09.03 Sustainable Organization

Threat: Feedback Loop

The core question of this cluster is whether and how organizations can generate sustainable cooperation. The first project develops a new and rich theory of sustainable organization as coordinated cooperation for robust and legitimate value-creation. The second project theorizes and empirically investigates the causes, processes and consequences of cooperation decay. Against the background of a rich conception of sustainable organization, it breaks new ground by investigating failures in sustainable organization, which provides input for improved solutions. The normative account of organizational sustainability and the theoretical-cum-empirical analysis of organizational decay will mutually enrich and inspire each other. The cluster combines recent developments in social philosophy, social ontology, organizational sociology in general and neo-institutionalism in particular.

Aim of the project

Organizations serve to promote coordinated cooperation. This project investigates how they can do so in a sustainable manner. To this end, it employs a rich conception of sustainability as the robust and legitimate creation of value (Hindriks 2019). It aims to identify the social mechanisms by which organizations can generate sustainable cooperation.

Theoretical background

Organizations combine collective decision-making procedures with a system of social rules to achieve a mission. According to neo-institutional theories of governance, their success turns on their efficiency, their use of incentives and their legitimacy (Wittek 2007). How efficient an organization is, depends on the extent to which it reduces transaction costs, relative to more loosely structured alternatives such as the market. A second determinant of success is how the organization motivates its members by means of material rewards and social sanctions, formal as well as informal. A third determinant is the legitimacy of an organization, which turns on the extent to which its practices are accepted by outsiders.

Taking neo-institutional sociology of organizations as its point of departure, this project develops an account of sustainable cooperation within organizations. It is premised on the idea that, whereas markets engage in coordinated competition, hierarchies or organizations serve to promote coordinated cooperation (cf. Williamson 1975). Furthermore, to do so successfully, an organization relies on coordination norms as well as cooperation norms. Against this background, the project investigates two theoretical conjectures.

First, the success of an organization depends not only on its external legitimacy but also on its internal legitimacy. This is a function of the authority of its management. Crucially, it is also a matter of the extent to which its norms are regarded as justified. Although sanctions can make a difference, too, the degree to which people comply with norms depends to an important extent on how legitimate participants take them to be (Bicchieri 2006). People care about the congruence between their values and norms on the one hand, and the practices and goals of the organization on the other, as well as the spillover effects they have on outsiders. Conversely, the erosion of legitimacy can lead to a vicious cycle that threatens to undermine the creation of value. For instance, perceived injustice undermines compliance.

Second, how robust the process of value-creation is, depends to an important extent on the motivation of the members of the organization. Furthermore, they are motivated not only by incentives and intrinsic motivation, but also by the coordination and cooperation norms that are in place. And, as the first hypothesis has it, this is a function not only of the associated sanctions, but also of the extent to which those norms are perceived as legitimate. Norms are stable when they are, for the most part, complied with. They are robust to the extent to which member motivation exceeds the level needed for compliance, in which case there is a motivation surplus. Norms corrode when there is a motivation deficiency. Thus, the second hypothesis is that, because norms contribute in important ways to the creation of value, their strength is a crucial determinant of sustainable organization. These ideas have recently been developed with respect to institutions (Hindriks 2019). The project investigates whether and how they generalize to organizations.

Research design

The project develops a philosophical theory of sustainable organizations that is informed by existing empirical studies.

Literature

Bicchieri, C. (2006) The Grammar of Society: The Nature and Dynamics of Social Norms. Cambridge, Cambridge University Press.

Hindriks, F. (2019). Norms that Make a Difference: Social Practices and Institutions. Analyse & Kritik, 41(1), 125–146.

Pettit, P. (2015). The Robust Demands of the Good. Oxford: Oxford University Press.

Williamson, O. E. (1975). Markets and Hierarchies: Analysis and Antitrust Implications. New York: MacMillan Publishers.

Wittek, R. (2007). Governance from a Sociological Perspective. In D. Jansen (Ed.), New Forms of Governance in Research Organizations (pp. 73–98). Dordrecht: Springer.