Systems Theory_ Societal Contexts_ _ Organizational Heterogeneity

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					Systems Theory, Societal Contexts,
& Organizational Heterogeneity
Raimund Hasse & Georg Krücken
Discussion by Carliss Charles
New Institutionalism: The macro-
 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-
 Organizations are considered to be
  shaped by their wider socio-cultural
 In this context, organization is the
  dependent variable
 Global culture and its organizational
  representatives are the independent
    The meso-perspective
   DiMaggio & Powell- organizations are deeply
    shaped by those other organizations which
    serve as ‘significant others’
    ◦ Organizational fields
   3 Pillars of Isomorphism
         Coercion                           Mimicry
      • Regulatory      • Professional   • peers
        agencies          associations   • Competitors
      • State           • Consulting     • collaborators
        organizations     firms
                        • Educational
The Meso-Perspective: More on
 Organizations differ according to their field
 Organizational fields mediate between a
  single organization and broader societal
 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
The Meso-Perspective: More on
 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
 Thoughts on the role of institutional
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-
       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
      Economy              Reduction of Satisfaction                Payment /            Budgets        Money
                           Scarcity     of needs                    Non-

(source: H-Georg Muller, 29, cited by,
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
    ◦ A crisis in any system may negatively effect other systems
    ◦ Examples?
Luhmann’s Systems Theory:
   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

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
  progress, etc. for legitimacy
                                   Other societal systems are
 The impact of other               only relevant as an external
  welfare states is central         resource for continuous
 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)
 Sociological systems theory stresses the
  conceptual links between organizational
  analysis and wider societal fields and their
 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
 What are the emerging issues?

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