Strategic Behavior in Institutional Environments

One doubt
One truth
One war
One truth
One dream
--Peter Gabriel

In a previous post, we proposed that the strength of institutional environments depends on preference among individuals for legitimacy and on the legitimacy that individuals accord rule making entities and processes. When these factors are present in high degrees, then more isomorphic behavior should be expected. At lower levels of these factors, individuals should act more strategically, meaning that they will circumvent institutional pressures in pursuit of personal interests.

Oliver (1991) elaborated several antecedents likely to influence the extent to which organizations act strategically in response to institutional processes. These antecedents are linked to five institutional factors: cause, constituents, content, control, and content.

Cause concerns why organizations are being pressured to conform to institutional rules and expectations. Some pressures may cause organizations to become more socially fit (e.g., pollution and health regulations) while others improve economic fitness (e.g., accounting and budgeting norms). The greater the perceived fitness to be obtained, then the more likely that organizations will acquiesce to institutional pressures. More isomorphism and less strategic behavior should be expected.

Constituents are the entities who exert institutional pressures on organizations. Various constituents can impose laws, regulations, and expectations, including the state, professions, interest groups, and the general public. Passive acquiescence should be difficult to achieve when multiplicity (i.e., the degree of multiple, conflicting expectations) is high among constituent groups is high. Strategic behavior that seeks to compromise, avoid, defy, or manipulate institutional expectations is likely. The extent to which organizations depend on these constituents also influences resistance to institutional pressure. High levels of dependence discourage strategic behavior.

Content involves the norms or requirements that organizations are expected to conform to. Institutional norms or requirements that are inconsistent with the internal goals and objectives of an organization encourage resistance and strategic behavior. Rules that restrict discretionary decision-making should similarly reduce passive conformance and isomorphism in favor of defiant behavior.

Control is about the means or mechanisms that exert institutional pressure. Legal coercion is likely to drive acquiescence because organizations will be reluctant to break laws and face the strong arm of the state. Institutional pressures can also be diffused voluntarily through non-legal means. Oliver posits that high voluntary diffusion should similarly drive more acquiescent behavior--primarily because their broad acceptance should drive a 'contagion of legitimacy.' Perhaps, but I believe this proposition is contestable. If diffusion is voluntary, then organizations face less aggressive pushback for nonconformance. More theoretical nuancing seems appropriate here to tease out the role of violent sanction on strategic response.

Finally, context concerns the general backdrop within which institutional pressures are exerted. Environmental uncertainty, defined as the degree to which future states of the world can be anticipated and accurately predicted, is one element of context. Oliver proposes that high uncertainty discourages strategic behavior. This proposition is also contestable. Oliver argues that uncertainty causes organizations to relinquish illusions of control. Moreover, uncertainty fosters more mimicry as organizations copy the behavior of others hoping to achieve more stability. 

While some of this resonates (think mindless imitation of masking policies during the pandemic), there is an argument to be made that uncertain situations stimulate novel behavior that enables adaptation in changing environments. Perhaps both perspectives should be combined temporally, such longer periods of uncertainty cause organizations to be less imitative and more innovative in search of behavior that allows them to stabilize resource flows.

Another dimension of context is interconnectedness. Interconnectedness refers to the density of interorganizational relationships among occupants of an organizational field. Here, the proposition is much more intuitive. The greater the degree of interconnectedness, the higher the likelihood of passive acquiescence. 

My suspicion is that interconnectedness may constitute the key factor in explaining the high levels of institutional isomorphism observed during the CV19 pandemic. Technology has driven tighter coupling among organizations. Coupling drives more groupthink. Interconnectedness may have created a pandemic network of conformance.

I wonder whether high degree of interconnectivity might render many of these other factors moot.

Reference

Oliver, C. (1991). Strategic responses to institutional processes. Academy of Management Review, 16: 145-179.