systems theory, societal contexts, and organizational ...study.sagepub.com/sites/default/files/22...

Systems Theory, SocietalContexts, and Organizational

Heterogeneity

Raimund Hasse and Georg Krücken

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INTRODUCTION

From the outset, attention to the embedded-ness of organizations in wider societal con-texts has been a trademark of the newinstitutionalism in organizational analysis.Different strands of neo-institutional analy-sis converge in continuing this Weberianapproach to the study of organizations byfocusing on the co-evolution of organiza-tions and their societal environments. Thisgeneral point of departure is shared by both the macro-sociological and the inter-organizational perspectives on organi-zations. The former, which has been elabo-rated by John Meyer and his students,assumes that organizations are shaped bythe broader social and cultural forces of aglobal society. The latter, which hasbecome most prominent in the concept oforganizational fields, sees organizationalbehavior as intimately bound to other organ-izations in their field. Both approachesdiffer with regard to many aspects, mostnotably the level of abstraction and

the role attributed to organizational agency.Nevertheless, they both lead to an overem-phasis on homogeneity and convergence,triggered by world societal forces or bythose forces operating within an organiza-tional field. As organizational research hasincreasingly begun to question this overem-phasis and to allow for more heterogeneityand variety, more and more neo-institu-tional scholars have looked for conceptualremedies against this bias. The concept ofthe institutional entrepreneur seems to playa crucial role here, as it helps explain whyorganizations which operate under the samecircumstances do not always become simi-lar. By focusing on the micro-level of indi-vidual actors, however, the basic feature ofthe new institutionalism in organizationalanalysis, i.e., the analysis of interrelationsbetween organizations and their broadersocietal environments, becomes less pro-nounced. We clearly see both the necessityof allowing for more heterogeneity and vari-ety in neo-institutional research and the con-ceptual problems revolving around analyses

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highlighting the role of institutional entre-preneurs. Therefore, we would like to pres-ent a macro-sociological alternative to thecurrently debated micro-level approach toheterogeneity and variety.

In contemporary European macro-socio-logical theories, the argument that modernsociety can only be perceived as being com-posed of different, at times conflictingspheres, and not as a homogeneous set ofprinciples is well established. PierreBourdieu has distinguished between differentsocietal fields (for example, economy, educa-tion, arts, mass media, and politics). Albeitthese fields may both overlap and be composed of diverse subfields, they are characterized by distinct norms, values, andrationalities. Bourdieu’s fields are conceptu-alized as arenas for competition whose ‘rulesof the game’ can be modified by powerfulactors. It is important to notice, however, thatsuccess in one field cannot easily be trans-lated into other fields. In his much cited bookDistinction: A Social Critique of theJudgment of Taste (Bourdieu 1984), theselimits to convertibility become obvious asBourdieu delineates cultural barriers to thenew rich, whose possession of economic capital does not lead to a similarly developeddistinction of taste. Not unlike Bourdieu,Anthony Giddens (1984) has distinguishedbetween different social institutions based ontheir modularities of structuration. Specificcombinations of rules and resources consti-tute political, economic, legal and other institutional domains on the societal macro-level. Though Bourdieu and Giddens couldbe of great help in developing a theoreticalperspective for organizational institutional-ism, in which differences, not homogeneityon the societal level are highlighted, we willfocus on Niklas Luhmann’s systems theoryfor this purpose.1 Luhmann has placed amuch greater emphasis than the other authorson the fact that modern society is definedthrough autonomous, functionally differenti-ated societal systems (economics, science,politics, religion etc.), which follow a verydistinct logic (Luhmann 1995, 1997).

To point out precisely this characteristic of histheory, an American collection of some of hisarticles appeared under the title TheDifferentiation of Society (1982). In addition,and in contrast to Bourdieu and Giddens,from his early writings up to his later workLuhmann has also been an organizationalsociologist (Luhmann 1964, 2000). Accordingto Luhmann, modern society can only be fullyunderstood when taking into account theexpansion of formal organizations – in allsocietal systems over time and on a globalscale (see Hasse/Krücken 2005b).2

We would like to develop our argument infour steps. First, we will reconstruct both themacro-perspective and the field approach inneo-institutionalism. According to our analy-sis, they both lead to a similar overemphasison homogeneity. Only in this context can thesearch for concepts allowing for heterogene-ity and variety be understood. As we will seeat the end of part 1, the neo-institutionalfigure of the institutional entrepreneur couldbe seen as a result of that search process.Second, we will reconstruct Luhmann’s per-spective on society with its strong emphasison differences between societal systems. Aswe will argue, from this perspective modernsociety can only be reconstructed as a multi-dimensional project. This orientation couldcounterbalance both the bias towards convergence inherent in neo-institutionalanalysis and the recent emphasis on institu-tional entrepreneurs. Third, and in order tofully grasp the interrelatedness of societaland organizational trajectories in Luhmann’swork, we will discuss the basic tenets of hiscontributions to organizational sociology. In the fourth part, we will then demonstratethat Luhmann’s macro-perspective can offerinsights into societal differentiation, whichare also valuable for the concrete analysis oforganizations in society. With the help of twoexamples we will exemplify the similaritiesand differences between the macro-sociological perspective in the new institu-tionalism and Luhmann’s systems theory. Inthe concluding section we will briefly discuss the implications of our analysis.

540 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

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SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY 541

THE NEW INSTITUTIONALISM:HOMOGENIZING FORCES IN SOCIETYAND ORGANIZATIONAL FIELDS

The macro-perspective: globaldiffusion processes and therationalization of society

The macro-sociological strand of the newinstitutionalism has been elaborated mainlyby John Meyer over the last thirty years(Krücken/Drori 2008). He assumes thatmodern society is not a concrete and hard-wired structure composed of actors. It israther a broader and imagined culturalsystem, in which the main cultural patternsof Western society – like universalism,progress, and equality – are embedded. Thiscultural system is inherently globalizing. Thedriving forces of societal development are,therefore, not actors and interests as typicallyassumed. The causality is not ‘bottom up,’but rather ‘top down.’ Society as the embod-iment of broader cultural norms constitutesits actors. With its strong phenomenologicaland ‘culturalist’ emphasis, the macro-per-spective in neo-institutional research is astrong antidote against all kinds of realist,individualistic and actor-centered social the-ories currently prevailing in American soci-ology (Jepperson 2002; Krücken 2002).

According to Meyer, the cultural system of society constitutes three types of modernactors: nation-states, organizations, and individuals. Though organizations are ofparamount importance in Meyer’s macro-sociological institutionalism, from the per-spective of organizational research it isstriking that they mainly have the status of adependent variable in this theory context.The cultural shaping of organizations ismostly emphasized in Meyer et al. (1997).Here, the authors criticize dominant interpre-tations of globalization in which (a) global-ization processes are interpreted as anaggregate effect of state activities, and (b) state activities are considered as an out-come of individual and organizational action

within nation-states. Against this perspective,Meyer et al. (1997) argue that organizationsare considered to be shaped by their widersocio-cultural environment.

Though Boli and Thomas (1997) have putmore emphasis on the effects of organiza-tions, they take a similar view. Their mainargument is that organizations of a specifictype – international ones of the third sector(i.e., non-governmental and non-profit) –serve as agents of world culture. The normsand cognitive schemes of the latter, then, aresupposed to profoundly affect any modernstate and organizations of all types. The legit-imacy and power of international organiza-tions, so the argument goes, stems from theirstatus as institutions which are driven by uni-versal ideals instead of utilitarian interests.3

As in the case of Meyer et al. (1997), theauthors identify a cause/effect-relationshipbetween states, organizations, and individu-als on the one hand and a broader global cul-ture and its organizational representatives onthe other. According to this perspective, theformer is the outcome of the latter. In addi-tion, even the most influential organizationsare seen as carriers of broader culturalnorms, enacting and enforcing them, but notas independent actors in society.

This macro-perspective on the relationbetween society and organizations has led toone of the most fascinating contemporaryresearch programs in sociology, which hasbeen highly influential for the developmentof organizational institutionalism. Over thelast thirty years Meyer’s approach has provedits originality and fruitfulness when address-ing the global diffusion of cultural and struc-tural features of Western society, whichcross-cut different regions and sectors ofworld society. In this, the spread of formalorganizations, which are the central embodi-ment of these features, figures most promi-nently (for a most recent and systematicaccount see Drori/Meyer/Hwang 2006). The neo-institutional approach of Meyer andhis students has also proved its innovativecharacter by exploring new lines of theoreti-cal and empirical research. Closer links to

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other research traditions have been lookedfor, like, for example, social movementsresearch (Khagram/Riker/Sikkink 2002;Tsutsui 2004). Furthermore, the more recentfocus on science in the ongoing rationaliza-tion of society (Drori/Meyer/Ramirez/Schofer 2003) and theoretical reflections onthe constitution of individual actorhood inmodern society (Meyer/Jepperson 2000;Frank/Meyer 2002) have opened up wholenew lines of investigation and made similari-ties to other ways of theorizing visible, which have hardly been explored yet.4

Nevertheless, and this point is central for theargument we will develop here, the macro-approach in neo-institutional research doesnot systematically account for heterogeneityand differences in society. Despite all theo-retical developments and refinements theapproach has undergone over the last thirtyyears, the underlying assumptions onhomogenizing forces in global society haveremained stable und unchanged. Even criticswho generally sympathize with that approachpoint to the inherent limitations of itsoveremphasis on homogeneity and conver-gence (for a most comprehensive critique seeSchneiberg/Clemens 2006).

The meso-perspective: from inter-organizational relations toinstitutional entrepreneurship

DiMaggio/Powell (1983) have offered astarting point, which is different from themacro-perspective discussed above. Theircontribution does not refer to an all-encompassing world culture or to other kindsof broader societal contexts. Instead,DiMaggio/Powell considered organizationsas being deeply shaped by those other organ-izations which serve as ‘significant others’ inthe sense of Berger/Luckmann (1967).Conceptually, organizational and inter-organizational parameters gained status asindependent variables, and in this respect theperspective has been meso-sociological. Thebasic units were organizational fields (not a

single organization); and any organizationwas considered to be embedded in a distinctsetting of organizations (Greenwood/Hinnings 1996: 1026–7). DiMaggio andPowell’s well-known ‘three pillars of isomorphism’ (Scott 2001) thus can be usedto classify the shaping of organizations byother organizations: Coercion results fromregulatory agencies (predominantly stateorganizations); normative isomorphism isbased upon professional associations, consulting firms and educational institutions;and mimicry stems from the ongoing observation of peers, competitors and collaborators.

DiMaggio/Powell’s (1983) notion of orga-nizational fields has expanded the scope oforganizational analysis profoundly. For theargument to be developed here it is most cru-cial to note that the concept of organizationalfields and its focus on isomorphism withinfields has, implicitly, offered an understand-ing for persistent differences between fields.To the extent to which organizations areshaped by other significant organizations(such as state organizations, regulatory agen-cies, professional associations, consultants,competitors and collaborators), they areexposed to rather specific influences. It thusmay be concluded that organizations differaccording to their field membership which,for example, results from their embedded-ness in national regimes (Orru/Woolsey/Biggart/Hamilton 1991; Dobbin 1994).

Assumptions regarding the differentiationof organized contexts also can be found inother contributions from the founding phaseof the new institutionalism. Scott (1983) distinguished between two sectors – techni-cal and institutional – and argued that a focalorganization is embedded in either a techni-cal or an institutional environment. Thisassumption soon was replaced by the insightthat most organizations have to deal withboth technical and institutional requirements(Hasse/Krücken 2005a: 33–4). Additionally,it seemed that such a distinction was too rigidto account for differences within these two sectors. Scott and Meyer (1991) thus


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developed a more differentiated concept ofsocietal sectors. Sectors were conceptualizedas functional domains which are composedof diverse organizations as well as correspon-ding non-organizational features such asmeaning and belief systems or governancestructures and other ‘rules of the game.’ In asimilar vein, Scott (1991) has emphasizedcharacteristic features of organizationalfields. Not unlike DiMaggio/Powell (1983),organizations appear to be deeply influencedby ‘their’ field – and to a much lesser extentby an all-encompassing world culture.

To summarize, the field approach is char-acterized by the assumption that organiza-tional fields mediate between a singleorganization and broader societal contexts.The implication of such a conceptualizationis that global impacts tend to be devaluatedbecause such impacts need to be enacted byfield-specific institutions. Such an under-standing of organizational fields fits nicely toobservations of robust differences becauseisomorphism within fields corresponds withdiversity among organizational fields. It thuscan be argued that clusters of interactingorganizations can be considered as institutional barriers against homogenizingtrends on a global scale.

Based on the organizational fields-approach some new institutionalists haveargued from the 1990s onwards that, to a cer-tain extent, organizations can also activelyintervene in their contexts. This implies afarewell to sharply distinguishing betweenenvironmental causes and correspondingeffects on a focal organization. Instead, thenotion of organizational fields highlightsprocesses of mutual adaptation. As comparedwith the top down-perspective of the macro-sociological approach, organizations are thusconsidered to be more actively involved inthe overall development of society.According to this perspective, organizationsnegotiate with other organizations and theymay also try to actively manipulate thoseorganizations and other institutional factors.Analytically, the crucial shift is from ‘environment’ to ‘context’ (respectively

‘network’) because this shift implies that afocal organization appears to be an integralpart of its institutional setting.5

Two basic questions emerge from this per-spective: (1) What determines whether or notorganizations can be successful in activelyintervening into their context, and (2) whatdetermines how organizations may use theirpotential for active intervention? In order todeal with these questions, it should be notedthat neo-institutionalists ever since havedescribed the constitution of fields and thesocialization of single organizations as anopen and ongoing process. In this respect,references were made to the social construc-tivism of Berger and Luckmann (1967)(DiMaggio/Powell 1983; Meyer 1992). Thelegacy of this theory also has sensitized thepotential of organizations to active handlingof institutional constraints. Accordingly, theprocessing of environmental constraints isopen for variation, and this deeply affects thereproduction of the institutional context.Fligstein (1996), for example, even hasdescribed organizational fields as politicalarenas – arguing that there are striking imbalances of power at work (see alsoGreenwood et al. 2002). While some organi-zations may experience their field context asbeing out of control, others may be in a position that allows for an institutional engi-neering of fields.

The idea of organizations being activelyinvolved in their context does not just implyimbalances of power. It also raises questionsabout how organizations may utilize theirpotential and to what extent they handleissues of power strategically. These questionshave led to a rediscovery of purposive agen-cies, being conceptualized as somethingwhich is not covered by institutional factors(Beckert 1999). The concept of agency, how-ever, is not taken from economic approachessuch as rational choice or principal/agency-theory. Instead, new institutionalists haveincorporated insights from those theories ofpractice which have been developed in late20th-century European sociology (Bourdieu1977, 1990; Giddens 1984; Joas 1996).


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Agency, then, includes the potential foractively making choices and for reflexiveself-monitoring, but it is not assumed thatdecisions and actions are determined byfixed preferences (cf. Feldman/Pentland2003: 95–6; Child 1997).

Institutions, from this perspective, mayconstrain or enable to act in accordance withgiven interests, and they may thus becomeobjects of strategic modifications. However,it is not just organizations (and, of course,not heroic individuals) which can serve as‘institutional entrepreneurs’ (Thornton 1999;Greenwood et al. 2002). Instead, professions,standard setters (Hwang/Powell 2005) andsocial movements (Rao/Monin/Durand2003) can get involved in the engineering ofinstitutions. As a consequence, institutionscan be considered as the outcome of a broadarray of institutional entrepreneurship(DiMaggio 1988) – either because actors aresupposed ‘to escape the determining powerof institutions … [or because of] … multipleinstitutional referents that overlap and con-flict’ (Dorado 2005: 385). This requires that institutional forces have to be handled actively (Barley/Tolbert 1997;Friedland/Alford 1991). In any case, theissue of institutional entrepreneurship has ledto a rediscovery of agency (Emirbayer/Mische 1998). It has let researchers deal withthe entire range of cognitive, social andmaterial resources which are needed for suc-cessful interventions in the institutional setup(Rao 1998; Lounsbury 2001), and it has ledto the identification of contingency factorswhich determine the opportunity structuresto do so (Seo/Creed 2002).6

Due to the theoretical significance ofentrepreneurship it comes as no surprise thatnew institutionalists debate the issue contro-versially. While some ‘stress at the outsetthat an institutional perspective is more “con-structivist” than “agentic” ’ (Hwang/Powell2005: 180), others argue that ‘the discourseof institutional entrepreneurship has helpedto usefully redirect neoinstitutional analysestowards the study of actors and their role in catalyzing institutional change’

(Lounsbury 2005: 30). From the latter pointof view, this discourse has attracted a greatbulk of attention, because it offers an expla-nation for the dynamic character of institu-tional contexts (Greenwood/Hinnings 1996).There is also the potential to end quasi-paradigmatic disputes with old institutional-ists, with institutional economics and withthose social theories which put more empha-sis on voluntary action and rational decisionmaking (Blom-Hansen 1997; Abbell 1995).Finally, there are profound non-academic con-siderations which support the emphasis onactive entrepreneurship, because, as comparedto macro-sociological top down-explanationsthe focus on institutional entrepreneurs offers better perspectives for decision makersand consultants (Sahlin-Andersson/Engvall2002). One may thus expect a high degree ofcultural legitimacy and support for develop-ing such a perspective – and, ironically, this is quite in line with basic insights of the macro-sociological approach in neo-institutionalism (see Hwang/Powell 2005: 182for the same argument).

While such pragmatic reasons for bringingactors back in have been discussed broadly, amore critical reflection of the theoreticalimpact of putting interests and entrepreneur-ship at center stage has been neglected. Inorder to compensate for this one-sidedness itneeds to be taken into consideration that theoutlined trend affects the aspiration toexplain what otherwise most often is takenfor granted – i.e., rational action and ourunderstanding thereof. In some cases, thefocus on institutional entrepreneurs has led toa reversal of the traditional neo-institutionalperspective because actors’ preferences andtheir choices are assumed to explain institu-tional structures. The advantage of such aperspective seems to be that one can moreeasily focus on issues of variation and differentiation – the Achilles heel in both themacro-approach (‘global society’) and theorganizational meso-perspective (‘institu-tional isomorphism’) in neo-institutional the-orizing. The disadvantage, however, is thatthe quest for less situational and for other

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than actor-based causes of persistent differ-ences tends to be neglected. In particular, thisapplies to causes which might be inscribed in the social structure of modern society –and which are experienced as external social realities.

We assume that the quest for such causesis less developed because the institutionalcontext programmatically has been equatedeither with a uniform and homogenizingworld culture or with homogeneous institu-tional configurations at the field level. Bothworld culture-explanations at the macro-level and field-concepts of isomorphism atthe meso-level did not allow for an explana-tion of persistent differences, be they at thelevel of society or within organizationalfields. In order to emphasize differences andheterogeneity, for many neo-institutionalresearchers there appeared to be no alterna-tive to referring to the micro-level and tobring purposive actors and their interestsand strategies back in. In what follows we will present an alternative explanationby referring to Luhmann’s systems theory. It is based on a concept of social structurewhich is more sensitive to differences – and which considers such differences to be deeply inscribed into the macro-structure of modern society. Our brief account of the basic tenets is structured around issues of modern society’s internally differentiated character, and the role organizations play in that macro-sociologicalapproach.

LUHMANN’S SYSTEMS THEORY: MODERN SOCIETY,DIFFERENTIATION,AND ORGANIZATIONS

Modern society as a differentiatedand multidimensional project

Luhmann’s theory of social systems is one ofthe most comprehensive projects in socialtheory of the 20th century. The approach is

unique in combining a grand historical per-spective with an in-depth analysis of domi-nant features of contemporary society.7 At itscore one can find a scheme that outlines theevolution of human society from the begin-ning onwards. In this respect, there are someresemblances with Durkheim’s remarks onsimple forms of social life as the startingpoint (Durkheim 1933). When it comes toLuhmann’s reflection on more recent formsof societal evolution, one may also identifysimilarities with another founding father ofsocial theory: Max Weber. Not unlike Weber(1958), Luhmann refers to a unique set of cir-cumstances in the Western world which trig-gered the take off of modernity.

In a broad socio-historical perspective,Luhmann has stressed that sophisticatedforms of societal stratification emergedbefore the advent of modernity, particularlyin ancient high cultures, as for example inChina, Egypt, Greece, and India (Luhmann1982, 1997). Here, the differentiation isstrictly vertical, and societal order is struc-tured in a clear-cut and hierarchical way.Characteristic features of stratified societiescan be illustrated with respect to the tradi-tional caste system in India. First, there arestrict rules which affect every facet of sociallife. Second, mobility via economic achieve-ment or via marriage is restricted. Third,hierarchy is legitimized by religion. As aconsequence, status differences and positionsin the societal strata are experienced as des-tiny, and no legitimate alternative form ofsocial order is taken into consideration.

Historically, the disappearance of verticalstratification as the main principle of societaldifferentiation was triggered by challengingthe status of religion as an authority thatdetermines social life in general. This processbegan in Europe in the 16th century, whenpolitics began to claim autonomy from reli-gion. At the end of this process, a politicalorder was to be found, which no longer wassubordinated to any other order. Since then,politics can be described as a distinct fieldwhich follows an inner logic that is independ-ent of religious and other authorities.

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Likewise, the birth of the modern sciences is marked by their emancipationfrom religious beliefs and wider social norms.In comparison with its ancestors, which wereembedded in guilds and monasteries, sciencedefined itself as an enterprise which is basedon the rigorous observation of facts. Sincethen, social conditions, such as political regu-lation or religious dogma, may constrain orsupport scientific research, but they do nolonger directly affect the direction of scien-tific progress. Luhmann has thus stressed thatthe sciences have matured to an autonomoussphere of modern society, just as politics. A similar development could be observedwith regard to the economy. In this respect,Luhmann’s contribution is in line with Max Weber (1968), Karl Polanyi (1944),Jürgen Habermas (1985/1989), AnthonyGiddens (1984), and many others. Thecommon ground of these sociologists is toassume that economic relations, which traditionally used to be embedded in widersocial bonds, are increasingly characterizedby the specific logic and rationality of theeconomic field.

The economy may serve as the paradig-matic case for the emergence and lock-in ofspecific rationalities. It neither can bederived from wider frames of non-economiccriteria nor can it be reduced to the motivesand preferences of individual actors. Whilethis basic idea was already at the heart ofKarl Marx’s analysis, Luhmann expands it toa more general statement on the horizontaldifferentiation of society. That type of socie-tal differentiation, which has substituted ver-tical stratification as the dominant mode ofdifferentiation, is called ‘functional differen-tiation’ as societal systems are considered tofulfil functions that cannot be substituted byother systems.8 The economy as a societal orfunctional system regulates the productionand distribution of scarce products and serv-ices; science generates new knowledge; andthe political system is unique in producingcollectively binding decisions which affectthe entire society. From this point of view,both politics and science, for example, are

distinct societal systems with characteristicrationalities that cannot be subordinated tothe logic of other systems. Furthermore, thehistorical appearance of other societal sys-tems has been described. Among them arethe nuclear family and the ideal of romanticlove, which both are no longer primarilybased upon political or economic or anyother external reference. In a similar vein, theemergence of an art system, of mass mediaand of sports, has been described as a histor-ical process. The fundamental characteristicof any such system is that it is based on a distinct logic, which implies that it developsspecific criteria for success. As a conse-quence, what is politically feasible may notbe true according to scientific standards; reallove cannot be affected by economic consid-erations, and arts are not necessarily in linewith religion.

Analytically, Luhmann has argued thatmost societal systems, which came intobeing with the turn towards the functionaldifferentiation of society, are based on abinary scheme of information processing(i.e., 0 or 1, plus or minus, yes or no). Binarycodes are all-encompassing constructions asthey allow everything that happens in societyto be processed by assigning one value or theother. As everything can be processedaccording to the binary coding of informa-tion, societal systems actively scan theirenvironments for opportunities to apply theircodes. The technical advantage of such amode of information processing is its reduc-tionism: Any information is either ‘0’ or ‘1.’For example, the application of the binarycode ‘true’ or ‘false’ is assumed to be at thecore of science. Science can thus be definedas that specific form of information process-ing which strictly refers to whether or notsomething is considered as true or false.Binary coding not only allows for the expan-sion of the system. It also safeguards againstthe claims of other systems. Monetary pay-ments, for example, are an important prereq-uisite for science. A direct interference withthe code of scientific truth and falsity, how-ever, is labelled as a scandalous distortion.


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The same logic is to be found in other sys-tems as well. In the economy, monetarytransactions are related to each other. Thecode is ‘payment’ versus ‘non-payment,’ andthe economic system can only be activated tothe extent to which this code can be applied.In a similar vein, the political system is aboutthe power to make collectively binding deci-sions, and the code is ‘power’ vs. ‘lack ofpower.’ The legal system strictly distin-guishes between ‘legal’ and ‘illegal,’ regard-less of material effects and issues of socialnorms; mass media are about attracting theattention of the public according to what isregarded as newsworthy or not; and sportsare based on the code ‘winning vs. losing.’To summarize, most systems on the macro-level of society represent a specificand highly reductionist binary logic of information processing, and concerns rele-vant for other systems or overall societalnorms have to be transformed according tothat very logic.

Coded information processing providessocietal systems with an identity which distinguishes them from each other. Thisidentity is not open for change. But thesesystems are not only based on codes, but alsoon programs that, by contrast, can and dochange. Programs provide societal systemswith information on how the code is to beapplied. According to Luhmann, the dynamiccharacter of societal systems is thus inscribedinto the variation of their programs. In orderto illustrate the dynamics of systems, onemay again refer to science. There is the stateof the art of a research field, there are modifications with respect to theories andaccepted research methods, and there is vari-ation of research agendas – all of which indi-cate how the scientific code is to be applied.Likewise, economic rationality can only beapplied to the extent to which scarcity,demand and corresponding price signallingcan be identified; in politics there are thematic issues, agendas, and political pro-grams; the legal system is based on legalnorms as inscribed into constitutional lawand into court decisions; in mass media there

are schemes which serve as providers ofinformation about what to select and how topresent what has been selected; in sportsthere are plenty of regulations which limitand specify competition. Combining theselectivity and robustness of binary informa-tion processing with the openness and flexibility of programs has provided societalsystems with a degree of complexity whichhistorically was never experienced before.The consequence is unprecedented growth:Today, there is more science than ever; politics is more all-encompassing and regu-lates many facets of society; legal issues canbe related to almost anything, economicactivities have exploded, etc.

Societal dynamics, however, are not limited to the dynamics of its individual systems. Any societal system is dependent onthe contributions of other systems, andmodern society is characterized by anextraordinary high degree of mutual depend-ency. The economy, for example, is in perma-nent need of scientific knowledge in order tobe innovative; it is dependent on legal norms,in particular with respect to property rights; itneeds mass media in order to attract attention(via advertisement and product placement);and it is in need for political decision makingand implementation, for example in order toregulate competition or with respect to anti-trust norms. Without such outputs of othersystems, the economy would be substantiallyless efficient. Vice versa, the same holds truefor other systems, all of which are dependenton economic and other outputs. Due to thehigh degree of mutual dependency, a crisis inany system may negatively affect other systems. Societal evolution is thus describedas a risky enterprise. As Luhmann has shownin particular in his work on risk and the envi-ronment (Luhmann 1989, 1993) as well as inhis Observations on Modernity (Luhmann1998), the polycentric and highly interrelatedcharacter of modern society is both a strengthand a permanent source of vulnerability ofmodern society.

Compared with the macro-sociologicalperspective in neo-institutional theory, it is

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obvious that Luhmann’s perspective empha-sizes the multidimensional and internally dif-ferentiated character of modern society. Thebasic argument is that neither a hierarchical,stratified order nor a clearly identifiablecenter remains after the advent of modernity.In the polycentric society as described byLuhmann, no unifying system or commoncoordinating principle exists. Neither reli-gion nor politics, neither science nor theeconomy determine modern society as awhole. From this perspective, societal inte-gration or homogenization on the basis ofuniversal norms and cultural principlescannot be achieved. Instead, modern societyis shaped by very distinct societal logics andtheir interrelatedness. Before we comparebasic tenets of both macro-approaches withthe help of two examples, we will focus onLuhmann’s organizational theory.

Bringing organizations back in

In Luhmann’s grand theory of societal evolu-tion organizations are of pivotal importanceas societal macro-structures and organiza-tions co-evolve. Historically, organizationsemerged in ancient high cultures which werecharacterized by the prevalence of a hierar-chical and stratified societal order. However,due to shortcomings in the social precondi-tions of these societies – literacy, moneyeconomy, and technologies of accountingwere still not given on a larger scale – the diffusion of organizations was ratherrestricted both geographically (close to theleaders in the centers) and functionally(public administration and larger militaryand construction projects). While this con-stellation remained rather stable for a longtime, the transition from stratified to func-tionally differentiated societies witnessed thespread of formal organizations. Luhmann hasdescribed this initial phase of modernity as aco-evolutionary process of functional dif-ferentiation and organization building.According to this interpretation, functionaldifferentiation requires formal organizations,

and it stimulates the further spread of organ-izations which, again, allow for further differentiation. This process of mutual self-enforcement begins with the institutionaliza-tion of guilds and crafts, and it is later relatedto religious organizations, scientific associa-tions, business enterprises, political partiesand so forth. The19th century is crucial forthe spread of the organizational form, whenclub membership of very diverse sorts gainedstatus as an integral part of a modern life style.9

Today, most societal systems are repre-sented by specific organizations, and, viceversa, most organizations are related to asocietal system. For organizations, thisimplies copying and reproducing those formsof rationality which are represented by thecodes of the system in which they are embed-ded. The business firm, for example, is char-acterized by subordinating any of its diverseactivities under monetary aspects, i.e., issuesof payments. Likewise, political parties andtheir candidates strive for positions of political power; scientific institutions anduniversities aim at the discovery of truths,sports clubs aim at being champions, pub-lishing houses and TV stations try to gain theattention of a mass audience, and so forth.Exceptionally, organizations may alter theirprimary orientation. For example, a researchinstitute may transform itself into an economic organization. Additionally, a feworganizations may not be strictly related toexactly one systemic logic (for example, private hospitals), and there are still organi-zations which cannot be related to any societal system at all (for example, leisureclubs). Nevertheless, most organizations insociety strictly accept one societal systemand its binary code as their main frame ofreference.

Organization research has found profoundevidence for the fact that organizations tendto grow. It has also been shown that growthand increasing complexity are parameterswhich stimulate organizational differentia-tion. According to Luhmann’s systemstheory, these processes strikingly reflect the


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functional differentiation of society. Manyorganizations, for example, have establishedresearch departments, some of them have setup offices that deal with legal issues, largeorganizations often engage in political lobby-ing, economic criteria have to be consideredby organizations of all kinds, and deviancefrom legal norms can seriously threaten anyorganization. Organizations thus differentiatethemselves into departments or offices thatconcentrate on economic issues, legal norms,research, and so on. A major task for man-agement then is to adjust such diverse ration-alities to the identity of an organization,which, as we pointed out before, is definedthrough the specific rationality of the societalsystem in which the organization is embed-ded. To some extent, systems theory wouldthus support the basic idea of the new institu-tionalism that organizations are well advisedto copy the prevailing norms of their widersocietal context. In contrast to the new insti-tutionalism, however, systems theory wouldstress that these norms are copied only to theextent that they support the realization ofends which constitute the specific identity ofan organization as a business firm, as aresearch institute, or as a political party, forexample.

From the perspective of Luhmann’smacro-sociological approach, organizationsare not just crucial for the reproduction of thedifferentiation of society into distinct societalsystems. They may also compensate for thesharp differences in the logic of societal systems because organizations of any typeare able to interact with each other(Hasse/Krücken 2005b: 189–190). Whileeconomic and scientific rationalities, forexample, cannot be synthesized at the macro-level of society, which is character-ized by very different societal systems, economic and scientific organizations quitefrequently set up inter-organizational rela-tions. Depending on their absorptive capa-city, economic organizations can deal withresearch issues, they can collaborate withacademic partners, and they may translateand re-translate economic considerations

into research issues. Because something sim-ilar may be said with respect to all othertypes of organizations and with respect toreferences to any societal system, heteroge-neous inter-organizational relations have thepotential of mediating between differentsocial spheres and rationalities.

ACCOUNTING FOR HETEROGENEITY: TWO EXAMPLES

In the following section we will briefly dis-cuss the implications of Luhmann’s systemstheory for the analysis of two general topics,which also figure prominently in neo-institutional research: the expansion andtransformation of the modern welfare stateand recent trends towards academic entrepre-neurship. Both examples show the fruitful-ness of a theoretical perspective, whichassumes that the sources of societal and organizational heterogeneity are to be foundat the macro-level of society. Against the backdrop of the macro-approach in neo-institutional theory, we will argue thatthe trajectories of the welfare state do notnecessarily follow the enactment of broadersocietal norms, but rather the distinct innerlogic and dynamics of the political system ofsociety and its organizations. In our secondexample we will focus on an issue whichinvolves different societal systems, hencetriggering inter-organizational collaboration.Instead of assuming homogenizing forceswhich lead to the evaporation of institutionalboundaries, from the perspective of sociolog-ical systems theory distinct logics of information processing and related identityconcepts prevail.

The expansion and transformation of the modern welfare state

The modern welfare state seems to be a goodexample for pointing out similarities and


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differences between the macro-approach inneo-institutional theory and sociological sys-tems theory. Both converge on highlightingthe relevance of the welfare state for theunderstanding of modern society. But whilefor Meyer the development is driven by thediffusion of general societal norms,Luhmann emphasizes the specific rationalityof the political system as its driving-force.

From the macro-perspective bothapproaches take, welfare state dynamicscannot be grasped by a comparative perspec-tive, which emphasizes national differencesand different types of modern welfare states.From the comparative perspective, which hasbeen most convincingly elaborated byEsping-Anderson (1990), specific institu-tional configurations and power relations onthe one hand and varying functional require-ments on the other hand are of central importance here. As a consequence, manyparameters have to be taken into account aspotential determinants of welfare statedynamics like the degree of industrialization,family structures and demographic trends,economic growth and prosperity, as well asunionization and the strength of socialdemocrats.

From both a neo-institutionalist and a sys-tems theory perspective, it is striking thatcomparative welfare state researchers mainlyrefer to national differences and functionalrequirements. In contrast, both macro-approaches focus on causes which can neither be limited to individual nation-statesnor to functional requirements of societalreproduction.

Following the neo-institutional approachby John W. Meyer and others one ratherstresses the embeddedness of modern nation-states in a global society (McNeely 1995;Meyer et al. 1997). The emphasis is clearlyon the significance of a global culture and itsrepresentation by international organizations,and the impact of other welfare states asmodels or at least as significant others is cen-tral (Hasse 2003). From this point of view,social policy has become an integral part ofthe agenda of modern nation-states

(Strang/Chang 1993; Meyer 2007). Theyhave to adhere to broader societal norms ofjustice and progress and enact related scriptsof social policy in order to be regarded as alegitimate actor in society. Global standardsof social policy were codified by the UNDeclaration of Human Rights in 1948. Sincethen, international authorities such as theUNESCO, the International LaborOrganization (ILO) and others address wel-fare issues to any modern nation-state(Marshall 1981). Additionally, welfare stateissues are tackled by scientific experts andsocial movements, both of which are organ-ized in international associations and net-works. It thus may be concluded that theseinstitutions develop a standardized frame ofreference, and any state risks its social legiti-macy if it tends to ignore these contextualparameters. The driving-forces of the expan-sion of the welfare state are to be found at the level of societal macro-structures, i.e., broader societal norms which mainlydiffuse through international organizations.Different degrees of exposure to the worldculture and its internationally organizedagents, as well as differences of powerbetween those institutions which are not inaccordance with global cultural scripts, mayaccount for differences among nation-states.

A similar perspective may be appliedwhen it comes to the transformation of thewelfare state which has been taking placesince the 1980s.10 Historical data give evidence of a rather uniform expansion ofwelfare state-expenditures until the end ofthe 1970s (Flora 1986). Since then, however,the development seems to be more contin-gent. On the one hand, there are factorswhich forcefully support the extrapolation ofthis trend. On the other hand, serious concernabout the sustainability of such a dynamicgained wide attention. As a consequence,substantial changes have been observed – insome cases materializing as sudden quasi-paradigmatic shifts (Sweden at the end of the1980s), in others lasting decades (Germanyfrom the 1970s until the present time).Sometimes these changes were implemented


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as consensual projects (Finland in the1990s); sometimes they were highly contro-versial (the United Kingdom at the beginningof the 1980s). From a neo-institutional pointof view, however, it does not suffice toobserve these transformations at the nation-state level. Instead, the historical develop-ment of the welfare-state, as well as morerecent transformations, have to be seen as aglobally orchestrated process, in which trans-national organizations, world-wide diffusingrole models, experts and consultants are ofpivotal importance (Hasse 2003). TheOECD, for example, issued a dramatic reportin 1981 on the limits of welfare-state policies(OECD 1981). Based on critical assessmentslike this, substantial re-definitions tookplace: Administration as Service (OECD1987) was established as a new ‘Leitbild’;issues of service delivery were tackled; pri-vate alternatives to public bureaucracies werefavored; and reforms were driven by newbest practices such as ‘new public manage-ment’ or ‘non profits for hire.’ This paradig-matic change was accompanied by areplacement of models (from Germany toNew Zealand), international organizations(from ILO to IMF), and experts acting onglobal scale (from Keynesian social engi-neers to more practically inclined politicalconsultants).

While neo-institutionalism conceptualizeswelfare-state developments as trans-nationalprocesses, in which global models andscripts diffuse through a variety of channels,systems theory emphasizes the effects of thefunctional differentiation of society. As aconsequence, its political system appears tobe a distinct field which is based on a specificlogic or rationality, i.e., the application of thebinary code ‘power/not in power.’ In this, thepolitical system sharply differs from those ofother societal systems. In addition, the inter-nal differentiation of the political system hasto be taken into account. Internally, thesystem is composed of (a) political decisionmakers (governments and office holders), (b) administration and service deliverers, and(c) the public (as both voters and clients).

Any of these institutions of the politicalsystem contributes to the expansion of thewelfare-state. Other societal systems are onlyrelevant to the political system as an externalresource for its continuous reproduction. It isthus not surprising that systems theory puts a strong emphasis on the societal risks of systems dynamics.

Following Luhmann’s Political Theory inthe Welfare State (Luhmann 1990), theexpansion of the welfare-state appears to bean inevitable consequence of the evolution ofthe political system. The welfare-state pre-dominantly aims at the inclusion of personsand groups. On the basis of political powerlaw and money are used as means of effectu-ating the welfare-state. Structurally, itsexpansion is pushed by the interplay of thecore institutions of the political system andby referring to other societal systems: First,dense competition for scarce offices isassumed to result in political programs, inwhich the societal environment is activelyscanned for themes and organized interests,which might offer opportunities to apply theprinciple of welfare-state politics. Massmedia is considered here as an importantmediator between organized interests on theone hand and political parties and politicianson the other hand. Second, administrativeagencies and their experts actively supportthe identification of needs due to their pro-fessional knowledge and due to micro-political interests. Third, legal claims affectthe relation between the public administra-tion and the public. This fosters the trendtowards an expansion of welfare politics, too.As a consequence of this unprecedentedgrowth, severe problems occur in other partsof society. In particular, Luhmann has highlighted negative economic side-effects(due to the extensive use of money, but alsodue to attempts at actively regulating theeconomy), the risk of overloading the lawsystem (due to the extensive use of lawresulting in shortcomings of application andimplementation), and the expansion of statebureaucracies and professionals (as servicedeliverers and as experts).


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It should be noted that the starting point ofLuhmann’s analysis of the welfare-state isquite similar to the neo-institutional perspec-tive. Instead of highlighting national varia-tions, both approaches emphasize structuralfeatures of modern society, which affect verydifferent nation-states. However, two verybasic differences may be identified.

First, Luhmann refers to very generalcharacteristics of the political system, itsinternal logic and core institutions as drivingforces of welfare-state developments, whichare to be found in very different nation-states. Neo-institutionalism, instead, empha-sizes trans-national, ‘external’ causes astriggering these developments. Thoughnational differences are not of prime theoret-ical concern for both approaches, they couldbe explained through either specific nationalconfigurations of political institutions andtheir relevant societal environment (systemstheory) or linkages of nation-states to trans-national discourses and organizations (neo-institutionalism).

Second, the trend towards the transforma-tion of the welfare-state, which has occurredin very different countries and which hasbeen briefly discussed above, has to be con-ceptualized very differently. While neo-institutionalists focus on the role agents ofdiffusion such as trans-national organiza-tions, experts and consultants play, from thepoint of view of systems theory one has tostress that the discourses and concepts ofthese agents do not diffuse easily. Instead,they have to be translated into the politicalsystem, and this happens according to thelogic and rationality of that very system, andnot according to broader societal norms andscripts. Therefore, the focus is rather oninternal factors triggering change. Followingthe distinction between codes and programs,one should assume that aspects related to theformer are a source of structural stability.Societal differentiation, competitive featuresof the political system, and the interplay ofits core institutions are not considered asobjects of change. However, there is a perma-nent variation of programs as they provide

the political system with information abouthow to apply its basic principles. Programsmay vary profoundly across time and space,and organizations, both within the politicalsystem and in its relevant environment (likemedia organizations, business firms, andcourts) do not simply enact broader societalscripts. Instead, they play a very active and contingent role in the variation of pro-grams, for example those concerning thewelfare state.

Academic entrepreneurship

Academic entrepreneurship is embedded in amore general reappraisal of the role entrepre-neurial activities should play in society.Entrepreneurship has increasingly been seenas being beneficial with respect to broadersocio-economic impacts; in particular, start-up companies which contribute to the trans-fer of new knowledge are highly appreciated(Thornton 1999). Universities figure mostprominently in this broader discourse onentrepreneurship. All over the world, theirnew economic responsibilities have becomevisible. Economic parameters such as start-up founding rates or the commodifica-tion of new knowledge via patenting andlicensing have become new evaluation criteria, and universities have begun toactively get involved in these activities(OECD 2003). Though direct links betweenacademic researchers and industry have along history in many fields, carried out inaddition to the main tasks of the individualresearcher, it has now become an institutional mission of the university as an organization. Based on the assumptionthat a direct contribution to economic development has become a third academicmission of universities, on a par with the traditional missions of teaching and research,academic entrepreneurship seems to be at the core of a new, globally diffusing model for universities (see, for example,Etzkowitz/Healey/Webster 1998; Krücken/Meier/Müller 2007).


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While the new institutionalism emphasizesthe match between academic entrepreneur-ship on the one hand and wider social normsand expectations on the other, systems theoryputs more emphasis on aspects of societal dif-ferentiation and the distinct logics of societalsystems. The former perspective is well estab-lished in the context of this handbook. Hereone should mention neo-institutional researchon entrepreneurship (Hwang/Powell 2005), on inter-organizational networks among acade-mia and industry (Powell/White/Koput/Owen-Smith 2005), and on universities andtheir embeddedness in wider social normsand expectations (Meyer/Schofer 2007).Therefore, we will only focus on how aca-demic entrepreneurship might be conceivedfrom the point of view of systems theory.From that point of view one would assumethat distinct systems – in particular econom-ics, politics, and science – with distinctlogics are involved, which cannot be transcended.

First, systems theory considers businessfirms as a specific kind of organization,which is to be characterized by the fact thatnormative expectations are directed towardseconomic efficiency. Here, efficiency is ameans to achieve legitimacy, and any busi-ness firm which does not meet economic cri-teria in the longer run had to be evaluated asa problematic case. This does not deny thatthe initial economic difficulties of an aca-demic start-up can be accepted for sometime, or that start-ups may aim at new mar-kets or at attracting new investors instead ofachieving short-term profits. However, sys-tems theory assumes that start-up companiesget into serious problems if they are evalu-ated as hybrid organizations which serverather general and diffuse societal needs andexpectations, instead of aiming at economicsuccess in the longer run. Start-ups from aca-demia may thus be characterized by a spe-cific economic program (i.e., the marketingof new knowledge which is genuinely risky),but they can be considered as being ratherconventionally related to the binary coding ofeconomic activities through money.

Likewise, systems theory emphasizes thatthe political dynamics fostering academicentrepreneurship have to be analyzed likethose of any other political field. Thesedynamics are related to power issues and arecharacterized by the pursuit of a specificrationality, which differentiates the politicalsystem from other parts of society. In addi-tion, one would not expect that innovationpolitics and policies are breaking away fromthe traditional means of effectuating the welfare-state, i.e., law and money. Activelycontributing to academic entrepreneurship is thus a supplement of political programs,which inform the political system and itsorganizations about where, when and how toapply the binary code of politics. Systemstheory would stress that politics and policiesfostering academic entrepreneurship areexclusively determined by political consider-ations. It assumes that negative side-effectswith respect to science and the economy onlyaffect political decision making to the extentthat they make a political difference. Forexample, the political promotion of start-upsmay have adverse economic implications.Financial subsidies by the state may nega-tively affect the development of a venturecapital market, and state-funded start-upsfind it harder to attain an economic reputa-tion, which is important in order to attractfunding from venture capitalists. In a similarvein one may expect long-term negativeeffects on science if short-term socio-economic effects, which can be labelled asthe outcome of political decision making andthus be converted into political power,become the dominant goal of science politicsand policies.

Finally, the same perspective can beapplied to research organizations, which areassumed to process information along thebinary code ‘true’ vs. ‘false.’ Issues of academic entrepreneurship are framed withregard to the code and programs of the science system, while material effects ofstart-ups and positive socio-economicimpacts are considered to be less important.This implies two things: First, at the level of


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the individual researcher one should assumethat the specific incentive structure of thatvery system makes him or her more prone toconducting activities which can be mappedby conventional indicators of successful scientific action such as peer-reviewed publi-cations. Publications have no direct equiva-lent in other parts of society. On the otherhand, broader societal norms and the criteriaof other systems – like the general and, inparticular, political emphasis on entrepre-neurial activities – have to pass this bottle-neck in order to become relevant amongscientists. Second, also at the organizationallevel one has to take a rather skeptical viewof the repercussions of the current trendtowards academic entrepreneurship. Moststudies on technology transfer offices at universities suggest only very moderateeffects on entrepreneurial activities, and fol-lowing Meyer/Rowan (1977) transfer officescould be seen as a prime example of theloose coupling between formal and activitystructures of university organizations(Krücken 2003). According to systemsanalysis, however, referring to ‘loose cou-pling’ does not suffice as it does not explainwhy most university organizations do notfully embrace academic entrepreneurship.Following that type of analysis, one wouldrather assume that the degree of coupling isclosely related to the identity of an organiza-tion, which itself is a function of the specificsocietal system in which it is embedded.

To summarize, from the point of view ofsystems analysis academic entrepreneurshiphas to be considered as creating an opportu-nity for societal systems and their organiza-tions. Within different systems, academicentrepreneurship might lead to variations atthe level of their programs. The hypothesis,however, is that variations at the level of programs can hardly affect the identity of anyof the systems involved. For system theorists,the mutual adjustment of societal systemsthrough dense inter-organizational collabora-tion between scientific, political and economic organizations cannot be equatedwith the evaporation of systemic boundaries.

Though such collaborations are important asthey mediate between different systems andmake their specific rationalities visible, theyneed to be conceptualized primarily asopportunity structures that can be exploitedby any of its participants. While new institutionalists might expect processes ofmutual adjustment and isomorphic tenden-cies, which may alter organizations profoundly, systems theorists would ratherassume that the impact of such collaborationswill lead to new avenues for exploring thedominant rationalities of the organizationsinvolved.

CONCLUSION

Sociological systems theory in the way it hasbeen developed by Niklas Luhmann can playa crucial role in coming to terms with the het-erogeneity and variety at the macro-level ofsociety. In this, it is a relevant antidote to thetraditional neo-institutional emphasis onhomogenizing forces. Instead of recurring tothe role of purposive actors as in the conceptof institutional entrepreneurs, sociologicalsystems theory stresses the conceptual linksbetween organizational analysis and widersocietal fields and their developments, and sorefers to the very starting point of organiza-tional institutionalism. With the help of twoexamples we tried to exemplify the fruitful-ness of that approach. One could see, first,that the neo-institutional emphasis onbroader societal norms and their diffusion inthe development of the welfare-state has tobe complemented by a perspective, in whichthe distinct logic of one societal system, i.e.,politics, and the role of political organiza-tions, is highlighted. With our second exam-ple we enlarged the perspective by focusingon how one issue, academic entrepreneur-ship, is perceived and processed according tothe distinct logics of different societal sys-tems and their organizations. This, again,complements the traditional neo-institutionalemphasis on homogenizing forces in society.


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According to our analysis, though bothapproaches can hardly be integrated at ameta-theoretical level, they can be used asguidelines for re-establishing a macro-per-spective on the interconnectedness of socie-tal and organizational developments. Whileneo-institutional theory is particularly goodat analyzing diffusion processes, which tran-scend sectoral boundaries of society andshape all units of analysis, systems theoryinstead focuses on differences between soci-etal systems and their organizations, whichcannot be transcended. At the interface ofthese very different paradigms a fascinatingagenda for future research on the societalembeddedness of organizations mightevolve. As we tried to show, accounting forheterogeneity does not necessarily lead to areappraisal of individual agency. By referringto sociological systems theory, organiza-tional institutionalism might do better as wecan combine the more recent emphasis onheterogeneity with the traditional strength oforganizational institutionalism which lies inits focus on the co-evolution of organizationsand their societal environments.

NOTES

1 But see Hasse/Krücken (2005a: 85–94) for acloser look at Bourdieu and Giddens from a neo-insti-tutional point of view.

2 It should be noted that Luhmann has also devel-oped a specific micro-foundation of organizationaltheory, which offers further perspectives for a com-parison with the new institutionalism (see Hasse2005).

3 See Meyer/Jepperson (2000) for further detailson status differences between individual and organi-zational actors with respect to non-utilitarian ends.

4 Here we think in particular of the work of MichelFoucault. Though from very different angles anddespite Foucault’s rejection of the idea of a coherentnarrative of society, with regard to the role of scienceand, in particular, to the constitution of individualactorhood, both approaches display some remark-able similarities (Krücken 2002: 248–53). As Foucaulthas become one of the intellectual points of refer-ence for broader organizational theorizing, especiallyin the European context, also the field of organiza-tional research might benefit from exploring how

Foucauldian and neo-institutional thinking relate toeach other.

5 John Child made a similar point in order to arguein favor of his strategic choice-analysis: ‘The conceptof an organizational environment as a social network… raises doubts about how externalized it really isfrom its constituent organizations’ (Child 1997: 57).In order to emphasize this, Child rigorously identifies‘inner structuration’ (related to organizationalparameters) and ‘outer structuration’ (related to theorganizational context) as objects of strategic choice(Child 1997: 70–1).

6 To some extent, the contemporary emphasis onagency and institutional entrepreneurship seems tobe a ‘forward to the past.’ There are striking resem-blances to theoretical discussions many decades agowhen old institutionalists such as Philip Selznick(1949) and Arthur Stinchcombe (1965) were highlighting issues of power and conflict(Greenwood/Hinnings 1996: 103–4). In doing so,they joined a broad coalition of researchers which crit-icized the prevailing Parsonian approach as being fartoo static and sterile. Among these critics was S.N.Eisenstadt (1964, 1965), who considered elites andleadership roles as carriers of institutional entrepre-neurship. Not unlike many contemporary researchersof entrepreneurship, Eisenstadt also argued that ref-erence to other institutions and the ability to mobilizesupport were preconditions for institutional change.

7 We deliberately leave out the epistemologicalunderpinnings of Luhmann’s work, which are basedon more recent discussions in general systems theory,neuroscience, and logics. For an attempt to link thesehighly sophisticated arguments, which lead to atheory of social systems’ self-reference (Luhmann1995) and self-observation (Luhmann 1998), to orga-nizational theory (see Seidl/Becker 2005).

8 There is a certain tension in Luhmann’s workbetween the early emphasis on societal functions asthe driving-force of differentiation processes and thelater emphasis on processes of internal self-reproduc-tion. While the early period is marked by the influ-ence of Talcott Parsons, the later one is linked to the‘autopoietic turn’ in general systems theory, i.e., theassumption that the elements of a system are linkedto other elements of the same system, but not toexternal references. As we will focus on the distinctlogics of individual societal systems, through whichthey constitute themselves in difference to other soci-etal systems, the functional aspects of Luhmann’swork are only to be seen against that backdrop.

9 It should be noted that close linkages betweenorganization building on the one hand and thedevelopment of specific forms of rationality havebeen observed by other social scientists as well.Michel Foucault, for example, has emphasized thesignificance of the ‘birth of the clinic’ (Foucault 1973)for the development of the modern medical system;

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Richard Whitley (1984) convincingly has shown thatthe transformation of more or less sporadic ‘amateursciences’ into the modern science system was basedon the re-organization of universities which special-ized with respect to academic disciplines and corre-sponding scientific associations; the modern politicalsystem has been considered to be based on the for-mation of competitive political parties and the incor-poration of various interest groups (Evans 1999); andaccording to Max Weber (1968) modern capitalismrevolutionized the economy on the basis of the insti-tutionalization of the business firm which is differentfrom a traditional economy based on households. Fora more general account on the importance of the19th century for the spread of formal organizationsin society see also Türk (1995).

10 As both neo-institutionalism and systemstheory focus on the long-term development of thewelfare state, they rather emphasize its expansion.The more recent experiences mentioned below, how-ever, could be seen as strong indicators for the‘retreat of the state’ (Strange 1996) and the expan-sion of economic rationality in society. From the per-spective of neo-institutionalism and systems theoryone could argue that these experiences could only befully understood against the backdrop of a moremacro-historical and macro-sociological account. Inaddition, current discourses and practices could beanalyzed without altering the main conceptual toolsand premises of both approaches. From a neo-insti-tutional point of view, Lee/Strang (2006) analyzepublic-sector downsizing in 26 OECD countries as aglobal diffusion process. In a similar vein, one couldargue from the point of view of Luhmann’s systemstheory that we can currently witness variation inpolitical programs, while the code of the politicalsystem, in which the dominant rationality of thesystem is to be found, remains unchanged.

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