See also
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In sociology and organizational studies, institutional theory is a theory on the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for social behavior. [1] Different components of institutional theory explain how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse.
In defining institutions, according to William Richard Scott (1995, 235), there is "no single and universally agreed definition of an 'institution' in the institutional school of thought." Scott (1995:33, 2001:48) asserts that:
Institutions are social structures that have attained a high degree of resilience. [They] are composed of cultural-cognitive, normative, and regulative elements that, together with associated activities and resources, provide stability and meaning to social life. Institutions are transmitted by various types of carriers, including symbolic systems, relational systems, routines, and facts. Institutions operate at different levels of jurisdiction, from the world system to localized interpersonal relationships. Institutions by definition connote stability but are subject to change processes, both incremental and discontinuous.
According to Scott (2008), institutional theory is "a widely accepted theoretical posture that emphasizes productivity, ethics, and legitimacy." [2] Researchers building on this perspective emphasize that a key insight of institutional theory is ethics: rather than necessarily optimizing their decisions, practices, and structures, organizations look to their peers for cues to appropriate behavior. [3]
According to Kraft's Public Policy (2007): [4] Institutional Theory is "Policy-making that emphasizes the formal and legal aspects of government structures."
There are two dominant trends in institutional theory:
Powell and DiMaggio (1991) [5] define an emerging perspective in sociology and organizational studies, which they term the 'new institutionalism', as rejecting the rational-actor models of Classical economics. Instead, it seeks cognitive and cultural explanations of social and organizational phenomena by considering the properties of supra-individual units of analysis that cannot be reduced to aggregations or direct consequences of individuals’ attributes or motives.
Scott (1995) [6] indicates that, in order to survive, organisations must conform to the rules and belief systems prevailing in the environment (DiMaggio and Powell, 1983; [7] Meyer and Rowan, 1977 [8] ), because institutional isomorphism, both structural and procedural, will earn the organisation legitimacy (Dacin, 1997; Deephouse, 1996; Suchman, 1995 [9] ). For instance, multinational corporations (MNCs) operating in different countries with varying institutional environments will face diverse pressures. Some of those pressures in host and home institutional environments are testified to exert fundamental influences on competitive strategy (Martinsons, 1993; Porter, 1990) and human resource management (HRM) practices (Rosenzweig and Singh, 1991; [10] Zaheer, 1995; cf. Saqib, Allen and Wood, 2021; [11] ). Corporations also face institutional pressures from their most important peers: peers in their industry and peers in their local (headquarters) community; for example, Marquis and Tilcsik (2016) show that corporate philanthropic donations are largely driven by isomorphic pressures that companies experience from their industry peers and local peers. [3] Non-governmental organisations (NGOs) and social organizations can also be susceptible to isomorphic pressures. [5]
More recent work in the field of institutional theory has led to the emergence of new concepts such as
- institutional logics, a concept pioneered by Friedland & Alford (1991) and later by Thornton, Ocasio & Lounsbury (2012). The institutional logic perspective mostly take a structural and macro approach to institutional analysis
- institutional work, a concept pioneered by Lawrence & Suddaby, (2006). By contrast with the logic perspective, it gives agentic power to social actors, and assumes those actors can influence institutions - either maintaining or disrupting them.
A recent stream of research looks at the intersection of space and place (with inspirations coming from geography) and institutional theory. Rodner et al. (2020) mobilize Lefebvre to show how institutional work can be spatial by nature, in the context of the disruption of the cultural sector in Venezuela under Chavez. They also differentiate the institutional conception of place vs space. [12]
There is substantial evidence that firms in different types of economies react differently to similar challenges (Knetter, 1989). Social, economic, and political factors constitute an institutional structure of a particular environment which provides firms with advantages for engaging in specific types of activities there. Businesses tend to perform more efficiently if they receive the institutional support.
Not to be confused with the deinstitutionalization (i.e. closure) of psychiatric hospitals, this term is also used by some researchers in the institutional theory literature to think about the different ways that an undesirable institution might be disrupted. For example, Maguire and Hardy (2009) examined the processes leading to the deinstitutionalization of DDT. [13] This might include social movements from particular groups, such as the efforts leading to prohibition to deinstitutionalize the drinking of alcoholic beverages, [14] or the social and institutional pressures that led to the deinstitutionalization of permanent employment in Japan. [15] Public opinion can also lead to the deinstitutionalization of a practice, at least according to Clemente and Roulet (2015). [16]
Deinstitutionalization may also be used in partial ways, as seen in the deinstitutionalization of particular CSR concepts to make way for a new CSR construct, or in the deinstitutionalization of the practice of catching fish for sustenance. [17]
An organization or organisation, is an entity—such as a company, an institution, or an association—comprising one or more people and having a particular purpose.
The reputation or prestige of a social entity is an opinion about that entity - typically developed as a result of social evaluation on a set of criteria, such as behavior or performance.
An institution is a humanly devised structure of rules and norms that shape and constrain individual behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Institutions vary in their level of formality and informality.
New institutionalism is an approach to the study of institutions that focuses on the constraining and enabling effects of formal and informal rules on the behavior of individuals and groups. New institutionalism traditionally encompasses three major strands: sociological institutionalism, rational choice institutionalism, and historical institutionalism. New institutionalism originated in work by sociologist John Meyer published in 1977.
In sociology, an isomorphism is a similarity of the processes or structure of one organization to those of another, be it the result of imitation or independent development under similar constraints. The concept of institutional isomorphism was primarily developed by Paul DiMaggio and Walter Powell. The concept appears in their 1983 paper The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. The term is borrowed from the mathematical concept of isomorphism.
Historical institutionalism (HI) is a new institutionalist social science approach that emphasizes how timing, sequences and path dependence affect institutions, and shape social, political, economic behavior and change. Unlike functionalist theories and some rational choice approaches, historical institutionalism tends to emphasize that many outcomes are possible, small events and flukes can have large consequences, actions are hard to reverse once they take place, and that outcomes may be inefficient. A critical juncture may set in motion events that are hard to reverse, because of issues related to path dependency. Historical institutionalists tend to focus on history to understand why specific events happen.
Paul Joseph DiMaggio is an American educator, and professor of sociology at New York University since 2015. Previously, he was a professor of sociology at Princeton University.
William Richard Scott is an American sociologist, and Emeritus Professor at Stanford University, specialised in institutional theory and organisation science. He is known for his research on the relation between organizations and their institutional environments.
Social rule system theory is an attempt to formally approach different kinds of social rule systems in a unified manner. Social rules systems include institutions such as norms, laws, regulations, taboos, customs, and a variety of related concepts and are important in the social sciences and humanities. Social rule system theory is fundamentally an institutionalist approach to the social sciences, both in its placing primacy on institutions and in its use of sets of rules to define concepts in social theory.
Institutional analysis is that part of the social sciences which studies how institutions—i.e., structures and mechanisms of social order and cooperation governing the behavior of two or more individuals—behave and function according to both empirical rules and also theoretical rules. This field deals with how individuals and groups construct institutions, how institutions function in practice, and the effects of institutions on each other, on individuals, societies and the community at large.
Michael Lounsbury is an American organizational theorist, Associate Dean of Research, Thornton A. Graham Chair and Professor of strategic management, organizations and sociology at the University of Alberta, and expert in innovation and institutions.
Institutional logic is a core concept in sociological theory and organizational studies, with growing interest in marketing theory. It focuses on how broader belief systems shape the cognition and behavior of actors.
Walter W. Powell, born August 15, 1951, is a contemporary American sociologist. Powell is Professor of Education, Sociology, Organizational Behavior, Management Science and Engineering, and Communication at Stanford University and the Stanford Graduate School of Education since 1999 and is known for his contributions to organizational theory, in particular to the new institutionalism and network theory. Since 2000, he has been an external faculty member of the Santa Fe Institute.
Rational choice institutionalism (RCI) is a theoretical approach to the study of institutions arguing that actors use institutions to maximize their utility, and that institutions affect rational individual behavior. Rational choice institutionalism arose initially from the study of congressional behaviour in the U.S. in the late 1970s. Influential early RCI scholarship was done by political economists at California Institute of Technology, University of Rochester, and Washington University. It employs analytical tools borrowed from neo-classical economics to explain how institutions are created, the behaviour of political actors within it, and the outcome of strategic interaction.
Sociological institutionalism is a form of new institutionalism that concerns "the way in which institutions create meaning for individuals." Its explanations are constructivist in nature. According to Ronald L. Jepperson and John W. Meyer, Sociological institutionalism
treats the “actorhood” of modern individuals and organizations as itself constructed out of cultural materials – and treats contemporary institutional systems as working principally by creating and legitimating agentic actors with appropriate perspectives, motives, and agendas. The scholars who have developed this perspective have been less inclined to emphasize actors’ use of institutions and more inclined to envision institutional forces as producing and using actors. By focusing on the evolving construction and reconstruction of the actors of modern society, institutionalists can better explain the dramatic social changes of the contemporary period – why these changes cut across social contexts and functional settings, and why they often become worldwide in character.
In organizational studies, and particularly new institutional theory, decoupling is the creation and maintenance of gaps between formal policies and actual organizational practices. Organizational researchers have documented decoupling in a variety of organizations, including schools, corporations, government agencies, police, and social movement organizations. Scholars have proposed a number of explanations for why organizations engage in decoupling. Some researchers have argued that decoupling enables organizations to gain legitimacy with their external members while simultaneously maintaining internal flexibility to address practical considerations.Other scholars have noted that decoupling may occur because it serves the interests of powerful organizational leaders, or because it allows organizational decision-makers to avoid implementing policies that conflict with their ideological beliefs. Recent research has also identified the reverse of decoupling: recoupling, the process whereby "policies and practices that were once decoupled may eventually become coupled."
World polity theory is an analytical framework for interpreting global relations, structures, and practices. The theory views the world system as a social system with a cultural framework called world polity, which encompasses and influences the actors under it. According to the theory, world polity provides a set of cultural norms and directions that actors of the world society follow in dealing with problems and general procedures.
Patricia H. Thornton is an American organizational theorist, and Grand Challenge Initiative Professor of Sociology and Entrepreneurship at Texas A&M University as well as Adjunct Associate Professor of Business Administration at the Fuqua School of Business at Duke University. She is known for her work on "the sociology of entrepreneurship" and "the Institutional Logics Perspective."
Joseph Galaskiewicz is an American sociologist and Professor of Sociology at the University of Arizona, known for his work on interorganizational relations and social network analysis.
Mark C. Suchman is an American sociologist, Professor in Sociology at Brown University, known for his work on Institutional theory, and particularly on "managing legitimacy."