4.2.1 Defining tendering as a social institution
‘Institution’ is a term used to describe a type of social structure that exists where social actors or individuals grouped together by a common and boundaried purpose (Hodgson, 2006). The institution of public sector tendering is constituted through multiple interacting social structures, shaped by, and emergent from, pre-existing structures. Institutions have systems of established social rules that structure social interactions (Hodgson, 2006), which can be enabling as well as restraining. Explanations of resource-seeking and capability-building attempts by small firms to compete in public sector tendering environments need to be contextualised in the institutional domain of public sector tendering. Institutions have been described as formal or informal procedures, routines, and as durable, socially-embedded rules (Hodgson, 2006).
117 Any institution has a set of rules, as shown in chapters two and three. Public sector tendering is a highly complex institutional arrangement. It is characterised by compliance to EU procurement and fair competition law, by actors within a supplier and competition base, by specific spatial socio- economic priority mandates for policy direction and through documentary artefacts as carriers of institutional elements, upon which information exchange resides. Public sector tendering is a specific convention to socially transmit the institutional rules of one type of public sector procurement, tendering. The way the rules are replicated depends upon the existence of a normative social culture and language to make it exist. Institutional rules are therefore codified, and may not be easily understood and exploitable by SMEs. Some of these rules will be legal, others will be customary and some may be dynamic and emergent. Repeated exposure to rules and observations of what works channels agency to develop customary habits (Hodgson, 2006).
The interpretation and appreciation of rules is a social act. Tendering for contracts is a convention for imposing form, resource demands, consistency and language as part of the rules of market exchange with public sector customers. To conduct an empirical or theoretical analysis of how an institution works requires a conception of what an institution is, as much of human interaction and activity is structured in terms of overt or implicit rules (Hodgson, 2006). As Scott (2001) stated, in order to survive, organisations must conform to the rules and belief systems prevailing in the environment. Tendering therefore is the outcome of formal practices that become shaped by its institutional context.
Scott (2001) described three dimensions upon which coercive external pressure to change (discussed in chapter three) is applied to an institution: i) regulative, ii) normative, and, iii); cognitive. Regulative pressure refers to the bureaucratisation of the rules of tendering, normative behaviour links to the social pressure to copy firm appearances for legitimacy through policy alignment, value statements and so on, and cognitive pressure refers to the ability to ‘keep up’ with changing and idiosyncratic procurer behaviour.
118 Isomorphism (DiMaggio and Powell, 1983) is an outcome of coercive authority to describe external pressure to conform to the same set of environmental conditions, a principle that is also described as firms attempting to earn social legitimacy over market effectiveness (DiMaggio, 1983). Searle (1995) identifies regulative and constitutive processes in an institution that are created and enforced collectively. Regulative rules influence exiting activities and are procedural. For example, a minimum time-period for which a public tender must be advertised, or the length of time set aside for receipt of a tender response. Constitutive processes are conditions that have to be met in a particular context for a certain status to apply. Tendering has, for example, created specialist roles as a condition; public sector procurement officials are required to be in post to implement and safeguard tendering procedures.
Institutional exertion of pressure towards conformity introduces the notion of agent sensitivity or insensitivity (Hodgson, 2006). Within an agent sensitive institution, conventions are modified to accommodate actor feedback. Conversely, agent insensitive institutions place their operating structures in primary place over the beliefs of their actors. This can influence agents into positions where people are incentivised to act in certain ways and may become disincentivised from acting otherwise. Importantly, agents always have the potential to act otherwise, but agent- insensitive organisations may respond with strong penalties. Empirical findings err on the side of public sector tendering as agent-insensitive (Loader, 2011; Pickernell et al, 2011) with heavy compliance demands (Freshminds, 2008), conformative language imposition (Baden et al, 2011) and agent adaptation to regulation intentionally, inadvertently or not at all, being contingent on the agency of small businesses and their stakeholders (Kitching, 2006).
A key concept in institutional theory is path dependence, which is used to explain institutional stability as well as institutional change. Path dependence refers to a sequence of events, where later decisions are not taken entirely independently of past experience. At firm level, this is known
119 as the trodden trail (Ebbinghaus, 2006). As such, social learning cannot be neutral in its impact. This is because whilst actors and institutional structure remain distinct, they remain connected in a circle of mutual interaction and interdependence (Hodgson, 2006). Section 5.3 analyses tendering as a social institution, and describes the layered or ‘stratified’ structure within which firms are situated after an exploration of ontological and epistemological considerations in the remainder of section 5.2.
4.2.2 Ontological considerations for studying firm tendering capability
Critical realism emphasises how the world exists independently of what we think about it, making experience of it fallible. This means that a reality does exist, but it is difficult to understand (Easton, 2010). The form and nature of reality in critical realism is stratified as a meta-theory, and as a model of social enquiry that has emerged as a popular cited philosophical position (Bhaskar 2009; Collier, 1994; Archer, 1995). Critical realists see the world as an open, complex system (Bhaskar, 1993) where reality is multiply determined (Bhaskar, 2008). Critical realists believe that the world exists but individuals construct different understandings of it. There is a stratified view of reality that is accessible even if it is not observable, and forms of reality continually mediate each other. Tendering action achieves a temporal outcome that is directed through regulation, and it requires patterns of deliberate co-operation from businesses to enter into a specific form of knowledge exchange framework. Furthermore, it is as an enduring social structure. This investigation recognises that whilst agents require some conception of what they are doing, case firms may not be conscious of the laminated structures that make up the tendering environment.
Social structure is dependent on human actions but that we cannot rely on agents’ conceptualisations to ‘know’; experience is merely the starting point for explanation as agents have an inadequate understanding of societal structures that make certain actions possible (Ackroyd & Fleetwood, 2001). This affords an opportunity to observe the resources available to case firms and to look at corporate agency to help identify potential transformational
120 processes that they could take on to overcome structural constraint to procurement opportunities. Small firms as bundles of human agency draw on existing external and internal structures and practices that are then reproduced and/or transformed in action through tendering.
4.2.3 Epistemological considerations for studying firm tendering capability
Social structures include structuring factors that remain external to actors, but are open to agency interpretation as a form of reality. Emphasis is placed upon investigating empirical and actual domains (Bhaskar, 1979) to the deep causal mechanisms that govern events. For example, claims made in empirical literature that tendering is increasing resource demands on firms would, from a critical realist perspective, look at mechanisms by which this has occurred. This makes a realist evaluation place context centre stage and be considered as dynamic in nature. It is interested in answering questions about ‘what works for whom in which circumstances’ (Nielsen and Miraglia, 2017). Three questions to address are; i) what makes a firm routine work; ii) under what conditions can it be effective and; iii, what capabilities can be elicited? This approach is described as the context-mechanism-outcome (CMO) configurations (Pawson and Tilley, 1997). Realist evaluation also implies that tendering actions as firm intervention work differently depending on the context, and how mechanisms trigger outcomes depend on the context (Greenhalgh et al, 2015).
Epistemological considerations explain the utilisation of the realist concepts of embeddedness, mechanisms and context. Embeddedness means that voluntary individual action is always viewed through social relations in the environment where the firm exists. Mechanisms are causal structures that can explain a phenomenon. They are a central feature in critical realist theory, mostly uncovered indirectly by analytical work (theory-building).The existence of mechanisms in an open system are unobservable but knowable, and generative in nature. The context of organisations requires knowledge of both omnibus and discrete contexts (Nielsen and Miraglia,
121 2017). In existing literature, findings generally only refer to context at a ubiquitous level, without examination of individual tender and firm situation. Examples of omnibus contexts are high entry barriers, formal language and regulation complexity, or the liability of smallness compared to large firms. Investigation into case firms looked at under which environmental conditions action is taken and mechanisms that have triggered those actions to improve understanding of how actions improve tendering performance. The notion of context is important to understand the nature of reality and access to it through fieldwork.