Networks and Institutions

Introduction

Research on institutions and networks has proceeded on largely separate trajectories over the past few decades. The former is more associated with work in organizational and political sociology, and the latter serves as the wellspring of research in economic sociology. To be sure, a number of loose linkages exist between the subfields. For example, many institutional studies presume that professional or inter-organizational networks serve as conduits for the diffusion of appropriate practices and ideas. Indeed, much institutional research conflates ‘simple’ diffusion with ‘deep’ institutionalization. Meanwhile, research on networks often considers how categorical or status variations in network structures shape social comparison and stratification processes. But these points of intellectual cross-fertilization have remained undertheorized.1

We think there is much to be gained from a more analytically driven dialogue between these literatures. We argue that networks and institutions mutually shape one another. Over time, this co-evolutionary process creates, sustains, and transforms social worlds. The cognitive categories, conventions, rules, expectations, and logics that give institutions their force also condition the formation of relationships and thus the network structures that function as the skeletons of fields. But networks are more than just the scaffolds and circulatory systems of organizational fields. They are also the source of ‘horizontal’ distinctions among categories of individuals, organizations, and actions, as well as ‘vertical’ status differentials. While institutions shape structures and condition their effects, networks generate the categories and hierarchies that help define institutions and contribute to their efficacy. Thus, any effort to understand institutional processes must take networks into account, and vice versa.

Our argument draws on core concepts from institutional and network theory that are utilized across both lines of work. Despite their portability, however, they have rarely been theoretically integrated. Using institutional theory, we highlight the under-theorized relational aspects of both fields and logics. Starting in network theory, we [Page 597]emphasize the important institutional features of embeddedness and social capital. Our goal is to do more than review existing points of contact or stimulate joint discussion. We aim to provide a roadmap for future research that will directly address two critical animating questions. First, how do institutional practices and forms emerge from networks? Second, how do institutionalized categories and conventions shape the structure and effects of networks?

We begin with a brief excursion through several canonical works in institutional analysis, highlighting the implicit, but nonetheless strong, network underpinnings of these theoretical arguments. For symmetry, we select several well-known empirical studies that directly measure network effects to account for the transmission of institutional practices and structures. Next we revisit four foundational ideas - organizational field, institutional logic, embedded-ness or the non-contractual basis of contract, and social capital - which contain both network and institutional insights that are, we contend, indissoluble. We then develop answers to our key questions about emergence and constraint against this background.

Networks are Carriers of Institutional Effects

In their classic paper, Meyer and Rowan (1977) observed that the formal structures of organizations ‘dramatically reflect the myths of their institutional environments.’ They argued that organizations are driven to incorporate practices and procedures defined and buttressed by widely prevalent, rationalized concepts in the larger society. These practices were institutionalized through professional standards and prestige hierarchies, and reinforced by public opinion. Consequently, Meyer and Rowan contended that the building blocks of formal organization ‘litter the societal landscape.’

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