Institutional Logic Migration and Industry Evolution in Emerging Economies: The Case of Telephony in India

• Author: Deepali Sharma,Sanjay Jain
• DOI: http://doi.org/10.1002/sej.1160
• Date: 01 September 2013
• Published date: 01 September 2013

INSTITUTIONAL LOGIC MIGRATION AND INDUSTRY

EVOLUTION IN EMERGING ECONOMIES: THE CASE

OF TELEPHONY IN INDIA

SANJAY JAIN1* and DEEPALI SHARMA2

1Department of Management, Leavey School of Business, Santa Clara

University, Santa Clara, California, U.S.A.

2Prasar Bharati, Government of India, New Delhi, India

We employ a historical case narrative of the Indian telephony sector to inductively develop

a process model of institutional change in an industry within an emerging economy. Our

findings highlight the turbulent nature of migrating institutional logics—one that involves

processes we term subverting, maneuvering and bolstering. We demonstrate how these insti-

tutional dynamics impact entrepreneurial activity and explicate the role of the state as a

constrained institutional entrepreneur in these scenarios. In highlighting the contested and

capricious nature of such migration, we make contributions to the institutions-based view of

strategy and entrepreneurship and the institutional logics and institutional entrepreneurship

literatures. Copyright © 2013 Strategic Management Society.

INTRODUCTION

In this article, we build upon and extend a growing

body of research that has been termed ‘the

institutions-based view’ (IBV) of strategy and entre-

preneurship (Peng, Wang, and Jiang, 2008; Bruton,

Ahlstrom, and Obloj, 2008). This scholarship is

founded on the premise that formal and informal

institutions play a key role in influencing the strate-

gic and entrepreneurial behavior of firms. Ingram

and Silverman (2002: 20) articulate this position as

follows: ‘Institutions directly determine what arrows

a firm has in its quiver as it struggles to formulate

and implement strategy and to create competitive

advantage.’Even as research on emerging economies

has burgeoned in recent years, there is increased

appreciation that institutions—i.e., regulative, nor-

mative, and cultural elements (Scott, 1995) that

define the ‘rules of the game’ (North, 1990)—

significantly shape the strategic landscape and

impact firm decisions in these contexts (Wright

et al., 2005).

Almost all prior work within the nascent IBV

domain has focused on how firms strategically

respond to the opportunities and constraints afforded

by extant institutional frameworks—that is, it views

institutions (or their absence) as a given. By contrast,

there has been virtually no research that examines

how the rules of the game are themselves configured

in these contexts. This is somewhat surprising, as a

hallmark of most emerging economies is the signifi-

cant amount of institutional change taking place in

them—a phenomenon referred to as ‘institutional

transition’ (Peng, 2003). Indeed, it is our contention

that explicating the processes associated with the

(re)configuring of institutions is crucial given their

role in catalyzing the unlocking of value in these

Keywords: institutional logics; institutional entrepreneurship;

industry evolution; emerging economies; state; telephony

*Correspondence to: Sanjay Jain, Department of Management,

Leavey School of Business, Santa Clara University, 500 El

Camino Real, Santa Clara, CA 95053, U.S.A. E-mail:

sjain4@scu.edu; Deepali Sharma, Room 211, Akashvani

Bhavan, 1 Sansad Marg, New Delhi, 110001, India. E-mail:

deepalis05@gmail.com. The alphabetical ordering of author-

ship reflects the fully collaborative nature of this work.

Dr. Sharma contributed to this article in her personal capacity.

The views expressed here are her own and do not represent the

views of the organization.

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Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 7: 252–271 (2013)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1160

Copyright © 2013 Strategic Management Society

scenarios. As an illustration, the rise of India’s infor-

mation technology (IT) services industry has been

partly traced to the emergence of a supportive policy

regime (Arora et al., 2001).

In addressing this gap, we draw from two related

streams of research that have gained significant cur-

rency in recent years: institutional logics (Friedland

and Alford, 1991; Thornton and Ocasio, 2008) and

institutional entrepreneurship (Dimaggio, 1988;

Garud, Hardy and Maguire, 2007). Thornton and

Ocasio (1999: 804) define institutional logics as ‘the

socially constructed, historical patterns of material

practices, assumptions, values, beliefs, and rules by

which individuals produce and reproduce their mate-

rial subsistence, organize time and space, and

provide meaning to their social reality.’ Simply put,

institutional logics refer to the broader cultural

beliefs and rules that constitute meaning and guide

decision making and action in a field (Lounsbury,

2007). Incorporating the logics perspective into IBV

is useful, as it provides us with the analytic apparatus

to examine institutional change unfolding within

various industries in emerging economies. Specifi-

cally, the spate of liberalization activity taking place

in these contexts can be conceptualized as the migra-

tion from a state-based (often socialist) logic to a

market-friendly logic.

In order to develop a process model that captures

how actors migrate the logic of an industry, we draw

on the scholarship on institutional entrepreneurship

(Battilana, Leca, and Boxenbaum, 2009). We define

institutional entrepreneurs as actors that actively

mobilize resources to create new institutional logics

or transform existing ones (Jain and George, 2007).

In developing a theory of action within the insti-

tutional analysis of organizations, this body of

research represents a departure from the prior work

(including IBV) that focuses on the constraints under

which actors operate. In doing so, this research

showcases the dynamic interplay between actors and

the institutions they constitute (Giddens, 1984)

and emphasizes the socially constructed nature of

markets (Schneiberg, 2007).

We employ these streams of research to ask the

following research question: How do actors migrate

the institutional logic of an industry in an emerging

economy? We employ a detailed historical case that

documents the evolution of the Indian telephony

sector over three decades to develop our insights.

Our analytic narrative draws attention to the con-

tested nature of institutional logic migration in these

scenarios—one that involves processes that we term

subverting, maneuvering, and bolstering. We dem-

onstrate how the unfolding of these processes define

the emergent logic which, in turn, impacts the con-

tours of the industry. Finally, we explicate the role of

the state as a constrained institutional entrepreneur

in these scenarios. In highlighting these dynamics,

we develop a theoretical model of actor-driven insti-

tutional change within emerging economies.

THEORY DEVELOPMENT

Key to theory-building efforts related to the strate-

gic and entrepreneurial activity unfolding in emerg-

ing economies is developing an understanding of

the unprecedented institutional change taking place

in these contexts—what has been referred to as

institutional transitions (Peng, 2003). Along these

lines, there has been a robust stream of scholar-

ship on privatization in emerging economies (for

a review see Megginson and Netter, 2001) that

examines the move toward market friendly regimes

across various industries in these countries.

However, this work has tended to focus on the ante-

cedents and consequences of such activity and has

largely neglected the processual aspects of migra-

tion (for an exception, see Stark, 1994). In doing so,

it downplays the messy, political facets that charac-

terize institutional change. It is our contention that

employing the tenets of institutional analysis in

these scenarios is useful as a means of exploring

how actors influence such transitions. This is a task

we take on in this article by drawing on the more

recent work on institutional logics and institutional

entrepreneurship.

Institutional logics refer to the socially con-

structed regulations, practices, and assumptions that

provide practical guidelines to members of an orga-

nizational field (Friedland and Alford, 1991). From

an industry emergence perspective, logics refer to

the cognitive understandings and organizing frame-

works that sustain actor interaction (Van de Ven and

Garud, 1989). Early work employing this concept

focused on specifying the different types of institu-

tional orders that existed at various levels of analysis

(typically societal and field) and describing the

manner in which a logic shaped the cognition,

beliefs, and practices of actors embedded in it

(Friedland and Alford, 1991)—features that align

it closely with the institutions-based view. More

recently, scholars have highlighted the coexistence

of multiple competing logics within a domain as a

Institutional Logic Migration in Emerging Economies 253

Copyright © 2013 Strategic Management Society Strat. Entrepreneurship J.,7: 252–271 (2013)

DOI: 10.1002/sej