about the multidivisional form, while mimetic and coercive pressures worked primarily through organizational charts, reports, conversations and stories (Phillips et al., 2004: 639). Focusing on persuasive texts, Suddaby and Greenwood (2005) pointed to the skilled use of language in legitimating institutional change, and Munir and Phillips (2005) examined the way Kodak transformed photography from a specialized activity to one that became an integral part of everyday life through a study of the texts Kodak produced and disseminated; texts such as advertisements, company documents and annual reports. A study by Wicks (2001), through a textual analysis of secondary data, showed how a

(23)

mindset of invulnerability became institutionalized. The detailed study of language and texts can thus be used in institutional analysis. Through an analysis of the texts that Danish organizations produce and disseminate to their environments I will therefore be able to shed light on how Danish organizations make sense of the societal discourse on innovation. As described in the previous section, legitimacy is the primary reason why Danish organizations would focus on innovation. In the following section I will therefore turn to legitimation, the way organizations discursively try to attain legitimacy, as a specific tool to operationalize discourse analysis in institutional theory.

3.3 Legitimation

As mentioned in the section on institutional theory, a key factor is legitimacy: organizations must attain legitimacy to survive. A specific way to operationalize discourse analysis is thus to look at how organizations discursively, through texts, try to attain legitimacy. Berger and Luckmann (1966) argued that “language objectivates the shared experiences and makes them available to all within the linguistic community, thus becoming both the basis and the instrument of the collective stock of knowledge” (Berger & Luckmann, 1966: 85-86) and that legitimation is a process of “explaining and justifying” (Berger & Luckmann, 1966: 111).

Looking at language and how organizations explain and justify their actions is thus a fruitful avenue for exploring how organizations attain legitimacy: “The edifice of legitimation is built upon language and uses language as its principal instrumentality” (Berger & Luckmann, 1966: 82). Even though legitimacy has always been central to institutional theory, however, little attention has been given to how legitimacy is actually acquired (Suddaby & Greenwood, 2005: 37; Barley 2008: 506). According to Phillips et al. (2004), one way for organizations to attain legitimacy is to produce and disseminate texts to their environments:

… texts that leave traces – which include written and verbal reports, as well as other symbolic forms of communication – are likely to be generated in order to secure and maintain legitimacy; without such texts, organizations cannot signal to internal and external members of the organization that their activities are legitimate (Phillips et al., 2004: 642).

One discursive approach in institutional analysis is thus to analyze how organizations discursively seeks to attain legitimacy through texts. Meyer acknowledged that the mobilization of legitimacy is primarily a discursive process (Meyer, 2008: 531), and that

(24)

interesting new genres such as emails, homepages, reports, and hearings abound in organizational research (Meyer, 2008: 532).

The discursive processes, practices and strategies of legitimation can be studied in several ways, but in this thesis I will build upon Van Leeuwen and Wodak‟s (1999) general legitimation strategies, which was further developed by Vaara et al. (2006). These legitimation strategies are specific ways of employing different discourses or discursive resources, though not always intentional, to establish legitimacy. As Van Leeuwen and Wodak argued: “… legitimation, the question of why social practices or parts thereof must be the way they are. This „why‟ again is never intrinsic to the practice, but has to be constructed in discourse.” (Van Leeuwen & Wodak 1999: 98). Vaara et al. (2006) argued that even though legitimacy is fundamental in organizational action, and even though legitimacy has been a central theme in several streams of research within organization studies, analyses of legitimation have been limited. In particular, they argue that studies of the discursive processes and strategies employed to construct senses of legitimacy have been inadequate, and that knowledge of these discursive processes and strategies are needed if we want to understand the processes through which organizational phenomena are legitimated. More specifically, Vaara et al. (2006) looked at the textual practices and strategies that are used to construct senses of legitimacy, and they argued that those textual means play a central role in legitimating organizational phenomena. In this thesis I will thus analyze how specific organizations, through language, are trying to attain legitimacy through the texts that they produce and disseminate. By looking for such legitimation strategies, I can find the specific ways of mobilizing the discourse on innovation in Denmark to create a sense of legitimacy.

3.4 Legitimation Strategies

Van Leeuwen and Wodak (1999) identified four general legitimation strategies: authorization, rationalization, moral evaluation and mythopoesis. Authorization is legitimation by reference to an authority in which institutionalized authority is vested. It can be a person, or persons, like an expert or a doctor, or it can be impersonal such as the law. Authorization can also be out of conformity, that is, if “everybody else does it” (Van Leeuwen & Wodak, 1999: 104- 105). The second legitimation strategy, rationalization, has two sub-groups: instrumental rationalization and theoretical rationalization. Instrumental rationalization is legitimation through reference to the utility of a practice, that is, the rational justification of a practice and the purpose it serves, the needs it fills or the positive effects the given practice will have.

(25)

Theoretical rationalization, on the other hand, is legitimation by reference to “facts of life” or

“because that is the way things are” (Van Leeuwen & Wodak 1999: 105-108). The third legitimation strategy, moral evaluation, is when an activity is referred to through an expression that distils from it a quality which links the activity to a discourse of values which moralizes it. It can thus appear to be a straightforward description of what is going on, and is therefore one of the least explicit forms of legitimation (Van Leeuwen & Wodak 1999: 108- 110). The fourth type of legitimation, according to Van Leeuwen & Wodak, is mythopoesis which is the telling of stories. Van Leeuween and Wodak distinguished two types of mythopoesis: moral tales and cautionary tales. In moral tales a hero or heroes follow socially legitimate practices and are rewarded with a happy ending, whereas in cautionary tales a hero or heroes engage in socially deviant behavior resulting in an unhappy ending (Van Leeuwen

& Wodak 1999: 110).

On top of these four general legitimation strategies, Vaara et al. (2006) identified one additional legitimation strategy which they dubbed „normalization.‟ In Van Leeuwen and Wodak‟s distinctions, legitimation by means of reference to normal or natural behavior is not a separate strategy, but a sub-type of authorization or rationalization. Vaara et al., on the other hand, argued that rendering something natural or normal can be seen as the primary type of legitimation and should thus be treated as a separate legitimation strategy. Vaara et al. (2006) thus developed a model of discursive strategies used in legitimating organizational phenomena that includes five separate strategies building upon Van Leeuwen and Wodak‟s work: normalization, authorization, rationalization, moralization (moral evaluation), and narrativization (mythopoesis). Vaara et al. developed this model to analyze the discursive strategies used in legitimating an international merger in the media, but they argue that these legitimation strategies are likely to characterize other settings as well and that the model can be used to understand the discursive foundations of legitimation of other organizational phenomena (Vaara et al. 2006). In this thesis I will thus employ Vaara et al.‟s framework, or model, to analyze how Danish organizations discursively legitimize their focus upon innovation.

Before I proceed, however, some comments to Vaara et al.‟s model should be made. First, the five legitimation strategies are often intertwined and found together: “In fact, as our examples show, multiple legitimation – drawing simultaneously on several legitimating strategies – seems to be particularly powerful” (Vaara et al. 2006: 805). In my data, I can therefore expect

(26)

to find the different legitimation strategies together forming more powerful legitimating texts.

Secondly, I am not studying whether specific organizations or its actions are seen as legitimate at a specific point in time. Rather, I am analyzing how an organization is legitimating its actions, whether successful or not. I am thus looking at attempts, whether deliberate or not, to legitimate a focus on innovation. That is, I am researching the textual practices and strategies used to construct senses of legitimacy (Vaara et al., 2006: 791). And thirdly, as Vaara et al. argue, it is questionable whether rationalization and moralization form two separate legitimation strategies since all rationalizations have a moral basis (Vaara et al., 2006: 801). In my analysis, I will therefore treat rationalization and moralization as one strategy, and I will thus build my analysis on these four legitimation strategies:

Table 1:

Rationalization Normalization Authorization Narrativization Legitimation by

reference to the utility or function of specific actions or practices, focusing on benefits,

purposes, functions, or outcomes.

Legitimation by reference to normal functioning or behavior.

Legitimation by reference to authority of tradition, custom, law, and persons or organizations in whom institutional authority is vested

Legitimation conveyed through narratives where individuals or organizations are portrayed as winners, losers, heroes, or adversaries

When analyzing the texts that Danish organizations produce and disseminate, I will thus look for these four legitimation strategies. Classifying a text into one or more of four different categories obviously impose some problems. As Hernes (2008) argue: “… it is easy to forget that the world, in its „brute‟ form, does not come ready-partitioned. We choose the categories into which we partition it because they suit our analysis. The world really couldn‟t care less about our categories” (Hernes, 2008: 12). Any categorization is thus manmade, and as Alvesson and Kärremann argue, research texts cannot be objective or clinical accounts: any researcher has prestructured understandings (Alvesson & Kärremann, 2000: 148). Other researchers might therefore put some texts into other categories than I have. Throughout the entire analysis, however, I have tried to be very explicit about why I have treated specific texts as either cases of rationalization, normalization, authorization or narrativization.

(27)

3.5 Textual Analysis

As aforementioned, a number of studies have examined how texts can be used by organizations to gain legitimacy; according to Phillips et al. (2004), legitimacy can be achieved through the production and dissemination of texts, and as Meyer argued, interesting new genres such as emails, homepages, reports and hearings abound in organizational research (Meyer, 2008: 532). In my analysis, I have analyzed the homepages and annual reports of fifteen Danish organizations in five different organizational fields. The advantage of these genres is that all organizations in my study have homepages and publish annual reports, and there is thus consistency in the material I have analyzed across the organizations on which I conducted my research. A second advantage from this textual analysis of secondary material is that I did not force organizations to communicate a focus on innovation that they might not have. As Deephouse and Suchman (2008) has noted:

Taken-for-grantedness – an absence of questioning – is not, however, easy to measure, especially because asking one‟s research subjects about it is, in itself, a form of questioning. One increasingly popular measurement strategy involves counting the number of organizations or the number of media articles, with greater numbers indicating greater legitimacy (Deephouse & Suchman, 2008: 53).

Even though I did not research whether specific practices are seen as legitimate, but whether and how specific organizations are legitimating a focus on innovation, asking my research subjects about a possible focus on innovation would have forced them to elicit responses. By studying, instead, the texts that these organizations disseminate to their environments, I could study directly whether and how these organizations talk about innovation. And finally, the primary data that I could have collected, e.g. through interviews, would not be intended for anyone else but me and my thesis, and would thus not have been constructed to create legitimacy in the eyes of the wider society. By studying, instead, the texts that specific organizations produce and disseminate to their audiences, I could study directly these organizations‟ legitimating efforts.

More specifically, what I did in my analysis was to read through each organization‟s homepage and its latest annual report (as of June 2011) looking for texts that deal with innovation. I thus started with a thematic analysis where I identified which texts, if any, dealt with innovation or innovative practices in the annual reports and homepages of the

Innovation in Denmark: a discursive study of Danish organizations