theories of social entrepreneurship part1

Institutional theory and Social
Entrepreneurship

Anirudh Agrawal

Anirudh Agrawal
PhD Fellow
Copenhagen Business School
Porcelænshaven 18A, 0,119
DK-2000 Frederiksberg
Denmark
Office.: +45 38 15 34 01
M: +45 41 68 95 02
e-mail : aag.ikl@cbs.dk

Last Session
• Microfinance
– Theory of Change
• Poverty and Microfinance
• Financial Inclusion

– Formal banking system and Microfinance
• Debt and Equity finance
• Information assymetry
• Moral hazard

Anirudh Agrawal

Principles of Microfinance
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Poor people need a variety of financial services, not just loans.
Microfinance is a powerful tool to fight poverty.
Microfinance means building financial systems that serve the poor.
Microfinance must pay for itself to reach large numbers of poor people.
Microfinance is about building permanent local financial institutions.
Microcredit is not the best tool for everyone or every situation.
Interest rate ceilings making it harder for poor people to get credit.
The role of government is to enable financial services, not to provide
them.
• Donor funds should complement private capital, not compete with it.
• The key bottleneck is the shortage of strong institutions and managers.
• Microfinance works best when it measures and discloses its
performance.

Anirudh Agrawal

Institutional theory and Social
Entrepreneurship

http://www.youtube.com/watch?v=mL_KmeykiH0

Anirudh Agrawal

THE ORGANIZATIONAL SOCIETY

Clusters
Networks
Industries
Economic Groups
Cartels

Organization
Populations

Organizational
Field
Organizations

Source: Internet

Anirudh Agrawal

Institutional Theory
Legitimacy, Reputation, Mission, Vision, Objectives, Sustainability

Organizational
Maintenance, Expansion and Transformation
Identity construction, Memory, Power, Degree of coupling

Social

Comme
rcial

Public

regulato
ry

investor

Institutional environment

Anirudh Agrawal
Source: Anirudh Agrawal WIP-1 Seminar

6

Why organizations change?
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Innovation
Market pressures, Competition
New Norms
Changing consumer behaviour

Anirudh Agrawal

Institutional Theory
• Economic View
– Homo Economicus
– Efficiency
– Profit maximization

• Sociological view
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Norms and rules of the society
Culture
Religion
Family
Social Network
Anirudh Agrawal

What is an institution?
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Walls
Family
Religion
School
Education
Marriage
Rituals
Anirudh Agrawal

What is an institution?
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Organizational Structure
Bureaucracy
Constitution
Church
Society
Community
Market
Anirudh Agrawal

Why Organizations appear similar?

Anirudh Agrawal

Isomorphism
• DiMaggio & Powell: Organizations remain
similar– and continue to become more like
each other– because of different
“isomorphic” pressures.

Anirudh Agrawal

Types of Isomorphism
Competitive Isomorphism:
 Driven by regular market pressures
Institutional Isomorphism:
 Coercive: Driven by government regulation, political
influence, search for legitimacy
 Mimetic: Driven by standardized responses to uncertainty
 Normative: Socialization of workers– professionalization–
creates pressures to work in accepted ways

Anirudh Agrawal

Isomorphism
• Competition in Markets
– Influence firms to behave in order to respond to
markets

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Niche Markets
Emerging Markets
BOP Markets
Open Markets
Close Markets
Anirudh Agrawal

Discuss for 10 minutes
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Ashoka Fellowship and Unlimited
SKS Microfinance
Specialisterne
Car sharing

Anirudh Agrawal

Institutional Logic
Embeddednes: The idea that economic relations between
individuals or firms are embedded in actual social networks
and do not exist in an abstract idealized market
• Each institution has a central logic

• Logic guides organizing principles, gives actors vocabularies of
motive and sense of self

Anirudh Agrawal

Institutional Work
• the ways in which individuals, groups, and organizations work to create,
maintain, and disrupt the institutions that structure their lives
• the range of ways that people build, sustain, and change institutions.
• understand the role of individuals in building, maintaining, and toppling
institutions
• Examples:
• Managers in Organizations
• Priests in Church
• Parents in Family
• Community leaders

Anirudh Agrawal

Lawrence, T., Suddaby, R., & Leca, B. (2011). Institutional Work: Refocusing Institutional Studies of Organization. Journal of Management Inquiry

Institutional Memory
• Collective set of facts, concepts, experiences, and
know-how held by a group of people
• Culture
• Folk Tales
• Stories
• Documentations
• Processes, Products and Services
• How
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Pictures
Movies
Books and Writings
Folktales
Anirudh Agrawal

Institutional Void
• Lack of marketing supporting institutions such
as market intermediaries, legal protection.
– Ashoka Fellowship
– Impact investment
– Microfinance in Bangladesh
– Socialization place for the marginalized in
Copenhagen
– HuB Copenhagen
– http://www.youtube.com/watch?v=NswJJBJZQgE
Anirudh Agrawal

Institutional Entrepreneurship
• Who changes institutions?
• paradox of embedded agency
• How does new institution get legitimacy?

Anirudh Agrawal

Leca, Battilana and Boxambaum 2008

Institutional Entrepreneurship
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Gandhi
Martin Luther King
Mo. Yunus
Bill Drayton
Michael Jackson
Elvis Presley
Alferd Hichhock
Anirudh Agrawal

Legitimacy
• Suchman (1995) “generalised perception or
assumption that the actions of an entity are
desirable, proper, or appropriate within some
socially constructed system of norms, values,
beliefs and definitions.”

• But how is legitimacy constructed?

Anirudh Agrawal

Types of Legitimacy
• Moral legitimacy
• Pragmatic Legitimacy
• Cognitive Legitimacy

Anirudh Agrawal
Suchman 1995

Layers of Legitimacy

Anirudh Agrawal

Next Lecture
• Yunus, M., Moingeon, B., & Lehmann-Ortega, L.
(n.d.). Building Social Business Models: Lessons
from the Grameen Experience. Long Range
Planning
And
• Ashoka Fellowship and Unlimited
• SKS Microfinance
• Specialisterne
• Car sharing
Anirudh Agrawal

Additional reading list
Isomorphism
DiMaggio, P. J., & Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields.
American Sociological Review, 48(2), 147–160. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=14846933&site=ehost-live
DiMaggio, P. J., & Anheier, H. K. (1990). THE SOCIOLOGY OF NONPROFIT ORGANIZATIONS AND SECTORS. Annual Review of Sociology, 16(1),
137–159. Retrieved from http://escweb.lib.cbs.dk/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9101282649&login.asp&site=ehostlive&scope=site
Institutional Work
Dobbins, F. (2010). Institutional Work: Actors and Agency in Institutional Studies of Organizations. Administrative Science Quarterly, 55(4),
673–676. Retrieved from http://escweb.lib.cbs.dk/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=59240580&login.asp&site=ehost-live&scope=site
Lawrence, T. B., & Suddaby, R. (2006). Institutions and Institutional Work. In S. Clegg, C. Hardy, T. B. Lawrence & W. R. Nord (Eds.), The SAGE
handbook of organization studies (2nd ed., pp. 215-254). London: Sage Publications
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Agency and Institutional Entrepreneurship
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Agency and Institutions: A Review of Institutional Entrepreneurship
By Bernard Leca ,Julie Battilana ,Eva Boxenbaum (online free)
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Institutional logic
Thronton, Ocasio, & Lounsbury. (2012). The Institutional Logics Perspective: A new approach to culture, structure and process. Oxford: Oxford
University Press.

Anirudh Agrawal

theories of social entrepreneurship part1

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