This article synthesizes the large but diverse literature on organizational legitimacy, highlighting similarities and disparities among the leading strategic and institutional approaches. The analysis identifies three primary forms of legitimacy: pragmatic, based on audience self-interest; moral, based on normative approval: and cognitive, based on comprehensibility and taken-for-grantedness. The article then examines strategies for gaining, maintaining, and repairing legitimacy of each type, suggesting both the promises and the pitfalls of such instrumental manipulations.

https://www.jstor.org/stable/pdf/258788.pdf

Managing Legitimacy: Strategic and Institutional Approaches

This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.

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Dynamic capabilities, what are they?

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

https://www.jstor.org/stable/pdfplus/259056.pdf

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

After briefly explaining why social capital (civil society) is important to democracy, Putnam devotes the bulk of this chapter to demonstrating social capital’s decline in the United States across the last quarter century. (See Putnam 1995 for a similar but more detailed argument.) While he acknowledges that the significance of a few countertrends is difficult to assess without further study, Putnam concludes that crucial factors such as social trust are eroding rapidly in the United States. He offers some possible explanations for this erosion and concludes by outlining the work needed to consider these possibilities more fully.

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“Bowling Alone: America’s Declining Social Capital”

Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.

https://www.jstor.org/stable/pdfplus/259247.pdf

Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of who and What Really Counts

The development of collaborative network ties and configurations in the commercial biotechnology field is examined, in order to demonstrate how patterns and the logic of interaction and attachment emerge, take root, and shift over time. The ties between biotechnology firms, public research organizations (including public and private universities, nonprofit research institutes, and research hospitals), pharmaceutical companies, and venture capital firms are assessed. Three approaches are taken to analyze and understand network structures: (1) examination of the network to see how random or uniform the process of expansion is; (2) mapping the field's development by drawing network configurations, in order to assess the extent of attachment bias; and (3) assessing alternate mechanisms of attachment by examining network formation and dissolution. The data sample, comprising interorganizational agreements for United States and European firms, was developed from the database BioScan and covered the years 1988-1999. Also utilized were insights drawn from interviews of scientists, managers, and university faculty. The dominant forms of partner organizations were coded according to a 24-cell matrix of types of partner organizations and types of activities. Three types of analysis are conducted: (1) degree distributions, (2) discrete-time network visualizations, and (3) attachment bias. Four attachment mechanisms are hypothesized and tested: (1) accumulative advantage, (2) homophily, (3) follow-the-threat, and (4) multiconnectivity. Results show how different rules for affiliation shape network evolution. It was found that, over the period 1988-1999, collaborative activities shifted from commercialization to finance and research and development. The commercialization activities of early-entry corporations are supplanted by universities, research institutes, venture capital, and small firms. As collaborative activities increase and diversify, subnetworks form. Structural components, choices, and opportunities reinforce an attachment logic based on differential connections to various collaborators. (TNM)

Network Dynamics and Field Evolution: The Growth of Interorganizational Collaboration in the Life Sciences

Intellectual capital or signal? The effects of scientists on alliance formation in knowledge-intensive industries

The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Theory

Getting into Print

To appear in The Twenty-First Century Firm, P.J. DiMaggio, ed., Princeton University Press, forthcoming. I very much appreciate comments made by Paul DiMaggio, Neil Fligstein, Charles Tilly, Barry Wellman, and especially Steven Vallas, whose critical remarks were invaluable. I also benefited considerably from feedback from seminar participants at the Sociology department at North Carolina University, the Department of Business Studies at Uppsala University, the Strategy workshop at MIT’s Sloan School, the Social Organization Seminar at the University of Arizona, and the History, Technology, and Society program at Georgia Tech.

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Walter W. Powell

Papers

Network Dynamics and Field Evolution: The Growth of Interorganizational Collaboration in the Life Sciences

Intellectual capital or signal? The effects of scientists on alliance formation in knowledge-intensive industries

The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Theory

Getting into Print

The Capitalist Firm in the 21st Century: Emerging Patterns