When Religion Changes Individuals’ Experience of Institutional Complexity and Organizations’ Responses: The Case of Family Businesses in Saudi Arabia

Abstract

How do individuals subjectively interpret and experience institutional complexity and, consequently, enact institutional logics in their organizations? To answer this question, this research draws on 47 interviews with key decision makers in addition to observations and documents from 15 family-business cases in the Kingdom of Saudi Arabia which face institutional complexity created by the religion, family, and market logics. The study finds considerable variability in how decision makers experience institutional complexity and enact institutional logics across the different decision contexts in their organizations. Individuals’ orientations towards institutional logics, specifically, logics internalization, non-internalization, and the externality of logics, account for much of the differences in how individuals experience institutional complexity and enact institutional logics. When individuals internalize, and thus commit to, religion or family logics or both, their experience of institutional complexity between these logics and the market logic is reduced compared to individuals for whom religion is an externality they have to manage and who, consequently, experience heightened institutional complexity. This is because the internalization of religion and / or family logics moves actors to a higher level at which they do not experience institutional complexity from competing logics. Instead, they view the different prescriptions as compatible towards achieving their long-tern goals prescribed by the logics they internalize. Individuals’ experiences of institutional complexity (increased or reduced) also explain much of the variability in how decision makers enact institutional logics in their organizational decisions, in addition to organizational visibility and the nature of logics prescriptions which also explain parts of the differences observed in the enactment of logics. These findings draw attention to the meta-function of institutional logics under the condition of internalization where a logic becomes a lens through which many decisions from different institutional spheres are assessed. The findings also extend theory on individuals’ subjective experiences of institutional complexity through identifying the role 8

played by individuals’ orientations towards logics which form a boundary condition under which institutional complexity might reduce.