Standing Working Group 1 (Sub-theme 01):

Comparative Study of Economic Organizations –
Functional Conversion and the Renewal of Organizations

Convenors:

Call for papers

Institutional frameworks have become key ingredients in comparative organizational analysis. They shape the reaction space of actors in various ways – most notably in the definition of the scope and nature of new issues as well as for the design of the sets of possible solutions that actors may perceive for the problems they identified. Thus, institutional frameworks can constitute a powerful matrix of incentives and constraints that militates toward some kinds of behaviour thereby resulting in routine patterns of organizational life. A strong critique of this position which has emerged recently is that it overstates the power of institutional frameworks to constrain the behaviour of actors. The latter often seek to shape and change the contours of existing institutions precisely because they can powerfully shape the reaction space of others. Actors also possess a capacity to innovate, learn and push for change even under a constraining institutional framework – thereby resulting in potentially important organizational change.

The theme of this stream deals with the issue of renewal, both at the level of organization and institution. While the above criticism of institutional analysis highlights the importance of strategizing actors in defying the 'logics' of institutions, it is also possible that actors reconfigure existing institutions to accomplish new aims. Processes of functional conversion constitute the strongest scenario of change that balances form and function: institutions are redirected to new purposes in the presence of formal institutional stability. Functional conversion stresses the occurrence or organizational renewal despite the presence of institutional stability. Incremental change thus can lead to significant discontinuity without requiring dramatic disruptions. Rather than radical change breaking current patterns of institutional complementarity and re-shaping the preferences of actors, the process of organizational transformation often results from ongoing and accumulating dynamics that involve small adjustments. The practice associated with an institution can change without a similar transformation in its formal structure with important implications for the workings of organizations.

We invite contributions that seek to uncover the mechanisms through which the functional conversion of an institution operates with an exploration of its effects on organizational renewal. One potential mechanism of functional conversion is the reconfiguration of coalitional bases in light of shifting conditions – thereby enabling institutions to outlive their founding coalitions and organizations to renew themselves. Parts of the coalitions that make use of existing institutions might consist of actors operating at multiple levels seeking to gradually attempt to adapt the internal workings of national organizations to international practices.

Another potential mechanism of functional conversion lies in the ability of actors to draw on resources beyond those inherent in institutional frameworks. Actors might not need to capture and transform institutions in order to induce organizational change. The presence of heterogeneity within national economies illustrates quite well the working of this particular mechanism. For example, within the United States there are examples of large companies supporting German style vocational training, for example in the semiconductor industry. Within Europe regional clusters of high-technology firms have emerged in Stockholm and other Scandinavian cities. The ability of actors to draw upon the resources generated by public policies could enable them to compensating for deficiencies in institutional frameworks, thereby providing organizations with previously unknown capabilities. Explaining the heterogeneity of organizational forms within a given business system is an important topic that could be better explained by research exploring how actors strategize within institutions. The appearance of organizational heterogeneity might well constitute a reinterpretation of existing institutional frameworks rather than a process of institutional destruction.

A related question surrounds the identification and measurement of institutional reconfiguration. The apparent stability of institutions combined with ongoing and accumulating dynamics that involve small adjustments is not sufficient in order to assess whether change is evolutionary or radical. Different processes of change (abrupt and incremental) can both result in an evolutionary or radical transformation of the system. Mistaking radical transformation for more evolutionary shifts and vice versa is a common occurrence in the social sciences. The absence of an analytical framework to distinguish between patterns of institutional changes leaves us powerless to distinguish between them and to assess their consequences. Moreover, institutional frameworks can be stable for a long period of time before their effects on outcomes vary. How could we conceptualize the origins of a process of functional conversion? How can we then distinguish between the changing effects of a stable institutional framework versus the influence of another unexplored alternative independent variable? Another unanswered issue is when is an institution being 'converted' and by whom? How do we recognise continuity in form from discontinuity in function? When are we 'on' and 'off' the path – again, both in functional and in formal terms?

We invite contributions that focus on a number of broad aspects related to the question of change within apparently stable institutional frameworks. We welcome contributions from diverse academic disciplines (economic history, management, political science, sociology), and we particularly encourage the submission of papers containing comparative studies of institutional dynamics. The stream also seeks to gather papers that will cover a wide range of countries and economic models. Finally, as part of SWG 1's long-standing focus, we welcome comparative studies, particularly those analyzing the reconfiguration of national business systems.

Key references

Casper, Steve & Richard Whitley (2004): Managing Competences in Entrepreneurial Technology Firms, Research Policy, 33, 1: 89-106.

Thelen, Kathleen (2004): How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan. New York: Cambridge University Press.

About the convenors

Steven Casper is associate professor at the Keck Graduate Institute, Claremont Colleges, USA. His research interests include comparative studies of the development of new technology industries, with a special interest in processes by which biomedical science has been commercialized across European countries. Dr. Casper came to KGI from the University of Cambridge, UK, where he was a University Lecturer in Innovation and Entrepreneurship at the Judge Institute of Management Studies.

Michel Goyer is assistant professor in the Industrial Relations and Organizational Behaviour unit, Warwick Business School. His research interests include comparative corporate governance, labor relations in France and Germany, and the interaction between public policy and institutional analysis. He was previously a research fellow at the Max Planck Institute for the Study of Societies, Cologne, Germany.

Bob Hancké is a reader at the European Institute, London School of Economics. His research interests include comparative political economy of advanced capitalist economies, varieties of capitalist models in central and Eastern Europe, and the interact between central bank monetary policy and wage negotiation in the Euro zone. Dr. Hancké was previously employed as a Senior Research Fellow at the Social Science Center Berlin (WZB) in Berlin, and has been elected to the Executive Council of the Society for the Advancement of Socio-Economics.