Organizational change in stakeholder business systems: the role of institutions

Abstract

Purpose - The purpose of this paper is threefold: to contribute to the increasing global debate in organization theory about corporate ethics; to focus on the importance of measurement costs and its influence on organizational change in stakeholder systems; and to provide a framework for overcoming the inherent ambiguity and increased measurement costs associated with stakeholder business systems. Design/methodology/approach - The approach is to analyze the importance of institutional certification and indirect measurement indicators, which are defined as indices to develop a dynamic framework capable of evaluating change in stakeholder business systems. Findings - The stakeholder business system, a dominant system in continental European countries, as well as various countries in Asia, requires involvement by multiple actors, including financial markets, banks, employees, government. Research limitations/implications - Further research is necessary to analyze in more depth the way organization value can be measured and how stakeholders can interact with the organizations involved in external certification, in facilitating organizational change. There is also a need to further research the dynamics of the relationship between market, institutions and social structure in organizational change. Originality/value - A general contribution of the paper is that it illustrates that all industries have "indices", which are more tacit, implicit than the traditional, transparent market indicators and signals.