Institutional Pressures and Organizational Response

By investigating the business environment in Sub-Saharan Africa from an institutional theory perspective, the purpose of this thesis is to explain organizational response to the forces of this particular institutional environment. Coercive, normative and mimetic pressures serve as the basis for explaining the institutional environment. The organizations respond to these pressures by seeking legitimacy from the environment. The study is based on a qualitative research method relying on qualitative secondary data. Additionally a questionnaire was sent out to a limited number of experts to validate the findings. The main conclusion of this thesis is that networks are formed on the basis of norms and cultural processes working upon organizations in order to counter balance malfunctioning regulatory institutions. It has been revealed that organizations cannot rely solely on their response to coercive pressures for legitimacy. Normative aspects in networks are formed through repeated transactions that create trust and reputation between business partners that lead to legitimacy. Moreover, it is difficult for organizations to construct a proper response to cultural pressures since they stem primarily from heritage and ethnicity.