Law And New Institutionalism Research Paper

1. Old And New Institutionalisms

The ‘old institutionalism’ in sociology, as represented in the work of Selznick (especially 1957), distinguished between organizations as tools to accomplish particular purposes and organizations as entities to which people formed commitments. In pointing to processes by which an organization, originally formed for instrumental purposes, garnered the loyalty of participants who then became committed to keeping the organization alive, researchers argued that some organizations became institutions. Moreover, Selznick (1969) identified legalization as an important part of this transformation of instrumental organizations into institutions. When workers acquire rights in the workplace, he argued, they become members of an emerging polity and cease to be simply subordinates in a hierarchy.

In the classic studies of the old institutionalists, the evolving relationship between an organization and its environment was a central focus; this interest was retained by the new institutionalists. But where the old institutionalists might have looked at the process by which an organization itself (e.g., a university, a government agency) became institutionalized, the new institutionalists (starting with Meyer and Rowan 1977) instead look at the ways in which performing a broad set of tasks becomes institutionalized in particular areas of social life (what Bourdieu 1985, calls ‘fields’). They investigate the processes by which particular practices come to be regarded as the ‘usual’ ways of, for example, providing medical care (e.g., fee for service), organizing higher education (e.g., the conventional division of university training into disciplines and departments), or choosing among potential suppliers of goods and services (e.g., the bidding practices that link government agencies with contractors).

Developed as correctives to utilitarian or economistic approaches, the old and new institutionalist perspectives contend that (a) organizational phenomena cannot be explained solely by efficiency considerations or by the performance goals of organizations, and (b) the relationship between organizations and their environments is central to institutionalization. Institutionalists also share an interest in (c) the staying power of social phenomena, and (d) the process by which social phenomena come to be taken for granted and regarded as a normal, enduring part of the social landscape. Old and new institutionalists differ, though, in (a) what social phenomena they scrutinize (the institutionalization of organizations vs. the process by which institutionalized practices diffuse throughout a field), (b) the emphasis placed on normative forces (such as commitments to the organization) as compared with cognitive factors (such as scripts and schemas), and (c) whether they believe that organizational processes are shaped deeply or more superficially by institutionalization.

2. Law And Institutionalization

When new institutionalists ask about the relationship between organizations and their environment, they are especially interested in the common elements of organizational environments. Laws, legal actors, and regulatory bodies are important common elements of organizational environments. Even when organizations in the same industry interact with different suppliers or market to somewhat different consumers, they are likely to be governed by the same laws. Further, the legal environment probably has more capacity to coerce conformity than do other members of the social landscape, although conformity is also induced by the capacity of law to enunciate values and expectations and to resolve uncertainties by offering models for action. The legal environment, then, is an important source of uniformity and an important pressure for institutionalization (DiMaggio and Powell 1983).

This insight has been developed in a series of investigations of when and how specific statutes (particularly US employment law) have affected the practice of organizations. In order to gain legitimacy, researchers have argued, organizations adopt policies that conform to legal requirements (e.g., about equal opportunity hiring, wrongful discharge, or due process), develop procedures (e.g., grievance procedures) that build legal requirements into organizational routines, create positions for affirmative action officers, and charge human resources departments with the duty of implementing the law. Researchers often use event history techniques to study the diffusion of these procedures and positions that bring an organization into compliance with the law (e.g., Edelman 1992, Sutton et al. 1994, Dobbin 1998). Other researchers investigate the metamorphosis of law into organizational routine, the diffusion of legal innovations, and the role of the professions in spreading, constructing, and implementing law (e.g., Edelman 1990, Edelman et al. 1993, Carruthers and Halliday 1998, Grattet et al. 1998, Heimer 1999; for a general discussion of new institutionalist research on law, see Suchman and Edelman 1996).

3. Symbolic And Instrumental Effects Of Law In Organizations

A key argument of the new institutionalists is that policies are adopted for symbolic purposes. In adopting a policy, an organization signals its willingness to play by the rules endorsed by other actors in its environment. It claims membership in a world in which organizations doing roughly the same thing agree on a core set of rules that make the game ‘fair’ and a style of interaction with regulators, suppliers, customers, and other publics. But the adoption of a policy need not alter organizational practice in any fundamental way, particularly when members of the environment are unable to monitor how deeply organizational practice is transformed.

When organizations adopt policies that bring them into conformity with the law, is organizational practice altered? Or are practices decoupled from ceremony as institutionalist theory would predict? Researchers have discovered that the answer is more complex than anticipated. Although organizations often seem to adopt conforming policies for the expected symbolic reasons, and although such policies seem to have mainly symbolic effects at the start, over time the policies may have deeper effects. For instance, affirmative action officers appointed to send a signal of conformity without disrupting organizational practices may be more deeply committed to affirmative action than those who hired them. Organizations are not unitary actors and new hires bring with them links to new constituencies. Affirmative action officers may augment an organization’s ties to associations of personnel professionals. They may also feel some loyalty to minority communities as potential consumers or as labor pools.

But even symbolic effects are more complex than anticipated. For instance, in affirmative action, equal economic opportunity has more often been translated into a right to make a complaint than a right to a job. Likewise, medical organizations have responded to informed consent statutes by introducing consent forms that often do not ensure that patients and their families are informed about and have consented to a particular treatment.

However, researchers have also discovered that going through the motions of conforming to the law may lead ultimately to changes in the culture of organizations or modifications in the values of key employees. Decreases in pressure from the legal environment to adopt affirmative action policies had little effect on the adoption or implementation of such policies in American businesses, Dobbin (1998) argues. These policies had in the meantime taken on positive associations in the corporate world and been incorporated into a new story about how ‘diversity’ contributes to efficiency. In medicine, where physician autonomy remains an important value, scholars nevertheless concede that although in the 1960s, the vast majority of American physicians did not inform patients of cancer diagnoses, by the late 1980s, the vast majority of them claimed that they did inform their patients. Initially resistant to informed consent procedures and still inclined to implement them in a perfunctory way, physicians have nevertheless come to believe in patient rights (Heimer 1999). Symbolic effects may in the long run lead to instrumental effects, and initial symbolic gestures should perhaps be seen as the first phases in a protracted engagement whose ultimate outcome depends on whether new constituencies are created and new rationales developed that transform an imposed policy into an indigenous project.

New institutionalists have made legal scholars more cognizant of the importance of thinking about organizations as sites for the implementation of law. Because laws often are implemented by organizations, such as through the adoption and enforcement of new procedures or the creation of new departments and positions, the efficacy of laws depends deeply on what goes on inside organizations. If the creation of new positions leads to new affiliations, builds constituencies, or creates a forum for voices that have previously not been heard, then a policy adopted only to mollify a government agency may ultimately have some of the effects that the government agency intended. As often happens as a new perspective matures, the novel observations of the new institutionalists about the symbolic aspects of organizational policy have been recombined with earlier streams of thought. The new synthesis acknowledges that policies may have both instrumental and symbolic effects, and asks when each is especially likely to occur. Interestingly, the very scripts and schemas that have been identified as part of the process of institutionalization are now seen as routes to instrumental effects. Some policies remain window dressing; others are written into routines. Some organizational routines restructure work, others do not.

4. Institutions, Uniformity, And Innovation

Institutionalist arguments tend to focus on the production of uniformity. As institutionalized practices are more widely adopted in a field, it becomes deviant to do things differently: not to have an affirmative action officer, not to have an informed consent form, not to include a statement about diversity in advertisements for jobs, not to have rules about hate crimes. But these observations about legitimacy and uniformity raise questions about whether institutionalization produces stagnation and how innovation is possible.

Institutionalist arguments about decoupling of ceremony from day-to-day practices provide a partial answer. If legitimacy can be secured by superficial conformity, organizational handbooks may be brought into conformity with law while instrumental practices remain as before. Institutionalization may produce organization handbooks that portray organizations as rigid, and in particular as scrupulously conforming to the law, when they are in fact quite supple and quite innovative in devising ways to redefine the law. Resistance in decoupling ceremony from practice and in devising policies that satisfy the letter if not the spirit of the law, then, is one form of innovation. Edelman et al. (1993), for instance, discovered that in the hands of human resources officers responsible for processing discrimination complaints, civil rights law moved into the managerial realm. As a result, a right to complaint resolution replaced a more political right to a nondiscriminatory workplace.

We should also remember, though, that the standard practices of one field can be significant innovations when imported into another. Thus, increasing uniformity of some sorts may bring with it increasing diversity of other sorts. For instance, uniformity in strategies for solving a category of problems may bring with it diversity in the problems to which an institutionalized solution is applied. Thus Grattet et al. (1998) found that, in the United States, the variety of legal solutions used to combat hate crimes (e.g., criminalizing interference with civil rights, creating new categories of crime, increasing penalties for preexisting categories of crime) has decreased over time. At the same time, the number of ‘protected statuses’ (e.g., race, religion, ethnicity, sexual orientation) has increased.

These arguments that innovation occurs when actors invent ways to signal compliance without altering mundane organizational practice, transform unpalatable laws into more circumscribed routines, or transport institutionalized practices to new settings, all refocus attention on the innovators. In a variety of settings—employment law, corporate bankruptcy law, medical regulation, to name a few—scholars have found that professionals have played important roles. Rather than being identified solely with the organization, professionals retain commitments associated with their professions. They may dampen or amplify the impact of the law depending on whether legal tools are useful in advancing professional interests and achieving professionally valued goals (Edelman 1992, Heimer 1999). In their investigation of corporate bankruptcy law in the USA and the UK, Carruthers and Halliday (1998) argue that the role of professionals in legal innovation varies with their status and autonomy. Members of strong professions are not limited to devising ways of decoupling ceremony from practice or molding the routines that implement the law. Instead, high status professionals shape more directly the laws that govern an organizational field and frame their own work. They originate the practices that will eventually become the institutions that others adopt. Similar arguments have been made about the creation of international legal regimes (Dezalay and Garth 1996).

5. Institutional Competition And Legitimacy

In addition to the questions about efficacy and innovation discussed above, new institutionalists’ work on law also raises questions about the difficulty of gaining legitimacy with one portion of an organizational environment without alienating others. Initial formulations of the institutionalist argument suggested that the divergence of interest between internal and external audiences would often lead to a decoupling of ceremony from instrumental practice. Policies conforming to law might be adopted formally but ignored in practice. But because organizations’ environments cannot be expected to have unitary interests, and because environments actively compete for the right to construct the institutions that will govern a field (Bourdieu 1985), signals must be crafted carefully to appeal to, or at least not to alienate, multiple audiences. This fine-tuning of organizational policy often takes into account the relative power of members of the environment, the differential capacity of environmental elements to discern the difference between superficial and deeper adjustments to their interests, and the ease with which people and ideas pass between the organization and some parts of its environment.

In medical settings, for instance, the adoption of legally mandated ‘patient friendly’ policies may make medical practitioners nervous and so decrease the chances of recruiting prestigious departmental heads or the most attractive residents. At the same time, though, reluctance to bring hospital practice into conformity with new statutory requirements (e.g., ethics committees, medical care power of attorney, or advance directives) may increase state scrutiny. How, then, do hospitals simultaneously curry favor with both the state and with professionals? Organizational boundaries are, to varying degrees of course, porous, and some members of the environment have more capacity to cross such boundaries than others.

In medical settings, for instance, legal regulators are more completely outsiders than are members of medical professional societies. Those who span the boundary (e.g., professionals working in a hospital who are also members of professional associations) will be able to detect when policy and practice are decoupled. They will also be more able to ensure that day-to-day practice is more deeply shaped by the institutionalized policies to which they are committed. When the interests of medical practitioners and legal actors coincide, as when laws create tools that increase the power and autonomy of medical professionals, organizational routines that implement these laws can be expected to have substantial effects on practice.

Questions of legitimacy inevitably lead back to concerns about efficacy, then. Legitimacy can be purchased with ceremony only when powerful outside audiences cannot tell the difference. When organizational boundaries are more permeable and outsiders are able to form alliances with key insiders, an organization will be regarded as legitimate only to the degree that symbol and substance coincide. For legal actors, that can mean forming alliances with other professionals who are deputized to represent state interests inside organizations, or even in hospitals, moving court sessions inside the physical boundaries of organizations.

6. Conclusion

New institutionalist investigations of legal phenomena have led to important findings about the metamorphosis of statutes as they are transformed into organizational routines, the role of these routines in creating new constituencies, and the location of innovation. These studies have modified the agendas both of institutionalists, by altering their understanding of the place of legal actors in the process of institutionalization, and of sociolegal scholars, by clarifying thinking about the efficacy of law.

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