1 The institutional perspective
Giddens (1990) noted that “many ... aspects of social life may be institutionalised: that is, become commonly accepted practices which persist in recognisably similar forms across generations ... institutionalised forms of social conduct refer to modes of belief and behaviour that occur and recur, or....are socially reproduced”. Types of such institutions include: language, family and kinship, economic institutions, political institutions, religious institutions, educational institutions, the media, the monarchy, markets, trade unions, corporations, division of labour (occupational structures). Note that this concept of the term ‘institution’ differs from the way the term is used in everyday language to mean ‘collectivity’ like a prison, hospital, court. It also refers to established ways of doing things, like the institutionalisation of work conflicts through for example rights of workers in the workplace, trade union rights of representation, collective bargaining. Such institutional forms were regarded as arising from major social transformations which have affected all societies, such as industrialisation and urbanisation. Institutions are often different in different societies, although globalisation is creating similarities.
During the late twentieth century and early twenty first century, as society has become more fragmented, pluralistic and dynamically changing, sociologists (including Anthony Giddens) have tended to de-emphasise patterned behaviour over the generations, and emphasise how institutions are reproduced and transformed. Institutions are seen as more pluralistic, and subject to more rapid change. The modes of belief and behaviour that are reproduced are similarly more pluralistic (even fragmented), and subject to change. This has led to a development of institutional theories in economics, politics and sociology (which have similar concerns, but different emphases).
The well-known economist Douglass North sees institutions as establishing the ‘rules of the game’ within which organisations act, collaborate and compete. And taking a broader perspective he writes: “Institutions include any form of constraint that human beings devise to shape human interaction” (North, 1990). He argues that they consist of formal rules, and unwritten codes of conduct, as well as the structures (political/social) for enforcing such rules. Examples of such rule structures include:
- political and legal definitions of property,
- markets (the way different types of markets work),
- specific types of organisational structures
- the multi-divisional structure that became typical of large multi-nationals in the second half of the twentieth century,
- the development of the conglomerate model of corporations,
- the current lean, de-layered, focused corporate model
- the venture capital form that predominated in Silicon Valley in the USA
- at the inter-organisational level: industrial districts (or clusters), legislative and regulatory bodies.
Scott and Meyer (1994) argue: “The visible structures and routines that make up organisations are direct reflections and effects of rules and structures built into (or institutionalised within) wider environments. Organisations reflect patterns or templates established in a wider system. ...school, firm or hospital structures reflect standard forms created in the wider environment.”
This emphasis on contextual (institutional) factors should not be seen in any way as deterministic, acting as constraints on agency or the choices made by individuals and organisations.
So as well as structural elements, there are cognitive and ideological dimensions to the institutional framework. For example, the professionalisation of an occupation will influence the preferred options available to an agent (someone or some organisation taking action), the apparent success of Japanese forms of business organisation will help shape the prevailing ideology about work organisation, and thus the choices made by an agent; similarly for the growth of ‘human resource management’ as a set of management theories and practices, transmitted via MBA programmes and professional associations.
Scott and Meyer come up with the following definition: “Institutions are symbolic and behavioral systems containing representational, constitutive, and normative rules together with regulatory mechanisms that define a common meaning system and give rise to distinctive actors and action routines.”
Institutions operate at a variety of levels. Williamson (1985) distinguishes two levels: wider institutional environments and institutional arrangements. In other words at one level more abstract forms of rules and practices like the way markets operate, and at another level more concrete forms such as regulatory bodies.
In the context of technology policy and technology strategy, to adopt the perspective of institutions and organisations means to focus on a wide range of rules and practices as well as institutional bodies. For example when looking at innovation in small firms, it involves not just examining internal factors, but also examining how its institutional context shapes internal operations. This might include examining:
- how its market operates
- what role is played by trade bodies
- how a regional or national system of innovation operates
- how local and regional governments stimulate and regulate its technologies
- how professionalisation of certain types of staff influences practices
- how the educational system develops a skill and knowledge base for the firm’s activities
- how laws are interpreted
- how regulatory bodies protect or constrain the firm
- the influence of industrial production systems like Japanese production systems, etc.
In this unit we take some interesting examples of institutions and examine the different ways they have been researched.
This section is concerned with developing different views of the institutional context for technology policy and innovation by examining the work of Elinor Ostrom which looks at different institutional arrangements for managing common pool resources (such as water) where ‘tragedy of the commons’ outcomes so frequently occur.
Section 2 considers ‘clusters’ – sets of firms within a region that are interlinked directly or indirectly. Clusters have become a major focus of research since they are seen as providing a very effective interorganisational form of innovation and competitiveness, and their effectiveness, as we shall see, is strongly influenced by institutional factors.
Section 3 is concerned with associations, NGOs and networks. Networks are an important interorganisational form, but they vary in their characteristics. For example clusters typically include networks of small and medium sized enterprises.
Section 4 looks at organisations and network structures, such as a relatively recent way of conceptualising internal groups of staff as communities of practice, and how structure can be important for organisational learning. Knowledge management is an important theme throughout the Unit, and communities of practice is a particularly useful way of examining how knowledge is reproduced and managed within organisational and interorganizational networks.