Self‐destructive processes in institution building and some modest countervailing mechanisms

Abstract

Why is institution building difficult? Why does it often turn out to be self-destructive? And how does it take place in spite of its difficulties? Extending an analytical framework developed by James March (1991), this paper tries to tackle these questions by examining the dilemma between the exploration of alternative institutional arrangements and the exploitation or refinement of current ones. Institution building is viewed as a problem of adaptive intelligence and learning in the intertemporal allocation of resources. Some basic self-destructive processes and failure cycles associated with the exploration/exploitation dilemma are identified and discussed; implications are drawn for four distinct domains: competency, self-interest, identity, and trust. In the second part of the paper three basic modes of institution building are illustrated: focal points, increasing returns, and institutional bricolage. These are shown to be modest but viable mechanisms for countervailing self-destructive dynamics and for building institutions.

Effectuation As Ineffectual? Applying the 3E Theory-Assessment Framework to a Proposed New Theory of Entrepreneurship

“…Precursors to the defining dimensions of effectuation also exist, such as available means as being prior knowledge (e.g., Shane, 2000) and social networks (Uzzi, 1997), the prescription to leverage surprise (e.g., Manis & Meltzer, 1994;Spinosa, Flores, & Dreyfus, 1997) in emergent (Mintzberg, 1978) or non-predictive strategies (Lachmann, 1976), the consideration of affordable loss (e.g., Argote, 1999;Shackle, 1966;Sitkin, 1992), and the prescription to leverage partnerships (e.g., as in structuration [Giddens, 1979[Giddens, , 1982 or exploration [Spinosa, Flores, Dreyfus, Fernando, & Dreyfus, 1999]). And similar descriptions of observed entrepreneurial processes existed prior to effectuation, including bricolage (e.g., Hull, 1991;Lanzara, 1998;Levi-Strauss, 1966), improvisation (e.g., Miner, Bassoff, & Moorman, 2001), and experimentation in the face of a context dominated by random events, aka contingencies (Block & MacMillan, 1985;Woo, Daellenbach, & Nicholls-Nixon, 1994). In that vein, experimentation is described as "groping along" (Dimov, 2010) …”

“…Such preplanning and calculation have been shown to be necessary to allow performers (effectuators) to loosen up and better improvise when needed (Mirvis, 1998). By pursuing this direction, effectuation can contribute to the debate on how best to combine exploration and exploitation (at the new venture stage here) for the firm to respond to conflicting needs for diversity and reliability in processes and to break the paradoxes involved (Lanzara, 1998). Such case-based research may offer explanations and prescriptions for how disruption-like results can and do occur (e.g., in windturbine technology where bricolage-like, low-tech initial designs are ramped up over time to triumph over planned design approaches; Garud & Karnøe, 2003).…”

Globalisierung, Technik, Normen—Warum weichen japanische Unternehmen von internationalen Normen ab?

“…Einige Mitglieder werden von der bestehenden Institution begünstigt. Es ist anzunehmen, daß sich die Begünstigten gegen eine Veränderung der Verteilungsstrukturen stellen werden (Genschel 1996, Lanzara 1998 (Frey 1990). Mit einer neuen Institution hingegen entstehen sowohl neue fixe als auch neue variable Kosten.…”

Democratic effects of institutional reform in local government: the case of the Dutch Local Government Act 2002

“…Bergh (2001: 603) describes the Resource Based View (RBV): organisation members with long organisational tenure have the advantage of organisation-specific knowledge that enables them to enhance the process of socialisation. Longer-tenured members have unique, valuable and non-transferable knowledge and skills not available to their less experienced colleagues (Cannella and Hambrick 1993;Lanzara 1998). Based on these resources, more experienced members are more open-minded and better able to adapt to new circumstances.…”

“…The UEP states that there is a risk that longer-tenured actors can become stuck in former routines and therefore are less able to perform the desired (new) behaviour. In reference to this, Lanzara (1998) refers to competency and resource endowments (see Textbox 4.1). Thus, according to the UEP, the perceived behaviour control of longer-tenured actors is expected to be low.…”