Cognitive Underpinnings of Institutional Persistence and Change: A Framing Perspective

Abstract

We integrate the predictions of prospect theory, the threat-rigidity hypothesis, and institutional theory to suggest how patterns of institutional persistence and change depend on whether decision makers view environmental shifts as potential opportunities for or threats to gaining legitimacy. We argue that in the event that decision makers face ambiguity in their reading of the environment, they initiate decoupled substantive and symbolic actions that simultaneously accommodate the predictions of prospect theory and the threat-rigidity hypothesis.

Institutionalization, Framing, and Diffusion: The Logic of TQM Adoption and Implementation Decisions among U.S. Hospitals

“…Thus, the current study complements arguments for viewing rationality as culturally rooted (e.g., Dobbin, 1994;Lounsbury, 2007) by linking it to managers' tendencies to frame adoption decisions as gains or losses and competitive and institutional effects in diffusion processes. Furthermore, our study responds to various calls to examine the micro foundations of institutional theory (e.g., DiMaggio, 1997;DiMaggio & Powell, 1991;Scott, 1995), especially its more cognitive account of institutional persistence and change (George et al, 2006).…”

“…Some authors have extended institutional theory's cognitive dimension by showing how logics shape attention, cognition, and action (e.g., Lounsbury, 2007;Ocasio, 1995Ocasio, , 1997Thornton & Ocasio, 1999); still the theory lacks connection to work in social psychology that could strengthen its "cognitive underpinning" (George et al, 2006). Such cross-level theorizing would sharpen institutional theory's accounts of cognition and conformity-core topics in social psychology (Milgram, 1974).…”

“…In particular, we turn to micro-organizational behavior and psychology-based research that links organizational change to the framing and interpretation of issues as either opportunities for gains or threats of losses (e.g., Dutton & Jackson, 1987;George et al, 2006). In this literature, interpreting potential organizational changes as opportunities versus threats affects organizational action (e.g., Chattopadhyay, Glick, & Huber, 2001;Thomas, Clark, & Gioia, 1993;Thomas & McDaniel, 1990).…”

“…To develop this argument, we draw on prior research that relates the framing of situations as opportunities or threats to tendencies to interpret them as representing potential gains or losses, respectively (e.g., Dutton & Jackson, 1987;George, Chattopadhyay, Sitkin, & Barden, 2006;Staw, Sandelands, & Dutton, 1981). Specifically, we argue that early adoption is associated with opportunity framing and motivations to achieve gains, both economic and social, while later adoption is associated with threat framing and motivations to avoid losses, again in both economic and social terms.…”

Exceptional boards: Environmental experience and positive deviance from institutional norms

“…Agency and enactment take place when organizational decision makers interpret, construct, and enact the organization's external institutional context (George, Chattopadhyay, Sitkin, & Barden, 2006;Karnoe, 1997;Zilber, 2002) by paying selective attention to particular issues (Dutton & Dukerich, 1991;Hoffman & Ocasio, 2001), interpreting them, and then constructing a legitimate repertoire of possible responses (Daft & Weick, 1984;Kauer, 2008;Maitlis, 2005). All of these actions are influenced by the filters of the decision makers' prior experience, context and social interactions (Snook, 2000).…”