Systems Theory, Societal Contexts, & Organizational Heterogeneity Raimund Hasse & Georg Krücken Discussion by Carliss Charles New Institutionalism: The macro- perspective John Meyer-modern society is not a concrete, hard-wired structure composed of actors. Rather, a broader & imagined cultural system in which the main cultural patterns of Western society are embedded The causality for societal development is top-down: society as the embodiment of broader cultural norms constitutes its actors ◦ Nation-states ◦ Organizations ◦ Individuals New Institutionalism: The macro- perspective Organizations are considered to be shaped by their wider socio-cultural environment In this context, organization is the dependent variable Global culture and its organizational representatives are the independent variables The meso-perspective DiMaggio & Powell- organizations are deeply shaped by those other organizations which serve as ‘significant others’ ◦ Organizational fields 3 Pillars of Isomorphism Normative Coercion Mimicry isomorphism • Regulatory • Professional • peers agencies associations • Competitors • State • Consulting • collaborators organizations firms • Educational institutions The Meso-Perspective: More on Fields Organizations differ according to their field membership Organizational fields mediate between a single organization and broader societal contexts Organizations are considered to be more actively involved in the overall development of society—they negotiate with other organizations and may also try to manipulate those organizations and other institutional factors The Meso-Perspective: More on Fields~Discussion What determines whether or not organizations can be successful in actively intervening into their context? What determines how organizations may use their potential for active intervention Thoughts on ‘institutional engineering of fields’? Thoughts on the role of institutional entrepreneurship? Luhmann’s Systems Theory: Modern Society, Differentiation & Organizations Sophisticated forms of societal stratification emerged before the advent of modernity, particularly in ancient high cultures ◦ Differentiation is strictly vertical, societal order is structured e.g. caste system in India Disappearance of vertical stratification triggered by challenging the status of religion as an authority that determines social life in general (e.g.16th century Europe politics claim autonomy from religion) Luhmann’s Systems Theory: Modern Society, Differentiation & Organizations Functional differentiation-as societal systems are considered to fulfill functions that cannot be substituted for other systems. ◦ The economy regulates the production & distribution of scarce products and services ◦ Science generates new knowledge ◦ The political system produces collectively binding decisions which affect the entire society Based on a binary scheme of information- processing Luhmann’s Systems Theory: Binary Information Processing System Function Efficacy Code Program Medium Law Manage Regulation Legal / Illegal Laws, Jurisdiction Norm of Conflicts regulation, Expectations constitution Politics Make Practical Government Goals of Power Collective Application / Opposition Political Decisions Parties/Ideol Possible ogies Science Production Supply of True / False Theories, Truth of Knowledge methods Knowledge Economy Reduction of Satisfaction Payment / Budgets Money Scarcity of needs Non- payment (source: H-Georg Muller, 29, cited by, http://www.law.ed.ac.uk/ahrc/script-ed/vol4-4/savirimuthu.asp) Luhmann’s Systems Theory: Modern Society, Differentiation & Organizations Most systems on the macro-level of society represent a specific and highly reductionist binary logic of info processing, and concerns relevant for other systems or overall societal norms have to be transformed according to that logic Coded info processing provides societal systems with an identity which distinguishes them from the other Any societal system is dependent on the contributions of other systems, and modern society is characterized by a high degree of mutual dependency. ◦ A crisis in any system may negatively effect other systems ◦ Examples? Luhmann’s Systems Theory: Organizations The transition from stratified to functionally differentiated societies → the spread of formal organizations. The process of functional differentiation and organization building Societal systems ↔ organizations Growth and increasing complexity stimulate organizational differentiation Systems theory supports new institutionalism- organizations are well advised to copy the prevailing norms of their wider societal context In contrast to new institutionalism, systems theory stresses that these norms are copied only the extent they support the realization of ends which constitute the specific identity of an organization Two Examples: The example and transformation of the modern welfare state & Academic Entrepreneurship THE SOURCES OF SOCIETAL & ORGANIZATIONAL HETEROGENEITY AT THE MACRO-LEVEL OF SOCIETY Macro Neo-Institutional Theory Sociological Systems Theory (Meyer) (Luhmann) Diffusion of general societal Specific rationality of the political system (internal norms(external triggers) triggers) Must adhere to broader Emphasis on the effects of the societal norms of justice, functional differentiation in society progress, etc. for legitimacy Other societal systems are The impact of other only relevant as an external welfare states is central resource for continuous reproduction Conceptualized as trans- An inevitable consequence of national processes and the evolution of the political system & the interplay of its external causes core institutions (mass media, administrative agencies) The Expansion & Transformation of Modern Welfare State Macro Neo-Institutional Theory Sociological Systems Theory (Meyer) (Luhmann) Emphasizes the match b/n AE and Emphasizes societal social norms & expectations differentiation & distinct logics of Processes of mutual adjustment and isomorphic tendencies societal systems See Neo-Institutional research on AEs can be characterized by an entrepreneurship (Hwang/Powell economic program, a political 2005) program and a science system See Inter-organizational networks among academia & industry Must be considered as creating (Powell/White/Koput/Owen-Smith an opportunity for societal 2005) systems & their organizations See Universities and their embeddedness in wider social Conceptualized as opportunity norms & expectations structures that can be exploited (Meyer/Schofer 2007) by any of its participants Academic Entrepreneurship (AE) Conclusion Sociological systems theory stresses the conceptual links between organizational analysis and wider societal fields and their developments Neo-institutionalism and systems theory can be used as guidelines for re- establishing a macro-perspective on the interconnectedness of societal and organizational developments OT Questions Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others don’t? What are the emerging issues?
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