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Rethinking Collective Action: The Co-Evolution of the State and Institutional Entrepreneurs in Emerging Economies

Organization Studies

Published online on

Abstract

Why do groups form to influence policy outcomes? Classic notions of collective action tell us that a small number of homogeneous individuals are more likely to organize and thus achieve their preferred policy outcomes. Yet, this is not always reflected in the empirical record as external factors, such as the state, influence the costs of organizing. Instead, the traditional collective action literature largely assumes a purely rational or passive state. While the institutional entrepreneurship literature highlights the key role these actors can play in shaping institutions and, at times, organizational fields, it does not seek to explain why change agents appear in some instances and not others. This article seeks to fill this theoretical gap by drawing on the co-evolution literature, which helps explain the variation in group formation by underscoring how the state and institutional entrepreneurs shape one another. Utilizing rich qualitative data from the microfinance industry in Brazil and Mexico, this research asserts that the formation of microfinance associations is a function of actors’ ability to access the state, which results in distinct processes: co-evolution by isolation or co-optation. This process has subsequent implications for institutional change, policy outcomes, and, ultimately, the distribution of power and prospects of development within emerging economies.