Microfoundations of Institutions: Volume 65A

This double volume presents the state of the art in research on the microfoundations of institutions. In this introductory chapter, we develop an overview of where the emerging microfoundational agenda in institutional theory stands and in which direction it is moving. We discuss the questions of what microfoundations of institutions are, what the “micro” in microfoundations represents, why we use the plural form (microfoundations vs microfoundation), why microfoundations of institutions are needed, and how microfoundations can be studied. Specifically, we highlight that there are several traditions of microfoundational research, and we outline a cognitive, a communicative and a behavioral perspective. In addition, we explain that scholars tend to think of microfoundations in terms of an agency, levels, or mechanisms argument. We delineate key challenges and opportunities for future research and explain why we believe that the debate on microfoundations will become a defining element in the further development of institutional theory.

The authors explore how entrepreneurs with limited resources legitimated (or failed to legitimate) a new organizational category in different jurisdictions in Canada despite severe resistance. The authors identify three meso-level domains of institutional action (public, administrative, and legal), where actors intervene to change their macro-institutional environment. The findings suggest that these domains mediate the relationship between micro-level agency and macro-level institutions. The authors describe how macro-level consensus about the category legitimacy emerges through a competition between judgments embedded in different discourses and how a particular discourse attains validity, forcing other actors to change their initial unfavorable legitimacy judgments and recognize the category’s legitimacy.

This chapter studies the conditions under which market intermediaries reward or sanction market actors who deviate from the prevailing categorical order. The authors first assess how the expertise of a market intermediary – an understudied determinant of their authority – can lead to a positive evaluation of categorical deviation. Then, the authors identify two inhibitors that are likely to temper such positive appraisal: identity preservation and competition among market intermediaries. Factoring in both micro-level and macro-level dimensions of market dynamics, this chapter contributes to research on market intermediaries, the evolution of category systems, and more broadly, to the microfoundations of institutional change.

According to neo-institutional scholars, experts need to support decoupling, yet doing so may be more or less subjectively understandable for those who are employed as experts. The authors mobilize the phenomenological concept of the life-world as a lens for reconstructing how individuals give meaning to decoupling processes. Based on a hermeneutic analysis of a human resource management expert’s reflections on his activities, the authors highlight the subjective experience of decoupling as a process of solving tensions between an individual’s convictions and the relevances imposed by an organization. The authors conclude that a phenomenological lens enriches microfoundations debates by focusing on an individual’s learning within the framework of an imposed organizational reality.

Research has begun to explore how individuals perceive and respond to institutional complexity differently. The authors extend such efforts and theorize how the complexity of individuals’ cognitive representations of the institutional logics (based on their perceived differentiation and integration of the external environment) and of their role identities (based on the pluralism and unity of their self-representations) can predict such variation. The authors argue that the former explains whether individuals are capable of enacting norms and beliefs from different logics and of envisioning possibilities to reconcile their contradictory demands, whereas the latter explains whether they are motivated to implement a given response.

The authors theorize the role that identity, and especially collective identity, plays in the creation of new institutions. The authors begin by reviewing the literature on social movements, focusing on identity movements; from this, the authors extract and explore the role of identity in collective action and institutional formation. The authors propose that identity and lifestyle movements create institutions that furnish the necessary cultural tools to support and enact a given identity. As an example of this process, the authors examine Martha Stewart’s cultivation of a lifestyle-driven brand. The authors discuss the implications of their work on social movement theory and institutional theory.

Neo-institutional theory has been criticized for equating the macrolevel with the realm of unconsciously constraining institutions and the microlevel with the realm of actors’ reflexive agency and the origin of change. Considering the co-constitution of the macro and micro, the authors propose that change can be explained through reflexivity at the microlevel and through unconscious processes that affect the macrolevel. This chapter contributes to neo-institutional theory’s microfoundation by distinguishing four types of institutional changes. It will help institutionalists to become more explicit about what cognitive processes and what field conditions are related to what kinds of agency and change.

The authors explore self-identity construction as a mechanism of institution­aliz­ation at the individual level. Building on in-depth analysis of life stories of yoga practitioners who are at different stages of practice, the authors found that as yoga practitioners are more exposed to the yogic institution, yogic meanings gradually infuse their general worldview and self-concept. The authors follow the line of research which focuses on professional identity construction as institutional work, yet, opening the “black box,” the authors argue that institutional meanings take root at the individual level beyond the institutional context and beneath the explicit level of identity.

This study examines how highly disruptive issues cause profound dissonance in societal members that are cognitively and emotionally invested in existing institutions. The authors use PETA’s (People for the Ethical Treatment of Animals) entrepreneurial advocacy for animal rights to show how this highly disruptive issue interrupted and violated taken-for-granted interpretations of institutions and institutional life. The authors compare 30 YouTube videos of PETA’s advocacy to explore pathways to effective sensegiving and sensemaking of highly disruptive issues. The findings augment the analytical synergy that exists between sensemaking and institutional analysis by unpacking the micro-level dynamics that may facilitate transformational institutional change.

The author introduces cultural consensus theory as a theoretical and methodological tool for examining the microfoundations of institutions by linking variance in individuals’ micro-level conditions with cross-level variance in individuals’ adoption of macro-level socially constructed knowledge. The author describes the theory and methods, which include the use of cultural and subcultural congruence as cross-level variables. The author then provides an illustrative example of the theory and methods’ application for studying institutions, incorporating primary survey data of US-based ethics and compliance officers (ECOs). Results of the survey revealed variance in ECOs’ level of congruence associated with their direct communication with executives, their experience implementing ethics practices, and their educational background. Finally, the author discusses additional ways to use this approach for researching the microfoundations of institutions.

The author distinguishes between state, process, and object perspectives on institutions and institutionalization. While all-purpose process approaches dominate the literature, the author argues that these are analytically insufficient without theorizing the nature of “institutional objects.” Building on recently developed analytic disaggregations of the culture concept in cultural sociology, the author argues that doings, sayings, codes, and artifacts exhaust the broad classes of potential objects subject to institutionalization processes. The proposed approach provides a coherent ontology for future empirical work, features robust microfoundations, places institutional routines and practices in a material context, and acknowledges the importance of semiotic codes and vocabularies in organizational fields.

Identities provide a human link between macro-level mechanisms and microfoundations of institutions. Yet, as the literature on identity within the microfoundations of institutions has developed, scholars have begun to shift their understanding of “who” populates the microfoundations of institutions. This chapter offers a historical review of this niche, but growing, area of research. More specifically, the author identifies and discusses three phases of research on identity within the microfoundations of institutions, their ontological and epistemological assumptions, and their implications for the area. To conclude, the author reflects on the possible theoretical avenues for future research on identities within the microfoundations of institutions.

The authors investigate an institutional change as the co-occurrence of deinstitutionalization and institutionalization, while accounting for its determinants at multiple levels of analysis to further our understanding of how individual characteristics aggregated at the organizational level and organizational characteristics together account for the erosion and emergence of practices within the field. The authors empirically explore this question in a multilevel dataset of UK law firms and their employees, looking in particular at how the practice of equity partnership faded away and how non-equity partnership emerged as a new practice. The results contribute to the literature on institutional change and the microfoundation of institutions.

This analysis investigates the micro-dynamics of organizational decision-making by exploring connections between institutional theory, on the one hand, and both social psychological research on conformity and recent work in economics on herd behavior and information cascades, on the other hand. The authors draw attention to the differences between normative and informational conformity as distinct motivational drivers of adoption behaviors by exploring their differential effects on the post-adoption outcomes of decoupling (e.g., Westphal & Zajac, 1994), customization (e.g., Fiss, Kennedy, & Davis, 2012), and abandonment (e.g., Ahmadjian & Robinson, 2001). The authors conclude that normative conformity leads to certain post-adoption outcomes while informational conformity is associated with others.