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Institutional analysis and tourism

An introduction

Introduction

Institutions are a fundamental building block of society and of its study. Although there is no single agreed definition, an institution represents a social order or pattern that has attained a certain state and which helps establish the “rules of the game” (Hotimsky et al., 2006) by which organisations and individuals act and the bases for compliance and legitimacy of those organisations (North, 1990). Therefore, given their importance for social, economic, and political order, it is perhaps not surprising that institutions, broadly conceived, are a central idea of the social sciences as well as ideas regarding society, organisations, and how and to what purpose they are governed and act. Table 1.1 illustrates some of these ideas with reference to some of the key elements of Scott’s (2014) three pillars model of institutions. However, it is important to recognise that this three pillars approach, although highly influential and useful illustratively, has also been substantially criticised as being too reductionist (Hirsch & Lounsbury, 1997, 2015) reflecting that institutions are an essentially contested concept and their study remains open.

Institutions have long been the subject of political, economic, and social scientific thought (Scott, 2014). However, over the past 50 or so years, the study of institutions has expanded - what is widely referred to as new institutionalism or neoinstitutionalism (March & Olsen, 1984) - to become a particular field of knowledge in geography, management, organisational studies, sociology, and the wider social sciences, which constitutes what is generally referred to as institutional theory (Meyer & Rowan, 1977; Suchman, 1995; Tolbert & Zucker, 1999; Weerakkody et al., 2009; Kauppi, 2013; Munir, 2015). Elements of institutional analysis were adopted in tourism and hospitality studies in the 1990s, particularly with respect to the importance of organisational networks and collaboration (Selin, 1994; Palmer, 1996; Bramwell & Lane, 2000a; Casanueva et al., 2016) amid the

Table 1.1 Three elements of institutions

Regulative

Socia 1-Norm ati ve

Cui tin a 1- Cogn itii e

Basis of compliance

Expedience

Social obligation

Taken-for-grantedness, shared understanding

Basis of order

Regulative rules

Obligations and expectations

Constitutive schema, social practices

Mechanisms

Coercive - Formal and informal pressures such as government regulations and/or local culture

Normative - Arising from pro fes sionali sati on, partic ular ly of functional fields

Mimetic - Arising from uncertainty, organisations will imitate other organisations that appear- successful or legitimate

Logic

Instrumentality

Appropriateness

Orthodoxy

indicators

Rules, laws, regulations, sanctions

Certification, accreditation, members liip

Common beliefs, shared logics of action, isomorphism

Basis of legitimacy

Legally sanctioned

Morally governed, self-regulation

Comprehensible, recognisable, culturally supported

Source: After Scott, 2014; DiMaggio & Powell, 1983.

Institutional analysis and tourism

Institutional analysis and tourism 3 hollowing of the state (Hall, 1999; Bramwell & Lane, 2000b). In more recent years, the direct use of institutional theory in tourism and hospitality studies has grown substantially (Lavandoski et al., 2014), and has been used to explain phenomena including, among others, social entrepreneurship (McCarthy, 2012), reproductive tourism (Yang, 2020), adaptation in environmental management (DeBoer et al., 2017; Mensah & Blankson, 2013; Ouyang et al., 2019; Zhu et al., 2013), corporate social responsibility reporting (De Grosbois, 2016), investment in experiential learning (Dicen et al., 2019), anti-smoking regulations (Simons et al., 2016), and the adoption of technology such as e-marketing (Gyau & Stringer, 2011). It is not yet clear as to whether tourism and hospitality organisations provide a ‘special case’ for institutional analysis, but it can be argued that they do have some particular features which arguably makes them more susceptible to changes in the institutional environment:

  • a) They are service organisations that are primarily focused on customers from outside of the immediate environment of the destination. This means that they are highly susceptible to any restrictions on voluntary mobility - which is the nature of tourism.
  • b) They tend to be highly networked organisations.
  • c) Organisations that are internationally focused and which are located in destinations are, like many international businesses, susceptible to changes in the institutional environments of both tourist generating region and the destination country.
  • d) The movement of people across borders is highly regulated at the national level.
  • e) Tourism has not historically been given much significance as a policy area despite its economic significance. This makes it highly susceptible to changes in other policy fields and regimes.
  • f) Travel may be susceptible to informal pressures arising from sociopolitical concerns regarding rights, justice, morality, religious mores, and the appropriateness of leisure behaviours.

All of the above reasons highlight the need for greater attention to be given to the analysis of the role of institutions in a tourism and hospitality context.

This book seeks to briefly introduce institutional theory to students of tourism and hospitality. It is important because institutional theory, and the debates within it, provide an extremely useful way for thinking about organisations and how they adapt and change to their environments, their trajectories, and how they are managed, particularly at a time when, more than ever, they may have to adapt in order to survive. In addition to thinking about commercial firms, institutional theory also helps in understandingissues of collaboration, governance and policymaking, and implementation. This first chapter provides a very brief introduction to institutional theory and its significance, before the next chapter looks at the major elements of the theory. However, this chapter will first go on to discuss the importance of ‘doing theory’.

The importance of theory and frameworks

Conceptual frameworks, such as images, models, and theories, are fundamental to the development of understanding public and private institutions and the relationships between them. For example, in his extremely influential work on images of organisations, Morgan (1986, p. 12) emphasised: “how many of our conventional ideas about organization and management build on a small number of taken-for-granted images, especially mechanical and biological ones”. Similarly, Judge et al. (1995, p. 3) also noted that conceptual frameworks

provide a language and frame of reference through which reality can be examined and lead theorists to ask questions that might not otherwise occur. The result, if successful, is new and fresh insights that other frameworks or perspectives might not have yielded.

One framework that is often used with respect to theory-building in the social sciences, which is used throughout this book, is typologies. A typology, an organised system of types, is an important means for looking at concept formation and measurement that are used widely in organisational and management studies, tourism studies, political science, and sociology (Hall, 2014) (see Table 1.1 for an example of a typology). In policy terms, typologies are used for both descriptive and explanatory purposes and can focus on variables related to causes, institutions, and/or outcomes (Collier et al., 2008). Typologies play an important role as instruments in developing more general insights into the ways in which key concepts and ideas can be framed so as to facilitate comparative studies and map empirical and theoretical change, and, although usually associated with qualitative research, can also contribute to the quantitative analysis of categorical variables (Collier et al., 2008).

By exploring different conceptual frameworks and images, it is possible to identify the ways in which empirical reality and theoretical models of that reality interact and how theory influences how the world is analysed, understood, and acted upon (Hall, 2014). In institutional and public policy terms, this notion is well illustrated by Pressman and Wildavsky’s (1973, p. xv) insight that "policies imply theories”. Majone (1980, 1981)

Institutional analysis and tourism 5 also understood policies as well as the organisations and institutions from which they are often derived as theories in terms of their development in a quasi-autonomous space of objective intellectual constructs, of thoughts-in-themselves, equivalent to Popper’s (1978) third “world” of reality (Lakatos, 1971). ForMajone (1981, p. 25):

A policy, like a theory, is a cluster of conclusions in search of a premise; not the least important task of analysis is discovering the premises that make a set of conclusions internally consistent, and convincing to the widest possible audience.

Understanding how the institutional arrangements of governance are conceptualised is important as it determines the way in which the state, among other actors, intervenes in tourism and related policy arenas and therefore selects instruments that are used to achieve policy goals. The focus of most discussions on policy instillments in tourism and hospitality is on their utilisation or their effects rather than on the understandings of governance that led to such instillments being selected from the range of potential options that state actors have to intervene. This is therefore a major weakness in many existing studies of tourism organisations as well as the role of the state with respect to both explaining the actions of actors and connecting to wider debates in social science theory. Operational studies are of significance, but they do not then relate back to the conceptualisations of governance and meta-governance that underlie intervention and policy choice, i.e. why should the state intervene in one way and not another? (Hall, 2014). Also, just as significantly, why do organisations - collectivities intermediate between institutions and individuals that are shaped by institutions -and their stakeholders do what they do? Given that organisational actions, behaviours, and strategies also imply theories.

Institutions

Institutions encourage and induce particular behaviours. North (1990, p. 3) suggests that institutions as the “rules of the game” or “humanly-devised structures ... provide incentives and constraints to economic actors”. While this is undoubtedly true, the institutional approach applies to all actors in a society although it is used in the social sciences with respect to organisational, social, and political actors, whose roles may also have economic dimensions at times. Nevertheless, while institutions are often regarded as long-lived, they are not unchanging, and can be transformed by politics to, for example, become more just, while laws and regulations and the overall rales of the game can be transformed to encourage organisations andsociety to move in particular directions, for example, with respect to recognition of human rights, environmental responsibilities, and the allocation of environmental costs. However,

Not only may political institutions, political authorities, and political culture play a critical role in the definition, mobilization, and organization of interests, but the structure of political opportunities will shape the strategies of organized interests and their beliefs regarding the efficacy of different types of political action.

(Immergut, 1998, p. 21)

One issue that arises is how contemporary so-called new institutional approaches differ from other approaches that seek to explain the rales and procedures that affect societies and economies? March and Olsen (1984) who coined the term in the context of political science, used it to describe the emergence of a range of different approaches that sought to explain the role of political institutions. In broader social scientific terms, this issue brings us to a core issue that lies at the heart of social, political, and economic thought, that of the relationship between agency and structure. Structure can be understood as the patterned socio-economic arrangements which influence, constrain, and enable the choices and opportunities available to individuals. Agency is the independent capability, capacity, or ability of individuals to enact and make their own choices. Different political philosophies and schools of thought give different emphasis to agency and structure, which then flows through into different understandings of governance, decision-making, and the ways within which society operates. Many commentators on new institutionalism, such as Scott (2014), position institutional theory as a middle path between utilitarian and structuralist approaches to explaining society.

Building on the work of Immergut (1998, 2006) and Scott (2014), Table 1.2 seeks to illustrate how new institutional approaches can be contrasted with other schools of social and economic thought in terms of interests, political processes, and normative notions of democracy. Importantly these should be regarded as ideal types and not as fixed categories because different understandings of institutions occur all along the continuum between the two extremes of emphasis on the centrality of structure and agency in approaches to society. All of the approaches are concerned with how the preferences of human actors’, including organisations, are affected by the institutional contexts in which preferences are expressed. With the focus being “the effects of rales and procedures for aggregating individual wishes into collective decisions - whether these rales and procedures are those of formal political institutions, voluntary associations, firms, or even

Emphasis on

Agency! ------------

-----------------------------------► Structure

Behaviouralist/Utilitarian

Institutional

Structuralist/neo-Marxist/Marxist

hit erests

Preferences revealed through behaviour; each individual best judges of his or her interests

Diverse individual and collective interests; institutions influence then articulation and expression in politics

Social group and class-based interests. Also recognition of the role of elite/ruling class self-interest

Political

Utility aggr egation with

Problem of aggregation; the form of the process

Correspond to social/class structure

process

efficient transmission of preferences (in politics, in the market, in interest group market)

affects quality and results of participation

and struggle. Objective social interests often stymied by ruling class/elite

Normative

Formal democracy: fairness

Procedural democracy: substantive justice through

Substantive democracy: Social

notion of democracy

of process guarantees justness of results: formally open access to markets/politics; competition protected

formal procedure

harmony-organic solidarity

Institutional analysis and touri:

Source: After Immergut, 1998; Scott, 2014.

cognitive or interpretive frameworks” (Immergut, 1998, p. 25). Although Immergut (1998, 2006) suggests that there is a common agenda there are certainly different approaches within new institutionalism which, in great part, reflect the relative importance attached to agency and structure, including the persistence of structure over time, as well as whether authors are coming out of economics, sociology, political sciences, planning, or organisation studies. Table 1.3 details the similarities and differences between the widely categorised three types of “new” institutionalism: rational choice institutionalism, organisation theory, and historical institutionalism (Hall & Taylor, 1996; Rothstein. 1998; Peters, 2001; Immergut, 2006).

Nevertheless, Immergut (1998, 2006) suggests that given that the common research interest is the so-called “black box” between demands and ultimate outcomes (Easton, 1965), “it does not make sense to predefine the contents of this box. A standard definition of ‘institution’ is thus not desirable; the common research agenda is the study of institutional effects wherever, or however, they occur” (Immergut, 1998, p. 25). Indeed, she later argues that new institutionalism is nothing more than an interest in the inefficiencies of politics and the distorting effects of the political process in understanding how similarly-situated interest groups and stakeholders responded to their situations in different ways, with their claims on the state being met by different governmental responses. Yet, even if institutional theory is nothing more than this, and the role of formal and informal regulations, it is still important.

Conclusions and ovenlew

This chapter has sought to provide a very brief introduction to the emergence of new institutionalism and institutional theory in a general context. In doing so it highlights that the issue of institutions is an important one within the social sciences, and for tourism and hospitality organisations, as it seeks to explain their responses to the external environment and funire directions and change. Nevertheless, the re-emergence of interest in institutions in the 1980s and 1990s is marked by a variety of different approaches and emphases, although they are united in a common interest in the study of institutional effects.

This book is divided into four chapters. Chapter 1 discusses why institutional theory is an important theoretical tool to examine tourism-related phenomena. Chapter 2 provides an overview of institutional theory from various disciplines, including sociology, economics, political science, and business studies. These disciplines have their own underpinning assumptions about the formation and development of institutions. However, there is an interdisciplinary synthesis around the links between networks between

Rational choice/Positive political Organisation theory/Sociological Historical institutionalism

theory institutionalism

hit erests

Strategic factors cause rational actors to choose suboptimal equilibria (e.g. tragedy of the commons)

Political

Without rules for ordering, cannot

process

arrive at public interest; rules and regulations for voting, partitioning into jurisdictions, for example, affects outcomes

Normative

Understands behaviour based on micro-economic models of individual choice (Buchanan & Tullock, 1962; Riker, 1980, 1982; Elster, 1986)

Actors

Rational

Power

Ability to act unilaterally

Institutional

Structuring of options through

mechanisms

rules (reliance on norms controversial)

Actors do not necessarily know the full range of their interests, limits of tune, and information cause them to rely on sequencing and other processing rules (bounded rationality)

Inter- and intra-organisational processes shape outcomes, efforts to achieve administrative reorganisation, and policy implementation

norms of “appropriateness” and “standard operating procedures” as guides to behaviour (Perrow, 1986; DiMaggio & Powell, 1991; Powell & DiMaggio, 1991)

Cognitively bounded

Depends on the position in the organisational hierarchy

Structuring of options and calculations of Structuring of options, calculation of interest through procedures, routines, scripts, frames (implies norms)

Actors’ interpretations of their interests shaped by collective organisations and institutions that show traces of their own history

Political process structured by constitutions and political institutions, state structures, state-interest group relations, policy networks, contingencies of timing

The past influences the present day through a variety of mechanisms. Historical studies tend to combine elements of rationalistic and constructivist explanation (Lowi, 1979). Interest in path-dependency (Pierson, 2000) Self-reflective (social, cultural, and historical norms, but reinvention of tradition)

Depends on recognition by the state, access to decision-making, political representation, and mental constructs

interests, and formation of goals by rules, structures, norms, and ideas

Institutional analysis and tourism

Source: After Immergut, 1998, 2006.

different actors and the development of the institutional environment. Chapter 3 discusses the analysis of institutional logics, institutional effectiveness and enforcement, legitimation, and governance. The chapter then discusses the issue of organisational survival and change over time thr ough the lens of the relative "mortality” of organisations. Chapter 4 examines the utility of different research methods for "doing” institutional theory and outlines some potential future research directions. The concluding chapter also returns the reader to some of the issues surrounding the structure/ agency debate and the role of institutional theory as a means to try and reconcile these major forces on organisational and individual behaviour. It also reflects on the impact of institutions on the undertaking of research. Examples and cases from tourism and hospitality are used throughout.

Issues of organisations, regulations, and change are fundamental to the understanding of tourism and hospitality and its research. Although no single theory can necessarily do justice to the rich, multi-layered levels of cause and effect that influence the organisational life of tourism and hospitality firms and destination organisations, this book contends that institutional theory can help provide rich explanations and insights into organisational behaviour and change. Given the enormous challenges faced by tourism and hospitality organisations in light of COVID-19 and the climate and environmental crisis, and an increasingly complex regulatory and consumer environment, an improved understanding of the institutional enviromnent may assist organisations to not only survive, but thrive in meeting stakeholder demands.

 
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