rhetorical legitimacy strategies in hybrid organizations
TRANSCRIPT
Rhetorical Legitimacy Strategies in Hybrid Organizations:
Institutional conflict in the Rabobank
Jelmer Peter Samplonius
S2556995
Supervisor Thesis: prof. M.P. van der Steen
Word count (excluding references): 11.660
Master Thesis
MSc Management Accounting & Control
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Rhetorical Legitimacy Strategies in Hybrid Organizations:
Institutional conflict in the Rabobank
Abstract:
Institutional theory has developed over the years to acknowledge the role change agents have on
institutions. However, the understanding of the active influence these agents can have on multiple and
competing institutional logics, especially in hybrid organizations, remains largely unexplored. This
research draws on thematic content analysis of internal communications of a large Dutch cooperative
bank to examine the use of rhetorical strategies in attempts made to influence these conflicts. The
findings of this research suggest the presence of three novel rhetorical strategies and several
supporting arguments that are used when hybrid organizations are faced with various institutional
conflicts. Additionally, the understanding of the dynamic process of institutional conflicts is expanded
by examining the rhetoric used in the context of dominant logics, stakeholder involvement, and timing
of the conflict. By differentiating institutional conflicts and their context a reflection of previous
literature on decoupling, compromising, and selective coupling as methods to reduce institutional
conflict is provided. Taking the previous into account, this paper expands on the developing
understanding of institutional theory, rhetorical strategies, and hybrid organizations.
Keywords: Institutional conflicts, Hybrid organizations, Legitimacy, Rhetorical strategies, Thematic
content analysis
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Introduction
Institutional theories have an important impact on management accounting research. Neo-
institutionalism, pioneered by Meyer & Rowan (1977), renewed the interest in the effect institutions
have on the behavior of individuals and groups. Institutions can be defined as formal and informal
rules and norms that shape how we organize ourselves politically, economically, or socially (North,
1990). Organizations, in particular, have a central role in institutional theory, as certain institutions
can be detrimental to the way they function and are organized (Zucker, 1983). Whereas the early neo-
institutional theories were mainly focused on the passive ‘isomorphic’ compliance of organizations to
their institutional environment (Meyer & Rowan, 1977; DiMaggio & Powell, 1983), new schools of
thought arose at the turn of the century. Oliver (1991) noted that organizations could actively ‘resist’
institutional pressures by adopting specific strategies. Following Oliver (1991), multiple researchers
have broadened the understanding of the active participation of organizations and agents in the
forming and disruption of institutions. Beckert (1999) introduced the concept of ‘strategic agency’ to
further exemplify the active role agents can have when institutions limit their preferred outcomes. In a
similar vein, Lawrence (1999) pioneered the term ‘institutional strategy’ which he uses to explain how
organizational action can shape and change institutions. Fligstein (2001) uses the term ‘social skill’ to
describe tactics used by actors to gain cooperation from stakeholders. And Lawrence and Suddaby
(2006) coined the term ‘institutional work’ to describe “the broad category of purposive action aimed
at creating, maintaining, and disrupting institutions and businesses” (p. 215). Pache and Santos (2010)
extend the view of organizations interacting with institutions by acknowledging that organizations are
non-homogenous entities and add the perspective of intra-organizational dynamics. The evolution of
neo-institutional theories exemplifies the growing importance of the role of agency and interactions
taken by organizational actors in the case of institutional conflicts.
Central to understanding institutional conflicts are competing institutional logics. Thornton
and Ocasio (1999, p. 804) define institutional logics as “the socially constructed, historical patterns of
material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce
their material subsistence, organize time and space, and provide meaning to their social reality.” In
other words, institutional logics help us understand individual and organizational behavior. And
according to Thornton and Ocasio (2008) institutional logic both regularizes our behaviors but also
offers room for agency and change.
Organizations that are especially interesting to observe in their encounters with institutional
logics and subsequent conflicts are hybrid organizations. Hybrid organizations are organizations in
which multiple contrasting institutional logics are present. For example, an economic logic of making
profits as opposed to a social logic of helping society (Battilana & Dorado, 2010). Therefore, hybrid
organizations can be viewed as non-homogeneous entities, as mentioned by Pache and Santos (2010).
Where early neo-institutional theories mainly described ‘decoupling’ (Meyer & Rowan, 1977) or
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‘compromise’ (Oliver, 1991) to explain reconciliation of contrasting institutional logics found in
hybrid organizations, Pache and Santos (2013) introduced the concept of ‘selective coupling’. They
noted that organizations tended to implement selected intact demands from conflicting logics. For
example, in the study done by Battilana & Dorado (2010) a commercial microfinance organization in
Bolivia combined a commercial banking logic and a social development logic to reduce poverty.
However, as Pache and Santos (2013) note that the role of change agents leaves more room for further
research, especially in the application of selective coupling by change agents and how they motivate
their choices in preferred logics. Besharov and Smith (2014) propose a framework to identify the type
of hybridity, the degree to which competing institutional logics collide in organizations. The different
typologies of hybridity can lead to a different degree of conflicting institutional logics. The authors
recognize that there can be differences in goal compatibility (how compatible the institutional logic is
to the goal of the organization) and the centrality (how central the institutional logic is to the
organization) of institutional logics in organizations. Akin to Pache and Sanots (2013), Besharov and
Smith (2014) acknowledge the role that agency can play in influencing institutional logics and in
doing so reduce institutional conflict but note that it is a topic for further research, especially in times
when “broader societal force” (p. 378) creates variation in the institutional logics, for example during
an economic crisis. Therefore, this research aims to contribute to the literature by examining the role
of change agents in the process of legitimation of competing logics in hybrid organizations. Rhetorical
strategies can be considered as a tool for change agents to play an active role in institutional conflicts
in hybrid organizations.
Rhetorical strategies emerged in the field of legitimacy research when examining the role of
change agents in the legitimation process (Suddaby et al., 2016). Suddaby and Greenwood (2005)
identified five possible rhetorical strategies used when organizations are faced with institutional
change. These strategies have contributed much to the use of rhetorical strategies in the legitimation
process (e.g. Jarzabkowski & Sillince, 2007; Sillince & Brown, 2009), however, they do not seem
exhaustive to illustrate all possible rhetorical strategies as observable from the continuation in the
literature.
Further research confirmed and expanded on rhetorical strategies that helped in legitimation
in organizations with conflicting organizational identities (Sillince & Brown, 2009) and the influence
top management can assert on multiple organizational goals by using rhetorical strategies
(Jarzabkowski & Sillince, 2007). Rhetorical consistency, in particular, was found to be important to
convince stakeholders of goal compatibility. Rhetorical consistency implies that the strategies used
should be in line with the (historical) context of the organizations and previously employed rhetorical
strategies. (Jarzabkowski & Sillince, 2007). Sillince (2005) describes rhetorical consistency as the
unification between the communicated strategy and actual operations. However, rhetorical
consistency can be under significant pressure when the institutional demands change (Golant et al.,
2014) and therefore new insight can be gained when observing the use of rhetorical strategies in
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uncertain times for change agents. Moreover, previous research on rhetorical strategies in hybrid
organizations has mainly been done in the public sector (Jarzabkowski & Sillince, 2007; Sillince &
Brown, 2009) whereas this research examines an organization in the private sector. To contribute to
the literature this research hopes to establish if, how, and why change agents in hybrid organizations
use rhetorical strategies in attempts to reduce institutional conflicts.
This research will investigate the previously described phenomena by stating the following
research questions: Which rhetorical strategies can hybrid organizations use to reduce the potential
for institutional conflict?
To investigate this question, this research will conduct a qualitative content analysis of reports
of a Dutch cooperative bank. Through access to (internal) documents provided by Rabobank, thematic
content analysis will be performed for the period of 2004-2010. In this period, the commercial logic
of the central headquarters of the bank frequently collided with the social (cooperative) logic of its
member banks (Westerhuis, 2008; Boonstra, 2010; Groeneveld, 2016). Amongst others, the financial
crisis of 2007-2008 led to significant institutional challenges and subsequent expected shifts in
institutional logics. Additionally, centralization efforts and the international expansion of Rabobank
are similarly expected to have caused institutional conflicts.
The main theoretical contribution of this research will be the extension of the theory of hybrid
organizations by expanding the knowledge on rhetorical strategies as a potential tool to reduce
institutional conflicts. Moreover, contributions will be made on how hybrid organizations react to
different institutional conflicts in different contexts. Thereby acknowledging the dynamic nature of
institutional conflicts.
These theoretical contributions can offer practitioners new insight. Especially managers of
hybrid organizations will be able to review their use of rhetorical strategies to deal with their often
colliding institutional interests. Furthermore, they might gain insight into the best course of action
when a radical change in their rhetorical strategy is necessary due to disturbances in the institutional
environment.
Literature review
Institutional conflicts
An important theory in understanding accounting change and why firms conform to or defy pressures
from stakeholders is institutional theory. Institutions can be defined as formal and informal rules and
norms that shape how we organize ourselves politically, economically, or socially (North, 1990).
Organizations are both being influenced by institutions and can create or shape institutions and have
therefore an important place in institutional theory (Zucker, 1983). A concept fundamental to
understand why conflicts between institutions occur is the concept of institutional logic. Thornton and
Ocasio (1999: 804) define institutional logics as “the socially constructed, historical patterns of
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material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce
their material subsistence, organize time and space, and provide meaning to their social reality.” The
term was first introduced by Alford and Friedland (1985) when they described contradictions and
non-compatibility in practices and beliefs in the three major institutions in western society
(capitalism, state bureaucracy, and political democracy). Alford and Friedland (1991) extended this
theory to the interrelationship between individuals, organizations, and society as a whole. In their
view, institutions are supra-organizational patterns that are dominated by a shared institutional logic
that guides individual and organizational behavior accordingly. These institutional logics can
constrain individuals in their behavior, but can also enable change and agency (Alford & Friedland,
1991).
The theory and importance of institutional logics has since re-emerged in organizational
studies. DiMaggio and Powell (1983; 1991) were among the first to acknowledge the need for firms to
conform to their external environment. Their concept of ‘institutional isomorphism’ states that
institutions will eventually lead to organizations being homogeneous in structure, culture, and input.
This view emphasizes that firms will passively comply with external institutional demands. Therefore,
when institutional demands conflict, the organization will have to comply with one demand over
another and this can lead to diminished organizational legitimacy (Pfeffer & Salancik, 1978).
In contrast, Oliver (1991) disputes the passive organizational conformity to external
institutional pressures. Drawing on resource dependence theories, in which organizations display
active choice behaviors to influence externalities, she claims that organizations use strategic responses
in the institutional process. These strategic responses range from passive compliance strategies to
active resistance and are in order; acquiesce, compromise, avoid, defy, or manipulate. Subsequent
research confirms and builds upon the thought of active agency when institutions conflict. Beckert
(1999), introduced the concept of ‘strategic agency’ to describe the active role actors in an
organization can take to influence the outcomes of institutional conflicts. Similarly, Lawrence (1999)
described ‘institutional strategy’ as organizational actions that can be taken to shape and change
institutions. Fligstein’s (2001) concept of ‘social skill’ is introduced to describe tactics employed by
actors to gain co-operation from stakeholders and can be especially relevant in institutional conflicts.
The aforementioned theories and concepts are summarized by Lawrence and Suddaby (2006) in the
overarching concept of ‘institutional work’ to explain purposive actions taken by actors to influence
institutional demands.
The previous discourse of organizational responses to institutional conflicts is extended by
Pache and Santos (2010) as they included the intra-organizational political process. They state that in
previous studies organizations are treated as unitary actors, paying no regard to the internal decision-
making dynamics. They add two key factors to reflect these dynamics, the nature of the institutional
demands, and the internal representation of the conflicting demands. The organizational response will
be shaped by the institutional demand being about means or goals of the organization and if the
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internal representation of demands is absent, singular, or in multiple groups. The acknowledgment of
intra-organizational processes introduced organizational scientists to a unique organizational form, the
hybrid organization.
Hybrid organizations
Organizations that face frequent institutional conflicts due to intra-organizational dynamics are hybrid
organizations. Hybrid organizations are defined as organizations that integrate different institutional
logics (Battilana & Dorado, 2010). An example of a hybrid organization is one in which social logics
is blended with market logics (Pache & Santos, 2013). The organization of interest in this study, the
Rabobank, can be considered as a hybrid organization. Rabobank has a cooperative organizational
structure in which the social logic of guaranteeing the solvability of its numerous member banks and
the commercial logic of internationalization and profit maximization often conflict (Boonstra,
2010). Moreover, the intra-organizational structure of the bank is decentralized to such an extent that
local boards of members can exert considerable pressure towards Rabo NL and vice-versa when they
differentiate in institutional logics.
Two initial main strategies were identified to cope with competing institutional logics found
in hybrid organizations: decoupling (Meyer & Rowan,1977) and compromising (Oliver, 1991).
Decoupling entails that the hybrid organizations advocate one set of logics while operationally
implementing another set of logics. Compromising consists of carefully finding a balance between the
two conflicting logics. According to Pache and Santos (2013), however, decoupling and
compromising are rarely used in hybrid organizations. They propose that selective coupling is more
likely to occur, where intact demands are drawn from both logics. For example, when there is a
commercial and a social logic present, an organization will attempt to satisfy both institutional logics
when pursuing changes. But as the authors note, there remain questions about how organizations can
influence the choice to adopt, reject, or couple specific elements of competing logics. Moreover, they
mention that the role of organizational leaders in combining competing logics remains unexplored.
Further research by Besharov and Smith (2014) acknowledges that there can be differences in
the nature of hybridity in an organization. The type of hybridity can influence how extensive or
minimal the conflicts regarding the institutions can be. The two factors they use to describe their
typologies are the degree of centrality and the degree of compatibility. Centrality describes if one or
multiple institutional logics are central to the organization. Compatibility entails if the logics are
conflicting or offer compatible courses of action. When the degree of centrality is high and the degree
of compatibility is low there is extensive conflict and the type of hybridity is contested. In contrast,
when the degrees are the opposite there will be no conflict since there is a dominant institutional
logic. An important note they make is that actors can influence the degree of compatibility and
centrality in organizations through agency and possibly reduce the degree of institutional conflicts.
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However, they remark that more research is needed to establish factors that help in the interaction
between agency and institutional conflicts on the organizational level.
This research will focus on the role of agency in hybrid organizations to observe the use of
rhetorical strategies in institutional conflicts in attempts to engage in possible decoupling,
compromising, or selective coupling and thereby trying to reduce the degree of institutional conflicts.
Legitimacy and rhetorical strategies
To examine how change agents try to influence the outcomes of competing institutional logics the
theory of legitimacy can be considered. A common definition of 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).
Suddaby et al. (2016) further distinguish the streams of legitimacy research into three broad
categories, legitimacy-as-property, legitimacy as process, and legitimacy as perception. The three
streams differ in where and how legitimacy occurs. In this research, the view of legitimacy as process
will be used as this stream treats legitimacy as an interactive process of social construction brought
about by change agents (Suddaby et al., 2016). Moreover, this stream acknowledges that legitimacy is
not in a state of equilibrium and requires constant (re)negotiation when the organizational field
changes (Hallström & Boström, 2010; Human and Provan, 2000).
Following this logic, legitimacy can be altered by influencing and persuading through the use
of language (Nielsen & Rao, 1987). According to Subbady and Greenwood (2005), agents use
language deliberately to establish legitimacy in achieving institutional change by using rhetorical
strategies. Additionally, Suddaby et al. (2017) established that legitimation can occur through
language (Searle, 1969; Zilber, 2006), communication (Suddaby, 2010), and the translation of texts
(Czarniawski & Joerges, 1996). Therefore, qualitative thematic content analysis can be used when
reviewing the documents of interest to identify the theoretical concepts of interest. Thematic content
analysis will provide for a systematic method to code and categorize textual documents to identify
frequencies, trends, patterns, relationships, structures, and the discourse of the available information
(Vaismoradi et al., 2013) and therefore rhetorical strategies can be observed.
Research done by Sillince and Brown (2009) on the rhetorical strategies used by the police
found that rhetorical strategies helped in creating legitimacy when an organization has conflicting
organizational identities. Moreover, Jarzabkowski and Sillince (2007) investigated the rhetorical
strategies applied by top management to influence support for multiple strategic goals in universities.
Rhetorical strategies were found to persuade organizational members of the compatibility between
multiple goals. For example, in the context of the researched universities, rhetorical strategies
convinced the staff of the compatibility between their academic logic and the commercial logic to
provide research in line with industry demands. Furthermore, it was found that rhetorical consistency
improved commitment to multiple goals. Rhetorical consistency entails that strategies employed in
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line with the (historical) context of previous strategies were more effective in convincing
stakeholders. Sillince (2005) describes rhetorical consistency as the unifier between strategy (what is
desired) and operations (what currently happens) in organizations. Consistency creates a shared
meaning by unifying overarching institutional symbols. Moreover, rhetorical consistency is important
for building an organizational identity and removes contradictions in the organizations, such as
possible institutional conflicts. Rhetorical consistency, however, can be difficult to maintain when
new institutional conflicts arise (Golant et al., 2014). And therefore new insights can be gained when
examining periods when rhetorical consistency is under pressure due to external factors, such as an
economic crisis.
This research will contribute to the literature by examining rhetorical strategies in times when
institutional logics collide and rhetorical consistency, consequently, is under pressure. Moreover, the
use of rhetorical strategies can provide an understanding of the attempts of possible decoupling,
compromising, and selective coupling by change agents. Similarly, rhetorical strategies are expected
to be employed in attempts to influence the degree of institutional conflicts in hybrid organizations.
Potential findings of the previous phenomena can enrich the literature on the attempts made by change
agents to reduce institutional conflicts. To examine the rhetorical strategies employed, a thematic
content analysis approach will be taken as explained in the following section.
Methodology
Research setting
Case studies of particular organizations where there are institutional conflicts between logics are
frequently used in previous studies of rhetorical strategies (Jarzabkowski & Sillince, 2007; Sillince &
Brown, 2009). The subject of this study, Rabobank, is similar in the way where preservation of its
cooperative identity (or social logic) often collides with commercial logics (Westerhuis, 2008;
Boonstra, 2010), and therefore it makes for a good case study when examining hybrid organizations.
Moreover, Sillince and Brown (2009) did their research in the context of pluralistic organizations with
high diffusion of power and limited capacity to govern through management fiat. In other words,
organizations characterized by a decentralized organizational structure and decision-making process.
These characteristics are generally to be found in the governance of cooperatives (van Oorschot et al.,
2013; Wilson et al. 2013; Van Peursem et al. 2016) such as the Rabobank.
Data collection
The data used in this study is secondary data provided access to by Rabobank. Since 1898, the
headquarters of the bank has used various internally and externally distributed documents to
communicate with its stakeholders (including member banks). Previous content analysis research has
frequently examined externally available documents, such as annual reports, images, and transcribed
speeches when examining banks (Deephouse, 1996; Jørgensen & Isaksson, 2008; Pesci & Costa,
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2014; Siebert et al., 2020). Documents meant for exclusive internal use, however, remain largely
unexplored in research (Fiol, 1995). According to Harris (2001), content analysis of secondary data
has the following advantages: “… reduction in distortions due to selfreporting, access to information
about past events, cost, ability to assess and demonstrate the reliability of data collection, and the
opportunity to validate results obtained with other research methods” (p. 201).
The documents examined in this research will be drawn from the period between 2004 and
2010. This period is chosen due to the attempts made by Rabobank Nederland to increase
international activities and centralization in line with a commercial logic which was constrained by
skepticism by the local banks and their social logics of avoiding risks (Westerhuis, 2008). Moreover,
institutional conflicts are expected to be explicitly apparent in the aftermath of the financial crisis of
2007-2008 (Boonstra, 2010; Groeneveld, 2016). By examining the period before and after the
financial crisis it should be possible to observe a potential change in rhetorical strategies and their
consequences.
The dataset will further be narrowed down to the first issue of the year of the magazine
distributed by the Rabobank of the aforementioned period. The reason for this selection is twofold.
First, the publication at the beginning of the year is expected to address strategic issues for the coming
year as well as a reflection on the results of the previous year. Second, it will narrow down the focus
of the research by reducing the information to process and therefore offering more room for the
establishment of meaningful themes. This selection will result in a total of seven issues of internal
magazine addressed to local managers and board of directors (four issues of Bank & Bestuurder and
three issues of Bank in Beweging) and are summarized in table 1.
Magazine Issue Documents Pages Total paragraphs Paragraphs per document
(Average)
Bank & Bestuurder
(2004-2007) 4 96 459 115
Bank in Beweging
(2007-2010) 3 108 380 127
Total of documents 7 204 839 120
Table 1. Descriptive summary of the coded documents
Data analysis
The method of data analysis applied in this research will be a thematic content analysis approach.
Thematic content analysis is an accepted method to process textual evidence based on content
analysis. The main difference between regular content analyses and thematic content analyses is the
greater emphasis on qualitative aspects of the materials analyzed as opposed to a frequency count
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approach (Joffe & Yardley, 2004). To apply the method of thematic content analysis a similar
methodological approach to the qualitative data will be used as first presented by Gioia and
Chittipeddi (1991). The methodological approach was further elaborated through the years and has
been adapted to a step-by-step guide by Gioia et al. (2012). In the following paragraphs, the steps
regarding the analysis and theory articulation for this research will be described.
The first phase will be to familiarize with the data through reading and noting down initial
ideas. Gioia et al. (2012) establish so-called first-order concepts in the initial analysis phase of their
research. First-order concepts can be described as a process to categorize the information true to the
terms used in the original collected data. In this research, the unit of analysis to derive first-order
concepts will be on the (sub)paragraph level to be able to process more data effectively. In this phase
of the research, many concepts can emerge which will be refined in the subsequent analysis phases.
The second phase will entail distilling the first-order concepts into more theoretical themes,
also called second-order themes (Gioia et al., 2012). Vaismoradi et al. (2013) note that this process is
most defining for the construction of a clear scientific argumentation. Sufficient detail should be paid
to make sure the themes are carefully constructed. Constant review of the completeness and
exclusivity of the themes during the analysis of the data will be taken into account. This process
should be done until a point of ‘theoretical saturation’ (Glaser and Strauss, 1967) is reached and the
second-order themes can be developed in aggregate dimensions in the final stage of the coding
process (Gioia et al., 2012). When the first-order concepts, second-order themes, and aggregate
dimensions have been developed they will be presented in a data structure comparable to the structure
presented by Corley and Gioia (2004).
The final phase will be to report the findings and consequently the dynamics of the data
structure. Sufficient use of quotes will be used to illustrate and support the emergence of the themes
and subsequent aggregate dimensions (Gioia et al., 2012). However, whereas Gioia et al. (2012)
report the findings in a grounded theory model this research opts for the presentation of the result in a
summarizing table.
Thematic analysis of the aforementioned documents has led to the establishment of multiple
themes and subsequently five aggregate dimensions. Of the three aggregate dimensions, the first two
are concerned with the dominant logic in the organization and the prevailing institutional conflicts
whereas the subsequent three themes are the strategies that have been found to deal with them. In
figure 1 the process of the thematic analysis is illustrated in a data structure. In the following sections,
the development of the themes and aggregate dimensions will be discussed in more detail.
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- A good banker is a semi civil servant
- Checks and balances between board and supervisors
-Cooperative culture, link to the past and gives shared values
- Rabobank should be more pro-active in the market
-Introducing result orientated management
- Merging member banks to serve larger customer segments
-Directiemodel discussion
-Efficiency of central departments
-Connectedness local banks with customers
-Division of tasks at local or central level
-Customers increasingly operate international
-Rabo international in service of local banks
-Local banks should support Rabo int. due to globalization
-International expansion necessary for growth
-New customers due to stability and cooperative spirit
-Rabo should be more pro-active in leadership position
-Rabo too modest in crisis response
-Local banks were resistant to crisis due to cooperative identity
-Centralized government is more efficient
-Increased efficiency valued by customers
-Member banks too small for certain operations
-Incremental attitude hurts commercial potential bank
-Central departments profit form network local banks
-Local banks profit from expertise & resources central bank
-Appeal to opportunity to attract new customers
-Appeal to resistant banks by examplifying succes stories
-Establishing a world cooperative
-Rabo proof of cooperative as alternative to commercial model
-Rabobank has to follow behavior customers
-To remain competitive the bank has to adapt
-Attracting talented staff only possible when org. is a MNE
-Without international expansion no company growth
-Losing customers because of slower service
-The bank should offer services equal or better as competitors
-Cooperation is a organizaitonal form that encourages
collaboration
-Rabo not infected by Anglo-Saxon model
-Cooperative culture focusses on personal voice and customer
orientation
-Historical importance of being a cooperative
-Historical importance of expertise in food & agriculture
-Incrementality of bank is its strength
-Triple A standard most important mission of the bank
-Through stability the customers trust the bank
Cooperative Logic
Economic Logic
Central Governance
vs.
Local Governance
International
Expansion
Crisis Response
Efficiency
Synergy
Opportunity
Teleological
Inevitability
Antagonistic
Value-based
Historical
Stability
Prominent
Organizational
Logic
Prevailing
Institutional
Conflicts
Prospective
Persuasion
Strategy
Proselytism
Strategy
Precedent
Opportunism
Strategy
1st Order Concepts 2nd Order Themes Aggregate Dimensions
Figure 1. Data structure
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Findings
Prominent Organizational Logic
As previously established, hybrid organizations have two or more institutional logics present in their
organization. In the case of Rabobank, two logics are distinctly noticeable in the analyzed documents.
First, there is a distinguishable cooperative logic as this is not only the governance form of Rabobank
but also frequently used to describe its organizational culture. This logic is mostly embedded in
members of the supervisory board of Rabobank and directors at the local banks. For example, the
head of the supervisory board noted:
“The old-fashioned utility function of a bank has been infected by a vulgar drive to earn money by
spending money. People started to set up and govern their banks according to the American and
English example. We have managed to fend off that culture.”(Rabobank, 2010, Bank in Beweging, no.
10, p. 28).1
The cooperative logic stresses the importance of localness, membership, and democratic
governance. Proponents strife for the delegation of power to the local member banks and frequently
resist policies that erode local responsibilities.
In contrast, another logic is more visible amongst the directors of Rabo NL. This logic is
more geared towards economic utility. It is often used to pursue an agenda towards more efficient and
centralized processes and highlights the economic merits of that agenda. For example, a member of
the board of director notes:
“First, several changes are approaching at a fast pace in which the banks will have to find the right
balance between commercialism and governance. Also the ongoing mergers and subsequent necessity
to integrate people and processes in a new organization demand much from the governing capacity
and change capability of management. Furthermore, to benefit from possible economies of scale the
unavoidable quantitative reduction in personnel has to be compensated by a qualitative growth.”
(Rabobank, 2005, Bank & Bestuurder, no. 1, p. 11).
From the previous excerpts, it can be derived that there is a certain contradiction and
incompatibility between these two logics. Subsequently, in the following section, several institutional
conflicts will be described in which these two logics conflict.
Prevailing institutional conflicts
The three following themes can all be classified as institutional conflicts which were observable in the
analyzed documents. There are at least two distinct stakeholders with an opposing institutional logic.
In most cases, the opposing stakeholders are the local banks and directors from Rabo NL. The three
following institutional conflicts will serve as the starting point to evaluate the employed rhetorical
strategies of Rabo NL.
1 As the magazines are written in Dutch the excerpts are translations
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Central vs. local governance
A recurring issue throughout the years in which the documents were analyzed was the division of
governance between the local member banks and the central organization of Rabobank. An especially
sensitive debate involved the implementation of the “Directiemodel”. The central board of the
Rabobank introduced a strategy called Vision 2005+ to reduce the number of local banks and
convince the local boards to adopt the new aforementioned governance model. The directiemodel
entailed that instead of directly elected directors, new directors for the local banks should be
appointed by a commission existing of delegates of the local and central bank. These appointed
directors were full-time professional directors as opposed to part-time members in the other
governance form, the partnership model. The issue led to significant concerns as exemplified by the
following local bank director:
“In [name local director]’s opinion, the cooperation can be abolished if everyone adopted the
directiemodel. ‘As authority will no longer be delegated to the chosen.’” (Rabobank, 2006, Bank &
Bestuurder, no. 1, p. 9).
In contrast, Rabo NL stressed the increase in professionalism and efficiency of the
directiemodel. An example of their praise for appointed directors is the following:
“Analogous to corporate governance at commercial banks we know the concept of cooperative
governance. It is preferred to delegate governance to a professional board, consisting of two or more
people, who are monitored by a supervisory board consisting of members. A governance model which
is common in most Dutch organizations.” (Rabobank, 2007, Bank & Bestuurder, no 1., p. 8)
Furthermore, throughout the analyzed years, Rabo NL introduced or expanded several
centralized divisions such as the personal banking division and a centralized HR department for the
board of local banks. These departments and centralization efforts eroded the responsibilities of the
local banks and centralized responsibilities which were previously the domain of the local banks. The
division of responsibilities between Rabo NL and the local banks are frequently discussed in the
magazines and a topic of constant debate. A member of a commission who investigates the division of
responsibilities describes it as:
“Our mission seemed simple at first glance. Identify what happens locally, what happens centrally,
and subsequently assign the grey area to either side. However, we had to reassess this strategy. It
provided us with around a thousand topics. It seems as there is nothing that happens only on the local
or only at the central level.”(Rabobank, 2006, Bank & Bestuurder, no. 1 , p. 14).
Similar to the directiemodel discussion, the stakeholders with a cooperative logic were more
in favor of local governance. A local director aptly expresses the feeling the local directors have about
centralized departments and products as follows:
“It is inevitable that the feeling for customer value is locally more internalized than at Rabobank NL.
Our product developers are technically very competent. If you ask them to develop a certain savings
product that fits in a particular market and generates revenues they deliver good results. But I would
15
like to see someone that reminds them from time to time what kind of bank we aspire to be and their
part in realizing these aspirations.”(Rabobank, 2009, Bank in Beweging, no. 7, p. 22).
International expansion
Another topic that was often mentioned is the international ambitions of Rabobank. The urge to
expand internationally is primarily driven by Rabo NL. To realize their ambitions to expand the bank
to other countries, a separate entity Rabo International was created. This new entity reports directly to
Rabo NL and not to the local banks. Moreover, the organizational forms acquired abroad are not
cooperatives but private enterprises comparable to other commercial banks. Rabo international also
has no intent in transforming the acquired banks into cooperatives. An international manager
describes transforming foreign banks into cooperatives as following:
“It has no added value. It can even be harmful, as it makes Rabo International less flexible to grow
and attract foreign currency. Besides, why would you acquire something to give it away? It is also
questionable who you should give it to.”(Rabobank, 2008, Bank in Beweging, no.2, p. 25).
Furthermore, some of the local banks have a conflicted relationship with Rabo international.
Banks in the metropolitan areas of the Netherlands and close to the borders are more favorable to
internationalization as opposed to the banks in the Dutch countryside. The latter local banks do not
have a direct interest in internationalization and therefore do not sense any necessity to expand
internationally. Nearly thirty years after Rabobank started expanding internationally this sense of
disconnectedness can be exemplified by the following:
“[Name of head of supervisory board local bank] remarks the following about the view of supervisory
board members on internationalization: ‘Currently, it seems as very distant topic to me. I hope that
this improves.’” (Rabobank, 2008, Bank in Beweging, no. 2, p. 27).
Crisis Response
The final theme established in the aggregate dimension of prevailing institutional conflicts is the
response of Rabo to the financial crisis. Following the financial crisis of 2007-2008, Rabobank
managed to not only weather the troubles other banks faced successfully but also managed to attract
new customers due to the instability of the competitors. Another institutional conflict emerged in this
aftermath. Rabo NL saw their post-crisis position as an opportunity to become more proactive in the
market and establish the entire Rabobank as the undisputed market leader. A corporate management
trainee of Rabo NL voices this view as follows:
“In my opinion, Rabobank should become (even) more pro-active. Subsequently, the bank could
benefit from changes in the (social) economic environment instead of only reacting to them. Not an
easy job, but essential for the bank. The road towards a more pro-active approach has already been
taken; a movement I applaud and support.”(Rabobank, 2010, Bank in Beweging, no. 10, p. 5)
16
Opposed to this view were several local banks and members of the cooperative supervision board.
They emphasized that the reason for the success in the crisis is the stability and trustworthiness of the
cooperative structure. Furthermore, they state that risk management in a cooperative structure is
superior to that of commercial banks:
“The fact of information asymmetry is still very relevant nowadays. It is one of the reasons for the
large losses on structured loan portfolios. In these products, the connection between clients and
holders of debt is disrupted and risks have been insufficiently calculated and managed. Several
brokers, banks, and investors have acted too much out of greed and passed on the risk to the next link
in the system.” (Rabobank, 2009, Bank in Beweging, no. 7, p. 35)
In other words, Rabo NL saw the established position after the crisis primarily in financial
terms and a larger market share as opposed to competitors. Whereas the more cooperative-oriented
directors saw it as a testament to the cooperative organizational form and the risk-averse culture of the
bank. It is important to note that the balance between the logics shifted favorably towards the
cooperative logic in the analyzed documents. Whereas the previous institutional conflicts were
primarily framed in the economic logic.
With these established prevailing institutional conflicts the rhetorical responses and subsequent
underlying rhetorical legitimacy strategies can be observed. Each of these three institutional conflicts
necessitated a combination of different rhetorical responses by the change agents to convince the local
stakeholders of the legitimacy of their preferred logic and planned actions. In the following section,
these rhetorics and the strategies in which they are used will be elaborated upon.
Dominant rhetorical strategies
During the analyses, the use of some rhetoric was found to be more dominant in the discourse of
certain institutional conflicts. Three of these rhetorics have been derived from Suddaby & Greenwood
(2005), namely the value-based, teleological, and historical. Value-based is derived from instilled
values in the organization and drawn from a wider belief system. Teleological emphasizes the final
goal and the persuasion that the logic serves as a basis of the “grand design” of the organization. And
historical is based on the history and traditions of an organization and is used to counteract radical
change (Suddaby & Greenwood, 2005).
As the existing classifications were not exhaustive enough to describe several other rhetorics
observed, I derived various alternative rhetorical patterns to categorize the observed rhetorics. These
rhetorics will be presented and discussed in the following sections. Furthermore, where Suddaby and
Greenwood (2005) established the aforementioned rhetorics as independent strategies this research
argues that the rhetorics established by Suddaby & Greenwood (2005) and the independently
discovered rhetorics fit in broader aggregate rhetorical strategies. These strategies are used to address
one of the prevailing institutional conflicts and are used as attempts to reduce the degree of
17
institutional conflict. Three key characteristics differ between the found aggregate rhetorical
strategies. Firstly, the dominant logic used in the rhetorics; economic or cooperative. Secondly, the
involvement of the main opposing stakeholders (the local banks and supervisory boards); direct
involvement, indirect involvement, or leading involvement. Thirdly, the timing of the desired
conformation towards the preferred logic; in the past, the present, or the future. Differentiating
between these characteristics has led to the establishment of three rhetorical strategies and their
supporting arguments. In the following section the prospective persuasion, proselytism, and precedent
opportunism strategy will be established as rhetorical strategies used by Rabo NL.
Prospective persuasion strategy
The first rhetorical strategy distinguished is the prospective persuasion strategy. This strategy was
mainly employed by Rabo NL in the institutional conflict concerning local or central governance.
Prospective describes the desired present Rabo NL has for the member banks and persuasion as the
main method to convince the resisting stakeholders to conform to these desires. The strategy is
facilitated by three rhetorics that fit in the overall goal of persuading the stakeholders to comply
swiftly with the preferred economic logic; efficiency, synergy, and opportunity.
Efficiency
Efficiency rhetoric is employed by Rabo NL to convince the local banks that accepting central
governance leads to a better performing local bank. They use this rhetoric to position themselves and
their preferred efficiency-driven and centrally organized solutions as a more viable alternative as
opposed to local governance. For example:
“Merged banks should be able to facilitate more business internally. We have to centralize where we
can benefit from efficiency advantages, in the back office for example, or business for which local
banks are too small, such as large enterprises.” (Rabobank, 2005, Bank & Bestuurder, no. 1, p. 13).
Moreover, Rabo NL tries to convince local directors to relinquish control over certain
operations by stating that centralized departments will increase the time they can spend on other
issues within their bank. The chairman of Rabobank describes the merits of an independent mortgage
or payments division as:
“Without a doubt, the local boards can handle these responsibilities. The big advantage however is
the added time the local boards receive to handle strategic issues, to coordinate, motivate, and
convince, and to increase unity.” (Rabobank, 2004, Bank & Bestuurder, no. 1, p. 7).
Therefore, the rhetoric tries to encourage the proponents of local governance to accept the
strategy of Rabo NL towards more centralized departments and fewer independent local banks. These
desired changes are motivated by an economic logic. Moreover, the rhetorics used address the local
stakeholders directly as Rabo NL promises increased efficiency when conforming to the desired
changes. Subsequently, the depicted efficiency is used as a motivator for changes to be made as soon
18
as possible and it can therefore be assumed that the desired conformation to the change is in the
present.
Synergy
Synergy rhetoric tries to convince resisting stakeholders of the synergism between the proposed
course of action and the conflicting logics. This rhetoric attempts to reduce the feeling of loss of
control local banks can exhibit when certain divisions are centralized. Rabo NL highlights that the
centralized division should not be seen as a replacement but rather as an extension of service towards
the local banks. For example, the director of the centralized personal banking division describes the
potential of the private banking department as:
“Worldwide there is no other cooperative private bank. Where other private banking models get more
alienated from their clients, the Rabobank is very close to the clients with 153 local private
banks.”(Rabobank, 2009, Bank in Beweging, no. 7, p. 15)
The director of corporate clients uses similar rhetoric:
“It is a very solid combination: the network of the local bank and the expertise and knowledge of
corporate banking at the central level.’Accordingly, we have a better position than our competitors.’
A decentralized approach is also customer friendlier.” (Rabobank, 2007, Bank & Bestuurder, no 1, p.
14).
Although these departments are centrally organized at Rabo NL they dispute that they replace
responsibilities at the local level. According to this rhetoric, the knowledge and expertise of the
central departments will synergize with the customer-orientated focus of the local banks. The rhetoric
seeks to consolidate the economic logic of the benefits of centralization with the cooperative logic of
localness. Therefore, attempts are made with this rhetoric to reduce the present and directly relevant
concerns of the local banks regarding centralization.
Opportunity
Opportunity rhetoric is an attempt to appeal to the local banks by illustrating the success stories of
other banks who decided to work together with the centralization efforts. The following case of a
centrally guided reorganization of a local bank exemplifies the way Rabo NL advocates local banks
that embrace their preferred outcome:
“The board gave the new director the primary task to internally restructure the bank. So not a direct
focus on market expansion, but first revise the internal processes and efficiency-operations. … The
bank didn’t want to lag financially anymore and decided to navigate out of this crisis. To this end they
had two options; purchase a ‘do-it-yourself package’ or start working under the supervision of Rabo
NL. The secondary position of the bank in consideration, the bank chose for guidance.”
After a description of the changes and the use of the bank as an example of a predecessor of
the Vision2005+ centralization strategy they conclude with:
19
“The bank has since qualified as a primary bank … [Local director]: ’we have the feeling that we are
a fully-fledged bank again: we entirely matter again!’” (Rabobank, 2004, Bank & Bestuurder, no.1,
p. 8/9).
Hence, it becomes clear that the Rabo NL hopes to inspire other struggling banks to seek their
guidance. This rhetoric was similarly used to convince local banks of accepting mergers into larger
entities:
“In first instance, the merger was primarily economically motivated. The numbers added up, but there
was an organizationally disconnected feeling. Luckily the customers stayed loyal and the organization
started to slowly govern itself more tightly, partly because of stricter legislation.”
And subsequent success is reported as:
“Currently the bank is placed in the top three of banks regarding market penetration. [Local head of
supervisory board]: Besides commercially successful you have to be a stable organization in control
of its operations. We have combined those characteristics in the new bank.”(Rabobank, 2006, Bank &
Bestuurder, no. 1, p. 8/9).
Therefore, by making examples of local banks that complied with the demands of Rabo NL
attempts are made to persuade skeptical local banks of the opportunity of adhering to the dominant
economic logic. Recurrently, the rhetoric is used to directly prompt the active local resistant
stakeholders to support the desired outcome of the institutional conflict set out by Rabo NL.
Taking the previous into account, we can conclude that the prospective persuasion strategy exhibits
high involvement of the stakeholders. Local banks and Rabo NL both have an active interest in the
outcome of the institutional conflict. In the rhetorics used, there is a dominant position for the
economic logic as this appears to be the preferred logic of Rabo NL. However, certain concessions to
the cooperative logic are also noticeable in the synergy rhetoric. To conclude on this strategy, the
rhetorical prospective persuasion strategy used is exemplified by direct language by change agents to
convince the opposing stakeholders of directly applicable benefits
Proselytism strategy
The second derived aggregate strategy is a proselytism strategy. Proselytism entails converting
someone to a certain opinion. This terminology is chosen for two reasons; firstly the involvement of
stakeholders opposing the change agents can be considered passive. The task of the change agent is to
let them believe in their desired outcome. The desired institutional change does (in most cases) not
directly affect the operations of the local stakeholders. Secondly, it has a strong focus on the possible
future. Similar to religion, from which proselytism originates, the proselytism strategy offers converts
the perspective of paradise whereas non-believers will incur severe penalties. The use of this strategy
in rhetoric by Rabo NL regarding their internationalization will be exemplified by the use of three
rhetorics that support this future-orientated strategy: teleological, inevitability, and antagonistic.
20
Teleological
Teleological rhetoric is used to convince the local banks of the grand design of the international
ambitions of Rabo NL. It is used to make internationalization relevant to the local banks by invoking
their cooperative logic. The chairman of Rabo NL uses the following rhetoric:
“After acquisitions of foreign subsidiaries, we have to integrate them into the Rabo-formula, turn
them into real cooperatives. With devoted members. That is a real challenge. Maybe the yearly
members' meeting can get an international audience. A real unique group will be established. A Rabo
world cooperative would be beautiful. In the spirit of Raiffeisen.”(Rabobank, 2005, Bank &
Bestuurder, no.1, p. 6).
Similarly, the directors of Rabo NL try to invoke a sense of commitment to
internationalization by picturing a future in which the Rabobank is a worldwide cooperative:
“A frequently asked question is how the growth of international activities influences the
organizational balance and how these activities can stay true to our cooperative nature. … In nature,
you can find plants and trees with roots that branch out. This is how we used to spread the
cooperative to regions without cooperatives … With this method, Rabobank can grow into a powerful
international cooperative: Rabobank International.” (Rabobank, 2008, Bank in Beweging, no.2, p. 2).
Although Rabo NL claims to operate with the cooperative model in mind this is questionable.
During the analyzed period not a single foreign entity of Rabobank had a cooperative structure and it,
therefore, appears that they pursue an economic logic under the pretense of a cooperative logic.
Furthermore, by picturing the future of a world cooperative they try to mobilize support for their
international ambitions. Hence, this rhetoric appears to be directed at local stakeholders that are not
actively involved in internationalization.
Inevitability
Inevitability rhetoric relies on the threat of failure of the organization if international expansion is
resisted. Therefore, in the globalizing world and increasingly international clients Rabo NL argues
that it is inevitable to expand internationally:
“It is of the highest importance to quickly improve our international operations. Together with the
local banks and regional teams, we have started to work towards this goal. This forms the connection
between the local banks to Rabobank International. And it is important, as the international market
will be increasingly important for us in the future.” (Rabobank, 2008, Bank in Beweging, no. 2, p.
15).
Similarly, the chairman of Rabo NL pictures the necessity to expand internationally as:
“Luckily we notice that the issue of internationalization for most member banks has become evident.
Growth in the Netherlands is required, but we can’t rely solely on this. We have to grow abroad with
at least 10-12%. This is a must. We want to stay in charge of our own operations and secure our
advantage of being a Triple-A bank.” (Rabobank, 2006, Bank & Bestuurder, no. 1, p. 5).
21
The statement infers that Rabobank could lose control of their organization and their coveted
Triple-A status in the future when they do not pursue an internationalization agenda. This is used as a
motivation for local banks to accept the internationalization strategy of Rabobank. There is a clear
economic logic in these threats of losses for Rabobank used to motivate passive stakeholders to
conformation to the preferred change.
Antagonistic
Antagonistic rhetoric is used to supplement the teleological and inevitability rhetoric to describe
losing clients to competitors in the scenario the local banks continue to resits internationalization. A
local bank director is quoted stating the following:
“We have a lot of customers who trade in cocoa in Amsterdam. A customer wanted to build a
warehouse in Ghana and asked us for help. We transferred this request to a partner, as is customary
when Rabobank does not operate there. It resulted in an endless negotiation in Ghana. A competitor,
Société Generale, appeared at a certain moment and closed the deal within a week.”
To which the director of international services concludes:
“In these cases, you not only miss out on a deal but there is also a chance you lose a long-time
customer. They will transfer their other business to the bank which successfully helped them abroad.”
(Rabobank, 2008, Bank in Beweging, no. 2, p. 13).
Hence, it becomes clear that Rabo NL tries to mobilize its local banks to support
internationalization to prevent the loss of their customers to competitors. Once more the economic
logic dominates the rhetoric with an unfavorable future perspective in the case of resistance against
the desired change.
To summarize the previous findings, it becomes clear that the proselytism strategy is characterized by
a strong focus on the possible future. Economic logic dominates this rhetorical strategy as failure to
comply with the desired change is depicted as harming the competitive position of Rabobank.
Cooperative logic is used to describe a possible world cooperative. However, this can be disputed as
there are no actual operational examples of the rhetoric used. Furthermore, the rhetoric is used in a
way to convince the local stakeholders of their interest in internationalization as they mostly have
little involvement in internationalization.
Precedent Opportunism Strategy
The final aggregate strategy is the precedent opportunism strategy. Precedent signals a past event on
which the present or future can be explained or given form, and opportunism for the framing of the
precedent in such a way that benefits the change agent. This aggregate strategy was observable in the
aftermath of the crisis and the subsequent response of Rabo NL. Where the cooperative logic mostly
hindered the directors of Rabo NL in pursuing their economic logic in the previous strategies, a
22
change is noticeable after the crisis. Rhetoric shifted more favorably towards the cooperative logic
due to the success Rabobank experienced in the crisis. This will be exemplified in the following three
supporting rhetorics that are retrospective in nature: value-based, historical, and stability.
Value-based
Value-based rhetoric became especially more frequent in the rhetoric of Rabo NL in aftermath of the
crisis. Before the crisis directors of Rabo NL frequently questioned the merits of the cooperation as
exemplified by the chairman:
“When asked about the biggest disappointment in his first year in the Rabobank the director
paradoxically points to the extensive democratic process of the organization. ‘As a director, you have
to report more frequently to others, a lot more debating. Reaching consensus. I had to get used to it.’”
(Rabobank, 2004, Bank & Bestuurder, no. 1, p. 5).
In contrast, the following rhetoric used post-crisis by the successor of the chairman is
noticeably more positive about the cooperative values:
“The Rabobank has two equities. The first is the knowledge and energy of all people who cooperate in
our organization; members, employees, directors, and supervisors. The second is equity in financial
terms. Both equities ask for constant maintenance and reinforcement. … We need to realize the origin
of our equity, its purpose, and how we can use it to best reach our organizational goals” (Rabobank,
2010, Bank in Beweging, no. 10, p. 2).
The directors changed from skeptics of the cooperative logic to its staunch supporters as the
local banks were the reason for the success of the Rabobank during the crisis. The chairman addresses
the local directors the following after losses in the Rabobank group got compensated by the
performance of the local banks:
“’ Let us congratulate ourselves with a successful year’, said the chairman during the presentation of
the annual figures to the local bank directors. ‘We operated at a higher profit than all other Dutch
banks combined.’ … ‘Praise to you, you realized the extra effort.’” (Rabobank, 2010, Bank in
Beweging, no. 10, p. 6).
Accordingly, it appears if Rabo NL uses this rhetoric to protect itself from criticism of the
local banks. By acknowledging the positive values of the cooperative it suggests that Rabo NL hopes
to reduce its accountability for less profitable operations in the Rabo Group. From the previous
excerpts, it can be inferred that the dominant logic shifted to the cooperate logic due to the leading
role of the local banks in enduring the crisis. Moreover, the rhetoric was adopted in response to the
crisis and therefore reacting to a change in the past.
23
Historical
Historical rhetoric highlights the importance of Rabobank's history as both a cooperative and a leader
in food & agriculture as reasons why the crisis was navigated successfully. Local directors got
strengthened in their belief in the cooperative system:
“Historically every new customer was seen as a potential new member. The experience of cooperative
banking was and still will be the reason for our customer's loyalty and growth. … The sometimes dull
image of our bank is now seen as our strength. A person who joins the Rabobank will be seen as a
fully-fledged member and is allowed to make use of our strength. That is how it was and always will
be.”(Rabobank, 2009, Bank in Beweging, no. 7 , p. 5).
Similar rhetoric is mirrored by a director of Rabo NL:
“The increased demand of influence by customers and members is a logical development of the past
25 years according to the director. Through the increase in scale, greater anonymity in organizations
developed. Power is delegated to the few, who often lead out of self-interest and short-term
profitability. … I don’t pretend that the cooperative is the only well-organized organizational
structure, but it is an organizational structure that stays true to people. It’s a structure in which
people can recognize themselves, where people understand that cooperation is more profitable than
aiming for more and bigger.” (Rabobank, 2009, Bank in Beweging, no. 7, p. 5).
Hence it seems that the historical importance of membership and localness saw a resurgence
in importance after the crisis. Local directors use the history of the bank as the reason for a possible
explanation for the successful crisis times and this is mirrored by directors of Rabo NL. The
dominance of the cooperative logic forces the directors of Rabo NL to an obedient rhetorical position.
The directors of Rabo NL furthermore retrospectively reflect on the merits of the cooperation, which
is a logical inference in historical rhetoric.
Stability
Stability rhetoric emphasizes the stability of the cooperative logic. It frames the incrementality of the
bank as one of its strengths. A member of the supervisory board of a local bank reports the following:
“Where we used to look for expansion options and increasing our market share, we look for security
now. No business owner profits from a failing bank. This is however not likely for Rabobank. A
cooperative is incredibly strong in these times. The secure and safe character of the bank is paying
off.” (Rabobank, 2010, Bank in Beweging, no. 10, p. 22).
Another local supervisory member compares the stability of Rabobank to the competitors:
“we as bank also chose for long-term security and socially responsible banking. In contrast to the
traditional banks, as they recently feel the consequences of their actions.” (Rabobank, 2009, Bank in
Beweging, no. 7, p. 4).
The theme of stability is also mentioned by Rabo NL when a new chairman is presented:
24
“With the succession of the chairman from inside the organization the bank wants to provide in
harmony and continuity in these economic turbulent times.” (Rabobank, 2009, Bank in Beweging, no.
7, p. 10).
Therefore it seems that Rabo NL acknowledges the need for stability expressed by the local
banks in the years after the crisis. Moreover, subjects that previously sparked institutional conflicts,
such as centralization and internationalization receive less attention in the internal communication of
Rabobank in the periods after the crisis. Stability rhetoric presents the origins of stability in the past of
the bank with the local banks leading the rhetorical debate in the institutional conflict.
To conclude on the precedent opportunism strategy, it can be established that the dominant logic
shifted from the economic to the cooperative logic. This was mainly due to the effect of the leading
role the local stakeholders acquired in the aftermath of the financial crisis. Moreover, the moment of
the change in the institutional conflict was in the past which imposed the director of Rabo NL to
retrospectively embrace the history, values, and stability of the cooperative logic.
With the aforementioned qualitative findings, a summary table can be derived as presented in table 2.
Rhetorical Strategy Supporting Arguments Dominant Logic Stakeholder Involvement Timing
Prospective
Persuasion
Efficiency
Synergy
Opportunity
Economic
Direct
Present
Proselytism
Teleological
Inevitability
Antagonistic
Economic
Indirect
Future
Precedent
Opportunism
Value-based
Historical
Stability
Cooperative
Leading
Past
Table 2. Summary of qualitative findings
Discussion
Previous literature established the presence of active involvement of change agents in institutional
conflicts (e.g. Beckert, 1999; Lawrence & Suddaby, 2006). And more recently, research in hybrid
organizations has drawn on organizations that frequently face institutional conflicts due to competing
logics (Jarzabkowski & Sillince, 2007; Sillince & Brown, 2009). Although the role of change agents
can be seen as vital in these organizations, there is still a demand in the field for further research on
25
the role they play in navigating these institutional conflicts (Pache & Santos, 2013; Besharov &
Smith, 2014).
This research investigates the involvement of change agents in hybrid organizations by
examining their use of rhetorical strategies. Drawing on the notion that rhetorical strategies can be
employed by change agents to establish legitimacy in achieving institutional change (Suddaby &
Greenwood, 2005), an analysis of internal documents of the hybrid organization of Rabobank has led
to the expansion of the theory of rhetorical strategies in hybrid organizations by the following three
contributions.
First, this research has established multiple rhetorical strategies. Rhetorical strategies
established by Suddaby & Greenwood (2005) have been extended by identifying additional rhetorical
patterns, their configurations, and subsequent strategies. Synergy rhetoric was independently found by
research done by Jarzabkowski and Sillince (2007), however, rhetorics for efficiency, opportunity,
inevitability, antagonistic, and stability can enrich the possibilities to describe rhetorical patterns.
Moreover, this research expands on the configuration of multiple rhetorics in aggregate strategies.
Previous research that found certain configurations of rhetorics in hybrid organizations have
predominantly been done in the public sector (Jarzabkowski & Sillince, 2007; Sillince & Brown,
2009), however, research in the private sector with a larger focus on revenue and economic logic are
rare (e.g. Battalina & Dorado, 2010; Pache & Santos, 2013) and lack defined rhetorical strategies that
are applicable in these domains. This research contributes to the aforementioned gap by defining three
rhetorical strategies and their supporting arguments. Further research can draw on these findings to
examine the role of change agents and their applied rhetorical strategies.
Second, the need for a deeper understanding of the context in which rhetorical legitimacy
strategies are used (Suddaby et al., 2017) is met in this study. It is found that the dominant logic
present in the organization at the time of the institutional conflict influences the rhetoric used by the
change agents. Especially noticeable was the shift in logic after the external institutional distortion
due to the economic crisis. Where directors of Rabo NL used to prefer economic logic they started to
endorse the cooperative logic to a greater extent after the crisis. Similarly, Thornton (2004) found that
once a logic becomes dominant the focus of executives altered in favor of issues and solutions in line
with the dominant logic. We can infer from this research that these findings also hold for rhetorical
strategies used. Further support for this is also found in the reduced reporting of the previously
important institutional conflicts of centralization and internationalization dominated by economic
logic.
Additionally, it was found that the involvement of the addressed stakeholder similarly affects
the rhetoric used. Support for the argument that framing rhetorical strategies within the context of the
stakeholders can be found in research done by Besharov & Smith (2014). According to their theory,
institutional conflicts can be reduced when an institutional logic is more central to or compatible with
the stakeholders in hybrid organizations. An example in the case of Rabobank is the rhetorical
26
strategy employed in the context of international expansion. Internationalization was neither largely
compatible nor central to the cooperative institutional logic of local directors of smaller member
banks. But by framing international expansion as an opportunity to expand the cooperative identity
and strengthen the leadership position on food and agriculture change agents of Rabo NL attempted to
make the issue more central to and compatible with the core functioning of the (cooperative)
organization. Consequently, there was less self-reported resistance against internationalization.
Furthermore, in this research, the dynamic of the time of the desired change is taken into
consideration. When the desired change needs to be realized as quickly as possible, a more direct
rhetorical approach is used as observable in the governance debate. In contrast, in the
internationalization debate, more speculative rhetorics about a possible future of success or failure
were used. Moreover, during the post-crisis conflict rhetoric was more retrospective in nature. This
confirms the relevance of the timing of institutional conflicts found in previous research
(Jarzabkowski & Sillince, 2007; Battilana & Dorado, 2010) and suggests that certain rhetorics are
used more frequently depending on the timing of the desired change in the institutional conflict.
Third, the theory of selective coupling by Pache and Santos (2013) as a substitute for
decoupling and compromising can be reevaluated according to the three different conflicts and the
applied rhetorical strategies. Clear signs of selective coupling occurred during the central-local
governance institutional conflict. Due to the active resistance to the changes of the member banks,
Rabo NL was forced to draw on demands from the cooperative logic to expand and solidify localness
and membership to pursue their economic logic of appointed directors and the reduction of the
number of local banks. Rabo NL could not force every local bank to conform to their desired structure
and had to apply selective coupling. In contrast, findings regarding international expansion and the
post-crisis debate do not fully support the concept of selective coupling.
Pache and Santos (2013) argue that decoupling and compromising are barely observable in
their case study. The practice of decoupling, in which organizations separate their normative structure
(what they say they do) from their operational structure (what they actually do) (Meyer & Rowan,
1997; Bromley & Powell, 2012), can be observed in the case of internationalization. Although Rabo
NL claims that their international ventures will promote the cooperative identity of the organization,
actual evidence for these claims is not presented. None of the presented international daughter
companies of the Rabobank have a cooperative organizational form or direct participation by
members. On the contrary, excerpts are presented in the findings that the managers of Rabobank
International have no intent in conforming to a cooperative organizational form. Therefore, it seems
that the actual strategy of Rabobank in this regard can be seen as decoupling under the pretense of
selective coupling. The bold claim by Pache and Santos “that organizations rarely decoupled their
formal structure from their operational structure” (2013, p. 986) does not appear to be applicable in
this case. Hence, decoupling can still be considered as a valid strategy for hybrid organizations in
27
certain institutional conflicts where stakeholders have indirect involvement and rhetorics are future-
orientated.
Moreover, one can observe similar evidence for compromising during the post-crisis conflict.
Compromising consists of carefully considering and balancing elements of the conflicting demands
and therefore avoiding the risk of losing the endorsement of important stakeholders (Oliver, 1991).
And according to Pache and Santos organizations similarly “rarely engaged in compromise” (2013, p.
986). In this case, compromising can be observed during the post-crisis conflict as the prominent logic
of the member banks, the cooperative logic, became more dominant over the economic logic of Rabo
NL. This is illustrated by the change in rhetoric by the directors of Rabo NL before and after the crisis
as presented in the findings. From the other conflicts, it can be inferred that the directors of Rabo NL
preferred an economic logic in most cases and had to compromise to the cooperative logic to retain
the support of the local banks. The leading involvement of the local banks in the institutional conflict
and the importance of their endorsement can be considered as the reason for the compromises of Rabo
NL.
Nonetheless, the practice of selective coupling does occur in certain situations and therefore is
an enrichment of the literature on hybrid organizations. However, this research demonstrates that both
decoupling and compromising remain valid strategies given certain institutional conflicts and their
contexts. Hence I argue that selective coupling should be viewed as an alternative to decoupling and
compromising instead of a substitute.
The aforementioned theoretical contributions also offer practitioners new insights. This
research provides managers with an overview of employable rhetorical strategies as found in table 2.
When faced with similar conflicting institutions in their organization they can assess what strategies
can be used to potentially reduce these conflicts. Moreover, they can recognize if decoupling,
compromising, or selective coupling is appropriate to deal with their conflicts when they take the
dominant logic, stakeholder involvement, and the timing of the conflict into consideration.
Limitations and Further Research
As with all research, this paper has to acknowledge certain limitations. First, the single case setting of
the research limits its generalizability to other organizations. As a cooperative, Rabobank has a
distinct organizational form. However, similarly to conclusions by Jarzabkowski & Sillince (2007)
about universities, the structure of Rabobank is characterized by strong diffusion of power and lack of
management through fiat. Therefore, the insight of this research might apply to other hybrid
organizations or even organizations in general that face a strong decentralized structure and
conflicting logics. Further research is necessary to establish the discovered rhetorical patterns in other
hybrid organizations. Special interest should be paid to hybrid organizations outside the public
domain as comparable research on rhetorical strategies in this field is scarce.
28
Second, qualitative research relies on the interpretation of the researcher. Several choices
have been made throughout the research process which has given shape to the results presented. For
example, to support the thematic coding process excerpts are presented which try to represent the
dialogue in the data. As these excerpts are translations from Dutch, it is sometimes difficult to
adequately describe statements to show proverbs and expressions that are obvious to a native speaker.
However, by applying the methodological guidelines set out by Gioia et al. (2012) and presenting the
qualitative research process in a data structure and with several supporting quotes per subject, the
methodological process is observable by the reader. As Gioia et al. (2012) note on the necessity of
having independent coders: “We certainly do not consider such a step to be necessary, however,
because the data structuring procedures themselves lend the requisite rigor to the analyses” (p. 22).
Hence, the issues regarding validity are reduced by adhering to the methodological propositions as
presented in this study.
Further research should be considered to show the dynamic nature of institutional conflicts in
organizations. In line with previous literature (e.g. Jarzabkowski & Sillince, 2007; Sillince & Brown,
2009) this research has made the dynamic of these different conflicts more tangible. However, some
generalizations regarding the development of institutional conflicts over time persist in this research.
For example, the rhetorics employed regarding centralization or internationalization could be
significantly different when examined in another period than 2004-2010. The possibilities of
diverging rhetorical strategies over time in the same conflict should receive more attention. A
longitudinal study of a hybrid organization can provide additional insight if rhetorical strategies
evolve over time and thereby enrich the field of rhetorical strategies in hybrid organizations.
Conclusion
This study has examined the use of rhetorical strategies through the use of thematic content analysis
in the hybrid organization of Rabobank during the period 2004-2010. Three theoretical contributions
have been made to the existing literature. First, several novel rhetorical strategies and subsequent
rhetorics have been developed as a complement to the existing literature (Suddaby & Greenwood,
2005; Jarzabkowski & Sillince, 2007; Sillince & Brown, 2009). Second, contributions are made to
understand the dynamic process of institutional conflicts. By adding the dimensions of the dominant
logic, time of the desired conformation, and the degree of stakeholder involvement an improved
assessment can be made when certain rhetorical strategies are used more frequently. Third, the
theories of selective coupling (Pache & Santos, 2013), decoupling (Meyer & Rowan, 1977), and
compromising (Oliver, 1991) have been reassessed. Where Pache & Santos (2013) claim that they
barely notice the practice of decoupling and compromising in hybrid organizations this research
argues otherwise. It is therefore suggested that selective coupling must be seen as an alternative to
decoupling and compromising instead of a substitute and all three practices can be used by hybrid
29
organizations in certain institutional contexts. With these findings, this research hopes to contribute to
the evolving understanding of hybrid organizations and the role change agents can play therein.
30
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