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E-book China’s capitalist Transformation : The Rhetoric that Mattered
Chinese intellectuals like to blame things on institutions. After all, Chinese people areindustrious, prudent, and entrepreneurial. Yet modern Chinese history since theopium war has been characterized by one humiliation after another, and althoughthe founding of communist China gave the country independence, it came at the costof being self-isolated from the world and having a poor economy. What went wrong?It is commonly believed in China that the country’s institutions are the problem.Neo-institutional theory is a form of organization theory that specifically examinesinstitutions and therefore seems extremely fitting for the study of China. Now known asorganizational institutionalism, the theory has undergone several stages of develop-ment since its inception in the late 1970s and has grown to become one of the dominantparadigms in organization and management research. The theory has several core com-ponents. First, it is concerned with the diffusion of ideas and practices. It observes thatmany managerial practices, such as total quality management and diversity manage-ment, and a slew of corporate positions, such as Chief Human Resource Officer, ChiefCulture Officer, Chief Information Officer, and Chief Data Officer, are adopted acrossindustries and sectors. It posits that such wide adoption of corporate practices andstructures is driven by a need to be similar to others in a field of actors who are uncer-tain about what to do.Given this context, neo-institutional theory says that actors adopt popular ideas andpractices to obtain legitimacy.“Legitimacy”is a central term in neo-institutionalism andhas been theorized by many distinguished researchers, but the most interesting form oflegitimacy is cognitive legitimacy, which refers to a state of mind that takes something forgranted. By definition, being taken for granted means that the actor is no longer capableof questioning why such a belief exists in the first place. In early theorizing, legitimacywas something that only needed to be satisfied by organizations in highly institutional-ized environments, such as education, healthcare, and highly regulated industries; how-ever, in later theorizing, legitimacy became something that every industry and everycompany strives for. Legitimacy is conceptualized as a process and a variable withdifferent degrees of taken-for-grantedness and, in this sense, is like the concept of institutionalization
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