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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. 1 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 2 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 3 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. References Friedland, R., R.R. Alford. 1991. Bringing society back in : Symbols, practices, and institutional contradictions. W.W. Powell, P.J. DiMaggio, eds. The new institutionalism in organizational analysis. The University of Chicago Press, Chicago, 232-263. Greenwood, R., M. Raynard, F. Kodeih, E.R. Micelotta, M. Lounsbury. 2011. Institutional complexity and organizational responses. Academy of Management Annals 5(1) 317-371. Greenwood, R., R. Suddaby. 2006. Institutional entrepreneurship in mature fields: The big five accounting firms. Academy of Management Journal 49(1) 27-48. IPCC. 2014. Climate change 2014: Synthesis report. Contribution of working groups i, ii and iii to the fifth assessment report of the intergovernmental panel on climate change R.K. R.K. Pachauri, L.A. Meyer, eds. IPCC, Geneva, Swittzerland, 151 pages. Lawrence, T.B., R. Suddaby. 2006. Institutions and institutional work. S.R. Clegg, C. Hardy, T.B. Lawrence, W.R. Nord, eds. Handbook of organization studies Sage, London, 215-254. Lounsbury, M. 2007. A tale of two cities: competing logics and practice variation in the professionalization of mutual funds. Academy of Management Journal 50(2), 289-307. Maitlis, S., M. Christianson. 2013. Sensemaking in organizations. The Academy of Management Annals 57-125. NCCS/Norwegian Climate Center Service report 2/2015. Klima i Norge 2100. Kunnskap for klimatilpasning oppdatert i 2015 (only in Norwegian). Raaijmakers, A.G.M., P.A.M. Vermeulen, M.T.H. Meeus, C. Zietsma. 2015. I need time! Exploring pathways to compliance under institutional complexity. Academy of Management Journal 58(1) 85-110. Sine, W.D., R.J. David. 2003. Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the us electric power industry. Research Policy 32(2) 185. Smets, M., P. Jarzabkowski. 2013. Reconstructing institutional complexity in practice: A relational model of institutional work and complexity. Hum. Relat. 66(10) 1279-1309. Thornton, P.H. 2004. Markets from culture : Institutional logics and organizational decisions in higher education publishing. Stanford Business Books, Stanford, Calif. Thornton, P.H., W. Ocasio. 1999. Institutional logics and the historical contingency of power in organizations: Executive succession in the higher education publishing industry, 19581990. American Journal of Sociology 105(3) 801-844. Thornton, P.H., W. Ocasio, M. Lounsbury. 2012. The institutional logics perspecticve: New approach to culture, structure, and process. Oxford University Press, Oxford. Vasudeva, G., E.A. Alexander, S.L. Jones. 2015. Institutional logics and interorganizational learning in technological arenas: Evidence from standard-setting organizations in the mobile handset industry. Organization Science 26(3) 830-846. 4 Zilber, T.B. 2008. The work of mearnings in instititional processes and thinking. R. Greenwood, C. Oliver, K. Sahlin-Andersson, eds. The sage handbook of organizational instititutionalism. Sage, Thousand Oaks, CA, 151-169. 5