Working Paper | HBS Working Paper Series | 2011

How Foundations Think: The Ford Foundation as a Dominating Institution in the Field of American Business Schools

by Rakesh Khurana, Kenneth Kimura and Marion Fourcade

Abstract

The question of institutional change has become central to organizational research (Powell, 2008). Recent scholarship has demonstrated, often through carefully researched cases, that institutions can and sometimes do change. According to this research, there are two primary factors that can cause institutions to change. First, institutional entrepreneurs, including individual actors or small groups of actors, are able to think and act outside the confines of their institutional context and, therefore, mobilize change in directions that favor new sets of interests (for a review, see Battilana, 2010). A second factor that contributes to institutional change is determining whether the processes are endogenous to the everyday functioning of institutions, such as the loose coupling between formal and informal practices or the contested meanings in the adoption of new practices (Leblibici, et al., 1991; Lounsbury and Pollack, 2001). While both research approaches have been quite productive and provocative, some scholars have raised concerns about this turn in institutional research. They point out that there is a theoretical inconsistency between the strong reliance on individuals as the primary unit of analysis and the examination of endogenously generated processes to explain institutional change (Scott, 2008). For example, the practical deficiencies of individual agency and endogenous processes as the primary sources of institutional change become especially apparent when one considers large-scale institutions such as healthcare, academic disciplines, or social services, which are nested within or cut across a variety of institutional sectors. These institutions either operate within a highly constrained environment of norms, regulations, and practices that are taken for granted or in a context of pluralistic and contested demands (D'Aunno, Succi, and Alexander, 2000; Denis, Lamothe, and Langley, 2001; Abbott, 1988; D'Aunno, Sutton, and Price, 1991). This research modestly attempts to explore a decidedly more organizational and exogenous perspective to explain institutional change. We start with a construct called dominating institutions, a class of formal organizations that are purposively designed to change other institutions. We suggest that such organizations exist and provide us with a stepping stone toward a more theoretically consistent and empirically grounded explanation for how large-scale institutional change sometimes occurs. The goal of this paper is to describe the structural characteristics and associated behaviors of dominating institutions as they incite change within other institutions. Their primary structure can best be described as adjacency, a space between institutional fields that provides these organizations with the advantages of connectivity across a wide variety of institutions and with a vantage point that allows them to think strategically about key intervention points for changing an institution. However, while adjacency is an important structural position, it is not, by itself, dominance. Dominance requires action. Dominating institutions exercise dominance by (1) brokering across different institutional sectors, (2) legitimizing or stigmatizing organizations and/or their practices, and (3) creating resource dependencies with the key organizations they are trying to change. We carry out this research by examining a large-scale foundation and its approach to reshaping one of the largest institutional sectors within higher education.

Keywords: Change; Business Education; Business History; Organizations; Organizational Change and Adaptation; Organizational Structure; Relationships; Behavior;

Citation:

Khurana, Rakesh, Kenneth Kimura, and Marion Fourcade. "How Foundations Think: The Ford Foundation as a Dominating Institution in the Field of American Business Schools." Harvard Business School Working Paper, No. 11-070, January 2011.