Impermanent institutionalization: the duration dependence of organizational rule changes

Organizational rules face competing pressures that can makethem more or less permanent. On the one hand, pressures forreliability, legitimacy and efficiency demand unchanging rulesthat provide lasting guidelines for organizational action. Onthe other hand, changes in the environment and the imperativesof organizational growth demand timely adaptation of organizationalrules. How do organizations respond to such pressures, and whatare the resulting patterns of rule change? Prior explorationsof this question have emphasized either (i) institutional predictions:the likelihood of rule changes should decrease with duration(waiting time between changes); or (ii) obsolescence mechanisms:the likelihood of change should increase with duration. Surprisingly,recent studies on rule change find that in some contexts thelikelihood of radical rule changes (‘suspensions’)increases with duration, while the likelihood of incrementalrule changes (‘revisions’) decreases. In order toexplain this surprising finding, I develop simulation modelthat allows me to explore how rule changes are affected by organizationaltolerance for obsolescence. The findings suggest that the modeloffers a valid explanation for the observed patterns of rulechange. A main implication of this paper is that organizationalrules can become impermanently institutionalized when theirobsolescence is tolerated and they grow obsolete beyond repair.