How to change other people's institutions: discursive entrepreneurship and the boundary object of competition/competitiveness in the German banking sector

Abstract

The paper explores recent public debates about the structure of the financial system in Germany. It pays particular attention to their symbolic-strategic dimension, that is, to attempts by several institutional entrepreneurs to reformulate the criteria of organizational legitimacy, concentrating on the sense-making and legitimization processes involved in institutional persistence or change. The paper discourse-analyses a campaign by institutional entrepreneurs – mainly representatives of commercial banks – who attempted to homogenize the criteria of organizational legitimacy in the German banking sector by questioning the fundamentals of the three-pillar system and the non-commercial banks. Institutional entrepreneurs are understood as discursive entrepreneurs whose actions refer to institutionalized generalizations of value. In the case of the financial sector in Germany, it was the generalized value of competition/competitiveness that served as a discursive device to legitimize the attempts of commercial banks to alter the institutional structure.

Keywords:

• institutionalist theory
• institutional entrepreneurship
• financial sector
• legitimacy
• commercial banks
• competitiveness

Notes

1. For instance, they dispose of associated investment companies, DEKA and Union Investment, and, perhaps most famously, the WestLB which, as a regional bank, has been engaging in investment banking on an international scale (Grossman, 2006).

2. Douglas North (Institutions, Institutional Change and Economic Performance, 1991) has already suggested that formal institutions have to be seen in the context of more informal ones, which stand in connection to basic interpretative patterns institutionalized in society as commonly held beliefs and ‘ways of doing things’ (cf. DiMaggio & Powell, 1991, p. 6).

3. For instance, through market research. See also Moldaschl and Diefenbach (2003), who list scientific disciplines that are devoted to identifying criteria for relating internal processes to external structures, institutions and ‘intangible resources’ such as commitment, core competencies, etc.

4. This point is actually the one which makes the major difference between the rational choice model of institutional entrepreneurship underlying most institutionalist research in political economy (see the first section above) and a sociological model that refers to underlying pre-reflexive understandings and structures of plausibility (see DiMaggio & Powell, 1991).

5. See Tietmeyer, Henke, and Rolfes (2004), Linn, Krotsch, and Riese (2002), Merl and Betsch (2003), Kürble and Reichling (2004) and Schuster and Widmer (2004).

6. The English translation of Finanzplatz Deutschland does not render the expression's national and collective connotations.

7. ‘Boundary objects are both plastic enough to adapt to local needs and constraints, yet robust enough to maintain a common identity across sites’ (Bowker & Star, 1999, p. 297, quoted in Power, 2005, p. 260).