Systems Theory, Societal Contexts,
& Organizational Heterogeneity
Raimund Hasse & Georg Krücken
Discussion by Carliss Charles
New Institutionalism: The macroperspective


John Meyer-modern society is not a
concrete, hard-wired structure composed of
actors. Rather, a broader & imagined cultural
system in which the main cultural patterns
of Western society are embedded
The causality for societal development is
top-down: society as the embodiment of
broader cultural norms constitutes its actors
◦ Nation-states
◦ Organizations
◦ Individuals
New Institutionalism: The macroperspective
Organizations are considered to be
shaped by their wider socio-cultural
environment
 In this context, organization is the
dependent variable
 Global culture and its organizational
representatives are the independent
variables

The meso-perspective

DiMaggio & Powell- organizations are deeply
shaped by those other organizations which
serve as ‘significant others’
◦ Organizational fields

3 Pillars of Isomorphism
Coercion
• Regulatory
agencies
• State
organizations
Normative
isomorphism
• Professional
associations
• Consulting
firms
• Educational
institutions
Mimicry
• peers
• Competitors
• collaborators
The Meso-Perspective: More on
Fields



Organizations differ according to their field
membership
Organizational fields mediate between a
single organization and broader societal
contexts
Organizations are considered to be more
actively involved in the overall development
of society—they negotiate with other
organizations and may also try to manipulate
those organizations and other institutional
factors
The Meso-Perspective: More on
Fields~Discussion
What determines whether or not
organizations can be successful in actively
intervening into their context?
 What determines how organizations may
use their potential for active intervention
 Thoughts on ‘institutional engineering of
fields’?
 Thoughts on the role of institutional
entrepreneurship?

Luhmann’s Systems Theory: Modern
Society, Differentiation & Organizations

Sophisticated forms of societal stratification
emerged before the advent of modernity,
particularly in ancient high cultures
◦ Differentiation is strictly vertical, societal order is
structured e.g. caste system in India

Disappearance of vertical stratification
triggered by challenging the status of religion
as an authority that determines social life in
general (e.g.16th century Europe politics
claim autonomy from religion)
Luhmann’s Systems Theory: Modern
Society, Differentiation & Organizations

Functional differentiation-as societal systems
are considered to fulfill functions that cannot
be substituted for other systems.
◦ The economy regulates the production &
distribution of scarce products and services
◦ Science generates new knowledge
◦ The political system produces collectively binding
decisions which affect the entire society

Based on a binary scheme of informationprocessing
Luhmann’s Systems Theory: Binary
Information Processing
System
Function
Efficacy
Code
Program
Law
Manage
Regulation
Norm
of Conflicts
Expectations
Legal / Illegal Laws,
Jurisdiction
regulation,
constitution
Politics
Make
Collective
Decisions
Possible
Practical
Application
Government Goals of
Power
/ Opposition Political
Parties/Ideol
ogies
Science
Production
of
Knowledge
Supply of
Knowledge
True / False
Theories,
methods
Truth
Economy
Reduction of Satisfaction
Scarcity
of needs
Payment /
Nonpayment
Budgets
Money
(source: H-Georg Muller, 29, cited by, http://www.law.ed.ac.uk/ahrc/script-ed/vol4-4/savirimuthu.asp)
Medium
Luhmann’s Systems Theory: Modern
Society, Differentiation & Organizations
Most systems on the macro-level of society represent
a specific and highly reductionist binary logic of info
processing, and concerns relevant for other systems
or overall societal norms have to be transformed
according to that logic
 Coded info processing provides societal systems with
an identity which distinguishes them from the other
 Any societal system is dependent on the
contributions of other systems, and modern society is
characterized by a high degree of mutual
dependency.

◦ A crisis in any system may negatively effect other systems
◦ Examples?
Luhmann’s Systems Theory:
Organizations





The transition from stratified to functionally
differentiated societies → the spread of formal
organizations. The process of functional differentiation
and organization building
Societal systems ↔ organizations
Growth and increasing complexity stimulate
organizational differentiation
Systems theory supports new institutionalismorganizations are well advised to copy the prevailing
norms of their wider societal context
In contrast to new institutionalism, systems theory
stresses that these norms are copied only the extent
they support the realization of ends which constitute
the specific identity of an organization
Two Examples: The example and transformation of the
modern welfare state & Academic Entrepreneurship
THE SOURCES OF SOCIETAL &
ORGANIZATIONAL
HETEROGENEITY AT THE
MACRO-LEVEL OF SOCIETY
Macro Neo-Institutional Theory
(Meyer)
Sociological Systems Theory
(Luhmann)
Diffusion of general societal
norms(external triggers)
 Must adhere to broader
societal norms of justice,
progress, etc. for legitimacy
 The impact of other
welfare states is central
 Conceptualized as transnational processes and
external causes


Specific rationality of the
political system (internal
triggers)
 Emphasis on the effects of the
functional differentiation in
society
 Other societal systems are
only relevant as an external
resource for continuous
reproduction
 An inevitable consequence of
the evolution of the political
system & the interplay of its
core institutions (mass media,
administrative agencies)
The Expansion & Transformation of
Modern Welfare State
Macro Neo-Institutional Theory
(Meyer)
 Emphasizes the match b/n AE and
social norms & expectations
 Processes of mutual adjustment
and isomorphic tendencies
 See Neo-Institutional research on
entrepreneurship (Hwang/Powell
2005)
 See Inter-organizational networks
among academia & industry
(Powell/White/Koput/Owen-Smith
2005)
 See Universities and their
embeddedness in wider social
norms & expectations
(Meyer/Schofer 2007)
Sociological Systems Theory
(Luhmann)

Emphasizes societal
differentiation & distinct logics of
societal systems

AEs can be characterized by an
economic program, a political
program and a science system

Must be considered as creating
an opportunity for societal
systems & their organizations

Conceptualized as opportunity
structures that can be exploited
by any of its participants
Academic Entrepreneurship (AE)
Conclusion
Sociological systems theory stresses the
conceptual links between organizational
analysis and wider societal fields and their
developments
 Neo-institutionalism and systems theory
can be used as guidelines for reestablishing a macro-perspective on the
interconnectedness of societal and
organizational developments

OT Questions
Why do organizations exist?
 Why are firms the same/different?
 What causes changes in organizations?
 Why do some firms survive and others
don’t?
 What are the emerging issues?
