theories of social entrepreneurship part1

Anirudh AgrawalAnirudh Agrawal

Institutional theory and Social Entrepreneurship

Anirudh AgrawalPhD FellowCopenhagen Business SchoolPorcelænshaven 18A, 0,119DK-2000 FrederiksbergDenmarkOffice.: +45 38 15 34 01M: +45 41 68 95 02e-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

Principles of Microfinance

• 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.

Institutional theory and Social Entrepreneurship

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

Anirudh Agrawal

OrganizationPopulations

Organizations

THE ORGANIZATIONAL SOCIETY

Organizational Field

ClustersNetworksIndustriesEconomic GroupsCartels

Source: Internet

Anirudh Agrawal 6Anirudh Agrawal

Institutional environment

Social Public regulatory investorComme

Legitimacy, Reputation, Mission, Vision, Objectives, Sustainability

Organizational Maintenance, Expansion and Transformation

Identity construction, Memory, Power, Degree of coupling

Source: Anirudh Agrawal WIP-1 Seminar

Institutional Theory

Why organizations change?

• Innovation• Market pressures, Competition• New Norms• Changing consumer behaviour

Institutional Theory

• Economic View– Homo Economicus– Efficiency– Profit maximization

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

What is an institution?

• Walls• Family• Religion• School• Education• Marriage• Rituals

What is an institution?

• Organizational Structure• Bureaucracy• Constitution• Church • Society • Community• Market

Why Organizations appear similar?

Isomorphism

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

Types of IsomorphismCompetitive 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

Isomorphism

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

markets• Niche Markets• Emerging Markets• BOP Markets• Open Markets• Close Markets

Discuss for 10 minutes

• Ashoka Fellowship and Unlimited• SKS Microfinance• Specialisterne• Car sharing

Institutional LogicEmbeddednes: 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

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

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

• Pictures• Movies• Books and Writings• Folktales

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

Institutional Entrepreneurship

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

Leca, Battilana and Boxambaum 2008

Institutional Entrepreneurship

• Gandhi• Martin Luther King• Mo. Yunus• Bill Drayton• Michael Jackson• Elvis Presley• Alferd Hichhock

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?

Types of Legitimacy

• Moral legitimacy• Pragmatic Legitimacy• Cognitive Legitimacy

Suchman 1995

Layers of Legitimacy

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

Additional reading listIsomorphismDiMaggio, 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-liveDiMaggio, P. J., & Anheier, H. K. (1990). THE SOCIOLOGY OF NONPROFIT ORGANIZATIONS AND SECTORS. Annual Review of Sociology, 16(1), 137–159. Retrieved from http://esc-web.lib.cbs.dk/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9101282649&login.asp&site=ehost-live&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://esc-web.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• Agency and Institutional Entrepreneurship• Agency and Institutions: A Review of Institutional Entrepreneurship By Bernard Leca ,Julie Battilana ,Eva Boxenbaum (online free)• Institutional logicThronton, Ocasio, & Lounsbury. (2012). The Institutional Logics Perspective: A new approach to culture, structure and process. Oxford: Oxford University Press.

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