Enacting the Legal Environment

Conceptualizing law in terms of environment(s), this appears in a threefold manner as facilitative, regulative, and constitutive (Edelman & Suchman 1997). Organizations therefore come to face the law as a set of instruments, as a constraint of their behavior and as a set of rules that determines, which classes of organizations come into existence, for instance.

However, as constitutive environment, law also provides a set of catego-ries and definitions that establish and structure social relations (e.g. the concept of marriage). As it is to be expected that these categories and definitions are not uncontested among those who are concerned with them, law in so doing provides “paradigms for arguments” (Powell 1996: 963). Organizations are likely to have generated their own ‘meaning’ of what a given social relation is about and they will interpret the legal definition on this background. Dependent

upon the ‘gap’ between such definitions, one or the other definition will be-come challenged, among others by a set of routines that are also provided for by the law (Edelman & Suchman 1997).

These routines such as lawsuits become strategically used by organiza-tions in order to push forward their interpretation and interests. Thus, in its facilitative aspect, law is conceived as an organizational tool.¹⁶ In mobilizing law as a means to their ends, organizational actors shape the law directly by lobbying, drafting legislation or virtually dictating the laws that govern practice in their arenas (Scott 1994a). They have an impact on the scope of the law, on the definitions provided by it and consequently on the dynamics that occur in the process of its implementation. By challenging dominating paradigms and thus coining new labels and categories, social relations become (re-)structured and new issues are likely to come into being. Even though it is still expected that these strategies will be carried out most successfully by organizations more influential¹⁷, the strategic use of law can also be observed by less domi-nating organizations. In these cases, law becomes mobilized as a means of challenging the more dominant organizations and their interpretation of a given issue, in order to make a less popular interpretation more audible.

As regulative environment, law confronts organizations with demands in order to guide their behavior. In this case, organizations may obey the law – or what they perceive as such – or they may avoid it. These alternatives, compli-ance and devicompli-ance, become manifest in different shapes that depend upon the nature of the regulation and upon the organization, its will and possibilities, and thus its responsiveness in adapting to legal demands. Nevertheless, both these alternatives will be fulfilled on the organizational interpretation of what the legal demand is about. Thus, in trying to obey the law the organization may fail as its understanding of compliance differs from the ‘original’ legal under-standing. The same may happen, if the organization tries to avoid the law.

Whether in order to obey or to avoid the law, organizations model themselves on what they perceive as legal constraint, thus creating law-like rules and pro-cedures – to effect control, to protect rights, to delay settlements, to enhance legitimacy, and for many other reasons (ibid.). Consequently, they tend to be-come legalistic in that their mode of governance is infused “with the aspira-tions and constraints of the legal order” (Selznick 1969: 8). It is these legalistic

16 For an early approach that takes law as an organizational tool into account see Borosage et al. (1970), especially 1087-1088, where the role of lawsuits filed by organizations in the process of legal and social change is addressed.

17 For the mechanisms that lead to the ‘success’ of (already) ‘successful’ organizations in legal contexts see also Galanter (1974) and a reappraisal of the subject in a special issue of the Law & Society Review (Do the “Haves“ Still Come Out Ahead? 1999).

features that can be (mis-)read under the code legal/illegal, making organiza-tional practices and actions a ‘new’ source of law.

Recalling one of the central questions of this study the following assump-tions can made: when a legal rule enters the field it was designed to regulate, it becomes the object of the organizations’ sensemaking and enactment esses, thus productive misreadings (see also 1.1.2). In the course of these proc-esses, those to whom the rule is addressed fill its categories and definitions, its obligations and demands with meaning. The rule therefore meets to differing degrees with open and hidden opposition and a process is re-opened in which either one or another of the interpretations becomes the dominating one. To what degree this is going to happen and how conflict-ridden this process will be, depends upon the issue that functions as the regulatory trigger.¹⁸ As each issue will produce its own interorganizational network, the composition of or-ganizations will differ and so will the dynamics occurring among them. The legal definition of the respective issue, the definition of its scope and its prob-lems, prepares part of the ground for what is going to happen when the rule enters this network. Due to this definition, different organizational problem-solving strategies will become employed thus shaping the interorganizational network and the initial problem. However, as definitions and categories are charged with a fundamental ambiguity that makes a plurality of interpretations possible, this ambiguity – and thus uncertainty! – has to be resolved.

This ambiguity regarding the identity/nature of the regulated issue can be solved by two, already invoked media that is power and knowledge. Both these media have to be considered as means of shaping social relations even though they do so differently. In short, while power absorbs uncertainty by reducing the scope not only for the interpretation of the given rule but also for the inter-pretation of its regulatory trigger, the employment of knowledge broadens this scope by generating even more interpretations that are reasonable as well as questionable at the same time.

This leads back to the aforementioned configurations that characterize in-terorganizational networks. These configurations can now be connected with the implementation process of a legal rule into a given network. As organiza-tions will try – unintentionally as well as intentionally – to dominate their net-work, i.e., the meaning of its focal issue, they will also try to dominate this implementation process. Nevertheless, the degree to which they will succeed depends upon the distribution of power and knowledge throughout the network.

Therefore, ‘success’ in this context refers to the question in how far new labels,

18 The relevance of the empirical matter for the subsequent regulatory processes also is dem-onstrated by the observation that the process of implementation in the majority is fulfilled uncontested.

practices as well as problem-solving strategies that have been generated in the respective organizations of the network will become institutionalized, thus in-filtrating the rule by enacting it. By enactment processes, law is crafted by or-ganizations operating creatively under certain constraints, which calls attention to the fact that the enactment of an organizational environment not only de-pends upon the organizations’ responsiveness towards their environment but also upon the dominance of that environment. That is to say that the distribu-tion of power and knowledge among an interorganizadistribu-tional network affects the individual organizations’ ability to enact their environment – by delimiting as well as by supporting. Which organization is thus likely to ‘succeed’ in this sense of the term depends upon the question which of both these media will dominate the implementation process of the given rule.

A legal rule can define its regulatory trigger as a normative or as a cogni-tive problem. In the first case, this is meant in the very literal sense of the term

‘normative’ and refers to the question, which norms have to be established as the applicable law in a given case. If the regulatory trigger is defined from the outset as a cognitive problem, its insufficient knowledge base is put in the fore by the regulation. In this latter case, knowledge and organizational knowledge-based strategies will become employed in the process of the law’s mobiliza-tion, whereas in the first case power and organizational power-based strategies will dominate the mobilization process. Thus, a legal rule will become accom-panied by either power or knowledge when it is introduced into its network.

The organizational employment of either power or knowledge will shape the network since “changes in environmental conditions reconstruct individual organizations, changes in organizational behavior reciprocally reconstruct fields” (Edelman & Suchman 1999: 945). Consequently, the interplay among those to whom the rule is addressed to, the rule itself, as well as the focal issue in their total will lead to different regulatory structures throughout a network.