Institutional strategy is the process of determining the utility of an institution in a changing strategic environment. The timing of a strategy change is dependent on internal and external factors. Some of the most common strategies involve balancing or bandwagoning. In these cases, the target state is imposed with favorable rules and norms, which allows smaller states to diplomatically influence great powers. However, these strategies have a downside: in the case of balancing, the target state may be subject to a severe punishment. On the other hand, in the case of bandwagoning, the target state may face the loss of its autonomy.
Various research studies have explored the importance of institutional strategy. A subset of these studies focused on the role of institutional strategy in the ASEAN region, particularly during the post-Cold War era. Other studies were also concerned with the effects of institutional variation on organizations. While the effect of institutional variation is a significant topic, less attention has been given to the strategic shaping of institutional contexts. Identifying similarities and differences between contexts is the first step in understanding competitive advantage.
It is often difficult to predict which type of institutional strategy is the best choice. In some cases, the choice will be determined by intra-institutional politics among member states. For instance, in the case of a RSI, the decision will depend on the internal political processes. If a security institution is primarily built on an explicit and implicit agreement, its members will be very cautious about implementing an institutional shift.
An institution’s design will play a major role in determining the type of strategy that it should pursue. Changing an institution’s design to optimize its marketing and recruitment efforts can lead to improved student enrollment rates. At the same time, institutions must also carefully consider how to integrate design thinking into their processes. This is especially important in a rapidly evolving world where modernization and digitisation are key to boosting the growth of emerging markets.
Several studies have examined the significance of institutional co-option. Co-option refers to an arrangement whereby a target state is given the opportunity to participate in an existing security institution. The goal of this arrangement is to facilitate cooperation in non-contested areas and nurture cooperative norms. Generally, this approach does not require a major transformation of the format or structure of the institution.
Another interesting strategy is the use of institutional hedging. Hedging attempts to avoid a ‘lock-in’ of the target state into an institutional framework, which can lead to a loss of autonomy. In the case of a RSI, this could be done simultaneously with a co-option strategy.
The aforementioned three strategies are a brief summary of the main types of institutional strategy. While each is effective in its own way, it is often hard to choose a specific strategy for each situation. Using a multi-criteria decision-making process, an institutional strategist should evaluate the value of each strategy and select the one that is most appropriate for the situation.