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Institutional Logics
Patricia H. Thornton and William Ocasio
and Friedland (1985) to describe the contra- thereby contingent set of rules, premiums
dictory practices and beliefs inherent in the and sanctions that men and women in partic-
institutions of modern western societies. ular contexts create and recreate in such a
They describe capitalism, state bureaucracy, way that their behavior and accompanying
and political democracy as three contending perspective are to some extent regularized
institutional orders which have different and predictable. Put succinctly, an institu-
practices and beliefs that shape how individ- tional logic is the way a particular social
uals engage political struggles. world works.’ Jackall, like Friedland and
Friedland and Alford (1991) further devel- Alford, views institutional logics as embod-
oped the concept in the context of exploring ied in practices, sustained and reproduced by
the interrelationships between individuals, cultural assumptions and political struggles.
organizations, and society. They view But the emphasis for Jackall is on the norma-
institutions as supraorganizational patterns of tive dimensions of institutions and the
activity rooted in material practices and intra-institutional contradictions of contem-
symbolic systems by which individuals and porary forms of organization; in contrast the
organizations produce and reproduce their focus for Friedland and Alford is on
material lives and render their experiences symbolic resources and the inter-institutional
meaningful. Rejecting both individualistic, contradictions of the inter-institutional
rational choice theories and macro structural system, for example between the market and
perspectives, they posited that each of the the family and the professions and the
institutional orders has a central logic that corporation.
guides its organizing principles and provides Building on the developments of the
social actors with vocabularies of motive and concept by both Jackall (1988) and Friedland
a sense of self (i.e., identity). These practices and Alford (1991), Thornton and Ocasio
and symbols are available to individuals, (1999: 804) defined institutional logics as
groups, and organizations to further elabo- ‘the socially constructed, historical patterns
rate, manipulate, and use to their own advan- of material practices, assumptions, values,
tage (Friedland and Alford, 1991: 232, 248, beliefs, and rules by which individuals
251–252). produce and reproduce their material subsis-
For Friedland and Alford (1991) the core tence, organize time and space, and provide
institutions of society – the capitalist market, meaning to their social reality.’ According to
the bureaucratic state, families, democracy, this definition institutional logics provide a
and religion – each has a central logic that link between individual agency and
constrain both the means and ends of individ- cognition and socially constructed institu-
ual behavior and are constitutive of individu- tional practices and rule structures. While
als, organizations, and society. However, Friedland and Alford’s approach is both
while institutions constrain action they also structural and symbolic, and Jackall’s is both
provide sources of agency and change. The structural and normative, Thornton and
contradictions inherent in the differentiated Ocasio’s (1999) approach to institutional
set of institutional logics provide individuals, logics integrates the structural, normative,
groups, and organizations with cultural and symbolic as three necessary and comple-
resources for transforming individual identi- mentary dimensions of institutions, rather
ties, organizations, and society. than separable structural (coercive), norma-
A separate, albeit related, conception of tive, and symbolic (cognitive) carriers, as
institutional logics was developed by Jackall suggested by alternative approaches
(1988). In his ethnographic analysis of ethi- (e.g., Scott, [1995] 2001).
cal conflicts in corporations, Jackall (1988: While varying in their emphasis, the vari-
112) defines institutional logic as ‘the ous definitions of institutional logics all
complicated, experientially constructed, and presuppose a core meta-theory: to understand
9781412931236-Ch03 1/11/08 5:27 PM Page 102
individual and organizational behavior, it The eventual result was that first manufactur-
must be located in a social and institutional ing, then marketing succumb in power and
context, and this institutional context both control to those in finance. Updating his data
regularizes behavior and provides opportu- on corporate control, Fligstein (2001) devel-
nity for agency and change. The various oped a shareholder value conception of
dimensions of the meta-theory are further control as distinct from the earlier finance
elaborated in Section IV. conception – shifting influences away from
the corporate venue to that of the market.
For Fligstein (1985, 1987, 1990), individ-
Precursors ual executives are the primary carriers of the
contending conceptions of control. However,
Research sometimes referred to as logics of these conceptions may not be explicitly
action provides precursors to the institutional institutionalized. For example, Ocasio and
logics approach – similarly being based on Kim (1999) suggest that the alternative
an interdependent set of logics that provide conceptions of control were never institu-
some context for social influence on actors’ tionalized in the organizational field, as none
actions in a domain. We highlight the exam- of them became dominant. While Fligstein’s
ples that illustrate different logics of action work is similar to the institutional logics
operating either within or between institu- approach because of its implicit interplay of
tional orders – Fligstein’s (1987, 1990) three institutional sectors – the professions, the
conceptions of control within corporate gov- corporation, and the State, the emphasis on
ernance, DiMaggio’s (1991) two conflicting the utilitarian individual and the power-
models to organize the field of art museums, oriented organization motivated subsequent
and Boltanski and Thevenot’s ([1986] 1991) work leading to the institutional logics
multiple modes of justification to evaluate approach that more systematically integrated
agreements situated between six different conflict and cultural perspectives.
worlds. In reviewing these examples note the In another example of logics of action,
relatively early and similar dates of publica- DiMaggio (1991) develops ideal types of
tion and that all the examples involve an organizing the organizational field of art
analysis of conflicting logics without focus- museums, the Gilman and the Data models,
ing on isomorphism. to understand how competing cultural
Fligstein (1990) identified three competing models formed the basis of a power struggle
conceptions of control that guide the gover- to redefine the field; a struggle between the
nance of large industrial firms: the manufac- elite upper classes and their social circle of
turing, marketing, and finance conceptions. collectors and curators and the new class of
For Fligstein, both intra-organizational power museum professionals fueled by the expan-
struggles (Fligstein, 1987) and field-level sion of higher education in the fine arts. The
struggles to control market competition and case reveals the structuration of organiza-
contest state legislation shaped the formation tional fields is a contested process between
of these competing conceptions, or logics of these two cultural models. However, there is
action. Executives’ views on how to best run an evolutionary ordering with the creation of
the corporation were selectively influenced a standardized body of knowledge, the
by their experience in the corporation. organization of professional associations,
Employees’ ability to fight it out among each and the collective definition of a field, being
other in the rise to the top of the corporation historically prior to the diffusion of the Data
occurs in a Chandlerian (Chandler, 1962) Model.
world of significant economic and industrial Boltanski and Thevenot (1991) apply a
change, organizational and professional inno- taxonomy of cultural repertoires that present
vation, coupled with a powerful State. different justifications of worth to understand
9781412931236-Ch03 1/11/08 5:27 PM Page 103
how people disagree, compromise, and on the role of institutions and institutional-
conclude more or less lasting agreements. ization in shaping logics than the approaches
Identified with the tool kit school, they view of Friedland and Alford (1991) or Jackall
culture as a social resource that individuals use (1988). While sharing with the institutional
strategically, culture is more than motivating logics perspective a focus on culture as a
action – it also justifies it. Boltanski and source of agency (Swidler, 1986; DiMaggio,
Thevenot illustrate in a variety of scenarios of 1997), these precursors differ from an institu-
interactions that what is legitimate changes tional logics approach by deemphasizing the
depending on the context in which it is negoti- structural and normative constraints imposed
ated and evaluated, the ideal types being six by institutional logics.
different worlds – the inspired, domestic, fame,
civic, market, and industrial. Compromises are
less fragile when there is groundwork to
embed them in the specific arrangements of META-THEORY OF INSTITUTIONAL
these worlds assuming that the embedding is LOGICS
congruent with the worlds. Transposing or
putting together elements extracted from the The institutional logics approach incorpo-
descriptions of the various worlds of worth can rates a broad meta-theory on how institu-
cause actors to be placed in incongruent or tions, through their underlying logics of
compromising situations, depending on the action, shape heterogeneity, stability and
particular scenario. An intuitively awkward change in individuals and organizations. Not
example illustrates their point. ‘At home, to get all aspects of the meta-theory have been
his children’s attention, a father presents a incorporated into every application of the
glowing picture of his ability to direct a project institutional logics perspective, due to differ-
at work …. The first combines elements bor- ences among authors in emphasis, and par-
rowed from the domestic world (a father and tially to the limitations of the journal
his children), from the world of fame (attract publication process. Here we propose five
attention, present a glowing picture), and from principles that in our judgment underlie the
the industrial world (ability to direct a project) meta-theory and provide opportunities for
(Boltanski and Thevenot, 1991: 227). This is an theoretical development and refinement.
incongruous transfer of worth from different
worlds since fathers do not receive attention
based on industrial worth through the eyes of
Embedded agency
their children.
Fligstein’s (1985, 1987, 1990), Perhaps the core assumption of the institu-
DiMaggio’s (1991) and Boltanksi and tional logics approach is that the interests,
Thevenot’s ([1986] 1991) approaches all identities, values, and assumptions of indi-
posit the existence of conceptions, models, or viduals and organizations are embedded
logics at a supraorganizational level, and within prevailing institutional logics.
either implicitly or explicitly emphasize the Decisions and outcomes are a result of the
role of culture in shaping and interpreting interplay between individual agency and
individual and organizational activities. institutional structure (Jackall, 1988;
These examples also illustrate the interrela- Friedland and Alford, 1991; Thornton and
tionship between individuals, organizations, Ocasio, 1999). While individual and organi-
and the environment and how logics zational actors may seek power, status, and
interpenetrate multiple levels of analysis economic advantage, the means and ends of
from the social psychological to the levels of their interests and agency are both enabled
the organizational field and societal sector. and constrained by prevailing institutional
These approaches are less focused, however, logics (Giddens, 1984; Sewell, 1992).
9781412931236-Ch03 1/11/08 5:27 PM Page 104
This assumption, which over time has levels as an important mechanism for organi-
become known as embedded agency (Seo zational and institutional change.
and Creed, 2002; Battilana, 2006;
Greenwood and Suddaby, 2006), distin-
guishes an institutional logics approach from Society as an inter-institutional
rational choice perspectives on institutions system
(North, 1990; Ingram and Klay, 2000) which
presume individualistic interests. This The main innovation of Friedland and Alford
assumption also distinguishes an institutional (1991) is to conceptualize society as an inter-
logics approach from macro structural institutional system. To locate behavior in a
perspectives which emphasize the primacy of context requires theorizing an inter-institu-
structure over action (DiMaggio and Powell, tional system of societal sectors in which
1983; Meyer et al., 1987; Meyer et al., 1997; each sector represents a different set of
Schneiberg and Clemens, 2006) and expectations for social relations and human
Parsonian (Parsons 1956) perspectives on and organizational behavior. In Friedland
institutions, which posit a separation of insti- and Alford’s words, the capitalist market,
tutional from economic or technical sectors bureaucratic state, democracy, nuclear
(e.g., Meyer and Scott, 1983). family, and Christian religion are key institu-
The embeddedness of agency presupposes tional sectors, each with its own distinct logic.
the partial autonomy of individuals, organi- Thornton (2004: 44–45) elaborated this
zations, and the institutions in society in any typology in a review of a series of empirical
explanation of social structure or action studies to include six sectors – markets,
(Friedland and Alford, 1991). Society corporations, professions, states, families,
consists of three levels – individuals compet- and religions.
ing and negotiating, organizations in conflict Viewing society as an inter-institutional
and coordination, and institutions in contra- system allows sources of heterogeneity and
diction and interdependency. All three levels agency to be theorized and to be observed
are necessary to adequately understand soci- from the contradictions between the logics of
ety; the three levels are nested (embedded) different institutional orders. There is not just
when organizations and institutions specify one source of rationality, as in world systems
progressively higher levels of constraint and approaches (Meyer et al., 1997), but multiple
opportunity for individual action. sources. Rather than positing homogeneity
Rather than privileging one level over and isomorphism in organizational fields, the
another, this perspective suggests that while institutional logics approach views any con-
individual and organizational action is text as potentially influenced by contending
embedded within institutions, institutions are logics of different societal sectors. For exam-
socially constructed and therefore consti- ple, the health care field is shaped by the
tuted by the actions of individuals and organ- institutional logics of the market, the logic of
izations (Berger and Luckmann, 1967). This the democratic state, and the professional
suggests that cross-level effects are critical. logic of medical care (Scott et al., 2000).
One limitation, however, is that most The inter-institutional system enables two
research, whether theoretical or empirical, advances in institutional analysis. First, it is
tends to emphasize one level over another. non-deterministic, that is no institutional
Friedland and Alford (1991), despite their order with its accompanying principles of
direct call for multiple levels, emphasized the organization and logics of action is accorded
role of the societal level. Recent work on causal primacy a priori. Second, the inter-
institutional entrepreneurship (Battilana, institutional system provides researchers
2006; Greenwood and Hinnings, 2006) with an understanding of the institutional
has incorporated the relationship between foundations of categories of knowledge.
9781412931236-Ch03 1/11/08 5:27 PM Page 105
Key constructs in the analysis of organiza- utilities – and these values and utilities cannot
tion, such as efficiency, rationality, participa- be traded off as simple economic alternatives.
tion, and values are not neutral, but are Thus, an important underlying assumption is
themselves shaped by the logics of not whether motivation and action are rational
inter-institutional system. As posited by or irrational; instead the argument is how the
Friedland and Alford (1991: 260) ‘Categories comparative conflict and conformity of insti-
of knowledge contribute to and yet depend tutional logics (which are both material and
upon the power of institutions which make cultural) influence human and organizational
them possible. Without understanding the behavior (Thornton, 2002).
historical and institutional specificity of the This assumption reflects a cultural turn in
primary categories of analysis, social scien- the study of conflict and agency. This
tists run the risk of elaborating the rationality cultural turn is motivated by the thorny ques-
of institutions they study, and as a result tion of how individual agents know they have
become actors in their reproduction.’ economic or political struggles on their
hands and what is an appropriate way to
respond to them. For example, Thornton and
The material and cultural Ocasio (1999) and Thornton (2004) showed
foundations of institutions that resource competition was actually
greater in higher education publishing in the
A key assumption of an institutional logics era of the editorial logic – but this competi-
perspective is that each of the institutional tion was interpreted differently and
orders in society has both material and cul- responded to in a non-conflictual manner.
tural characteristics (Friedland and Alford, With the rise of a market logic, resource
1991). For example, both the family and reli- competition, although less significant, had
gion, while typically not considered part of greater effects on organizational actions and
the economic sphere, are directly involved in decisions. Stinchcombe (2002: 429) has
the production, distribution, and consump- commented around this issue – needing
tion of goods and services (Becker, 1976). culture to define the meaning of power and
Similarly, markets, while often not consid- competition – viewing it as a causal sequenc-
ered part of the cultural sphere, are directly ing problem. His argument is that if power is
shaped by culture and social structure, theorized as a first-order construct in
including networks of social relationships as explaining change, independently of culture,
well as structures of power, status, and dom- two problems need to be addressed. First,
ination (Granovetter, 1985). Rather than power is created in the course of action: it
privileging material or cultural explanations does not occur prior to the action that it
of institutions, an institutional logics per- explains. Second, the decision to use power
spective recognizes that institutions develop is an intentional, strategic choice; however, it
and change as a result of the interplay is not always possible for actors to know the
between both of these forces. cultural framing or menus of available
In explaining human behavior and organi- options in advance of any action. Thus,
zational structure, Friedland and Alford instrumental political theories of action may
(1991) argued that theories which ‘retreat be incomplete explanations because the
from society,’ – emphasizing market mecha- necessary sequence of events is unlikely
nisms to aggregate individual utilities and to occur. Consequently, cultural explana-
preferences, organizational competition, tions are necessary adjuncts to structural
technology, and resource dependence – begin explanations.
to fail. Instead, institutional sectors, for In making way for the role of culture
example families, professions, states, and in shaping action, institutional logics
religions locate the origins of values and incorporate both the symbolic and the
9781412931236-Ch03 1/11/08 5:27 PM Page 106
and organizations in the California thrift societal level. Jackall argues that the formal
industry, studied how with the rise of bureaucratic logic, as characterized by Weber
Progressivism, changes in institutional logics ([1922] 1978), had little affinity with
at the societal level affected the formation of American individualistic affinities and
distinct organizational forms at the industry cultural values, with the hybrid logic of
level. In particular, their analysis shows how patrimonial bureaucracy thereby emerging.
plans that embodied bureaucratic logics and Thornton and Ocasio (1999) focus on the
rational decision making were more likely to formation of industry-level institutional
thrive than those that embodied a community logics in higher education publishing. They
logic and mutual cooperation among actors. propose that industries are a relevant bound-
The emphasis here is on institutional logics ary for establishing institutional logics
at the societal level affecting the selection of because producers in an industry establish a
alternative forms at the organizational level. common identity through social compar-
A secondary, and less developed, aspect of isons, status competition, and structurally
the coevolutionary process in the paper sug- equivalent network positions (White, 1992).
gests that as organizational forms that Their analysis and the subsequent research
embody a particular institutional logic evolve by Thornton (2001, 2002) focus on the
and become institutionalized at the industry effects of shifts, at the industry level, from an
level, the corresponding societal-level insti- editorial logic to a market logic. While focus-
tutional logics further evolves and becomes ing on industry-level logics that both emerge
further institutionalized. from and sustain market competition, these
The emphasis on societal-level institutions logics do not emerge in the industry de novo,
is illustrated by the work of Bhappu (2000), but are shaped by higher-order societal
which draws on anthropological analysis of professional and market logics. The link
the ancient Japanese family system to argue between industry-level logics and the logics
how the institutional order of the family is of the inter-institutional system is further
the origin of the institutional logic of developed by Thornton (2004).
Japanese corporate networks. Scott et al. Research on institutional logics adopting a
(2000) examine how societal-level profes- field-level perspective has emphasized the
sional, government, and managerial-market existence of competing logics within the
logics shape the transformation of the health field. For example, in a qualitative analysis
care organizational field, from one domi- of U.S. academic health centers, Kitchener
nated by professional logics to one where (2002) explores the effects of competing
the three logics co-exist and no single one managerial and professional logics on the
dominates. responses to merger initiatives. Reay and
In Jackall’s (1988) ethnographic analysis, Hinings (2005) adopt a similar approach in
the emphasis is on institutionalization at the their analysis of structural change in
organizational level. Here the focus in on the Canadian health care organizations.
structures of managerial careers and how Greenwood and Suddaby (2006) focus
they shape the formation of a managerial instead on contradictions between institu-
ethos that shapes decision making and action tional logics in organizational fields and
in organizations. The formal structures of the suggest that boundary bridging organiza-
organizations combine with institutionalized tions are sources of change in institutional
practices of fealty and patronage to create an logics (see below). Lounsbury (2007)
institutional logic termed patrimonial examines competing trustee and professional
bureaucracy. While clearly focusing on orga- logics in the mutual fund industry. In his
nizational-level institutionalized practices, analysis geographic communities are also a
Jackall’s analysis suggests how these source of institutionalization of logic, as
practices also reflect cultural forces at the Boston and New York are centers of the
9781412931236-Ch03 1/11/08 5:27 PM Page 108
trustee and professional logics respectively, Zajac and Westphal’s analysis of historical
leading to different patterns of organizational contingency in financial markets (2004) is
change in the two areas. notable in viewing markets themselves as
The variety of levels of analysis studied shaped by institutional forces. The paper
suggests the fecundity of the institutional finds that the emergence of an agency
logics perspective. The breadth of the meta- perspective in the 1980s led to historical
theory may have encouraged imprecision in shifts in stock market response to stock
research, and it could be inferred that any repurchases, from an unfavorable reaction,
logic or interpretive scheme, at any level of consistent with a professional logic, to a
analysis, may be characterized as an institu- favorable one, consistent with an agency
tional logic. We suggest otherwise. logic. The paper suggests that the market’s
Institutional logics are more than strategies reaction to particular corporate practices are
or logics of action as they are sources of not, as financial economists contend, simply
legitimacy and provide a sense of order and a function of the inherent efficiency of such
ontological security (Giddens, 1984: Seo and practices, but are influenced by the prevail-
Creed, 2002). Research on competing ing institutional logic.
institutional logics, as some of the work on However, note with the current rise of reli-
organizational fields described above, often is gion in world discourse that institutional
not precise on the level of which logics logics, both in their elaboration and relative
become institutionalized, or whether they pattern of dominance between institutional
should be considered institutional logics at all. orders, are not simply an evolutionary or
linear model of development driven by scien-
tific progress or market rationalization. Here
the institutional logics approach departs dis-
Historical contingency
tinctly from Meyer and his colleagues’ work
Historical contingency is a key meta-theoret- noted earlier on modern rationalization. For
ical assumption of the institutional logics example, Thornton, Jones, and Kury (2005)
approach. In general this assumption is con- illustrate other models of the historical
sistent with institutional theory, which focuses contingency of institutional logics that show
attention on how larger environments affect cyclical or punctuated equilibrium functional
individual and organizational behavior. While forms in their comparison of the cases of
the six institutional orders of the inter-institu- accounting and architecture.
tional system in western societies previously Many studies reveal findings that are valid
identified have remained influential, empiri- in one historical time period but not in others.
cal observation also informs us that they Thornton (2004: 127) presents a meta-analy-
differed in development and importance over sis partitioning the findings on the higher
time. For example, modern societies have education publishing studies by universal
greater emphasis on corporate and state influ- and particular effects. Founder and owner-
ences and earlier societies in general empha- ship effects were found to be universal across
sized family and religion to a larger extent. In time, whereas relational and structural effects
particular, during the last 30 years the promi- were particular to a historical period in which
nence of market logics has been found in an institutional logic prevailed. Many find-
multiple studies in various contexts, including ings typically predicted by resource depend-
Thornton and Ocasio (1999) in higher educa- ence and economic theories are found to be
tion publishing, Scott et al. (2000) in health historically contingent. Note that the models
care, Lounsbury (2002) in financial interme- in this meta-analysis controlled for differ-
diation, Zajac and Westphal (2004) in equity ences in organization age, size, and resource
markets, and Meyer and Hammerschmidt competition and other macro economic
(2004) in public management. variables. Note also that the meta-analysis
9781412931236-Ch03 1/11/08 5:27 PM Page 109
including spoken words, pictures, symbols, Swedberg (2005: 3), in drawing from
and cultural artifacts among others. Suddaby Weber, gives an example. ‘When the wood-
and Greenwood (2005), for example, used cutter brings down his axe on the wood, it
rhetorical analysis of vocabularies (words) to can be a case of wage labor, provision for
expose contradictory institutional logics one’s household, or form of recreation – and
embedded in historically different which one it is depends on the meaning with
understandings of professionalism to explain which the action is invested.’ In the Appendix
the multidisciplinary partnership as a new we include examples of ideal types devel-
organizational form. oped from the analysis of the effects of insti-
While this vibrant resurrection and devel- tutional logics in three industries, higher
opment of qualitative methods strengthens education publishing, accounting, and
the capacity to interpret meanings, we architecture.
caution that the strength of the foundational DiMaggio’s (1991: 271) analysis of the
studies of the institutional logics perspective two models of organizing art museums is a
has been on triangulation of types of data and precursor to bringing back the use of ideal
methods of analysis – being reliant on both types in institutional analysis. His categories
qualitative and quantitative methods. One on the Y axis focused on the mission, defini-
method that integrates interpretive and tion of art, legitimate perception, education,
hypothesis testing approaches is the use of major publics, control, strategy, building, and
ideal types. living artists – showing how the X axis spec-
Ideal types are a method of interpretive ifies the Gilman and Data models varied on
analysis for understanding the meaning that these universal dimensions. Rao et al. (2003)
actors invest their actions with. They were also used ideal types in their characterization
first developed by the classic theorists as a of classical and nouvelle French cuisine to
theoretical tool to facilitate intelligible understand how new logics displaced old and
comparisons (Weber, 1922). Researchers ushered in new role identities. Their
have further developed this method of analy- categories on the Y axis examine the dimen-
sis to suggest testable hypotheses (Thornton sions of culinary rhetoric, rules of cooking,
and Ocasio, 1999). archetypal ingredients, role of the chef, and
In theory building, ideal types require the organization of the menu – showing how the
development of formal typologies composed X axis defined the two characteristics of
of two parts: (a) the description of ideal types classical and nouvelle cuisines. However,
and (b) the set of assertions that relate the what is the causal connection between
ideal types to the dependent variable (Dotty DiMaggio’s and Rao et al.’s ideal types and
and Glick, 1994). While often derived from the inter-institutional system? Should we, for
empirical observation, ideal types are not for example, intuit that the Gilman Model was
describing an organizational field, but influenced by the institutional logics of the
instead are theoretical models for comparing family and the Data Model by the logics of
the effects of various meanings in a location the professions and the state?
with a definable boundary. They do not Thornton and Ocasio (1999: 808–809) and
precisely conform to reality because of Thornton (2004) explicitly anchor the higher
deliberate simplification to afford compara- education publishing ideal types in the
tive analysis and multidimensional classifi- domains (orders) of the inter-institutional
cation of phenomena not restricted by the system – revealing their origins. Their
events of the selected cases. Ideal types categories on the Y axis examined form of
assign a hypothetical meaning that can be capitalism, organizational identity, legiti-
used as a yardstick to compare and contrast macy, authority structures, mission, focus of
hypothesized and actual meaning and attention, strategy, logics of investment, and
behavior. rules of succession – showing how the X axis
9781412931236-Ch03 1/11/08 5:27 PM Page 111
specifying the editorial and market logic 1991). Collective identities also emerge
varied on these general elements. among populations of organizational
Once derived from interview and archival forms (Haveman and Rao, 1997; Carroll
data they pushed the standards further and Hannan, 2000), market competitors
by externally validating the ideal types (Porac et al., 1989; White, 1992; Peteraf
with publishers’ experiences and their use and Shanley, 1997; Thornton and
in the Stanford University Publishers Ocasio, 1999), and industry associations
College.1 (Aldrich and Fiol, 1994; King and Lenox,
2000).
As collective identities become institution-
alized, they develop their own distinct insti-
HOW LOGICS SHAPE INDIVIDUAL tutional logic, and these logics prevail within
AND ORGANIZATIONAL ACTION the social group (Jackall, 1998). These
effects of institutional logics are emphasized,
Collective identities and identification among others, in the work of Haveman and
A mechanism by which institutional logics Rao (1997), on the theory of moral senti-
exert their effects on individuals and organi- ments embodied in the collective identities of
zations is when they identify with the collec- organizational forms; in Thornton and
tive identities of an institutionalized group, Ocasio (1999)’s shift from an editorial logic
organization, profession, industry or popula- to a market logic in the collective identity of
tion (Tajfel and Turner, 1979; March and competitors in the higher education
Olsen, 1989). A collective identity is the publishing market; in Jones and Livne
cognitive, normative, and emotional connec- Tarandach’s (Forthcoming) rhetorical
tion experienced by members of a social strategies of architects based in the institu-
group because of their perceived common tional logics of business, profession, and
status with other members of the social group state that focus attention on distinct
(Polleta and Jasper, 2001). Collective competencies – servicing clients, building
identities emerge out of social interactions great architecture, or managing facilities, and
and communications between members of in Lounsbury’s (2002) analysis of collective
the social group (White, 1992). As individu- identities embodied in professional
als identify with the collective iden- associations in the field of finance. In
tity of the social groups they belong to all of these cases, albeit at different
they are likely to cooperate with the levels of analysis, identification with the
social group (Tyler, 1999; Brickson, 2000), respective institutional logics occurs
abide by its norms and prescriptions directly, as the identification with the
(March and Olsen, 1989; Kelman, 2006), collective is equivalent to the identifi-
and seek to protect the interests of the collec- cation with the institutional logic prevailing
tive and its members against contending in the collective, whether they are organiza-
identities (Tajfel and Turner, 1979; tional forms, market competitors, or profes-
White, 1992). sional associations, or any other social
Individuals are members of multiple social grouping.
groups with a collective identity, including
professions and occupations (Abbott, 1988; Contests for status and power
Fine, 1996; Glynn, 2000), gender, racial and The contests for status and power are rela-
ethnic groups (Cerulo, 1997; Lamont and tively universal mechanisms for individual
Molnar, 2002), social movements (Benford and organizational actions. However, an
and Snow, 2000; Rao et al., 2003), and indi- institutional logics perspective suggests that
vidual organizations (Selznick, 1957; Albert these mechanisms are conditioned by pre-
and Whetten, 1985; Dutton and Dukerich, vailing institutions (Fligstein, 1996;
9781412931236-Ch03 1/11/08 5:27 PM Page 112
Thornton and Ocasio, 1999; Lounsbury and a market logic created a shift from status
Ventresca, 2003). While power and status driven by reputation within business practice
differences are present in all organizations, to reputation driven by normative conformity
researchers can identify the sources of power to increasingly mathematical economics.
and status, their meaning and consequences Professional finance associations led the
by understanding how these power and status transformation to a market logic in this field.
differences are associated with the prevailing New professions such as money management
institutional logic. Institutional logics shape and securities analysis helped diffuse
and create the rules of the game, the means- new financial theories such as portfolio and
ends relationships by which power and status risk management, and status within the
are gained, maintained, and lost in organiza- field became increasingly determined by
tions (Jackall, 1988; Ocasio, 1999; familiarity and expertise with new financial
Lounsbury and Ventresca, 2003). Social theories. As social actors gained status and
actors rely on their understandings of institu- position by their reliance on financial theo-
tional logics in the competition for power ries, the market logic gained prominence in
and status and in doing so generate the the field.
conditions for the reproduction of prevailing Zhou (2005) relies on an institutional logic
logics. perspective to explain occupational prestige
For Jackall (1988), competition for power, ranking. Building on Weber’s argument that
status, and position in organizations shapes social statuses or social honors are related,
the creation and reproduction of a patrimo- but distinct from one’s economic resources
nial bureaucratic logic in U.S. corporations. or structural positions, Zhou is searching for
Managers, driven by career concerns, estab- an explanation of how a hierarchical ordering
lish and maintain a system of patronage and of occupations must be recognized through a
fealty, where strong social ties to those in meaning system shared by members of the
position of authority determine power and same community. He proposes an institu-
privilege in organizations. Achieving career tional logic of social recognition to explicate
success requires social actors to play by the the causal mechanisms. What is appropriate
rules, with language use and symbolic and legitimate must be seen as transcend-
management serving to reproduce the formal ing self-interests and group boundaries, and
structure, while promotion patterns parallel be accepted by a large audience. Overall,
the patrimonial structure, serving to occupation prestige should vary system-
reproduce the informal status hierarchies and atically with the basis for making legitimate
power structures. claims and with group membership
Thornton and Ocasio (1999) focus on the as a function of their inclusion into the
link between institutional logics and power realm of a shared institutional logic (Zhou,
structures. They find that under an editorial 2005: 98).
logic, publishers’ means and ends are shaped
by author-editor relationships, and power Classification and categorization
structures are determined by organization A key mechanism by which institutional
size and structure. Under a market logic, logics shapes individual cognition is through
publishers’ means - end relationships are social classification and categorization
shaped by resource competition and acquisi- (DiMaggio, 1997). Cognitive psychologists
tions, and power structures are determined by emphasize the importance of categories in
competition in the product market and the shaping individual cognition (e.g., Rosch,
market for corporate control. 1975; Medin, 1989). While psychologists
Lounsbury (2002) focuses on status who study categories typically emphasize the
competition and status mobility in the field study of categories of objects occurring in
of finance. A shift from a regulatory logic to nature, the classification and categorization
9781412931236-Ch03 1/11/08 5:27 PM Page 113
in which logics are characterized by cultural also symbolic. To use an analogy to the
differentiation, fragmentation, and contradic- bricoler (Levi-Strauss, 1966), institutional
tion (DiMaggio, 1997). This differentiation, entrepreneurs creatively manipulate social
fragmentation, and contradiction is relationships by importing and exporting
evident both within and between institu- cultural symbols and practices from one
tional orders (Friedland and Alford, 1991). institutional order to another. In theory, the
We focus on three mechanisms of change: different social locations of the institutional
institutional entrepreneurs, structural orders bring to light different cultural tools
overlap, event sequencing, and a fourth for institutional entrepreneurs (Thornton,
topic, often an antedecent or conse- 2004). Note the focus on cultural resources
quence of change – competing institutional as distinct from material resources; culture
logics. being something people strategically use,
deploy, and mobilize. This focus is consistent
Institutional entrepreneurs with the meta-theory of the institutional
Institutional entrepreneurs are the agents that logics approach which views culture as both
create new and modify old institutions a motivation as well as a justification of
because they have access to resources that action.
support their self-interests (DiMaggio, There are several mechanisms that institu-
1988). By definition, institutional entrepre- tional entrepreneurs use to manipulate cul-
neurs can play a critical role in perceiving tural symbols and practices, for example
institutional differentiation, fragmentation, story telling (Zilber, 2006), rhetorical
and contradiction by virtue of the different strategies (Suddaby and Greenwood 2005;
social locations they may occupy in the inter- Jones and Livne-Tarandach, forthcoming),
institutional system and in taking advantage and tool kit approaches (Swidler 1986;
of the opportunities it presents for institu- Boltanski and Thevenot 1991).
tional change (Thornton, 2004). Fligstein Suddaby and Greenwood (2005) showed,
(1997), for example, describes how entrepre- for example, in their study of organizational
neurs perceive and exploit contradictions in forms in the accounting industry, how institu-
institutional logics to further their self- tional entrepreneurs used ‘rhetorical strate-
interest. DiMaggio (1988: 14–15) argues that gies’ to reinterpret and manipulate prevailing
the creation of institutions requires an symbols and practices. Rhetorical strategies
institutionalization project in which the or ‘institutional vocabularies’ were used by
claims of institutional entrepreneurs are sup- entrepreneurs to affirm or discredit the dom-
ported by existing or newly mobilized actors inant institutional logic which defined the
who stand to gain from the success of the legitimacy of organizational forms. To
institutionalization project (DiMaggio, discredit an institutional logic and bring
1991). The challenge for the institutional about institutional change, entrepreneurs
entrepreneur is to create an environ- exposed the contradictions or ameliorated the
ment to successfully enact the claims of a contradictions by associating them with
new public theory. Sometimes this involves broader cultural analogies (Douglas, 1986;
institutional entrepreneurs organizing from Strang and Meyer, 1994).
the center of an established environment In returning to Holm’s (1995) concern
(Suddaby and Greenwood, 2005) and at with embedded agency, Leca and Naccache
other times it may stem from the periphery (2006) argue from a critical realist
of emerging fields (Maguire, Hardy, and perspective that the concept of institutional
Lawrence, 2004). entrepreneur does not completely address
However, the environments that institu- the paradox of embedded agency because the
tional entrepreneurs enact to garner control concept by definition does not take
of resources are not just material, they are into account the interrelated sequencing of
9781412931236-Ch03 1/11/08 5:27 PM Page 116
structures and actions and the causal emer- interesting because it is inconsistent with
gent properties of both structures and extant theory which would predict
actions. They argue for a critical realist change from the periphery, not the center
approach in which actors use the causal of the field. They argue that contact
powers of pre-existing structures to with institutional logics in multiple and
create new institutions or challenge exist- different organizational fields increases
ing ones. We highlight their important the awareness of and experiences with
insight as it motivates our subsequent discus- contradictions in logics, which lowers con-
sion of structural overlap and event straints and embeddedness of actors and
sequencing. enables central actors to become institutional
entrepreneurs.
Structural overlap
Structural overlap occurs when individual Event sequencing
roles and organizational structures and func- Event sequencing is defined as the temporal
tions that were previously distinct are forced and sequential unfolding of unique events
into association (Thornton, 2004). Mergers that dislocate, rearticulate, and transform the
and acquisitions are an example of structural interpretation and meaning of cultural sym-
overlap when organizational actors from bols and social and economic structures
divergent cultures are forced into associat- (Sewell, 1996: 844). For example, this can be
ion, triggering a change in institutional changes in cultural schemas, shifts of
logics guiding the firm. Structural over- resources, and the emergence of new sources
lap across systems with differentiated of power. As noted above, because structures
logics creates contradiction in organiza- are often overlapping, any rupture has the
tions and organizational fields, creating potential of cascading into multiple changes,
entrepreneurial opportunities for institutional particularly when the events are character-
change. ized by heightened emotion, collective
For example, Stovel and Savage (2005) creativity, and ritual. The accumulation
showed how a merger wave exposed compet- of events can result in a path-dependent
ing institutional logics and triggered the elab- process in which shifts in the symbolic inter-
oration of the modern, mobile, bureaucratic pretation of events are locked in place by
career in the financial sector. Thornton, simultaneous shifts in resources. Such
Jones, and Kury (2005) illustrated how the sequencing produces more events that
structural overlap when accounting firms reinforce or erode the dominance of the
incorporated management consultants into incumbent logic.
their organizations brought professional and Event sequencing has been used as an ana-
market logics head to head and conflicted the lytical method to address the problem of
focus of attention of accountants from over- embedded agency or what Barley and Tolbert
seeing the accuracy of client’s books to using (1997) term conflation and the problem of
exposure to accounting ledgers to identify reducing structure to action or action to
consulting clients. Greenwood and Suddaby structure. (How such event sequences inter-
(2006), in their analysis of a pioneering new sect to reveal causation has been extensively
organizational form, the multidisciplinary examined in the literature on historical com-
practice (MDP) within the field of business parative methods of analysis (Abbott, 1990;
services, theorize a case of structural overlap Griffin, 1992; Sewell, 1992, 1996)). There
in which elite organizations are more likely are several ways to assess the impact of event
to come into contact with competing and sequencing on institutional change –
contradictory logics because they bridge for example, nominal and ordinal compar-
different organizational fields. They point isons and narrative analysis (Mahoney,
out that this case of institutional change is 1999). These are different strategies of
9781412931236-Ch03 1/11/08 5:27 PM Page 117
when activists gain control of professional A market in one historical and cultural con-
societies, critique the traditional logic, and text is not the same as a market in another
proffer a solution hinging on a new institu- (Fligstein, 1996). Similarly non-market
tional logic. Note, the theory doesn’t fore- institutions, such as professions, the family,
shadow why critic activists chose to engage and religion are also economic structures and
in an institutional deconstruction project. are not independent from market forces
One can surmise the influence of other social of demand and supply (Friedland and Alford,
movements that are supported by other 1991).
domains in the professions and even other Second, institutional logics do not emerge
institutional orders, for example the more from organizational fields – they are locally
generic health movement. instantiated and enacted in organizational
Overall, the studies of competing institu- fields as in other places such as markets,
tional logics focus either on strategies of industries, and organizations. Institutional
action at a lower level of analysis, for exam- logics stem from the institutional orders of
ple an organizational field, for example Reay the inter-institutional system (Friedland and
and Hinings (2005), or on how a higher- Alford, 1991), not as commonly miscon-
level institutional logic at the societal-sector strued from an organizational field (Scott,
level transforms strategies of action in a 2001: 139). Institutional logics through
lower-level domain, for example Haveman various mechanisms may get reshaped and
and Rao (1997) and Meyer and customized in an organizational field.
Hammerschmid (2006). This difference may However, an organizational field is a level of
be partly reflected in the research design, for analysis; it is a place where institutional
example the qualitative study of a case versus logics get played out, but not by itself a
the quantitative analysis of a specific instan- theoretical mechanism. Friedland and Alford
tiation of an institutional order. These differ- (1991: 244) have commented around this
ences may also be reflected in how the issue:
camera lens is focused. That is, if you get
defining the boundaries of an organizational field,
close to the action as qualitative researchers within which there are strong pressures for
are able to do, one is more likely to interpret conformity, is difficult and potentially tautological.
the action as a power struggle when indeed it The approach seems to assume that formal
may also reflect the operation of higher-level attributes of organizational fields can be specified
independently of the institutional arena in which
institutional forces.
they are located. But, we would argue, it is the
content of an institutional order that shapes the
mechanisms by which organizations are able to
conform or deviate from established patterns.
MISCONCEPTIONS REGARDING These institutional orders, and the specific relations
INSTITUTIONAL LOGICS between them, delimit types of organizational
fields.
With respect to the institutional logics Third, ideal types are not a description of
approach there are several misconceptions in what happens in an organizational field. Ideal
our view that we feel compelled to comment types are formal analytical models by which
on. One is a continued juxtaposition between to compare empirical observations across
institutional and market structures (e.g., institutions. Therefore, ideal types are best
Greenwood and Suddaby, 2006). While mar- developed at least in pairs, if not multiple
kets are economic structures – they are also characterizations. Instead, often what are
institutions. They function because of a set of often mischaracterized as ideal types are a
formal laws and normative expectations description of a particular case study rather
about them and these normative expectations than a set of findings that can be refuted or
have changed through time and space. generalized and aggregated.
9781412931236-Ch03 1/11/08 5:27 PM Page 120
Fourth, most studies of institutional logics theory requires increased attention to its
do not in some way tie their analyses back to microfoundations. DiMaggio’s (1997) paper
the institutional orders of the inter- on culture and cognition is a start, providing
institutional system. This is partly due to a link between the microfoundations of
page limitation requirements of the journals cognitive processes and the cultural
and a focus on other alternative units of structures inherent in institutional logics. But
analysis. In other cases it appears due to the cognitive theory is only part of the story. The
authors who do not focus on causal relation- Carnegie School is another source and the
ships both up and down stream. To simply recent call for a neo-Carnegie perspective
and briefly recognize these multi-level may also yield answers (Gavetti, Levinthal,
relationships is important to further the and Ocasio, 2007). Given the rejection of
development of the institutional logics rational choice theory, how embedded inter-
approach as it systematically advances and ests, identity and commitments play a role is
foreshadows questions for future study. For an important topic for further theoretical
example, why do culinary critics, the lynch development and empirical research.
pin of the four mechanisms that begin the New methodologies that make use of
shift in chef identities, decide to favor web-based experiments show promise in
nouvelle over classic cuisine? Are these research linking levels of analysis and also in
critics, for example, increasingly under partitioning causes and effects by level of
market pressures or have professional pres- analysis, helping to specify the underlying
sures changed in some way? theoretical mechanisms (Thornton, 2004).
For example, Salganik, Dodds, and Watts
(2006) show the micro-macro linkages in
SUGGESTIONS FOR FUTURE how people select songs. This partitioning
RESEARCH also should address the meta-theoretical
assumption of incorporating both the
The main intellectual hurdle in institutional material and cultural. However, incorporating
analysis is in many respects the same as it is both is not enough – what is needed is theory
for sociological theory more generally. We and methods to partition these effects – that is
need to better understand how macro-level to understand the autonomy of culture from
states at one point in time influence individ- economy (DiMaggio, 1994).
uals’ orientations to their actions, prefer- Future research needs to move beyond
ences, beliefs; how these orientations to implicit assumptions and to engage explicit
action influence how individuals act; and discussion of the underlying theoretical
how the actions of individuals constitute the mechanisms, that is the clear identification of
macro-level outcomes that we seek to the ‘gears and ball bearings behind the statis-
explain. Moreover, how does the stability of tical models’ (Davis and Marquis, 2005).
institutional logics change systematically by Without formalization of the theory and
level of analysis – is it more stable or change- methods, studies of institutions cannot build
able at the top or bottom, macro- or micro- upon or invalidate one another and the social
level of analysis? This is a big theoretical science of institutions cannot grow systemat-
question. ically (Pfeffer, 1993). Instead, it will be
We need more work on the microfounda- forgotten as it was in the past (Hughes, 1939;
tions of institutional logics. Work on institu- Selznick, 1949, 1957).
tional logics is inherently cross-level, Most research on institutional analysis has
highlighting the interplay between individu- revealed the effects of market rationalization
als, organizations, and institutions. While the or state regulation; the latter is more about
embedded agency of actors is a key meta- resource dependence than institutional analy-
theoretical assumption, as discussed above, a sis. In theory, other underlying patterns of
fully developed perspective on institutional institutional change should exist. Given the
9781412931236-Ch03 1/11/08 5:27 PM Page 121
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