Institutional Regime, Opportunity Space and Organizational Path Constitution: Case Studies of the Conversion of Military Firms in China

• Published date: 01 June 2016
• DOI: http://doi.org/10.1111/joms.12170
• Author: Runtian Jing,Mary Benner
• Date: 01 June 2016

Institutional Regime, Opportunity Space

and Organizational Path Constitution: Case

Studies of the Conversion of Military Firms in China

Runtian Jing and Mary Benner

Shanghai Jiao Tong University; University of Minnesota

ABSTRACT This study examines organizational path constitution from an institutional regime

view. The research setting is the conversion of military firms to the civilian market in China

since the country’s economic reform in 1978. We begin with a questionnaire survey to better

understand the situation and context of military conversion, and then conducted an

embedded multiple-case study method that shows how different patterns of organizational

path constitution arise from a process of change efforts, change outcomes and opportunity

space. Our context further allows us to examine how heterogeneous locally-based institutional

regimes affect the opportunity space of embedded organizations, enabling or constraining

their change actions. The overall contribution is a theoretical model that reveals the relations

between heterogeneous institutional regimes, opportunity spaces and organizational path

constitution. Our findings have implications for the path dependence literature.

Keywords: institutional regime, opportunity space, organizational evolution, path creation,

path dependence

INTRODUCTION

The question of how the history of a firm determines its present state remains a key issue

in organization and strategy studies (Peli, 2009; Rowlinson et al., 2014; Vergne and

Durand, 2011). It is formally addressed as a ‘path dependence’ proposition, and its theo-

retical arguments have been of increasing interest in recent management studies (e.g.,

Garud et al., 2010; Gruber, 2010; Koch, 2011; Sydow et al., 2009; Vergne and

Durand, 2010).

Ideas about path dependence have been explored by scholars in evolutionary eco-

nomics and historical sociology in studies of technological innovation or policy formula-

tion (Arthur, 1994; David, 1985; Goldstone, 1998; Turnheim and Geels, 2013).

Address for reprints: Runtian Jing, Antai College of Economics and Management, Shanghai Jiao Tong

University, 1954 Hua Shan Road, Shanghai 200030, China (rtjing@sjtu.edu.cn).

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

Journal of Management Studies 53:4 June 2016

doi: 10.1111/joms.12170

Compared with pure technical systems, social systems often evolve in a more compli-

cated way, due to the interaction between embedded human agency and the

environment (Czarniawska, 2008). This complexity has led to a central debate in the

literature, between the ‘path dependence’ and ‘path creation’ views. Path dependence

highlights self-reinforcing processes in the constitution of an organizational path, which

can be defined as a set of mechanisms that makes a certain path more dominant over

time relative to alternative paths (Schrey€ogg and Sydow, 2011). Path creation focuses on

the agency of strategic actors engaging in a variety of purposive actions (or so-called

‘mindful deviation’) to initiate and sustain an organizational path (Garud and Karnoe,

2001). These views typically have been seen as contradictory (for instance, in the Journal

of Management Studies 47: 4 June 2010, Vergne and Durand (2010) and Garud et al.

(2010) contributed two point–counterpoint articles on this topic). Recently, however,

researchers have combined these views as complementary parts of a complete picture of

path constitution. For example, in a case study of the technological development of the

global semiconductor industry, Sydow et al. (2012) illustrated how both path depend-

ence and path creation can be simultaneously driven by collective efforts aimed at

extending a current technological path.

In this paper, we extend the promise of combining path creation and path depend-

ence in a view of path constitution, studying the conversion of military firms to civilian

markets in China during a period of over 30 years. Our setting is ideal for tracing out

the different paths of firms during this period and understanding the forces that influ-

enced path dependence through self-reinforcing mechanisms, and path creation through

mindful deviations of actors. Findings from our largely qualitative study reveal two addi-

tional elements of a path constitution process that have not been fully examined in prior

work and that extend our understanding of path constitution processes. First, we

incorporate the concept of ‘opportunity space’ in organizational path constitution.

Opportunity space refers to the perceived range of available options for organizational

variance by embedded actors, which can provide possibilities for courses of change

actions (Kornish and Ulrich, 2011). In this study, opportunity spaces arise from the

resources and knowledge inventory accumulated through different organizational learn-

ing processes (i.e., exploration and exploitation) (March, 1991). Our findings suggest

that previous change efforts (both transformational and incremental change) as well as

their outcomes influence the opportunity spaces of organizations, in turn, creating ena-

bling or constraining conditions for subsequent change efforts. Second, we are able to

consider the role of heterogeneous institutional regimes in organizational path constitu-

tion. Heterogeneous institutional regimes in China differentially affect the further wid-

ening or narrowing of organizational opportunity spaces, triggering both path

dependent processes as well as opportunities for new path creation and providing a view

of the possible alternative paths for organizations under different conditions. More spe-

cifically, we address the research question: How do local institutional regimes and

organizational learning effects influence opportunity spaces and patterns of organiza-

tional path constitution? Our overall contribution is a theoretical model to illustrate the

relationships between multi-level factors including institutional regimes, opportunity

spaces, and organizational changes in explaining the process of organizational path

constitution.

553Conversion of Military Firms

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