Institutional environments exert significant effects on organizational behavior, structure, strategy, governance, and process. To gain competitive advantage, managers are striving for legitimacy while maintaining efficiency. In line with this thinking, we propose the developmental process of institution-driven and legitimacy-embedded efficiency, and emphasize the confluence of legitimacy and efficiency in the context of business marketing. We then highlight several promising directions for further research on the development of institutional theory and its application in business marketing. Finally, we present a brief summary of each paper in this special issue.
Institutional theory provides a non-economic explanation of organizational behaviors and strategies (DiMaggio and Powell, 1991 and Scott, 2008). Institutions regulate economic activities by setting the rules of the game as the basis for production, exchange, and distribution. Thus, it is essential for firms to follow established rules, norms, and belief systems to gain legitimacy and mobilize their social, economic, and political resources in order to adapt to specific institutional environments in view of enhancing firm performance (Yang, Su, & Fam, 2012).
Scott (2008) has claimed that institutional theory has reached its adulthood. Nevertheless, relatively limited research on institutional theory has been conducted in the area of business marketing in a rigorous way. As an open system with rapid globalization, business markets have been facing even more complex, often contradicting institutional environments. As such, scholars have called for further coverage of a wide range of questions related to the development and application of institutional theory in business marketing (e.g., Grewal and Dharwadkar, 2002 and Yang et al., 2012).
This special issue of Industrial Marketing Management assumes the challenge of motivating innovative research, featuring strong theoretical grounding and empirical rigor, to explore two broad, interrelated arenas of institutional theory that bear on legitimacy and efficiency in the field of business marketing. The first arena lies in the development and conceptualization of various institution-based constructs and their relationships with other well-established theories, such as transaction cost economics, resource-based view, ecology theory, agent theory, and social network theory. For example, firms often employ such approaches as isomorphism, decoupling, or ceremonial adoption to gain social acceptance from various legitimating parties while maintaining efficiency ( Martinez & Dacin, 1999). How can these concepts apply to marketing practices in channel management? The second area is to explore performance implications of institutional environments from an interactive perspective ( Yang & Wang, 2011). Such interactive perspectives explore how firms accommodate strategic responses to handle institutional constraints and take advantage of institutional capital. Distinct institutional pressure and process (e.g., regulating, validating, and habitualization) evoke strategic business actions, which, in turn, affect firm performance ( Grewal & Dharwadkar, 2002; Oliver, 1991).
5. Conclusion
The recent development of institutional theory in other disciplines opens a wide door for innovative research in business marketing. Refining, enriching, and extending institutional theory in the setting of business markets require both reflective theoretical discussion and empirical examination. Our conceptual framework of the developmental process of institution-driven and legitimacy-embedded efficiency provides a guide for the directions of future research and for business strategies. The essential issue is: how can an organization keep one eye on efficiency and one eye on legitimacy? Further advancement of institutional theory by addressing this issue will enable firms to better interpret, manipulate, revise, and elaborate institutional environments in business marketing. We hope that this special issue will encourage marketing scholars to devote considerable effort to establishing innovative thinking and methods in order to make a significant contribution to the development of institutional theory in the context of ever-expanding business markets.
