Innovation and institutional change: the transition to a sustainable ...

32 Chapter 2
of these concepts and their roots. We provide a short introduction of the
concept of institutions and institutionalisation and follow with an overview
of several approaches that integrate institutional change within their
theoretical concepts, institutional economics, the new institutionalism in
organisational analysis, and ecological modernisation.
Scott (2001: 48) conceptualises institutions as follows:
– Institutions are social structures that have attained a high degree of
resilience;
– Institutions are composed of cultured-cognitive, normative, and
regulative element elements that, together with associated activities and
resources, provide stability and meaning to social life;
– Institutions are transmitted by various types of carriers, including
symbolic systems, relational systems, routines, and artifacts;
– Institutions operate at multiple levels of jurisdiction, from the world
system to localised interpersonal relationships;
– Institutions by definition connote stability but are subject to change
processes, both incremental and discontinuous.
The way institutions become established can be termed institutionalisation.
Institutionalisation refers to increasing coordination of activities through
institutions of a regulative, normative and cognitive nature (Zucker, 1988;
Holm, 1995; Scott, 2001). As representatives of the cognitive approach
Meyer and Rowan (1977: 341) define institutionalisation as involving “the
processes by which social processes, obligations, or actualities come to take
on a rulelike status in social thought and action”. A further important
concept is that of legitimacy, which expresses the continuous need to be able
to justify and explain why things are done in a certain way (Berger and
Luckmann, 1966: 58; Scott, 2001: 58-61). Opposite to institutionalisation
one can speak of de-institutionalisation involving weakening or
disappearance of institutions (Oliver, 1992; Scott, 2001).
New institutional economics
A predominant focus on institutions of a regulative nature is visible in the
work of economists such as Williamson (1981) and North (1990).
Williamson points at the transaction as the basic unit of economic analysis
and sets out to clarify why certain transactions take place within firms and
others within markets. His main premise is that transactions may be costly
due to their specificity, the bounded rationality of actors, and the possibility
of deceit by interacting parties (Williamson, 1981: 553-555). In order to
make transactions as efficient as possible, governance structures need to be
“tailored to the specific needs of each type of transaction” (Williamson,
1981: 568). Governance structures may vary from organisation of exchanges