Challenging Institutional Theory’s Critical Credentials

Abstract

Institutional theory’s claim to be critical rings hollow. Not only does the theory lack an emancipatory agenda but most institutional studies privilege agentic power over hegemonic. Even when engaging with ‘grand challenges’ institutional theorists are inclined to overlook larger structures of domination in favour of focusing on smaller, more manageable issues. As a result, institutional theorists run the risk of becoming complicit in the reification and legitimation of structures of domination. A process of self-critique must be initiated in order to recognize the role institutional theory is playing in this process.

Introduction

While the impressive rise of institutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977) as a ‘school of thought’ within organization theory has attracted many admirers and converts, it has also drawn its own share of critics (Alvesson & Spicer, 2018; Greenwood, Hinings, & Whetten, 2014; Willmott, 2015). Much of the criticism focuses on its shift away from organizations (Greenwood et al., 2014), or ‘imprecision’ or the proliferation of often conflicting or contradictory meanings of key terminology used by institutional theorists (Alvesson & Spicer 2018; Greenwood, Oliver, Sahlin, & Suddaby, 2008; Lawrence, Suddaby, & Leca, 2009).

To any institutional theorist, these charges should be of concern (Meyer & Höllerer, 2014). However, leaving it for another day, in this essay, I take up another, more worrying issue with institutional theory: its often uncritical, sanitized and dangerously misleading simplification of messy, complex social phenomena involving oppression. This, I argue, occurs because of a particular tendency to overlook the hegemonic operation of ‘power’ as a relevant explanatory variable in many social and organizational contexts and see it as a possession employed episodically by social actors to attain their goals. This is a point disputed by Prof. Drori (this issue). Nothwithstanding her defence of institutional theory, I argue that such an actor-centric approach de-focalizes the taken-for-grantedness of the moral necessity and associated legitimacy of the values and practices that represent normality for researchers. Worse, it results in a perspective that skirts any discussion of how this moral necessity is constructed, and privileges the standpoint of the ‘enlightened’ elite even when engaging with ‘grand challenges’ (for a definition of ‘grand challenges’ see George, Howard-Grenville, Joshi, & Tihanyi, 2016).

Power and Institutional Theory: So Close Yet So Far

Perhaps it is best to begin by noting that institutional theory is certainly not divorced from power. There should be no doubt in anyone’s mind that new institutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977) opened up vast new possibilities for understanding and theorizing organizations. Rejecting notions of contingency, for instance, which explained organizational structure and practices in terms of functional needs, it argued that formal organizational structures and practices are adopted not for efficiency but for legitimacy reasons. They start out, become institutionalized, and then persist unquestioned despite their inefficiency. Organizational actors do not independently figure out organizational structures and techniques that they deploy. Instead, they end up either adopting those that are normatively prescribed or simply mimicking organizations they understand to be more successful (Scott, 1995). Building on the social constructivist perspective offered by Berger and Luckmann (1967), institutional theorists exposed the myths that pervaded organizational and management phenomena, challenging a deeply entrenched and essentially Panglossian paradigm.

It is therefore difficult to argue that institutional theory does not represent a critique of what existed before. However, it is not institutional theory’s advances that are under scrutiny here. Critics of institutional theory (e.g. Willmott, 2015) already concede that institutional theory offers a robust critique of all theories that are insufficiently attentive to how human behaviour becomes institutionalized as well as of variants of rationalist analysis. As Willmott (2015, p. 105) suggests:

By attending to the social embeddedness of action, institutional theory delivers an antidote to analyses based on objectivist ontology that deliver an often mathematicized analysis of objectivated outcomes (Lawson, 2013). Whether in its ‘realist’ or more ‘phenomenological’ variants (Meyer, 2008), institutionalist analysis has addressed inter alia how actors’ beliefs and actions are conditioned within and by institutions; how institutions are created and transformed by (entrepreneurial) actors; and how forms of institutionalization can meet with resistance.

An appreciation of the fact that the question of how power operates is of fundamental importance should not be in any doubt. That old Cambridge philosopher Bertrand Russell thought understanding how power works was central to the social sciences. According to Russell (1938): ‘The fundamental concept in social science is Power, in the same sense in which Energy is the fundamental concept in physics.’ For him, what we do, why we do it, and how we do it essentially reflects how power operates in society. His contemporary and close friend at Cambridge, the economist John Maynard Keynes, was similarly aware of how deeply institutionalized ideas and beliefs can determine how individuals make sense of their environments when he pointed out (Keynes, 1936):

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

In other words, power is omnipresent. Who has what kind of power over whom, what they can or cannot make their subjects do, and how power operates are central questions in the social sciences. It is therefore not surprising that a vast literature has developed on power (Foucault, 1980; Gramsci, 1971). Even within organization studies, the study of power has had a long tradition (Bachrach & Lawler, 1980; Clegg, 1975, 1989; Jermier, Knights, & Nord, 1994; Pfeffer, 1981; Pfeffer & Salancik, 1978).

What’s more, power is central to institutional theory. Institutions are all about power. Indeed, power is what differentiates institutions from other social constructions (Phillips, Lawrence, & Hardy, 2004). As Lawrence and Buchanan (2017) write: ‘Institutions exist to the extent that they are powerful – the extent to which they affect the behaviors, beliefs and opportunities of individuals, groups, organizations and societies.’ Institutional change essentially involves loss or gain in power, while the process of change itself involves leveraging of power in myriad forms.

The Insistence on Human Agency

If institutions are indeed all about power, what grounds exist for the oft-repeated critique that institutional theory does not incorporate power (Clegg, 2010; Munir, 2015; Willmott, 2015)? This question requires understanding the critics’ argument better. They recognize and applaud institutional theorists’ focus on agency through ‘institutional work’, a broad category of purposive action aimed at creating, maintaining and disrupting institutions (Lawrence et al., 2009). Descriptions of institutional work generally focus on the struggle between culturally competent actors looking to disrupt and those trying to defend the status quo (Lawrence & Dover, 2015; Lefsrud & Meyer, 2012; Maguire & Hardy, 2009; Toubiana & Zietsma, 2017).

Therefore, narratives of institutional change typically centre, in one form or another, on the idea of ‘institutional entrepreneurship’, whereby agents episodically mobilize and deploy material and discursive resources at their disposal to effect change (Lawrence & Suddaby, 2006; Lawrence et al., 2009; Greenwood, Oliver, Lawrence, & Meyer, 2017). The matter is not helped by reviewers who feel obliged to ask authors to simplify things so that the exercise of human agency is clearly recognizable. This is not to say that efforts have not been made to contextualize agency. For example, Meyer and Höllerer (2010) point out how actors’ sensemaking of issues is determined by their social positions. Similarly, the concept of institutional infrastructure (Hinings, Logue, & Zietsma, 2017) locates agency within the governance mechanism of fields. Still, while acknowledging the circumscribed distributed nature of agency, the majority of institutional studies continue to lean back on an agency-centric conception of power: It is still agents wielding a variety of instruments and influence tactics, including framing, agenda setting, production of discourses and so on, who are at the heart of the change. It is this overwhelming reliance on human agency and creativity that is problematic.

Specifically, the focus on human agency comes at a cost, which is illustrated by the following example. In Khan, Munir and Willmott (2007) we studied how a group of ‘institutional entrepreneurs’ was able to end the practice of child labour in the soccer ball manufacturing capital of the world – a Pakistani town called Sialkot. As we pointed out our, focus could have been on the ‘entrepreneurs’ themselves who showed exemplary resourcefulness, responsiveness and cooperation in tackling this issue. However, this would have made us complicit in legitimizing and reproducing the real oppressive relationship that continues to exist between the soccer ball stitchers and their ‘saviours’. This is because a way of seeing the positive actions of the entrepreneurs is simultaneously a way of not seeing the postcolonial conditions and impoverishing consequences of their intervention (Khan et al., 2007). A conventional approach focusing on some actors bringing about change through their resourcefulness risks overlooking the manner in which power operates in systematic and pervasive ways hegemonically to identify agents’ ‘interests’ and to represent and normalize practices in a particular way. This is particularly the case in ‘postcolonial’ settings, where the values of the colonial power are routinely privileged in framing, interpreting and addressing the issue of child labour. Khan et al. (2007) pointed out that, in their case, the seemingly heroic members of the coalition (institutional entrepreneurs), especially the NGOs, could be seen as the postcolonial equivalents of agents of a colonial power overseeing the civilizing project.

Losing Sight of Hegemony

Constructing a narrative of change upon an actor-centric conception of power has the effect of ‘defocalizing’ (DiMaggio, 1988) the operation of ‘preconscious understandings’ (Khan et al., 2007), that are residues of social structures including class, gender, race or postcolonialism, which have been normalized over long spans of time. It is these residues that make us privilege certain institutions, beliefs, concepts and understandings over others. In the child labour case, these underpinned the credibility that was attached to the high-level meetings in the Geneva-based offices of the International Labour Organization or the press statements issued by athletic brands, lent support to NGOs with colourful brochures and websites littered with humanitarian references, but rendered powerless the soccer ball stitchers who worked at home as a family unit. The latter appeared pre-modern and in need of the West’s civilizing and liberating projects. Analysis informed by an actor-centric conception of power readily lends support to an interpretation (and denigration) of other forms of analysis as ‘politically’ motivated while implying that its own conceptualization of power does not itself articulate a (conservative) power/knowledge framework.

In other words, what many institutional theorists choose to miss is the investment of power in ‘invisible’ discourses around us that have become normalized for them. Where there is no violence or conflict (e.g. when we teach our courses in business schools) they are more likely to overlook the operation of power. This is precisely what Arendt (1969) cautioned against in her seminal work on violence. As she put it, where power operates effectively, violence is not required.

The idea that power operates invisibly is not new to institutional theorists. That is what ‘institutionalization’ or ‘taken-for-grantedness’ means, after all. However, while they are able to see some institutions exerting power over us, they sidestep more potent ones, either because these represent ‘normality’ for them, or because of disciplinary and careerist considerations. This partial blindness was explained in 1996 by Stern and Barley who lamented that the presence of organization theorists almost entirely in business schools meant a radical shift in organization theory’s focus. Hinings and Greenwood (2002, p. 413) similarly emphasized that placement in business schools meant the sociological focus was replaced by a more managerial orientation – in other words, from a concern with societal control and the consequences of that control, we moved to a focus on efficient and effective organizational design, all from the perspective of a senior manager. In their words, the locus shifted from the university, ‘inherently critical’ to the business school, which is ‘professionally oriented with the purpose of developing and enhancing a particular sector’ (Hinings & Greenwood, 2002, p. 413).

Thus, while we continue to be enthralled by the organizational world and study all manner of organizations, we do so in a fashion strangely isolated from their larger economic and political context. Indeed, for most of us only ‘authoritarian regimes’ merit explicit mention, with our own ‘democracies’ and ‘developed states’ representing normality. This is no different from Nkomo’s (1992) description of most organizational studies of race which, she suggests, must be understood within a racial ideology embedded in a Eurocentric view of the world – one in which ‘white’ is not a ‘colour’ but simply the normal against which other colours must be compared. Some aspects are problematized in institutional studies, while others are not. For example, as Aldrich (1999) suggested, it is possible to see the growth of organizational society as part of a larger class struggle; however, this view is one we would be hard pressed to find in most institutional studies.

Recent papers on microfinance (e.g. Ault & Spicer, 2014; Cobb, Wry, & Zhao, 2016) are a good illustration of how, in otherwise methodologically rigorous and sound papers, theorists can choose perspectives and lenses that sidestep the more exploitative aspects of the practice, choosing instead to attribute outcomes to national culture, organizational design or social constructs that have been normalized everywhere except in the relevant contexts. Furthermore, such studies uncritically take data that has been carefully collated by powerful actors in the field in databases that embody several aspects of the exploitative relationship between capital and workers. Similarly, as Banerjee and Jackson (2017) point out in their work on microfinance, focusing on how NGOs accomplish particular goals, which appear socially desirable to the researcher but not necessarily to the subject of the study, often avoids addressing or acknowledging larger power asymmetries which are at the heart of the subjects’ poverty in the first place.

If institutional theorists are unwilling to acknowledge the very structures of domination within which they work, they can hardly be called critical. For critics of institutional theory, merely mentioning or acknowledging power is not enough. Unless institutional theorists acknowledge and engage with larger power differentials that shape our empirical sites and even our own understandings of these, they cannot be taken as critical. To be critical, then, institutional theory needs to seek out and explain structures of oppression and domination and be committed to the ideal of overthrowing such structures.

Addressing Grand Challenges from an Institutional Perspective

The traditional requirement to be called a critical theory has always been an explicit agenda of emancipation (Adorno & Horkheimer, 2002; Habermas, 1985). Given the several different manifestations and dimensions of repression and enslavement in the world around us, many different critical theories have developed over time, often powering social movements that seek to liberate human beings from enslaving structures. Critical theorists have long distinguished themselves from other social theorists on the basis that they seek to combine moral philosophy with the social sciences. Such an approach, critical theorists argue, permits their enterprise to be practical in a distinctively moral (rather than instrumental) sense. By this definition, feminism, critical race theory, postcolonial theory are all critical theories while institutional theory is not. There is no moral compass within it. It is eschewed in favour of a ‘scientific’, ‘objective’ stance which willingly if not deliberately overlooks various dimensions of oppression while retaining its focus on questions that are not about oppression but are nevertheless interesting in other ways. The impressive narratives that many institutional theorists create of institutional change hardly ever question the institutions of class, race or postcolonialism that are visible to everyone except many of those of us who work in business schools. The performativity of power is complete with the researcher enmeshed in the intricate web of internalized and normalized discourses.

And yet, institutional theorists claim to be critical. Recently, much has been made of institutional theorists’ engagement with ‘grand challenges’. Jaco Lok (2019), writing in the Journal of Management Inquiry, points out that

Out of the 14 contributions to the Academy of Management Journal’s 2016 special topic forum on grand societal challenges (George, Howard-Grenville, Joshi, Tihanyi, 2016), eight articles sought to contribute to institutional theory by engaging societal challenges ranging from income inequality, poverty alleviation, hospital care for the uninsured, to psychological distress in war surgeons. And the second edition of the highly cited SAGE Handbook of Organizational Institutionalism includes 6 new chapters on economic and income inequality, organizational wrongdoing, race, the environment, and workplace diversity.

Similarly, we have had a number of special issues of journals including Organization Studies, ILR Review and Academy of Management Discoveries (Amis, Munir, Lawrence, Hirsch, & McGahan, 2018; Howard-Grenville et al., 2017; Tolbert & Castilla, 2017) on topics ranging from inequality to sustainable development. Apart from these special issues, studies by institutionalists have increasingly tackled issues such as poverty alleviation (Mair & Marti, 2009) and homelessness (Lawrence & Dover, 2015).

The rising interest by institutionalists in social issues is in many ways welcome. Not too long ago, I (Munir, 2011) criticized institutional theorists for not showing any interest in the 2008 global financial crisis, accusing them of being irrelevant. Indeed, in the immediate aftermath of the crisis, while several high-profile meetings of economists took place, there was only one involving organization theorists (Munir, 2011). In wider discourse on the subject too, organization theorists had little or nothing to contribute. Newspapers, magazines and airwaves were inundated for two years with discussions of the crisis, what led to it, how to understand it better and so on. Yet, there was hardly an institutional theorist out there explaining to the world why economists got it wrong, or how the institution of the market and its financialization had become institutionalized.

Therefore, to see the rising engagement of institutional theorists with issues of social relevance is heartening. However, while engagement with issues such as inequality, poverty, patriarchy, climate change, sustainability and so on is welcome, mere acknowledgement and engagement does not mean they are adopting a critical stance. When the United Kingdom’s Queen chooses to speak of rising inequality from her gilded living room, she is hardly joining the Occupy! movement. As Willmott (2019, p. 350) points out, ‘many approaches, conservative as well as radical, examine such “grand” issues. Attentiveness is not a persuasive indicator of a commitment to critique and/or to facilitate a transformation of relations of domination, oppression, exploitation, and so on.’

Willmott (2019) attributes this rising engagement to a desire to make institutional theory more relevant but not necessarily more critical. To Willmott, in all this engagement, institutional theory’s ‘conservative pedigree’ (Lok, 2019) shines through. In his dialogue with Willmott (2019), Lok (2019) argues that there are two types of critical studies, those with a big C and those with a small c. One could similarly suggest that there are Problems with a big P, and problems with a small p. The debate surrounding the award of the 2019 Nobel prize in economics to Michael Kremer, Esther Duflo and Abhijeet Banerjee is illustrative in this regard. The Nobel Prize Committee explicitly recognizes their contribution in breaking down global poverty into ‘smaller, more manageable questions’ (Nobel Prize Committee, 2019). As Kvangraven (2019) writes, ‘while such small interventions might generate positive results at the micro-level, they do little to challenge the systems that produce the problems’. Rather than challenging the tide of neoliberal policies that is sweeping away social safety nets, increasing inequality and its associated ills, and breaking up communities, the focus is on how handing out mosquito nets, reducing absenteeism of teachers and providing school meals can have positive effects on public health and classroom learning. As Kvangraven (2019) notes:

The history of thought on development economics is rich with debates about how capital accumulation differs across space, the role of institutions in shaping behavior and economic development, the legacies of colonialism and imperialism, unequal exchange, the global governance of technology, the role of fiscal policy, and the relationship between agriculture and industry. The larger questions have since been pushed out of the discipline, in favor of debates about smaller interventions.

Esther Duflo noted that their award is a victory for the entire experimental methods movement. This movement eschews engaging with the macro structures mentioned in the quote above only to focus on micro interventions as if the local dynamics of poverty, illiteracy or poor health exist independently of the larger context. A similar tendency can be observed among institutional theorists, who are becoming increasingly adept at turning big P Problems into small p problems.

It could be because the normality of most of us publishing in ‘top’ journals is different from that of those who have to deal with many of these grand challenges. Some have argued that this is because most organizational research published in mainstream journals on grand challenges tends to be from Western authors (Venkateswaran & Ojha, 2017). Hamann, Luiz, Ramaboa, Khan and Dhlamini (this issue) lay out in detail the tension between Global North and Global South when it comes to organization theory, emphasizing the problematic perspectives adopted by scholars from the North inviting peers to study the South. They also point to scholars from the South who call for the overthrow of the hegemony of ‘top journals’ when it comes to depicting the South. However, testimonies of scholars from the South show that challenging the hegemony of such perspectives is not as simple as it might seem. Venkateswaran and Ojha (2017) explain this in their study of how two of the most prominent academic associations in management, the Strategic Management Society (SMS) and the Academy of Management (AoM), approach international business. They show that the attitude towards developing-country scholars seems to emphasize the necessity for the latter to adopt the templates, categories and interests of their North American counterparts. Rosalie Tung, past president of the AoM, concurs: ‘Although our journals appear to be receptive to different topics, they publish only those articles that conform to “North American research templates”’ (Tung, 2005, p. 240).

To put it differently, it appears that while authors from around the world can meet with success in getting their research published, this is only as long as they have been socialized into the North American ‘way of thinking and methodology’ (Tung, 2005, p. 240). In their hard-hitting commentary on the state of international management research, Venkateswaran and Ojha (2017) point out that in the context of cross-cultural management, research has become so West-centric that those on the periphery have little role in creating knowledge about themselves on their own terms. I would argue that this is only partially true. Just as the European vs North American perspectives on institutional theory seem to be converging more towards the more uncritical North American pole, Northern perspectives have taken root in the Global South with an increasing number of scholars from countries of the South coming to understand their own realities through a Northern lens. The battle to inject a critical sensibility into institutional theory is just as crucial in the South as it is in the North.

Conclusion

In order to become critical, institutional theory would need a rebirth, with its emphasis shifting from creative institutional work to the hegemonic operation of power. There will need to be a greater self-awareness among institutional theorists of how we are complicit in reifying and perpetuating power differentials. Engaging with grand challenges from a conservative position, armed with a theory claiming to be neutral and objective, will not lead to progress, let alone criticality. Relinquishing power, however, will mean allowing space for radical voices within institutional theory, which engage with our grand challenges from more critical positions than we are currently prepared to allow. It will mean starting a process of self-critique, engaging with challenges to positions we have come to accept as normal and almost sacred. It will also mean pushing back on the constraints that many of us working in business schools face on how far we can go in challenging the macro structures lending stability to exploitative practices around us. This means institutional theorists will need to engage in significant institutional work, a subject they know much about. This should make clear to them both the power of hegemony and the limits of institutional work it faces.