Institutional Environments

Art Thomas: How old are you Mister, uh, Mister...
Brantley Foster: Whitfield.
Art Thomas: Yes.
Brantley Foster: Twenty-four.
Art Thomas: Well, I think you should keep quiet until you're at least 25.
Davis: If I may, I don't think Mr. Whitfield's age should be an issue here.
Art Thomas: No one is interested in your opinion, Davis.
--The Secret of My Success

The institutional environment can be seen as the rules and norms that define acceptable behavior in a particular society along with the structures that shape and transmit those rules and norms to societal members.

In some societies, institutional environments are strong and exert significant 'isomorphic' pressure on its members for conformance and sameness. In other societies, institutional environments exert little influence on people's behavior, with individuals consequently 'doing their own thing.'

At least two factors affect the strength of institutional environments. One is preference among individuals for legitimacy. Legitimacy in this sense is viewed as social recognition or acceptance. Those with a high preference for legitimacy seek a 'permission slip' of sorts from others in society to engage in behavior that is broadly condoned, or to shun behavior that is broadly discouraged. Those with a low preference for legitimacy don't care what others think and, instead, act on their own accord.

All else equal, the higher the preference for legitimacy among societal members, the more influential an institutional environment will be.

The other factor that governs the strength of institutional environments also involves the notion of legitimacy, but in this case pertains to the legitimacy accorded institutions themselves. To what extent do societal members recognize the validity of rule-making entities and processes? For instance, norms that have been around for long periods of time tend to be seen as more legitimate than newer ones. 

All else equal, the greater the perceived legitimacy of institutions and institutional structures in a society, the more influential an institutional environment will be.

What 'subfactors' shape these forms of legitimacy? We'll discuss in a future post.