Institutional and legitimacy theory

Question 1

Vilka tre frågor utgörs institutionell teori av?

Answer 1

1. Are organizations rational tools for achieving clear cut purposes?
2. Why are organizations so similar (At least structurally)? Typ skola och polis är strukturellt väldigt lika men samtidigt helt olika saker
3. Why is it so hard to change organizations?

Question 2

Vad är en institution?

Answer 2

• Ett mönster för kollektiv handling
• Skapar ordning, stabilitet och förutsägbarhet
• Nykomlingar blir upplära inom “så har saker alltid gjorts här”
• Motsatsen till “vana” som ofta är lokalt förankrat och individuellt
• Institutioner är long-lasting och har en normative explaination

Question 3

Vilka tre pelare utgör en institution?

Answer 3

Regulative pillar
Normative pillar
Cultural-cognitive pillar

Question 4

Explain regulative pillar

Answer 4

Rules, laws and their associated sanctions. Society expects that insitutions will live by the “rules”. The rules and laws in society that all insittutions have to deal with

Question 5

Explain normative pillars

Answer 5

These are the norms and values that permeate through the insitution and give it its ethics, its individuality and personality.
Expectations of the “proper” way to behave and perform are maintained through systems of education, accreditation and professional development.
There is a right way to behave

Question 6

Explain cultural-cognitive pillar

Answer 6

These are the “taken for granted” ways of getting things done. An institution sits easily in a society when it has absorbed the societys culture and ways of doing things done

Question 7

Give examples of different instituions

Answer 7

Marriage, the contract, wage labour, the hand shake etc

Some organizations, some cultural and some more structural

Question 8

Förklara kopplingen mellan institutionsteori och organisationer

Answer 8

Miljön skapas av och skapar i sin tur organisationer.

Org. måste anpassa till strukturen inom deras organisatoriska fält.

Question 9

Vad är ett organisatoriskt fält?

Answer 9

Organisationer som utbyter råmaterial, varor, kunskap, professionella värden osv.
Det instiutionella konceptet är likt till industrier men större i sin omfattning då det inkluderar leverantörer, kundgrupper, lagstiftare, pressure groups osv (stakeholder theory)

Question 10

Vilka är de två dimensionerna av inst. teori?

Answer 10

Isomorphism and decoupling

Question 11

Describe isomorphism

Answer 11

Ismorphism is a constraining process whereby an institution changes to resemble other institutions facing the same environmental conditions.
Isomorphism is a consequense of belonging to a field - you become similar.

Question 12

Describe decoupling

Answer 12

Where there is a separation from the formal institutional (the one that reflects society’s expectations) and the actual practices

Question 13

Describe the three types of isomorphism pressure

Answer 13

Coercive pressue: political pressue, legislation, adaption to new technology
Mimetic pressure: uncertainty (from unclear objectives, overload of information). Imitate a more successful org in the field
Normative pressures: comes from professionalization, by hiring professionals one get people with similar education –> homogenization. Professional networks –> enhance homogenization

Question 14

Organisations change due to societal expectations. Describe this from the three types of isomorphism.

Answer 14

Coercive: The inst. changes its practices because of pressure from dominant stakeholders.
Mimetic: Inst. will adopt the practices of successful inst. Therefore come to resemble them if it leads to greater access to resources and even some strategic advantage.
Normative: Norm groups (pressure groups) will pressure inst. to adopt what they see as normal behaviour. Eg bank and social inst and ESG-investments - no longer invest in mining companies because of the pressure from activist groups and media.

Question 15

Describe decoupling

Answer 15

Sometimes an insitution seeks all the benefits of appearing to comply with social expectations, while in reality they are “doing their own thing”. Greenwashing of oil companies?
It needs to be appreciated that there are large overlaps with legitimacy and stakeholder theories.

Question 16

What are the two possible approaches to forming inst.?

Answer 16

Market-based approach

Political approach

Question 17

What distinguish market based approach? Example for creation of institutions e.g sustainability certifications

Answer 17

Firms are proactive.

• They want to protect their reputations. Not just individual fims’s rep. that are damaged. Need to distinguish the good from the bad.
• Firms construct external systems to provide credible information to consumers. Stakeholders do not trust firm generated information
• Firms create certification to limit competition.

Question 18

What distinguish political approach? Example for creation of institutions e.g sustainability certifications

Answer 18

Firms are reactive and just one of many actors.

• States, NGOs, unions and social movements are key actors. They both pressure firms and participate in creating solutions.
• The process of creating inst. is based on conflicts and negotiations. Firms prefer weak commitments and NGOs strong commitments –> negotiations is held
• The setting for these conflicts and negotiations is a global neoliberal agenda. ideas of free markets and free flow of capital are important.

Question 19

What is legitimacy theory?

Answer 19

LT asserts that organisations (businesses or otherwise) are continually trying to influence society’s perceptions about them. They want society to see them as “legitimate”.
Firms can expect to run operations that generally meet society’s expectations
LT tries to explain why organisations act as they do.
The basic question is to see the org as a part of the society.

Question 20

Explain LT and the social contract

Answer 20

LT implies that there is a social contract representing the norms and expectations of both businesses and society.
Social contracts, like society itself, is difficult to pin down. Expectations and norms are always changing. What might have been demanded of a corporation a decade ago might now be frowned upon. Har utökats från att enbart vara lönsamma till att ftg måste betala sin beskärda del i samhället
The social contract determines the legitmacy of the organisation.

Question 21

Social contract in other words

Answer 21

The firms submits to the restrictions of society’s expectations (in other words, they are not free to lie, cheat and plunder the environment)
In return, society approves by granting the firm legitimacy in its estimations, and facilitates the flow of capital and resources to the firm –> society has obligations under the contract too.

Question 22

Give examples of restrictions to legitimacy

Answer 22

Legitimacy is not something the firm can acquire and build upon. It is only given by the society and can be taken away.

The firm can only seek legitimacy. It therefore need ways of being nice to society.
Company disclousers in different forms, represent one way of telling society how nice the firm is.

Question 23

Explain the lifecycle of legitimacy

Answer 23

1. Gaining legitimacy
2. Maintaing/reparing legitimacy
3. Loss/abandonment

Question 24

Explain the first step of the LT lifecycle: gaining legitimacy

Answer 24

Society bestows legitimacy upon a new organisation. Uber and Airbnb have received a degree of legitimacy in recent years.
Uber har skapat konflikt i många länder med hela samhället i form av fackförbund för taxiverksamhetsregleringar osv

Question 25

Explain the second step of LT life-cycle: maintaing/reparing legitimacy

Answer 25

Work has to be done to make up for mistakes. Society does not like you quite as much anymore. Exempelvis H&M som kanske börjar jobba med det först när en katastrof inträffar –> måste jobba för att bibehålla legimititeten

Question 26

Explain the third step of LT lifecycle: loss/abandonment

Answer 26

The firm works out that it isnt worth the cost of trying to be the nice guy of society. Lost Causes? Maybe tobacco? Alcohol? Försöker komma undan med att lansera alkoholfri öl

Question 27

What is the difference between legitimacy and accountability?

Answer 27

They are not the same. Accountability represents the extent that the firm’s governance requires those with responsibilities to fulfil them.
Legitimacy is the extent to which society thinks the firm is “legitimate” and worth supporting.

It may be possible for a firm to be motivated in its disclosures by needs for legitimacy that work against the need for accountability.