AOM submission # 14103
Institutional Logics and Models of Retail Pharmacy:
A Comparison of Sweden, Italy, UK and USA
Trish Reay (University of Alberta) Trish.Reay@ualberta.ca
Giuseppe Delmestri (University of Bergamo) giuseppe.delmestri@unibg.it
Beth Goodrick (Florida Atlantic University) goodrick@fau.edu
Davide Nicolini (Warwick University) Davide.Nicolini@wbs.ac.uk
Kajsa Lindberg (University of Gothenburg) kajsa.lindberg@gri.gu.se
Petra Adolfsson (University of Gothenburg) petra.adolfsson@gri.gu.se
Somewhat modified version of the paper presented at the International Management
Division of the Academy of Management Conference August 2009, Chicago
Abstract:
Using a multiple case study approach, we compare retail pharmacy in four different
countries-Sweden, Italy, UK, and USA. We draw on the concept of institutional logics to
understand both the isomorphism associated with globalization and also the variety of
organizational models observed in different countries. We identified characteristics
associated with each of six sectors (markets, corporations, professions, states, families,
and religions) and compared the typical model of retail pharmacy in each country with
the ideal type for each logic. In contrast to most accounts of institutional change in the
realm of globalization studies which have focused on the development of similar
organizational forms across nation-states over time, we see that some local material
practices and symbolic constructions are resilient. We conclude that different
configurations of potentially conflicting logics help explain the models of retail pharmacy
in the four different countries.
Key words: institutional change; institutional logics; globalization
Globalization may be taking us to a world where businesses look much the same
in all geographic settings. On the other hand, in some settings, we continue to see striking
differences in organizations when comparing across countries. We were struck by a
situation of both similarities and differences in our international comparison of the
business of retail pharmacy in four countries – Sweden, Italy, UK and USA (see Figure 1
for a reconstruction of the main historical events shaping pharmacy in the four countries).
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Pharmacists (health professionals who dispense medications) hold similar
qualifications throughout the western world, and their work practices of dispensing
medications based on physician prescriptions is also very consistent. Pharmaceutical
products themselves are developed, produced and distributed by very large multinational
corporations such as Pfizer, and Merck. The product sold throughout the world is exactly
the same. For example, a 10 mg. tablet of Valium looks the same and is of identical
composition wherever it is sold. However, the pharmacy in which pharmacists work, and
in which Valium or other pharmaceuticals are sold takes many different forms. In
Sweden, pharmacies are part of a government owned monopoly, and pharmacists work as
public sector employees. In Italy, pharmacies are independently owned by pharmacists
and often ownership is passed on to family members. In the UK, pharmacies can be
owned by pharmacists, a partnership of pharmacists, or a corporation. There is no limit to
the number of stores that one individual, partnership or corporation may own, however,
only a pharmacist may dispense prescribed pharmaceuticals. In the USA, there are no
restrictions on ownership1. Similar to any other business, anyone with sufficient financial
resources can own a pharmacy, but only a pharmacist may dispense prescribed
pharmaceuticals.
Institutional theory provides a framework for understanding both similarity and
differences. It arose from a desire to understand why organizations were so similar to
each other – the question of isomorphism (Meyer and Rowan, 1977; Scott, 2008).
However, over the past decade institutionalists have become increasingly interested in
understanding change. They want to understand how established institutions are broken
down and replaced with new ones, or how systems move away from established norms
1
The one exception is the USA state of North Dakota where only a pharmacist may own a pharmacy.
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and standards. Within this focus on institutional change, the concept of institutional
logics (values and beliefs that guide behavior within a field) has played prominently.
Theorists suggest that it is the transition of an organizational field from one guiding logic
to another that underpins such change (Thornton and Ocasio, 1999; Thornton, 2004).
We see that institutional theory and the concept of institutional logics provide
potentially interesting and informative ways of understanding both the isomorphism
associated with globalization and also the variety of organizational models observed in
different countries. In this paper, we contribute to the institutional theory literature by
drawing on relatively recent studies that point to the importance of not just one guiding
logic, but multiple institutional logics and their collective impact on field level actors
(Goodrick & Reay, 2007; Reay and Hinings, 2005; forthcoming; Thornton and Ocasio,
2008). We suggest that attention to the co-existence of multiple logics provides insights
into processes of institutional change and the existence of both similarities and
differences in organizational models when comparing across countries.
We wanted to understand the similarities and differences among typical models
of retail pharmacy in four countries. Retail pharmacy provides a very interesting setting
to study these relationships because a number of important societal logics collectively
shape the way in which pharmacy services are provided in different countries. For
example, a logic of professionalism guides practices since pharmacists are highly
educated professionals whose work is grounded in an exclusively held body of abstract
knowledge. At the same time, the market logic also guides practices since financial
sustainability of retail pharmacies depends upon selling pharmaceutical products. In
addition, logics of state, corporatism, family and religion may also impact.
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In the remainder of the paper we describe the current literature on institutionalist
views of globalization, institutional change more generally, and the role of institutional
logics. Next we briefly describe our four case studies of retail pharmacy with some
attention to key historical events. We then explain our research methods and present our
findings concerning the configuration of logics we observed in each country. Finally, we
set out our discussion and conclusions.
Background Literature:
Comparative studies of business practices in different countries have a long
history in management research. However, with the revival of institutionalism (neoinstitutional theory) in the 1970s, new approaches to globalization studies began to
emerge. In particular, studies eventually labeled as “world society theory” (e.g. Meyer et
al., 1975) brought two new approaches to understanding differences and similarities
across countries. First, institutionalists brought attention to the “power of culture and
norms in motivating social change,” and second they drew on “the notion of institutional
isomorphism” to challenge “realist expectations that intrinsic needs and unique histories
result in distinctive trajectories and features” (Drori, 2008: 452).
Within this institutional tradition, researchers began to give particular attention to
the characteristics of the place in which business practices occurred. Studies focused on
the importance of different institutional principles as related to different structures that
manifested those principles (Orrù, Biggart & Hamilton, 1991). And, globalization began
to be considered not only as a process of adaptation to global conditions and pressures,
but also as a process of institution building at the global level. In this way, globalization
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came to be conceptualized as comprised of two complementary processes: (1) the
diffusion of practices throughout the world, and (2) the development of global institutions
with values and beliefs that could be shared by organizations around the world. (Drori,
2008)
These concepts of globalization that rely upon not only diffusion of practices but
also the transfer and sharing of values and beliefs are consistent with concepts of
institutional change more generally and the role of institutional logics in guiding
organizational behavior (Scott, 2008). Institutional logics are the organizing principles
that shape the behavioral possibility of actors (Friedland & Alford, 1991). They exist at
the societal level and are associated with each of the most important societal level orders
-- market, state, democracy, family, and religion. Each societal sector is characterized by
a central logic which is associated with “a set of material practices and symbolic
constructions,” that is “available to organizations and individuals to elaborate” (Friedland
& Alford 1991: 248). Institutional logics thus shape behavior by specifying which goals
or values should be pursued within a given domain, and what actions, interactions, or
interpretations are appropriate for the pursuit (Scott et al. 2000; Thornton 2004; Thornton
& Ocasio 2008).
Although earlier studies assumed that one dominant logic organized the behavior
of all actors in an organizational field, there is now recognition that most fields are
characterized by multiple logics. “Multiple frameworks are available within developed
societies, which are differentiated around numerous specialized arenas – political,
economic, religious, kinship, and so on – and each of which is governed by a different
logic” (Scott, 2008: 186). As organizations or other actors negotiate their actions across
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these arenas, they may be influenced by different logics. In addition, organizations may
be able to draw on the different logics as resources in designing (or re-designing) their
operations.
The relationship between symbolic connstructions and material practices that
constitute institutional logics is conceptually important in understanding institutional
stability and change. We see that symbolic constructions and material practices are best
viewed as two sides of a coin rather than two poles of a traditional reductionist opposition
between materialism and idealism (Delmestri, 2008). Researchers have shown that
changing institutional logics at the field level leads to altered practices of both
organizational and individual actors (Hoffman, 1999; Thornton, 2004). At the same time,
research also shows that changing practices of local actors may lead to modifications in
institutional logics (Reay & Hinings, forthcoming). Understanding this relationship
between symbolic systems and material practices is further complicated by relatively
recent theorizing that many organizational fields are guided by multiple institutional
logics rather than a single dominant logic. As Scott pointed out, “Multiple frameworks
are available within developed societies, which are differentiated around numerous
specialized arenas – political, economic, religious, kinship, and so on – and each of which
is governed by a different logic” (Scott, 2008: 186). As organizations or other actors
negotiate their actions across these arenas, they may be influenced by different coexisting and possibly competing logics. In these settings, material practices (and changes
in these practices) may be best understood in relationship to an intertwined grouping of
institutional logics that may also be changing.
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In this paper, we take the position that institutional change and processes of
globalization can best be understood by focusing on the dynamics between or among
institutional logics and also by giving attention to how these logics are materialized in
observable organizational behavior. We attempt to better understand how processes of
institutional change can lead to both similarities and differences in different national
settings through our empirical comparative study of retail pharmacy in four different
countries – Sweden, Italy, UK and USA.
Case Studies
We used a multiple case study approach to investigate similarities and differences
in the way that pharmacy services are organized in four different countries. Here we
provide a short description of each case.
Sweden: In Sweden, pharmacies were privately owned from the 17th century until 1970.
Then, in 1971 the pharmacy system was nationalized and the state took over ownership
of all pharmacies. Pharmacists became public employees. Since that time, the stateowned company, Apoteket AB, has held the exclusive right to engage in drug retailing.
The state also controls the price of prescribed pharmaceuticals, since they are considered
an integral component of the public health system. Residents receive a tax-based system
of pharmaceutical benefit. In 2002, a new agency was appointed by the government to
determine which pharmaceuticals are reimbursable and to set prices that patients pay.
Pharmacies are not established to make a profit. They are in place to provide a health
service. This description of pharmacy practices accurately represents the current
situation; however, Economic Union (EU) anti-competition concerns are soon to be
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addressed through a new (but not yet established) way of organizing that will move away
from completely state-owned pharmacies.
Italy: In the past, the most prevalent form was “one pharmacist, one pharmacy.” Going
back to the early 19th century, laws precluded pharmacists from owning more than one
pharmacy. Since then some constraints have been altered. Pharmacies ownership remains
limited to pharmacists, but may be transferred relatively easily to a family member or
(with more restrictions) another pharmacist. Currently, one pharmacist may own only one
pharmacy, and up to four pharmacists may create a partnership that owns up to four
pharmacies. In addition, because the government considers the pharmacy to be a public
service, pharmacists have the opportunity to personally obtain a charter by winning open
publicly regulated competitions. Currently, the municipal and cooperative pharmacies
account for approximately 10% of pharmacies, while privately owned pharmacies are the
rule. Regardless of ownership, the government continues to limit the number and location
of pharmacies. The price of pharmaceuticals has been determined by state authorities
since 1240, and traditionally medicine has been distributed for free to the poor. In 1978,
with the institution of a national health care system, pharmaceuticals became fully
reimbursable as a right of citizenship. The Italian government has taken, and continues to
take a strong role in managing the overall pharmacy system, but relies on individual
pharmacists as owners and business operators of individual pharmacies.
UK: Since 1880, any private investor has been allowed to own a pharmacy provided that
the dispensing activity is carried out by a licensed pharmacist. Thus a pharmacy may be
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owned by any individual, partnership or corporation. While the government does not
regulate or limit the number of pharmacies, it does control the number of contracts with
pharmacies which dispense reimbursable drugs. This means that pharmacies with a
contract receive full reimbursement from the National Health Service (NHS) for all
prescribed pharmaceuticals dispensed. Pharmacies without a contract would have to
charge the full price to consumers. In recent years, NHS contracts have been used to
prevent extreme forms of competition and to preserve some of the independent
pharmacies. Currently in the UK, the price of reimbursable pharmaceuticals was resolved
through a Government-Industry agreement. Until the early 1900s, the price of
pharmaceuticals was left to market forces, but in the 1950s, a series of mechanisms were
introduced and resulted in almost complete government price control. These mechanisms
have been relaxed over time, but now, UK consumers pay a very low, set fee for any
‘reimbursable’ prescription.
USA: Ownership of pharmacies is not restricted. Anyone may own a pharmacy, but only
a pharmacist is allowed to dispense pharmaceuticals. Prior to the 1920s there was no
legal restriction on ownership. As chain drug stores began to proliferate, some states
restricted ownership to pharmacists. A 1928 Supreme Court decision ruled that state laws
were unconstitutional; anyone could open a pharmacy if they had sufficient means to do
so. The owner was required to hire a pharmacist if they did not hold the credentials. In
1973, the Supreme Court decision was overturned, with the result that states could restrict
ownership. However, since then, only one state (North Dakota) has chosen to restrict
pharmacy ownership to pharmacists. Most pharmacies are a small component of a much
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larger store where many other products (e.g. groceries, household goods, cosmetics) are
also sold. Following a free market principle, pharmaceuticals have been treated as a
normal good, with the price determined through mechanisms of supply and demand.
Private insurance plans (usually through employers) pay the cost of pharmaceuticals with
a moderate portion paid directly by the consumer. Recently, the federal government pays
partial costs for those citizens 65 and older. Government insurance also provides limited
coverage for the poor. Since insurance plans are discretionary for employers, not all
citizens are covered. Insurance companies negotiate price with suppliers but overall costs
to consumers are higher than in most other countries. In the USA, the government role
has primarily been to provide regulations with regard to safety standards and the
maintenance of a relatively free-market system.
Research Methods:
We followed a modified content analysis (Krippendorf, 2004) by using analytic
categories developed from concepts outlined by Friedland and Alford (1991) and
Thornton and Ocasio (2008). For each of our four case studies, we analyzed archival
records, professional publications, government statistics and other publications. We also
visited typical pharmacies in each country. Based on all data sources, we identified
characteristics associated with each of six sectors (markets, corporations, professions,
states, families and religions) – each with its own distinct logic (Thornton, 2004). Using
the concept of ‘ideal type’ (Freidson, 2001; Thornton, 2004) we developed a description
of how the field of retail pharmacy would be organized if that sector (with its distinct
logic) organized the field. For example, if the market sector exclusively organized the
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field of retail pharmacy, the observable material practices would be: unrestricted
ownership, signs of outlets emphasizing brand distinctiveness, pricing of products based
on principles of demand and supply, product content uncontrolled, no restriction on who
dispenses medications, and absence of external subsidies for consumers. The above listed
characteristics describe the ideal type for the market logic. (The ideal type for each of the
other five logics is described in Table 1 by the list of characteristics recorded in the first
column.)
[Table 1 about here.]
Then, for each sector (logic) and based on our description of the ideal type, we
evaluate the ‘closeness to ideal type’ for each characteristic in each case (Sweden, Italy,
UK and USA). This means that we compared the observed typical model of retail
pharmacy in each country with the ideal type for each logic. This evaluation required that
all members of our research team from different countries used their individual and
collective knowledge of each case to develop an agreed upon ranking. Each ranking is
based on a five point scale where 5 = very close to ideal type, and 1 = not at all close to
ideal type. Table 1 shows our evaluations of closeness to ideal type for each characteristic
in each geographic setting. For ease of discussion, we have summarized these evaluations
to develop an overall rating (high, moderate or low) of the relative strengths of each logic
in each country. These ratings are indicated in Table 2.
[Table 2 about here]
In addition to these evaluations, we also draw on the history of pharmacy in each
country to understand changes as they have occurred over time. To get a better
understanding of the field, we further analyzed each critical event presented in Figure 1.
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(In this version of the paper, we report on only one selected event for each case study.
We focus on the most recent event with significant implications that can be observed.)
Following the literature that conceptualizes institutional logics as realized in material
practices (Friedland & Alford, 1991; Thornton, 2004; Thornton & Ocasio, 2008) and
with particular recognition of the inherent duality of logics and practices (Delmestri,
2009; Mohr & Duquenne, 1997), we developed a coding scheme to record: (1) the nature
of the problem associated with the critical event, (2) a description of how the problem
was raised to the field level, (3) the way in which the problem was resolved, and (4) the
material practices evident in the field after the resolution. (See Table 3 for a summary.)
We then used this information to understand how conflict among multiple logics within
each field arose, was elevated to a level where resolution became critical, and how the
resulting practices reflect the new arrangements under which logics co-exist. Based on
our knowledge of retail pharmacy in each country, we focused on three societal level
logics that we believed to be most relevant across the four cases – the market,
professional and state logics. In addition to understanding this process within each field,
we also attempt to draw further conclusions from comparisons of patterns identified
across cases (Stake, 1995).
Findings: Configurations of Logics
Based on our ratings of the strength of each logic, we developed a snap-shot view
of the set or configurations of logics associated with the typical model of retail pharmacy
in each country. In each setting we observed that more than one logic was rated at
moderate or strong, a finding that is consistent with other studies that highlight situations
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where more than one dominant logic guides behavior in a field (Goodrick & Reay, 2007;
Reay & Hinings, 2005; forthcoming). In this section we describe the configuration of
logics guiding typical retail pharmacy practices in each country.
Sweden
We rated the configuration of logics associated with the typical model of retail
pharmacy in Sweden as: State = high; Professional = moderate; and Corporate =
moderate. There are only small indicators of a market approach, and there is no evidence
that the church or family logics are relevant.
In Sweden, the state influence is strong since pharmaceutical services are viewed
as an integral component of the publicly funded health care system. All pharmacies are
operated by the state-owned corporation, Apoteket AB. This company currently holds
the exclusive right to sell pharmaceutical products in Sweden, although this arrangement
will likely be modified based on recent rulings by the EU. We also evaluated the state
logic as highly influential because the consumer price of pharmaceuticals is determined
based on socially acceptable standards, and kept low as part of overall government
objectives to maintain the health of the population. Low-income citizens receive
medications at no cost. Similar to all countries we studied, the government takes
responsibility for ensuring the quality of pharmaceutical products.
In addition to the strong influence of the state logic, we also rated the influence of
the professional and corporate logics as moderate. The professional association for
pharmacists controls educational and entry-to-practice standards. The dispensing of
pharmaceutical products is restricted to licensed pharmacists, although pharmacy
technicians may dispense a limited number of products. Even products that are freely
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available in many other countries (Over-the-counter pharmaceuticals – OTCs – such as
Tylenol or cold remedies) have been available only in pharmacies. Even though Apoteket
is state-owned, it does operate on a corporate model with bureaucratic structures and
reporting relationships. Pharmacists must work within this corporate structure, and
receive a relatively low salary (Lindberg & Adolfsson, 2007).
A visit to a typical Apoteket pharmacy provides the following view. Pharmacy
outlets have outside signage showing a stylized green caduceus (a winged staff entwined
by two snakes) followed by the name of the company (Apoteket), and the name of the
city of neighborhood where the pharmacy is located. Inside the store, many products
(cosmetics, herbal remedies and personal products) are displayed in easily accessible
shelving, and sales personnel walk about in this open area of the shop. Pharmacists and
pharmacy technicians are easily available to provide information about products, and also
dispense controlled medications from behind the counter. Displays inside the pharmacy
are often related to health maintenance products and provide a strong sense of
professionalism.
Italy
Our evaluation of the configuration of logics associated with the typical model of
retail pharmacy in Italy is: Professional = high; State = high; and Family = moderate.
There are few indicators of a market or corporate approach, and at this point in history,
there is no longer evidence that the religious logic is relevant.
We rated the influence of professionalism as high because ownership of
pharmacies is restricted to pharmacists. The professional association sets educational
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standards and determines appropriate qualifications for entry to practice. As in other
countries, dispensing of pharmaceutical products is also restricted to pharmacists,
however, in Italy, even OTC pharmaceutical products must be sold by pharmacists. The
influence of the state logic is also high. Pharmaceuticals are considered to be an
important component of publicly provided health services. As such, the cost of
medication is reimbursable from the government for all citizens. The government
controls the number of pharmacies in any community by granting only a limited number
of pharmacists the right to operate a pharmacy.
In Italy, the family logic remains moderately influential in the typical model of
retail pharmacy. The majority of pharmacies are passed on from father to son (or
daughter). Regulations on ownership favor the transfer to a family member – even if the
family member does not currently hold the appropriate qualifications as a pharmacist.
Special provisions allow time for the family member to become educated as part of
ownership transfer process. The owner of the pharmacy typical hires other family
members (including non-pharmacists) to work in the store – making the pharmacy a
typical family business, strongly guided by family principles.
A customer visiting an Italian pharmacy will see consistent signage on the outside
of the building with a green cross and the word, “Farmacia.” In addition, the title and
name of the owner-pharmacist is displayed, often signaling the name of a traditional
family that has owned the outlet for decades or even centuries. Inside the pharmacy,
displays tend to be focused on pharmaceutical or other health-based products. Stores are
relatively small, with displays of cosmetic or herbal products in the open area. The
pharmacist must be on-site for all sales of pharmaceutical products, and if he or she is
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absent for any period of time, customers must return later to pick up their prescription or
OTC purchase. Very recently, new regulations allow that OTC products may be
purchased in supermarkets, but only in a section of the store specifically designated for
OTCs, and only with the assistance of a pharmacist to put the medication into the
consumer’s shopping cart.
UK
Our evaluation of the configuration of logics in a typical UK pharmacy is as
follows: State = high; Corporate = high; Professional = moderate; Market = moderate.
The family and religious logics do not hold observable influence.
We rated the influence of the state logic as high because pharmaceuticals are
considered an important part of the National Health System (NHS). All citizens receive
prescribed medications for a small flat fee (approximately ₤7). Although the government
does not own pharmacies, the number of pharmacies holding a contract with the NHS is
limited. Pharmacies could operate without an NHS contract, but they would then be
forced to recover the full cost of medications from consumers. This effectively limits the
establishment of a pharmacy to those with an NHS contract. As in other countries, the
government also plays a strong role in setting standards for the quality of pharmaceutical
products.
We also rated the influence of the corporate logic as high. Ownership of a
pharmacy (or pharmacies) may be by a person, partnership or corporation. In effect, this
has translated in 2007 into about 60% of pharmacies being multiples, i.e. owned by
corporate chains. In particular, Boots owns more than 50% of all pharmacies in the UK.
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This large corporate ownership of pharmacies means that bureaucratic systems and
structures prevail. Most pharmacists work as employees of a corporation such as Boots,
and corporate management of stores is the norm.
The configuration of logics we identified for UK pharmacies also includes
moderate influence from the professional and market logics. The professional association
of pharmacists controls educational standards and manages eligibility criteria. Only
pharmacists can dispense prescribed medications, but the list of OTC products is
relatively large and these products may be sold in any store by anyone. The influence of
the market logic is also evident because unrestricted ownership means that anyone can
open a pharmacy, and in some parts of the country ownership is relatively diverse.
Pharmacy owners do operate based on profitability criteria, although the market is
definitely skewed by NHS coverage for the cost of most medications (Anderson, 2005;
Silcock et al., 2004).
A visit to a typical UK pharmacy would show a relatively large store with
corporate signage on the front of the premises indicating the name of the corporation (or
individual owner). Inside the pharmacy, a large number of cosmetic, personal hygiene,
and OTC products are displayed in multiple rows of shelving. The pharmacist counter is
usually set prominently near the front of the store, and often features a queue of people
waiting to have their prescription filled. Displays within the store are focused on both
healthy living advice, and also advertising for personal products such as shampoo or
cosmetics.
USA
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We rated the typical model of retail pharmacy in the USA as: Market = high;
Corporations = high; Professions = moderate and State = moderate. In contrast to the
other countries studied, we observed that the market logic holds a strong influence in
organizing the typical model of retail pharmacy in the USA. Pharmacy ownership is
unrestricted, which means that anyone can operate the business even though only a
pharmacist can dispense medications. This was determined in 1928 when the US
Supreme Court ruled that states could not restrict ownership of retail pharmacies in the
same way that they could not restrict ownership of other business (U.S. Supreme Court,
1928). Also consistent with the ideal type of the market logic, prices of pharmaceutical
products are determined by supply and demand without government interference. There
are few subsidies available for consumers, although recent changes to Medicare programs
provide government support for senior citizens. Even though the market logic strongly
influences the model of retail pharmacy, some aspects of retail pharmacy are not
consistent with the market logic. The quality of pharmaceutical products is controlled by
government – not the market. The bargaining power of insurance companies influences
the price paid for pharmaceuticals. And although there are a large number of OTC
medications that can be sold by anyone, most pharmaceuticals can only be sold to
consumers by a licensed pharmacist.
We also found that the configuration of logics associated with retail pharmacy in
the USA included strong influence from the corporate logic. Almost all pharmacies are
owned by corporations, and unlike the European model, names of pharmacists are not
prominently displayed. This situation has changed dramatically since the 1950s when
52% of pharmacies were owned by independent pharmacies. Currently, less than 3% of
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pharmacists report being self-employed (Mott et al., 2000). The professional and state
logics also contribute to the configuration of logics since dispensing of medications
(other than OTCs) is restricted to pharmacists who have been educated in accordance
with standards determined by the professional association. And the state logic is also
important because the quality of medications is highly regulated by government
authorities, and increasingly the government is involved in programs to provide
pharmaceuticals to senior citizens (CMS, 2009). Currently, neither the family logic nor
the religious logic influence the model, but in the first half of the 20th century, family
ownership of pharmacies was common (Kremers et al., 1963). Churches have not taken a
role in pharmacy practice in the history of the USA.
The picture of a typical pharmacy in the USA is very strongly connected to the
market logic. Most pharmacies are very large stores where many other products (in
addition to pharmaceuticals) are sold. The two largest chains have 4,000 stores each and
dispense 41% of total prescriptions sold (U.S. Department of Health and Human
Services, 2000). Pharmaceutical sales typically occur at the back of the store, where a
pharmacist and technicians work behind a locked counter to fill prescriptions and
dispense medications to customers. Inside and outside store displays indicate the
corporate brand (e.g. Walgreen’s) and often indicate bargain prices available on
merchandise other than pharmaceuticals. For example, front door signage commonly
announces sale prices on soft drinks, snack foods or toiletries. Retail pharmacies in the
USA provide an image of a place where consumers go to purchase a wide variety of
products. They may or may not purchase pharmaceuticals in their store visit.
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To summarize by comparing across cases, we observed different configurations of
logics in each country we studied. The model of retail pharmacy in the USA is particular
influenced by the market logic, but also by logics of corporatism, professionalism and the
state. The model in the UK is closest to that of the USA with strong influence from the
corporate logic but also from the state logic, and only moderate influence from the
market and professional logic. In Sweden the influence of the state is very high since
pharmacies are operated by a state owned corporation that holds a monopoly for
pharmaceutical services. In addition, the professional and corporate logics influence the
model. And finally, the Italian case is somewhat different. In this configuration of logics,
the professional and state logic are high in influence together with moderate influence
from the family logic.
Discussion and Conclusions:
We view the pharmacy as a place to observe how institutional logics become
materialized in a locally sustainable model of retail pharmacy. Since the pharmacy is the
location where patients (consumers) take possession of medications, it is a physical space
where the intersection of multiple institutional logics becomes more visible. In each
country we examined, there was significant influence from a number of potentially
competing logics and the tension among those logics was resolved in different ways.
The model of retail pharmacy in the USA is the most influenced by the market
logic. This finding is not surprising given that the USA is the only one of our cases where
market principles organize the provision of health care more generally. The strength of
the market logic is observable not only in the pricing mechanism for pharmaceutical
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products (demand and supply), but also in the wide variety of products sold in a typical
US pharmacy. Owners of pharmacies are businessmen and as such they sell products on
which they can make a profit. Some products are pharmaceuticals, but many are not.
However, even though the market logic is strong in the USA it does not explain other
components of the model. Quality assurance of pharmaceutical products is not left to
market forces – it is highly controlled by government agencies. And the logic of
professionalism (not the market logic) explains the requirement that only pharmacists
dispense prescribed medications. Thus we see that a configuration of logics (that might
otherwise be considered competing logics) collectively influence the observed model. We
have used the USA case as an example, but in the other three cases, we similarly find that
the influence of a number of logics is evident.
We draw on this concept of a configuration of logics to better understand
processes of institutional change that result in both similarities and differences in retail
pharmacy across countries. Most accounts of institutional change in the realm of
globalization studies focused on the development of similar organizational forms across
nation-states over time including the globalization of health (Inoue & Drori, 2006). In
contrast, our study suggests that some local material practices together with their
symbolic justifications may be more resilient than others. For example, across our four
cases, we see the standardizing influence of professional pharmacists – even when they
are paid by the state (Sweden) compared to those in the USA who receive relatively large
salaries based on highly profitable pharmacy sales. But at the same time, we see
continued adherence to market-based pricing (USA) and equally strong adherence to nonmarket, flat fee consumer prices (UK). This suggests that some components of a state
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logic may be strongly evident, while other components are not. Overall, we see that the
dynamics among institutional logics and material practices involve both continuity and
change.
From an institutional perspective, globalization consists of two processes of
change – (1) global institutionalization of world society through global organizations and
(2) the diffusion of established models from one national setting to another (Drori, 2008).
These processes are considered to be complementary, but how they co-exist has not been
fully addressed. The theoretical construct of a configuration of logics provides a
framework for understanding how both processes can occur simultaneously – perhaps
existing as complementary to each other, but also potentially in competition with each
other. For example, we see that the strength of the professionalism logic is moderate or
high in each of the countries we studied. Its universal strength may be explained by the
existence of global organizations such as international pharmacy associations, or global
pharmaceutical manufacturers. In addition, societal trends have been toward
standardization to protect patient safety with the diffusion of professional models of
health care as one component (Inoue & Drori, 2006). However, global standards may
come into opposition with local preferences or long-established traditions such as family
ownership of pharmacies in Italy. In this country, we can explain the co-existence of
potentially conflicting logics of family and professionalism through a configuration of
logics that balances and accommodates principles of family ownership with the global
necessity of professional standards.
Based on our historical data sources, we see that changes in national models of
retail pharmacy shift over time in association with alterations in the configuration of
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AOM submission # 14103
logics. Logics that were a strong component of the configuration at one point in time,
became less significant or in some cases almost irrelevant at a later date. For example, in
the early history of Italian pharmacies, the church played a very strong role with monks
compounding medications and distributing them to those in need – a practice prohibited
only in the late 19th century by a young Italian state in the struggles to establish itself in
front of delegitimizing attacks by the Vatican authorities. Today, the church plays no role
in pharmacy and discussion of a religious logic seems inappropriate. Similarly, in the
USA during the somewhat lawless settling of western areas, pharmaceutical products
were concocted by anyone and sold to those who would buy. The practices were fully
consistent with a free market logic. Over time, government standards were introduced,
ownership of pharmacies was restricted and then unrestricted, and most recently,
government subsidies for some population segments have been introduced. Although
pharmacy practices in the USA are more closely aligned with the market logic than in
other countries studied here, they are much less aligned now than they were in the past.
Both of these examples show the concept of a configuration of logics may help to explain
gradual shifts (continuous change) because within the grouping of logics, changes in one
logic may be compensated for or buffered by alterations in other logics.
Our attention to the role of historical events also points to the importance of what
Schneiberg (2007) labeled as flotsam and jetsam. We observed that previous events held
ongoing significance to the constellation of logics, even when those events were
temporally distant and not logically related. For example, in Italy the historical
importance of family dynasties in many areas of business means that sustaining family
ownership of pharmacies is viewed as a very appropriate government strategy. Also, in
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AOM submission # 14103
the USA, previous legal and regulative battles that were fought over the importance of
free-market principles have left indelible patterns leading decision-makers to adopt
stances in support of free-market principles for pharmacies. We believe that more
attention to the importance of previous events (often not in the same industry) may help
to uncover important insights about the resilience of certain models in some countries.
In this paper, we have drawn on the concept of a configuration of logics
(Goodrick & Reay, 2007) to understand how institutional changes may result in
worldwide similarities but also differences. Our content analysis of archival data,
historical information and personal observations has allowed us to consider how the
arrangement of potentially conflicting logics may influence models of retail pharmacy in
four different countries – Sweden, Italy, UK and USA. This work contributes to previous
institutionalist approaches to understanding globalization, and also to institutional theory
and the role of institutional logics. We hope that further investigations in different
industries will build on our work.
References
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Drori, G.S. 2008. ‘Institutionalism and Globalization Studies’. In Greenwood, R., Oliver,
C., Sahlin, S. & Suddaby, R. (Eds.), Sage Handbook of Organizational
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Reay, T. & Hinings, C.R. 2005. The recomposition of an organizational field: Health care
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Table 1:
Closeness to ideal type by logic and by typical pharmacy type in country
(1= not at all close to ideal type; 5= very close to ideal type)
Institutional logic
(characteristics of ideal type)
Markets
 Ownership unrestricted
 Prices set by demand/
supply
 Inside & outside
displays emphasize
brand distinctiveness
 Product content
unregulated
 No restrictions on who
dispenses drugs
 No subsidies for
consumers
Corporations
 Corporate ownership
 Prices set to maximize
corporate profit
 Inside & outside
displays signal corporate
distinctiveness
 Product content
determined by
corporation
 Corporation determines
who dispenses drugs
 Corporations may
subsidize some
consumers (e.g. seniors)
Professions
 Pharmacist ownership
 Prices set to give
pharmacists fair salary
 Inside & outside
displays signal
professional affiliation
 Product content assured
by pharmacist
 Only pharmacists
dispense drugs
Sweden
Italy
UK
USA
1
2
1
1
5
1
5
5
2
1
5
5
1
1
1
1
1
1
2
2
1
1
1
4
3
1
1
1
4
2
5
5
3
1
5
5
1
1
1
1
1
1
1
1
1
1
1
1
1
1
5
1
2
1
1
1
3
5
1
1
1
1
1
1
4
5
4
4
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AOM submission # 14103

Pharmacist chooses to
subsidize some
consumers (or not)
States
 State ownership
 Prices set based on
public social welfare
 Inside & outside
displays signal
affiliation with state
 Product content assured
by state regulations
 State dispenses drugs
directly to patients
 State subsidizes
consumers unable to pay
Families
 Family ownership
 Prices set by family
owners
 Inside & outside
displays signal family
presence
 Product content assured
by family owners
 Families determine who
dispenses drugs
 Family owners choose to
subsidize consumers
Religions
 Church ownership
 Prices determined by
church officials
 Inside & outside
displays signal religious
affiliation
 Product content assured
by church officials
 Church dispense drugs
 Church chooses to
subsidize some
consumers (e.g. poor)
1
1
1
1
4
5
1
5
1
5
1
1
1
1
1
1
5
5
5
5
1
1
1
1
5
5
5
2
1
1
5
1
1
1
1
1
1
2
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
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AOM submission # 14103
Table 2: Overall rating of logic strength (closeness to ideal type) in each country (present times)
Logic
Market
Corporate
Professional
State
Family
Religion
Sweden
Low
Moderate
Moderate
High
Low
Low
Italy
Low
Low
High
High
Moderate
Low
UK
Moderate
High
Moderate
High
Low
Low
USA
High
High
Moderate
Moderate
Low
Low
Country
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AOM submission # 14103
Table 3: Selected problems, resolutions and practices
The problem
How problem gained
importance at field level
How problem was resolved
Description of practices at
resolution
Sweden
1970
How should the
government ensure that
pharmacies were located
appropriately in urban and
rural areas to meet
citizens’ need for access to
pharmaceuticals?
Government and health officials
became concerned with
increasing numbers of
independently owned
pharmacies that tended to be
clustered in urban areas.
Government took action to meet
health needs of citizens.
Negotiations between the government
and the association of pharmacy
owners resulted in the decision to
nationalize all pharmacies through
establishment of Apoteket AB.
Italy
1968
Who can own a pharmacy,
and do they have the right
to sell their pharmacy?
And what role should
pharmacists take in the
health system?
Political parties negotiated a
compromise agreement that led to
legislation establishing: (1)
pharmacists’ responsibilities as quasi
public health officers, (2) pharmacy
ownership by right of a personal
license, tradable only once in a lifetime
and inheritable by family members
who could have time to gain
certification as a pharmacist.
UK
2003
How should NHS
contracts with community
pharmacies be controlled?
Discussion of pharmacy
ownership was framed around
survival of rural pharmacies and
the future identity of the
pharmacist as a business owner
or public officer. Different
arguments made by different
key actors: pharmacy owners
association, pharmacy
employees association, and
main political parties (Christian
Democrats, Socialists,
Communist Party & MSI.
Question was whether to make
pharmacists public officers or
maintain non-tradable personal
license arrangement.
Office of Fair Trading
recommended an end to controls
limiting numbers of NHS
contracts for new community
pharmacies.
All pharmacies owned by government
corporation, Apoteket.
Any profits are held by Apoteket.
Location, hours of operation, etc.
controlled by govt.
Pharmacists and others are
government employees.
Prescription drugs dispensed only by
pharmacists.
OTC drugs sold only in pharmacies.
Pharmacies owned by a pharmacist or
cooperatives of pharmacists.
Any profits are held by owner.
The number and location of
pharmacies are controlled by
government.
Prescription drugs dispensed only by
pharmacists.
OTC drugs sold only by pharmacists.
Government decision: modify entry
control regulations rather than abolish
them.
Health authorities monitor number of
pharmacies with an NHS contract, and
Pharmacy owned by any individual or
corporation.
55% pharmacies belong to chains.
Any profits held by owner.
Pharmacies are integrated with health
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AOM submission # 14103
decide whether new applications for a
contract will be granted.
USA
1928
Should ownership of
pharmacies be restricted to
pharmacists?
New York corporation with
three stores challenged
Pennsylvania State Law
restricting ownership of new
pharmacies to registered
pharmacies or corporations in
which all members were
pharmacists. State court
supported restrictive ownership.
1928 Supreme Court ruled that there
was insufficient evidence that nonpharmacist ownership of a pharmacy
would threaten public health safety.
The risk did not warrant restriction of
private business. Therefore, no
restrictions could be placed on
pharmacy ownership.
system through NHS reimbursements
& health authority control over
contracts.
Prescription drugs dispensed only by
pharmacist.
OTC drugs sold in controlled retail
settings.
Pharmacies can be owned by any
individual or corporation.
61% of pharmacies belong to chains.
Pharmacies operate as businesses (as
opposed to as part of a health care
system) and are reimbursed primarily
through private insurance and copays.
Prescription drugs dispensed only by
pharmacist.
OTC drugs sold in any retail
establishment as well as in vending
machines.
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Figure 1: Critical problems and resolutions over time in the four countries
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AOM submission # 14103
33