Can Institutional Theory Be Critical?

Institutional theory and critical management studies (CMS) have much in common. They both challenge the hegemony of economic explanations of the social world by questioning the prevailing assumption that efficient production is both a necessary and proper organizational objective. The focus of CMS is on “the social injustice and environmental destructiveness of the broader social and economic systems that . managers and organizations serve and reproduce” (Adler, Forbes, & Willmott, 2007, p. 119). Institutional theory, similarly “is an approach to understanding organizations and management practices as the product of social rather than economic pressures. It has become a popular perspective within management theory because of its ability to explain organizational behaviors that defy economic rationality” (Suddaby, 2013, p. 379). Both theories trace their philosophical antecedents to German Idealism and are rooted in a reaction against the Kantian assumptions of objectivity. Thus, critical theorists and institutional theorists agree, at least implicitly, that the world is largely a product of subjective interpretation. Social structures, such as organizations and institutions, gain their essence not from an empirical reality but, rather, as a result of how they are perceived and categorized based on a shared history of perception (see R. Meyer, 2008, for the philosophical roots of neo-institutionalism and Held, 1980, for critical theory). Both theories, similarly, draw from Hegelian assumptions that reject the notion that human experience (culture and society) are epiphenomena that can be reduced to economic rationality. Instead, the theories largely grant assumptive privilege to culture and society (Marxist-inspired CMS theorists being a notable exception) and argue that economic explanations can, ultimately, be reduced to more fundamental socio-cultural causes. The privileging of socio-cultural causes is perhaps most apparent in critical management theory, which has adopted a powerful normative element in both its theoretical and empirical focus. Human emancipation and “real” democracy are powerful guiding themes for critical theory (Alvesson & Willmott, 1996). These themes have encouraged critical researchers in management schools to resist the temptation of adopting the viewpoint of managerial or shareholder elites in their efforts to understand organizations (Alvesson & Deetz, 2000; Alvesson & Willmott, 2003). Within critical theory, thus, adopting a socio-cultural lens to view the world is thought to offer the basis for human agency. Institutional theory, by contrast, uses the same philosophical assumptions to explain why humans lack agency. A foundational argument of institutional theory is that organizations exist in social contexts in which the rules of appropriate behavior are defined, not by economic rationality, but rather by prevailing myths of appropriate conduct (J. W. Meyer & Rowan, 1977) that become so cognitively embedded that they influence managerial assumptions of efficiency and rationality (Zucker, 1977). As a result, human agency, in institutional theory, is “embedded” or made subordinate to shared norms that, once institutionalized, take on a rule-like status. Both institutional theory and critical theory have drifted substantially from their philosophical roots. The drift is perhaps most obvious in institutional theory, which has moved in three distinct stages, from its roots in phenomenology, often called the “old” institutionalism (see Selznick, 1996; Stinchcombe, 1997), to a high degree of structural determinism (i.e., DiMaggio & Powell, 1983), and eventually to a new focus on institutional agency (Oliver, 1991) and change (Greenwood, Suddaby, & Hinings, 2002), which critics describe as an attempt to smuggle contingency theory “in the back door” (Mutch, 2007). Critical theory, by contrast, can be viewed as existing in two distinct phases: a narrow and a broad phase. The narrow phase of CMS adheres closely to the philosophical project that emerged from the Frankfurt School of the 1930s, which tried to counterbalance the emerging totalitarianism of positivist science by tempering it with elements of human reflexivity and morality. Over time, this narrow form of critical theory has expanded into a broader range of projects that include, variously, post-colonialism, post-structuralism, discourse theory, feminism, globalization, and a broad range of associated theoretical and empirical projects (see Adler et al., 2007, for a summary). As a result, both theories have fragmented into a range of sub-disciplines that often appear unrelated to each other. Both critical theory (Delbridge, 2014) and institutional theory (Suddaby, 2010) have been accused of losing their 545304 JMIXXX10.1177/1056492614545304Journal of Management InquirySuddaby research-article2014