Download Innovation in the realm of institutional complexity

Innovation in the realm of institutional complexity – the case of climate
adaptation
By
Lena E. Bygballe & Ragnhild Kvålshaugen
Department of Strategy, BI Norwegian Business School, 0442 Oslo, Norway
The world is facing major climate changes, and one of the major consequences is increase in
the average temperature in most parts of the world (IPCC 2014). The increased temperature
leads to changes in precipitation – some areas of the world face major increase in
precipitation, while other areas face major decrease in precipitation. In the Northern
hemisphere, the climate is becoming warmer and wetter, which puts enormous strain on the
built environment due to increase of flooding and landslides. This has wide range
consequences for society and the various organizations involved in developing and
maintaining buildings and infrastructure. Climate changes accentuate the need for adaptation
of innovative solutions to deal with the impact of the changes, which in turn requires that the
involved actors create new and alter old practices. In this setting, new practices involve
development of new interaction patterns among the multiple actors involved. These actors
include authorities, municipalities, users, insurance companies, commercial developers and
contractors, as well as various specialists and suppliers. We refer to these actors as the built
community, which is characterized by fragmentation and high degree of interdependence.
We are interested in studying how this built community, constituted by multiple actors deals
with the highly urgent need and strong external pressures for climate adaptation. We are
particularly concerned about the inter-organizational information-sharing and decisionmaking processes connected to use of available solutions to handle climate changes. To study
these processes, we draw on insight from the institutional logics perspective (Friedland and
Alford 1991; Thornton et al. 2012), particularly looking at how institutional complexity
(Greenwood, Raynard, Kodeih, Micelotta and Lounsbury 2011) influences the likeliness of
climate adaptation and innovations (i.e. actual application of new solutions). An institutional
logic is understood as a dominant logic on “how to interpret organizational reality, what
constitutes appropriate behavior, and how to succeed” in a field (Thornton 2004: 70). Thus,
institutional logics give attention to specific problems and limit potential solutions, i.e.
alternatives lying outside the bounds of the institutional logic may never enter into the
solution set (Thornton and Ocasio 1999). The understanding of institutional logics is
particularly relevant here due to the fact that adaptation to climate change requires change in
an inter-institutional system (Thornton 2004). This change is embedded in societal logics and
subject to field level processes between different actors in the institutional field (Thornton,
Ocasio and Lounsbury 2012). The effects of a societal logic is often discontinuous driven by
external events (Sine and David 2003) and internal contradictions (Greenwood and Suddaby
2006). Even if the built community can be regarded as constituting a mature institutional
field, which apparently share symbolic meanings and material practices (Zilber 2008), the
climate changes and the way they are handled are likely to incur multiple and probably
competing logics (Lounsbury 2007). “Organizations face institutional complexity whenever
they confront incompatible prescriptions from multiple institutional logics” (Greenwood et al.
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2011: 317). Our research addresses how different logics influence upon the behavior, and the
interaction and decision-making processes of the built community involved in climate
adaptation and how the actors deal with the institutional complexity.
We draw on case study research from Norway, a country which will be facing increased
precipitation in the years to follow (NCCS, 2015). Several incidents in the past few years
illustrate the challenges that these changes incur. One case is from Kvaernerbyen, an area in
central Oslo, the capitol of Norway, which in the past few years has been refurbished and
subject to a large housing project. On 2nd September 2015, the local river, which floats
through the area was flooding due to heavy rain and strong wind during the night. The
flooding resulted in the surrounding roads being closed, and many house occupants found
their basements filled with water and the electrical system shut down. In addition, 70 children
in a nearby kindergarten had to be evacuated due to risk for water-triggered landslides, which
in turn triggered a great media exposure. Following this incident, many have pointed to the
fact that the existing sewers and drain pipes on a national basis are not dimensioned to handle
this type of rain; they are outdated and do neither take into account the increasing population
density of these new areas. In the Kvaernerbyen case, the newly built culvert, being jointly
owned by the municipality and the private property developer responsible for the housing
project, was not able to handle the water. However, the initial assessments indicated that this
was not mainly due to capacity as such, but because of an obstacle in the culvert and an
unfortunate combination of several factors. The incident has triggered a thorough evaluation
and a third party has been engaged to write a report since there are disputes over who is
responsible and who should pay the bill. The costs of these floods are enormous, and there is
an ongoing public debate and questions being raised about the role and responsibilities of the
different actors involved, as well as how they interact.
Our interpretation of the climate adaptation case is that there is a need for a new social order
coping with the challenges emerging because of the climate changes. We argue that the
involved actors operate according to various institutional logics, which are more or less
(mis)aligned. Our study delves into what these logics are and how they affect upon the way
the actors are dealing with climate changes and subsequent risks. Our initial findings indicate
that there is a technical-oriented logic, advocated by engineers (e.g. in the responsible
department in the municipality), who are concerned about the capacities and properties of the
technical solutions, and a more economic-oriented logic, advocated by the commercial actors
involved. In some respect, our research more specifically addresses why innovations and the
adoption of innovative solutions do not happen in these situations. What allows such apparent
misalignment of behaviors and miscommunication between the involved actors? We find
some explanations for this in the fact that societal logics are not transposed directly to an
institutional field in whole cloth (Thornton et al. 2012). Climate adaptation requires change in
the material practices, but the ideational element of the structuring of the existing institution
may prohibit change to happen (Thornton et al. 2012). Thus, the need for new practices
challenge existing institutional logics among the different actors in the community. Climate
change is rapidly developing and the evolutionary change may prohibit taking necessary
measures in order to adapt to the climate changes fast enough. Further, the climate change
logic provide available and accessible categories and schemas for sense making and action
(Maitlis and Christianson 2013). These schemas and categories are translated and adopted in
the institutional field through theories (how things are), frames (meaning, understanding), and
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narratives (stories about how thing are and the sense making of it) (Thornton et al. 2012).
Thus, the central elements to investigate when understanding challenges connected to
adopting to climate changes in the built community are theories, frames and narratives;
“Theories increase coherence in institutional logics and rapid adoption of institutional
practices. Frames facilitate identification and mobilization, and therefore agency and
institutional change. Narratives, by linking theories and frames with specific practices,
generate specific linkages between the symbolic and material elements of institutional logics”
(Thornton et al. 2012: 152). Changes in institutional logics involve combination of changes in
narratives and practices, resulting in new vocabularies in the institutional field. The new
vocabularies become visible through changing theories, frames and narratives.
Some studies have already addressed this issue. For instance, a recent study shows that
institutional complexity leads decisions makers to delay compliance to new institutional
demands (Raaijmakers, Vermeulen, Meeus and Zietsma 2015). However, in the process of
adapting to new demands they work on neutralizing opposing pressures, challenging coercive
pressure, adapting new practices to fit new demands, and waiting to see how the situation
unfolds as multiple parties influence each other. Another study has identified a relationship
between institutional logics and inter-organizational learning (Vasudeva, Alexander and
Jones 2015), i.e. learnings for development of new practices. This study found that routines
of inter-organizational learning are grounded in institutional logics (Vasudeva et al. 2015)
meaning that there a limitations to what you can learn based on existing institutional logics.
Further, the relational model of institutional work (Smets and Jarzabkowski 2013) is also of
relevance for our study. This model shows how actors construct and reconstruct complex
institutional environments in their practical everyday work through different cycles by
making sense of contradictory logics over time.
These previous studies are important starting points for our study on climate adaptation of the
built environment. However, our research seeks to expand these perspectives in several ways.
For example, there is an identified need to clarify the processes of translation and adaptation
of societal logics into an institutional field (Thornton et al. 2012), particularly when actors
and organizations are exposed to multiple institutional logics, i.e. understanding the dynamic
patterns that confront organizations when they jointly are facing pressure to develop new
practices (Greenwood et al. 2011). The perceived increased complexity creates ambiguity
about what is legitimate and how the organizations should adapt to the institutional pressure.
The empirical setting in our research is highly inter-organizational, and is therefore likely to
reveal interesting insight into these processes. Further, there is a need to explore meaning
making in action and the interrelationship between the different meanings in institutional
change (Zilber 2008). Thus, the relationship between the practice/structures and the
ideational needs more research, i.e. the understanding of enactment of beliefs over time is
still missing in current research. Our study aims to contribute in this respect by examining
how the multiple actors in the built community deal with the needs for climate adaptation and
how various solutions to the problem are adopted and translated in response to the need for
change. In line with the call for more research focusing on meaning making and enactment of
belief, actors and individuals are interesting as they are the sites for interpretation,
maintenance, and change of institutionalized practices; they “muddle through” everyday
processes through situated action (Lawrence and Suddaby 2006). Our cases indicate that the
involved actors are not very well prepared to handle the strains put upon them. As such, we
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aim at understanding how new and altered organizational practices develop due to a new
societal logic (climate change) within an institutional field (the built community), i.e. the
transition of an institutional field from mature (established practices) to emerging (unfinished
practices) due to institutional pressure from exogenous factors such as climate change.
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