Institutional Theory

You're watching movies trying to find the feelers
You only see what we show you
We're the slaves of the phony leaders
Breathe the air we have blown you
--The Who

Institutional theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977) views individuals and organizations as operating inside fields of socio-economic networks and relationships that shape institutional norms in their environments. Institutional norms are expectations of acceptable behavior within an environment.

Because the ultimate goal is survival, individuals and organizations conform to institutional norms to increase legitimacy and survival capabilities. Pressure to adopt institutional norms should increase as environmental uncertainty grows. Pressures can be normative ("Do this because it's the proper thing to do"), mimetic ("Let's copy the successful people"), and coercive ("Do this or go to jail").

The survival motive and pursuit of norms encourages conditions of isomorphism in institutional fields. Isomorphic tendencies should increase with environmental uncertainty.

Ultimately, of course, isomorphism as an adaptive mechanism conflicts with other theories such as Darwinism, which posits that variation under uncertainty is necessary for long term survival.

As such, institution theory can be seen as a theory of maladaptation.

Nonetheless, like threat-rigidity theory, institution theory helps explain tendencies toward compliant and collectivistic behavior, particularly in uncertain times.

References

DiMaggio, P.J. & Powell, W.W. 1983. The iron cage revisited: Institutional isomorphism and collective reality in organizational fields. American Sociological Review, 48: 147-160.

Meyer, J.W. & Rowan, B. 1977. Institutional organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83: 340-363.