2. Summary…………………………………………………………………………………………….…………………………………………………..2-4
Institutional Theory & CSR …………………………………………………………………………………4-7
Example of theory application………………………………………………………………..7-10
Critiques…………………………………………………………………………………………………………………………………………..11-12
Some prospects for future development……………………………………12
References………………………………………………………………………………………………………………………………………………13
1

3. “the only social responsibility of
business is to increase its profits”.
(Milton Friedman, 1970)
Social Responsibility of a
Businessman ????
2

4. • But within the past three decades…
• Corporate Social Responsibility
(CSR) has transformed to be one of
the prominent features of business
to which managers are expected to
respond (Lockett et al. 2006).
• What is CSR?
“The adoption by a business of a
strategic focus for fulfilling the
economic, legal, ethical and
philanthropic responsibilities
expected of it by its stakeholders”
(McAlister et al. 2005:13)
This situation reflects the influence
of broad range of theories including
agency theory, theory of the
firm, strategic management and
finally the institutional perspective.
3

5. Organizations are expected to behave
rationally. But then, why would
corporations behave in a
socially accountable manner?
Here the central idea is relying in the
actual meaning of ‘rationality’.
Main idea that captured the
imagination in early stages of
institutional studies (Greenwood et al, 2008)
Organizations are influenced by their
institutional context, i.e. by
widespread social understandings
(rationalized myths) that define what
it means to be rational.
Institutional theory rejects the idea of
contingency theory arguing that
organizations are shaped by their
‘Institutional Context’.
Institutional Theory & CSR ?
Why? How?
Not coincidental (Brammer, 2012).
4

6. Institutional Perspective
• Organizations are driven to
incorporate the practices and
procedures defined by prevailing
rationalized concepts of
organizational work and
institutionalized in society.
• Surface Isomorphism (Zucker, 1987; Meyer &
Rowan, 1977).
Mimetic
Institutional Dispersion
Mechanisms
Coercive
Normative
5

7. • Numerous study applications in
several areas.
• Now, possibly the dominant
approach for understanding the
organizations (Greenwood et al. 2008).
• Topic of CSR also was not separated
from this trend.
• Bringing interdependencies amongst
various stakeholders of organization
into analysing level, institutional
theory seems vital for understanding
the CSR concept and its
transformations (Matten & Moon, 2008).
Corporations are…
• Not completely autonomous actors
• Sensitive to the changing rules of the
game in society and make behavioural
adjustments vis-à-vis society
6

8. Let me give you an example from
applications of Institutional theory in
CSR studies
Reflecting the idea of institutions as
rationalized myths,
Cross-National Comparison Studies
compare practices in different countries by
testing whether distinct cultural values
result in different organizational behaviours.
• Institutional variances result in different
expectations, therefor the vast expansion
of the CSR notion in different forms and
names in various countries can be
explained through adoption of
institutional theory (Visser & Tolhurst, 2010).
• Socially responsible behaviour may mean
different things to different people and at
different times.
• Specific institutional settings within a
particular society.
• Engaging in CSR activities or level of this
engagement is extremely relying on
specific institutional settings within a
particular society.
7

9. Campbell (2007) by defining an explicit
institutional context argued that in
different socio-cultural systems
engagement of companies in CSR depends
on existence of:
Well-enforced state regulatory system.
Effective industrial self-regulatory system.
Private, independent nongovernmental
organizations like NGO’s and media.
Environment in which normative calls for CSR
are institutionalized.
Associations that have commitment for
promoting the responsible business.
Within the institutional
literature:
 Economists have mostly focused on
formal laws, rules, and regulations (e.g La
Porta et al. 2008)
 Sociologists have paid more attention to
informal cultures, norms, and values
(DiMaggio & Powell, 1983; Meyer & Rowan, 1977)
 Also some tried to support a
complementary view considering
impacts of formal & informal
components.(e.g. North,1990; Scott,1995)
8

10. INFORMAL:
 Norms
 Culture
 Religious Beliefs
 Values
 Ethics
 Traditions
 Normative Calls for CSR Practices
Institutional Context
FORMAL:
 Law
 Regulations
 Rules
 Industry Self-Regulations
Coercive CSR
Normative CSR
Mimetic CSR
Corporate Social
Responsibility
(CSR)
9

11. CRITIQUES:
Conceptual Looseness
•Overlaps between sub-processes
of institutional isomorphism
•“No discussion of these overlaps
nor theory significance for the
structure of the theory, nor of
how the distinction between
coercive, mimetic and normative
types of isomorphism are to be
maintained” (Donaldson, 1995:84) .
•Within the CSR-institutional
studies overlap or distinction
between coercive and mimetic
types of isomorphism can be a
source of criticism
•Government recognition of
certain companies makes their
CSR plans and policies role
models for other organizations
which seek legitimacy.
10

12. •“These causal mechanisms seem to
be the same as the state power
referred to under coercive
isomorphism and the latter
mechanism seems also to refer to the
process of mimetic isomorphism”.
(Donaldson, 1995:84)
•If state or other regulatory bodies
force corporations to adopt a
particular CSR practices, then there
must be other forms of possible
alternatives known to companies,
and so the enforced form is not a
taken-for-granted.
Some Prospects for
Future Development
 There is a call for more studies in
understanding CSR as a global
managerial concept.
 Developed or
 Developing or
 Undeveloped countries
 Small & Medium Sized
Organizations (SMEs)
11

13. 12