Institutional theory refers to the universally accepted posture that emphasizes on rational myths, legitimacy and isomorphism. It consists of policy making that concerns itself with the formal and legal structures of government. It is concerned with the resilient aspects of social structure and the manner in which such structures become authoritative guidelines for social behavior in institutions. In effect, institutional theory may be useful in explaining the stability of institutional realities that is sometimes occasioned in institutions. It is the case that for organizations to survive, they must conform to the beliefs and rules of systems that are subsisting in a particular environment. This follows from the fact that it is both structural and procedural institutional isomorphism that enables an institution to gain legitimacy. As such, institutions endeavor to remain stable over time in terms of its rules, beliefs and behavior in a bid to survive. Institutional isomorphism refers to the behavior exhibited by institutions whereby an organization that has emerged as a respected entity in a certain field is imitated by other organizations as they seek to excel. Other entities then adopt similar practices as the market leader in order to gain a competitive edge and ensure their survival.
According to Hardy and Phillips in their paper, Canadian Refugee System, institutional realities that are already ingrained in institutions remain stable over time owing to this behavior. In particular, refugees in Canada sought to adopt and conduct similar practices as their counterparts in other refugee camps so as to earn legitimacy. Institutional logic is a key concept that examines how belief systems are able to shape the cognition and behavior of actors. It refers to assumptions, practices, beliefs, and rules by which individuals organize their time and conduct their affairs. Essentially, institutional logic remains unchanged for a number of organizations as they seek to gain a competitive edge. Normative pressures also influence behavior in organizations which may emanate from within or without the organization. These pressures may cause an organization to be guided by legitimized elements such as professional certification or directions given by regulatory agencies or government. Consequently, organizations end up having crystallized institutional realities that remain for a time.
Di Maggio defines institutional entrepreneurship as the process through which researchers attend or ought to attend to the agentic and creative ways in which organizations inculcate their institutional environments. Despite argument by some scholars that organizations become isomorphic with their institutional environments thus resulting in stability as far as institutional realities are involved, this assumption is incorrect. As espoused by Di Maggio, organizations strategically and indeed do respond to organizational pressures thus resulting in a change in institutional realities. The principle that organizations become isomorphic with each other and thus become identical resulting in stability in their institutionalized realities over time is erroneous. Organizations are not mere recipients of elements and pressures from their institutional environments so that they simply assimilate them. Organizations do change and alter the institutional logics with the aid of institutional entrepreneurs. Institutional theorists need to examine the processes by which institutions are created, maintained and destroyed which is basically institutional work. Institutional work is normally conducted by individuals yet these individuals are regularly left out of research on institutional theory.
It may well be said that organizations are no prisoners of their institutional environments and they continually respond to different organizational pressures thus altering their institutional realities or logics. As Lincoln said of institutional theory, it refers to the tendency for social structures and processes to acquire meaning and stability on their own right so as to achieve specialized ends.
References
Burger, T., & Luckmann, P. (2008). The Social Construction of Reality. New York: Double Day Anchor.
Di Maggio, P. (2007). Interest and change in Institutional Theory. In Z. L, Institutioanl Patterns and Culture (pp. 3-32). Cambridge: Ballinger.
Di Maggio, P., & Powell, W. (2010). The Iron Cage Revisited: Institutional Isomorphisma and Collective Rationality in Organizational Fields. American Sociological Review, 48,147-160.
Goodstein, D. M., & Scott, W. (2009). Institutional Theory and Institutional Change. Academy of Mnagement Journal, 45,45-57.
Lawrence, P. N., & Hardy, C. (2006). Discourse and Institutions. Academy of Management Review, 29,635-662.
Oliver, C. (2009). Strategic Responses to Institutional Processes. Academy of Management Review, 16,145-179.
Suddaby, R. (2010). Challenes for Institutional Theory. Journal of Management Inquiry, 14-16.
