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Keywords:

  • institutional ambiguity;
  • organizational defiance;
  • informal economy;
  • institutional complexity;
  • informal institutions;
  • embeddedness

Abstract

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

We extend research on informal economic activity and investigate why organizations adopt informal rules when formal ones exist and how and why patterns of defiance vary across organizations. We build on data from an in-depth study of four organizations operating in the Nigerian movie industry. We identify ambiguity of formal institutions as a major source of organizational defiance. We also find that the organization's domain of embeddedness mediates the relationship between institutional ambiguity and organizational defiance. According to our analysis, the rationale for organizing propelled by the dominant domain of embeddedness affects whether organizations consistently or selectively defy ambiguous formal rules. Our findings highlight the importance of the interplay between institutional and organizational dynamics in understanding informality within an economy. Copyright © 2014 Strategic Management Society.


Introduction

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

The growth and persistence of the informal economy is now a generally accepted phenomenon (Godfrey, 2011; La Porta and Shleifer, 2008; Vogel, 2006). The informal economy consists of economic activities that occur outside of formal institutional boundaries but remain within informal institutional boundaries pertinent for large segments of society (Webb et al., 2013). Generally, formal institutions refer to laws, regulations, and their supporting apparatuses (North, 1990), while informal institutions refer to ‘socially shared rules, usually unwritten, that are created, communicated, and enforced outside officially sanctioned channels’ (Helmke and Levitsky, 2004: 727).

In the past several years, there has been increased academic interest in explaining why economic activity follows prescriptions of informal institutions in spite of the fact that formal ones are available. The concept of defiance, indicating a more active form of resisting institutions (Oliver, 1991), has been applied to discuss this phenomenon of failing to comply with the prescriptions of formal institutions in the context of economic activity (Bruton, Ireland, and Ketchen, 2012; Khavul, Bruton, and Wood, 2009; McGahan, 2012; Webb et al., 2013). Scholars have engaged and offered a variety of perspectives to enhance our understanding of origins and implications of defiance (De Soto, 1989; Greif, 2006; Grosh and Somolekae, 1996; Khanna and Palepu, 1997; Portes, 1994; Webb et al., 2009). Research in this area has also started to examine the nature of defiance and highlights that no uniform pattern of complying with formal law exists across economies. Instead, economic actors might choose to selectively comply with formal prescriptions. However, why and how this occurs still need to be explained (Godfrey, 2011; Webb et al., 2013). Also, while all these theoretical perspectives on informal economic activity emphasize the importance of considering the interplay between formal and informal institutions, empirical research has paid relatively scant attention to this dynamic at the level of the organization. We find this surprising. Organizations in institutionally complex settings, such as developing countries, are often born at the interstices of formal and informal institutions, and their organizational life is critically shaped by the interplay of what the law prescribes as legal and what informal systems of beliefs foresee as socially acceptable (Webb et al., 2009). Thus, the embeddedness of organizations in informal institutional domains such as family, religion, polity, etc., constitutes an important element in understanding economic and organizational activity in these contexts (Mair, Martí, and Ventresca, 2012; Rimac, Mair, and Battilana, 2012). Rules, norms, and customs associated with these informal institutional domains provide prescription on how to act. They critically shape the interests, identities, and relationships of individual members of organizations and influence strategic decisions and organizational behavior. Thus, understanding defiance from the perspectives of organizations requires looking more deeply into institutional and organizational realities. It also requires examining the interplay between the institutional and organizational aspects that shape informality within economies.

In this article, we adopt an organizational perspective on defiance of formal institutions and define organizational defiance as an organization's purposive pursuit of economic activity aligned with informal institutions despite the fact that formal rules are readily available. We ask why organizations defy formal prescriptions and how and why defiance patterns might vary across organizations. We address these questions through an inductive qualitative study of four movie producing organizations operating in the Nigerian movie industry (Nollywood), which is the second-largest movie industry in the world in terms of number of productions (UNESCO, 2009). The industry is officially recognized by the Nigerian government. Although the majority of organizations have official licenses to operate, they fail to comply with some aspects of the Nigerian Copyright Act and rather engage in cash-based transactions and forge agreements without written contracts (James, 2009; Lobato, 2010). In addition, Nollywood is also an industry located in a multiethnic, multireligious, and multicultural country where more than 250 indigenous languages are spoken (Library of Congress, 2008). As a result, Nollywood represents a unique setting for studying organizations embedded in multiple and diverse informal institutional domains.

This study makes a number of contributions to the literature on informal economic activity. First, at the institutional level, we highlight the role of ambiguity of formal institutions in facilitating organizational defiance. We argue that when formal rules are ambiguous, organizations turn to informal rules as an alternative framework for organizing rather than as a means for exploitative rule breaking. This insight goes beyond the dominant view in the literature that defiance is a deliberate attempt to break the law in order to take advantage of weak formal rules (Mahoney and Thelen, 2010; De Soto, 1989; Grosh and Somolekae, 1996). It also opens up the opportunity for future research to explore the linkages between institutional ambiguity, organizational defiance, and innovation. Our second set of findings exposes differences in defiance among organizations facing institutional ambiguity. We find that the effect of institutional ambiguity on organizational defiance is moderated by an organization's domain of embeddedness. We refer to embeddedness as the contextualization of economic activity in ongoing patterns of social interaction (Granovetter, 1985) shaped by institutions, culture, social structure, and cognition (Zukin and DiMaggio, 1990; Dacin, Ventresca, and Beal, 1999). In this study, domains of embeddedness of our focal organizations include religion, family, friendship, and ethnicity. We find that organizations exhibit consistent or selective defiance patterns and relate these patterns to the rationale for organizing promoted by the organization's dominant domain of embeddedness. Overall, our article enriches the literature on informal economy by positioning institutional ambiguity as a source of organizational defiance and by revealing the salience of domains of embeddedness in shaping how institutional ambiguity affects organizational defiance.

Theoretical Perspectives on Defiance of Formal Institutions

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

An increasing amount of research has investigated how and why economies or sectors defy the prescriptions of formal institutions (Bruton et al., 2012; Khavul et al., 2009; McGahan, 2012; Webb et al., 2013). Different perspectives have been adopted to understand this phenomenon. In a seminal article, Webb et al. (2009) have introduced the concept of institutional incongruence to highlight that formal and informal institutions might send different signals about what are acceptable means and ends of entrepreneurial activity. According to the authors, economies defy formal institutional prescriptions because of differences in what is defined as legitimate by formal and informal institutions. In other words, what a society establishes as legal through its overarching formal institutions may not necessarily be legitimate to large groups in society that possess different perspectives of social acceptability (Centeno and Portes, 2006). Similarly, the requirements of formal institutions might be considered as too restrictive compared to what informal institutions consider as socially acceptable (Webb et al., 2009). As a result, institutional incongruence creates a situation in which socially acceptable opportunities exist outside formal institutional boundaries for organizations that are willing to take the risks of operating outside the law (Webb et al., 2013).

The transaction cost perspective has posited that economies skirt the prescriptions of formal institutions in response to high costs of registration, taxation (De Soto, 1989; Grosh and Somolekae, 1996), and burdensome regulatory policies (Portes, 1994). For instance, it has been argued that the stringency of formal institutional policies creates costs for firms (Portes, 1994) and creates potential opportunities to create value outside formal boundaries (Portes and Haller, 2005). Examples include entrepreneurs trying to skirt costs created by new pollution policies aimed at preserving a society's health (Blackman, 2000) or smuggling activities that emerge as a response to changes in international trade policies (Neuwirth, 2011). This literature highlights the pervasiveness of defiance of formal rules and traditionally leverages arguments and examples that refer to developing and emerging economies.

The institutional voids perspective has offered additional insights for understanding why and how economies defy prescriptions of formal institutions (Leff, 1976). The principal insight is that the formal institutions that govern economic activity and are taken for granted in Westernized economies are either absent or weak in emerging economies (Greif, 2006). In these situations, either existing informal institutions prevail (Mair and Martí, 2009) or business groups develop intraorganizational structures and mechanisms to cope with the weakness of formal institutional arrangements (Khanna and Palepu, 1997). While these three perspectives have been important to illustrate the prevalence of informal institutions in contexts where formal institutions are present and/or emerging, they have been relatively silent about the origins and patterns of defiance of formal prescriptions viewed from the perspective of ordinary organizations, i.e., organizations that are born at the interstices of formal and informal institutions, bootstrap their operations, and lack the resources of business groups to proactively address and influence inchoate institutional arrangements. Although these organizations constitute the primary actors in many industries in developing countries, including the Nigerian movie industry, scholarly attention has been limited at best. In this article, we argue that understanding the nature and patterns of defiance exposed by these organizations is important to advance theoretical and empirical research on informal economic activity. First, it allows an unpacking of the institutional dynamics at play when organizations defy formal prescriptions. Second, it offers a path to uncover the organizational-level mechanisms shaping distinct patterns of defiance. And third, it provides preliminary insights that illustrate the need to investigate intraorganizational processes accounting for the persistence of organizational defiance.

In summary, we argue that few studies have investigated the source and variance in patterns of organizational defiance. We address this gap through an in-depth case-based study situated in the Nigerian movie industry and are particularly attentive to the interplay between institutional and organizational dynamics shaping organizational defiance. The following two questions guide our empirical analysis: (1) why do organizations follow prescriptions of informal institutions when formal institutions are available; and (2) how and why do organizational defiance patterns vary? Answers to these questions inform a conceptual and analytical frame to guide future research on outcomes and performance implications of organizational defiance.

Research Context: the Nigerian Movie Industry

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

The Nigerian movie industry provides a unique industry setting for analyzing organizational defiance. The industry's serendipitous launch was prompted in 1992 when an automobile spare parts dealer, who was trying to sell a large stock of blank videocassettes, decided that the videocassettes would sell better with something recorded on them. He shot a film called Living in Bondage (1992) which sold more than 750,000 copies on the open market with the help of a network of electronics and cassette traders (Economist, 2006). This event prompted the entry into filmmaking of a large number of entrepreneurs. Like the automobile parts dealer, many of these entrepreneurs had no formal training in movie production and also lacked the entrepreneurial training needed to start movie production and distribution companies. Although the organizations were registered officially with the National Corporate Affairs Commission as legal entities in 1993, they did not comply with formal rules prescribed by the Nigerian Copyright Act established in 1990. Today, the industry is recognized as the largest movie industry in Africa and the second largest in the world in terms of volumes of movies produced per year (UNESCO, 2009). During the 1990s, more regulatory bodies were created to monitor activities of the organizations. Such bodies include the National Film and Video Censors Board as well as the National Copyright Commission. Even today, organizations operating in this industry do not fully comply with the laws and formal rules regulating the industry. For instance, while the Nigerian Copyright Act stipulates that ownership rights should be accorded to individual originators of works, most organizations in the industry consciously or unwittingly choose not to comply with this law (Ozako, 2009).

Methods

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

Sampling, data collection, and sources

We selected our sample of four organizations from the list of 300 movie production companies that are registered with the Nigerian Film and Videos Censors Board (NFVCB). We arrived at this sample based on two criteria. First, we chose from the 10 organizations that had been part of the industry since its inception in 1992. A key advantage of adhering to this criterion was that we chose organizations that began at the same time with comparable resources, investors, technical excellence, and founder connections. This way, we accounted for factors that are often associated with the age of an organization and initial starting conditions (Stinchcombe, 1965). Second, we concentrated on an in-depth study of four of the 10 organizations because these organizations provided the researchers with access to observe their organizational processes and also the opportunity to interview multiple informants over a period of two years (Sutton, 1997). The organizations were Rapture, Mirror, Classic, and Mirage. Rapture is an offshoot of a Christian evangelical drama group that had been staging performances in religious gatherings. Mirror was set up by members of a family, i.e., by brothers who had previously participated in a travelling theater group operating in Yoruba communities. Classic was set up as an organization by friends who had previously worked in a state-owned television station, and Mirage was set up by members of the same ethnic group, but not of the same family, to promote the Yoruba cultural heritage.1 To ensure the reliability and transferability of our findings, we also interviewed the directors of the other six organizations, as well as several other industry informants. Table 1 summarizes the case descriptions and data collected.

Table 1. Case description and data sources
 RaptureMirageClassicMirror
Company missionTo win souls for ChristTo promote Nigeria's cultural heritageImpart knowledge to filmmakersPromote Yoruba culture
Date of foundingFebruary 1993February 1993March 1993June 1993
Number of productions20342820
Legal statusRegisteredRegisteredRegisteredRegistered
Number of full-time staff4865
Number of contracted staff for movie project46223440
Description of interview informants (n = 52), observations, and other data
 RaptureMirageClassicMirror
Number of interviews10171312
Profile of informantsExecutive producer, actor, coproducersCEO/founder, administrative manager, editor, legal consultants, actorsProduction head, CEO, external scriptwriter, movie director, actorsCEO, director, actors, producer, industry regulators, lawyers
Number of site visits61296
Number of hours spent on observation27484222
Archival data—number of videos4633
Archival data—external sourcesN/A10 pages20 pagesN/A
Estimated budget for a movie project$14,000$100,000$20,000$15,000
Duration of shooting7 days20 days8 days7 days
Duration of entire movie production1 month4 months1 month1 month

We collected data from different sources: semi-structured interviews, observations, publicly available data from Web sites, and material provided by informants. We conducted 52 semi-structured interviews of 45 to 90 minutes in length over a period of eight months from 2009 to 2011. We made 32 site visits from 2010 to 2011 to observe the day-to-day activities of the companies. Thus, our data collection covers a three-year period, from 2009 to 2011. Interview informants included company CEOs, movie producers, scriptwriters, actors, editors, copyright lawyers, industry regulators, and industry association members. We mitigated informant bias by following interview guides that encouraged informants to discuss chronologies of events and practices (Golden-Biddle and Locke, 2007; Miller, Cardinal, and Glick, 1997).

Sample characteristics

According to recommendations on qualitative research design (Eisenhardt, 1989), the four organizations from the movie industry that constitute our sample are particularly suited for our study, since they are embedded in different institutional domains with one domain qualifying as the dominant domain. Our understanding of domains of embeddedness builds on the claim of Friedland and Alford (1991) that a society comprises several distinct domains, each one built around a central institutional logic that specifies distinct meaning, systems, and orderings of reality, along with social practices (Mair et al., 2012). We classified organizations according to four dominant domains—religion (Rapture), family (Mirror), ethnicity (Mirage), and friendship (Classic)—in which the organizations were primarily embedded. The religious domain embodies a range of spiritual beliefs that influence the lives of individuals in Nigeria. Beyond beliefs, this domain contains a community of believers who rely on tenets of their spirituality to make decisions that influence their cultural, economic, and political practices (Eboh, 1984). The family domain commands cooperation and solidarity among members of the same family in order to uphold the beliefs of the group (Meagher, 2005). The ethnic domain is the cultural domain shared by people of the same ethnic origin. The belief system of an ethnic domain is based on a strong sense of community and exclusivity among members of the group and particularly emphasizes the use of a common language among members and intermarriage within the community (Lovejoy, 1980). Finally, the friendship domain is inhabited by friends committed toward helping one another on a long-term or short-term basis in the fulfillment of a common objective. We assigned these specific domains of embeddedness to organizations in which the ‘rules of the game’ of the institutional domain critically shaped the founding phase of the organization (Marquis and Tilcsik, 2013), as well as the day-to-day reality of the organization (Dacin et al., 1999; Seelos et al., 2011). While all institutional domains coexisted, constituting an institutionally complex setting (Mair et al., 2012; Greenwood et al., 2011), our initial exposure to the setting suggested that one institutional domain served as the dominant domain of embeddedness for each organization. We applied two criteria to relate organizations and domain of embeddedness. First, we assessed whether a principal custom associated with an institutional domain affected the modus operandi, i.e., how things get done, within the organizations. Second, we examined to what extent relationships based on a dominant domain mattered for the main activity of the organization, i.e., producing movies.

Building on interviews with members of the organizations, as well as externals such as regulatory officials, lawyers, producers, and distributors, we identified Christian solidarity custom (religion), Esusu cooperative system (family), apprenticeship custom (ethnic), and rent-seeking custom (friendship) as principal customs. We validated these claims by observing these customs ‘in action’, i.e., how they affected the way the organizations planned and executed the entire movie production process. Furthermore, in the four organizations, religious-, family-, ethnic-, or friendship-based relationships with members who occupied leading roles in the organization were considered to be the most important criteria in transactions and exchanges related to the production of movies. For example, actors and staff were predominately selected based on the rules and social ties prescribed by the specific embeddedness domain. At Classic, 30 out of the 40 members of staff involved in movie production had friendship connections with the head of the organization or with some other employees. Similarly, at Rapture, all members of the cast and crew belonged to the same religious denomination. Among the crew members, the movie director and production manager were pastors of the church and had never been trained as movie makers. A good number of the actors were either pastors or members of the same church. The location manager, gaffer, and some cameramen were novices who were in film production for the first time. The production manager justified this way of doing things by saying:

‘Of course, all those that work with us have to be Christian. You cannot give what you do not have. We want people with a Christian orientation to be the ones evangelizing, not people who might give a bad example.’

At Mirror, the employees were part of the extended family of the head of the organization, whereas at Mirage, the employees of the production team all belonged to the same ethnic group. By and large, the mission statements and circumstances prior to founding were closely linked to the informal institutions that the organizations were associated with. But, the Nigerian Copyright Act (1990) was the formal institution that regulated the activities of the movie industry. This act regulated issues regarding authorship, ownership and transfer of cinematographic works and, therefore, covered practices related to employment, production, and distribution agreements.

Data analysis

The research design is a multi-case inductive study (Davis and Eisenhardt, 2011). Multiple cases permit a replication logic in which the cases are treated as a series of experiments that confirm or disconfirm emerging conceptual insights (Eisenhardt and Graebner, 2007). Emergent theory from multiple-case research is typically more generalizable and better grounded than theory from single-case studies, making it more amenable to extension and validation with other methods (Davis, Eisenhardt, and Bingham, 2007). Data analysis was conducted in two main steps—this process enabled us to be attentive to the institutional and organizational level and go back and forth between the data and the emerging theoretical arguments (Miles and Huberman, 1994; Strauss and Corbin, 1998).

Step 1: Locating and mapping organizational defiance

We wrote individual case reports that traced if, how, when, and why the organizations responded to prescriptions of the Nigerian Copyright Act. We focused our analysis on rules regulating (1) employment, (2) ownership, and (3) distribution arrangements, which are critical areas for the functioning of the organization and are regulated by the Nigerian Copyright Act. We specifically focused on rules at play and assessed whether these rules were consistent with the prescriptions from the Nigerian Copyright Act. We made statements of findings only if we corroborated a given finding across multiple informants to mitigate the possibility of problems associated with multiple informants (Gioia et al., 2010; Uzzi, 1997). After summarizing the case reports, a more nuanced view of the nature and origin of defiance in the context of the Nigerian movie industry emerged.

Step 2: Identifying and analyzing patterns of organizational defiance

In a next step, we analyzed the defiance patterns of the sampled organizations by tracking whether there was any variation in how the organizations defied the stipulations of the Nigerian Copyright Act (in the employment, ownership, and distribution arrangements) over a three-year period (2009 to 2011). This analysis helped us identify two patterns of organizational defiance, namely consistent defiance and selective defiance. We categorized consistent defiance as defying formal prescriptions across the domains of employment, ownership and distribution. Whereas we categorized selective defiance as defying certain aspects of the Nigerian Copyright Act (in our case, employment and ownership) but complying with others (in our case, prescriptions related to distribution arrangements). In line with recommendations on building theory from qualitative data (Suddaby, 2006), we engaged in an iterative process going back and forth between theory and data to build the conceptual apparatus supporting our findings. Table 2 enumerates the statistics for data collected on key concepts of the study, while Table 3 summarizes the evidence on organizational defiance.

Table 2. Statistics on data collected for major concepts in the study
Core ConceptsNumber of interview quotesNumber of observed eventsNumber of quotes in archival documents
Institutional ambiguity144549
Selective organizational defiance272020
Consistent organizational defiance261110
Domain of embeddedness21147
Table 3. Summary of evidence: ambiguity of formal rules, patterns of organizational defiance and domains of embeddedness
CharacteristicsRaptureMirrorMirageClassic
Perceived ambiguity of formal rules++++
Evidence‘How do you register the synopsis of an idea that has not come to light?'— Producer‘Copyright seeks to create fixed expressions, some of our traditional expressions are not fixed prior to performance.’—Lawyer‘The distribution policy that has been introduced is not meaningful. So right now, we don't even have any distribution or marketing format.’— Director‘I ask myself what is the Nigerian Copyright Commission doing? What is their duty? In fact, in Nigeria, we don't even need them.’— Director
Pattern of organizational defianceConsistent defianceConsistent defianceSelective defianceSelective defiance
Defying formal rules of employment++++
Defying formal rules of ownership++++
Defying formal rules of distribution++
Dominant domain of embeddednessReligionFamilyEthnicityFriendship
Social cohesion propelled by embeddedness domain++
Evidence‘The crew joined hands in prayer before the shooting commenced.’Field Notes‘We levy ourselves to pay for the needs of our members. We believe favors should be reciprocated.’Producer‘When a cameraman broke the lens of the camera, the director bellowed—I feel like sending a punch across to you.’—Field notesThe editor and HOD closed the door of their shared office and began to complain bitterly about the director's behavior.’— Field notes

Findings

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

Our findings explain the source and variance in patterns of organizational defiance. We offer insights that span two levels: institutional and organizational. At the institutional level, we find that ambiguity of formal rules is a major source of organizational defiance. At the organizational level, we find that organizations do not defy uniformly. Rather, organizational defiance varies across organizations and defiance patterns (consistent and selective) are shaped by the organization's dominant domain of embeddedness.

Source of organizational defiance

Why do organizations comply with prescriptions of informal institutions when formal prescriptions are available? While prior research has largely focused on explaining defiance of formal prescriptions at the macro-level (Bruton et al., 2012; Khavul et al., 2009; McGahan, 2012; Webb et al., 2013), this study found that ambiguity of formal prescriptions facilitated organizational defiance. Following Edelman (1992), we define ambiguous formal institutions as rules that have unclear meanings in terms of compliance and, thus, constrain implementation and enforcement within organizations. We found that organizations defy formal prescriptions due to the ambiguity that exists between formal rules and their application in actual situations. The meaning of what constitutes ‘intellectual property’ under the Nigerian Copyright Act was unclear for all the sampled organizations. For instance, Section 1-2 of the Nigerian Copyright Act (1990: 3) prescribes that:

‘A literary, musical or artistic work shall not be eligible for copyright unless- (a) sufficient effort has been expended on making the work to give it an original character; (b) the work has been fixed in any definite medium of expression.’

Yet the meaning of what constitutes a work ‘fixed in any definite medium of expression’ is ambiguous. Mirror's lawyer expressed this concern saying,

‘The Copyright Act seeks to protect fixed expressions, but most of our traditional expressions are not fixed prior to the shooting. How does the Act apply in our situation?’

Similarly, Rapture's producer complained about the ambiguity of the meaning of what constitutes ‘sufficient effort’ for the making of a work. In his words: ‘How do you register the synopsis of an idea that has not come to light?’

These findings resonate with Streeck and Thelen's (2005: 14) claim that ‘ambiguity might exist when formal rules do not fully or perfectly map onto the activities that they regulate in a mutually exclusive and jointly exhaustive fashion.’

Another aspect of ambiguity is the incompleteness of certain formal prescriptions. We found that some prescriptions of the Act were incomplete. For example, Section 39-1f of the Nigerian Copyright Act (1990: 26) stipulates that:

‘An author in the case of cinematograph film means the person by whom the arrangements for the making of the film were made, unless the parties to the making of the film provide otherwise by contract between themselves.’

While this stipulation is explicit about individual authors of cinematographic works, it remains silent on a collectivity of authors or owners of these works. Producing movies in Nigeria, however, is widely regarded as a collective endeavor. Thus, the concern that prescriptions by formal law do not reflect the actual situation in the Nigerian movie industry was echoed by the different organizations in our sample. Mirror's director stressed:

‘We use material that belongs to the community. It is hard to identify the first owner or individual originator of these works because they tend to be done communally.’

These examples support the position in the literature that formal rules are ambiguous when they do not cover all possible contingencies or are silent about some activities (Carruthers, 2012). When formal rules are unclear or ambiguous, organizations in our sample turned to informal institutions as an alternative framework for organizing. For instance, Article 9-4 of the Nigerian Copyright Act (1990: 8) stipulates that:

‘In the case of a cinematograph film or sound recording, the author shall be obliged to conclude, prior to the making of the work, contracts in writing with all those whose works are to be used in the making of the work.’

However, this formal prescription did not match the reality of how movie production unfolds in the sampled organizations. While the formal rule emphasized that organizations were obliged to settle all arrangements in writing before producing a movie, the actual production process and unpredictable workflow made such definite arrangements almost impossible. For instance, roles and responsibilities were not explicitly fixed for each employee. Rather, employees frequently switched from one role or responsibility to another on very short notice. For example, an actress working for Rapture did not show up for filming a scene as previously agreed. The production manager phoned her and discovered that her child was sick and had to be taken to the hospital. When this was explained to other crew members, the staff member responsible for makeup volunteered to step in. She quickly changed costume, spent half an hour revising the lines to be repeated during the shooting, and then performed in the shooting without signing any contracts (field notes, Rapture).2 We observed a similar situation in Classic, when an actor suddenly disappeared from the shooting location. He had not left a message to inform the director of his absence and could not be reached by phone. The director was furious. Without any hesitation, the director called the props manager and said ‘you must act today.’ The props manager disclosed that he had never acted before. Without paying the slightest attention to his plea, the director instructed him to learn a couple lines and directed him to the makeup artist for appropriate grooming. After 45 minutes, the props manager enacted the role (field notes, Classic). In the face of the mismatch between what the formal rules prescribe and the reality of how the organizations actually organize, these organizations tended to defy formal prescriptions. All the sampled organizations failed to comply with formal rules regarding the signing of contracts for employment arrangements. According to Rapture's producer:

‘We do not sign any contracts to hire our employees; we also do not agree on any specific amounts to pay them.’

Also, a lead actor from Mirror argued:

‘I must confess that most of our agreements are not based on written contracts. This is because oral agreements work for us.’

The organizations reacted in a similar way when it came to dealing with ambiguous stipulations about ownership of intellectual property. While the Copyright Act emphasizes that cinematographic works have to be in fixed and definite forms, the reality in the sampled organizations was that artistic works were hardly created in any predetermined manner. Stories and scripts were spontaneously and collectively improvised as the movie production process unfolded. According to Mirror's director:

‘We have no written scripts. We agree on how the story will end and then work our way, building a story as we move along. Everyone participates in the process.’

Similarly, in Rapture, an employee prepared an outline of the script while other employees added and removed aspects of the storyline. The production manager described the process in this way:

‘Of course, the credit in the film goes to the scriptwriter but all of those who participate in the production and contribute to the changing of the scripts are also scriptwriters in a way.’

In the face of ambiguity over how formal prescriptions relate to the actual situation, all organizations deliberately defied these formal prescriptions and instead adopted arrangements that were not covered by the Act.

According to Edelman (1992), ambiguous formal rules also hamper legal enforcement since rule enforcers are not clear about how to mandate compliance from rule takers (those who comply with rules). In line with this insight, we found that the ambiguity of the Nigerian Copyright Act also hampered the legal enforcement of the Act. The organizations in our sample repeatedly lamented the weak enforcement of the Act. For instance, Classic's director stressed:

‘The Nigerian Copyright Commission today cannot prosecute. So what is their essence? If the government still wants it, then let them put a vibrant person there who can bring about changes.’

In sum, our findings revealed that ambiguity in the formal institutions is a major source of organizational defiance. Consistent with the literature, we found that when faced with ambiguity, organizational actors discuss, test out alternatives, or negotiate in order to arrive at a commonly agreed interpretation (Brun, Saetre, and Gjelsvik, 2008). Thus, efforts are made to construct a plausible sense of what is happening, and this sense of plausibility normalizes the breach, restores the expectation, and enables organizations to adopt strategies of action (Weick, Sutcliffe, and Obstfeld, 2005). In other words, organizational defiance is a vital part of the organizing process in organizations facing ambiguous formal rules. In formal terms, this finding suggests the following:

  • Proposition 1: In contexts characterized by ambiguous formal institutional arrangements, organizations are more likely to defy formal rules to organize their economic activity.

Social embeddedness and patterns of organizational defiance

Do all organizations defy formal prescriptions in a uniform way? Prior work has speculated that organizations might carry out some activities that are legally compliant while carrying out other activities that do not comply with the law (Webb et al., 2013; Godfrey, 2011; Guha-Khasnobis, Kanbur, and Ostrom, 2006). Yet, there is little empirical and theoretical research on why and how patterns of organizational defiance vary within a population of organizations belonging to the same industry. First, our analysis reveals that organizations facing ambiguous formal prescriptions defy them in different ways, i.e., consistently or selectively. We refer to consistent defiance as the defiance of formal prescriptions across areas of employment, ownership, and distribution. Selective defiance, however, refers to the defiance of formal prescriptions for employment and ownership while complying with formal prescriptions for distribution arrangements. Next, our analysis reveals that the effect of institutional ambiguity on an organization's pattern of defiance is moderated by the organization's domain of embeddedness. Particularly, our analysis of interview, ethnographic, and archival data suggests that different domains of embeddedness emphasize varying rationales for engaging in economic activity which, in turn, lead organizations to consistently or selectively defy ambiguous formal prescriptions. We theorize about this and generate propositions that explain how domains of embeddedness moderate the relationship between institutional ambiguity and organizational defiance.

Organizations that defy formal prescriptions are not homogenous groups, but are embedded in diverse institutional domains (such as ethnicity, religion, friendship, or family), which make different demands on organizations. Embeddedness domains represent informal institutional and normative environments that prescribe ways of acting and relating to each other. Drawing from extant literature in economic sociology, we highlight the social relational aspects and implications of embeddedness in different domains to accentuate that economic activity is contingent on ongoing patterns of social interaction and is shaped by sets of values, beliefs, and norms characteristic of these domains (Granovetter, 1985; Dacin et al., 1999). In our sample, organizations were embedded in the domains of religion (Rapture), family (Mirror), ethnicity (Mirage), and friendship (Classic) and, therefore, they were governed by very specific rules that affect the social and economic lives of individuals. As these rules become taken-for-granted ways of doing things for individuals, they also affect the behavior of the organizations constituted by these individuals. Rapture was governed by the Christian solidarity custom stipulated by the religious domain. The primary tenet of this custom was taken from the biblical stipulation: ‘love your neighbor as yourself.’ This custom requires that members of the organization treat each other as children of the same family and thus work to promote unity among members. This custom shaped Rapture's organizational behavior in a number of ways. For instance, members of Rapture spontaneously took turns to provide the food needed during outdoor shooting events. Costumes for movies were not provided by Rapture. Rather each member volunteered to bring costumes that actors could use (fieldnotes, Rapture). In the case of Mirror, the family domain prescribed a familial custom known as Esusu cooperative system. This custom stipulates that members of the group ought to engage in reciprocal exchange of gifts, favors, and financial resources to help one another in their needs (Bascom, 1952). This custom permeated the organizational life of Mirror in several ways. As Mirror's lights engineer explained,

‘Sometimes a brother or sister might come and say “how much do you need to pay for your child's school fees? I want to add something to it.” ’

This custom is explained further by an actor of Mirror:

‘There is not much difference between what we do and communal farming. It is a method whereby the community helps one man on his farm today and moves to the farm of another man the next day to help with the farm work. That barter system is our Esusu custom.’

Mirage, embedded in the ethnic domain, was governed instead by the apprenticeship custom prescribed by the Yoruba ethnic domain. This custom stipulates that an older member of an ethnic community can engage a younger member of the same ethnic community for an indefinite period under a patron-client relationship in which the qualifications needed for work and rewards are not clearly stipulated in advance (Ensminger, 1996). This custom shaped some of the hiring arrangements among the production team of Mirage. As Mirage's administrative manager explained:

‘As a rule, we do not develop our productions around professional stars; most of our actors are apprentices of Yoruba (ethnic) origin.’

Our observation of events in Mirage also highlighted the existence of this custom. For example, as the shooting of a scene in a compound was taking place, a young apprentice working with the lights engineer began to fiddle with the lights. Mirage's director got very upset and threatened the Yoruba apprentice saying,

‘If you do that again, I will dismiss you immediately from this production and you will no longer be my apprentice.’

Finally, the prevailing custom in Classic, prescribed by the friendship domain, was a rent-seeking custom. This custom is an unwritten agreement between the head of the organization and his friends that the group is to occasionally provide material assistance to members in need on the condition that these favors will be returned in the future. Examples of how this custom shaped organizational life in Classic abound. For example, under this arrangement, the editor was permitted by the director of Classic to use one of the office rooms as a venue for showing football games to other friends who did not belong to the company. Classic's director emphasized how this custom shapes the organization's behavior. He emphasized:

‘We are bound by tradition to help our friends become something in life.’

Thus, our data illustrates that domains of embeddedness affect organizations differently. In the context of our study, the theoretical and empirical question resulting from this finding is: how does an organization's domain of embeddedness matter for how organizations cope with institutional ambiguity? Our data suggests that being embedded in different domains triggers distinct different rationales for organizing which, in turn, influence the pattern of organizational defiance of formal rules. Rationales represent anchors of judgment and evaluation that determine courses of action especially relevant in entrepreneurial contexts (Stark, 2009). An economic rationale prioritizes economic benefits and emphasizes efficiency and effectiveness as criteria for what is valued, while a social rationale prioritizes objectives aligned with the set of values and norms associated with a particular embeddedness domain. We hereby illustrate how the variation in rationales emphasized by domains of embeddedness led the organizations to consistently or selectively defy formal prescriptions.

Findings from our data revealed that religious (Rapture) and family (Mirror) domains of embeddedness consistently applied a social rationale. The social rationale promoted by the Christian solidarity custom of the religious domain (Rapture) prioritizes the diffusion of the Gospel and the spiritual well-being of members over the opportunity to charge a premium price. Likewise, the social rationale promoted by the Esusu cooperative custom of the family domain (Mirror) prioritizes the collective bonding of its members over the search for commercial benefits. Rapture's actor described the social rationale emphasized by the religious domain in the following words:

‘We have a strong association and one voice. Agreements without written contracts work for us. We have this collective bonding that makes us care for one another and seek to return favors to each other as we work. One good turn deserves another.’

Similarly, Mirror's producer explained:

‘It is basically a fraternal spirit. We are committed to helping our own.’

When asked why Rapture did not apply an economic rationale to its decisions, the director emphasized:

‘We are not doing this for the money. We are not here to make profit. We have a mandate from God to love one another.’

Mirror's producer's response to the same question was similar:

‘We are not chasing commercial gains. We have a culture of mutual respect among us.’

Our data indicates that the religious and family domains’ emphasis on the use of a social rationale in making organizational decisions affected the organizations’ pattern of defiance. Rapture and Mirror consistently defied prescriptions of the Nigerian Copyright Act across employment, ownership, and distribution agreements. Distribution agreements were reached without signing contracts and without any explicit arrangements on how the proceeds from the sale would be shared across the employees. Mirror's producer explained the process:

‘Whenever the script is ready, I call the distributor. Next, we talk about the percentage each person will get from sales. We don't need to sign contracts.’

Similarly, Rapture's director explained:

‘Why do we need to sign contracts with distributors? Even in cases where our movies are pirated, we do not speak publicly against it.’

Both organizations also adopted a similar pattern for employment and ownership. For instance, Mirror's production manager explained that the company does not follow the prescriptions of the Copyright Act regarding ownership. In his words:

‘We do not use scriptwriters. We work together to produce the story. We don't use copyright since the story belongs to us.’

For the organizations embedded in religious (Rapture) and family (Mirror) domains, not signing contracts for employment agreements became an opportunity to reciprocate favors or fulfill family and religious obligations consistent with the social rationale rather than an opportunity to secure profitable deals. For example, Rapture's employees never signed contracts before taking part in movie projects (field notes, Rapture). The employees entered agreements by praying for the success of the projects. During shooting periods, the day's job started with a prayer said by all members of the organization (field notes, Rapture). Not signing contracts also facilitated a familial approach in dealings among employees. The director was called daddy. Female employees had the title sister put before their first names and male employees had the title brother (field notes, Rapture). Similarly, Mirror's employees did not sign contracts for movie projects. Employees showed their commitment to agreements by eating from the same bowl and by having joint prayer sessions (field notes, Mirror). Furthermore, not signing contracts for ownership agreements was regarded as an opportunity to engage in collective volunteering consistent with the social rationale rather than as a money making opportunity. Employees in Rapture were happy to provide their private vehicles for the transportation of office equipment to locations for shooting without signing any written agreements (field notes, Rapture). A similar example in Mirror is the case of an actor on set who immediately offered his apartment as a location for a movie when no contractual arrangements had been made (field notes, Mirror).Thus, while Rapture and Mirror consistently defied prescriptions from formal institutions, their behavior was fully aligned with the principal customs and prescriptions of their domain of embeddedness. Viewed from a Western perspective, this behavior might be considered paradoxical. After all, it implies that organizations not only deliberately fail to comply with formal rules, but often also forgo the opportunity of superior returns. Yet, it demonstrates the paucity of local social realities in guiding economic activity in institutionally inchoate or complex settings (Mair et al., 2012; Tobias, Mair, and Barbosa-Leiker, 2013). In sum, the religious and family domains’ emphasis on the social rationale facilitated the consistent defiance of formal prescriptions in the affected organizations.

However, customs and prescriptions of the ethnic (Mirage) and friendship domains (Classic) emphasized a balance of social and economic rationales which propelled the selective organizational defiance of formal rules. The social rationale of the ethnic domain (Mirage) was referred to the fulfillment of patron-client obligations among ethnic affiliates, while the social rationale for the friendship domain (Classic) foresaw to provide for the personal needs of friends. However both domains also emphasized an economic rationale of generating a profit from business activities. Thus, while Mirage and Classic did not comply with the Nigerian Copyright Act for employment and ownership agreements and anchored decisions in a social rationale, they complied with the Act for distribution arrangements following an economic rationale. As Classic's head of production explained,

‘When working with friends, we discuss the arrangement , reach an agreement, and start working based on friendship even before we define terms and conditions.’

However, when asked why the company signs contracts with distributors, the assistant director emphasized:

‘We also want to make some money and the distributors have the channel to help us sell our films.’

Similarly, Mirage's director explains how the company signed distribution contracts following an economic rationale and, thus, complied with formal rules:

‘We had to sign contracts with the broadcasters because they had an insatiable hunger for content and were very rich from the financial point of view. On the other hand, we were vulnerable and always hungry for returns. We needed it to have some means of survival.’

Thus, the organizations dominantly embedded in the ethnic and friendship domain selectively applied social and economic rationales when making decisions. They did not sign formally prescribed contracts with employees of the same ethnic or friendship group.

However, both organizations signed contracts with their distribution teams (that is broadcasters, DVD sellers, satellite television employees, university librarians) made up of distributors who were not part of the ethnic or friendship group. Classic's director explained:

‘We hire our production team from among our friends because culturally we want to help our own. Our distributors are not our friends. We just use them because we want to sell our movies and recoup our investment. We have signed contracts for temporary broadcast rights for 10 selected TV stations in Nigeria. We have also signed an exclusive contract with M-Net for broadcast in the African and Oceanic region.’

Mirage's director also made similar remarks:

‘My cast and crew come from the Yoruba travel theater, but I use foreigners for my distribution and broadcast. Inasmuch as I cherish the Yoruba tradition and customs, I am also running a business, and I do not want to run at a loss. We have already given exclusive rights for the distribution of our movies in the U.S. We normally sign contracts for distribution and broadcast.’

Thus, the ethnic and friendship domains’ emphasis on balancing social and economic rationales facilitated the selective organizational defiance of formal prescriptions. Overall, we find that organizations are embedded in different domains of embeddedness, which command varying rationales for organizing economic activity. These rationales, in turn, shape how such organizations respond to ambiguous formal prescriptions. In formal terms, this finding suggests the following:

  • Proposition 2: Domains of embeddedness moderate the relationship between institutional ambiguity and organizational defiance such that (1) domains of embeddedness that emphasize social rationales will increase the likelihood of consistent defiance, whereas (2) domains of embeddedness that emphasize a balance of social and economic rationales will increase the likelihood of selective defiance.

Discussion and Conclusion

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

In this article, we made efforts to arrive at a more granular understanding of the source and variance in patterns of organizational defiance. We find that ambiguity of formal institutions encourages organizational defiance, i.e., the purposive pursuit of economic activity aligned with informal institutions when formal rules are readily available. We further find that the uncovered relationship between institutional ambiguity and defiance is moderated by the organization's domain of embeddedness. Figure 1 illustrates our conceptual model.

figure

Figure 1. Model on source and patterns of organizational defiance of formal rules

Download figure to PowerPoint

Extending previous studies on defiance of formal prescriptions that focused primarily on studying economies and sectors (Bruton et al., 2012; Khavul et al., 2009; McGahan, 2012; Webb et al., 2013), our study focuses on organizations. We move research on informal economic activity beyond sector studies (Godfrey, 2011) and unpack the institutional and organizational dynamics that shape the existence and pattern of organizational defiance. At the institutional level, we found that the ambiguity of formal prescriptions encouraged defiance in the sampled organizations of the Nigerian movie industry. We defined ambiguous formal rules as prescriptions with unclear meanings in terms of compliance, which constrains their implementation and enforcement within organizations (Edelman, 1992). Our study offers a different perspective on the origins and nature of defiance. Particularly, it goes beyond the dominant view in the literature that defiance is a deliberate attempt to break the law in order to take advantage of weak formal rules (Mahoney and Thelen, 2010; De Soto, 1989; Grosh and Somolekae, 1996). Our findings suggest that when formal rules are ambiguous, organizations turn to informal rules as an alternative way of organizing rather than as a means for exploitative rule breaking. The insights on ambiguity emerging from our analysis inform future studies on informal economic activity in several ways.

Extant research posits that ambiguity is a natural companion of innovation in organizations. At least in the early phase of an organization's life, a certain degree of ambiguity is seen as absolutely necessary to achieve innovation (Aldrich, 1999; Burgelman, 2002; Brun et al., 2008). This suggests that organizations that face ambiguous formal institutions might be more inclined to experiment with local and informal institutional arrangements as a basis for their market-based activities (Mair et al., 2012). Innovative ideas might result from the negotiations and interaction between members of the organizations as they struggle to decide on how formal prescriptions are to be interpreted. Ambiguity might also positively affect the development of new products or categories (Brun et al., 2008), and organizations defying formal rules might be in a favorable position to spot and enact such opportunities for innovation. In particular, this is because ambiguous contexts allow scope for creative action through processes of iteration, projection, and evaluation (Emirbayer and Mische, 1998). Future research might build on these insights and more systematically examine the relationship between ambiguity, organizational defiance, and innovation at the institutional, organizational, and product levels.

From a strategic management perspective, our study suggests that managing ambiguity might constitute a vital strategic capability for organizations operating at the intersection between the formal and informal economy. This implies that organizations might also have a strategic interest in sustaining rather than eliminating institutional ambiguity as it constitutes the locus of a possible competitive advantage. Furthermore, the strategic management of institutional ambiguity within organizations could be critical for maintaining flexibility and agility in unstable and constantly changing situations (Eisenberg, 1984; Brun et al., 2008). Thus, our study opens up a ray of questions for future research related to organizational defiance. Do organizations defying ambiguous formal rules engage in more innovation than organizations that are not faced with ambiguity? How do different sources of institutional ambiguity affect organizational defiance? Take the example of a set of formal rules created by one body (e.g., Congress passes a law). These rules get further elaborated by other bodies (e.g., administrative agencies write rules under the law) and then get implemented by yet other bodies. How does the ambiguity emerging from this process affect organizational defiance?

The second set of findings of this study focused on explaining why organizations do not defy formal prescriptions uniformly. Our analysis revealed, first, that organizations facing ambiguous formal prescriptions defy consistently or selectively and, second, that the organization's domain of embeddedness moderates the relationship between institutional ambiguity and organizational defiance. We identified the rationale for economic activity propelled by the domain of embeddedness as a central mechanism. Religious and family domains (Rapture and Mirror) consistently adopted a social rationale, which facilitated consistent defiance of formal prescriptions. But, ethnic and friendship domains (Mirage and Classic) emphasized a balance between economic and social rationales, which facilitated the selective defiance of formal prescriptions.

These findings highlight the salience of domains of embeddedness and the effect of their respective institutions in organizational and economic activity. While the fine-grained understanding of organizational defiance of formal institutions put forward here is just one example, it enriches extant literature in several ways. First, it empirically strengthens the view in the literature that informality and formality are not strictly dichotomous, but proceed along a continuum (Godfrey, 2011; McGahan, 2012). It further suggests that formal and informal institutions are not always opposed to each other, but are closely intertwined—a point raised by scholars who argued that taking into consideration this interdependency matters for understanding institutional change (Carruthers, 2012) and the evolution of markets (Mair et al., 2012). Second, it offers a novel perspective about the role of informal institutions within organizations. Informal institutions do not just fill in for formal institutions (Sheingate, 2010). Rather, their role can be more nuanced. Taking domains of embeddedness seriously and examining their effect on organizational behavior advances our understanding from both a theoretical and an empirical point of view. For example, our findings show that religious and family relationships within organizations exert a different influence on organizations than ethnic and friendship relationships. Building on institutional research on organizational embeddeness (Dacin et al., 1999; Jack and Anderson, 2002; Seelos et al., 2011), future research could go beyond the social relational dimension of embeddedness emphasized in this study and analyze how, for example, the political dimensions of embeddedness shape the pattern and evolution of organizational defiance.

Third, the two distinct organizational patterns of defiance—consistent and selective defiance—can serve as the starting point for examining performance implications of defiance of formal institutions. Important questions for future research include: do organizations that defy selectively perform better than organizations that defy consistently? Under what conditions do organizations move from defying selectively to complying completely with the law? Do organizations that defy selectively organize differently from those that defy consistently or comply consistently with the law? Furthermore, the insights on consistent and selective defiance have implications for the broader research on organizational responses to conflicting institutional demands (Oliver, 1991; Pache and Santos, 2010; Kraatz and Block, 2008). It extends Oliver's (1991) model on defiance as a strategic response to institutional demands by examining it as a strategy in the context of institutional complexity and, in particular, by paying empirical attention to the paucity of informal institutional arrangements. It also complements the view that organizations are not a uniform crowd, but heterogeneous entities that differ in the extent to which organizational members adhere to or promote institutional prescriptions (Kim et al., 2007; Pache and Santos, 2010).

Finally, our study also points toward another promising line for future inquiry: the question of why patterns of organizational defiance persist over time. The evidence we gathered in the context of this research project suggests that organizational defiance does not refer to a static characteristic of organizations, but is the outcome of a continuously (re)negotiated dynamic process. While additional empirical research is necessary to theorize about this in more depth, our preliminary analysis suggests that hiring might constitute an important organizational practice affecting the durability of patterns of organizational defiance. More specifically, hiring from an organization's institutional peer group, i.e., the group associated with their domain of embeddedness, might further strengthen social cohesion, propel intraorganizational trust, and foster organizational homogeneity that facilitates consistent organizational defiance. Future research could investigate the validity of these claims and thus offer a fine-grained understanding of the intraorganizational dynamics shaping organizational defiance. These studies would greatly help advance organizational and strategic research on defiance of formal institutions (Oliver, 1991) and solidify the view of embeddedness as a dynamic concept rather than a static equilibrium (Chang, 2011).

Limitations and conclusions

In this study, we examined the behavior and decisions of organizations operating in the Nigerian movie industry to understand the sources and patterns of variance in organizational defiance. We do not wish to claim that our findings represent the only way in which organizations respond to formal institutional prescriptions. Neither do we take the position that the religious, family, ethnic, and friendship domains of embeddedness studied in our sample influence organizations in the same way across geographies and cultural settings. While religious and family domains of embeddedness tend to emphasize social rationales (Senger, 1970; Tracey, 2012) and ethnic and friendship domains tend to blend economic and social rationales (Jean, Tan, and Sinkovics, 2011), the importance might vary based on the legal, historical, or cultural traditions of different countries. In other words, differences across cultural traditions might affect how and to what extent domains of embeddedness propel specific rationales. For example, compared to Western societies, cultural traditions in Asia tend to place more emphasis on a social rational in various domains of embeddedness (Chua, Morris, and Ingram, 2009). Our objective in this article was to highlight the institutional and organizational dynamics involved in dealing with formal institutional rules in the highly underresearched context of Nigeria, an economically and socially vibrant country on the African continent.

As in all case-based research, the choice of setting and the focus on the four organizations in our sample restrict the generalizability and transferability of the findings. However, our analytical approach of investigating defiance within organizations might provide a useful lens for researchers studying these phenomena. Despite these limitations, a unique context such as the one presented in this article offers an opportunity to complement and extend already existing work on the informal economy. The case of the Nigerian movie industry is uncommon and analytically unusual in the literature, but common in economies operating in developing countries and, hence, timely and relevant for researchers. We hope that research on organizations and strategy will continue to provide rich insights on the phenomena like the one investigated in this article.

Acknowledgements

  1. Top of page
  2. Abstract
  3. Introduction
  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References

We are grateful to the special issue guest editors and the anonymous reviewers for their constructive feedback and encouragement throughout the review process. We also thank Woody Powell, Steve Barley, Daniel Armanios, Fabrizio Ferraro, Filipe Santos, Renate Meyer, and Pinar Ozcan for their support and insights reflected in earlier versions of this work. This article would not have been possible without the help of colleagues at the Lagos Business School and the Scandinavian Consortium for Organizational Research (SCANCOR). This article also benefited greatly from discussions organized by the Nollywood Study Centre of the School of Media and Communication, Pan Atlantic University. It also benefited from discussions at the EGOS Consortium in Lisbon, 2010. Both authors contributed equally.

Footnotes
  1. 1

    Nigeria is composed of more than 250 ethnic groups, each having its own indigenous language and culture. The three major ethnic groups in terms of population size are the Yoruba, Igbo, and Hausa ethnic groups. Different ethnic groups reside in different parts of the country. Hausa indigenes are predominantly in northern Nigeria, Igbo indigenes are in eastern Nigeria, and Yoruba indigenes are in western Nigeria (Library of Congress, 2008).

  2. 2

    Field notes are notes taken from observations of daily events in the organization.

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  4. Theoretical Perspectives on Defiance of Formal Institutions
  5. Research Context: the Nigerian Movie Industry
  6. Methods
  7. Findings
  8. Discussion and Conclusion
  9. Acknowledgements
  10. References
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