Innovation in Denmark: a discursive study of Danish organizations’ focus on innovation.

Mikael Boisen Westh M.Sc. in Strategy, Organization and Leadership Supervisor: Eva Boxenbaum, IOA Copenhagen Business School August, 2011 Number of pages: 76 Number of STUs: 172.982

Abstract This thesis takes its point of departure in the societal discourse in Denmark about innovation. I argue that there is a wide-spread belief in Denmark that we must live off our ability to innovate if we are to stay competitive in the future. This belief is shared by politicians, international organizations such as the European Union and OECD, trade associations and unions in Denmark as well as major private sector companies. Following the arguments of new institutional theory, Danish organizations should be influenced by this societal belief and to some extent focus on innovation to gain legitimacy. My research question was: 

How have Danish private sector organizations discursively responded to the societal discourse on innovation? o Is there variation in the manner and extent to which different organizations have responded? o Is there variation in the manner and extent to which different organizational fields have responded?

Through a discourse analysis of texts produced and disseminated by fifteen large, Danish private sector companies from five different industries I have analyzed how and to what extent Danish organizations have picked up the societal discourse on innovation. I analyzed the websites and annual reports of Novo Nordisk, Lundbeck, LEO Pharma, Coloplast, GN Store Nord, William Demant, Novozymes, Chr. Hansen, Danisco, Maersk, DSV, DFDS, Danske Bank, Jyske Bank, and Sydbank to determine how and to what extent these organizations have incorporated the discourse in innovation.

My findings demonstrate that the societal discourse on innovation is shared by our biggest companies: eleven out of the fifteen organizations I analyzed discursively recognize the need for innovation. In addition, I found significant variation between various industries as well as some variation within industries. Most notably did none of the financial organizations show any focus on innovation, whereas the biotechnology companies showed a very strong focus on innovation. Outside the financial sector, eleven out of twelve organizations communicated a focus on innovation, and the societal discourse on innovation thus seems to be shared by our largest companies.

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Table of Contents TABLE OF CONTENTS ................................................................................................................................ 3 1. INTRODUCTION....................................................................................................................................... 5 1.1 BACKGROUND ............................................................................................................................................... 5 1.2 INSTITUTIONAL THEORY AND DISCOURSE ANALYSIS .................................................................................... 9 1.3 RESEARCH QUESTION .................................................................................................................................... 9 2. INSTITUTIONAL THEORY ................................................................................................................... 10 2.1 INTRODUCTION ............................................................................................................................................ 10 2.2 INSTITUTIONAL THEORY .............................................................................................................................. 11 2.3 INSTITUTIONAL LOGICS AND STRATEGIC RESPONSES .................................................................................. 15 2.4 LEGITIMACY ................................................................................................................................................ 18 3. METHODOLOGY.................................................................................................................................... 20 3.1 SCIENTIFIC THEORY..................................................................................................................................... 21 3.2 DISCOURSE ANALYSIS ................................................................................................................................. 21 3.3 LEGITIMATION ............................................................................................................................................. 23 3.4 LEGITIMATION STRATEGIES......................................................................................................................... 24 3.5 TEXTUAL ANALYSIS .................................................................................................................................... 27 4. DATA ........................................................................................................................................................ 28 4.1 INTRODUCTION ............................................................................................................................................ 29 4.2 ORGANIZATIONS .......................................................................................................................................... 30 4.3 PHARMACEUTICAL SECTOR ......................................................................................................................... 31 4.4 HEALTH CARE SUPPLIES SECTOR ................................................................................................................ 31 4.5 BIOTECHNOLOGY SECTOR ........................................................................................................................... 32 4.6 TRANSPORTATION SECTOR .......................................................................................................................... 33 4.7 FINANCIAL SECTOR ..................................................................................................................................... 34 5. ANALYSIS ................................................................................................................................................ 35 5.1 PHARMACEUTICAL SECTOR ......................................................................................................................... 35 5.1.1 Novo Nordisk ....................................................................................................................................... 35 5.1.2 Lundbeck ............................................................................................................................................. 37 5.1.3 LEO Pharma ....................................................................................................................................... 38 5.2 HEALTH CARE SUPPLIES SECTOR ................................................................................................................ 39 5.2.1 Coloplast ............................................................................................................................................. 39 5.2.2 GN Store Nord ..................................................................................................................................... 40 5.2.3 William Demant ................................................................................................................................... 42 5.3 BIOTECHNOLOGY SECTOR ........................................................................................................................... 43 5.3.1 Novozymes ........................................................................................................................................... 43 5.3.2 Chr. Hansen ........................................................................................................................................ 46 5.3.3 Danisco................................................................................................................................................ 48 5.4 TRANSPORTATION SECTOR .......................................................................................................................... 50 5.4.1 Maersk ................................................................................................................................................. 50 5.4.2 DSV ..................................................................................................................................................... 52 5.4.3 DFDS................................................................................................................................................... 53

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5.5 FINANCIAL SECTOR ..................................................................................................................................... 54 5.5.1 Danske Bank........................................................................................................................................ 54 5.5.2 Jyske Bank ........................................................................................................................................... 55 5.5.3 Sydbank ............................................................................................................................................... 55 5.6 OVERVIEW ................................................................................................................................................... 56 6. DISCUSSION ............................................................................................................................................ 57 6.1 SUMMARY OF FINDINGS .............................................................................................................................. 57 6.2 LIMITATIONS ............................................................................................................................................... 58 6.3 ISOMORPHISM .............................................................................................................................................. 61 6.4 VARIATION .................................................................................................................................................. 62 6.5 IMPLICATIONS FOR PRACTICE ...................................................................................................................... 65 7. CONCLUSION ......................................................................................................................................... 68 8. REFERENCES ......................................................................................................................................... 69 8.1 BOOKS AND ARTICLES ................................................................................................................................. 69 8.2 ANNUAL REPORTS ....................................................................................................................................... 72 8.3 WEBSITES .................................................................................................................................................... 72

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1. Introduction 1.1 Background There seems to be a widespread acceptance that Denmark, Europe, and the Western World alike must live off innovation and knowledge if we are to stay competitive in the future. The American president Barack Obama gave innovation focal attention in his latest State of the Union Address, and spoke of the need for a new generation‟s “Sputnik Moment:” The first step in winning the future is encouraging American innovation. (…) What we can do -- what America does better than anyone else -- is spark the creativity and imagination of our people. (…) In America, innovation doesn‟t just change our lives. It is how we make our living (The White House, August 2011).1

That is, if America is to prosper again and fuel new economic growth after the financial crisis, American organizations must be innovative. The beliefs apparent in the quote above seem to be shared by many. In 2010, e.g., the Organization for Economic Co-operation and Development (OECD) launched an innovation strategy stating that “In 2007, Ministers acknowledged the need for a cross-government policy to harness innovation as a major driver of productivity that can strengthen economic growth and development” (OECD, August 2011).2 OECD, as part of this innovation strategy, published “The OECD Innovation Strategy – Getting a Head Start on Tomorrow” in which the executive summary stresses the need for the private sector to be innovative: “Innovation in firms must be unleashed. Firms are essential for translating good ideas into jobs and wealth” (OECD, 2010: 12). The European Union, in a similar vein, has research and innovation as a distinct policy area, arguing that:

Research and innovation help deliver jobs, prosperity and quality of life. Although the EU is the global leader in many technologies, it faces increasing challenges from traditional competitors and emerging economies alike (…) In particular, EU Industry needs to close the spending gap between itself and counterparts in the US and Japan to remain competitive at the cutting edge of technology and innovation.” (The European Union, August 2011).3

1

http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address http://www.oecd.org/document/6/0,3746,en_41462537_41454856_45150854_1_1_1_1,00.html 3 http://europa.eu/pol/rd/index_en.htm 2

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From a political perspective, there thus seems to be a shared understanding among political leaders and international organizations that our companies must be innovative if we are to experience economic growth in the future and stay competitive in the global economy. Since I have limited myself to Danish organizations in this thesis, it is interesting that the beliefs of Barack Obama and the international organizations just described seem to be shared by the Danish Prime Minister Lars Løkke Rasmussen: We must make creativity and ideas grow. (…) We must focus specifically on knowledge as an essential condition for new growth. (…) Danish companies must be even more innovative in the future than they are today (Statsministeriet, August 2009).4

This speech was given at the opening of the Danish parliament in 2009. It focuses on creativity and innovation as essential to economic growth and very specifically gives the responsibility to our private sector companies. That is, if Denmark is to experience economic growth Danish private sector companies must be innovative. Similarly, the Danish Ministry of Economic and Business Affairs states that innovation is a central element in creating new growth in Denmark, and that there is a need for Danish companies to strengthen their efforts to create new products and services: “The government‟s goal is that by 2020 Denmark has to be among the countries in the world where the companies are most innovative” (Ministry of Economic and Business Affairs Denmark, August 2011).5 The Ministry of Economic and Business Affairs therefore made the publication “Strengthened Innovation in the Companies.” Naturally, these beliefs reflect a political discourse and need not be shared by anyone else than politicians.

Focusing specifically on Denmark and moving away from politics, however, powerful Danish organizations also seem to share these beliefs. The Danish Chamber of Commerce, one of the largest professional business organizations in Denmark representing 20,000 companies and 100 trade associations, suggested setting up an official innovation council arguing that: “Denmark must innovate itself to growth, and an innovation council can provide an overview, get knowledge out to the firms, and create new ways of thinking” (Dansk Erhverv, August

4 5

http://www.stm.dk/_p_12951.html http://www.oem.dk/arbejdsomraader/erhvervsudvikling-og-vaekstvilkaar/innovation

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2011).6 7 The Danish Chamber of Commerce, alongside their proposal, published a pamphlet called “Innovation Creates Growth” in which they argue that: “If Denmark in the future is to make it in the global innovation economy it will take forward-looking initiatives and political action” (Dansk Erhverv, 2011: 5). We thus also here see a clear belief that innovation, private-sector organizations and economic growth go hand in hand, and The Danish Chamber of Commerce even talks about a „global innovation economy.‟ From the perspective of the employees, DJØF, the Association of Danish Lawyers and Economists and a major trade union for people with a higher education, published an industrial policy under the name “Roads to Knowledge Based Growth” in which two of the five roads to increased growth focus on innovation: more investments in research and innovation in interaction with companies and more innovative public-private sector interaction (DJØF, 2011: 4). Employers and employees alike thus seem to agree: Danish private sector companies must be more innovative if Denmark is to survive in the global economy. In the media as well, this discourse seems to be shared. Liberal editor at the centre-right newspaper Berlingske, Jesper Beinov, in a blog argued that: “Countries like Denmark have to survive by a combination of diligence and innovation since the sources of prosperity today are coming from radical renewal in production and services” (Berlingske Tidende, August 2011).8

So far I have thus argued that political leaders, international organizations, Danish organizations and the media alike share a discourse about innovation being essential to create economic growth. In other words, if we are to create new growth after the financial crisis, our companies must be more innovative. The question then is if our companies agree. At first glance, the answer seems to be yes. Powerful and influential companies in Demark already have a strong focus on innovation, at least officially. At the Danish Top Executive Network Summit 2011 there was a strong focus on innovation, as the theme was „Towards 2020 – Prepare for Development Leaps, Innovation Junctions and Exponential Growth.‟9 Some of the key speakers were an inventor, a director of global sales and business development, and a chief science officer, and two of the themes at the summit were “innovation junctions” and “technology and innovation” (VL Groups, 2011). According to Jeff Olsen Gravenhorst, CEO of ISS A/S, one of the leading facility services companies in the world and the biggest Danish 6

http://www.danskerhverv.dk/OmDanskErhverv/Profil/Danish-Chamber-Commerce/Sider/Danish-ChamberCommerce.aspx 7 http://www.danskerhverv.dk/Nyheder/Sider/innovation-skaber-vaekst.aspx 8 http://beinov.blogs.berlingske.dk/2011/06/07/nar-%c3%b8st-og-vest-m%c3%b8des/ 9 http://vluk.gominisite.com/Summit-2011---Towards-2020

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company measured on number of employees, speaking at the summit, innovation is an outright necessity if a given company wants a market share in the future.10 To survive, then, companies must innovate, according to Jeff Olsen Gravenhorst:

So when we look at this challenge, what is it that ISS has to focus on when going forward, what is it that a service provider has to focus on to get a share of this market in the future? It is, of course, innovation (Danmarks Radio, August 2011).11

According to Gravenhorst, then, innovation is not just a necessity for the Danish economy as a whole. For the particular companies, innovation is also imperative if they want to survive and grow. Similarly, Maersk, the biggest Danish company measured by revenue, argue that: “Innovation is a fundamental part of modern business. If you don‟t innovate, you stand still. And in today‟s world, standing still means going backwards as others keep moving ahead” (Maersk website, August 2011).12 Top executives in Denmark and two of the biggest companies in Denmark, measured on number of employees and revenue, thus all seem to agree with the politicians and various organizations that innovation is and will be fundamental for survival and future economic growth – for our society as a whole and for the particular organizations as well. I therefore believe that it is fair to argue that there is a widespread belief in Denmark that we must live off of our ability to be innovative and that Danish organizations should be influenced by this institutional context and pick up the discourse on innovation.

In this section I have shown that politicians, international organizations, Danish organizations, and Danish private sector companies seem to share a discourse regarding innovation as being essential in today‟s economy and a necessity for future economic growth. There also seems to be a shared understanding that most of this innovation must come from private sector companies. At a first glance, then, it seems that there is a consensus that innovation is a necessity in Danish private sector companies. It is a discourse that is shared by politicians, 10 11

http://www.issworld.com/about_iss/organisation/pages/default.aspx

http://www.dr.dk/DR2/Danskernes%20akademi/Oekonomi_Ledelse/VL_Doegn_2011/VL_Tema.htm?play=http %3A%2F%2Fvodfiles.dr.dk%2FCMS%2FResources%2Fdr.dk%2FDR2%2FDanskernes_akademi%2F2011%2F02%2 F0957648d-d40c-4ea9-880a-47649a76c4a4%2FISSweb_3d1cd0728afb4d85a7de2851a53baf66.mp4%3FID%3D865544 12 http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/WorkingWithInnovation.aspx

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international and national organizations and business leaders. There is a widespread belief that innovation is a necessity, and this view is rarely, if at all, contested. I therefore argue that innovation has become taken for granted in our society, and innovation is thus something that we can expect our organizations to focus on. What this thesis, then, sets out to research is how the discourse on innovation in our society is reflected in Danish private sector companies. I will perceive the necessity of innovation as a widespread belief in our society that our organizations should adhere to.

1.2 Institutional Theory and Discourse Analysis I have, so far, described the discourse on innovation in our society and argued that there is a widespread belief that we must live off our ability to innovate to survive in the global economy. How our organizations respond to this discourse and belief is the focus of my thesis. My thesis builds on the arguments from the new institutional theory which argues that organizations are influenced by social understandings that define what rational behavior is (Greenwood et al., 2008: 3). By applying institutional theory I can therefore offer a societal explanation of why Danish organizations want to be innovative: that is, there is a widespread belief in the Danish society that we must be innovative to create economic growth, which imposes institutional pressures on our organizations. I can thus, through an application of institutional theory, study how the societal discourse and belief that we have to live off innovation has been discursively integrated into Danish organizations. The foundation for this thesis is therefore that organizational structure, strategies and practices are influenced by the wider society through the institutional environment. To study how Danish organizations have reacted to the discourse in our society about innovation, I employed discourse analysis as a methodological tool. I analyzed texts produced and disseminated by fifteen Danish organizations from five different organizational fields to study whether and how they have integrated the societal discourse on innovation.

1.3 Research Question Summing up the two previous sections, what I researched in my thesis was whether and how fifteen organizations from five different organizational fields have responded to and incorporated the societal discourse on innovation. These organizations are Novo Nordisk, Lundbeck, LEO Pharma, Coloplast, GN Store Nord, William Demant, Novozymes, Chr. Hansen, Danisco, Maersk, DSV, DFDS, Danske Bank, Jyske Bank, and Sydbank. There seems to be a widespread belief in our society that we must live off innovation, and according 9

to the new institutional theory our organizations should be influenced by this belief. Through a discursive study of the texts these organizations produce and disseminate to their environments I have studied whether and how they have have responded to this belief. My research question therefore was: 

How have Danish private sector organizations discursively responded to the societal discourse on innovation? o Is there variation in the manner and extent to which different organizations have responded? o Is there variation in the manner and extent to which different organizational fields have responded?

The structure of my thesis is as follows: in the following section I will introduce the new institutional theory and its different components as they are relevant to my study. I will then move on to explain discourse analysis as a methodological tool to be used in institutional theory before presenting my data. Subsequently, I will move on to the actual analysis of my data and then a discussion of my findings before I will wrap up my study in the conclusion.

2. Institutional Theory 2.1 Introduction Although apparent in several disciplines, institutional theory has been more constant in sociology than in other disciplines, and most institutional analysts refer to Max Weber as their prime influence. Weber, however, never himself made use of the term “institution,” but he tried to understand the ways in which cultural rules define social structures and how they govern social behavior (Scott, 1995: 10-11). Building from that, institutional theory posits that organizational forms, strategies and practices are influenced by institutions in the wider society which impose influence on organizations. The foundation for this thesis will thus be that organizational structure, strategies, practices, etc. are influenced by the wider society through the institutional environment. To survive in this environment, organizations must do more than succeed economically; they need to establish legitimacy (Meyer and Rowan, 1977). Through institutional theory I can thus look at how a set of organizations are trying to establish legitimacy by living up to certain societal, or institutional, beliefs about innovation

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as a necessity to stay competitive. In this thesis I will thus research the influence of institutional environments on organizations, or, more specifically, the institutional pressures in Denmark related to organizations‟ focus on innovation. In the following I will give a more detailed overview of new institutional theory, and how it is relevant in the context of this thesis.

2.2 Institutional Theory The new institutional theory developed in the 1970s as a reaction to what some believed were overly agentic perspectives on organizational behavior, such as rational choice theory (Greenwood et al. 2008: 3). The new institutional theory, as the name suggests, departed from the old institutionalism in organization theory as well. Both the old and the new institutionalism reject rational-actor theories of organization, and both argue that culture shapes organizations. The new institutionalism, however, parts from the old by downplaying conflicts within and between organizations and by focusing on organizational fields in its conceptualization of the environment. That is, institutionalization happens at the sectoral or societal levels where organizational forms, structures and rules become institutionalized. The new institutional theory, in addition, stresses the unreflective and taken-for-granted nature of human behavior and sees interests and actors as constituted by institutions themselves (DiMaggio & Powell, 1991: 11-15). Or, as Scott (1995) put it, the new institutionalism has emphasized cognitive frameworks over normative ones and has focused attention on the effects of cultural belief systems operating in the environments of organizations (Scott, 1995: 31). One of the founding papers of the new institutional theory, henceforth just called „institutional theory,‟ was Meyer and Rowan‟s (1977) article which argued that organizations incorporate rationalized institutional rules to gain legitimacy and resources. As their central argument goes:

That is, organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. (Meyer and Rowan, 1977: 340)

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According to Meyer and Rowan, then, formal organizations will reflect their institutional environments more than they will reflect the demands of their ongoing work activities. Organizations adhere to structures and ideals to appear rational and to gain legitimacy, and in that way they enhance their survival prospects:

Incorporating externally legitimated formal structures increases the commitment of internal participants and external constituents. And the use of external assessment criteria – that is, moving toward the status in society of a subunit rather than an independent system – can enable an organization to remain successful by social definition, buffering it from failure (Meyer & Rowan, 1977: 349).

Meyer and Rowan (1977) thus argued that by submitting to rationalized concepts in their institutional environments, organizations show that they are acting on collectively valued purposes, and that they use the legitimacy they attain to strengthen their support and to secure their survival. Or in other words, organizations that conform to institutionalized myths attain legitimacy and resources and in that way secure their survival. Meyer and Rowan further argued that “technical activities and demands for efficiency create conflicts and inconsistencies in an institutionalized organization‟s efforts to conform to the ceremonial rules of production” (Meyer & Rowan, 1977: 355). The conflict between ceremonial rules and efficiency can be solved through decoupling: elements of structure are decoupled from activities and from each other. Decoupling therefore enables organizations to maintain standardized formal structures while ongoing activities vary in response to practical considerations (Meyer & Rowan, 1977: 356-357). Another founding and highly influential paper was DiMaggio and Powell‟s (1983) article where the authors argued that where much of the organizational theory of the 1970s sought to explain variation, the question should rather be why there is such homogeneity of organizational forms and practices. DiMaggio and Powell argued that when an organizational field becomes established there is a push towards homogeneity, or: isomorphism. They further argued that organizations are becoming still more similar, not because they are driven by competition or the need for efficiency, but because of the structuration of organizational fields:

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… highly structured organizational fields provide a context in which individual efforts to deal rationally with uncertainty and constraint often lead, in the aggregate, to homogeneity in structure, culture, and output (DiMaggio & Powell, 1983: 147).

Such an organizational field, according to DiMaggio and Powell, is a number of organizations that constitute a recognized area of institutional life. That is, suppliers, consumers, regulatory agencies and other organizations producing similar outputs. DiMaggio and Powell further contended that early adopters of an organizational innovation will be driven by a desire to improve performance, but as an innovation spreads, a point will be reached beyond which an adoption will provide legitimacy more than improved performance (DiMaggio & Powell, 1983: 148). Legitimacy is therefore a central concern to both Meyer and Rowan (1977) and DiMaggio and Powell (1983). DiMaggio and Powell also identified three analytically distinct mechanisms of isomorphism: coercive, mimetic and normative isomorphism. Coercive isomorphism results from formal and informal pressures from laws, regulations and standards, mimetic pressures stems from uncertainty and implies imitating other organizations, and normative isomorphism comes from professionalization, that is, norms, socialization and professional methods of work. DiMaggio and Powell point out that conforming to any of these pressures will not increase organizational efficiency. Rather, being similar to other organizations in a field will make it easier for a given organization to transact with other organizations, it will make it easier to attract employees, and it will provide the organization with legitimacy (DiMaggio & Powell, 1983: 150-154). Taking Meyer and Rowan‟s (1977) and DiMaggio and Powell‟s (1983) arguments together, then, organizations adopt structures, forms, practices and strategies that are perceived as legitimate in the eyes of society and in that way attain resources securing their survival. On the field level, organizations are becoming still more similar within these organizational fields. This process is called isomorphism and has three analytically distinct mechanisms: coercive, mimetic and normative. Being similar to other organizations will not necessarily make a given organization more effective, but it will give the organization legitimacy, which enhances its survival prospects.

According to Greenwood et al. (2008), empirical support for these founding arguments of institutional theory abounds and comes from a wide array of practices and settings: studies have verified that organizations seek to attain legitimacy by adopting practices that are 13

assumed to be rational, that organizations converge around these practices, and that social values in different countries lead organizations to use different organizational practices (Greenwood et al., 2008: 8-10). From these founding propositions, then, institutional theory expanded in scope and diversity. One of the most cited works within institutional theory has been Richard W. Scott‟s pillars that underpin institutions (Greenwood et al. 2008: 15). Scott (1995) distinguished between three such pillars: regulative, normative and cognitive. The basis for compliance in the regulative pillar is expedience, and its indicators are laws, rules and sanctions. The normative pillar, on the other hand, rests on social obligation for compliance with certifications and accreditations as its indicators. Finally, the cognitive pillar revolves around the „taken-for-grantedness‟ as its basis for compliance. Its basis for legitimacy is culturally supported, and it is indicated by isomorphism; that is, when more and more organizations have adopted a given structure, form or practice (Scott, 1995: 35). According to Greenwood et al. (2008), however, few researchers have successfully operationalized the three different pillars which are often intertwined. In the same vein, the distinction between the three pillars has led to a divide in institutional theory where different researchers have emphasized different pillars leading to a growing divide between different institutional approaches (Greenwood et al. 2008: 15). For these reasons, Phillips and Malhotra (2008) criticize the three pillars on the grounds that if an institution is enduring and stable, then it does not need regulatory sanctions or other social controls to support it since it is taken-for-granted. Instead, Phillips and Malhotra argue that institutions are fundamentally cognitive, and that the two other pillars are not necessary in institutional theory (Phillips & Malhotra, 2008: 710-711). According to Phillips and Malhotra, Scott himself has argued that it is the cultural-cognitive pillar that gives the deeper foundations of institutions, and that beliefs, norms and rules rest on this pillar (Phillips & Malhotra, 2008: 715). According to this view, then, institutions are fundamentally cognitive and self-reinforcing with no external sanctions. That is, they rest on the taken-for-grantedness as a basis for compliance: organizations adopt structures and forms because they can conceive of no alternatives. Phillips et al. (2004) argue that institutions involve mechanisms that associate non-conformity with increased costs economically, cognitively and socially, and that institutions therefore are subject to self-regulating controls (Phillips et al., 2004: 637-638). Berger and Luckmann (1966) argued for this position from the outset of institutional theory:

To say that a segment of human activity has been institutionalized is already to say that this segment of human activity has been subsumed under social control. 14

Additional control mechanisms are required only in so far as the processes of institutionalization are less than completely successful (Berger & Luckmann, 1966: 73).

In this thesis I will therefore focus on the cognitive pillar, or the taken-for-grantedness, as fundamental in institutional theory: organizations in Denmark can be expected to focus on innovation because it is taken for granted in the Danish society that innovation is what we must live off. The basis for legitimacy, in that case, is that actions or forms are culturally supported. A societal discourse on innovation, which I outlined in the previous section, is thus expected to be taken up by organizations, not through rules, laws, norms, or social obligation, but because it is socially supported and taken-for-granted. That is, organizations can be expected to focus on innovation to attain legitimacy since innovation is a „culturally supported‟ practice.

2.3 Institutional Logics and Strategic Responses If the question that DiMaggio and Powell (1983) sought to answer was why organizations are so alike, other researchers within institutional theory have sought to answer the opposite question: how do we explain differences? From the arguments of DiMaggio & Powell it would follow that all organizations are alike, or that they would become alike over time. But how do we then explain variation between organizations and institutional change? Friedland and Alford (1991) provided one possible answer when they introduced institutional logics to institutional theory. In line with DiMaggio and Powell, Friedland and Alford argued that:

From an institutionalist perspective, organizations which adopt the appropriate forms perform well not because they are most efficient, but because these forms are most effective at eliciting resources from other organizations which take them to be legitimate. (Friedland & Alford, 1991: 243) Friedland and Alford then went on to argue that institutions are “supraorganizational patterns of human activity and symbolic systems that individuals and organizations use to order reality and make it meaningful” (Friedland & Alford, 1991: 243). Each of the important institutional orders in Western societies, they argued, has a central logic that organizations and individuals draw upon when making sense of activities: capitalism, family, bureaucratic state, democracy, and Christianity (Friedland & Alford, 1991: 249). Thornton, in a review of empirical studies, 15

included six sectors: markets, corporations, professions, states, families and religions (Thornton & Ocasio, 2008: 104). These logics, however, are conflictual, and the most important struggles between organizations concern the type of institutional logic appropriate in a given situation, and it is the outcomes of these struggles that may transform institutions: Through individual, organizational, and class politics, institutional contradictions may be politicized and institutions transformed (Friedland & Alford, 1991: 256). Organizations, as actors, can thus instigate change by appealing to different logics. Institutions are therefore not stable, but are changing over time. Thornton and Ocasio (2008), however, warned that the phrase „institutional logic‟ has become a buzz word that researchers take for granted and thus fail to define. Thornton and Ocasio (1999) themselves defined institutional logics as socially constructed historical patterns of material practices, assumptions, values, beliefs and rules that individuals use to provide meaning to their social reality (Thornton & Ocasio, 1999: 804). Institutional logics, then, open up for individual agency and differences in institutional theory since there are multiple sources of rationality. That is, different societal sectors and different organizational fields can differ in which logics they are influenced by (Thornton & Ocasio, 2008: 101, 104). Or in other words, institutional logics lead to contradictions in the institutional environment, and the focus can therefore not only be on isomorphism: differences and change has a place in institutional theory, and institutional theory has moved towards including multiple sources of rationality and multiple sources of legitimacy.

The early researchers within institutional theory also acknowledged that institutional theory must better address how and why institutions change, and as early as Berger and Luckmann (1966) it was acknowledged that institutions do change:

Institutionalization is not, however, an irreversible process, despite the fact that institutions, once formed, have a tendency to persist. For a variety of historical reasons,

the

scope

of

institutionalized

actions

may

diminish;

de-

institutionalization may take place in a certain areas of social life. (Berger & Luckmann, 1966: 99).

Powell, too, acknowledged that there are differences that institutional theory needs to account for and argued that we need a better understanding of the sources of heterogeneity in the institutional environments and the processes of institutional change (Powell, 1991: 183). Powell went on to argue that: 16

I also want to suggest that much of the imagery of institutional theory portrays organizations too passively and depicts environments as overly constraining. There is a wide range of institutional influences, and internal responses to these pressures are more varied than is suggested by our initial arguments. (Powell, 1991: 194) Another research that seeks to explain variation more than isomorphism is Oliver‟s (1991) article that blended resource dependence theory with the institutional perspective to come up with strategic responses to institutional pressures that organizations can employ. Oliver argued that organizational behavior can vary from passive conformity to active resistance in response to institutional pressures, and she described five distinct strategies that organizations can employ: acquiescence, compromise, avoidance, defiance, and manipulation (Oliver, 1991: 152-159). Organizations can thus actively conform or resist institutionalization to varying degrees as organizations can have different strategic responses to the institutional environment. According to this view, then, agency and self-interest do have a place in institutional theory. DiMaggio also acknowledged that institutional theory had to open up for more agency, power, interests, and institutional change and suggested that individuals may act as „institutional entrepreneurs‟ that seek to achieve interests that they value, and that new institutions arise when actors with sufficient resources realize these interests (Hardy & Maguire, 2008: 198). A stream of research focusing on change through institutional entrepreneurship has followed, with the basic propositions that institutional entrepreneurship is “activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones” and that institutional entrepreneurs are “actors to whom the responsibility for new or changed institutions is attributed” (Hardy & Maguire, 2008: 198). These institutional entrepreneurs may be individuals, organizations, networks, associations, and social movements (Hardy & Maguire. 2008: 200). Yet other studies explaining variation argue that ideas and practices are modified by the organizations picking up and incorporating these ideas. While early institutional theorists depicted the adoption of practices and structures by organizations in a field as a „diffusion‟ of ideas where practices and structures were transmitted across organizations, other researchers have employed the metaphor of „translation‟ where specific ideas, practices or structures are translated and thus reshaped and adapted by the organizations picking up those new ideas, structures or practices (Zilber, 2008: 162). As Sahlin and Wedlin 17

(2008) argued: “ideas are translated throughout their circulation, and as they evolve differently in different settings, they may not only lead to homogenization but also variation and stratification” (Sahlin & Wedlin, 2008: 219).

From the founding papers and the classical arguments of institutional theory, researchers have thus begun to look more at how and why institutions change, and have been trying to bring some degree of agency into institutional theory. The picture is therefore not only of organizations passively adopting the same structures and forms leading to isomorphism: there can instead be multiple pressures and multiple sources of legitimacy, as well as a multitude of strategic responses to the institutional environment. Organizations and organizational fields can thus differ in the logics upon which they draw, they can differ in their strategic responses to the same institutional pressure, and they can translate the same ideas, structures or practices differently. When looking at how Danish organizations in different organizational fields react to the societal belief that we must be innovative, one can thus expect to find differences across organizations and across fields.

2.4 Legitimacy Whether studying isomorphism, institutional change, strategic responses or translations, one concept remains central in institutional theory: the concept of legitimacy. Suchman (1995) argued that the transformation from viewing organizations as tightly bound rational systems over open systems to the institutional perspective has made legitimacy a focal issue: legitimacy has become an anchor-point addressing the forces that constrain, construct and empower organizations and its actors (Suchman 1995: 571). Suchman argues that organizations pursue legitimacy for a number of reasons: legitimacy enhances the stability and comprehensibility of organizational actions, it leads to persistence since audiences will supply resources, and audiences will perceive the organization as being more meaningful, predictable and trustworthy (Suchman 1995: 574-575). Suchman went on to argue that the literature within organization theory can be divided into a strategic camp and an institutional camp. The strategic approach views legitimacy as an operational resource that organizations extract from their environments and use in pursuit of their goals. The institutional perspective, on the other hand, posits that external institutions construct and interpenetrate organizations and that cultural definitions determine how organizations are built, how they are run, and how they are understood and evaluated. Legitimacy thus empowers organizations by making them natural and meaningful, and legitimacy is therefore not a resource that organizations can 18

extract. Suchman, however, argued that it is possible to take the middle way: addressing the dilemmas that focal organizations face in managing their symbolic relationships with their constituents and at the same time acknowledging that cultural environments are fundamentally constitutive of organizational life (Suchman 1995: 575-577).

In institutional theory, the seminal work of Meyer and Rowan, which is described above, made legitimacy central to institutional theory from the outset by arguing that legitimacy enhances organizations‟ prospects of survival, and that legitimacy can result from conforming to institutionalized myths in the organizational environment (Meyer & Rowan, 1977). According to Deephouse and Suchman (2008), however, Meyer and Rowan never actually defined legitimacy, but definitions of legitimacy abound. Scott argued that legitimacy is a “condition reflecting cultural alignment, normative support, or consonance with relevant rules or laws” (Scott, 1995: 45). Yet another definition is Suchman‟s (1995) definition of legitimacy: “Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman 1995: 574). The strength of this definition, according to Suchman, is that it is a broad-based and inclusive definition that incorporates both the evaluative and the cognitive dimensions.

Deephouse and Suchman (2008) argued that there can be various sources of legitimacy, such as specific legitimacy-granting authorities (e.g. the state, intellectuals, and lawyers), the media, society-at-large, and inter-organizational relations (Deephouse & Suchman, 2008: 57). According to Deephouse & Suchman (2008), “any act of legitimacy may operate on a variety of dimensions,” e.g. regulatory, cognitive, and normative. In the same vein, they argue that subjects, e.g. an organization, seek support from a multiplicity of sources simultaneously. It is thus important to note that there can be many sources and dimensions of legitimacy, and that organizations can seek support from several sources. Suchman (1995), however, argued that the best way to acquire legitimacy is through conformity with the environment, a proposition reinforced by numerous studies, according to Deephouse and Suchman (2008). This is also in line with Meyer and Rowan‟s (1977) original article which argued that organizational conformity with institutional myths will provide an organization with legitimacy. Even though that there can be a multitude of sources and dimensions of legitimacy, then, we can expect organizations to conform to the institutional environment to attain legitimacy. This is

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in line with the view that it is the cognitive pillar that provides the deeper foundations of institutional theory.

In the context of my thesis it can therefore be assumed that organizations in Denmark will conform to the institutional pressure to being innovative since it can be presumed that in Denmark, focusing on innovation will be viewed as desirable, proper and appropriate behavior and will therefore provide organizations with legitimacy. According to the literature on institutional logics, institutional entrepreneurship, translation and strategic responses, however, there will be differences between various organizations and various organizational fields in the extent to which they pick up the belief about innovation, the logics on which they draw, how the discourse or practices regarding innovation are translated into various organizations, and in what their strategic responses will be. Or in other words, it can be assumed that focusing on innovation will provide organizations with legitimacy, but the way in which they do this will vary between different organizations and different organizational fields.

3. Methodology So far I have discussed and explained the aim of my thesis and the theoretical foundation for my analysis. To sum up so far, I have established that the aim of this thesis is to look at how Danish organizations have discursively integrated the discourse about innovation and whether there are differences between various institutional fields. Subsequently, I laid out the theoretical foundations for the thesis: that organizations are shaped by norms and rules in our societies, and that organizations in this institutional environment must attain legitimacy to survive. Taken together, then, we thus see a shared acceptance in our society that we must live off of our ability to innovate, and that organizations should be shaped by this and conform to this belief to attain legitimacy. To answer my research question and to see the link between the societal discourse and our organizations, I will in the following section explain and operationalize discourse analysis as an analytical tool. In this section I will first explain the scientific paradigm that I am employing in this thesis before I go on to describe discourse analysis as an analytical tool to be used in institutional analysis. I will then move on to explain how exactly I am going to utilize discourse analysis, and then finally describe the objects of my research.

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3.1 Scientific Theory The scientific standpoint that I have taken in this thesis is a social constructivist one: that is, I see the world as socially constructed and subjective. The thesis will thus be of interpretative nature. I am trying to get an understanding of „what is going on‟ and the thesis is thus explanatory. It lies at the very heart of institutional theory that institutions are social constructions, and that institutionalization, the process through which institutions are produced, is a social process by which individuals come to accept shared definitions of social reality (Phillips et al., 2004: 638). I am thus employing an interpretive, qualitative approach to generate meaning and to provide an understanding of „what is going on.‟ According to Zilber (2008), longitudinal, quantitative studies have become the dominant approach in institutional theory, thus breaking with the foundations of the new institutional theory which emphasizes meaning. According to Zilber, institutional theory originated from the social constructionist approach, and research within institutional theory should therefore focus more on meaning than on structures and practices (Zilber, 2008: 151-154). Zilber further pointed to the power of language since language constructs reality (Zilber, 2008: 158). By employing a qualitative, discursive method in my study, I am thus able to look at how actors (in this thesis organizations) make sense of the societal discourse on innovation, how they socially construct meaning, and how they take part in the social construction of institutions. In addition, Berger and Luckmann (1966) defined institutions as social constructions that become taken-forgranted through repeated social enactment primarily through the use of language. In the following section, I will therefore turn to discourse analysis as a tool to be used in institutional analysis.

3.2 Discourse Analysis As aforementioned, research within institutional theory has primarily been large-scale, quantitative analyses (Zilber, 2008: page 154), but recently, language has become a main focus in organizational institutionalism (Meyer, 2008: 531). According to Alvesson and Kärreman (2000), one of the most profound trends within the social sciences in general has been an increased focus on language. Scholars within disciplines such as sociology, social psychology and communication theory have suggested that the proper understanding of societies, social institutions, identities and cultures can be regarded as discursively constructed ensembles of texts, and that organizational analysis is being subjected to this linguistic turn as well. According to Alvesson and Kärreman, however, a great majority of 21

organizational researchers have an overly simplistic understanding of language, viewing language as simply mirroring an external reality and as a transparent medium for the transport of meaning (Alvesson & Kärreman, 2000: 136-140). Alvesson and Kärreman, instead, urge researchers to view language as active, processual and outcome oriented, and as a tool used to persuade, enjoy, engage, discipline, criticize, express feelings, clarify, unite and do identity work. They propose an approach to discourse analysis where interest is on discursively produced outcomes such as texts working toward an interpretation that goes beyond those specific texts (Alvesson & Kärreman, 2000: 142-147).

More specifically, within institutional theory, Phillips et al. (2004) argued that discourse analysis provides a framework for studying the processes underlying institutionalization. They propose a discursive model of institutionalization highlighting the relationship between texts, discourse, institutions and actions. Phillips et al. argue that the majority of institutional theory has been realist investigations where organizational practices have been disconnected from the discursive practices that constitute them (Phillips et al., 2004: 635). Instead, they argue that language is fundamental in institutionalization: “Institutionalization occurs as actors interact and come to accept shared definitions of reality, and it is through linguistic processes that definitions of reality are constituted” (Phillips et al., 2004: 635). In particular, texts are seen as fundamental. Institutions, then, are not only social constructions, but social constructions constituted through discourse, and these institutions are constructed primarily through the production of texts which mediate the relationship between action and discourse (Phillips et al., 2004: 638). A fruitful avenue for language-oriented organizational research would thus be through a detailed exploration of texts, they argue (Phillips et al., 2004: 646). In a study by Palmer, Jennings and Zhou (1993), texts where shown to be fundamental in the institutionalization of the multidivisional form in major US corporations in the 1960s, according to Phillips et al. (2004). Normative pressures operated through business schools and the use of a particular book about the multidivisional form, while mimetic and coercive pressures worked primarily through organizational charts, reports, conversations and stories (Phillips et al., 2004: 639). Focusing on persuasive texts, Suddaby and Greenwood (2005) pointed to the skilled use of language in legitimating institutional change, and Munir and Phillips (2005) examined the way Kodak transformed photography from a specialized activity to one that became an integral part of everyday life through a study of the texts Kodak produced and disseminated; texts such as advertisements, company documents and annual reports. A study by Wicks (2001), through a textual analysis of secondary data, showed how a 22

mindset of invulnerability became institutionalized. The detailed study of language and texts can thus be used in institutional analysis. Through an analysis of the texts that Danish organizations produce and disseminate to their environments I will therefore be able to shed light on how Danish organizations make sense of the societal discourse on innovation. As described in the previous section, legitimacy is the primary reason why Danish organizations would focus on innovation. In the following section I will therefore turn to legitimation, the way organizations discursively try to attain legitimacy, as a specific tool to operationalize discourse analysis in institutional theory.

3.3 Legitimation As mentioned in the section on institutional theory, a key factor is legitimacy: organizations must attain legitimacy to survive. A specific way to operationalize discourse analysis is thus to look at how organizations discursively, through texts, try to attain legitimacy. Berger and Luckmann (1966) argued that “language objectivates the shared experiences and makes them available to all within the linguistic community, thus becoming both the basis and the instrument of the collective stock of knowledge” (Berger & Luckmann, 1966: 85-86) and that legitimation is a process of “explaining and justifying” (Berger & Luckmann, 1966: 111). Looking at language and how organizations explain and justify their actions is thus a fruitful avenue for exploring how organizations attain legitimacy: “The edifice of legitimation is built upon language and uses language as its principal instrumentality” (Berger & Luckmann, 1966: 82). Even though legitimacy has always been central to institutional theory, however, little attention has been given to how legitimacy is actually acquired (Suddaby & Greenwood, 2005: 37; Barley 2008: 506). According to Phillips et al. (2004), one way for organizations to attain legitimacy is to produce and disseminate texts to their environments: … texts that leave traces – which include written and verbal reports, as well as other symbolic forms of communication – are likely to be generated in order to secure and maintain legitimacy; without such texts, organizations cannot signal to internal and external members of the organization that their activities are legitimate (Phillips et al., 2004: 642).

One discursive approach in institutional analysis is thus to analyze how organizations discursively seeks to attain legitimacy through texts. Meyer acknowledged that the mobilization of legitimacy is primarily a discursive process (Meyer, 2008: 531), and that 23

interesting new genres such as emails, homepages, reports, and hearings abound in organizational research (Meyer, 2008: 532).

The discursive processes, practices and strategies of legitimation can be studied in several ways, but in this thesis I will build upon Van Leeuwen and Wodak‟s (1999) general legitimation strategies, which was further developed by Vaara et al. (2006). These legitimation strategies are specific ways of employing different discourses or discursive resources, though not always intentional, to establish legitimacy. As Van Leeuwen and Wodak argued: “… legitimation, the question of why social practices or parts thereof must be the way they are. This „why‟ again is never intrinsic to the practice, but has to be constructed in discourse.” (Van Leeuwen & Wodak 1999: 98). Vaara et al. (2006) argued that even though legitimacy is fundamental in organizational action, and even though legitimacy has been a central theme in several streams of research within organization studies, analyses of legitimation have been limited. In particular, they argue that studies of the discursive processes and strategies employed to construct senses of legitimacy have been inadequate, and that knowledge of these discursive processes and strategies are needed if we want to understand the processes through which organizational phenomena are legitimated. More specifically, Vaara et al. (2006) looked at the textual practices and strategies that are used to construct senses of legitimacy, and they argued that those textual means play a central role in legitimating organizational phenomena. In this thesis I will thus analyze how specific organizations, through language, are trying to attain legitimacy through the texts that they produce and disseminate. By looking for such legitimation strategies, I can find the specific ways of mobilizing the discourse on innovation in Denmark to create a sense of legitimacy.

3.4 Legitimation Strategies Van Leeuwen and Wodak (1999) identified four general legitimation strategies: authorization, rationalization, moral evaluation and mythopoesis. Authorization is legitimation by reference to an authority in which institutionalized authority is vested. It can be a person, or persons, like an expert or a doctor, or it can be impersonal such as the law. Authorization can also be out of conformity, that is, if “everybody else does it” (Van Leeuwen & Wodak, 1999: 104105). The second legitimation strategy, rationalization, has two sub-groups: instrumental rationalization and theoretical rationalization. Instrumental rationalization is legitimation through reference to the utility of a practice, that is, the rational justification of a practice and the purpose it serves, the needs it fills or the positive effects the given practice will have. 24

Theoretical rationalization, on the other hand, is legitimation by reference to “facts of life” or “because that is the way things are” (Van Leeuwen & Wodak 1999: 105-108). The third legitimation strategy, moral evaluation, is when an activity is referred to through an expression that distils from it a quality which links the activity to a discourse of values which moralizes it. It can thus appear to be a straightforward description of what is going on, and is therefore one of the least explicit forms of legitimation (Van Leeuwen & Wodak 1999: 108110). The fourth type of legitimation, according to Van Leeuwen & Wodak, is mythopoesis which is the telling of stories. Van Leeuween and Wodak distinguished two types of mythopoesis: moral tales and cautionary tales. In moral tales a hero or heroes follow socially legitimate practices and are rewarded with a happy ending, whereas in cautionary tales a hero or heroes engage in socially deviant behavior resulting in an unhappy ending (Van Leeuwen & Wodak 1999: 110).

On top of these four general legitimation strategies, Vaara et al. (2006) identified one additional legitimation strategy which they dubbed „normalization.‟ In Van Leeuwen and Wodak‟s distinctions, legitimation by means of reference to normal or natural behavior is not a separate strategy, but a sub-type of authorization or rationalization. Vaara et al., on the other hand, argued that rendering something natural or normal can be seen as the primary type of legitimation and should thus be treated as a separate legitimation strategy. Vaara et al. (2006) thus developed a model of discursive strategies used in legitimating organizational phenomena that includes five separate strategies building upon Van Leeuwen and Wodak‟s work: normalization, authorization, rationalization, moralization (moral evaluation), and narrativization (mythopoesis). Vaara et al. developed this model to analyze the discursive strategies used in legitimating an international merger in the media, but they argue that these legitimation strategies are likely to characterize other settings as well and that the model can be used to understand the discursive foundations of legitimation of other organizational phenomena (Vaara et al. 2006). In this thesis I will thus employ Vaara et al.‟s framework, or model, to analyze how Danish organizations discursively legitimize their focus upon innovation. Before I proceed, however, some comments to Vaara et al.‟s model should be made. First, the five legitimation strategies are often intertwined and found together: “In fact, as our examples show, multiple legitimation – drawing simultaneously on several legitimating strategies – seems to be particularly powerful” (Vaara et al. 2006: 805). In my data, I can therefore expect 25

to find the different legitimation strategies together forming more powerful legitimating texts. Secondly, I am not studying whether specific organizations or its actions are seen as legitimate at a specific point in time. Rather, I am analyzing how an organization is legitimating its actions, whether successful or not. I am thus looking at attempts, whether deliberate or not, to legitimate a focus on innovation. That is, I am researching the textual practices and strategies used to construct senses of legitimacy (Vaara et al., 2006: 791). And thirdly, as Vaara et al. argue, it is questionable whether rationalization and moralization form two separate legitimation strategies since all rationalizations have a moral basis (Vaara et al., 2006: 801). In my analysis, I will therefore treat rationalization and moralization as one strategy, and I will thus build my analysis on these four legitimation strategies:

Table 1: Rationalization

Normalization

Authorization

Narrativization

Legitimation by

Legitimation by

Legitimation by

Legitimation

reference to the

reference to normal

reference to authority conveyed through

utility or function of

functioning or

of tradition, custom,

narratives where

specific actions or

behavior.

law, and persons or

individuals or

practices, focusing

organizations in

organizations are

on benefits,

whom institutional

portrayed as winners,

purposes, functions,

authority is vested

losers, heroes, or

or outcomes.

adversaries

When analyzing the texts that Danish organizations produce and disseminate, I will thus look for these four legitimation strategies. Classifying a text into one or more of four different categories obviously impose some problems. As Hernes (2008) argue: “… it is easy to forget that the world, in its „brute‟ form, does not come ready-partitioned. We choose the categories into which we partition it because they suit our analysis. The world really couldn‟t care less about our categories” (Hernes, 2008: 12). Any categorization is thus manmade, and as Alvesson and Kärremann argue, research texts cannot be objective or clinical accounts: any researcher has prestructured understandings (Alvesson & Kärremann, 2000: 148). Other researchers might therefore put some texts into other categories than I have. Throughout the entire analysis, however, I have tried to be very explicit about why I have treated specific texts as either cases of rationalization, normalization, authorization or narrativization.

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3.5 Textual Analysis As aforementioned, a number of studies have examined how texts can be used by organizations to gain legitimacy; according to Phillips et al. (2004), legitimacy can be achieved through the production and dissemination of texts, and as Meyer argued, interesting new genres such as emails, homepages, reports and hearings abound in organizational research (Meyer, 2008: 532). In my analysis, I have analyzed the homepages and annual reports of fifteen Danish organizations in five different organizational fields. The advantage of these genres is that all organizations in my study have homepages and publish annual reports, and there is thus consistency in the material I have analyzed across the organizations on which I conducted my research. A second advantage from this textual analysis of secondary material is that I did not force organizations to communicate a focus on innovation that they might not have. As Deephouse and Suchman (2008) has noted: Taken-for-grantedness – an absence of questioning – is not, however, easy to measure, especially because asking one‟s research subjects about it is, in itself, a form of questioning. One increasingly popular measurement strategy involves counting the number of organizations or the number of media articles, with greater numbers indicating greater legitimacy (Deephouse & Suchman, 2008: 53).

Even though I did not research whether specific practices are seen as legitimate, but whether and how specific organizations are legitimating a focus on innovation, asking my research subjects about a possible focus on innovation would have forced them to elicit responses. By studying, instead, the texts that these organizations disseminate to their environments, I could study directly whether and how these organizations talk about innovation. And finally, the primary data that I could have collected, e.g. through interviews, would not be intended for anyone else but me and my thesis, and would thus not have been constructed to create legitimacy in the eyes of the wider society. By studying, instead, the texts that specific organizations produce and disseminate to their audiences, I could study directly these organizations‟ legitimating efforts. More specifically, what I did in my analysis was to read through each organization‟s homepage and its latest annual report (as of June 2011) looking for texts that deal with innovation. I thus started with a thematic analysis where I identified which texts, if any, dealt with innovation or innovative practices in the annual reports and homepages of the 27

organizations. After this thematic analysis, I conducted a textual analysis focusing on the particular legitimation strategies employed in the texts dealing with innovation. I thus looked at how specific organizations, through the texts that they produce and disseminate, intentionally or unintentionally, discursively try to establish legitimacy by talking about innovation. My analysis thus resembles the one employed by Vaara et al. (2006).

In conducting this analysis, I did not only look for the legitimation strategies; I also did a count of how many texts from the different organizations that deals with innovation. I was, in other words, counting the number of texts each organization has produced and disseminated that deals with innovation. I thus regarded e.g. a given annual report as a collection of texts, and a given annual report can thus contain several texts dealing with innovation. A text, in this thesis, is thus what one could call a text segment or a paragraph. In, e.g., Novo Nordisk‟s 2010 Annual Report (Novo Nordisk, 2011) in the section “Letter from the CEO,” the word „innovation‟ or „innovations‟ is mentioned three times in three different parts of the text. In my thesis, these three mentions of „innovation,‟ „innovations,‟ „innovative,‟ etc. thus represent three different „texts‟ containing innovation as they are mentioned in different passages. The same “Letter from the CEO” can thus contain several texts dealing with and legitimating a focus on innovation: only if „innovation,‟ „innovative practices/procedures‟, etc. is mentioned several times in the same passage in the same section of the same annual report or website do they constitute one single legitimating effort. In this way I was trying to get the most detailed exploration of Danish organizations‟ focus on innovation and their legitimating efforts hereof. By counting how many texts from the various organizations‟ annual reports and websites that dealt with innovation, I could better analyze the differences between various organizations and various organizational fields. I also counted the number of texts employing each of the different legitimation strategies, which enabled me to look for differences in which legitimation strategies different organizations and different organizational fields tend to employ.

4. Data So far I have explained the aim of my thesis and I have described the discourse there is in Denmark about innovation. I then went on to outline my theoretical standpoint before I linked

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it to my choice of method and ontological considerations. In this section I will describe my data, which is the last step before the actual analysis and the subsequent discussion of it.

4.1 Introduction Before I describe my choice of data, however, it is of importance to give a few comments on the delimitation of data. I have chosen only to analyze Danish companies, and I thus narrow my analysis and research to Denmark. This might be contrary to the international scope of institutional theory which has traditionally seen the entire world as the environment (Drori, 2008). According to Drori (2008), nation-states are embedded in world society and it might therefore make little sense to look specifically at Danish companies since these will be subject to global institutional pressures, and it is therefore not possible to say if a practice or structure is distinctively Danish, unless you compare Danish organizations with organizations from other parts of the world. However, since this thesis is not about suggesting whether something is “Danish” it makes sense to delimit my focus to Danish companies. I also limited myself to private sector companies since much of the discourse I outlined in the introduction seems to focus on the necessity of innovation in our private sector organizations. My analysis is thus a comparison of Danish private sector companies from different organizational fields.

What I did, then, was to analyze how Danish organizations have responded to the institutional pressure to being innovative through a discursive analysis of the texts they produce and disseminate. Since the institutional pressure, as described in the theory section, cannot be expected to be uniform, I have decided to compare different organizational fields within Denmark. In doing this, I will stick to DiMaggio and Powell‟s (1983) definition of fields:

By organizational field, we mean those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products (DiMaggio & Powell 1983: 148).

This definition of the field has the advantage that it includes all relevant actors and not just competing firms. It resembles the definition of an industry, and it therefore enabled me to compare different industries, or sectors, in Denmark to see if certain industries are more likely or have been more prone to respond to the institutional pressure to being innovative. By focusing on organizational fields I am emphasizing sectors (fields) as an important type of 29

environment influencing the structure and performance of component organizational units (Scott & Meyer, 1991: page 122). I am thus conducting what Scott and Meyer (1991) dubbed a cross-societal analysis

4.2 Organizations I have chose to conduct my discourse analysis on organizations from five different industries in Denmark: the pharmaceutical industry, the health care supplies industry, the biotechnology industry, the transportation and logistics industry, and the financial industry. Other sectors could have been chosen, but the sectors chosen are all prominent in the Danish economy and have enough companies to enable me to compare organizations within the same sector. Each industry, or sector, contains several large Danish companies, and my focus is therefore on the larger organizations in the Danish business society. From each organizational field I have chosen three organizations based on their centrality in their respective fields, as it is supposed that their actions are more likely to be imitated by smaller and less influential organizations than the other way round. Or as Phillips et al. (2004) propose:

Texts that are produced by actors who are understood to have a legitimate right to speak, who have resource power or formal authority, or who are centrally located in a field are more likely to become embedded in discourse than texts that are not (Phillips et al., 2004: 643).

Focusing on larger companies has the additional advantage that they disclose much the same information: their annual reports and websites resemble one another in terms of structure, and I therefore had consistency in the material I analyzed. The fifteen organizations I chose are as follows: from the pharmaceutical industry I have picked Novo Nordisk, Lundbeck and LEO Pharma. From the finance sector I have chosen Danske Bank, Jyske Bank and Sydbank. From the transportation, shipping and logistics industry I have chosen Maersk, DSV and DFDS A/S; from the biotechnology industry I have chosen Novozymes, Chr. Hansen and Danisco; and from the health care supplies industry I have chosen Coloplast, GN Store Nord and William Demant. I thus have fifteen organizations from five different and distinct organizational fields which enabled me to compare different industries in Denmark. In the following I will briefly introduce each organization.

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4.3 Pharmaceutical Sector From the pharmaceutical industry, Novo Nordisk is a global healthcare company based in Copenhagen that manufactures and markets pharmaceutical products. Novo Nordisk focuses especially on insulin for diabetes care, but is also present within haemophilia care, growth hormone therapy and hormone replacement therapy. The organization has got approximately 30,000 employees in 76 countries and its products are present in 179 countries worldwide. Novo Nordisk‟s shares are traded on NASDAQ OMX Copenhagen and are among the 20 most traded shares (OMXC20).13 14 Lundbeck is another Danish pharmaceutical company based in Copenhagen. Lundbeck does research and markets products within CNS disorders such as depression, schizophrenia, Alzheimer‟s disease, Parkinson‟s disease, Huntington‟s disease, epilepsy and insomnia. The organization employs approximately 5,900 persons worldwide with employees in 57 countries and its products are registered in more than 100 countries. 15 Lundbeck used to be part of OMXC20, but was replaced on December 20 2010.16 LEO Pharma is also among the biggest pharmaceutical companies in Denmark describing itself as a leading global pharma company specializing in dermatology and critical care. LEO Pharma has approximately 3,800 employees in 58 countries and their products are sold in more than 100 countries.17 All three companies are members of The Danish Association of the Pharmaceutical Industry and can thus be assumed to be part of the same organizational field. 18 In addition, both Lundbeck and Novo Nordisk are listed in the Pharmaceuticals sector index on the Copenhagen Stock exchange.19

4.4 Health Care Supplies Sector From the health care supplies industry, Coloplast is a global health care company with headquarters in Humlebæk just north of Copenhagen. The company develops products and services within ostomy care, urology and continence care and wound and skin care. The company employs more than 7,000 people and is part of OMXC20.20 13

http://www.novonordisk.com/about_us/about_novo_nordisk/introduction.asp https://newsclient.omxgroup.com/cdsPublic/viewDisclosure.action?disclosureId=428651&lang=en 15 http://www.lundbeck.com/media/facts_and_background/fast_facts/uk/default.asp 16 https://newsclient.omxgroup.com/cdsPublic/viewDisclosure.action?disclosureId=428651&lang=en 17 http://www.leo-pharma.com/Home/About-us.aspx 18 http://www.lifdk.dk/sw23133.asp 19 http://www.nasdaqomxnordic.com/index/index_info?Instrument=DX0000000451 20 http://www.coloplast.com/about/pages/aboutcoloplast.aspx 14

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Initially a telegraph company, GN Store Nord now operates within the headset industry and the health care industry where its main products are hearing instruments and audiological diagnostics equipment marketed under the brands ReSound, Beltone and Interton. GN Store Nord has approximately 4,100 employees worldwide with production taking place in China. GN Store Nord is also part of OMXC20.21 William Demant Holding Group (henceforth William Demant) is an international health care company with products within hearing devices, diagnostic instruments and personal communication.22 William Demant is one of the largest hearing aid manufacturers in the world with revenues close to DKK 7 billion and more than 6,000 employees as of 2010.23 All three organizations are listed in the sector Health Care Equipment sector index on OMX Copenhagen.24

4.5 Biotechnology Sector From the biotech industry, Novozymes is, according to itself, a world leader in bioinnovation focusing on industrial enzymes, microorganisms and biopharmaceutical ingredients with the development, production, distribution and sale of enzymes comprising 94% percent of sales. Novozymes employs approximately 5,432 employees worldwide and had sales of DKK 9,724 million in 2010.25 Chr. Hansen is a global supplier of bioscience based ingredients to the food, health and animal feed industries producing cultures and dairy enzymes, probiotics and natural colors.26 The company has 2,300 employees in over 30 countries with development centers in Denmark, USA, France and Germany. Furthermore it has a global presence through distributors and agents.27 The last biotech company I have chosen, Danisco, is a world leader within food ingredients, enzymes and biobased solutions. The company operates from more than 80 locations in more than 40 countries with approximately 6,800 employees as of June 2010. The company had revenues of DKK 13.7 billion in fiscal year 2009/2010.28

21

http://www.gn.com/EN/GNAbout/Pages/AboutGNDefault.aspx http://www.demant.com/ 23 http://www.demant.com/financials-keyRatios.cfm 24 http://www.nasdaqomxnordic.com/index/index_info?Instrument=DX0000000455 25 http://report2010.novozymes.com/Menu/Novozymes+Report+2010/Report/Company+profile 26 http://www.chr-hansen.com/about_us.html 27 http://www.chr-hansen.com/about_us/facts.html 28 http://www.danisco.com/wps/wcm/connect/www/corporate/about_us/danisco_in_brief/facts 22

32

Both Novozymes and Chr. Hansen are listed in the sector index Chemicals on the Copenhagen stock exchange whereas Danisco is listed in Food Products.29

30

Since all three

organizations, however, define themselves in much the same way, it makes sense to put them in the same organizational field. They all describe themselves as leaders within “bioinnovation,” “bioscience” and “biobased solutions,” and they all work with enzymes. In DiMaggio and Powell‟s definition they can thus be assumed to belong to the same organizational field.

4.6 Transportation Sector From the transportation and logistics industry I have chosen Maersk, which is the biggest company in Denmark measured by revenue. Officially under the name A.P. Moller-Maersk Group, the company is a conglomerate with approximately 108,000 employees and operations in about 130 countries. Maersk is involved in several industries such as energy, logistics, retail and manufacturing, but its largest business area is its shipping industry which is one of the largest in the world.31 The organization is thus primarily within transportation and logistics. DSV is another global transport and logistics company offering end-to-end transport and logistics solutions. The company is divided into three divisions: a road division, an air and sea division and a solutions division. DSV is included in the OMXC20 index of the 20 most actively traded shares in Denmark.32 DSV operates worldwide, has offices in more than 60 countries and employs approximately 21,000 employees.33 DFDS A/S, Det Forenede Dampskibs-Selskab, is a Danish shipping company founded in 1866. It calls itself the largest integrated shipping and logistics company in northern Europe and operates 30 routes with 60 passenger and freight ships and provides freight solutions in Europe with trailers, containers and rail. DFDS has approximately 5,000 employees located in 20 countries with expected revenue in 2011 of DKK 12 billion.34

29

http://www.nasdaqomxnordic.com/index/index_info?Instrument=DX0000000400 http://www.nasdaqomxnordic.com/index/index_info?Instrument=DX0000000445 31 http://www.maersk.com/AboutMaersk/WhoWeAre/Pages/WhoWeAre.aspx 30

32

http://www.dsv.com/irj/servlet/prt/portal/prtroot/ExternalWebGui.IntegratedInternet?content=/documents/ DSV_DFDS%20Transport/Integrated%20Internet/External%20Web%20Site%20Repository/COM/ENG# 33

http://www.dsv.com/irj/servlet/prt/portal/prtroot/ExternalWebGui.IntegratedInternet?content=/documents/ DSV_DFDS%20Transport/Integrated%20Internet/External%20Web%20Site%20Repository/COM/ENG# 34 http://www.dfdsgroup.com/about/

33

All three companies are part of the same sector index on the Copenhagen stock exchange (transportation) and have similar services.35

4.7 Financial Sector From the financial sector, the first organization I have chosen is Danske Bank. The Danske Bank Group is, measured by total assets, the largest financial enterprise in Denmark and provides banking products, insurance, mortgage finance, real-estate, brokerage, asset management and leasing services. The group has more than five million customers and approximately 21,500 employees and is located throughout northern Europe, Northern Ireland and Ireland and the Baltic countries.36 Jyske Bank is the third-largest bank in the Danish market and the second-largest bank with Danish owners. The company employs almost 4,000 employees and has 116 branches in Denmark, and it also has offices in e.g. Hamburg and Zurich. Apart from providing financial solutions for private customers and small and medium-sized companies, Jyske Bank also offers leasing services, IT hosting and payroll systems.37 The third financial organization I have chosen is Sydbank. Sydbank is the fourth-largest bank in Denmark with 102 branches in Denmark and three in northern Germany plus a subsidiary in Switzerland. The bank is located in Aabenraa in the southern part of Jutland, it has about 2,300 employees and almost 400,000 customers resulting in a market share of 5-8 percent.38

As Scott and Meyer (1991) argued, attempts to classify organizations using the criterion of similarity of products or services are plagued by numerous problems such as how similar the products or services must be, whether focus is on form or function, and that concrete units often are broader and more diffuse than the classes identified (Scott & Meyer, 1991: 118119). The solution proposed by Scott and Meyer is to be explicit about the criteria used including the level of specificity, and to recognize that analyses and conclusions will be influenced by the choices made (Scott & Meyer, 1991: 118). In this section I have tried to be explicit about the criteria I used: how the respective organizations describe themselves and how the markets classify them. Having described my theoretical standpoint and the method I used to analyze my data, and having presented the organizations on which I conducted my study, it is now time to move on to the actual analysis. 35

http://www.nasdaqomxnordic.com/index/index_info?Instrument=DX0000000405 http://www.danskebank.com/en-uk/About-us/Pages/About-us.aspx 37 http://www.jyskebank.dk/jyskebankinfo/home/home/aboutjyskebank/318659.asp 38 http://www.sydbank.com/sydbankcom/about/profile/sydbankgroup 36

34

5. Analysis 5.1 Pharmaceutical Sector In the pharmaceutical sector, the three organizations, Novo Nordisk, Lundbeck and LEO Pharma, all show a response to the discourse on innovation. In the texts I analyzed, all three organizations deal with innovation to some extent with rationalization being the dominant legitimation strategy. In addition, Novo Nordisk is the company which deals the most with innovation.

5.1.1 Novo Nordisk Novo Nordisk‟s 2010 annual report has five words displayed on its front page: imaginative, focused, ambitious, innovative, and healthy. Innovation can thus be assumed to be a practice with which Novo Nordisk wants itself to be associated. In that sense it serves as a form of normalization as Novo Nordisk communicates innovation as something „normal‟ or „natural‟ to them. Moving on to the actual report, innovation is mentioned in the “letter from the CEO”:

As the global leader in diabetes care, with 51% of the insulin market measured by volume, the success of our core business is linked to innovations and improvements in global diabetes care (Novo Nordisk, 2011: 3).

Here, Novo Nordisk CEO Lars Rebien Sørensen legitimates a focus on innovation by referring to its utility: innovation has given Novo Nordisk the position as a world leader within diabetes care. It is thus a case of rationalization, although some authorization is also present since Lars Rebien Sørensen is referring to the “market” as an authority. Later in the same letter, the management of innovation is mentioned as a requirement for future growth, and he hopes 2011 will be a year “with significant growth and continued innovation for the benefit of all our stakeholders” (Novo Nordisk 2011: 4). These are thus other cases of rationalization: innovation will provide future growth, and innovation is thus legitimated by reference to its purpose. Next follows an entire section with the name “valuing therapeutic innovation” in which Lars Rebien Sørensen explains the value of innovations with phrases such as “The research-based pharmaceutical industry‟s continued efforts to discover new therapeutic offers are intended to benefit patients as well as society.” (Novo Nordisk, 2011:

35

5), and “In our view, innovations will eventually benefit all people with diabetes.” (Novo Nordisk, 2011: 5). These are also examples of rationalization, where the utility or function of a practice is referred to. As Vaara et al. (2006) describe rationalization, it is when a practice or action is legitimated through reference to the utility of that action or practice by focusing on the benefits, purposes, functions or outcomes of that action or practice. In this case, that therapeutic innovation will benefit all people suffering from diabetes and society as a whole. Other instances of rationalization in the report are apparent, such as “we continue to invest in the expansion of insulin innovation leadership with research activities aimed at continuous improvements for all types of insulin” (Novo Nordisk, 2011: 18) and the undertaking of an “innovation culture review in 2009” intended to help Novo Nordisk to “respond to broader challenges in the business environment” (Novo Nordisk, 2011: 20). In the section „The Novo Nordisk Way,‟ it is listed under „The Essentials‟ that “we provide innovation to the benefit of our stakeholders” (Novo Nordisk, 2011: 23), and throughout the report innovation is also linked to specific products or treatments such as “continuous innovation for improved blood glucose control” (Novo Nordisk, 2011: 30) and “we innovate to help patients and to defeat diabetes by finding better methods of diabetes prevention, detection and treatment (Novo Nordisk, 2011: 43). Through most of the annual report, then, innovation is being rationalized through reference to the benefits, purposes, functions or outcomes of innovation, and the overarching legitimation strategy employed in the annual report is thus one of rationalization.

However, even though Novo Nordisk is primarily employing rationalization to legitimate its focus on innovation, some normalization, as mentioned earlier, is also apparent. In a section called „strategic focus areas,‟ it is explained that “Novo Nordisk is at the forefront of innovation in protein expression in yeast” and that Novo Nordisk is a “market-leading incubator for innovation to change diabetes treatment” (Novo Nordisk, 2011: 17-18). Innovation is thus legitimated as something that Novo Nordisk “is”, thus rendering it normal or natural functioning, even though rationalization is still apparent in these texts.

In sum, in its 2010 annual report Novo Nordisk is constantly legitimating innovation through rationalization by explaining the rationale for focusing on innovation: the development of specific products, to experience future growth, for the benefit of stakeholders, for the benefit of patients and for the benefit of society as a whole. At the same time, some normalization is seen when Novo Nordisk describes itself as being innovative, thus rendering it a natural 36

behavior. In sum, I found 16 instances of legitimation through rationalization, 4 normalizations and 1 authorization.

On its website, Novo Nordisk does not mention innovation much. Novo Nordisk has an innovation workshop for students called “innovation in action” which can be seen as a normalization strategy, since Novo Nordisk is describing innovation as being natural to the company (Novo Nordisk Website, August 2011).39 The program itself might be legitimated through rationalization, but it conveys innovation as such as something normal or natural to Novo Nordisk. Taking the annual report and the website together, I found rationalization in 16 different texts, normalization in 5 texts, and 1 text with authorization.

5.1.2 Lundbeck Moving on to Lundbeck and its 2010 annual report, we here see a much slighter focus on innovation per se. However, there is a great focus on research and development in the report, something I assume is communicated to give the picture of a leading-edge, innovative company. And even though the term „innovation‟ is not used very much in itself, it is often mentioned in relation to research and development. Such as in the phrase: “Approx. 20% of the revenue is reinvested in research and development of new and innovative pharmaceuticals for the treatment of brain disorders” (Lundbeck, 2011). Research and development will thus provide innovative pharmaceuticals with the purpose of treating brain disorders. Or in other words, research and development will provide innovative products that have a specific purpose: treating brain disorders. Both research and development and innovation are thus rationalized by providing the utility of it. These examples are present throughout the annual report: “In 2010 Lundbeck, implemented a new research strategy in which disease biology is the basis of the development of new and innovative pharmaceuticals” (Lundbeck 2010: 1), “our value creation is driven by our ability to invent, develop, and insure the dissemination of innovative pharmaceuticals” (Lundbeck, 2011: 3), “in 2010 we implemented a new research strategy which will enable us, also going forward, to deliver innovative pharmaceuticals for the treatment of people suffering from brain disorders” (Lundbeck, 2011: 6), and “the purpose of the strategy is to develop innovative products that will lead to improved treatments for people with brain disorders whilst also securing continued growth for Lundbeck” (Lundbeck, 2011: 15). In the section called „Lundbeck‟s development portfolio‟ it says that “[Lu

39

http://www.novonordisk.com/careers/student/innovation-in-action.asp

37

AA24493] represents an innovative approach to obtaining proof of principle, as biomarkers are to provide early indications of therapeutic efficacy” (Lundbeck, 2011: 21). I thus, throughout the annual report, find several mentions of the term innovation even though innovation as such is not the focus of attention. It is the research and development that will lead to „innovative‟ products that in turn have a specific purpose, benefit, outcome or function: treating diseases or securing future growth for Lundbeck. Throughout the annual report, this focus on „innovative pharmaceuticals‟ is then being legitimated by reference to its utility. That is, legitimation through rationalization. I found seven such legitimations. On Lundbeck‟s website, in a text on its corporate culture, the headline says “innovation is what drives us forward,” and below that:

We want our innovations to help improve the quality of life for people all over the world who suffer from psychiatric and neurological disorders. Our focused innovation reinforces a culture of motivated and highly qualified employees (Lundbeck website, August 2011).40

This text is the only one that mentions or deals with innovation on Lundbecks website. On its website too, then, Lundbeck rationalizes a focus on innovation. In sum I found nine texts dealing with innovation in Lundbeck‟s annual report and website, all of them rationalizing a focus on innovation or innovative products.

5.1.3 LEO Pharma LEO Pharma‟s 2010 annual report does not have one single mention of the word „innovation,‟ and only one reference to innovative products, services or practices: an energy-saving activity where waste heat are used for water cooling through an „innovative process‟ (LEO Pharma, 2011: 16). It is in relation to CSR practices, however, and there is thus no mention of LEO Pharma as an innovative company or to any innovative practices in the annual report. On its website, however, it is explained on the front page that LEO Pharma improves lives through „innovation,‟ and a link to a video presentation about the organization is provided in which it is explained that innovation is at „the heart‟ of LEO Pharma (LEO Pharma website, August

40

http://www.lundbeck.com/careers/working_with_us/corporate_culture/default.asp

38

2011).41 The website thus rationalizes a focus on innovation by providing the utility of it (it improves lives) and normalizes it by referencing to normal functioning (innovation is at the heart of LEO Pharma). In LEO Pharma‟s annual report and on its website I thus found one text containing rationalization and one containing normalization.

In sum, the pharmaceutical industry, here represented by Novo Nordisk, Lundbeck and LEO Pharma, through texts disseminated to external stakeholders, primarily legitimates its focus on innovation through rationalization where the organizations explicitly provide the utility or function of innovation, innovative practices or innovative products. To a lesser extent, but still apparent, normalization is employed by describing innovation as almost a given practice in the respective organizations. It is also apparent that all organizations to some extent share the societal discourse on innovation, with Novo Nordisk and Lundbeck having adopted the discourse or trend more than LEO Pharma. The results from the pharmaceutical industry are as follows:

Table 2: Pharmaceutical Sector

Novo Nordisk

Lundbeck

LEO Pharma

Rationalization:

16

9

1

Normalization:

5

0

1

Authorization:

1

0

0

Narrativization:

0

0

0

5.2 Health Care Supplies Sector The health care supplies sector, in my study represented by Coloplast, GN Store Nord and William Demant, also focuses quite a bit on innovation. In this sector, however, rationalization is not the dominant legitimation strategy. Instead, all three organizations primarily utilized normalization when describing their innovative efforts.

5.2.1 Coloplast Beginning with Coloplast and its 2009/2010 annual report, innovation is mentioned in the management‟s report under the section “research and development.” It is described how 41

http://www.leo-pharma.com/

39

Coloplast, through a number of new and improved products, has “retained its position as a leading innovator.” (Coloplast, 2010: 10). The text goes on say:

Even with already high innovative focus, Coloplast further accelerated its ambitions during the financial year. Gaining inspiration from leading multinational brands with particular innovative strength, we have implemented a new way of driving innovation. We have reallocated resources to strengthen the early stages of new product development, and innovation has become an integral part of the overall organization. (Coloplast, 2010: 10)

In this text, two legitimation strategies concerning innovation are apparent: normalization and authorization. Normalization is apparent through phrases such as “we have retained our position as a leading innovator” and “innovation has become an integral part of the overall organization.” Authorization, on the other hand, is when Coloplast states that they have got inspiration “from leading multinational brands.” Even though these authorities are not explicitly specified, the “leading multinational brands” represents an authority: they have institutional authority since they are “leading.” On Coloplast‟s website, a text concerning enterprise risk management mentions that “profitable growth, globalization and innovation are key focus areas in our efforts to achieve our business goals” (Coloplast website, August 2011).42 Innovation as a key focus area is thus rationalized by providing its utility: to achieve business goals. Apart from this mention of innovation, no texts deal with innovation on Coloplast‟s website. In sum, then, Coloplast does communicate a focus on innovation, and legitimates it through normalization, which I found in two texts, and authorization and rationalization, each of which I found in one text.

5.2.2 GN Store Nord In GN Store Nord‟s 2010 annual report the words „innovation‟ and „innovative‟ are mentioned several times throughout the report, clearly indicating that GN Store Nord describes itself as being innovative. The entire report can thus be seen as a text legitimating a focus on innovation through normalization. In the foreword by the chairman of the board of 42

http://www.coloplast.com/About/InvestorRelations/enterpriseriskmanagement/Pages/enterpriseriskmanage ment.aspx

40

directors, Per Wold-Olsen, sentences like “our innovation objectives,” “our innovation skills,” and “in other words, the innovation engine is also running at full speed” clearly normalize a focus on innovation as the texts render innovation a natural functioning for GN Store Nord (GN Store Nord, 2011: 3). Some rationalizations are also apparent, such as “we need to continue to develop innovative products [to cement our achievements] …,” and “in 2010, GN ReSound delivered as promised, generating positive organic growth by taking a lead in the innovation race …” (GN Store Nord, 2011: 3).

The references to innovation as a normal behavior are seen consistently throughout the report, such as: “through its Jabra brand, GN Netcom is a world leader in innovative headset solutions” (GN Store Nord, 2011: 8), “technology innovation, consistent launch processes, sales and service excellence and the supply chain transformation are our key focus areas” (GN Store Nord, 2011: 12), and “… the R&D department demonstrated its innovation capabilities …” (GN Store Nord, 2011: 15). All these references to innovation describe innovation as a natural functioning for GN Store Nord and are thus normalizations. Three instances of authorization are also present, e.g.: “Jabra STONE2 has won the prestigious CES “Best of Innovations” Design and Engineering Award in the category of Wireless Handsets Accessories at CES, the world‟s largest consumer electronics show” (GN Store Nord, 2011: 10).

On its website, GN Store Nord has an interview with Per Wold-Olsen in which he very explicitly normalizes innovation: “Innovation and the commercialization of innovation and technology is what created GN 139 years ago, and this is still the basis for GN” (GN Store Nord website, August 2011).43 This is clearly describing innovation as a natural functioning for GN Store Nord, and it is done through retrospective references making innovation natural to GN Store Nord. In a similar interview, the then CEO of GN ReSound, a part of GN Store Nord, Mike van der Wallen, stated that “innovation has always been a stronghold for GN ReSound and we are continuously working hard to stay out in front with leading quality products” (GN Store Nord website, August 2011).44 Some rationalization is present in this text (being innovative to stay in front), but yet again, innovation is being normalized as something natural. In sum, the leadership of GN Store Nord, although some rationalization is apparent, is primarily employing normalization to legitimate a focus on innovation. I found 14 43 44

http://www.gn.com/EN/GNNews/2008/GNnews3_2008/Pages/InterviewwithPerWold-Olsen.aspx http://www.gn.com/en/gnnews/2009/issue1/pages/onefootontheaccelerator.aspx

41

texts containing normalizations, 6 texts containing rationalizations, and 3 texts containing authorization in the material I analyzed from GN Store Nord.

5.2.3 William Demant William Demant‟s 2010 annual report also primarily legitimates innovation through normalization: “… we must strive for a high innovation level through a flexible and knowledge-based organization” and “… to constantly be at the forefront of trends and deliver the most innovative solutions …” (William Demant, 2011: 18). And later in the report: “it is therefore also vital in the long term to maintain the Group‟s innovative edge and to attract the most qualified and competent staff” and “it is our policy to take out patents for our own groundbreaking innovations …” (William Demant, 2011: 22). A focus on innovation is thus not explicitly legitimated, but described as a natural functioning for William Demant.

On its website we also find legitimation through rationalization. In a text about Oticon Medical, a part of the William Demant Group, it is explained that “through user-driven product development, innovation and dedicated service, this synergy will propel the performance of bone anchored systems to greater heights” (William Demant website, August 2011).45 Innovation is thus supposed to enhance performance. Innovation is, however, still primarily described as something natural to William Demant: “The William Demant Holding Group of international companies develops, manufactures and sells innovative and hightechnology solutions incorporating micro-electronics, micro-mechanics, wireless technology, software and audiology” (William Demant website, August 2011).46

In sum, William Demant primarily legitimates a focus on innovation through normalization. Innovation is often mentioned as something William Demant „is‟ and a focus on innovation is seldom explicitly legitimated: it is a natural functioning for William Demant. In the annual report and on the company website, I found six texts containing normalization and two texts in which rationalization is employed.

Taking the three organizations in the health care supplies sector together, it is clear that they all share the societal discourse on innovation. In addition, all three organizations primarily legitimate their focus on innovation through normalization: innovation is rarely explicitly 45 46

http://www.demant.com/companies.cfm http://www.demant.com/mission.cfm

42

legitimated, but very often described as something normal or natural. And as Vaara et al. (2006) argue, normalization can be seen as the primary type of legitimation: when something is the way it is simply because it is that way, and no explicit legitimation is needed (Vaara et al., 2006: 798). The results from the health care supplies sector are as follows:

Table 3: Health Care Supplies

Coloplast

GN Store Nord

William Demant

Rationalization

1

6

2

Normalization

2

14

6

Authorization

1

3

0

Narrativization

0

0

0

5.3 Biotechnology Sector The biotechnology sector, here represented by Novozymes, Chr. Hansen and Danisco, shows a stronger focus on innovation than the two preceding sectors. All three organizations deal extensively with innovation in the texts I analyzed, and all three organizations utilize rationalization as their primary legitimation strategy, but I also found normalizations, authorizations and narrativizations in this sector.

5.3.1 Novozymes In the first section of Novozymes‟ 2010 annual report, „Letter from the Board of Directors,‟ innovation is mentioned several times. In the very first section it says “one important way to achieve [profitable and sustainable growth] is by always keeping innovation and strategic change high on the agenda.” In the same section, a text called „innovation and recognition‟ states that “Novozymes‟ ability to innovate, change and adapt to our surroundings has put the company in a strong market position” and that “this larger market share is the result of expanding the industrial enzyme market through innovations …” (Novozymes, 2011: 1). A focus on innovation is thus being legitimated through rationalization. This is, however, not the only legitimation strategy used: Procter & Gamble named Novozymes its “Supplier of the Year” for the third year in a row in 2010 out of more than 80,000 suppliers. This is the first time ever that

43

a company has received the award three times and is a testimony to our innovative capabilities. (Novozymes, 2011: 1) The text goes on to say that “Novozymes is recognized by both customers and financial institutions for our innovative products and for our sustainability efforts” (Novozymes, 2011: 1). These are both cases of authorization as Novozymes is referring to authorities (Proctor & Gamble, customers and financial institutions) to legitimate its focus on innovation. In the section „company profile,‟ the headline reads “Novozymes is a world leader in bioinnovation,” and the text goes on to say that “more than 16% of Novozymes‟ global workforce of 5,432 works on innovation and development, and we invest around 14% of our sales in research and development.” This is normalization as Novozymes is explaining innovation as something natural for the company. More rationalization is, however, also found: “we are constantly striving to expand our markets by introducing innovations within existing markets as well as developing new applications” (Novozymes, 2011: 5). In a section called „a remarkable sales story,‟ a headline says “innovation drives sales,” and underneath it is a text explaining how customers turn to Novozymes for innovative solutions. In the section „a history of technological innovation‟ it is explained that “Novozymes invests heavily in technological innovation to improve both the strains that produce our enzymes and the performance of the enzymes themselves,” and that “the technological innovation that makes this possible also plays an important part in the discovery and developments of new enzymes” (Novozymes, 2011: 7-9). In the „Letter From CEO‟ it is written that “we must continue to focus on innovation, optimization, and diversification,” and that “if we can ensure that we have the most innovative solutions that enable the world to change, this will not only secure Novozymes‟ future but also benefit our customers and the environment.” This section of the annual report contains several such rationalizations, such as: “by being innovative and providing our customers with valuable solutions based on our industrial insight, we can help them change the world – while growing our business” (Novozymes, 2011: 25). In the „about us‟ section on the Novozymes website it is explained that “we believe that through bioinnovation we can potentially re-engineer thousands of everyday products to deliver enhanced performance on a sustainable basis at no extra costs,” which is thus a case of

44

rationalization (Novozymes website, August 2011).47 On the website there is also a section dedicated to innovation. In this section, a text called „innovation – leading the way forward‟ is displayed. In this text the rationale for a focus on innovation is explained: “[to] help our customers achieve higher profitability and improved environmental sustainability.” Later in the same text, retrospective normalization is also found: “every major innovation in the enzymes over the course of the last 40 years has been achieved by Novozymes” (Novozymes website, August 2011).48 In the innovation section of the website, there is a section called „innovation across industries‟ in which case stories about innovations achieved by Novozymes in its different industries are given. One of these case stories, „the alliance fights back as animal feed costs rise,‟ tells the story of an innovation by Novozymes within agriculture. The case story explains how “farmers are under tremendous pressure these days” as “higher feeding costs are reducing their profits.” Novozymes, however, developed a “new breakthrough feed solution” giving „impressive‟ benefits for the farmers. As the introduction to the case story states:

Take two companies, 10 years of hard work, and a project that involved more than 100 employees and you get RONOZYME® ProAct – a game-changing enzymatic solution that makes chicken feed more digestible and broiler farming more profitable (Novozymes website, August 2011).49

This case story can thus be seen as legitimation through narrativization since Novozymes portrays itself as the heroes. The case story explains a problem that Novozymes solves through innovation. As Vaara et al. (2006) argue, telling a story provides evidence of acceptable, appropriate, or preferential behavior, and Novozymes is thus legitimating its focus on innovation by portraying itself as winners or heroes in narratives where the company, through innovation, solves problems for individuals, organizations or society. A total of 12 such case stories are provided where Novozymes, through innovation, solves a problem. On its website, then, Novozymes also employs narrativization to legitimate its focus on innovation.

47

http://novozymes.com/en/about-us/Pages/default.aspx http://novozymes.com/en/innovation/Pages/default.aspx 49 http://novozymes.com/en/innovation/Innovation-across-industries/Agriculture/Pages/the-alliance-fightsback-as-animal-feed-costs-rise.aspx 48

45

Taking the annual report and the website together, Novozymes primarily legitimates its focus on innovation through rationalization with 14 texts containing legitimation of innovation through rationalization. 12 different case stories, however, provide legitimation through narrativization where Novozymes portrays itself as winners or heroes and therefore legitimates a focus on innovation by portraying it as acceptable, appropriate or preferential behavior. Four cases of normalization are also apparent in the annual report and on the company website, alongside two instances of authorization. Novozymes, then, seems to have a very strong focus on innovation, and employs all four different legitimation strategies, with rationalization and narrativization being the dominant ones.

5.3.2 Chr. Hansen Moving on to Chr. Hansen, I found a strong focus on innovation as well. In the company‟s 2009/2010 annual report innovation is given attention in the introductory section „letter to our shareholders.‟ Under the headline „innovation is a cornerstone‟ it is explained that:

A cornerstone of our business is a strong competence-based bio-science platform for innovative product and process development. Our highly skilled R&D staff performs state-of-the-art innovation and transforms it into the best applications while maintaining long-standing relations and working partnerships with our customers (Chr. Hansen, 2010: 3).

Chr. Hansen is here legitimating a focus on innovation through both normalization and rationalization. Innovation is described as a cornerstone, something natural to the company, and at the same time the reason for a focus on innovation is given. Throughout the report, however, rationalization is the dominant legitimation strategy. Some examples are: “we have built our market position on solid expertise, focused innovation, supply chain excellence and long-term customer relationships,” “… while our innovative solutions help optimize customers‟ production by increasing yields and ensuring quality” (Chr. Hansen, 2010: 9), “we build customer competitiveness and bring value to customers through strategic ingredients, market insight, product innovation and cost-efficient solutions,” “new ways of combining and optimizing sales, marketing and innovation resources are helping to fuel future growth” (Chr. Hansen, 2010: 18), “local applications of innovative new solutions is a crucial element in servicing customers” (Chr. Hansen, 2010: 22), and “the focus in innovation is on introducing new products and production processes that can set new standards for naturalness and 46

functionality in the industry” (Chr. Hansen, 2010: 35). Some normalization is also found: in a section on the company‟s CSR practices it is stated that “innovation has taken us where we are today – be it in the form of new product developments or new and better ways of implementing business processes” (Chr. Hansen, 2010: 48). The dominant legitimation strategy in Chr. Hansen‟s latest annual report, however, is rationalization. On Chr. Hansen‟s website in the „about us‟ section, it says that “our market positions are built on our product innovation and applications, production processes, long-term customer relationships and intellectual property” (Chr. Hansen website, August 2011).50 In a text about the company‟s values it is further explained that “we set ambitious goals and we reach them by being ambitious, innovative and passionate about everything we do” (Chr. Hansen website, August 2011).51 Innovation is thus being rationalized in these texts. In the „research & development‟ section on the website, however, normalization is employed: Since 1874 Chr. Hansen‟s solutions have been based on strong research and development competencies. We strive to understand nature‟s own processes – and to apply this knowledge to create better food products and optimize production processes. Collaborating closely with our customers, we aim to drive innovation with value-added ingredients towards new frontiers (Chr. Hansen website, August 2011).52

This text employs both retrospective and prospective normalization as it explains that research and development has been a major part of Chr. Hansen since 1874 and by also projecting this into the future (“towards new frontiers”). Rationalization is also present since the objective of innovation and research and development is to create better food products and optimize production processes. Except for this headline, however, the rest of the section explains the benefits and outcomes of the strong focus on research and development and innovation, and how Chr. Hansen works with it, and is thus a rationalization of Chr. Hansen‟s focus on innovation.

50

http://www.chr-hansen.com/about_us.html http://www.chr-hansen.com/about_us/values.html 52 http://www.chr-hansen.com/research_development.html 51

47

Taking the annual report and the company website together, the dominant legitimation strategy is rationalization. Some normalization is also apparent when innovation or R&D is described as a „cornerstone‟ or as something that can be traced back to 1874. In sum I found 16 texts containing rationalizations and 8 texts containing normalizations.

5.3.3 Danisco The final company in the biotechnology sector, Danisco, in its 2009/2010 annual report places great emphasis on the company‟s innovation efforts. Innovation is mentioned in its „mission‟: “to help our customers increase their competitiveness through innovative, sustainable and biobased ingredient solutions that meet market demand for healthier and safer products” (Danisco, 2010: 4). This rationalization is followed up in the letter from the CEO: “… our stepped-up innovation focus on industrial enzymes to ensure competitive and innovative solutions has started to gain traction,” and “… we will continue to invest into our sustainability offering and innovation platform to support our long-term growth path” (Danisco, 2010: 6). Such rationalizations are the dominant legitimation strategy employed in the report, with texts such as: “as a result, we will continue to pursue growth opportunities by supporting our capabilities in innovation and sustainability that meet many of the overarching global challenges discussed in greater detail throughout this annual report” (Danisco, 2010: 9), “our innovation is strongly aligned to the needs of both industry and society and contributes to finding solutions to some of the challenges that humankind is facing” (Danisco, 2010: 25), “… which aims at enhancing our innovation processes to ensure that we are focused on the present and anticipated future needs of our customers and the consumers” (Danisco 2010: 26), and “the projects undertaken by our innovation group have gone a long way to ensure the future profitability of Danisco‟s xylitol in this demanding market” (Danisco, 2010: 31). Several authorizations are also apparent throughout the report. One text reads: “in May 2010, Huntsman Textile Effects won the prestigious German „Industriepreis 2010‟ in the biotechnology category for Gentle Power Bleach™, the novel bio-based pre-treatment system based on Genencor‟s enzyme innovation” (Danisco, 2010: 15). A section deals with „innovation awards‟ and has a text saying “a new rye toast, developed in close collaboration with a bakery customer, has been voted by German consumers in the magazine Lebensmittel Praxis as the Best Innovation of the Year in the category Bread,” and other awards include “the Frost & Sullivan 2009 New Product Innovation Award for Enzymes for Biofuel 48

Production” and “also, Goodyear‟s concept tyre based on our innovative Biolsoprene™ product received the prestigious auto industry award” (Danisco, 2010: 25). These are all authorizations as Danisco refers to authorities such as organizations, magazines, awards, consumers or customers. Danisco is, in other words, legitimating its focus on innovation by referring to authorities in whom it believes some kind of authority is vested.

Legitimation through normalization is also found in the report. There is an entire section in the report called „innovation‟ whose introduction states that “innovation is the conversion of a new idea into revenue and profits and it is at the heart of what we do at Danisco” (Danisco, 2010: 24). Later in the report, „innovation‟ is listed as one of Danisco‟s five values alongside creating value, building competencies, taking responsibility and believing in dialogue (Danisco, 2010: 61). Some normalization is thus also present in Danisco‟s 2009/2010 annual report referencing innovation as a normal or natural functioning or behavior for Danisco. The dominant legitimation strategies in the report, however, are rationalization followed by authorization and normalization. On Danisco‟s website in the section „about us‟ a text called „what we focus on‟ states that “our key focus is to meet demands from global food industry and develop biotechnological solutions to help our customers increase their competitiveness through innovative, healthy and sustainable solutions” (Danisco website, August 2011).53 This kind of rationalization is apparent several times on the website, and is the dominant legitimation strategy found: “our innovation is strongly aligned with the needs of industry and society, contributing to solutions that meet consumer demands for a healthier, more sustainable lifestyle,” “to enhance our innovation processes and strengthen our focus on your need as a manufacturer, we have launched a major new initiative – Market Driven Innovation,” and “the potential to innovate is high within food ingredients, as food manufacturers regularly seek to reformulate food and beverage products to cut costs, extend shelf life and provide specific health benefits” (Danisco website, August 2011).54

55 56

There is, however, also one instance of authorization on the

website: “The Patent Board Scorecard, published by the Wall Street Journal Market Data Center, has confirmed our commitment to innovation and patent protection, ranking Danisco ninth within the global food, beverage and tobacco segment” (Danisco website, August 53

http://www.danisco.com/about_us/ http://www.danisco.com/about_us/innovation/innovation_in_danisco/market_driven_innovation/ 55 http://www.danisco.com/about_us/innovation/innovation_in_danisco/market_driven_innovation/ 56 http://www.danisco.com/products/innovation/food_ingredients_innovation/ 54

49

2011).57 The dominant legitimation strategy on the website is thus rationalization followed by authorization which was present in one text. Taking the annual report and the website together, the dominant legitimation strategy employed by Danisco is rationalization followed by authorization and normalization. I found 21 texts employing rationalization, 9 texts containing authorizations and 7 texts with normalizations.

The biotechnology sector as a whole, based on the three organizations I analyzed, has a strong focus on innovation and certainly seems to share the societal discourse on innovation as a necessity to stay competitive in today‟s economy. All three organizations deal with innovation in both their latest annual reports and on their websites. The dominant legitimation strategy is rationalization, but this organizational field employs all legitimation strategies as rationalization, authorization, normalization as well as narrativization is employed to legitimate a focus on and commitment to innovation. The results from the sector are:

Table 4: Biotechnology Sector

Novozymes

Chr. Hansen

Danisco

Rationalization

14

16

21

Normalization

5

8

7

Authorization

2

0

9

Narrativization

12

0

0

5.4 Transportation Sector In the transportation sector I found significant differences between the three organizations I studied. Whereas Maersk provides several texts dealing with and legitimating a focus on innovation and DFDS also deals with innovation, the texts I analyzed from DSV did not contain any mention of innovation or innovative practices at all.

5.4.1 Maersk Maersk‟s 2010 annual report barely mentions or deals with innovation. „Innovation‟ or „innovative‟ is only mentioned in passing, such as “Maersk Oil has initiated a number of activities, the purpose of which is to ensure top rankings in terms of safety, operation of 57

http://www.danisco.com/about_us/innovation/our_skills_your_solution/investing_in_innovation/

50

mature fields, and innovation” (Maersk, 2011: 12) and a passage about investments in “new, innovative vessels” (Maersk, 2011: 13). On Maersk‟s website, however, there is an entire section dedicated to how Maersk works with innovation. On the website‟s front page, four links are displayed at the top: „career,‟ „sustainability,‟ „about Maersk‟ and „innovation.‟ In the section called „working with innovation,‟ there are several texts explaining how and why Maersk works with innovation: Innovation is a fundamental part of modern business. If you don‟t innovate, you stand still. And in today‟s world standing still means going backwards as others keep moving ahead. At Maersk, we have a dedicated innovation department consisting of a team of marine engineers and naval architects who work on all sorts of “outside the box” projects (Maersk website, August 2011).58

The rationale for working with innovation is thus given here, and Maersk are thus employing rationalization in this text. The text goes on to explain that “the innovative solutions our team has come up with so far will reduce fuel consumption by some 20%.” And in a text called „our approach to innovation‟ it is explained that “it‟s a highly focused discipline that enables us to simplify our processes, improve our results and build a better company for all concerned,” “innovation is also a critical tool for improving the service we offer our customers and for boosting efficiency” and “in fact, we see innovation as a key to improving virtually every aspect of our business” (Maersk website, August 2011).59 In another section called „sustainable innovation,‟ a text explains that “the idea of “sustainable innovation” involves putting innovation to work to reduce energy consumption, improve environmental performance and enhance employee safety – measures that secure our ability to keep innovating” (Maersk website, August 2011).60 On its website, then, Maersk primarily legitimates its focus on innovation through rationalization, but one section, „case stories,‟ employs narrativization. Three such case stories are provided on Maersk‟s website: „Maersk forms joint venture to help protect marine ecosystems,‟ „Nadiro brings lifeboat safety into the 21st century‟ and „Generating power from heat instead of fuel‟ (Maersk website, August

58

http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/WorkingWithInnovation.aspx http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/Ourapproachtoinnovation.aspx 60 http://www.maersk.com/Innovation/SustainableInnovation/Pages/SustainableInnovation.aspx 59

51

2011).61 Each case story begins with a statement of a problem that Maersk then solves. The second story, e.g., begins with “The shipping industry has seen too many lifeboat incidents over the years, and a number of them have involved fatalities.” Then some statistics on lifeboat incidents are given, before the solution is provided: “Bent Nielsen, an employee of Maersk Drilling and Maersk FPSOs, started thinking about the problem and came up with an idea for a new design, which he proposed and developed in conjunction with our innovation department.” Finally, a happy ending: “We‟re convinced that Nadiro will improve safety, reduce risk of accidents and, ultimately, save more lives” (Maersk website, August 2011).62 These case stories are thus narratives where Maersk is portrayed the hero. Maersk is thus legitimating its focus on innovation by portraying itself as winners or heroes in narratives where the company, through innovation, e.g. saves lives. In sum, then, Maersk is primarily rationalizing their focus on innovation, backed up by narratives legitimating its focus on innovation through narrativization. I found five rationalizations and three narrativizations.

5.4.2 DSV DSV‟s 2010 annual report makes no single mention of the word „innovation‟ and has no references to „innovative‟ practices. The report deals a lot with market growth and global expansion, and it explains that DSV wants to continue this growth “through customer focus, asset-light business model, IT systems and organization” (DSV, 2011: 8). Innovation does therefore not seem like a focus area for DSV. This is also the case on the company website where no texts deal with innovation. In a text named „our future,‟ it is stated that “DSV is constantly changing, pursuing a strategy of expanding its position among the leading and most profitable transport businesses in Europe.” It is further explained that the future growth of DSV “should be created through organic growth, acquisitions and mergers” and that DSV‟s focus areas are to “extend customer relationships, strengthen international position, engage best partners and vendors, organizational growth, expand network worldwide, operate with global IT and logistics technologies” (DSV website, August 2011).63 DSV, it seems, does therefore not believe innovation to be necessary for future expansion and growth, but focuses instead on e.g. customer focus and IT systems.

61

http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/CaseStories.aspx http://www.maersk.com/Innovation/WorkingWithInnovation/Pages/CaseStories.aspx?SSItemId=2 63 http://dsv.com/index.html 62

52

5.4.3 DFDS DFDS‟s 2010 Annual Report, on the other hand, does mention innovation. In the first section, a foreword by the chairman and the CEO, a section called „innovative operations‟ states that “creating value for customers in highly competitive markets requires a business model which offers innovative services and solutions” and “we will therefore continue to demonstrate to the world that DFDS is a modern, responsible and innovative workplace” (DFDS, 2011: 5). These are thus cases of rationalization, as innovation is supposed to „create value for customers.‟ In the next section called „vision, strategy and goals‟ it is explained that “the people of DFDS continue to deliver efficient and innovative transportation services for our customers as they have done since 1866” (DFDS, 2011: 6). This is thus retrospective normalization as innovation is being normalized by referring to similar practices in the past, as well as rationalization (for our customers). In the section „management report‟ it is argued that “… DFDS‟ ability to meet the growing needs of freight customers … require broad market coverage, innovative customer concepts and efficient information systems” (DFDS, 2011: 12). Here, again, innovation is being rationalized as the purpose, to meet the needs of freight customers, is provided. On DFDS‟ website only one text deals with innovation: a text about DFDS‟ policies and strategy. The text, however, is almost similar to the normalization in the annual report: “the people in DFDS continue to deliver efficient and innovative transportation services for our customers as they have done since 1866” (DFDS website, August 2011).64 This is almost the same retrospective normalization of innovation as is found in the annual report in the section „vision, strategy and goals‟ (DFDS, 2011: 6). In sum, then, DFDS both rationalizes and normalizes its focus on innovation, but DFDS does not mention or explain innovative practices to the same extent as Maersk do. In sum, I found four texts legitimating innovation through rationalization, and two texts legitimating it through normalization.

Taking the transportation sector together, it is obvious that the three organizations I have analyzed have reacted quite differently to the societal discourse on innovation. Maersk deals quite a bit with innovation, with rationalization and to a lesser extent narrativization as its legitimation strategies. DFDS also acknowledges the need for innovation, but legitimates its focus on innovation primarily through rationalization and some retrospective normalization.

64

http://www.dfdsgroup.com/policies/strategy/strategy

53

Finally, the texts I analyzed from DSV contained no mentions of the word „innovation‟ or any references to innovative practices or projects. It can thus be concluded from my data that these three organizations have responded very differently to the discourse in our society about innovation as a necessity to stay competitive and survive. The results are:

Table 5: Transportation Sector

Maersk

DSV

DFDS

Rationalization

5

0

4

Normalization

0

0

2

Authorization

0

0

0

Narrativization

3

0

0

5.5 Financial Sector The last organizational field I have chosen, the financial sector, shows no response to the societal discourse on innovation at all. None of the texts I analyzed contain any references to innovation or innovative practices, products or services.

5.5.1 Danske Bank The first organization, Danske Bank, does not mention innovation or any innovative practices in its 2010 annual report. Instead, what seems to be the focus is: The Group‟s robust banking activities, tight cost control and strong focus on risk, liquidity and capital management provide a solid foundation that will enable us to meet the many challenges we will face in the years ahead (Danske Bank, 2011: 5).

Going forward, innovation is not what is needed. Instead, robustness, tight cost control and a strong focus on risk, liquidity and capital management are areas of focus. The report itself is a very matter-of-fact overview of the organization‟s financial performance in 2010, and on Danske Bank‟s website there is no mention of innovation either. The five core values that Danske Bank has displayed are integrity, expertise, value creation, commitment, and accessibility (Danske Bank website, August 2011).65 On the investor relations section of the 65

http://danskebank.com/en-uk/about-us/core-values/Pages/core-values.aspx

54

website it is further written that “at Danske Bank, openness and transparency are essential in maintaining good relationships with investors and analysts” (Danske Bank website, August 2011).66

5.5.2 Jyske Bank The picture is the same with Jyske Bank: innovation is not mentioned at all in its 2010 annual report. At Jyske Bank it seems like stability and robustness are preferred: “the uncertainty about the economic development was stronger than usual and gave rise to strengthening of earnings and equity as well as debt reduction rather than consumption and investments” and “considering the improved market conditions and the current economic circumstances, the robust and stable earnings and the aggregate results are satisfactory” (Jyske Bank, 201a: 4-5). In the section „outlook 2011‟ it is written that “in 2011 Jyske Bank will still focus on maintaining its robust earnings …” (Jyske Bank, 2011: 10). On the Jyske Bank website, there are also no mentions of innovation or innovative practices. Instead, in a section called „our foundations – the core of Jyske Bank‟ it is explained that “being open an honest is one of the core values of the Jyske Bank Group” (Jyske Bank website, August 2011).67

5.5.3 Sydbank Just as Danske Bank and Jyske Bank, Sydbank does not mention innovation in its 2010 annual report which is primarily a somewhat technical review of the company‟s financial performance and situation. In a section called „idea and business foundation‟ it says that the words „competent,‟ „trustworthy,‟ „obliging‟ and „competitive‟ should define Sydbank (Sydbank, 2011: 17), and on its website Sydbank does not mention innovation at all either. Instead it says that “good management, motivation, team spirit, job satisfaction, loyalty and counseling rooted in customers‟ needs are the fundamental values for Sydbank” (Sydbank website, August 2011).68

Taking the three financial organizations together, it is clear that they do not focus on innovation at all. The societal discourse on innovation does not seem to have affected our financial organizations at all, as I did not find one single mention of innovation or innovative practices in any of the three companies‟ annual reports or websites. Instead, words like 66

http://danskebank.com/en-uk/ir/Pages/investor-relations.aspx http://www.jyskebank.dk/jyskebankinfo/home/home/aboutjyskebank/ourfoundations/235948.asp 68 http://www.sydbank.dk/omsydbank/ 67

55

robustness, stability, honesty, openness and integrity seems to be concepts that these banks want to be recognized with. The results from the financial sector are thus:

Table 6: Financial Sector

Danske Bank

Jyske Bank

Sydbank

Rationalization

0

0

0

Normalization

0

0

0

Authorization

0

0

0

Narrativization

0

0

0

5.6 Overview When aggregating the results across the different sectors, it is clear the different organizational fields have taken up the discourse on innovation to varying extents – if at all. The biotechnology sector has far more texts dealing with innovation than the other sectors I analyzed, followed by the health care supplies sector and the pharmaceutical sector. In the transportation sector I did find some texts dealing with innovation in two of the three companies I analyzed, whereas none of the financial organizations in my study had texts focusing on innovation. The results for each sector are:

Table 7: Pharmaceutical Health

Biotechnology Transportation Financial

Sector

Sector

Sector

Sector

35

94

14

0

Rationalization 26

9

51

9

0

Normalization

6

22

20

2

0

Authorization

1

4

11

0

0

Narrativization 0

0

12

3

0

Care Supplies

Texts with

33

innovation

56

6. Discussion 6.1 Summary of Findings The findings in my analysis are twofold. Firstly, it showed that most of the organizations in my study, all of them among the biggest companies in Denmark, share the societal discourse on innovation. Secondly, it showed that there is clear variation in the manner and in the extent to which organizations within and between different organizational fields discursively talk about innovation.

In the introduction I established that there is a societal discourse and a widespread belief in Denmark that our organizations must be more innovative: we must live off innovation. The key finding in my thesis is therefore that our organizations seem to agree and have picked up and incorporated this discourse. Eleven out of fifteen organizations in my study communicated a focus on innovation in their annual reports and websites. Since three of the four organizations not showing any response to the discourse on innovation come from the same organizational field, the financial industry, four out of five organizational fields in my study have picked up the innovation discourse in the texts I analyzed. That is: most organizations and organizational fields in my study in the texts they produce and disseminate to their environments legitimize, intentionally or unintentionally, a focus on innovation. The biotechnology sector does this to the largest extent with more texts focusing on innovation in the annual reports and websites I analyzed than in any other sector. All three organizations in the biotechnology sector showed a strong focus on innovation, and they legitimated this focus in much the same way (primarily rationalization). Following the biotechnology sector, both the pharmaceutical sector and the health care supplies sector showed a focus on innovation as well. In the pharmaceutical sector, Novo Nordisk and Lundbeck showed the strongest response to the innovation discourse while LEO Pharma only showed a slight response. In the Pharmaceutical sector, all organizations have picked up the discourse on innovation as well, but in this sector normalization was the dominant legitimation strategy. In the transportation sector, both Maersk and DFDS communicated a focus on innovation primarily rationalizing it whereas DSV did not talk about innovation at all in its annual report or website. Finally, the financial sector was the only organizational field in my study not showing any focus on innovation at all. In sum then, except for the financial sector, most organizations and organizational fields seem to have picked up the

57

discourse on innovation and have incorporated it in the texts they produce and disseminate to their environments.

Clear variation was thus apparent from my analysis. The biotechnology sector had 94 texts dealing with innovation, the pharmaceutical sector and the health care supplies sector 33 and 35 respectively, the transportation sector had 14 texts and finally, the financial sector did not have any. There are also differences as to how innovation is legitimated in the different organizational fields: the pharmaceutical sector, the biotechnology sector and the transportation sector primarily rationalize a focus on innovation while the health care supplies sector primarily employs normalization. There are thus significant differences between the organizational fields, but differences exist within these fields as well. In the pharmaceutical sector, LEO Pharma shows a much slighter focus on innovation than Novo Nordisk and Lundbeck, in the health care supplies sector GN Store Nord has almost twice as many texts dealing with innovation as Coloplast and William Demant combined, and in the transportation sector DSV has no texts dealing with innovation at all. I have, in other words, found differences both within and between organizational fields.

6.2 Limitations As to any study, there are a number of limitations to my key findings presented above. As Alvesson and Kärremann (2000) argue, “… research texts are not, and cannot be, objective or clinical accounts of the facts” (Alvesson & Kärremann, 2000: 148). Instead, a research text is a persuasive construction of facts through the voice of a clinically objective researcher. Every researcher, however, has a prestructured understanding informed by his or her class, gender, and nationality and political and theoretical preferences and biases (Alvesson & Kärremann, 2000: 148). I do not pretend that my study is not informed by my prestructured understandings: other researchers might very well have come to other conclusions than I did. As Alvesson and Kärremann, however, argue, language has the capacity to convey insights and factual information and to clarify phenomena. Language can convey something beyond itself, but it is imperative for the researcher to remain reflective and skeptical and carefully think about to what extent a text may be treated as an indication of phenomena (Alvesson & Kärremann, 2000: 148-149). I feel I have done just that by only analyzing textual material produced and disseminated by the organizations themselves, by not forcing them to elicit answers on possible innovative practices, by being explicit about my choice of organizations and organizational fields, and by concluding on the discursive level: I do not argue that 58

Danish organizations in general are innovating, but that the organizations in my study discursively have picked up the societal discourse on innovation.

Apart from the general issue of prestructured understandings, there are a number of limitations more specific to my study as well. First of all, I did not study legitimacy as such, and I can therefore not know whether focusing and communicating a focus on innovation in fact provides legitimacy. This relies on an assumption, an assumption derived from the core argument of institutional theory: that there is a widespread belief in Denmark that we must live off our ability to innovate, and that Danish organizations therefore will attain legitimacy by focusing on innovation. It could be, however, that the organizations in my study are solely focusing on innovation for practical reasons. An altogether different account for these organizations‟ focus on innovation could thus be given by a study informed by resource dependence theory. Resource dependence theory emphasizes the task environment rather than the social environment of organizations, and focus is on the active choices that organizations exercise to exert influence over the allocation of critical resources (Oliver, 1991: 147-148; Greenwood et al. 2008: 3). Organizations will thus seek to acquire control over resources to minimize their dependence on other organizations or to maximize other organizations‟ dependence on them. A resource dependence study on innovation could thus argue that organizations are engaging in innovative practices to obtain valuable and scarce resources and to minimize their dependence on other organizations; not necessarily because innovation is perceived as rational behavior in society. As outlined in the theory section, however, institutional theory is firmly established within organizational theory. It is outside the scope of this thesis to provide empirical support for one theoretical perspective over another, but as Greenwood et al. (2008) argue, much of the institutional argument has been confirmed and institutional theory is perhaps the dominant approach to understanding organizations (Greenwood et al., 2008: 2-22). Secondly, as I argued in the theory section, institutional theory has moved towards including more agency and strategic behavior, in that way to some extent incorporating other perspectives on organizational behavior. I therefore believe that it is fair to assume that Danish organizations is under a societal pressure to focus on innovation, and that such a focus will provide organizations with legitimacy.

A second limitation to my study is that I have not been studying the actual practices of organizations: I cannot prove whether the organizations in my study in fact are being innovative. I have studied how Danish private sector companies discursively make sense and 59

create meaning regarding a societal discourse on innovation. What my study shows is that Danish organizations have picked up a societal discourse on innovation and how there are variations as to how this is done in different organizational fields. I have, in other words, been studying discursive practices, not actual behavior. There is reason to believe, however, that Danish organizations are in fact focusing on innovation. Or, at least, that the discourse on innovation will have an impact on actual organizational practices. As Sahlin and Wedlin (2008) argue, Meyer and Rowan emphasized the ceremonial adaption of rationalized myths and the decoupling of such myths from ongoing activities, but more recent research has shown that adopted ideas have substantial effects on formal structures, day-to-day organizational practices, organizational identities, field transformations and institutional changes. Even though I am focusing on discursive practices in my study, I therefore find reason to believe that the discursive adoption of the innovation discourse can have significant effects on actual organizational practices.

Another limitation is that my study is limited to Denmark, and I can therefore not say whether there is a specifically Danish discourse or focus on innovation. The belief that we must live off innovation might very well be international and have started somewhere else; in fact, according to the views of international organizations outlined in the introduction it seems as if that is the case. It is therefore logical to assume that organizations in other countries than Denmark have shown the same response to the innovation discourse. I can, in other words, not conclude anything about a specifically Danish focus on innovation. And if all other countries focus just as much on innovation as do Danish organizations, are our organizations then innovative enough? Does Denmark then have any advantages regarding innovation? Another study could research whether that is the case by comparing organizational fields across countries, regions or continents. Such a study could test whether discourses on innovation varies from country to country, and in which countries organizations focus most on innovation. And if such a study was conducted over time it could also shed light on where and when the discourse started, and if organizations in this, or these, countries have a higher focus on innovation. In addition, it could answer the question whether Danish organizations primarily pick up on the Danish discourse about innovation or whether Danish organizations are influenced by an international discourse.

Another related limitation concerns my choice of organizations. First of all, I limited my study to private sector companies thus excluding the public sector and government owned 60

companies. There might also be a bias in the organizational fields I have chosen, but since eleven of the fifteen organizations chosen are listed on the OMX Copenhagen 20 stock market index, they can be assumed to be organizations with central positions in their respective fields as well as organizations with high visibility and attention. Central actors in a field might still not be representative for their entire field, but as Hardy and Maguire (2008) argue, empirical studies have found that change can be initiated by powerful actors located in dominant positions in mature fields (Hardy & Maguire, 2008: 201), and DiMaggio and Powell (1983) also recognized the influence of elite interests. In my study, I focused solely on actors assumed to be central in their fields under the assumption that actors more peripheral in these fields will be influenced by these, more powerful, actors. Related to this are the definitions of organizations and the categorizations of organizations into organizational fields. I have, on a more general level, classified organizations according to the similarity of products or services. As Scott and Meyer (1991) argued, however, classifying organizations has a range of difficulties. I have, just as Scott and Meyer suggested, however, been very explicit about the criteria I have used: how the organizations describe themselves and how the markets have classified them. Regardless of how explicit any researcher is, however, the analysis and conclusions will be influenced by those choices made: As Hernes (2008) argues, an essentially fluid and complex reality is sliced into pieces for analytical convenience (Hernes, 2008: 9). This holds true for any research, but by being explicit about the categorizations I made, I have tried to show exactly how I came to the conclusions I did.

6.3 Isomorphism With the above limitations in mind, that is, that any research will be subject to the researcher‟s prestructured understandings, that I did not study legitimacy as such, that I did not study actual organizational practices, and that I limited my study to private sector companies, I can now move on to the theoretical implications of my findings. As I mentioned above, my findings are twofold. One conclusion I can derive from my analysis is that there seems to be at least some isomorphism within the different organizational fields. That is, it does seem that organizations within organizational fields converge around practices perceived to be rational in the eyes of society. As Meyer and Rowan (1977) argued, organizations incorporate practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. In the terms of this thesis: there is a widespread belief in our society that our organizations must be innovative, which our 61

organizations then act upon by incorporating, at least discursively, innovation as a practice. As DiMaggio and Powell (1983) then argued, this leads to a homogenization in structure, culture and output within organizational fields. In the pharmaceutical sector, rationalization was dominant, and the three organizations all talked about innovation. In the biotechnology sector, all organizations showed a strong response to the innovation discourse, primarily employing rationalization. In the health care supplies sector normalization was the dominant legitimation strategy in all three organizations, and in the financial sector none of the three organizations discursively constructed innovation as a practice important to the organizations. To a good extent, then, most organizations in my study do converge about practices constructed as rational behavior in society. As Meyer and Rowan (1977) posit, however, organizations can decouple ongoing activities from formal structure. The organizations in my study that discursively establish that they are engaged in innovative practices might therefore not be innovative at all: “The organizations in an industry tend to be similar in formal structure – reflecting their common institutional origins – but may show much diversity in actual practice” (Meyer & Rowan, 1977: 357). Even though the organizations in my study to a large extent have incorporated the discourse on innovation, Meyer and Rowan argue that this might not have much effect on the day-to-day activities of these organizations. To study whether the organizations in my thesis have decoupled or if they are in fact engaging in innovation, future research could compare the accounts organizations produce and disseminate to gain legitimacy with the actual practices of those organizations. In that way it could be empirically tested whether these organizations only converge around innovation discursively, or whether they do so in their ongoing practices and activities as well. In this study, my data and findings demonstrate this only on the discursive level: most organizations and most organizational fields have produced and disseminated texts to their environments showing adherence to innovation – but this might only be ceremonial. My findings do, however, show that organizations to some extent converge around practices assumed in society to be rational.

6.4 Variation Apart from the finding that the organizations in my study do seem to act on collectively valued purposes, and that some isomorphism is apparent, my findings also demonstrate significant differences in the manner and in the extent to which they do this. This is consistent with the recent trends in institutional theory, which has sought to incorporate variation, agency and change as I outlined in the theory section. 62

In my study, it is striking that none of the organizations in the financial sector show any response to the societal belief that we must live off innovation. A number of hypotheses could be offered suggesting why that is. It could be that the financial sector in Denmark draws on different institutional logics than the other organizational fields in my analysis. As Friedland and Alford (1991) argued, each institutional order in society has a central logic that organizations draw upon when making sense of activities, and organizations can therefore appeal to different logics. As Thornton and Ocasio (1999) defined an institutional logic, it is a socially constructed historical pattern of material practices, values, beliefs and rules that individuals use to give meaning to their social reality. In society, there will therefore be multiple sources of rationality and different societal sectors and organizational fields can therefore differ in which logics they appeal to:

Rather than positing homogeneity and isomorphism in organizational fields, the institutional logics approach views any context as potentially influenced by contending logics of different societal sectors. For example, the health care field is shaped by the institutional logics of the market, the logic of democratic state, and the professional logic of medical care (Thornton & Ocasio, 2008: 104).

What is seen as rational behavior and collectively valued purposes in the financial sector might therefore be different from what is seen as rational in e.g. the biotechnology sector. It might be the case that organizations in the financial sector appeal to different logics than they do in other organizational fields. Future research could test this proposition by investigating which institutional logics different organizational fields in Denmark appeal to. The financial crisis could be another, related, possible explanation for the financial sector‟s lack of interest in innovation as an organizational practice. As I outlined in the theory section, there can be multiple sources of legitimacy. An organizational practice that provides legitimacy in one organizational field might not in another: it might be that, after the financial crisis, society seeks stability, integrity and responsibility from our financial organizations, not innovation. A study over time of the financial sector could test this hypothesis. Research could study whether there has been a shift in how financial organizations describe themselves before and after the financial crisis. These two hypotheses can be combined as well. It would be logical to assume that financial organizations draw upon the logics of the market, corporations and the professional logic of 63

finance. After the financial crisis, however, it might be that financial organizations have turned to other logics such as states, families or even religions. A study over time testing which institutional logics the finance sector has appealed to before and after the financial crisis could test this proposition.

My findings not only demonstrate differences between organizational fields, however. In the transportation sector, DSV did not provide any texts dealing with innovation whereas Maersk described innovation as „a fundamental part of modern business‟ and explained that „we see innovation as a key to improving virtually every aspect of our business,‟ while DFDS has offered „innovative transportation services‟ since 1866 and is a „modern, responsible and innovative workplace.‟ As described in the section on theory, Oliver (1991) argued that organizations can actively conform to or resist institutionalization to varying degrees as organizations can employ the strategies of acquiescence, compromise, avoidance, defiance or manipulation towards institutional arrangements. That is, whereas Maersk and DFDS might have employed acquiescence, following taken-for-granted norms, obeyed rules and accepted norms, DSV could have defied an institutional pressure by ignoring explicit norms and values. This tactic of dismissal is a strategic option that organizations can use when the external enforcement of institutional rules is perceived to be low or when internal objectives conflict with institutional requirements (Oliver, 1991: 156). That organizations within the same organizational fields can have employed different strategies towards innovation as a practice holds true for the other organizational fields in my study as well. In the pharmaceutical sector, Novo Nordisk and Lundbeck provide considerably more texts on innovation than LEO Pharma. This might be because LEO Pharma is employing the strategies of compromise or avoidance by balancing the expectations of multiple constituents or by disguising nonconformity (Oliver, 1991: 153-156). Different strategic responses to institutional processes might also be the reason why e.g. the biotechnology sector as a whole provided more texts regarding innovation than the pharmaceutical sector, the health care supplies sector and the transportation sector taken together. It is a possibility that some organizations are providing formal accounts giving the impression of being an innovative company, while in reality decoupling ongoing activities from formal structure. In that way, if done deliberately, these organizations would be compromising or avoiding in terms of Oliver‟s strategies. Future research could look into whether different strategic responses to institutional processes can explain the differences in and between various organizational fields in Denmark. 64

Yet another stream of research that could possibly explain the differences within and between the different organizational fields is the translation studies. As Sahlin and Wedlin (2008) argue, it is important to understand how ideas are translated, shaped and changed through processes of imitation. Innovation as an organizational practice can therefore undergo several changes as it spreads from one setting to another, “resulting in local versions of models and ideas in different local contexts” (Sahlin & Wedlin, 2008: 225). It could be that successful organizations started the discourse, and as it then spread throughout various organizational fields it was translated and changed to fit local contexts. Future research could trace the innovation discourse over time to find out when and where it started, and then see if the discourse and its materialization in organizational practice have been adapted to fit local contexts. Another possible explanation for the variation my findings demonstrated is what DiMaggio and Powell (1983) noted: early adopters of an organizational practice are driven by improving performance, but as an innovation spreads, a point will be reached beyond which an adoption will provide legitimacy more than improved performance (DiMaggio & Powell, 1983: 148). It might thus be that some powerful and influential organizations started the innovation discourse by focusing on innovation to improve performance, while late adopters of innovation as a practice have done so primarily to gain legitimacy.

6.5 Implications for Practice Regardless of the institutional logics appealed to, the strategic motives underlying behavior, how the innovation discourse has been adapted to local contexts, and who adopted the discourse first, it remains evident that most organizations in my study have picked up the discourse on innovation. This, as mentioned before, does not mean, however, that Danish organizations are in fact innovating. In the analysis I showed how Danish organizations have responded discursively to innovation as an organizational practice, but as Meyer and Rowan (1977) argued, organizations ceremonially adopt rationalized myth with the consequence that the daily operations and the day-to-day activities of the organizations are decoupled from the formal structure. That is, even though our organizations officially focus on innovation, they might not be very innovative in reality. Newer research, however, has showed that the adoption of rationalized myths not only has an effect on formal structure, but also on daily practices (Sahlin & Wedlin, 2008). That is, over time, adopted ideas will inevitably have an effect on the actual practice of organizations. It should therefore be good news for politicians and organizations championing innovation that Danish organizations to this extent have 65

adopted and incorporated the discourse on innovation: outside the financial sector, eleven out of twelve organizations claimed that they were focusing on innovation. This is somewhat in contrast to recent statistics from Statistics Denmark, however, which shows that only 44 percent of Danish companies were innovative in the period 2007-2009 (Danmarks Statistik, 2011). This discrepancy between what the organizations in my study say they do and what the numbers from Statistics Denmark show might be due to a bias in the organizations I picked: larger companies, as those in my study, might be more innovative than smaller companies, or maybe the sectors I chose are more innovative than other sectors in Denmark. In addition, I did not conduct my study on enough organizations to do meaningful statistics on them: that was never my intention. There still is, however, quite a difference between less than half of all Danish companies being innovative and then the focus on innovation that most organizations in my study communicated. Furthermore, according to Statistics Denmark, 52 percent of all Danish companies were innovative in the period 2004-2006 (Danmarks Statistik, 2008). In three years, then, the percentage of Danish companies being innovative fell by almost ten percentage points. From a societal perspective, then, it seems that the societal discourse on innovation is not making Danish companies focus more on and invest more in innovation. It seems that we need more initiatives such as the ones from the Ministry of Economic and Business Affairs, the Danish Chamber of Commerce, and DJØF which I outlined in the introduction (Økonomi- og Erhvervsministeriet, 2010; Dansk Erhverv, 2011; DJØF, 2011). It seems, from my analysis, that Danish organizations do accept the premise that we must be innovative, but every company has financial limits: in the end it comes down to how to allocate resources. By making it easier to focus on innovation, by having more focus on partnerships, and by providing funding it seems that more organizations would gladly focus on innovation. My study, at least, show that Danish private sector organizations recognize the need for innovation.

From the perspective of the organizations, it clearly seems that legitimacy can be gained from a focus on innovation: it is a practice that society values and eleven of fifteen of the largest Danish organizations have discursively incorporated this belief into the texts they produce and disseminate. It is therefore plausible to assume that an organization can gain legitimacy by focusing on innovation. This can, however, as my study shows, be done in several ways. I looked at the discursive practices of organizations through legitimation strategies, that is, a focus on innovation could either be rationalized, authorized, normalized or narrativized. Although I did not study which of the four legitimation strategies that work best, some 66

assumptions seem reasonable. Vaara et al. (2006) argued that rendering something natural or normal, normalization, can be seen as the primary type of legitimation. In the texts I analyzed, however, narrativization seemed a more powerful legitimation strategy. It is somewhat „easy‟ to write that “innovation is the conversion of a new idea into revenue and profits and it is at the heart of what we do at Danisco” (Danisco, 2010: 24). Instead, by giving concrete examples of problems your company has solved through innovation it seems more convincing that your organization is, in fact, innovating. As the narratives from Novozymes and Maerks demonstrate: it would be difficult for these two companies to come up with their case stories had they not been true. Narrativization thus seems like a very powerful legitimation strategy in my study, a notion backed by several studies: Gabriel (2000) argued that story-work involves the transformation of everyday experience into meaningful stories in that way infusing reality with meaning which shapes organizational identities, Downing (1997) argued that emotions can be stimulated through dramatic stories, and Vaara (2002) argued that narratives is the main source of knowledge in organizations. Narrativizations are thus powerful tools which can give meaning, provide knowledge, shape organizational identities and stimulate emotions. In my study, however, only Maersk and Novozymes provided narratives of their innovating efforts. A suggestion to organizations who want to give convincing accounts of their innovative practices would therefore be to encapsulate their projects, results and achievements in narratives. And as Vaara et al. (2006) writes, narratives attract readers since they are often entertaining in tone. Another way to convincingly communicate a focus on innovation is by providing texts containing authorizations, especially if they are concrete and specific. E.g. when GN Store Nord explains how one of its products won a prestigious „best of innovations‟ award (GN Store Nord, 2011: 10), when Danisco has a section in its 2009/10 annual report dealing only with innovation awards the company has been awarded (Danisco, 2010: 25), or when Novozymes on the very first page of its 2010 annual report refer to Procter & Gamble (Novozymes, 2011: 1). These awards and recognitions are hard to make up, and can therefore almost be seen as „proofs‟ that an organization is in fact being innovative. Across all organizations and organizational fields in my study, however, narrativization and authorizations were by far the least commonly used legitimation strategies. By providing narratives or authorizations, a given organization would therefore be able to provide convincing accounts and distinguish itself from other organizations claiming to be innovative.

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7. Conclusion My analysis and findings clearly show that Danish private sector organizations have picked up the societal discourse on innovation. Eleven out of fifteen organizations discursively established themselves as innovative companies or companies focusing on innovation. Outside the financial sector, the numbers are eleven out of twelve, and all organizations fields except the financial sector produced and disseminated texts focusing on innovation. It was also evident from my findings that rationalization was by far the most commonly used legitimation strategy: only in the health care supplies sector was normalization the dominant legitimation strategy.

My findings also demonstrated that the discourse on innovation has been picked up differently between the fifteen organizations. The biotechnology sector had far more texts dealing with innovation than any other sector, the financial sector did not have any texts dealing with innovation at all, and the health care supplies sector primarily normalized a focus on innovation whereas the other organizational fields primarily employed rationalization. Within organizational fields I found differences as well: in the transportation sector DSV did not provide any texts dealing with innovation whereas Maersk and DFDS did, in the pharmaceutical sector Novo Nordisk and Lundbeck provided far more texts than LEO Pharma, and in the health care supplies sector GN Store Nord provided almost twice as many texts focusing on legitimation than Coloplast and William Demant.

To answer my research question, then, it is clear that most of the organizations in my study have responded to the societal discourse on innovation: eleven out of fifteen organizations provided texts dealing with innovation. My findings also demonstrate that rationalization is the dominant legitimation strategy, with normalization the second-most used. My analysis also showed clear variation between the five organizational fields and some variation between organizations within the same organizational fields.

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8. References 8.1 Books and Articles  Alvesson, M., & Kärreman, 2000. Taking the Linguistic Turn in Organizational Research: Challenges, Responses, Consequences. The Journal of Applied Behavioral Science, Vol. 36, No. 2: 136-158.  Barley, S.R. 2008. Coalface Institutionalism. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications.  Berger, P.L., & Luckmann, T. 1966. The Social Construction of Reality: A Treatise in the Sociology of Knowledge. Penguin Books.  Danmarks Statistik 2008. Innovation i Erhvervslivet 2006. Nyt Fra Danmarks Statistik, Nr. 322.  Danmarks Statistik 2011. Innovation i Erhvervslivet 2009. Nyt Fra Danmarks Statistik, Nr. 174.  Dansk Erhverv 2011. Innovation Skaber Vækst. Dansk Erhverv og Ingeniørforeningen IDA: 1-24. http://www.danskerhverv.dk/Nyheder/Documents/innovationsraad-skabervaekst.ida.de.2011.pdf  Deephouse, D.L., & Suchman, M. 2008. Legitimacy in Organizational Institutionalism. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 49-77.  DiMaggio, P.J., & Powell, W.W. 1991. Introduction. In W.W. Powell & P.J. DiMaggio (Eds.), The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.  DiMaggio, P.J., & Powell, W.W. 1983. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, vol. 48: 147-160.  DJØF 2011. Veje til Vidensbaseret Vækst: Djøfs Erhvervspolitik 2011. DJØF: 1-33. http://djoef.dk/~/media/Documents/Djoef/D/Djøfs%20erhvervspolitik%202011.ashx  Downing, S.J. 1997. Learning the Plot: Emotional Momentum in Search of Dramatic Logic. Management Learning, vol. 28, no. 1: 27-44.  Drori, G.S. 2008. Institutionalism and Globalization Studies. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 449-472.

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 Friedland, R., & Alford, R.R. 1991. Bringing Society Back In: Symbols, Practices, and Institutional Contradictions. In W.W. Powell & P.J. DiMaggio (Eds.), The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.  Gabriel, Y. 2000. Storytelling in Organizations. Facts, Fictions, and Fantasies. Oxford University Press, Cp. 2: 31-57.  Greenwood, R., Oliver, C., Sahlin, K., & Suddaby, R. 2008. Introduction. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 1-46.  Hardy, C., & Maguire, S. 2008. Institutional Entrepreneurship. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 198-217.  Hernes, T. 2008. Understanding Organization as Process: Theory for a Tangled World. Routledge, Cp. 1: 1-18.  Meyer, J.W., & Rowan, B. 1977. Institutionalized Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology, vol. 83, No. 2: 340-363.  Meyer, R.E. (2008). New Sociology of Knowledge: Historical Legacy and Contributions to Current Debates in Institutional Research. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications.  Munir, K.A., & Phillips, N. 2005. The Birth of the „Kodak Moment‟: Institutional Entrepreneurship and the Adoption of New Technologies. Organizations Studies, Vol. 26: 1665-1687.  OECD 2010. Executive Summary. In OECD, The OECD Innovation Strategy: Getting a Head Start on Tomorrow. OECD: 9-15. http://www.oecd.org/dataoecd/3/14/45302349.pdf  Oliver, C. 1991. Strategic Responses to Institutional Processes. The Academy of Management Review, Vol. 16, No. 1: 145-179.  Palmer, D.A., Jennings, P.D., & Zhou, X. 1993. Late Adoption of the Multidivisional Form by Large U.S. Corporations: Institutional, Political, and Economic Accounts. Administrative Science Quarterly, Vol. 38: 100-131.  Phillips. N., Lawrence, T.B., & Hardy, C. 2004. Discourse and Institutions. Academy of Management Review, Vol. 29, No. 4: 635-652.  Phillips, N., & Malhotra, N. 2008. Taking Social Construction Seriously: Extending the Discursive Approach in Institutional Theory. In R. Greenwood, C. Oliver, K. Sahlin & R.

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Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 702-720.  Powell, W.W. 1991. Expanding the Scope of Institutional Analysis. In W.W. Powell & P.J. DiMaggio (Eds.), The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.  Sahlin, K., & Wedlin, L. 2008. Circulating Ideas: Imitation, Translation and Editing. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 218-242.  Scott, W.R. 1995. Institutions and Organizations. Thousand Oaks: Sage.  Scott, W.R., & Meyer, J.W. 1991. The Organization of Societal Sectors: Propositions and Early Evidence. In W.W. Powell & P.J. DiMaggio (Eds.), The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.  Suchman, M.C. 1995. Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, Vol. 20, No. 3: 571-610.  Suddaby, R., & Greenwood, R. 2005. Rhetorical Strategies of Legitimacy. Administrative Science Quartely, Vol. 50: 35-67.  Thornton, P.H., & Ocasio, W. 2008. Institutional Logics. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 99-129.  Thornton, P.H., & Ocasio, W. 1999. Institutional Logics and the Historical Contingency of Power in Organizations: Executive Succession in the Higher Education Publishing Industry, 1958-1990. American Journal of Sociology, Vol. 105, No. 3: 801-843.  Vaara, E. 2002. On the Discursive Construction of Success/Failure in Narratives of Postmerger Integration. Organization Studies, vol. 23, no. 2: 211-248.  Vaara, E., Tienari, J., & Laurila, J. 2006. Pulp and Paper Fiction: On the Discursive Legitimation of Global Industrial Restructuring. Organization Studies, Vol. 26: 789-810.  Van Leeuwen, T., & Wodak, R. 1999. Legitimizing Immigration Control: a DiscourseHistorical Analysis. Discourse Studies, Vol. 1: 83-118.  VL Groups, the Danish Top Executive Network 2011. Annual Danish Top Executive Summit 2011. VL Groups: 1-9. http://www.uk.vl.dk/Summit-2011---Towards-2020  Wicks, D. 2001. Institutionalized Mindsets of Invulnerability: Differentiated Institutional Fields and the Antecedents of Organizational Crisis. Organization Studies, Vol. 22: 659692.

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 Zilber, T.B. 2008. The Work of Meanings in Institutional Processes and Thinking. In R. Greenwood, C. Oliver, K. Sahlin & R. Suddaby (Eds.), The SAGE Handbook of Organizational Institutionalism, Sage Publications: 151-169.  Økonomi- og Erhvervsministeriet, 2010. Styrket Innovation i Virksomhederne. Økonomiog Erhvervsministeriet: 1-42. http://www.oem.dk/publikationer/2010/~/media/oem/pdf/2010/publikationer2010/2010/styrket-innovation-i-virksomhederne-pdf.ashx

8.2 Annual Reports  Chr. Hansen 2010. Improving Food & Health – annual report 2009/10. Chr. Hansen.  Coloplast 2010. Annual Report 2009/10. Coloplast.  Danisco 2010. Annual Report – 2009/10. Danisco.  Danske Bank 2011. Annual Report 2010. Danske Bank.  DFDS 2011. DFDS Annual Report 2010. DFDS.  DSV 2011. 2010 Annual Report. DSV.  GN Store Nord 2011. GN Store Nord – Annual Report 2010. GN Store Nord.  Jyske Bank 2011. Annual Report 2010. Jyske Bank.  LEO Pharma 2011. LEO Pharma Annual Report 2010. LEO Pharma.  Lundbeck 2011. Annual Report 2010. Lundbeck.  Maersk 2011. A.P. Møller-Mærsk A/S Annual Report 2010. Maersk.  Novo Nordisk 2011. Novo Nordisk Annual Report 2010. Novo Nordisk.  Novozymes 2011. The Novozymes Report 2010. Novozymes.  Sydbank 2011. Årsrapport 2010 Sydbank. Sydbank.  William Demant 2011. Annual Report 2010. William Demant.

8.3 Websites The following websites were accessed and used in the period February to August 2011. Direct links are displayed in footnotes throughout the thesis.  http://www.b.dk/  http://www.chr-hansen.com/  http://www.coloplast.com/Pages/home.aspx  http://www.danisco.com/  http://www.danskebank.com/da-dk/Pages/default.aspx

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 http://www.danskerhverv.dk/Sider/Forside.aspx  http://www.demant.com/  http://www.dfdsgroup.com/Documents/index.html  http://www.dr.dk/  http://www.dsv.com/irj/servlet/prt/portal/prtroot/ExternalWebGui.IntegratedInternet?conte nt=/documents/DSV_DFDS%20Transport/Integrated%20Internet/External%20Web%20Si te%20Repository/COM/ENG  http://europa.eu/index_en.htm  http://www.gn.com/EN/Pages/default.aspx  http://www.issworld.com/Pages/Frontpage.aspx  http://www.jyskebank.dk/jyskebankinfo/home/home/7378.asp  http://www.leo-pharma.com/  http://www.lifdk.dk/  http://www.lundbeck.com/  http://www.maersk.com/Pages/default.aspx  http://www.nasdaqomxnordic.com/nordic/Nordic.aspx  https://newsclient.omxgroup.com/cdsPublic/viewDisclosure.action?disclosureId=428651& lang=en  http://www.novonordisk.com/default.asp  http://www.novozymes.com/en/Pages/default.aspx  http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html  http://www.oem.dk/  http://www.stm.dk/_a_1578.html  http://www.sydbank.com/sydbankcom/  http://www.uk.vl.dk/  http://www.whitehouse.gov/

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