Organisationnele and institutionnels arrangements

At the heart of institutional and organizational arrangements are the notions of institution and organization.

By institution, we use the definition given by John R. Commons (1931)¹ i.e.: “collective action that controls, liberates and extends the scope of individual action”. Commons conceives of individual actions in close connection with collective actions, where the former are subsumed into the latter.

Every individual actor is fundamentally defined in terms of a bundle of rights and responsibilities defined by the cultural framework that subsumes him. The actor thus defined represents an institutional product from which he/she relies to establish social relations with other actors, other individuals. Commons qualifies the relations that take place between actors using the notion of “transactions”. He identifies three types of transaction : exchange (surrounding goods or services), governance (relating to the modalities of managing exchanges) or distribution-redistribution (in order to determine the distribution of resources). Each transaction mobilizes one or more sets of rules, norms, normative frameworks, and therefore institutions. The latter may be informal or poorly organized (a custom, for example), or they may take a formal or well-organized form (kinship, trade unionism, the State).

The institution is a collective action in the sense that it is socially accepted or recognized as relevant by the group concerned by its application or for its implementation. In this way, the institution acts as a matrix, a framework or a template for action. Since individual action cannot be anything other than a socialized action, it is in fact transformed into collective action, which actualizes in a more or less perfect way the institution to which this action refers. Depending on a “reference directivity”, the actor uses this referential baggage by applying it in a contextual and conjunctural way. Collective action then takes the form of a going concern or a concerned action : thus both determined and determining. Each going concern is concretely materialized in the tangible form of an organization.

The organization is the collective “machine”, the practical concretization of the implementation of the goals/means of the institution. The organization is thus the activation (going), the reality in act (working), of the institution (collective action) in its capacity to mobilize in the same concern individual wills (willingness) towards the same goal (Gislain, 2002, p. 55²)

If the organization is a by-product of the institution, it is instituted under the influence of the latter, it retroacts on the institution by confirming its relevance and legitimacy. Moreover, it has the capacity to be instituting in the sense of allowing the institution to evolve (the transformation of the papacy over the centuries), or to engender its erasure by creating a new institution (slave labor replaced by wage labor). The “instituted-instituting” dynamic is at the heart of the evolutionary process of the institutional matrix characterizing a social group, a community, a society or a civilization.

The institution, as an idea of work guiding the “individual and collective” action, is thus called to evolve according to conjunctural or structural changes, to the expression of wills linked to the interests to the needs and to the aspirations of the actors or according to various elements linked to the contingency : under the angle of opportunities which arise or constraints or adversities which occur. The institution, as a word dictated by “pastness”, contributes to defining the present moment — “presentness” — while at the same time participating in the statement of futurities. It does so in the present time by concretizing itself in the organized. Institutions and their respective organizational forms are in some sense condemned to constantly evolve, to always produce a new futurity … always actualizing individual initiatives and their consequences” (Ibid.).

Now, if every individual action is part of a transactional process, which is itself governed by one or more institutions, this means that a social actor is constantly called upon to deal with different institutions. He must therefore learn to combine not only institutional requirements or expectations, but also their interpretation by the other actors with whom he is called upon to interact.

The implementation of the idea of the work of an institution (embodied in the institutional spirit that inhabits each social actor) translates into behavioral systematizations that take the form of institutional arrangements, which are headed, guided, influenced or constrained by institutional environments.

An “institutional environment” essentially refers to the norms and rules of the game that frame individual or collective action by imposing constraints, but also by providing more or less effective supports for the organization of transactions. Of course, these rules evolve only very slowly. They can be formal, for example the legal regime of property rights, but also informal, for example the customs and beliefs that help structure economic activity and the role of actors.

While an institutional arrangement captures “the way in which agents, operating within a framework set by institutions, combine more or less specific assets, physical or human, in order to develop their production and exchange activities³.

With an institutional arrangement and environment, organizations are themselves characterized by two forms of arrangement. The first type of arrangement is part of the very constituents of any “organized fact“⁴, referring for example to the differences that can be observed between the extended family and the nuclear family. A second type of arrangement relates to the existence of a system external to the organization, which brings together other organizations and institutions, thus forming an ecosystem of action that is both organizational and institutional.

Notes

1
John R. Commons, J.R. (1931). “Institutional Economics : the American Economic Review, vol. XXI, pp. 648 – 657.
2
Gislain, Jean-Jacques, (2002). “Institutional Causality : Futurity in J. R. Commons,” Economics and Institutions, n. 1, pp. 47 – 66.
3
Claude Ménard, “Economics (History of Economic Thought) — Neo-institutionalism,” Encyclopædia Universalis [online], accessed 21 April 2021. URL : http://www.universalis-edu.com/encyclopedie/economie-histoire-de-la-pensee-economique-neo-institutionnalisme/.
4
On the definition of an organized fact, see Fontan, Jean-Marc (2022). “Les dynamiques sociales”, in Tannery F., Denis, J.P, Hafsi, T. and A.C. Martinet. Encyclopédie de la stratégie, Caen, Éditions EMS Management & Société, Entrée 33.