Institutional Logic Theory

3. Institutional logics theory

This study aims at explaining the differences between various incubation practices. In order to do so this study rests upon the perspective of institutional logic theory as a theoretical basis for analyzing the relationship between institutional logics and practice variations within the field of business incubators. The concept of institutional logics finds its origin in a much older sociological stream of literature identified as ‘institutional theory’. In order to understand the fundamental aspects of the institutional logics approach, it is important to firstly uncover the mechanism of institutional theory. Although the concept of institutional logics stems from the basic principles of institutional theory,

Powell and Colyvas (2008) refer to this reciprocal influence in two distinct ways of analysis: ‘built up’ processes and ‘pulled down’ processes. Built up processes, also referred to as ‘bottom up’ processes, uncover the influences of individual and organizational actors on higher-level institutions by means of micro-level rituals and negotiations that aggregate over time (Powell and Colyvas, 2008). Pulled down or ‘top down’ processes on the other hand stress how institutional logics at a societal level are embedded as ‘taken-for-granted’ norms within organizations and individual beliefs. This process, where macro-level and micro-level processes influence each other is visualized in the figure below (figure 2). March and Olsen (1989) refer to this mechanism in two dichotomous distinctions. On the one hand, logics of appropriateness. These types of logics are driven by macro institutional rationalities, which are referring to rationalized and impersonal prescriptions conforming to ‘rulelike’ and appropriate means within the environment. On the other hand, logics of consequences, which are influenced by instrumental rationalities. These logics are more driven from a micro perspective, consisting of personal interests and autonomous goals (Lounsbury, 2008). Whilst logics of appropriateness

The way individual actors focus their attention is strongly influenced by their environmental stimuli, as actors are part of multiple social networks, cultures and structures. The situational fit between the institutional logic and environmental characteristics determine an actor’s identity, goals and schemas guiding social interaction. This perspective takes a rather instrumental view on rationality, emphasising on the role of personal interests enabling a variety of cognitive orientation rooted through multiple networks and structures (Lounsbury, 2008). Lounsbury (2001) highlighted the role of collective social movement in the creation new institutional logics. The authors showed how the ecological movement SEAC helped in building upon a recycling industry and the diffusion across American universities. His study provided insightful evidence in how personal interests and the level of commitment to ecological movements causing a variety in practices and shaping the establishment of new logics. Drawing from a cross-level model of institutional logics developed by Thornton et al (2012), individual goals have to be accepted by a broader social movement or group in order to influence new organizational practices. Once new practices are adopted within an organizational field, it inherently influences the existing