Sociological Institutionalism: Co-Authored by Joe and Alp.

In this this paper we examined organizational theories within a sociological institutionalism frame among several complementary and competing theorists. The paper begins by defining key terms and concepts within organizational and institutional studies as a means to establish relative context.  The paper continues with a description of the evolution of institutionalism within a larger community of related theories.  Next, the paper explores a number of prominent institutional theorist with a focus on relationships among competing theories, their commonalities and divergent concepts.  Principal among theories explored is neo-institutionalism.  Following this, the paper concludes with the author’s views on the future direction of institutionalism within a sociological frame, and areas of consideration for further inquiry.

Organizational Theories and Sociological Institutionalism

Organizational theories occupy a unique position within the larger sociological field. Therefore in order to facilitate understanding, clear definitions are needed to anchor key concepts and foster relative perspectives.   Although far from comprehensive, the following definitions seek to link and bound a number of terms that relate to sociological perspectives of organizational theory.  At a high level of abstraction, organizational theory is defined as “concerned with organizations, the relationship between organizations and their environment, the effects of those relationships upon intra-organizational functioning, and how organizations affect the distribution of privilege within society.” (Greenwood, 2007, para. 1).  This definition, among other things, implies a systems-oriented approach to defining and bounding organizational theory.  Organizational theory operates in a system that is influenced and simultaneously defined by its environment and other participants (i.e., society, culture, power, etc.) (Greenwood & Hinings, 1996).  These descriptions echo the attributes of a diverse number of social systems that in this context are populated by groups (e.g., institutions) rather than more individualistic forms (i.e., organizations). 

Institutions as collective groups may be defined as “any structure or mechanism of social order and cooperation governing the behavior of a set of individuals within a given human community” (Miller, 2008).  Lawrence and Suddaby (2006) in reference to Scott (2001) extend this definition to include “cultured-cognitive, normative and regulative elements that …provide stability and meaning to social life.” (Lawrence & Suddaby, 2006, p. 216).  Institutions as social systems operate as a collective whole reflecting the actions of its individual actors i.e., the “whole is the sum of its parts.”  This perspective implies that both the collective (the institution) and those that function within it (organizations and/or actors) are at the same time independent and interdependent within a larger social system.  Given the complexity of these relationships, it is important to thoroughly examine each component in order to gain an understanding of the larger social system i.e., the parts are known by the whole and the whole is known by the parts.

Further, institutions and in particular institutional theory is defined as a theory that “highlights cultural influences on decision-making and formal structures. It holds that organizations, and the individuals who populate them, are suspended in a web of values, norms, rules, beliefs, and taken-for-granted assumptions that are at least partially of their own making.” (Barley & Tolbert, 1997, p. 93).  Barley and Tolbert (1997) refine this concept further by framing these taken-for-granted assumptions as an idealized construct establishing that “these cultural elements define the way the world is and “should be” (Barley & Tolbert, 1997, p. 93). These taken-for-granted assumptions operate as blueprints for organizing by specifying the forms and procedures an organization should adopt if it is to be seen as a member-in-good-standing of its type.

This definition follows two distinct paths.  First, it recognizes the effects of environmental forces on decision-making and the product of these decisions.  Second, and perhaps more importantly, it calls out the elements that facilitate the decision-making process.  These elements operate within a larger meaning-making process that recognizes the influence of environmental forces.  Lawrence and Suddaby (2006), in reference to Scott (2001) offer another description of what an institution is; a “cultured-cognitive, normative and regulative elements that ... provide stability and meaning to social life ... Institutions are transmitted by various types of carriers, including symbolic systems, relational systems, routines and artifacts and they operate at multiple levels of jurisdiction” (Lawrence & Suddaby, 2006, p. 216).  Institutions in this context must be understood as operating along a continuum that on one end are bound by conceptual forms such as symbolic systems and on the other by more concrete forms such as institutions defined by laws, rules and regulations.  Although extremely different in form, the forces that influence the creation, sustainability and evolution of institutional forms will fundamentally be the same.  In sum, institutions operate within a diverse environmental context and are driven by actors within an extremely complex sociological frame.

Overview of Prominent Institutional Theory

Having defined organizational and institutional theory, albeit at a very high level, it will be instructive to examine the origins of current institutional theory.  Institutional theory and in particular, neo-institutionalism can trace their origins back to classical management theorist of the mid-20^th century and notable among them, Max Weber.  Weber’s theoretical contributions related to organizations as rational systems supported and enabled by bureaucratic power structures forms the foundation of many early institutional theories (Weber, 2004).  Weber’s work on the effects of broader institutional forces in shaping and supporting differing administrative systems provides a common fundamental thread between classical and neo-institutional theory (Jacoby, 1990).  

Classical Institutional Theory

Classical institutional theory emphasizes organizational adaptation, variation and the role of environmental factors as catalytic forces influencing organizational behavior (Kraatz & Zajac, 1996).  Core themes within classical institutionalism include; “issues of influence, coalitions, and competing values were central, along with power and informal structures” (Greenwood & Hinings, 1996, p. 1022).  Classical theory seeks to explain organizational change as a function of employing rational (i.e., technical) processes over time in an effort to achieve higher levels of performance (Ashworth, Boyne & Delbridge 2007).  Influenced by Weber, bureaucracy becomes a commonly cited theme reflecting classical theories focused toward maximizing the utility of administrative functionality in the pursuit of higher performance (Barley & Tolbert, 1997; Jacoby, 1990).  This theoretical perspective looks externally to forces that influence and drive organizational behaviors.  Within this theoretical perspective, competitive factors such as access to resources (i.e., cost of capital and labor) influence the creation, sustainability and evolution of institutions and the organizational structures that exist within them. 

Neo-Institutionalism

Seeking a more holistic approach to understanding organizational behaviors, alternative theories have emerged over the past three-decades with most notable among them, neo-institutionalism (DiMaggio & Powell, 1983; Kraatz & Zajac, 1996).  Barley and Tolbert (1997) describe the sentiment behind this theoretical shift; “The rising interest in institutions among students of organizations reflects a growing disenchantment with theories that portray efficiency as the driving force behind decision making or that treat variations in formal structure as rational adaptations to technical and environmental conditions.”  (Barley & Tolbert, 1997, p. 93).  Moving beyond environmental and technical forces, neo-institutionalism takes a more inclusive approach that seeks to understand the role of actors within institutional systems (Lawrence & Suddaby, 2006).

The neo-institutional movement is most fully expressed in the theories presented by DiMaggio and Powell (1983, 1991).  These authors suggest that the forces that drive organization and institutional change are a function of environments dominated by internally motivated dynamics including conformity to perceived normative conditions (DiMaggio & Powell, 1983).  Neo-institutional theorists argue that organizational change is not principally driven by the pursuit of absolute performance but instead that institutional environments demand conformity as a means to achieve legitimacy (Kraatz & Zajac, 1996).  Central to this theoretical perspective is conformity that becomes a pivotal factor in the distinction between classical institutionalism and neo-institutionalism.  To understand the importance of conformity to this theoretical frame, the relationship between legitimacy and conformity must be explored. 

Conformity represents the isomorphic processes whereby organizations become increasingly homogenous over time.  These processes fall into three distinct categories – coercive, mimetic and normative (DiMaggio & Powell, 1983).  Coercive processes represent exogenous forces employed by governments, regulators or other institutional agencies that promote and maintain a particular system.  Mimetic processes reflect activities pursued by actors designed to emulate or adopt another organizations processes, systems, strategies or structures.  Normative processes manifest themselves in the activities of institutionalized communities e.g., professions, self-regulating groups, etc. (Ashworth, Boyne & Delbridge, 2007).  Normative processes often take the form of taken-for-granted behaviors that align with the norms of the institutional community.  All of these isomorphic processes lead to convergence of activity resulting in “heavily structurated” institutional norms within a relative domain.  The catalyst for these conforming behaviors is the pursuit of legitimacy.

Legitimacy as defined by Suchman (1995) is “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” (Suchman, 1995, p. 574).  This definition of legitimacy infers that the behaviors of the target organization or institution are acceptable, credible and desirable by one or more social groups.  With this concept in mind, conformity then becomes the means to pursue what is perceived to be, a legitimate end.  Legitimacy can be further broken down into three distinct categories – pragmatic legitimacy, moral legitimacy and cognitive legitimacy (Suchman, 1995). 

Each supports the perception that the actions of an organization will be desirable, proper or appropriate.  Pragmatic legitimacy reflects the pursuit of self-interested actions relative to a high-value target audience.  Suchman (1995) refers to this as a type of exchange legitimacy where the actions of an organization are dependent on the perceived value to the target audience.  Moral legitimacy represents the perceived positive normative evaluation of the organization and its actions.  This form of legitimacy is not tied to performance and reward like pragmatic legitimacy rather it is a function of the perception of just benefit and social welfare (Suchman, 1995).  Cognitive legitimacy looks to cultural models that afford plausible explanations for organizational action (Suchman, 1995).  Cognitive legitimacy reflects the intuitive sensibility of organizational actions relative to established cultural norms and related models of organizational behavior. 

Scott (2001) in a similar fashion describes institutional legitimacy in terms of “three pillars” – regulative, normative and cultural-cognitive. Characteristics of the three pillars are summarized below in Figure 1 (Scott, 2001).  Each of these forms of legitimacy may operate independently or collectively depending upon the organizational context (Hirsch, 1997).  The pursuit of legitimacy regardless of its distinct form will require some degree of conformity to achieve its end.

Figure 1  Scott’s Three Pillars Model

A byproduct of organizational conformity within an institutional frame is a persistent reversion to the mean behavior pattern as organizations seek to legitimize organizational behaviors relative to others in their respective field.  The result of this persistent pursuit of legitimacy is the convergence of organizational values, beliefs and normative behaviors within a given field (DiMaggio & Powell, 1983).  Convergence within this context refers to the degree that organizations within a particular field resemble each other over time (Ashworth, Boyne & Delbridge, 2007).  Therefore, convergence within a given field results in greater homogeneity as organizations become increasingly isomorphic in their behavior.  As a general rule, convergence operates within natural and open systems over compliant behaviors that are more naturally aligned with rational systems.  Compliance represents another isomorphic force that is a product of organizations moving toward the direction of the greatest isomorphic pressure (Ashworth, Boyne & Delbridge, 2007).  This form of isomorphic convergence reflects a momentum-driven behavior as actors within a given organization align with other participants in their respective field.  Another important feature within neo-institutional theory influenced by isomorphic forces that warrants discussion is structuration (Kratz & Zajac, 1996; Barley & Tolbert, 1997). 

Structuration in very simple terms represents the process required to define institutional fields.   Relative to neo-institutional theory, DiMaggio and Powell (1983) define structuration as “the process of institutional definition, or `structuration', consists of four parts: an increase in the extent of interaction among organizations in the field; the emergence of sharply defined inter-organizational structures of domination and patterns of coalition; an increase in the information load with which organizations must contend, and the development of a mutual awareness among participants in a set of organizations that are involved in a common enterprise.” (DiMaggio & Powell, 1983, p. 148).

In the pursuit of legitimacy, structuration informs the meaning-making processes that influence decisions required to establish, maintain and evolve institutional constructs.  In this regard, structuration spans the gap between institutional order and the social processes operating within any given system.  Barley and Tolbert (1997) describe this spanning function in the model offered by Giddens in Figure 2 below

Figure 2  Giddens’ Structuration Model

Institutional Realm	Signification	Domination	Legitimation
Modalities	Interpretive Schemes	Resources	Norms
Realm of Action	Communication	Power	Sanction

Within this model, the institutional realm reflects the world of rules and the social principals that support them.  The realm of action represents the social activities of actors operating within the system.  Modalities function as meaning schemes that inform action relative to actor’s perceptions of the institutional realm.  Holistically, the process of structuration represents a duality as social action creates social structure and social structures are required to enable social action (Barley & Tolbert, 1997, Meyer & Rowan, 1977).  This notion that structure emerges from social action and vice versa is important.  With this perspective in mind, the relationship between Giddens’ model of structuration and the models of legitimacy described by Scott and Suchman become increasingly apparent (Suchman, 1995; Scott, 2001).  These models directed at distinct purposes find commonality in the idealistic pursuit of legitimacy and the isomorphic processes and organizational homogeneity that result.

Carrying this notion further, structuration as reflected in Giddens’ model provides a schema that reflects the sociological framework within a particular field or institution.  This sociological framework provides a meaning structure that is defined by a broad set of psycho-cultural assumptions (i.e., institutional realms).  In turn, these meaning structures provide general frames of reference that inform decision-making and guide organizational behaviors (i.e., modalities).

Underlying and supporting these meaning structures are meaning perspectives that represent the values, norms and beliefs and provide context and frames of reference for actors that operate within organizational systems (i.e., legitimizing functions) (Suchman, 1995).  Meaning structures represent taken-for-granted rules that influence and support agency within an organizational system (i.e., realm of action).  It is these meaning structures that provide the frames of reference that inform isomorphic behaviors that organizations exhibit in their idealistic pursuit of legitimacy.  

An unintended product of the pursuit of legitimacy is increasing homogeneity and organizational “inertia” as isomorphic forces constrain organizational change and innovation (DiMaggio & Powell, 1983).  This isomorphic dynamic reflects a systemic process that results in a paradoxical relationship between change and inertia (Senge, 2006).  Figure 3 following represents a causal loop diagram that seeks to describe the cause and effect relationship among factors within a system (Senge, 2006). 

Figure 3  Causal Loop

In the causal loop described in Figure 3, an organization seeking a desired state looks to benchmarks within a given field to assess positioning relative to peers.  As many desired states are idealized and dominant positions mythical in nature, gaps in position to performance are perceived.  Seeking to close gaps to performance, organizations will search for what are perceived to be the most legitimate models within the relevant field i.e., “best practices” (Meyer & Rowan, 1977).  The adoption of these practices represents conformity and/or compliance to what are perceived as legitimate models of organizational behavior.  Conformity leads to greater homogeneity within a field as participants converge on similar practices.  Convergence in-turn leads to a perceived legitimacy gaps as organizations aspire to achieve above median performance.  The cycle begins anew and as an increasing number of institutions move toward what is perceived as a desired and legitimate state, salvation recedes before them like the horizon.

Having described the fundamental elements of neo-institutional theory and some of the associated processes in prior sections, it is apparent that there are certain core themes that run through the theoretical construct.  Kraatz and Zajac (1996) discuss “fundamental neo-institutional propositions.”  DiMaggio and Powell (1983) in their neo-institutional theory-defining article discuss twelve hypotheses that function as predictors of isomorphic change.  Ashworth, Boyne and Delbridge (2007) speak of neo-institutional theory in the form of stated propositions.  As neo-institutionalism has become a dominant theory among organizational scholars, these same themes although perhaps less overtly stated, are clearly present.  In an effort to bring some order to these diverse themes, following are some fundamental tenets that ground neo-institutional theory derived from several authors in the neo-institutionalism field (DiMaggio & Powell, 1983, 1991; Ashworth, Boyne & Delbridge, 2007; Greenwood & Hinings, 1996; Kraatz & Zajac, 1996).  These tenets do not represent a comprehensive list of the tenets associated with neo-institutional theory.  They are presented in no particular order.

1.     Organizations operating in mature and highly institutionalized fields are unlikely to behave in ways that differ from the perceived institutional environment.

2.     Organizations operating in mature and highly institutionalized fields are influenced by changes in technology to a lesser degree than by environmental and sociological forces.

3.     Organizations operating in mature and highly institutionalized fields realize increasing homogeneity among peers over time.

4.     Organizations operating in mature and highly institutionalized fields realize greater inertia as fields become more homogeneous.

5.     Organizations operating in mature and highly institutionalized fields gravitate to what is perceived as the most legitimate organizational constructs within a given field.

6.     Organizations operating in mature and highly institutionalized fields are not dependent upon environmental diversity to enable change.

7.     Organizations operating in mature and highly institutionalized fields that change in ways contrary to field norms are more likely to realize bad outcome.

8.     Organizations operating in mature and highly institutionalized fields are influenced by technical change to a lesser degree that early lifecycle adopters.

9.     The higher the degree of uncertainty between means and ends (e.g. causes and effects), the greater the convergence upon perceived legitimate constructs.

10.  The higher the degree of resource dependence within a field, the greater the level of isomorphic pressure.

11.  The greater the degree of structuration within a field, the higher the level of isomorphic pressure within that field.

12.  The more observable the dominate resource model(s) with a field, the greater the isomorphic pressure to converge on that model.

A few common threads emerge from the descriptions of the tenets above.  Most obvious among them relate to degree of change (greater, higher, more), convergence (reversion to a mean) and the idealized state of perceived legitimate models (salvation goals).  All of these themes are behavioral or cognitive in nature with environmental and/or sociological forces catalyzing each.  Additionally, it is important to recall that these tenets operate within a complex organizational frame and often in highly institutionalized contexts.  Within these highly institutionalized contexts are deeply embedded perceptions and normative behaviors that underlie organizational notions of legitimacy.  The level of complexity associated with the interaction and interdependence among these forces is meaningful.

 

Limitations of Institutional Theory

Although neo-institutionalism emerged almost three decades ago, the theory as articulated by DiMaggio and Powell (1983) is still relevant.  That said, the theory has critics nonetheless.  In sharp contrast to the empiricism of classical institutionalism, neo-institutionalism has been criticized as being too abstract for empirical research and practical application (Barley & Tolbert, 1997).  The theories reliance on abstract conditions within the organizational environment makes measurement of cause and effect extremely challenging.  Additionally, the interplay between abstract conditions, dynamic environments and diverse groups of actors results in a complex systems that yields results that are extremely difficult to interpret.  Ashworth, Boyne and Delbridge (2007) reveal these challenges in their discussion of the results of their research into the organizational dynamics of UK local government services – “We found that the level of support for institutional theory varied across organizational characteristics and was stronger for culture and strategy content than for structures and processes.  Thus, the evidence implies that the bars of the iron cage are widely spaced in places, and some of them are broken or missing.” (Ashworth, Boyne & Delbridge, 2007, p. 19).  The level of diversity among factors that influence organizational behaviors coupled with the complexity of relationship dynamics imposes many challenges for researchers.  Issues relating to reliability, validity, generalizability and transferability come to the fore.  In order to overcome concerns over research credibility, dependability and transferability, researchers need to consider alternative methodologies and study designs. 

Critics of classical institutional theorist focus attention upon the overreliance upon environmental forces to drive organizational change (Jacoby, 1990).  In turn, perhaps neo-institutional theory is overly reliant on internally focused organizational dynamics to drive and define theory.  The two theories share many theoretical similarities as a function of their common origin.  Both schools of thought agree that environmental and technical forces influence institutions.  Both hold that institutions change over time in response to environmental factors (Rutherford, 1995).  Both recognize the duality of actors operating within institutional structures.  This recognition sees the individual as being both constrained by institutional structures while at retaining the ability to influence the structures they operate in (Groenewegen, 1995).

Some authors have taken the position that neo-institutionalism is the next evolutionary step in organizational theory (Greenwood & Hinings, 1996).  Perhaps it is more appropriate to view these two theoretical frames as operating on a continuum where the boundaries between are less fundamentally defined.  The relatively recent emergence of neo-institutional theory provides ample opportunity for further research regarding its relationship to other organizational theories.  As the theory matures through further research and ongoing dialogue within the organizational field, the boundaries between and among competing theories will become more evident.

Future Directions for Institutional Theory

The various theoretical forms of institutionalism all struggle with two fundamental questions: “how do diverse institutions operate interdependently?” and “what factors influence institutional change?”  The first question is challenging due to the complexity of institutionalized processes and diversity in structuration.  Additionally, the recent emergence of institutionalism as a distinct field of inquiry results in a relatively limited cannon of research from which to draw independency conclusions.  As further research is conducted and as institutionalism matures as a field, this research gap will narrow.

Each theoretical model of institutionalism tends to narrow its focuses on a limited number of institutional factors; typically establishing theoretical legitimacy as a response to gaps that exist in other theoretical frames.  Regardless of the research methodology employed, principal theorists are frequently compelled to take an integral approach to establishing and defending their particular model.  Indeed, Scott (2001) recognizes the influence and interdependency of regulative, normative and cultural-cognitive forces within an institutional frame.  The interdependencies that exist between regulative agencies and normative forces that ensure social compliance is one example of this.  Interdependent activities in part, are a function of the interdependence between institutional forms, as actors are almost always operating within various institutions e.g., citizens are subject to the laws rules and regulations of the state, corporate policies of an employer, cultural norms, etc.  

The second challenge for all forms of institutionalism is how to explain the origin and nature of institutional change.  As institutions by definition stabilize social structure and establish order, much of the research examines issues of compliance and conformity over emergence and change (Ingram, 2007).  For neo-institutional theorist, the key factor is diffusion of practice through adoption by actors within a field, gaining momentum and legitimacy through broad acceptance (DiMaggio & Powell, 1991).  In practice, this theoretical approach does not sufficiently account for the diversity in institutional behavior and the factors that facilitate the emergence of new institutional forms.  Kraatz and Zajac (1996) speak to this topic directly.

Recent research into institutional change and emergence reflect the bridging of differing cultures of inquiry with a focus on neo-institutionalist theories within broader social movement theories (Ingram, 2007).  This more inclusive approach views institutional entrepreneurship as a driving force affecting institutional change.  This is accomplished through various social forums that influence decision-making within preexisting institutions and that catalyze the emergence of new institutional forms.

 Additionally, elements of the institutional framework from diverse fields may be reconstructed into new institutions in a form of bricolage.  Handheld mobile computing is such a form combining telephony, hardware, software and emerging cloud technologies.  This inclusive and integrative approach combines a number of institutional theories recognizing that institutions are a function of the collective actions of individual actors, and that although institutional change operates within preexisting institutional frames, unforeseen and often unpredictable events may influence dramatic shifts in the direction of existing institutions and spawn new institutional forms.

   
References

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This is a personal story of an educational journey.

This, then, is the story of those who love the why of things.

Discovering the Systems

Introduction:  Awakening

In the process of studying the systems, it became increasingly obvious that systems theory meant vastly different things to different groups of people, depending upon their disciplinary and occupational perspectives. After being exasperated to get a handle on what systems theory was exactly, I was fortunate enough to be introduced to Stephan Fuchs’s, “The Professional Quest for Truth: A Social Theory of Science and Knowledge (1992) by Professor R. Silverman.  

While some might contest that Fuchs introduces the roots of the systems theory in his work to a novice, it provided a direction and introduced a somehow unusual, fascinating and diverse group of notions and individuals exploring the cosmic order in the universe dating back to antiquity. 

From this point on, the realm of the systems almost became magnetizing. The notion of looking for patterns of behavior, seeking underlying systemic interrelationships beyond events were something that I knew in my guts but these were never so well articulated before. Starting with Marcus Aurelius' work Meditations, these thoughts were amplified and following words resonated deeply. “Constantly regard the universe as one living being, having one substance and one soul; and observe how all things have reference to one perception, the perception of this one living being; and how all things act with one movement; and how all things are the cooperating causes of all things which exist” (Marcus Aurelius, 1964).

Driven by this motivation, this paper questions the systems thinking to understand if and how innovation and a collaborative problem solving can be cultivated in a world whose people are becoming rapidly more interdependent, and where the external forces which control them are becoming more centralized.

The Quest for Truth

From the outset, Fuchs’s “The Professional Quest for Truth” almost appears to be a collection of two books, where the first initial chapters assess the field of sociology of science and the remainder sections centers on the theory of scientific organizations. Fuchs intertwines these two discussions by forming a relationship between microsocial studies of science (i.e. the idiosyncratic nature of scientific reasoning, the dynamics of fact production and controversies) and social structural patterns of scientific organizations (i.e. which shapes collective cognitions and cognitive practices whether in ordinary groups or in scientific communities).

In essence, Fuchs argues that the authoritative power of science and its well-respected worldview is based not on its’ superior rationality, but rather on its’ superior organizational capabilities and resources. From this point of view, he approaches the scientific field as a group of social and organizational structures. This scheme allows Fuchs to concentrate on the specific philosophical and epistemological orientation of different scientific fields and to question why and how knowledge production differs in each; e.g. science and facts vs. hermeneutics and conversation; amalgamation vs. fragmentation; relativism vs. positivism.

Although. I found Fuchs's assessment of the field of sociology of science to be informative and insightful; particularly his scientific organizational theory captured my attention, since it can be applied not only to traditional science institutions, but also to other diverse professional groups engaged in knowledge production. For instance, in the arena of the software (SW) industry, product research and development (R&D) efforts are embedded in particular kinds of organizational contexts, social structures, and technologies. More than any other factor, it is these components of the organizational sociology affect and shape the behavior and interaction between the SW architects, strategists and developers, by influencing the kind of R&D discourse, activities and methodologies in this community. On the other hand, too often when the commercial R&D groups adapt this neo-Durkheimian approach of differentiation, pluralism and solidarity (Young, 1999), it ultimately results in a commercial failure. Because, these tightly knitted communities work in a relatively closed system, which generates shared beliefs, enforces right ways of thinking and acting, kills individual creativity and spontaneity, and in due course isolates organizations and minds from competitive market place in exchange of individuals need to affiliate with social solidarity.

Emergence of the Primitive Self-Philosophy

Embryos of the Self-Systems Thinking

In the process of reading “The Professional Quest for Truth”, I was covertly anticipating to learn more about the discipline of the System Inquiry. While Fuchs’s work allowed me to visualize the determinants of scientific production, it has failed to convincingly explain the recursive relationship between philosophy, theory, methodology and application. This gap prompted me to seek answers to number of theoretical and practical questions in the field of systems thinking.

As I am interested in intrepreneurship within seemingly infinite boundaries of the multinational organizations, I seek to understand and develop conscious strategies for transforming the systems inquiry into knowledgeable action that would stimulate pragmatic innovation in open systems. However, since the systems theory by its nature does not have a well-established, precise meaning; it became increasingly obvious that to seek answers to my questions, first I needed to develop my own perspective.  As a derivative, I also realized that I needed to find alternative ways of thinking in contrast to my habitual mechanistic approach and rationalist epistemology that have been intensely embedded to my thought process by the education system.

Birth of Intellectual Conception

Following a course of research, I now conceive that systems theory is not actually a theory but a rather high-level abstraction that is a working and evolving hypothesis.

In this most abstract sense, a system is a set of objects together with relationships among the objects. Such a definition implies that a system has properties, functions, and dynamics distinct from its constituent objects and relationships (Burns, 2007). Where the systems theory, attempts to explain the behavior of all systems, whether in the natural world, such as weather systems, or created by humans, such as computer systems. (Harter & Phillips., 2004).

Although, this is how the mainstream literature makes an effort to define the systems theory, works of Austrian-born biologist Ludwig von Bertalanffy (1901–1972) offers a broader point of view in order to get to the roots of the ‘general system theory’. In the late 1920's motivated by the Aristotelian worldview "the whole is more than the sum of its parts", Von Bertalanffy wrote: “Since the fundamental character of the living thing is its organization, the customary investigation of the single parts and processes cannot provide a complete explanation of the vital phenomena. This investigation gives us no information about the coordination of parts and processes. (Ludwig Von, 1972).

In Aristotelian’s notion of “the whole is more than the sum of its parts”, the “more” is seen in the relations between the parts. According to Drack (2009), the properties and modes of action of the higher levels are not explainable by the summation of the properties and modes of action of their components as studied only in isolation. But if we know all the components brought together and all the relations existing between them, then the higher levels are derivable from their components as studied only in isolation.

In my view, this particular relationship defines the relationship between system and its’ environmental boundaries, meaning by their very nature the systems are not closed entities, but rather must be open organizations in constant exchange with their environment. I visualize this exchange similar to basic economical transaction, where the inputs necessary for survival are traded for the outputs that are in demand by the environment. The economic equilibrium in this equation defines the negotiation point between the system and the larger ecosystem so called environment.

Therefore, in any field of sciences or in the world of commercial R&D, tightly knitted communities living in ivory towers will be destined to perish in isolation. For survival and competitive success, any entity (biological, social, mechanical or digital) must include a feedback loop with its environment to process information, to react to information, and to change or to be changed. I confide in principles of “Cybernetics” to support this hypothesis and reference to Norbert Wiener (considered to be the original cyberneticist): “Feedback is a method of controlling a system by reinserting into it the results of its past performance (Kelly, 1995).

Based on this vindication, if we return to the example of the software industry; today’s most successful commercial companies amalgamate information about their products and services (e.g. which aspects of the features are used the most or least) through explicit feedback from their environment. In return, they improve customer satisfaction; hence stimulate demand and market competitive strength. Those who are left outside of this feedback loop silently fade away from the neon tickers of the stock exchange, which justly or not integrates all the global subsystems of today.

First Self-Cognizant View of the Systems World  

Inherently, in classical economic doctrine, society was considered as a sum of human individuals as social atoms. Then, there was a tendency to consider a society, an economy, or a nation, as a whole, which is super-ordinated to its parts. This conception is at the basis of all the various forms of collectivism, the consequences of which are often disastrous for the individual and, in the history of our times, profoundly influence our lives (Bertalanffy, 1950).

Niklas Luhmann’s systems theory takes this notion one step further, which articulates that systems has four important consequences. First, the system is the difference between system and environment; Second, the system can be defined through a single mode of operation; Third, every (social) system observes internally (i.e. within the system) its own system/environment distinction; there is a re-entry of the system/environment distinction into the system. Fourth, every social theory is part of the social domain and as such part of what it describes (Luhmann, 2006).

Grounded on the amalgamation of these abstractions, this is how I conceive the system and system theory - at least for now:

·       A system is an entity with a distinctive identity.

·       It is defined by a boundary between itself and “multiple” environments.

·       By itself, the inner components and workings of the system reduce complexity.

·       To survive, system must observe and communicate with the universe.

·       Yet, this communication must occur selectively to manage and process infinite information to survive and/or to thrive.

·       If a system fails to maintain individuality, and ceases its connection with the environment it simply recedes.

·       At the hearth of this current opinion rests isomorphism, where there is a relationship between all objects, without which I imagine no existence.

Without a doubt just as the systems do, my intellectual cognizant and this understanding will be influenced and changed along this journey.

Correlating Systems and Innovation

In a way, the idea of the “isomorphism” conceptualizes the universe as a giant machine composed of intricate but replaceable machine-like parts; where everything is connected and joined together by a web of relations. This also implies that all the human interaction networks, small and large, from the household to global trade, constitute a system, i.e. the world-system, where all of the economic, political, social, and cultural relations among the people of the earth. Thus, the world-system is not just "international relations" or the "world market", but it is the whole interactive system, where the systemic interaction is routinized so that the connected actors come to depend, and to form expectations, based on the connections (Chase-Dunn & Grimes, 1995).

Subsequently, if integrating web of relationships creates emergent properties of the whole and these properties can not be found in any analysis of the parts, then how can we understand, deal, manage and enhance our world?

I envisage, this is where the “Systems Inquiry” comes in as a research model of how things work together to attain wholeness. A Hungarian linguist and systems scientist Bela Banathy explains this reasoning in this extract: “We can look at the world in terms of facts and events in the context of wholes, and we understand them as integrated sets purposefully arranged in systemic relations. In contrast to the analytic, reductionist, linear, single cause-and-effect view of the philosophy of classical science, systems philosophy brings forth a reorganization of ways of thinking and knowing perceived reality, a view manifested in synthetic, expansionist, dynamic, and multiple/mutual causality modes of thinking and inquiring, how things work more than what things are.” (B. Banathy, 1997).

Hence, institutions, academics, scientists, and entrepreneurs functioning in seclusion discard the central meaning of innovation, i.e. changing the values onto which the system is based. An Austrian-American economist and political scientist Joseph Alois Schumpeter rationalizes this point through “Innovation economics” (Schumpeter, 1950). His doctrine suggests that innovation should stimulate growth through knowledge and entrepreneurship at the center of the integrated systems rather than as an independent force that is largely unaffected by the environment. Fundamentally implying that; institutions, academics, scientists, and entrepreneurs must be at the heart of the systems for survival and progression. Therefore, the flow of technology and information among people, enterprises and institutions must be the key to an innovative process.

Reconciling Philosophy- Theory- Methodology-Application: System Inquiry

During the fifties, the basic concepts and principles of a general theory of systems were set forth. The scholars shared and articulated a common conviction: the unified nature of reality. They recognized a compelling need for a unified disciplined inquiry in understanding and dealing with increasing complexities, complexities that are beyond the competence of any single discipline and. As a result, they developed a trans-disciplinary perspective that emphasized the intrinsic order and interdependence of the world in all its manifestations (B. H. Banathy, 2003).

This trans-disciplinary model of system inquiry has four interrelated and internally consistent domains; philosophy (general principles), science (particulars), methodology (planning) and application (action) to analyze, to design, to develop, to address real-world problems and to enact on knowledgeable actions in complex systems. Consistent application of this paradigm as suggested surely will help to foster interaction in the hopes of bringing unity to science; while liberating scientists, institutions, academics, and entrepreneurs operating in their encapsulated private universe.

Growing Pains: Self-Dilemma

This background arouses many provoking questions for an inquisitive mind.

First, the systems thinking arguably legitimizes the existence of a unified model - a principle - a law that can consistently apply across the universe. This notion implicitly supports the potential existence of a supreme creator as the source of “intelligent design”.

Even though, such debate postulates that because certain things in nature are very complicated, therefore they must have been designed; for a person with no previous profound theological thoughts systems thinking spark a compelling self-reflecting argument.

Second, today’s society puts so much emphasis in the individuals. Yet, so far this paper claimed that a single part of a system does not have any significant relevance. Thus, suggesting that individuals and individualism has no place in the world of systems. As a true believer of individualism, initially I thought this to be an absurd notion, until I was introduced to Niklas Luhmann by Stephan Fuchs.

While Luhmann also denies the human being a central role in society, he argues that this is not because of a lack of respect for humans, their bodies, their rights, and their values. But it is rather because of the insight that human being is, in reality, such a complex assemblage that it cannot be adequately understood in terms of a single concept (Moeller, 2006). In another words, Luhmann thought that the previous attempts to use systems theory in the social sciences applied cybernetic concepts too directly and suffered from the residual normative orientation. To be rigorous and consistent, systems theory had to drop all reference to actors and their self-interpretations, which were nothing but ‘psychical systems’ that form part of the environment for other systems. In this way systems theory can be generally applicable to every level of social analysis (Schmidt, Luhmann, Holmes, & Larmore, 1983).

In his work of “The Differentiation of Society” ( 1982 ) Luhmann goes one step further. He conceives society as composed entirely of communication and the subsystems that organize it, rather than as a network of human actors. In Luhmann's terms, human beings are neither part of society nor of any specific systems. That is not to say that people are not a matter, but rather, the communicative actions of people are constituted (but not defined) by society, and society is constituted (but not defined) by the communicative actions of people: society is people's environment, and people are society's environment.

Ever Evolving Conclusion

Initially, I contemplated this knowledge area as any other, i.e. defining, analyzing, evaluating systems thesis, purposes, philosophies, methodology, applications etc.  Yet, mysteriously my habitual ways of thinking and ways of being are shaped.

In turn, my sense of interconnectedness to physical, social, professional life is in some way altered. Half way through this study, I formed a preliminary self-definition of the systems thinking. Introduction to Luhmann and others already impelled me to revisit my opinions many times over, which I am sure will continue to do so. With this intellectual growth, my second paper will aim to gain a deeper apprehension of the relationship between systems, functional systems, social systems and systems of communication in the context of today's “inter-national” society to understand the inner and outer workings behind innovation.