Systems Theory, Societal Contexts, & Organizational HeterogeneityRaimund Hasse & Georg KrückenDiscussion by Carliss Charles

New Institutionalism: The macro-perspectiveJohn 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-perspectiveOrganizations 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-perspectiveDiMaggio & Powell- organizations are

deeply shaped by those other organizations which serve as ‘significant others’◦Organizational fields

3 Pillars of IsomorphismCoercion

• Regulatory agencies

• State organizations

Normative isomorphis

m• Profession

al associations

• Consulting firms

• Educational institutions

Mimicry

• peers• Competito

rs• collaborat

ors

The Meso-Perspective: More on FieldsOrganizations differ according to their

field membershipOrganizational 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~DiscussionWhat 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 & OrganizationsSophisticated 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 IndiaDisappearance 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 & OrganizationsFunctional 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 ProcessingSystem Function Efficacy Code Program Medium

Law Manage Norm Expectations

Regulation of Conflicts

Legal / Illegal

Laws, regulation, constitution

Jurisdiction

Politics Make Collective Decisions Possible

Practical Application

Government / Opposition

Goals of Political Parties/Ideologies

Power

Science Production of Knowledge

Supply of Knowledge

True / False

Theories, methods

Truth

Economy

Reduction of Scarcity

Satisfaction of needs

Payment / Non-payment

Budgets Money

(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 & OrganizationsMost 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: OrganizationsThe transition from stratified to functionally

differentiated societies → the spread of formal organizations. The process of functional differentiation and organization building

Societal systems ↔ organizationsGrowth and increasing complexity stimulate

organizational differentiationSystems 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

THE SOURCES OF SOCIETAL & ORGANIZATIONAL HETEROGENEITY AT THE MACRO-LEVEL OF SOCIETY

Two Examples: The example and transformation of the modern welfare state & Academic Entrepreneurship

The Expansion & Transformation of Modern

Welfare State

Macro Neo-Institutional Theory (Meyer)

Sociological Systems Theory (Luhmann)

Diffusion of general societal norms(external triggers)

Must adhere to broader societal norms of justice, progress, etc. for legitimacy

The impact of other welfare states is central

Conceptualized as trans-national processes and external causes

Specific rationality of the political system (internal triggers)

Emphasis on the effects of the functional differentiation in society

Other societal systems are only relevant as an external resource for continuous reproduction

An inevitable consequence of the evolution of the political system & the interplay of its core institutions (mass media, administrative agencies)

Academic Entrepreneurship (AE)

Macro Neo-Institutional Theory (Meyer)

Sociological Systems Theory (Luhmann)

Emphasizes the match b/n AE and social norms & expectations

Processes of mutual adjustment and isomorphic tendencies

See Neo-Institutional research on entrepreneurship (Hwang/Powell 2005)

See Inter-organizational networks among academia & industry (Powell/White/Koput/Owen-Smith 2005)

See Universities and their embeddedness in wider social norms & expectations (Meyer/Schofer 2007)

Emphasizes societal differentiation & distinct logics of societal systems

AEs can be characterized by an economic program, a political program and a science system

Must be considered as creating an opportunity for societal systems & their organizations

Conceptualized as opportunity structures that can be exploited by any of its participants

ConclusionSociological 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 QuestionsWhy 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?