Pages:7 (2030 words)
Document Type:Literature Review
Literature Review on Coping Through The Use Of Informal Institutions during COVID 19 in South Africa, Nigeria, and Swaziland
The institutional theory deals with the outlines, regulations, standards, and procedures that are formulated in the institutions as commanding instructions for social behavior. This theory gives an understanding of how institutions are shaped, and the societal norms and frameworks are informed to all people of an organization. Communication is the sole indicator of how organizations are formulated with the help of formal rules and regulations, as that would reflect how they are conversed across all levels of the firm and in what way people are obeying them. This would ultimately build an organizational culture for coping with social and political issues. The informal institutions are socially shared instructions, typically unwritten, that are formed, transferred and imposed outside the official boundaries (Torniainen & Sasstamoinen, 2007), for example, giving tips to the food delivery man is now an informal institution, which is actually not an official rule written anywhere but is still followed as acceptable social behavior.
Studies have been conducted to see what drives change in an organization and how institutional theory comes into play. There are certain actions carried out in an organization when change happens, and that is evident on all levels and hierarchies, in which the organization itself plays a part in a catalyst (Dacin, Goodstein & Scott, 2002). The character of the organization changes over time with a change in its potency, and this is where institutional theory highlights the richness and diversity inside the processes. The same research also revealed that there are three major sources of pressure on institutional norms, which are functional, political, and social. Functional pressures are observed when difficulty in performance is sensed with the institutionalization of practice within the organization. Political pressures are when the existing political arrangement within the institutional powers change, and the related interest dealings are altered accordingly. The social pressures are when different beliefs and practices within the organization are influenced by the social expectations that deter the continuance of customs. Due to these, institutional change can take place, which might sometimes be hardly noticeable for the institutional participants. When an organization is working on a multinational level, there are many new entrants with diverse backgrounds. Change takes place within the firm in the form of structural change, process change, and change in hierarchy. The concepts and principles are translated across all levels of the chain of command, and therefore, symbols, relations, and routine social standards of social behavior also alter. Coping with change and its effects are inevitable since the transformations even take place at larger levels, such as changes in relations within the organization, changes in limits of the existing organization, and governance structures. The ‘structuration’ within the firm signifies the density of connections since it creates bonds between the rules and the participants, mainly what is stated in institutional theory, through all echelons of the firm.
With the help of another research, it was deducted that informal institutions can entail criteria like corruption, political ideology, and culture (Kaufmann, Hooghiemstra & Feeney, 2018). Assumptions have been made that higher levels of corruption are related to tighter bureaucracy. Among the informal institutions, more bureaucracy is seen in countries where there is a conservative role of government, and the corrupt countries have more individualistic ideologies in nature. Perceptions were that informal institutions should be adhered to if there is less uncertainty avoidance, which means that others should follow strict formal rules, but no one wants to follow them on their own. Especially among the red tape bureaucrats, the obedience to rules is lower as they find these policies to be annoying but expect (informal institution for perception and expectations) that ordinary people and employees should follow them strictly. The personal observance is quite weak in this regard. Culture is the set of beliefs and social norms that the person learns at an early age and sticks to them throughout life. The cultural domain in different countries affects differently on the business dealings and entrepreneurship in the light of bureaucracy. Hofstede distinguishes four cultural dimensions, out of which collectivism versus individualism relates to the degree that society fellows would look after themselves or others. Mainly in entrepreneurship, self-fulfillment, and the accomplishment of personal goals is the highlight of a more individualistic approach. This would entail the entrepreneur’s perceptions (informal institutions) towards the government rules and regulations and whether those would be beneficial for their independence and personal growth. Also, individual autonomy reassures persistence and an urge to chase business aims with freedom of action.
Formal and informal institutions both have their respective effects on the entrepreneurship of a country. If the scope is limited to informal institutions, then it was studied that social norms, culture, and cognitive aspects like perceptions reduce the uncertainty in economic decisions of that region (Escandon-Barbosa et al., 2019). Prior studies suggested that there are four environmental dimensions of the entrepreneurial process: government policies, socio-economic conditions, business skills, and financial or non0finanacila help. The informal factors serve as mediators between formal factors and entrepreneurial activity. For example, if in a meeting of an entrepreneur and the investor, the formal rules and guidelines of the construction of a hotel at any site are available but whether the investor is willing to accept those rules and offer money as an investment is mainly based on his reaction accepted as a social norm. If the perception of the entrepreneur is based on his positive reaction, then he is certain to start a new entrepreneurial venture in that country. The same happened in Colombia; the entrepreneurial activities in rural and urban Colombia depended on informal institutions like social norms and subjective insecurity. The political and social contexts should not be ignored as these factors of a country shape the entrepreneurial decisions. The social norms of the country improve the results of formal institutions during the process of entrepreneurial pursuit.
The research was conducted where…
Coelho, A. (2019). The role of informal institutions in the enforcement of rules and how to improve corporate and public governance in Brazil: Studies based on a set of corporate governance cases involving state-owned companies (Working Paper). Retrieved from SSRN website https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3434037
Dacin, M.T., Goodstein, J. & Scott, W.R. (2002). Institutional theory and institutional change: Introduction to the special research forum. Academy of Management Journal, 45(1), 45- 47. DOI: 10.2307/3069284
Escandon-Barbosa, D.M., Urbano, D., Hurtado-Ayala, A., Paramo, J.S. & Dominguez, A.Z. (2019). Formal institutions, informal institutions, and entrepreneurial activity: A comparative relationship between rural and urban areas in Colombia. Journal of Urban Management, 8(3), 458-471. https://doi.org/10.1016/j.jum.2019.06.002
Estrin, S. & Prevezer, M. (2010). The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared. Asia Pacific Journal of Management, 28, 41- 67. https://doi.org/10.1007/s10490-010-9229-1
Kaufmann, W., Hooghiemstra, R. & Feeney, M.K. (2018). Formal institutions, informal institutions, and red tape: A comparative study. Public Administration, 96(2), 386-403. https://doi.org/10.1111/padm.12397
Meluch, A.L. (2016, August). Understanding the organizational and institutional origins of social support in a cancer support center. (Unpublished doctoral dissertation). Retrieved from https://etd.ohiolink.edu/!etd.send_file?accession=kent1466944822&disposition=inline
Torniainen, T.J. & Sasstamoinen, O.J. (2007). Formal and informal institutions and their hierarchy in the regulation of the forest lease in Russia. Forestry: An International Journal of Forest Research, 80(5), 489-501. https://doi.org/10.1093/forestry/cpm033
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