New Forms as Settlements

Introduction

A challenge facing neo-institutionalism is to detail how pre-existing institutional conditions and alternative institutional projects influence the creation of new organizational forms. We build on the idea that varying degrees of contention underlie the construction of new forms, and suggest that a settlement or truce has to occur among contending parties for the new organizational form to gain a foothold. We develop a model of how asymmetries of power among the contestants and incompatibility among their proposals shape the nature of the settlement, and its durability. We discuss when asymmetries of power among contestants are high or low, and when ideological compatibility among the proposals is high or low, and present a matrix of possible settlements. We illustrate the framework by drawing on examples and discuss implications for institutional theory and organizational ecology.

The institutional perspective proposes that new organizational forms arise when actors with sufficient resources see in them an opportunity to realize interests that they value highly, but first they must legitimate the theory and values underpinning the form (DiMaggio, 1988: 18). In this perspective, institutional projects can arise from organized politics or social movements, and in the case of the former they resemble the latter to the extent that resources and interests are not fixed and the rules governing interaction are contested (Fligstein, 2001). A few studies have shown when and how new organizational forms and industries are spawned by social movements and entail varying degrees of contention (Davis and McAdam, 2000; Rao, Morill and Zald, 2000; McAdam and Scott, 2005).

Recently, organizational ecologists have suggested that an organizational form is a taken-for-granted category with default conditions that define membership such that violation of these conditions is penalized by audiences (Hannan, Polos, and Carroll, 2007). Thus, an organizational form is an externally enforced identity composed of diagnostic elements and the expected (and thus, rewarded) values on these elements (Polos, Hannan, and Carroll, 2002). These diagnostic elements cohere to form a code of conduct which is enforced by consumers, critics and other audiences.

So a challenge is to reconcile the political process by which organizational forms are [Page 353]constructed with their existence as socially coded identities. Put another way, how does conflict and contestation culminate in a code? Therein, lies the motivation for our chapter. We propose that forms have to be first constituted as settlements - that is agreements have to be negotiated among parties before new forms can be institutionalized as codes. A settlement is a set of understandings and expectations about a form that are shared among internal and external audiences. Settlements become codes only when these understandings and expectations become default conditions of membership, and are enforced by external and internal audiences.

We visualize a process wherein coalitions of institutional entrepreneurs champion proposals, that is intended projects that concretize the strategic intent, vision, and goals of the promoters. When different coalitions promote competing proposals, the construction of a settlement becomes a political process in which asymmetries in the power of the various coalitions become critical. In particular, the size of the coalition, its ability to mobilize additional resources, and its power to frame become decisive. We develop a model of how asymmetries of power among the contestants and incompatibility among their proposals shape the nature of the settlement, and argue that settlements become institutionalized into codes of conduct with varying levels of durability and enforceability. We discuss when asymmetries of power among contestants are high or low, and when ideological compatibility among the proposals is high or low, and present a matrix of possible settlements.

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