Institutional Change and the Transformation of Interorganizational Fields: An Organizational History of the U.S. Radio Broadcasting Industry
Leblebici, Huseyin, Salancik, Gerald R., Copay, Anne, King, Tom, Administrative Science Quarterly
The research reported here explores how institutional practices change ver time in an interorganizational field, in the historical context of the U.S. radio broadcasting industry. It identifies three endogenous mechanisms of change: analogies that are used to make sense of and manage new phenomena, private agreements between indentifiable parties, and conventions, the practices adopted by ome contituents to solve coordination problems. The use of each mechanism is associated with the nature of the goods transacted within a field and triggers change in established practices as actors attempt to realize value from their transactions. After describing each mechanism as found in the radio broadcasting industry, we focus our historical analysis on conventions. It reveals that conventions were introduced into the broadcasting field by fringe players to deal with shifting coordination problems and competitive pressures. Once they were adopted by the central players, these conventions transformed the organization of the industry by changing the basis of transactions and became its new institutional practices. We conclude that the organization of a field is not permanent, but is contingent upon institutionalized definitions of what is being transacted.
How do institutional practices change? Researchers from different perspectives on organizations--institutional, ecological, and neoinstitutional economics--find it necessary to address directly or indirectly this particular aspect of organizational reality. The topic is critical because it is at the core of the question of how organizational order is maintained both at the level of individual organizations and at the level of interorganizational fields. The primary objective of this paper is to address this question within the context of a unique interorganizational field, the U.S. radio broadcasting industry. We subscribe to Scott's (1983) argument that the interorganizational field context is the appropriate level of analysis for understanding the interplay between a field's structural evolution and change in its institutional practices. By incorporating network, cultural, and historical elements, interorganizational fields provide a fruitful context for tracing and interpreting the nature and process of change in institutional practices.
Through an historical analysis, this study documents the cycles of institutional change in the U.S. commercial radio broadcasting industry from its inception in this century's first decade through its mature state in the 1960s. Our objective is to present historically grounded descriptive material and develop a set of conjectures for understanding institutional change. Less than a century old, the radio broadcasting industry has had a rich history of technological innovations, government interventions, personal rivalries, and changing tastes in mass communication. Our analysis focuses on the institutional and structural transformations of the industry and, specifically, on the organization of exchange transactions among its key constituents. To anchor the scope for our investigation, we frame questions from three theoretical issues in the literature. How were new exchange practices started? Which participants introduced them? and How did the new practices influence the industry's growth and organization? Finally, we ask what theoretical mechanisms can explain the introduction and, later, the establishment of a practice? Our goal was to conclude with a set of theoretical conjectures about institutional change.
The U.S. radio broadcasting industry held several advantages for our study. First, it could be studied from its inception, allowing us to track its changing practices without having to assume anything before the period. Second, the American system represents a peculiar combination of competitive private enterprise and government franchise. Third, the transactions are complex. Besides radio stations and listeners, there are networks, advertisers, advertising agencies, talent agents, performers, manufacturers, rating agencies, and the state, which regulates relations among the others. …