2.2 Theoretical Framework
2.2.1 The Institutional Theory (The Sociological Organisational Theory)
In this study, the researcher would limit focus to the Institutional Theory as part of the bigger sociological, socio-economic organisational theory, and yet being an essential component of the Organisational Change Theory (Section 2.2.3). Scott (2014, p. 56) defines the Institutional Theory as the theory which deals with institutions as the core block of social life, where “institutions comprise regulative, normative, and cultural cognitive elements that, together with associated activities and resources, provide stability and meaning to social life”. Research has identified that the institutional theory and other management change theories have been extensively used to analyse how different organisational factors would shape the decision for ERM adoption and how the implementation process is being conducted (Deck 2015, p.
38). In the Conceptual Framework analysis, the researcher provided for the significance of the relationship between ERM implementation and elements of academic organisational, institutional and performance change, thus giving the rationale for opting to this theory as a major theoretical component of the study. Deck (2015, p. 51) posited in his research that “institutional theory contributes to understanding how institutional forces support and motivate ERM implementation”. In this sense, based on prominent research done in the field, the researcher justifies the use of this theory as both related and leading to a major conceptual component of the study, that is “institutional change”. Based on previous literature, in a sense, the researcher concluded that this theory is interwoven into the elements of organisational change, and this in itself is the pivotal product of the study inquiry of ERM implementation and its impact on HEIs.
According to Cai and Mehari’s (2015), in their overview of the Institutional Theory, “organisation studies and higher education research are two dynamic domains within social sciences with a reciprocal effect on each other’s development” (p. 2). Since according to Greenwood et al. (2008) the institutional theory has increasingly become a powerful exploratory tool for the analysis of various organisational phenomena in new societies, they claimed that study of the ERM implementation in higher education as a change tool cannot be complete without shedding light on its relevance to the institutional theory.
However, the challenge remains in the fact that literature in educational research applying the institutional theory is still lacking (Cai and Mehari 2015), where few recent studies on the subject would be worth highlighting.
In this sense, this study has no room for an elaborate and extensive analysis of the giant sociological organisational theory that goes back to as early as the beginning of the 20th century (Haveman and Wetts 2019). According to Haveman and Wetts (2019), the organisational theory found its first validity origins
in the philosophies of economist, sociologist and socio-political theorists Karl Marx and Maximillian Weber. Modern philosophers and sociologists, such as Durkheim and Simmel, emphasized the fact that the organisational theory proposes and advocates realistic solutions of organizational issues and helps institutions sustain more productivity in their processes. This organisational theory in general would maintain interest in rational decision‐making and environmental conditions that shape organizational processes and outcomes, being part of the social and pragmatic contingency theories. A major part and parcel of the organisational theory comes the institutional theory which was defined by Cai and Mehairi (2015, p. 2) as a “popular and powerful explanatory tool for analysing a variety of organisational phenomena in contemporary society”. The reason it is included it in this ERM study is that as posited by Cai and Mehairi (2015, p. 2) “since the turn of the new millennium, it has gradually moved to centre stage in higher education research” and especially in risk management research as evidenced by Lundquist (2013; 2015) and Deck (2015).
Cai and Mehari (2015) concluded that the Institutional Theory developed through three main stages:
“namely old institutionalism (originating at in the end of the 1940s and the beginning of the 1950s), new institutionalism (originating at in the end of the 1970s and the beginning of the 1980s) and a variety of new perspectives on institutional theory (evolving since the 1990s)” (p. 3). Greenwood et al. (2008) defended the notion beginning of the 1990s that new institutionalism gradually developed into the more recent model of institutionalism where it started to involve more elements required for institutional or organisational change, a concept that had long been missing in the tenets of old institutionalism.
2.2.1.1 Relevance of the Institutional Theory to higher education and ERM research
The institutional theory is relevant to the context of ERM research in the sense that it does not only present the rationale for an organisation’s or HEI’s decision to adopt change in the form of ERM, it also helps determine the type of ERM model an institution can implement. Deck (2015, p. 51) states that the
“institutional theory contributes to understanding how institutional forces support and motivate ERM implementation” and adds that “although the COSO (2004) ERM framework refers to normative and culture-cognitive elements, the framework relies heavily on the regulative element outlined in institutional theory”. The works of Greenwood et al. (2008), Cai and Mehari (2015) and Haveman and Wetts (2019) show that that institutional analyses in higher education research mainly deal with management and policy issues. In HEIs, and even more so in the context of UAE HEIs, such management and policy issues would include for example problems and challenges relating to strategic decision making, conflict of interests between faculty members and administrators (the subjects of this study),
competitiveness in the market, leadership issues and their impact on, and contribution to, the HEI image and reputation, profit and return issues, and finally issues related to ranking and formal evaluations.
However, since it is agreed among researchers, as the literature of this study shows, that the context of HEIs is different from that of the business world, new ERM practices need to be implemented in order to face those challenges. In this study, it is proposed that ERM implementation would fall under the institutional theory parameters in that it helps unpacks and resolves all issues which face higher education stakeholders. In a sense, when HEI leadership or top management senses the hazard of their reputation and image being at risk, they rapidly rush to implement ERM as firstly a covering shield which justifies their way of management, and secondly as a mark of positive change, and who in the academic setting would not seek positive change at times of proven risk.
However, based on institutional theory literature, it is evident that other issues related to the teaching and learning processes, curriculum design, teacher-instructor-student interactional experiences, quality and quality assurance, academic work and knowledge, and research are all included in the literature of Institutional Theory (Gioia and Thomas, 1996). Literature on this theory also shows that studies on these subjects, as well as the analysis of their associated issues, are for the main part approached at the level of HEIs. In this direction, it was found by Tight (2012) that institutional theory topics in the majority of research concern governance, structure, system policy, management, leadership and the history and evolution of HEIs, etc. To that effect, research on such subjects is investigated in one of two ways, either at the level of HEIs or at the level of national systems, which leads to shortage in micro-level analysis of such topics.
Therefore, since new institutionalism has identified itself as the major resource for Institutional theorizers, it is of no surprise that the Institutional Theory is mainly focused on studying policy and management change issues and with a primary focus on organisational change within organisational operating environments. In this sense, it can be argued that this theory would best facilitate the understanding of issues related to management and policy change in HEIs as shown in the proposed preliminary Conceptual Framework (See Figure 2.3) and final confirmed Conceptual Framework (Figure 5.1) of this study. ERM research has shown that reforms in higher education systems in general are best approached from a top-down decision-making perspective. In other words, in order for organisational change to take place effectively, strategic managerial decisions must be involved and invested on. In this sense, since ERM as a process is the ownership of top management at a given HEI, institutionalism and more specifically contemporary institutionalism, which defends top-down decision making, would be the
ideal tool to be adopted to resolve issues and problems related to the effectiveness of ERM implementation in relation to academic performance and effectiveness. Cai and Mehari (2015) cite the empirical and academic research applying new institutionalism as follows: Arnold, 2004; Bernasconi, 2006; Brint, Proctor, Murphy, Turk-Bicakci, and Hanneman, 2009; Gonzales, 2012; Webber, 2012; Youn and Price, 2009. In this perspective, the application of ERM into academic leadership form an institutional point of view which can be a dominant factor ensuring the stability, organisational resilience as well as survival of HEIs.
2.2.1.2 Weakness of the Institutional Theory
As mentioned earlier, research on Institutional Theory is approached mainly at the HEIs top managerial level, namely the level of owners, sponsors and/or decision makers. For that reason, the theory lacks the details of micro-level analysis required for institutional change (Cai and Mehari 2015, p. 9). The findings of studies mentioned in previous section for example may well indicate that the Institutional Theory itself was not meant to have been developed as a theory for organisational change, as this study proposes ERM implementation would indeed aim at, but rather provides an analysis for organisational arrangements in a given organisational environment. In this sense, such findings of previous research challenge the dominant views of Institutional Theory on management and leadership change. This theory may be seen as weak in its attempt to merely analyse the internal factors leading to organisational change and as such ignoring factors which lead to real change of power factors and efficiency which are major components of a successful management and leadership (Greenwood et al. 2018). Cai and Mehari (2015) investigated 93 articles on the subject of Institutional Theory and “of the 93 articles, 39 combined new institutional theory and other theories. As claimed by most authors, the reason for so doing was that the sole use of the theory is not enough to comprehensively grasp the nature of HEIs” (p. 11). Therefore, another more ERM specific and sophisticated theory would be worth presenting in this study to justify the application of ERM as a major management tool, and that would fall within the tenets of the legitimacy theory.