There is an interesting debate unfolding on the pages of the current issue of the Journal of Institutional Economics, a special issue on Business Routines (Vol. 7, issue 2). It appears to mark the moment when institutional economics and the economic theory of the firm first encountered actor-network theory and its allies (unless I’d missed that moment happen somewhere else already).
The encounter was partly brought about by the confrontation between Teppo Felin & Nicolai Foss, who had launched a broadside against the literature of organizational routines, and Brian Pentland, who in turn rode to the rescue. Felin & Foss have been advocating for some time a “return to micro-foundations” in organisation studies (see e.g. Felin & Foss 2005), by which they seem to mean a return to methodological individualism, in the face of the methodological collectivism they perceive in the literature of organizational routines (which can be traced back to Schumpeter and includes the evolutionary theory of the firm and the resource-based theory it inspired, as well as the more recent efforts to develop a theory of organizational routines by Feldman, Pentland et al.).
In their JIE paper Felin and Foss claim that the organizational routines literature considered the concept of the routine as a black box, where the inputs determine the outputs (somewhat reminescent of what Latour calls an “intermediary” in his Reassembling the Social):
In short, empiricist and behaviorist approaches postulate a strong, deterministic relationship between various inputs and associated outputs. Various external factors (whether stimulus, experience, environment, exposure, situation) essentially determine not only outcomes but also the internal make-up of the organism in question.
In response, they stand up for human agency which they feel is sidelined by the concept of organizational routine:
there is an opportunity to study the underlying ‘microfoundations’ of organization, that is to study the individuals that compose the organization, their underlying characteristics, nature, abilities, preferences, choices, and so forth.
There are three interesting responses to Felin & Foss by Sidney Winter (who disputes the above characterisation of the routines literature as empiricist and behaviourist), Geoffrey Hodgson and Thorbjørn Knudsen, and Brian Pentland. Let’s focus on Pentland’s response, as it draws directly on the tradition to which ANT belongs, and Pentland himself deployed ANT in some of his earlier work (e.g. Feldman & Pentland 2005, Pentland & Feldman 2007).
Already in his introduction, Pentland makes an ANT-ish observation of Felin and Foss’ critique:
They have created philosophical problems concerning organizational routines by disconnecting words from their meaning in practice; they write about ‘experiences’ and ‘routines’ in general, rather than writing about any specific experience or routine. (…) By avoiding empirical examples, and by overlooking or misrepresenting current theory, they create the impression that there are serious problems and confusion in the literature on organizational routines.
Pentland then stays true to the principles of ANT by using specific empirical examples to illustrate his argument that indeed there has been significant effort made in the ethnographic accounts of organizational routines to unpack the black box, which is far from a simple input-output switch. More importantly, and in contrast to the rationalist, choice-based humanist approach of Felin & Foss, Pentland makes the point that in his ethnographic study of organisational routines,
Multiple actors are involved. Dozens of people participated in processing invoices, but it is important to note that not all of the actors were human. Across the four organizations studied by Pentland et al. (2010), the percentage of actions taken by the humans ranged from 15 to 89%; the computerized workflow system performed the rest of the actions.
The main point of Pentland however is that Felin & Foss (and by implication, the economic theory of the firm and institutional economics) are unaware of the primarily sociological literature that has provided detailed empirical accounts of organisational routines for decades:
Some recent theories of organizational routines have been grounded in theories of structuration (Giddens, 1984) and practice (Bourdieu, 1990). Routinization is at the core of structuration theory (Giddens, 1984). Likewise, Bourdieu’s (1990) concept of practice centers on the repetitive, patterned activities that constitute habitus. These theories use different vocabulary and emphasize different things, but they have made a fruitful foundation for a theory of organizational routines (e.g., Pentland and Rueter, 1994; Feldman, 2000, 2003; Feldman and Rafaeli, 2002; Feldman and Pentland, 2003; Pentland and Feldman, 2005). This theoretical view is successful because it is supported by detailed ethnographic observation of a wide range of actual work practices, such as filing papers in an office (Suchman, 1983), photocopier repair (Orr, 1996), medical imaging (Barley, 1986), technology roadmapping (Howard-Grenville, 2005), software support (Pentland and Rueter, 1994), navigating a ship by sight (Hutchins, 1991), and many others.
The contributions of ANT-inspired approaches are brought up under their own heading (8: Routines are Socio-Material):
The most serious flaw in the current Felin and Foss paper (2011), and in their so-called ‘microfoundations project’ in general, is that it fails to incorporate current thinking about the ontology of organizational routines. (…) Contemporary scholars have adopted the term ‘sociomateriality’ to refer to this phenomenon (Orlikowski, 2007; Leonardi and Barley, 2008). Building on the work of Latour (2005), Law (2004) and others, Orlikowski has argued that: “…every organizational practice is always bound with materiality. Materiality is not an incidental or intermittent aspect of organizational life; it is integral to it” [emphasis in original] (Orlikowski, 2007: 1436).
Pentland’s intervention however wasn’t the only figuration of ANT in this special issue. Luciana D’Adderio has a separate paper focused solely on “Artifacts at the centre of routines: performing the material turn in routines theory,” making a strong argument for the agency of artefacts, drawing on STS and ANT:
Existing theories of organizational routines have generally had simplistic and extreme views of artifacts as fully deterministic or largely inconsequential. Artifacts have been treated as either too solid to be avoided, or too flexible to have an effect. This paper endeavours to improve our understanding of the influence of artifacts on routines dynamics by proposing a novel and deeper conceptualization of their mutual relationship. In drawing from recent advances in Routines and STS/Performativity Theory, the paper contributes to advancing our understanding of routines dynamics by bringing artifacts and materiality from the periphery to the very centre of routines and Routines Theory.
So there you have it: ANT and institutional economics face-to-face. Let’s hope that this debate results in some cross-fertilisation, although Foss’ initial response (“unfortunately Pentland has thoroughly misunderstood the nature of the micro-foundations projects we advocate”) suggests otherwise. However, Pentland and D’Adderio have provided plenty of pointers for where the theory of the firm could benefit from the insights of ethnographic studies inspired by ANT and related approaches. These approaches in fact share Felin & Foss’ desire to open up the black box of organisational routines: however, rummaging in the black box has already begun and it had found more than just ‘rational human actors’.
Addendum
After rereading my post I realised that it may give the impression that the above debate is about methodological individualism vs. methodological collectivism. Felin and Foss indeed seem to propose methodological individualism as an alternative to the methodological collectivism that they perceive in the tradition of the evolutionary theory of the firm (such as in Nelson & Winter 1982). However, the ANT perspective is decidedly neither individualist or collectivist. As a research approach, ANT is agnostic about the nature of an agent prior to an empirical inquiry and it allows for the seemingly strange possibility that an individual can enact collective agency and/or that a collective can act as an individual, and that individuals and collectives also include nonhuman entities. As Callon and Law (1997) put it:
Stable social arrangements are both individual and collective. They are necessarily possessed of a double nature. Sometimes it is useful to talk of individual entities: to imagine that they are discrete objects in an environment. But it is equally appropriate to treat them as collective effects – as patterned networks.
(…)
The argument, then, is that the division between the individual and the collective is an effect.
(…)
The distinction between individual and society is unnecessary. Indeed, it is seriously misleading. For the sociology of science and technology shows that the idea that society is a set of relationships between human actors is a misunderstanding. Instead it suggests that it is better understood as a collective association of human and non-human entities.
(Some) references
Abell, P., Felin, T., et al. (2008). “Building Micro-Foundations for the Routines, Capabilities, and Performance Links.” Managerial and Decision Economics, 29 (6): 489-502.
Callon, M. and Law, J. (1997). “After the Individual in Society: Lessons on Collectivity from Science, Technology and Society.” Canadian Journal of Sociology / Cahiers canadiens de sociologie, 22 (2): 165-182.
Felin, T. and Foss, N. J. (2005). “Strategic Organization: A Field in Search of Micro-Foundations.” Strategic Organization, 3 (4): 441-455.
Feldman, M. and Pentland, B. (2005). Organizational Routines and the Macro-Actor. Actor-Network Theory and Organizing. Czarniawska, B. and Hernes, T. Malmö: Liber; Copenhagen: Copenhagen Business School Press: 91-111.
Latour, B. (2005). Reassembling the Social: An Introduction to Actor-Network-Theory. Oxford; New York: Oxford University Press.
Nelson, R. R. and Winter, S. G. (1982). An Evolutionary Theory of Economic Change. Cambridge, Mass.: Belknap Press of Harvard University Press.
Pentland, B. T. and Feldman, M. S. (2007). “Narrative Networks: Patterns of Technology and Organization.” Organization Science, 18 (5): 781-795.
