The Role of Analogy in the Institutionalization of Sustainability Reporting

Abstract

We study institutional entrepreneurship in an emergent field by analyzing the case of the Global Reporting Initiative (GRI) and its efforts to purposefully institutionalize the practice of sustainability reporting. We suggest that analogies affect institutionalization processes through two mechanisms. In early stages of institutionalization, analogy operates primarily as a normative mechanism and adoption is driven mainly by an instrumental logic. This emphasis on similarity to existing institutions stresses conformity and promotes legitimacy. Yet, analogies can also have a cognitive effect on institutional design, especially once initial acceptance from the environment has been secured, by directing attention towards incongruences between the emergent institution and its analogical source. Institutional entrepreneurship can spur innovation and departure from existing institutions by highlighting limitations of the analogical source and providing a compelling value-rational argument underscoring the worth of the new institution. This theoretical contribution helps explain how analogies to existing institutional practices can both provide legitimacy to novel institutions and constitute the basis for a creative process of institutional design.3 Institutional entrepreneurship is a delicate balancing act between two conflicting tasks. On the one hand institutional entrepreneurs must disguise the radical nature of their enterprise in order to engage supporters and evade the wrath of incumbents, while on the other they cannot adhere too closely to existing practices, for by doing so, they will not be able to further any meaningful change (Aldrich and Fiol 1994). Institutional entrepreneurs need to become skilled cultural operatives, fashioning stories in order to attract resources. In this work it is essential to "balance the need for legitimacy by abiding by societal norms about what is appropriate with efforts to create unique identities that may differentiate and is relatively well-studied. However, the role of analogy in shaping institutional design has not been explored in depth. Tropes like simile, analogy and metaphor can help gather political support and legitimacy, but they also lead to analytical closure (Oswick, Keenoy and Grant 2002). Remaining within the confines of a clearly defined analogy cannot lead to evolution to profoundly different institutions (Hoffman and Ventresca 1999). Furthermore, the analogy cannot be discarded at later stages (Ocasio and Joseph 2005) when deeper institutional change is being advocated, as cognitive lock-in has already limited external constituents' receptivity to alternative scenarios. How, then, do analogies shape the construction and evolution of proto-institutions? 4In this article we address the role of analogies in institutional change by presenting a longitudinal case-study of the Global Reporting Initiative (GRI) and its strategies to promote and institutionalize sustainability reporting practices. GRI, a non-profit organization headquartered in Amsterdam, ...

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