Understanding Institutional Environments: An Institutional Logics Model of Societal Evolution

Research on institutional logics has illuminated how institutional heterogeneity shapes individual and organizational behavior and the strategic management of organizations. This research has focused on the field and organizational levels of analysis, generally overlooking broader societal forces. Yet, increasingly complex societal dynamics, marked by unstable and conflicting institutional pressures, are consequential for decision-making and especially the management of organizations, suggesting the need to theorize societies for their evolutionary and revolutionary effects. We integrate institutional logics with legitimacy theory to develop an ecological model of societal evolution. This model explains how dominant institutional logics emerge and result in marginalizing alternative institutional logics. We argue societies characterized by a dominant logic are less stable and resourceful because logic dominance reduces institutional diversity, diminishing actors’ capacity to avail, access, and activate the necessary diversity of institutions to define and solve issues in complex societies. Analogously, the dominant logic crowds out space for alternative institutions in society, which decline in much the same way that biological ecologies languish under insufficient biodiversity. We develop the concept of institutional diversity to explain the mechanisms reinforcing checks and balances to ensure the availability of a broader range of institutions for identifying and solving problems in society.