A Critical Review of Institutional Theory in Marketing: An Abstract

Abstract

It has long been established that marketing science benefits from borrowing theories from other disciplines (Alderson 1957). One such organization theory that can inform marketing studies is institutional theory (Hult 2011). This study provides a critical review of marketing articles that draw on institutional theory as a theoretical lens and are published in top marketing journals. Specifically, it assesses the state of institutional theory in marketing to identify gaps and directions for future research.

The findings of the critical review indicate that many marketing articles in the strategy area apply institutional theory to understand corporate behavior with a social dimension—for example, adoption of sustainable innovations orientation (Varadarajan 2017), Global Reporting Initiative (GRI) (Nikolaeva and Bicho 2011), and voluntary green initiatives (VGIs) (Clemens and Douglas 2006). This application of the theory has benefited from the theory’s assertion that legitimacy constitutes one of the main motivations to participate in such activities.

The second biggest research stream to use institutional theory is supply chain management (SCM). Given that institutional theory is a management theory, this finding is not surprising. Relative to other streams, SCM is closer to the theory’s roots. In SCM, researchers have looked at stages of institutional environment development and the influence of institutional pressures on supply chain constituents (Grewal and Dharwadkar 2002). In addition, mimetic pressures have been found to lead to “supply chain contagion” (McFarland et al. 2008).

Consumer behavior researchers are increasingly using institutional theory, but it still remains underexplored. In this area, the theory has been used to study how media shapes legitimacy perceptions of consumption practices (Humphreys 2010) and industrial crises (Humphreys and Thompson 2014) as well as how consumers become institutional actors (Moorman 2002; Scaraboto and Fischer 2013).

Institutional theory has been used several times to complement other theories—for example, service-dominant logic (Vargo and Lusch 2016) and transaction-cost economics (Gatignon and Gatignon 2010). However, the list of theories is not exhausted yet. Theories such as stakeholder theory and resource dependence theory can be integrated with institutional theory to explore firm and industry dynamics. Lastly, little research has investigated deinstitutionalization and institutional change, both in terms of companies and consumers. Future studies should use institutional theory to examine these issues as they have become important processes in an era of disruptive innovations and more turbulent markets.