Institutional inertia and practice variation

Abstract

PurposeInstitutional theory had been developed for the purpose of explaining widespread diffusion, mimetic adoption and institutionalization of organizational practices. However, further extensions of institutional theory are needed to explain a range of different institutional trajectories and organizational responses since institutionalized standards constitute a minority of all diffusing practices. The study presents a theoretical framework which offers guidelines for explaining and predicting various adoption, variation and post-adoption scenarios.Design/methodology/approachThe paper is primarily conceptual in nature, and the arguments are developed based on previous institutional theory and organizational change literature.FindingsThe notion of institutional inertia is proposed in order to provide a more detailed explanation of when and why organizations ignore, adopt, modify, maintain and abandon practices and the way intra-organizational institutional pressures shape, direct and constrain these processes. It is specified whether institutional inertia will be temporarily eclipsed or whether it will actively manifest itself during adoption, adaptation and maintaining attempts. The study distinguishes between four institutional profiles of organizational practices – institutionalized, institutionally friendly, neutral and contested practices – which can vary along three dimensions: accuracy, extensiveness and meaning. The variation and post-adoption outcomes for each of them can be completely characterized and predicted by only three parameters: the rate of institutional inertia, institutional profile of these practices and whether they are interpretatively flexible. In turn, an extent of intraorganizational institutional resistance to new practices is determined by their institutional profile and flexibility.Practical implicationsIt is expected that proposed theoretical explanations in this paper can offer insights into these empirical puzzles and supply a broader view of organizational and management changes. The study’s theoretical propositions help to understand what happens to organizational practices after they are handled by organizations, thus moving beyond the adoption/rejection dichotomy.Originality/valueThe paper explores and clarifies the nature of institutional inertia and offers an explanation of its manifestation in organizations over time and how it shapes organizational practices in the short and long run. It challenges a popular assumption in organizational literature that fast and revolutionary transition is a prerequisite for successful change. More broadly, the typology offered in this paper helps to explain whether and how organizations can successfully handle and complete their change and how far they can depart from institutional norms.