Learning from Learning Theory: A Model of Organizational Adoption Strategies at the Microfoundations of Institutional Theory

David Chandler, and Hokyu Hwang
Journal of Management, Volume 41, Issue 5, pp. 1446-1476

In spite of recent interest in its microfoundations, institutional theory’s account of what, why, and when ideas diffuse remains limited and oversocialized. As such, it is unclear how firms decide what to adopt and how these decisions evolve across a population as innovations spread and become taken for granted. We review recent work in institutional theory on this issue and draw from learning theory to inform institutional accounts of adoption decisions in ways that add to current explanations of organizational heterogeneity. In particular, we develop a model of adoption strategies that explains how firms identify which practices to adopt by drawing on knowledge that is either local or distant (search scope) to understand what works and what does not (mindfulness). We then theorize how the decision to adopt is further conditioned by the extent of diffusion (temporal variation) and the characteristics of the field, organization, and innovation (decision context). We discuss the implications of this model for our understanding of how things diffuse and identify additional ways in which the microfoundations of institutional theory can be advanced by studying how organizations learn.