institutional theory, institutional void, instititional logic, institutional memory

1. Institutional theory and Social
Entrepreneurship
Anirudh Agrawal
Anirudh Agrawal
PhD Fellow
Copenhagen Business School
Porcelænshaven 18A, 0,119
DK-2000 Frederiksberg
Denmark
Office.: +45 38 15 34 01
M: +45 41 68 95 02
e-mail : aag.ikl@cbs.dk

2. Last Session
• Microfinance
– Theory of Change
• Poverty and Microfinance
• Financial Inclusion
– Formal banking system and Microfinance
• Debt and Equity finance
• Information assymetry
• Moral hazard
Anirudh Agrawal

3. Principles of Microfinance
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Poor people need a variety of financial services, not just loans.
Microfinance is a powerful tool to fight poverty.
Microfinance means building financial systems that serve the poor.
Microfinance must pay for itself to reach large numbers of poor people.
Microfinance is about building permanent local financial institutions.
Microcredit is not the best tool for everyone or every situation.
Interest rate ceilings making it harder for poor people to get credit.
The role of government is to enable financial services, not to provide
them.
• Donor funds should complement private capital, not compete with it.
• The key bottleneck is the shortage of strong institutions and managers.
• Microfinance works best when it measures and discloses its
performance.
Anirudh Agrawal

4. Institutional theory and Social
Entrepreneurship
http://www.youtube.com/watch?v=mL_KmeykiH0
Anirudh Agrawal

5. THE ORGANIZATIONAL SOCIETY
Clusters
Networks
Industries
Economic Groups
Cartels
Organization
Populations
Organizational
Field
Organizations
Source: Internet
Anirudh Agrawal

6. Institutional Theory
Legitimacy, Reputation, Mission, Vision, Objectives, Sustainability
Organizational
Maintenance, Expansion and Transformation
Identity construction, Memory, Power, Degree of coupling
Social
Comme
rcial
Public
regulato
ry
investor
Institutional environment
Anirudh Agrawal
Source: Anirudh Agrawal WIP-1 Seminar
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7. Why organizations change?
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Innovation
Market pressures, Competition
New Norms
Changing consumer behaviour
Anirudh Agrawal

8. Institutional Theory
• Economic View
– Homo Economicus
– Efficiency
– Profit maximization
• Sociological view
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Norms and rules of the society
Culture
Religion
Family
Social Network
Anirudh Agrawal

9. What is an institution?
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Walls
Family
Religion
School
Education
Marriage
Rituals
Anirudh Agrawal

10. What is an institution?
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Organizational Structure
Bureaucracy
Constitution
Church
Society
Community
Market
Anirudh Agrawal

11. Why Organizations appear similar?
Anirudh Agrawal

12. Isomorphism
• DiMaggio & Powell: Organizations remain
similar– and continue to become more like
each other– because of different
“isomorphic” pressures.
Anirudh Agrawal

13. Types of Isomorphism
Competitive Isomorphism:
 Driven by regular market pressures
Institutional Isomorphism:
 Coercive: Driven by government regulation, political
influence, search for legitimacy
 Mimetic: Driven by standardized responses to uncertainty
 Normative: Socialization of workers– professionalization–
creates pressures to work in accepted ways
Anirudh Agrawal

14. Isomorphism
• Competition in Markets
– Influence firms to behave in order to respond to
markets
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Niche Markets
Emerging Markets
BOP Markets
Open Markets
Close Markets
Anirudh Agrawal

15. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

16. Institutional Logic
Embeddednes: The idea that economic relations between
individuals or firms are embedded in actual social networks
and do not exist in an abstract idealized market
• Each institution has a central logic
• Logic guides organizing principles, gives actors vocabularies of
motive and sense of self
Anirudh Agrawal

17. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

18. Institutional Work
• the ways in which individuals, groups, and organizations work to create,
maintain, and disrupt the institutions that structure their lives
• the range of ways that people build, sustain, and change institutions.
• understand the role of individuals in building, maintaining, and toppling
institutions
• Examples:
• Managers in Organizations
• Priests in Church
• Parents in Family
• Community leaders
Anirudh Agrawal
Lawrence, T., Suddaby, R., & Leca, B. (2011). Institutional Work: Refocusing Institutional Studies of Organization. Journal of Management Inquiry

19. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

20. Institutional Memory
• Collective set of facts, concepts, experiences, and
know-how held by a group of people
• Culture
• Folk Tales
• Stories
• Documentations
• Processes, Products and Services
• How
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Pictures
Movies
Books and Writings
Folktales
Anirudh Agrawal

21. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

22. Institutional Void
• Lack of marketing supporting institutions such
as market intermediaries, legal protection.
– Ashoka Fellowship
– Impact investment
– Microfinance in Bangladesh
– Socialization place for the marginalized in
Copenhagen
– HuB Copenhagen
– http://www.youtube.com/watch?v=NswJJBJZQgE
Anirudh Agrawal

23. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

24. Institutional Entrepreneurship
• Who changes institutions?
• paradox of embedded agency
• How does new institution get legitimacy?
Anirudh Agrawal
Leca, Battilana and Boxambaum 2008

25. Institutional Entrepreneurship
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Gandhi
Martin Luther King
Mo. Yunus
Bill Drayton
Michael Jackson
Elvis Presley
Alferd Hichhock
Anirudh Agrawal

26. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

27. Legitimacy
• Suchman (1995) “generalised perception or
assumption that the actions of an entity are
desirable, proper, or appropriate within some
socially constructed system of norms, values,
beliefs and definitions.”
• But how is legitimacy constructed?
Anirudh Agrawal

28. Types of Legitimacy
• Moral legitimacy
• Pragmatic Legitimacy
• Cognitive Legitimacy
Anirudh Agrawal
Suchman 1995

29. Layers of Legitimacy
Anirudh Agrawal

30. Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing
Anirudh Agrawal

31. Next Lecture
• Yunus, M., Moingeon, B., & Lehmann-Ortega, L.
(n.d.). Building Social Business Models: Lessons
from the Grameen Experience. Long Range
Planning
And
• Ashoka Fellowship and Unlimited
• SKS Microfinance
• Specialisterne
• Car sharing
Anirudh Agrawal

32. Additional reading list
Isomorphism
DiMaggio, P. J., & Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields.
American Sociological Review, 48(2), 147–160. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=14846933&site=ehost-live
DiMaggio, P. J., & Anheier, H. K. (1990). THE SOCIOLOGY OF NONPROFIT ORGANIZATIONS AND SECTORS. Annual Review of Sociology, 16(1),
137–159. Retrieved from http://escweb.lib.cbs.dk/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9101282649&login.asp&site=ehostlive&scope=site
Institutional Work
Dobbins, F. (2010). Institutional Work: Actors and Agency in Institutional Studies of Organizations. Administrative Science Quarterly, 55(4),
673–676. Retrieved from http://escweb.lib.cbs.dk/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=59240580&login.asp&site=ehost-live&scope=site
Lawrence, T. B., & Suddaby, R. (2006). Institutions and Institutional Work. In S. Clegg, C. Hardy, T. B. Lawrence & W. R. Nord (Eds.), The SAGE
handbook of organization studies (2nd ed., pp. 215-254). London: Sage Publications
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Agency and Institutional Entrepreneurship
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Agency and Institutions: A Review of Institutional Entrepreneurship
By Bernard Leca ,Julie Battilana ,Eva Boxenbaum (online free)
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Institutional logic
Thronton, Ocasio, & Lounsbury. (2012). The Institutional Logics Perspective: A new approach to culture, structure and process. Oxford: Oxford
University Press.
Anirudh Agrawal

33. Anirudh Agrawal