Cultivating Foreignness: How Organizations Maintain and Leverage Minority Identities

• Published date: 01 January 2016
• DOI: http://doi.org/10.1111/joms.12129
• Author: Jesper Edman
• Date: 01 January 2016

Cultivating Foreignness: How Organizations Maintain

and Leverage Minority Identities

Jesper Edman

Hitotsubashi University

ABSTRACT Scholars increasingly recognize that organizational fields contain minority identities,

linked to alternative logics. Extant work has been largely silent on how such minority

identities are maintained, and what their implications are for organizational agency. I

contribute to filling this gap by examining how organizations cultivate minority identities, and

how such identities both enable and constrain agency. Employing the foreignness of

multinational enterprise subsidiaries as a particular case of minority identity, I find that

managers actively cultivate minority identities by embedding into niche networks, reinforcing

alternative expectations, and categorizing themselves into distinct collective identities. These

elements of the minority identity enable particular forms of agency – internal experimentation

and an external license to deviate – while constraining others – adaptation to the dominant

logic and positioning in mature market segments. The findings extend theory by highlighting

how minority identities are generated and sustained, as well as their implications for agency.

Keywords: foreignness, identity, institutional logics, multinational enterprise

INTRODUCTION

How do organizations successfully defend and maintain identities that diverge from

the dominant logics of their institutional field? Institutional theorists have devoted

increasing attention to the linkage between organizational identities and field-level

logics, yet these works predominantly examine the way in which identities resolve

institutional complexities and help actors establish their legitimacy in organizational

fields (Battilana and Dorado, 2010; Creed et al., 2010; Kodeih and Greenwood,

2014; Lok, 2010; Wry et al., 2011). By contrast, far less work has examined how

organizations distance themselves from the dominant logics by creating and maintain-

ing minority identities, that is, those linked to alternative or subordinate field-logics

(Durand and Jourdan, 2012). Understanding the construction and implications of

minority identities is of particular importance in developing theories of how

Address for reprints: Jesper Edman, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo 186-8601, Japan

(jedman@ics.hit-u.ac.jp).

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C2015 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

Journal of Management Studies 53:1 January 2016

doi: 10.1111/joms.12129

organizations are able to span multiple fields, populated by conflicting logics (Green-

wood et al., 2011; Thornton et al., 2012). We particularly lack insight into how

minority identities are sustained, and what their consequences are for the

organization.

This paper remedies this research gap by exploring how foreign-owned subunits of

multinational enterprises (MNEs) maintain and leverage minority identities in host

country institutional settings. Because of their linkages to home country institutions

and logics, MNE subunits frequently refrain from aligning their identities with host

country logics (Kostova and Zaheer, 1999; Rosenzweig and Singh, 1991); this lack of

adaptation heightens their foreignness and outsidership in the organizational field

(Johanson and Vahlne, 2009; Zaheer, 1995). Consequently, foreign MNE subunits

constitute an ideal case for examining organizations that actively choose to distance

themselves from prevailing logics.

This paper examines the case of foreign firms operating in the Japanese banking

industry. Through a comparative case study of foreign and domestic banks, I examine

both how foreign minority identities were maintained, as well as how they enabled

and constrained agency, specifically in the introduction of loan syndication, an arm’s

length lending practice that deviated significantly from the dominant relational lend-

ing logic of the domestic Japanese banking industry. The findings suggest organiza-

tions cultivate minority identities by focusing on niche network positions, encouraging

expectations of non-conformity, and categorizing themselves as a unique collective

identity. These attributes in turn both enabled and constrained the organizations’

ability to engage proactively with field-level logics to introduce new innovations and

practices. The analysis suggests that the minority identity and different forms of

agency effectively reinforce each other, thus cementing the minority identity within

the field.

The findings contribute to institutional theory in three ways. First, they highlight

how minority identities are not only assigned and imposed by external audiences

(Zuckerman, 1999), but also actively pursued and cultivated by purposive actors. Sec-

ond, the findings contribute to our understanding of how institutions interact with

strategic intent by demonstrating how organizations cultivate identity positions that

emerge due to external pressures. By reinforcing and shaping their foreign identity,

managers effectively construct both their own opportunities and constraints in the

local institutional setting. Finally, by contrasting the actions of minority and majority

identities in the introduction and subsequent legitimization of a deviant innovation,

the findings contribute to our understanding of how different identities together shape

processes of institutional transformation.

THEORETICAL BACKGROUND

Scholars have long been interested in the notion of organizational identity. While

early work focused on internal elements (Albert and Whetten, 1985; Dutton and

Dukerich, 1991), more recent approaches link identity to institutional logics (Glynn,

2008). Institutional logics are the guiding principles and taken-for-granted rules that

give order and meaning to organizational fields (Thornton et al., 2012). Logics are

56 J. Edman

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instantiated and expressed through both material and symbolic elements (Thornton

and Ocasio, 2008). Material aspects include specific practices and organizational

forms (Lounsbury, 2007; Thornton, 2002). Symbolic or immaterial aspects include

vocabularies, frames, and identities (Creed et al, 2010; Lok, 2010; Rao et al., 2003).

The material and symbolic elements of logics are closely intertwined (Jones et al.,

2013); organizational identities are hence not only created from the cultural resources

supplied by particular logics (Wry et al., 2011), but also serve to instantiate and

underpin logics (Lok, 2010). As Thornton et al. (2012) note, identities are ‘loosely

coupled’ to field-level logics.

Identities are of particular interest to institutional scholars because they provide a

link between micro-level agency and macro-level institutions (Pouthier et al, 2013;

Powell and Colyvas, 2008). Organizations and actors leverage the vocabularies,

frames, and practices of their identities to both generate field-level institutional change

(Creed et al., 2010), and resolve complexities arising from the introduction of new,

competing logics (Kodeih and Greenwood, 2014). Actors also create new identities,

both as a way of bringing about field-level transformations (Rao et al., 2003), and as

a means of combining practices from different logics (Battilana and Dorado, 2010;

Lok, 2010). Extant works hence highlight how identities serve as enablers of strategic

agency vis-a-vis field-level logics.

While these studies have provided important insights, they largely view identity as

a means for establishing and maintaining the organization’s legitimacy vis-a-vis the

field’s dominant logic (Wry et al., 2011). By allowing actors to combine and reconcile

practices from conflicting logics, identities reduce ambiguity and uncertainty over cat-

egory membership (Battilana and Dorado, 2010). By instantiating institutional change,

identities provide a means for actors to justify behaviours that might otherwise be

viewed as norm-breaking and deviant (Creed et al., 2010). Identity construction and

maintenance, as well as identity-based strategies, have thus primarily been seen as

‘legitimating accounts’ (Creed et al., 2002) that strengthen the link between the orga-

nization and dominant field logics.

By contrast, few studies have sought to explore how organizations might instead

actively employ identities to distance themselves from field-level logics. The notion that

not all organizations seek legitimacy with the dominant logic has gained increasing

currency as scholars recognize that fields are composed of plural, and often competing

logics (Greenwood et al., 2011; Kraatz and Block, 2008). Institutional plurality creates

room for minority identities, i.e. those aligned with subordinate logics and alternative

practices that deviate from governing principles and behaviours (Durand and Jour-

dan, 2012). Minority identities may stem from the organization’s origins, either at the

hands of illegitimate founders (Alexy and George, 2013) or in separate fields guided

by different logics (Jones et al., 2012). Previously dominant identities may also be rele-

gated to minority positions if the introduction of new actors, practices, and logics dra-

matically alter the status quo (Marquis and Lounsbury, 2007; Reay and Hinings,

2009).

While extant research recognizes the existence of minority identities (Greenwood

et al., 2011), most works view such actors as rebels (Jones et al., 2012) and deviants

(Alexy and George, 2013), whose very divergence poses legitimacy risks.

57Cultivating Foreignness

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